Customs, Excise and Gold Tribunal - Mumbai
Jaysynth Dyechem Ltd. vs Commissioner Of Customs on 8 May, 1998
Equivalent citations: 1999(113)ELT748(TRI-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. Appellant imported goods described in the invoice as polynest grading and marking system. According to the invoice, this consisted of a computer and peripherals. Appellant claimed clearance of the goods under Heading 8479.89 and the benefit of Entry 58 and 64 of the Table to Notification 16/85. The entries are pattern grading machine and pattern making machine respectively. The goods were originally claimed under Open General Licence (OGL).
2. The Department was of the view that the goods, being a computer system would not be entitled to the benefit of notification and also proposed to deny clearance under OGL on the ground that the computers were listed in Appendix 2B Item 175 as a restricted item. Notice was issued proposing confiscation of the goods and denial of notification benefit. Appellant in its reply asserted the eligibility to the notification and to clearance under OGL. In the alternative, it requested clearance of the goods in terms of sub-para (2) of para 177 of the 1988-90 policy for which a REP licence was produced. In the order impugned in the appeal, Additional Collector denied benefit of the notification and of OGL. He declined to accept the licence on the ground that the Chief Controller of Imports and Exports, apparently in response to the Department's query, had said, in his letter dated 3rd April, 1990 that computer requires a specific licence. He was also of the view that the appellant had not followed the provisions of sub-para (3) of para 195 of the policy. He ordered confiscation of the goods with option to redeem them on payment of fine and also imposed a penalty.
3. Advocate for the appellant does not challenge the finding that the benefit of notification and of OGL will not apply. He limits his arguments to admissibility of import of these goods under REP licence. He contends that the licence contained the condition that it is valid for import of permissible items subject to conditions prescribed in para 177 of the 1988-91 Policy. This Policy permitted import of capital goods up to a value of Rs 10.00 lacs.
4. The Departmental Representative reiterates the condition that computers are among the restricted category of items specified in Appendix 2B and the licence produced therefore was not valid to permit their import. He disputed the contention that computers are capital goods. He says that they do not fit into the definition of capital goods, being machinery, equipments and accessory required by the appellant, for production of goods or for rendering service, occuring in para 7(8) of the Policy.
5. It is not possible to accept that the goods do not fall within the definition of the term "capital goods". The appellant intended to use the goods for marking and grading pattern for garments patterns. This they could do by utilising the polynest software which was also imported. The fact that the computer could be used for other purposes by using appropriate software will not restrict it from being used for production of goods by the appellant. So far as the appellant is concerned, it satisfies the definition of capital goods.
6. The licence which was issued for import of specified items permitted the licence to be utilised within the flexibility portion of Rs 22.00 lacs approximately (out of the total value of Rs 38.88 lacs) for import of 'admissible items' subject to the provisions and fulfilment of conditions laid down in para 177 and 177(A) of the 1988-91 Policy. Para 177(2) permitted utilisation of a REP licence for import of capital goods without the recommendation of the sponsoring authority and without indigenous clearance within the flexibility of 10% subject to the following conditions being fulfilled :
"(i) the total value of import shall not exceed Rs 10.00 lakhs;
(ii) import of capital goods included in Appendix I Part A, instruments included in Appendix 8 and office machines as specified in para 118;
(iii) import of tools and instruments or any combination thereof, shall not exceed 100 in numbers, subject to a maximum of Rs 2.00 lacs;
(iv) import of second hand capital goods would not be permissible."
Para 177A which was included by amendment to the policy made in 23rd October, 1989 permitted a REP licence to be utilised within the flexibility for import of items listed in Appendix 19 of the Policy.
7. The condition in the licence, referred to above, declared that the cif value of the flexibility pattern of Rs 20.03 lacs within which it was valid for import of admissible items subject to the provisions in fulfilment of conditions laid down in para 177 and para 177A. This condition therefore made it clear that capital goods can be imported to the extent of Rs 22.00 lacs.
8. It is difficult to accept the contention that computers would have to be considered as included in Entry 148 of Appendix 2B which listed items restricted for import. Chapter 3 of the Policy specifically contains provisions relating to import of computer and computer based systems. Paragraph 37 of the Policy provides for import under OGL computers and computer based systems of specified minimum configuration. Para 38 also contains provisions of import of computer systems. It would be absurd to argue that these provisions would not apply because import of computers as electronic equipments or systems was restricted by entry 148. Apart from this, para 177, which detailed the imports to be made within the flexibility provision of a REP licence had been specifically excluded computers or computer based systems, although certain other categories of goods were excluded as has been indicated above. Once it is accepted that the computers in question were capital goods, their import in terms of this para was permissible. The Additional Collector has relied upon the fact that the provisions of para 195 of the 1990-1993 Policy, requires the registered manufacturer exporter to intimate the licensing authority according to the procedure prescribed of, he wishes to import capital goods in terms of sub-para (1) of para 195 which was permitted. This is the paragraph that was referred to in a clarification of the Chief Controller of Import and Export, which is referred to in his order. A copy was not made available by either side. However, the licence was issued within the 1988-91 Policy and was specifically made subject to the conditions in that Policy. The flexibility portion was certified in the licence specifically subject to the conditions of paras 177 and 177A of that Policy being followed. Recourse to the 1993 Policy therefore was not permissible. Import was therefore permissible.
9. Appeal allowed. Impugned order set aside.