Bombay High Court
Nibs India vs Union Of India on 1 January, 1800
Equivalent citations: 1991ECR745(BOMBAY), 1990(49)ELT337(BOM)
JUDGMENT
1. The petitioner are a partnership firm and are small scale unit having factory at Thane and the prtitioners manufacture drawing pens, nibs etc. For the purpose of manufacture the petitioners imported seven consignments during March to October 1986 and cleared the same for home consumption under Open General Licence in the capacity as actual users. The goods were classified under Heading 90.17 sub-heading 9017.20 of the First Schedule to the Customs Tariff Act, 1975. The goods were charged to duty at the rate of 60% ad valorem basic customs duty plus 40% ad valorem auxiliary duty plus 15% ad valorem additional duty. The additional duty was levied under Section 3(1) of the Customs Tariff Act.
2. The petitioners claim that levy of additional duty was contrary to law in view of Notification No. 71/86 dated February 10, 1986 as amended by Notification No. 164/86 dated March 1, 1986. The petitioners preferred refund applications in respect of levy of additional duty before the Assistant Collector of Customs on April 11, 1987. The applications for refund were rejected by the Assistant Collector of Customs, Air-cargo Complex, Bombay by various orders holding that the refund claims were lodged after expiry of six months of time limit stipulated under Section 27 of the Customs Act, 1962 and therefore were barred by limitation. The orders passed by the Collector of Customs are under challenge in this petition filed under Articles 226 of the Constitution of India.
3. Shri Nankani, learned counsel appearing on behalf of the petitioners, submitted that the conclusion of the Assistant Collector that the claims were barred under Section 27 of the Customs Act is incorrect. It is now well settled that in respect of duty recovered without authority of law the refund cannot be declined on the ground of limitation as prescribed under Section 27 of the Customs Act. The question therefore which requires determination is whether the additional duty levied in respect of import made by the petitioners was in violation of law. Shri Nankani strongly relies upon the exemption notification dated February 10, 1986 as amended on March 1, 1986. Before referring to this notification,it is desirable that the heading 90.17 and 9017.20 are set out.
"90.17 DRAWING,MARKING-OUT OR MATHEMATICAL CALCULATING INSTRUMENTS (FOR EXAMPLE, DRAFTING MACHINES, PANTOGRAPHS, PROTRACTORS, DRAWING SETS, SLIDE RULES, DISC CALCULATORS): INSTRUMENTS FOR MEASURING LENGTH,FOR USE IN THE HAND (FOR EXAMPLE, MEASURING RODS AND TAPES, MICROMETERS, CALLIPERS), NOT SPECIFIED OR INCLUDED ELSEWHERE IN THIS CHAPTER 9017.20 -Other drawing,marking-out or mathematical calculating instruments."
The exemption notification was issued in exercise of powers conferred by sub-rule(1) of Rule 8 of the Central Excise Rules, 1944 by the Central Government and interalia provides that the duty of excise leviable on the goods stands exempted in respect of description of goods set out in the table annexed to the notification. Item 8 of the table refers to Chapter Heading 90.17 and the description of the goods is "drawing and mathematical instruments". In respect of import of this item the exemption notification provides that the duty would be `nil'. Shri Nankani submits that in face of this notification it was not open for the Department to recover additional duty in respect of the imports. The submission is correct and deserves acceptance.
4. Shri Devadhar, learned counsel appearing on behalf of the Department, raised two-fold submission in answer to the claim of the petitioners. The learned counsel urged that the ambit of exemption under the notification cannot be examined by reference to the tariff entry under the Central Excise. It is not possible to accede to the submission of the learned counsel. The exemption notification specifically refers to Heading 90.17 under the Schedule to the Tariff Act. Shri Devadhar then submitted that what is exempted under the Notification is merely `drawing and mathematical instruments' and that would not cover the articles which were imported by the petitioners. It is not in dispute that the petitioners imported cones for Variant B Technical drawing pens and it is accepted position that these items are not instruments in themselves but are spare parts or accessories of the instruments. Shri Devadhar further submitted that what is exempted under the notification are only the instruments and not accessories or the spare parts. It is not possible to accede to the submission of the learned counsel. The basic customs duty and ad valorem auxiliary duty as well as additional duty was recovered from the petitioners on the basis that the items imported squarely falls under Heading 90.17. The Department never made distinction between the instruments on one hand and spare-parts or accessories on the other while levying duty on the imported items. The fallacy of submission advanced by Shri Devadhar becomes evident by perusal of Heading 98.06 of the Tariff Item. This heading deals with parts of machinery, equipments, appliances, instruments and articles of Chapters 84,85,86,89 and 90. The bare perusal of this heading makes it clear that accessories or spare parts of heading covered under Chapter 90 would be liable to duty under Heading 98.06 and not under Heading 90.17. The Department did not treat the items imported by the petitioners as parts of machinery or articles falling under Chapter 90 and therefore it is not now permissible for the Department to claim that what was imported by the petitioners are merely parts of drawing instruments and are not therefore entitled to advantage of the exemption notification. In my judgment, the stand taken by the Department is unsustainable and the levy of additional duty was in violation of law. The petitioners are therefore entitled to the refund of the amount of additional duty paid at the rate of 15% ad valorem.
5. Accordingly, petition succeeds and the rule is made absolute and the Department is directed to refund the additional duty paid by the petitioners in respect of refund applications which were filed before the Assistant Collector of Customs. The Assistant Collector of Customs should calculate the amount of refund and make the payment within a period of three months from the date the petitioners tender the requisite documents. The petitioners would not be entitled to interest in case the amount is paid by the Department within three months from the date of tendering of the documents. In case amount is not paid, then the petitioners would be entitled to interest at the rate of 12% from the expiry of period of three months from the date of lodgment of the documents till payment. There will be no order as to costs.