Customs, Excise and Gold Tribunal - Tamil Nadu
Pentamedia Graphics Ltd. (Formerly ... vs Commissioner Of Customs, Chennai on 2 November, 2001
Equivalent citations: 2002(141)ELT133(TRI-CHENNAI)
JUDGMENT
C.N.B. Nair
1. All these four appeals raise a common question of law and facts and hence they are taken up together for disposal, as per law. In the miscellaneous application seeking change of cause title they have filed all supporting documents of evidence fore the change of name. Therefore, the application for change of cause title is allowed.
2. The issue involved in these appeals is whether the appellants were entitled to the Customs duty exemption under Notification No. 140/91 dated 22.10.91. That Notification exempted specified goods when imported into India for the purpose of development of software for export out of India by software development units under the Software Technology Park 100% Export Oriented Unit Scheme. In terms of the Notification , in 1994, the appellants imported about Rs. 5 crores worth of computers and peripherals. Software was developed using these machines and during the period of 1994-95 to 1996-97, the appellants developed and exported software valued around Rs. 47 crores with these machines. However, the impugned orders have denied the appellants the exemption under the Notification and demanded duty on the imported goods. The basis for denying the exemption is that the appellants were using these machines for training purpose also and the said training yielded an income of about Rs. 5 crores to the appellants during the period 1994-95 to 1996-97.
3. The contention of the appellants in these present appeals is that by exporting about Rs. 47 crores worth of software out of India, the appellants had more than met the export obligation for becoming eligible for the exemption. According them, the value addition required was only 60% or the value of the imported. As against this, the appellants exports are more than 9 times the value of the imported goods. It has been pointed the verification report of the Customs authorities themselves have admitted that the actual value addition of the unit is 90%.
4. Ld. Counsel appearing for the appellants emphasised that utilisation of the imported items partly for training was inevitable, in as much as training personnel for export production of software is an integral part of software development activities. He also drew out attention to the Circular No. 37/97 dated 18.4.95 of the Central Board of Excise & Customs to show that the present orders are contrary to the position clarified in the Circular. He also pointed out that the latter Circular No. 24/97-Cus also clarified the same position.
5. As against the aforesaid submission on behalf of the appellants, Ld. SDR pointed out that the Notification did not permit use of the imported machinery for any purpose other than software development. In the present case, the appellants had carried out training programmes as a commercial activity and therefore, the denial of the exemption was fully justified.
6. We note, that the terms of the exemption Notification was that the goods must be imported for the purpose of software development and export. It is clear from the data already mentioned as well as the verification report of the Customs that the appellants have used the machinery for the purpose for which they were imported under the exemption scheme and they have produced and exported already software worth of about Rs. 47 crores as against the import cost of less than Rs. 5 crores of the machinery. The appellants had placed the Circular of the Board before the lower appellate authority. However, that authority took the view that the Circular did not cover the present case (SIC). We are unable to see how the Circular does not cover the appellants case. The Circular No. 37/95 dated 18.4.95 stated that:-
"Accordingly if such units set up for export purpose use the equipment also for training there can be no objection. it is clear that in such cases the obligation under the STP scheme and if this is so the Customs may have no objection for import of the equipments under the respective Notification.
In view of the aforesaid facts, I am directed to clarify that imports by STP units should be permitted by the Customs authorities in terms of the relevant Customs Notifications and if later the equipments are used for training purpose also we may have no objection".
The subsequent Circular No. 24/97 dated 7.7.97 is also to the same effect. Para 3 of the Circular reads as under:-
"In view of the aforesaid facts, I am directed to clarify that the STP units should be permitted by the Customs authorities in terms of the relevant provisions even if later on when units have completed their Export Obligations, the equipments are used for training including commercial training purpose, provided the training is conducted within the bonded premises".
7. From the Circulars of the Board extracted above, it is clear that use in training including commercial training does not offend the exemption Notification. The appellants case is therefore clearly covered by the Circular. It is also well settled that lower authorities in the Revenue department cannot go against the Circulars and the clarification issued by the Central Board and that the same cannot be overlooked as they are binding on the department as held by the Apex Court in the case of BRITISH MACHINERY SUPPLIES CO. v. UOI [1996 (86) ELT 449 (SC)].
8. In the light of what has been stated above, the appeals are allowed after setting aside the impugned order.
(Dictated and pronounced in open Court)