Customs, Excise and Gold Tribunal - Delhi
Dps India (P) Ltd. vs Collector Of Customs on 4 August, 1992
Equivalent citations: 1993ECR120(TRI.-DELHI), 1992(62)ELT837(TRI-DEL)
ORDER Jyoti Balasundram, Member (J)
1. The brief facts of the case are as follows:-
In 1984, the appellants who are manufacturers of Data Processing and Computer Software, imported equipment for microfilming of documents, processing of microfilms as well as computer aided retrieval and printing of these microfilms. Prior to the importation, by letter dated 16th August, 1984, the appellants wrote to the Public Relations Officer, Calcutta Customs stating that the machineries in the list annexed thereto viz. microfilm Printing Machine, stop and repeat cameras and Micropoint Controller fell under the OGL list of Import Policy, 1984-85 and sought clarification as to whether the goods would be assessed for duty as Project Import. The Public Relations Officer replied on 27-9-1984 that microfilming of documents is a servicing industry and not manufacturing activity and the machineries do not fall within the scope of Project Imports under Heading 84.66 of the Customs Tariff Act, 1975. The appellants then approached the Director of Industries who wrote to the Collector of Customs by letter of 23-11-1984 requesting that the unit of the appellants may be allowed import at a concessional rate as Project Import and informing that the unit is also registered with the Directorate of Industries for the purpose of import. The appellants applied to the Assistant Collector for Project Import Contract registration on 21-12-1984. As the goods arrived on 22-12-1984 and as no order had been passed till 10-4-1985, the appellants informed the Collector of Customs on 22-3-1985 that they were clearing goods on payment of duty under protest to avoid damage of machineries and heavy demurrage.
2. The adjudicating authority, by order dated 25th April, 1986, rejected the application for registration of the contract for the reason that the imported items were not required for setting up of a manufacturing industry. The lower appellate authority upheld the rejection on the grounds that
(a) the goods were cleared for home consumption before registration of the contract in violation of the provisions of the Project Imports (Registration of Contracts) Regulations, 1965.
(b) the goods were required for substantial expansion of a service project and not for manufacturing activity.
3. Aggrieved by the order of the Collector (Appeals), the appellants have preferred the above appeal.
4. We have heard Shri M.A. Rangaswamy, Learned Counsel and Shri M.S. Arora, Learned DR and considered the rival submissions.
5. We agree with the contention of Shri Rangaswamy that the Lower Appellate Authority has erred in proceeding on the basis that the consideration of the case on merits is not possible as the contract was not registered prior to the clearance of the goods. We find that the appellants had done all that they were required to do under the Law to have the contract registered but the delay was ....:. by the Customs Authorities. The appellants had applied for Project Import Contract Registration on 21-12-1984, their application is as found below :-
Sub: Registration of Contract for Project Import of Microfilming equipment for assessment under Heading 84.66 of Section XVI of Customs Tariff Act, 1975 (51 of 1975).
Dear Sir, We are a unit registered with the Directorate of Cottage and Small Scale Industries under Registration No. 21/004/00107/FNL/WHSI, dated 30-8-1977. We have been in operation in the field of data processing for more than six years now and have a wide range of customers. Our customers include various large nationalised banks, multinational companies, various Government departments, professional bodies like the institute of Cost and Works Accountants of India, etc. During the course of data capture for processing, we have to handle a large volume of invaluable and sometimes confidential documents, particularly for the banks and Government departments. Most customers are reluctant to let such documents out of their own premises, such is the importance of these documents. As a natural expansion to our Data Processing activity, and on special request from certain nationalised banks and others, we now wish to offer our customers services for the microfilming of documents, processing of such microfilms as well as retrieval and printing of these microfilms.
We are, therefore, setting up a new project to render the above microfilming services to our existing as well as new clients. For this purpose, we have entered into a contract with M/s. MS Singapore Pvt. Ltd., for the supply (Import) of the necessary microfilming equipment viz. Step and Repeat Cameras, Film Processors, Reader-Printers and Accessories. The total CIF value of the plant and machinery to be imported is US $ 52,252.50. The total billing from this project is expected to be Rs. 28 lacs in the first year, going upto Rs. 38 lacs in the third year. The net profit from this project is expected to be Rs. 2.85 lacs in the first year, going upto Rs. 5.34 lacs in the third year. We would now request you to kindly register our contract tinder Project Import Rules for enabling us to avail of the concessional rate of duty under Heading No. 84.66 of Section XVI of the Customs Tariff Act, 1975 (51 of 1975).
We enclose, for your kind consideration, the following :-
1. Proforma invoice from Suppliers.
2. Telex Order and Order Acceptance from M/s. SM Singapore Pvt. Ltd.
3. Project Import bond with Annexure-A.
4. Two letters from Directorate of Industries, recommending our case for project import.
5. Set of Catalogues related to the equipment being Imported.
6. Copy of Related Letter of Credit.
7. Copies of the following with regard to DPS India Pvt. Ltd.:
(I) Factory Registration Letter (II) SSI Certificate
(III) Subsequent letter from Directorate of Industries granting us loan -DGTD and Non-SSI registration No. DINDUS/001-1 & E/84 dated 7-7-1984.
(IV) Copy of CCl & E allotment of Importers Code No. CH 400058
8. Copy of Invoice from M/s. SM Singapore Pvt. Ltd.
It may be pertinent to mention here that the total CIF value of goods actually air-freighted by M/s. SM Singapore Pvt. Ltd. is US $ 51,364.25 on account of certain spares not being currently available. This falls short of the Proforma Invoice value by US $ 888.27. This is explained in the telex received by us from SM Singapore Pvt. Ltd., a copy of which is also enclosed.
6. The appellants appear to have complied with the provisions of the Project Import (Registration of Contract) Regulations, 1965. As there was no response from the Authorities and the goods had arrived and were running the risk of demurrage and as the demurrage charges were rising, the appellants had no other option but to clear the goods under protest on payment of the assessed duty. Ultimately, an appellate order was issued by the Assistant Collector on 23-4-1986 i.e. about 16 months after the application for Registration as Project Import. In these circumstances, the benefit of Project Import can not be denied to the appellants on the ground that the goods were cleared for home consumption before Registration of the Contract.
7. As regards the merits of the matter, we find that the matter is covered by the decision of the Tribunal in the case of Saraswathi Stores v. Collector of Customs, reported in 1985 (22) E.L.T. 68 wherein the Tribunal has held that reproducing of records into tape cassettes is a project relating to an industrial plant for industrial activity eligible for concessional assessment under Heading 84.66 of the Customs Tariff Act, 1975.
8. Paragraph 7 & 8 of the order is reproduced below :-
"7. Apart from the foregoing submissions on both sides relating to what constitutes an industrial plant, industry, production etc., the appellants have filed before us a copy of the judgment of the High Court of Adjudicator, Madras, in the case of Das Colour Lab. v. Assistant Collector of Customs, Appellate Collector of Customs and Collector of Customs, Madras [Writ Petition No. 8398 of 1984] . In this case, on import of automatic computerised equipment for developing of colour films, printing, enlarging and processing of colour photo films, the benefit of concessional assessment as project import was allowed to the appellants. We observe that, in that case, the same doubts had been expressed as regards whether the goods imported could be related to an industrial plant or whether the project could be considered to be industrial activity. It would appear that, on these issues, the Ministry of Finance, Department of Revenue, Government of India consulted the Director General, Technical Development, and, on the basis of advice tendered, issued a clarification on the 4th of November, 1983, that the project import facility was admissible to an automatic colour film processing laboratory. It has been argued before us that, in view of this decision of the Madras High Court, it would not be open to the department to raise any doubts here as regards whether the goods imported in their case, namely tape duplicators, cassette masters, etc. would constitute an industrial plant or whether duplication of cassettes would constitute an industrial activity. The appellants have also pointed out that in the case of other importers of identical goods, the facility of registration of contract under the project import has been duly allowed. In this case, reference has been made to the order of the Assistant Collector, Bombay dated 9-10-1980, in the case of M/s. Tharangini Studios and another order in the case of M/s. Leela Chitnis Studios, Bombay.
8. We have carefully considered the facts of the case and the submissions made before us. In view of the judgment of the Madras High Court in the case of M/s. Das Colour Lab. and, in the absence of any judgment of another High Court or the Supreme Court, taking a contrary view, we feel that we do not need to go into the merits put forward by the department, in this case, since these are similar to the arguments that were put forward in the case decided by the Madras High Court. Accordingly, we set aside the order of the Collector of Customs, Madras, and allow the appeal with consequential relief to the appellants."
9. The appellants herein had specified industrial plant at the time of importation of the machinery in question and their plant was for manufacture of computer software which falls under the heading "Electronic Components & Equipments" as recognised by the Directorate of Industry, Government of West Bengal and the Ministry of Industry, Government of India. The Directorate of Industries, West Bengal has certified that the system imported was for the substantial expansion of a specific unit. The activities to be carried on by the imported equipment are complex process somewhat akin to the activity of developing of colour films, printing, enlarging and processing of photo films as in the case of Das Colour Lab. and Saraswathi
10. Following the ratio of the above decisions, we hold that the goods in question are entitled to the benefit of concessional assessment as Project Import under Heading 84.66(1) of the Customs Tariff Act, 1965. (Should be Customs Tariff Act, 1975 - Ed.) We set aside to the impugned order and allow the appeal with consequential relief to the appellants.