Customs, Excise and Gold Tribunal - Delhi
Menon Associates vs Collector Of Customs on 14 January, 1988
Equivalent citations: 1988(34)ELT367(TRI-DEL)
ORDER M. Santhanam, Member (J)
1. The appellants imported consignment of Ball Bearing valued at Rs. 86,061/- equivalent to SKF Series 6201 to 6208, 6202 to 6308, 6004 and 6005. They claimed the clearance of goods against stock and sale licence No. 2030871, dated 26-12-1983 issued in terms of para 80(1) of the Import Policy for 1983-84. The sald para stipulates that Import licence issued in these cases will be subject to the condition that import of a single item of spares listed under Appendices 3, 4 & 30 of the Import Policy shall not exceed Rs. one lakh, in value per item and import of other items will not exceed Rs. 10 lakhs in value (c.i.f.). The term "single item" for the purpose of this para will have the same meaning as defined in sub-para 31(2) of the Policy Book. The appellants had earlier imported a consignment of ball bearing covered by Sl. No. 434 of Appendix 3 within the value limit of Rs. one lakh permissible for "single item" of spares. The appellants claimed the release of these bearings falling under Sl. No. 86 of Appendix 4 against the stock and sale licence issued in their favour. The Asstt. Collector issued a show cause notice on 21-1-1986 stating that the appellants had already imported ball bearings against the said licence and that the balance available for bearings was only Rs. 2,409/-. The appellants were called upon to show cause as to why the goods worth Rs. 83,652/- should not be confiscated Under Section 111(d) of the Customs Act read with Section 3 of the Imports & Exports (Control) Act and why penalty should not be levied Under Section 112 of the Customs Act.
2. The appellants, in their letter dated 11-2-1986 submitted that for determining the scope of the term "single item", the ball bearings under Sl. No. 434 of Appendix 3 and those falling under Sl. No. 86 of Appendix 4 were to be treated as distinct single items. They contended that the entries in these two appendices had to be treated separately and they should not be clubbed together for ascertaining whether they constituted a "single item" or not. They urged that it would not be proper to combine these two entries under different Sl. Nos. of different appendices to make that they constituted a "single item". After personal hearing, the Dy. Collector did not accept the appellants' contentions. He observed that para 31(2) of the Policy Book clearly stipulated that the item will count as one even if it may be used in various sizes and specifications e.g. ball and roller bearing will be treated as a "single item". As the appellants had already imported ball bearings against the licence, the balance available was only Rs. 2,409/-. He held that the goods were not covered by the licence. He ordered confiscation and gave the appellants an option to clear the goods on payment of fine of Rs. 83,000/-in lieu of confiscation.
3. An appeal was filed before the Collector of Customs (Appeals) Bombay. The appellants submitted that each appendices had to be taken separately for the purpose of determining the single item. According to them, the Dy. Collector had erred in clubbing the two entries on the ground that both these entries referred to ball bearings. The appellants also pointed out that the numbers of bills of entries alongwith Import licences to show that it had been the practice of the Customs House to allow ball bearings falling under different entries under different appendices without clubbing them together. The Collector of Customs (Appeals) did not accept the submissions of the appellants and hence the present appeal.
4. Sh. N.C. Sogani, Consultant drew our attention to para 31(2) of the Policy Book for. AM 1983-84 and argued that there were two conditions mentioned therein. The first condition was that it would constitute a single item though imports may be of various sizes and specifications e.g. ball and roller bearings. The second restriction as per para (c) was, that, a group of items of the same nature having descriptive Heading under the same entry/sub-entry had to be treated as a "single item". Sh. Sogani submitted that the practice of the Customs House was to treat the ball bearing falling under Appendices 3 & 4 and those falling Open General Licence as different items and not covered by the value limit for single item. He, therefore, urged that the order of the lower authority cannot be sustained.
5. Sh. D.K. Saha, JDR adverted to para 31(2) and urged that even though the ball bearings be of different sizes, they should be treated as "single item". According to him, the appellants cannot propound an interpretation that would defeat the purpose of the policy.
6. The admitted facts show that the appellants have imported a consignment of ball bearing valued at Rs. 86,061/- and that the ball bearings fell under Sl. No. 86 of Appendix 4. It must also be mentioned that, earlier, the appellants had under the same licence imported ball bearings under Sl. No. 434 of Appendix 3. If the value of the earlier clearances of Sl. No. 434 of Appendix 3 items are taken into consideration as per the restrictions for stock and sale licence prescribed in the policy, then the balance available would be only Rs. 2,409/-. So, the entire controversy rests on the interpretation of term "single item" as defined in para 31(2) of the Policy Book. Para 80(1) of the Policy Book reads as follows :-
"... Import licences issued in these cases will be subject to the condition that import of a single item of spares listed in appendices 3, 4 & 30 of the Import Policy shall not exceed Rs. one lakh in value (c.i.f.) per item. A single item for this purpose will have the same meaning as defined in sub-para 31(2) of this book."
As per this para, the import of a "single item" of spares, listed in the three appendices mentioned, shall not exceed Rs. one lakh in value (c.i.f.). We are not left in doubt about the definition of "single item", occuring in this sub-para. A "single item" will have the same meaning as in para. 31(2) of the Policy Book.
7. The material portion of para 31(2) is as follows :-
"... An item will count as one even if it may be used in various sizes and specifications e.g. ball and roller bearings, etc., will be treated as a single item. Secondly, the said value limit of Rs. one lakh for a single item would apply to ;
(a) a single entry wherever there is no sub-classification thereunder;
(b) a sub-classified item having its own sub-entry number;
(c) a group of items of the same nature having descriptive heading under the same entry/sub-entry number;
(d) the totality of electronic items, included under entry No. 561 in Appendix 3. (For these items, the 'maximum value limit will be Rs. 1.5 lakhs, instead of Rs. one lakh; but the import of a single item amongst these will not exceed Rs. 50,000/-;
(e) In the case of ball, cylindrical, taper, spherical and roller bearings etc., covered under entry No. 434 in Appendix 3, the maximum value limit for import of a single item will be Rs. 1.5 lakhs instead of Rs. one lakh.
(f) In the case of tools covered under entry No. 548 in Appendix 3, the maximum value for all the items covered therein, put together, will be Rs. 1.5 lakhs, but the import of a single item will not exceed Rs. 50,000/-."
8. Since para 80(1) refers to the sub-para 31(2) for the purpose of understanding the meaning of a single item, we have to find out the nature and scope of the term "single item". As rightly urged by Sh. Sogani, para 31(2) consists of two portions i.e. the first portion specifies that the item would count as one though it may be used in various sizes and specifications. They have given the examples of ball and roller bearings. They should be treated as a "single item" irrespective of the sizes and specifications. But the second limb of para 31(2) is more important. It specifies different circumstances for construing "single item" where the said value limit would be applicable. Para 31(2) stipulates as under :-
(i) If there is a single entry in the Appendices 3 & 4 without any sub-classification thereunder, it would constitute a single item;
(ii) A sub-classified item having its own sub-entry number would constitute a single item for the purpose of applying the value limit;
(iii)The third category consists of a group of items of the same nature and falling under the same descriptive heading under the same entry/sub-entry number. This clause fixes the value limit as Rs. one lakh in regard to group of items and they should be constituted as a single item for the purpose of para 31(2);
(iv) In respect of electronic, items, under entry 561 of Appendix 3, the value limit is fixed at Rs. 1.5 lakhs instead of Rs. one lakh. But the import of a single item shall not exceed Rs. 50,000/-;
(v) In regard to certain items like ball, cylindrical, taper-spherical and roller bearings covered under Sl. No. 434 in Appendix 3, the maximum value limit is fixed at Rs. 1.5 lakhs; and
(vi) In case of tools covered under the entry, the maximum limit for all the items covered therein is Rs. 1.5 lakhs subject, of course, to the condition that single item will not exceed Rs. 50,000/-.
9 The above discussion shows that there is no scope for clubbing the imports falling under the two different appendices. The meaning of 'a "single item" has a bearing on the same entry/sub-entry number. This should not be taken as including different entries under the different appendices. Such an interpretation alone would be consistent with the plain meaning of the paras in the policy.
10. If we advert to the facts of the case, in the above background, the entry at Sl. No. 434 of Appendix 3 had to be taken separately from the entry at Sl. No. 86 of Appendix 4. The authorities below have erred in clubbing the two entries together on the basis that both the entries referred to ball bearings. Obviously, there was some misapprehension in the interpretation because of the first limb of para 31(2) relating to different sizes and specifications. It would be wrong to club the ball bearings falling under different entries in different appendices for the purpose of determining the value of "single item" under para 31(2).
11. In this connection, we may also refer to Clause (d) and Clause (f) where there is reference to totality of items and also maximum value limit. If we read all the clauses together, it is reasonable to conclude that only such ball bearings which falls under the same entry/sub-entry have to be treated as "single item" The ball bearings covered by entry No. 434 of Appendix 3 would be totally different from ball bearings falling under Sl. No. 86 of Appendix 4.
12. The Ld. consultant also referred to us the decision of the Bombay High Court in the case of Gujarat State Export Corporation vs. U.O.I. [1984 (17) E.L.T. 50] where the Hon'ble High Court had observed that if the Custom House had been treating the identical imported items as valid and was releasing the imports on previous occasions, it could not be said that the act was in contravention of the provisions of Section 111(d) of the Customs Act. In this connection, we must mention that the appellants raised this plea before the Appellate Collector who has rejected the contentions as a ''wrong practice" which could not be "allowed to perpetuate". We are of the view that this approach by the department is not consistent with the ruling of the Bombay High Court. Further, a careful examination of the provisions show that the earlier practice was justified.
13. In view of the above conclusions, we hold that the impugned order cannot be sustained and the same is set aside. The appellants also pray for the issue of detention certificate so that the appellants could seek relief from the Bombay Port Trust in respect of demurrage charges. The authorities may consider the relief as per the existing practice.
14. The appeal is allowed.