Bombay High Court
United Breweries Ltd. vs Union Of India (Uoi) And Ors. on 4 April, 1994
Equivalent citations: 1994(53)ECR13(BOMBAY)
JUDGMENT M.L. Pendse, J.
1. The petitioners are a company registered under the Companies Act and carrying on business of trading and exports and imports of various goods through a division known as United Breweries International. The petitioners were issued an additional licence dated October 11, 1984 under the provisions of the Import Policy April 1984-March 1985. In accordance with the Import Policy, the petitioners were entitled to import certain items under the additional licence. The petitioners entered into two contracts with Osram Bmbh, West Germany for the purchase and import of Sodium Vapour lamps for an aggregate value of Rs. 1,73,491/- and Rs. 46,898.20 respectively. After the consignments under the two contracts reached Bombay, the petitioners filed two bills of entries on September 2, 1985 and September 3, 1985 for clearance of the consignments and offered the additional licence dated October 11,1984. The petitioners also addressed two letters dated October 24, 1985 to the Customs Authorities setting out the reasons as to why Sodium Vapour Lamps were eligible for clearance under the additional licence.
2. On October 30, 1985, the Customs Authorities served two show-cause notices upon the petitioners inter alia claiming that the Sodium Vapour Lamps cannot be described as 'spares' and called upon the petitioners to show cause as to why the two consignments should not be confiscated under Section 111(d) of the Customs Act and penalty should not be imposed. On November 30, 1985 the petitioners filed replies to the show-cause notices and claimed that Sodium Vapour Lamps were imported as spares within the meaning of item No. 85.20 of Schedule I to the Import (Control) Order.
Before the Customs Authorities could pass an order of adjudication on December 9, 1985, the petitioners approached this Court by filing Writ Petition No. 2449 of 1985 under Article 226 of the Constitution challenging the validity of show-cause notices. The petition was summarily dismissed by learned Single Judge but in Appeal No. 1113 of 1985 preferred by the petitioners, the petitioners were permitted to clear the consignments on furnishing bank guarantee of 100% of c.i.f. value. The Customs Authorities were permitted to proceed with the hearing of the show-cause notices and pass an order of adjudication.
3. In accordance with the direction of this Court, the petitioners were heard by the respondents and by two orders dated February 4, 1986 and February 13, 1986 the claim of the petitioners that consignments may be cleared under the additional licence was turned down. The Customs Authority could not confiscate the goods in view of the clearance permitted by this Court and thereupon in lieu of confiscation, fine in the sums of Rs. 1,70,000/- and Rs. 45,000/- was directed to be paid by the petitioners. The petitioners have preferred the present writ petition to challenge the correctness of the order.
4. Shri Hidaytullah, learned Counsel appearing on behalf of the petitioners, submitted that Sodium Vapour Lamps are qualifying as spares permissible under para 186(8) of the Import Policy. The learned Counsel urged that the conclusion of the authority below that Sodium Vapour Lamps are a complete item in themselves and hence do not qualify as spares, is not correct. The learned Counsel further urged that it is necessary to take into consideration the commercial understanding of the terms referred to in the Import Policy and in the trade, the only known spare of a Sodium Vapour Lamp is a lamp itself. Shri Hidaytullah submitted that the construction put by the Customs Department would make several of the headings of Schedule I of the Import (Control) Order redundant. The submission was advanced by urging that in several places, the only commercially recognised spares was a complete item in itself. Shri Hidaytullah further submitted that the conclusion of the Customs Authorities that the consignments fall within the expression of 'consumer goods' appearing in the Import Policy is not correct because the expression 'consumer goods' must be restricted to only those goods which directly satisfy human needs or in other words which are used for domestic purpose. Shri Bulchandani, learned Counsel appearing on behalf of the Department, on the other hand urged that the reasons furnished by the Authority while passing order of adjudication cannot be faulted with and the petitioners are not entitled to any relief in exercise of writ jurisdiction.
5. In view of the rival contentions, the first point which requires attention is whether Sodium Vapour Lamps which are a complete item in themselves can qualify as spares to enable the petitioners to import the lamps under the additional licence dated October 11, 1984. The expression 'spare' has been defined under the Import and Export Policy for April 1984-March 1985 in para 5(1) and reads as under:
Spare means a part or sub-assembly or assembly for substitution i.e. ready to replace an identical similar part or sub-assembly or assembly, if it becomes faulty or worn out and includes an accessory (or attachment) in the same regard.
The additional licence is granted to the petitioners in accordance with Clause 186 of the Import Policy and Clause 186(8) inter alia provides that additional licence will also be valid for import of spares of the item falling under heading No. 85.20 in Chapter 85 of Schedule I of Appendix 2 which reads as follows:
Electrical filament lamps and electric discharge lamps (including infra-red and ultra-violet lamps); arc-lamps; electrically ignited photographic flashbulbs.
Shri Hidaytullah urged that Sodium Vapour Lamps fall within the expression 'spares' because the lamps imported are used as substitution though it is a complete item. The learned Counsel did not dispute that Sodium Vapour Lamps are the complete item in itself but urged that the lamps will still fall within the expression 'spares' as defined under the Import Policy. The learned Counsel urged that it is not possible to have spares in respect of Sodium Vapour Lamps because in case the lamp goes out of order, then it is not possible to substitute some of the parts to make the lamp to work again. It was contended that in case the lamp goes out of order, then the new lamp has to be substituted and therefore the new lamp should be treated as spares. Strong reliance was placed on the definition of expression 'spares' which includes sub-assembly or assembly for substitution. It is not possible to accede to the submission of the learned Counsel. The expression 'spares' used in Import Policy must be understood as known in the common parlance. The definition clearly refers to a part and it is obvious that while using the expression 'sub-assembly or assembly' what the policy had in mind was the part of assembly or sub-assembly. The expression 'spare' will lose its connotation if an item, completely itself, is treated as spare. It is impossible to hold that a whole can be a part. In our judgment, the adjudicating authority reached correct conclusion in turning down the contention of the petitioners that clearance can be claimed against the additional licence in respect of Sodium Vapour Lamps by treating them as spare parts of light fitting.
6. Shri Hidaytullah submitted that the terms of the Import Policy should be understood in accordance with the trade of commercial meaning. It was contended that in the trade, Sodium Vapour Lamps are considered as spares and in support of the submission, reliance is placed on the affidavit sworn in by Ajit Mirchander, Deputy General Manager of M/s. Bajaj Electricals Ltd. The perusal of the affidavit indicates that in the event of the breakdown, it is not possible to replace any of the parts of the lamp and it is necessary to substitute the same by a fresh one. Mirchander claimed that ready available stock of bulbs or lamps as replacement is kept and these are described as spare bulbs and spare lamps. It is impossible to conclude from the contents of this affidavit that the Sodium Vapour Lamps are known in the trade circle as spares as defined by the Import Policy. Reference was made by Shri Hidaytullah to the certificates issued by the General Manager (Operations) of M/s. Genelec Ltd., and Product Manager of M/s. Bajaj Electricals Ltd. We are afraid we cannot place any reliance upon these certificates to conclude that Sodium Vapour Lamps are known in the market as 'spares' defined under the Import Policy.
6A. Shri Hidaytullah then submitted that in case the decision of the adjudicating authority that Sodium Vapour Lamps are not spares is accepted, then several of the headings of Schedule I of the Import (Control) Order would become redundant. The learned Counsel urged in several cases under Heading No. 85, the only commercially recognised spare was a complete item in itself. The learned Counsel had to concede that there were several entries under the Heading No. 85 where the parts of the completed item can be imported as spares and it is not that in every case the only commercially recognised spare was a complete item in itself. The adjudicating authority very rightly pointed out that most of the headings cover a variety of machinery and equipments which are assembled out of components and on being worn out, such components, are required to be replaced by identical spares.
6B. A faint contention was also urged by Shri Hidaytullah that the Customs Authorities had consistently permitted clearance of studio bulbs and projection lamps which are identical to the Sodium Vapour Lamps in terms of function and use. Reliance was placed on the circular dated January 29,1979 in which studio bulbs and projection lamps were considered as spare parts and not consumables. The submission that on the strength of the circular, Sodium Vapour Lamps should be treated as spares, cannot be accepted because the circular recites that studio bulbs and projection lamps are highly specialised types of lamps and which can be used only with special fittings. It is not possible to compare studio bulbs and projection lamps with the Sodium Vapour Lamps which are regularly used for the purpose of street lighting.
7. Shri Hidaytullah contended that the adjudicating authority was in error in holding that Sodium Vapour Lamps fall within the expression 'consumer goods' as defined under the Import (Control) Policy. The expression 'consumer goods' is defined under Chapter 2, Clause 5(13) and reads as follows:
Consumer goods for the purpose of import policy, will mean consumption goods which can, directly satisfy human needs without further processing, it would include consumer durables also.
Shri Hidaytullah submitted that Sodium Vapour Lamps do not directly satisfy human needs because such lamps are used for professional lighting to suit different lighting conditions such as play grounds, stadium lighting, airport lighting etc. The submission was advanced by urging that expression 'consumer goods' must necessarily refer to consumption of the goods in household. The assumption of the learned Counsel that consumer goods must be one which are used as domestic appliances is incorrect. The Sodium Vapour Lamps are normally not used in the residential premises but still will not cease to be consumer goods because the consumers of Sodium Vapour Lamps are municipal corporation or airport authorities or stadium authorities. The expression 'consumer goods' cannot be limited to the consumption by domestic users. In our judgment, the adjudicating authority very rightly held that the import of Sodium Vapour Lamps squarely falls within the expression 'consumer goods'. It is not in dispute that Sodium Vapour Lamps are consumer goods under the additional licence dated October 11, 1984 offered by the petitioners in respect of import of lamps was not valid and the import was without any licence. The adjudicating authority is perfectly justified in directing confiscation of the goods and in view of the clearance of the goods in pursuance of the order of this Court, imposing fine in lieu of order of confiscation. In our judgment, the two orders dated February 4, 1986 and February 13, 1986, copies of which are annexed at Exhs 'M' and 'N' respectively to the petition, do not suffer from any infirmity and the petition must fail.
8. Accordingly, rule is discharged with costs. In case the amount of fine and penalty imposed by the adjudicating authority in both the cases are not yet paid, the same shall be paid forthwith.