Kerala High Court
Kitex Garments Limited vs Union Of India on 1 March, 2002
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE
TUESDAY, THE 21ST DAY OF FEBRUARY 2017/2ND PHALGUNA, 1938
WP(C).No. 21161 of 2013 (U)
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PETITIONER(S):
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1. KITEX GARMENTS LIMITED
PB NO.5, KIZHAKKAMBALAM, ALUVA,
ERNAKULAM DISTRICT,KERALA-683 562,
REPRESENTED BY ITS MANAGING DIRECTOR,SABU M JACOB.
2. KITEX CHILDRENSWEAR LTD
PB NO.5, KIZHAKKAMBALAM, ALUVA,
ERNAKULAM DISTRICT,KERALA-683 562,
REPRESENTED BY ITS MANAGING DIRECTOR,SABU M JACOB.
BY ADV. SRI.P.R.VENKETESH
RESPONDENT(S):
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1. UNION OF INDIA
REPRESENTED BY ITS SECRETARY,
MINISTRY OF FINANCE, NEW DELHI.
2. THE COMMISSIONER OF CUSTOMS
CUSTOMS HOUSE, WILLINGTON ISLAND, KOCHI.
R1 BY ADV. SRI.N.NAGARESH, ASG
R2 BY ADV. SMT.SHEELA DEVI.I., SC
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
20-12-2016, THE COURT ON 21-02-2017 DELIVERED THE FOLLOWING:
WP(C).No. 21161 of 2013 (U)
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APPENDIX
PETITIONER(S)' EXHIBITS
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EXHIBIT P1.TRUE COPY OF RELEVANT EXTRACT OF NOTIFICATION NO.21/2002
DATED 1/3/2002.
EXHIBIT P2.TRUE COPY OF THE NOTICE DATED 10/10/2005 ISSUED BY THE
CUSTOMS DEPARTMENT
EXHIBIT P3.TRUE COPY OF ORDER OF THE REPLY DATED 22/12/2005 BY THE
PETITIONER TO THE CUSTOMS DEPARTMENT
EXHIBIT P4.TRUE COPY OF REPLY DATED 27/4/2006 FROM THE MINISTRY OF
FINANCE DEPARTMENT OF REVENUE TO THE PETITIONERS.
EXHIBIT P5.TRUE COPY OF ORDER DATED 31/8/2006 ISSUED BY THE ASSISTANT
COMMISSIONER OF CUSTOMS, AIRPORT.
EXHIBIT P6.TRUE COPY OF ORDER DATED 18/3/2009.
EXHIBIT P7.TRUE COPY OF THE JUDGMENT IN CUS-A.NO.3/2010 DATED 2572011
OF THIS COURT
EXHIBIT P8.TRUE COPY OF ORDER IN SLP DATED 26/3/2012 OF THE
HONOURABLE SUPREME COURT.
EXHIBIT P9.TRUE COPY OF NOTICE DATED 2/5/2013 ISSUED TO THE 1ST
PETITIONER BY THE DEPARTMENT OF CUSTOMS.
EXHIBIT P10.TRUE COPY OF THE NOTICE DATED 3/5/2013 ISSUED TO THE 2ND
PETITIONER.
EXHIIT P11.TRUE COPY OF THE NOTIFICATION REFERRED TO BY THE
DEPARTMENT NO.21/2011 DATED 1/3/2011.
EXHIBIT P12.TRUE COPY OF THE NOTIFICATION NO.12/2012 DATED
17/3/2012.
EXHIBIT P13.TRUE COPY OF FINAL ORDER DATED 21/6/2013 IN RESPECT OF
THE 1ST PETITIONER.
EXHIBIT P14.TRUE COPY OF THE ASSESSMENT ORDER IN RESPECT OF THE 2ND
PETITIOENR DATED 21/6/2013.
EXHIBIT P15.TRUE COPY OF THE BILL ENTRY DATED 20/12/2003 CLEAR
THROUGH AIR CUSTOMS.
EXHIBIT P16.TRUE COPY OF THE BILL ENTRY CLEARED THROUGH SEA CUSTOMS.
EXHIBIT P17.TRUE COPY OF THE BILL ENTRY SHOWING THE DESCRIPTION AS
SNAP FASTENERS.
EXHIBIT P18.SPECIMEN OF THE CONTINUITY BOND TO BE EXECUTED.
EXHIBIT P19.TRUE COPY OF THE JUDGMENT PASSED BY THIS HONOURBALE
COURT IN WPC NO.12982/2006 DTED 1/7/2013.
EXHIBIT P20.COPY OF BOARD CIRCULAR DATED 18/12/2007.
WP(C) No. NO.21161/13 -2-
EXHIBIT P21. TRUE COPY OF THE ORDER DATED 31/8/2016 OF THE
COMMISSIONER OF CUSTOMS I.
EXHIBIT P22. TRUE COPY OF THE SAID ORDER 29.1.2016 OF THE
COMMISSIONER OF CUSTOMS.
RESPONDENT(S)' EXHIBITS NIL
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Rp
//TRUE COPY//
PS TO JUDGE
A.M. SHAFFIQUE, J.
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W.P. (C) No. 21161 of 2013
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Dated this, the 21st day of February, 2017
J U D G M E N T
This writ petition is filed with reference to the claim made by the petitioners that they are entitled for the benefit of exemption from payment of duty in regard to certain commodities which are being imported.
2. The short facts involved in the case would show that the first petitioner and the second petitioner are sister concerns and they are engaged in the manufacture and export of children's garments. Various accessories are imported by them of which most of them are exempted from payment of customs duty as per notification issued by Government of India, Ministry of Commerce and Industry. The benefit is extended to bonafide exporters based on their track record. It is stated that as per notification No.21/2002 dated 1/3/2002 issued by the Government of India, various goods described in the notification have been exempted from duty either completely or partially or on certain conditions. Petitioners refer to Sl.Nos.140 and 167 of the said notification. In Sl.No.140, the W.P(C) No.21161/13 -:2:- description of goods are shown as "tags, labels, printed bags, stickers, belts, buttons or hangers". It is stated that a similar entry is seen under Sl.No.167, which includes various items including "fasteners". According to the petitioners, those items coming under Sl.No.167 enjoys only a limited benefit on account of the Entry in Column No.5 as condition No.21 which again is specified in the Annexure to the notification. According to the petitioners, they have been regularly importing snap buttons from the year 2002/2003 onwards, which would come squarely under Sl.No.140 and the duty was totally exempted, without any conditions attached to it. However, they were issued with a show cause notice dated 10/10/2005 stating that there was a misdeclaration of the goods that were imported. In the show cause, demand was made for `78,10,094/-. The matter was taken up with the Textile Commissioner and also Ministry of Textiles and by Ext.P4 dated 27/4/2006. A reply was received stating that under Sl.No.140, exemption is available only to buttons which are classified under sub heading 96062110 of Customs Tariff whereas the snap fasteners are covered under heading No.96061010. Pursuant to the show cause notice, order dated 31/8/2006 was passed as W.P(C) No.21161/13 -:3:- Ext.P5 in respect of 35 bills of entry and imposing on the petitioners penalty for misdeclaration. Petitioners preferred an appeal before the Commissioner of Appeals, who confirmed the order and the matter was taken up before the Customs, Excise and Service Tax Appellate Tribunal, Bangalore (CESTAT) as Customs Appeal No.281/2008. The Tribunal allowed the appeal holding that button included in Sl.No.140 includes snap buttons as well. Though a further appeal was filed by the Department before this Court as Customs Appeal No.3/2010, by judgment dated 25/7/2011, this Court confirmed the view of the Tribunal. The matter was taken up before the Apex Court by filing Special Leave Petition No.10900/2012, which came to be dismissed. Therefore, according to the petitioners, they were getting the benefit of exemption in terms of Sl.No.140. In the meantime, petitioners were again served with another notice dated 2/5/2013 in respect of certain Bill of Entries inter alia contending that there is a change brought about by way of amendment to notification No.21/2002 w.e.f. 1/3/2011 as per notification No.21/2011-Cus, which is produced as Ext.P11. The Department took up a stand that Sl.No.167 has undergone a change. By the amendment in W.P(C) No.21161/13 -:4:- Ext.P11 notification, the Entry "fasteners" have been substituted with "fasteners including button and snap fasteners, zip fasteners, including zippers in rolls, slides/pullers and end- shoppers." The Department therefore took up a contention that the snap fasteners which are imported by the petitioners under the respective bills of entry can no longer be assessed under Sl.No.140, but assessment can be made only under Sl.No.167. It is submitted that notification bearing No.12/2012 dated 17/3/2012 was published superseding notification No.21/2002 by which the items had been renumbered. The original Sl.No.140 has been renumbered as Sl.No.232 and Sl.No.167 has become Sl.No.282. However, the contents remained the same.
3. Though the petitioners filed objections and appeared for personal hearing, relying upon the earlier orders passed, by order dated 21/6/2013, the Deputy Commissioner of Customs confirmed the same. The order passed against the first petitioner is produced as Ext.P13 and the second petitioner Ext.P14.
4. The main contention urged by the petitioners is that there is no change in law as matters stand now as the issue has already been confirmed in the judgment of the CESTAT, Bangalore W.P(C) No.21161/13 -:5:- as confirmed by this Court as per the judgment dated 25/7/2011 in Customs Appeal No.3/2010 and therefore, there is no reason why a different view should be taken in the matter merely for the reason that snap fasteners have been included under Sl.No.167 which is now renumbered as 282.
5. On the aforesaid contentions, the petitioners seek for a declaration that the buttons imported by them are entitled for exemption under Sl.No.232 as per notification No.12/2012 notwithstanding the amendment to the entry "fasteners" in Sl.No.282 of notification No.12/2012. Petitioners also seek for a direction to permit clearance of the goods under Sl.No.232 and to permit them to describe the item of import as buttons/snap buttons in the Bills of Entries.
6. Counter affidavit has been filed by respondents 1 and 2 inter alia stating that buttons and snap fasteners are two different types of fasteners having different identity, different modes of operation and also structurally different. Petitioners were importing snap fasteners declaring them as snap buttons and claiming duty exemption available for buttons. In the case which was already decided by the CESTAT, it was held that button W.P(C) No.21161/13 -:6:- includes parts of the button which would also be covered by Entry
140. The discussion was whether parts of a button would be eligible for the benefit under Sl.No.140 when the said exemption was available to buttons. The contention urged is that the actual issue whether the snap fasteners would fall under Sl.No.140 or Sl.No.167 was not discussed. It is therefore contended that the judgment of the CESTAT which was confirmed by this Court did not consider the difference between button and snap fasteners. The very fact that snap fasteners was included by amending the notification and Sl.No.167 was amended incorporating snap fasteners clearly indicates that it is a different commodity liable to be exempted only on compliance of certain conditions as stipulated in the notification. It is further contended that the impugned order can be challenged by preferring appropriate appeal before the appellate authority and there is no reason why this Court should consider the matter.
7. The petitioners have filed reply affidavit controverting the stand taken by the department.
8. There cannot be any dispute regarding the fact that Exst.P13 and P14 orders passed by the Deputy Commissioner of W.P(C) No.21161/13 -:7:- Customs imposing a levy is appealable under Section 129E of the Customs Act, 1962. The learned counsel for the petitioners submits that on account of specific findings in the CESTAT order which was confirmed by this Court, the entitlement for exemption under Sl.No.140 of the 2002 notification has already been confirmed and therefore the Department cannot take up the very same contention in respect of other Bill of Entries and hence estopped from taking such a view.
9. The first question to be considered is whether the order passed by CESTAT which was confirmed by the High Court would estopp the Customs in passing Exts.P13 and P14 orders. The CESTAT order has been produced as Ext.P5. In Ext.P5 order, the issue considered was whether imported parts of snap buttons were entitled for nil duty as per exemption Notification No.21/02 under Sl.No.140. During the relevant time, Entry No.140 included buttons. The argument was that the term "buttons" includes parts of a button. It was held that part of a button would also be covered by Entry No.140 and any other interpretation will lead to absurdity. This Court confirmed the view taken by the CESTAT. By Ext.P9, another show cause notice was issued in respect of 64 W.P(C) No.21161/13 -:8:- Bills of Entry which wee provisionally cleared, which ultimately resulted in the impugned orders as well as the findings of the Department. Reference was made to provisional assessment of 64 bills of entry filed for clearance of snap fasteners/parts of snap fasteners. The provisional assessment was made extending the benefit of notification No.21/02 under Sl.No.140. This was done based on the orders passed by the CESTAT, which was confirmed by the High Court. It is observed that on examination of the provisional duty bonds in the light of amendment to description of goods given to Sl.No.167 of Notification No.21/2002 and as per notification 21/2011 read with notification No.12/2012, it was noticed that the claim for duty exemption benefit under Sl.No.140 was not applicable to snap fasteners/part of snap fastener. It is therefore apparent that the CESTAT judgment at Ext.P5 was concerned with the question whether part of the buttons was entitled for duty exemption. In the case on hand, the imported item is stated as snap fasteners and according to the Department, fasteners come under the entry at Sl.No.167 of notification 21/2011. It is therefore observed that when a specific entry is made under Sl.No.167 of notification 21/2002 and Sl.No.282 of W.P(C) No.21161/13 -:9:- notification 12/2012, there is an obligation to comply with the conditions to claim exemption from paying duty. It is therefore clear that the order passed by the CESTAT as well as the judgment of this Court was not considering the question regarding snap fasteners which is specifically covered by virtue of an amendment made to Sl.No.167 as per notification 21/2011 and incorporated in notification 12/2012 as well. The amended entry at Sl.No.167 of notification 21/2011 indicates the item as fasteners including button and snap fasteners. Therefore, I do not think that Ext.P9 and subsequent proceedings have been taken contrary to the finding in the orders at Exts.P5 and P6. In other words, the present provisional assessment is based on the amended provision by which the meaning of fasteners had been extended as including button and snap fasteners. Hence, the Department is not estopped from taking action on the basis of the amended provision.
10. Learned counsel for the petitioners further argued that in so far as the successive notifications did not change the nature and character of the entry "buttons", it is not open for the Department to take action against the petitioners by denying the W.P(C) No.21161/13 -:10:- exemption. The argument is that though an amendment has been made as per notification 21/2011 to Entry at Sl.No.167 by stating the same as fasteners including buttons and snap fasteners, no change had been made to the entry at Sl.No.140. Ext.P12 is the customs notification No.12/2012 in which Sl.No.140 of the earlier notification had been renumbered as 232 in which the duty is shown as nil and the description of the entries reads as "tags, labels, stickers, belts, buttons or hangers, imported by bonafide exporters". In other words, the contention is that the entry of buttons had not been changed and is still treated as nil duty. But in regard to fasteners, the entry had been renumbered as 282 where Clause (a) of the description would show it as "fasteners including buttons and snap fasteners". It is argued that when parts of a button is generally termed as snap fastener and it comes under entry 140/232, by incorporating fasteners including buttons and snap fasteners would result in substantial confusion. Though the duty is nil, the importer will have to comply with various conditions as specified in condition No.24 whereas no such condition is prescribed as far as entry 140/232 is concerned. It is true that the entry buttons has not been taken away from W.P(C) No.21161/13 -:11:- Sl.No.232. But it is relevant to note that item 282 relates to fasteners, including buttons and snap fasteners. Apparently, there is some difference as far as buttons are concerned compared to that of fasteners. In Sl.No.232, buttons alone has been mentioned whereas in Sl.No.282, the word used is "fasteners" and it is qualified by the words "including buttons and snap fasteners, zip fasteners, including zippers in roll, sliders/pullers and end-stoppers." In other words, if it is merely buttons, it comes under Sl.No.232 and with respect to buttons which can be used as fasteners, it will come under Sl.No.282.
11. Apparently, there is a difference between both the commodities and it is for the various customs authorities to verify the same and arrive at a conclusion. Hence, I do not think that this Court will be justified in arriving at a conclusion as to whether the particular commodity was either "button" coming under Sl.No.232 or "fasteners"/snap fasteners" coming under Sl.No.282. Petitioners of course had an opportunity to challenge the finding by filing an appeal which was not opted by the petitioners. An interim order was also granted by this Court directing the 2nd respondent to release the goods imported by the petitioners on W.P(C) No.21161/13 -:12:- furnishing bank guarantee. Primarily, if the goods can be termed as fasteners or snap fasteners, it will only come under Sl.No.282.
12. Be that as it may, since the petitioners have the right of appeal which has been lost on account of filing of the writ petition, if the petitioners could substantiate that the goods imported are not fasteners and only buttons as seen in Sl.No.232 of Customs Notification of the year 2012, it would be appropriate that an opportunity is granted for the same.
Accordingly, this writ petition is disposed of as under:-
(i) That the petitioners are permitted to prefer an appeal against the impugned orders, Exts.P13 and P14.
(ii) The time during which this writ petition was pending before this Court, i.e., from 26/8/2013, till the date of judgment, shall be excluded in computing the period of limitation.
(iii) Invocation of the Bank Guarantee given by the petitioner shall be kept in abeyance for a period of one month from today.
Sd/-
A.M. SHAFFIQUE, JUDGE Rp //TRUE COPY// PS TO JUDGE