Customs, Excise and Gold Tribunal - Bangalore
Sipani Automobiles vs Collector Of Customs on 4 November, 1994
Equivalent citations: 1995(56)ECR614(TRI.-BANGALORE)
ORDER S. Kalyanam, Member (J)
1. Since the issue arising for consideration in all the above appeals is one and the same, they are consolidated and taken up together and disposed of by a common order, since these relate to same appellants.
2. Shri G. Sampath, the learned Counsel for the appellants/petitioners, submitted that the petitioners imported parts of Car in knocked down condition classifiable under tariff headings 8707 and 8708. Proceedings were instituted against the petitioners on the ground that the petitioners imported Cars in knocked down condition and the same were not permissible for import as per the Import Policy AM 1992-97 in terms of para 156(j)(3) without a specific licence. The department also took the view that the parts imported could make an essential characteristic of a Car as per Rule 2A of the Interpretation Rules 1975 and the Department, therefore, chose to classify the parts under subheading 87.03 of the Customs Tariff Act, 1975, and levied duty at the rate of 65% under the respective impugned orders. Shri Sampath contended that the petitioners are prima facie entitled to the benefit of Customs Notification 72/93 dated 28.2.1993 under which the goods are permissible for clearance at a concessional rate of 50% of duty. Under the impugned orders, the learned adjudicating authority has not given the petitioners the benefit of the Notification in question on the ground that the goods imported were cars in knocked down condition and the same should be construed to be "Cars" themselves by virtue of 2A of interpretative Rules, 1975 and the learned Counsel assailed the correctness of this reasoning. The learned Counsel also placed reliance on the ruling of this Bench in the case of the appellant in Order No. 209/1994 dated 6.9.1994. The learned Counsel further contended that the ruling of the Privy Council dated 19th November, 1937, 1983 ECR 1582D : ECR C Cus 8 Privy Council referred to and relied upon in the impugned order has absolutely no application whatsoever to the present case either on facts or in law. With reference to the valuation of the imported Cars in that case, the Privy Council ruling deals with post-importation charges in the context of Clause 30(a) of the Sea Customs Act, 1978, with which we are not concerned in the present case at all. The learned Counsel elaborately placed reliance on the ruling of the Calcutta High Court in the case of HCL Ltd. v. Union of India , wherein the scope relating to Rule 2A of the Rules of Interpretation for First Schedule of Customs Tariff Act, 1975 has been dealt with. Finally, the learned Counsel submitted that in any event the petitioners, after paying 50% of the duty, would pray for waiver of pre-deposit of only 15% of the balance duty payable and seek stay of operation of the impugned order with a direction to the adjudicating authority to accept necessary bond as per law and permit clearance of the goods pending appeal. The learned Counsel also pleaded for complete waiver of the redemption fine. The learned Counsel in this context submitted that in order to complete the Cars, in addition to the parts that have been imported, the petitioners will have to add 92 parts. In this connection he drew our attention to the list of important parts required to complete the manufacture of cars and the list contains very important items like Engine and Gear Box assembly, Air Cleaner, Gear Change Mechanism, Gear Box suspension, tyres and tubes etc. without which car cannot be manufactured. It was submitted that without these important parts as specified in the list it would be impossible to complete the manufacture of the cars and even conceive of a car as understood in trade as without these essential parts, the Cars would not be marketable, and the learned Counsel urged that prima facie factors are in favour of the petitioners. The learned Counsel further submitted that the petitioners entered into Collaboration with foreign manufacturer complying with all legal formalities after obtaining the permission from the Industries Department of the Government of India and it would cause irreparable loss and injury to the petitioners, if clearances are not permitted as entire manufacturing activity would be paralysed. The learned Counsel also stressed the phased manufacturing programme of Cars by the petitioners and drew our attention to collaboration agreement and urged that within two years 63% of the parts will be indigenised. The learned Counsel further submitted that in respect of the importations covered by 38 BEs the petitioners have paid the entire duty according to the tariff without being given the benefit of Notification cited supra besides excess collection since the issue in regard to valuation was being considered in the Valuation Cell of the Customs House, and as a matter of fact the petitioners have been called upon to deposit an extra amount to the tune of 44,68,541.90 which is not payable.
3. Shri P.R. Prasad, the learned SDR, submitted that the reasoning in the impugned orders is sustainable in law and on facts and in regard to differential duty of 15% in the facts and circumstances of the case the petitioners may be called upon to make some pre-deposit.
4. We have carefully considered the submissions made before us. The issues involved in the applications prima facie are two fold viz., (i) whether the goods imported are covered by the import policy and (ii) whether the petitioners prima facie are entitled to the concessional assessment in terms of Notification 72/93. Being stay petitions we do not elaborate on the various issues except to catalogue certain important circumstances. The petitioners have admittedly in respect of 38 BEs without being given the benefit of concessional Notification No. 72/93 have been directed to pay duty as per tariff rate in full, which the petitioners have paid, besides that since the valuation issue is being examined in the Valuation Cell, even as on date the Department has directed the petitioners to pay extra Rs. 44,68,541.90. It would be seen that the Department has collected over and above the tariff rate 10% extra duty in respect of each BE on the ground that the valuation issue is still being examined. We further find that in the impugned order, the learned Collector in denying the benefit of Notification cited supra has resorted to application of Interpretation Rules 2A of the Customs Tariff Act, 1975. The Calcutta High Court in the case of HCL v. Union of India has observed as under:
The only charge which the Collector found substantiated against the petitioner is the charge of importing whole machines even though the petitioner had only import licences for component parts. The whole machines were not imported in fact. Even the Collector has not found that whole machines useable as such ever or at any place crossed the Indian frontiers. It is the admitted case that the petitioner pays excise duty for the manufacturing activity of making the machines complete, workable and marketable. The petitioners never even claimed before the Excise authorities that they were not undertaking any manufacturing activity as they had imported the whole machines. The excise authorities would to my mind, be extremely surprised if such extreme contention of no manufacturing activity' had been put forward before them.
5. We also note that this Bench of the Tribunal in the case of Ganashrajan Organisations v. Collector of Customs reported in 1991 (36) ECR 334 (T) : 1991 (56) ELT, by referring to the ruling of the Supreme Court has observed as under and the same has also been referred to in the order of this Tribunal in Order No. 209/1994, dated 6.9.1994 in Appeal No. C/SB/2585/94/MAS in the case of the present applications.:
Therefore, the mere fact, that the goods imported by them were so complete that when put together would make them motor cycles and scooters in C.K.D. condition, would not amount to a breach of the licence or of Entry 295. Were that to be so, the position would be anomalous as aptly described by the High Court. Suppose that an importer were to import equal number of various parts from different countries under different indents and at different times, and the goods were to reach here in different consignments and on different dates instead of two consignments from the same country as in the present case. If the contention urged before us were to be correct, the Collector can treat them together and say that they would constitute motor cycles and scooters in C.K.D. condition. Such an approach would mean that there is in Entry 295 a limitation against importation of all parts and accessories of motor cycles and scooters. Under that contention, even if the importer had sold away the first consignment or part of it, it would still be possible for the Collector to say that had the importer desired it was possible for him to assemble all the parts and make motor cycles and scooters in C.K.D. condition. Surely, such a meaning has not to be given to Entry 295 unless there is in it or in the licence a condition that a licensee is not to import parts in such a fashion that his consignments, different though they may be, when put together would make motor cycles and scooters in C.K.D. condition. Such a condition was advisedly not placed in Entry 295 but was put in Entry 294 only. The reason was that import of both motor cycles and scooters as also parts and accessories thereof was permitted, of the first under Entry 294 and of the other under Entry 295. A trader having a licence in respect of goods covered by entry 294 could import assembled motor cycles and scooters, but not those vehicles in C.K.D condition, unless he was a manufacturer and had obtained a separate licence therefor from the Controller of Imports who, as aforesaid, was authorised to issue such a licence on an ad hoc basis. Thus the restriction not to import motor cycles and scooters in C.K.D condition was against an importer holding a licence in respect of goods covered by Entry 294 under which he could import complete motor cycles and scooters and not against an importer who had a licence to import parts and accessories under Entry 295.
The goods as imported would not satisfy the definition of 'consumer goods' which would mean for the purpose of Import Policy consumption goods which can directly satisfy the human needs without further processing. Before parting with this case, I should like to add that it is well settled proposition of law and cannons of interpretation that if a Policy is capable of two different interpretations in a given context, the benefit of the same should go to the importer or the assessee as the case may be. Therefore, on consideration of the entire evidence on record and for the reasons set out above, I am inclined to think that the import cannot be said to be in contravention of the law and in my view the goods imported would be overed by the REP licence produced by the appellant. As I mentioned earlier, when there is no doubt with reference to the applicability of the licence to the goods in question vis-a-vis the relevant provisions of the Policy the benefit of the same should be given to the importer. In this view of the matter, I set aside the impugned order and allow the appeal.
6. We further note that in a similar situations, where import of accessories of motor cycles and scooters in CKD conditions were involved, the Supreme Court in the case of Union of India v. Tarachand Gupta & Brothers reported in ECR C 539 SC : ECR C Cus 779 SC : 1983 ELT 1456 (S.C.) have observed that parts and accessories of motor cycles and Scooters imported in CKD conditions will be treated as import of parts and accessories only.
7. Since except in the case of the present 4 BEs in all other BEs the petitioners have already paid the entire duty according to tariff rate and also excess amount of 10% as stated above and since there are contentious and arguable issues in favour of the petitioners, and keeping in mind the ratio of the rulings of the Supreme Court and the ruling of the Calcutta High Court and also the ruling of this Tribunal in the cases cited supra and also having regard to the fact that the adjudicating authority has had recourse to Rule 2A of the Interpretation Rules, 1975, the scope of which also in the context of the interpretation would call for deeper examination, we are inclined to think that interests of justice would be met, if the petitioners in the facts and circumstances of the case are given the benefit of Customs Notification 72/93 dated 28.2.1993 as amended on prima facie ground and we order accordingly. We further direct that the petitioners, after paying the duty in terms of Notification 72/93 cited supra shall execute a personal bond in accordance with the provisions of the Customs Act, 1962 for the balance duty pending disposal of the appeals. We also direct the adjudicating authority to release the goods pending appeals and we grant an interim stay of the operation of the impugned orders for three months. In giving the direction for release of the goods pending appeal, we follow the ratio of the ruling of the Division Bench of the Madras High Court in the case of CCE, Madras v. Madras Electro Castings (P) Ltd. .
8. So far as the redemption fine is concerned, the petitioners are directed to deposit 50% of the same and we grant waiver in regard to the balance.
9. The petitioners are directed to take out an application before the Special Bench, Nezv Delhi since a number of similar appeals have been made over to the Special Bench so that all the appeals can be consolidated and disposed of by a common order as the issue arising for determination is common.
10. We grant interim stay of the operation of the impugned orders for a period of three months from the date of receipt of this order, to enable the petitioners to move the appropriate Special Bench. Since interpretation of Notification is involved, the papers are directed to be made over to the Special Bench, New Delhi.
(Pronounced in open Court).