Delhi High Court
Century Spinning And Manufacturing ... vs Union Of India on 1 January, 1800
Equivalent citations: 1980(6)ELT721(DEL)
JUDGMENT
1. The petitioner manufactures cloth and rayon yarn, etc. Each rayon spinning machine has got 132 individual positions. Each position is fitted a pot motor and a pot in which the yarn is collected and given the required. A rayon pot spinning machine cannot function without pot motors. DOr motors have been given a special shape and design for the purpose of collection and giving a twist to it on the spinning machine. Pot motors have been a very special shape for accommodating 132 such pot motors or each spinning frame in between Coagulation Trough and Spray Collection Troughs. Numbers of these pot motors is specially construed to give positive movement 16 p.m. Such or like pot motors are not produced or manufactured in limited these pot motors are essential integral component parts of the spinning material and these pot motors cannot be used outside the rayon spinning machines.
2. The Petitioners imported these pot motors due the years 1961 and 1964. The Petitioner contended that the customs duty chargeable on these pot motors would be under Entry 72(3) of the Indian Customs Tariff (49th Issue), which is as below:
-----------------------------------------------------------------
" Item Name of Article Nature Standard
No. of rate of
duty duty
-----------------------------------------------------------------
72 (3) Component parts of machinery Revenue 10 per
defined in item No.72,72(1) cent ad
and 72 72 (2)and not otherwise valorem"
specified, namely such parts only
as are essential for the working
of the machine or apparatus and have
been given for that purpose some
special shape of quality which would
not be essential for their use for any
other purpose but excluding small tools
like twist, drills and reamers, dies
and reamers, dies and taps, gear cullers
and hacksaw blades :
Provided that articles which do not
satisfy this condition shall also be
deemed to be component parts of the
machine to which they belong if they
are essential to its operation and are
imported with it in such quantities as
may appear to the Collector of Customs
to be reasonable.
-----------------------------------------------------------------
3. Customs authorities on the other hand, were of the view that the customs duty chargeable on these items would be under Article 73(21), which is as below :
-----------------------------------------------------------------
" Item Name of Article Nature Standard rate
No. of duty of duty
-----------------------------------------------------------------
73(21) Electric Motors, Revenue The excise duty
all sorts,and time being
parts there of leviable on
like articles
if produced or
manufactured in
India and where
such duty is
leviable at
different rates
the highest
duty; and the
so leviable on
shall be in
addition to
duty leviable
on the article
under any of
the other items
in this
Schedule."
-----------------------------------------------------------------
Since these pot motors were not manufactured in India, all, the Customs authorities charged countervailing duty on pot motors under section 2A of the Indian Tariff Act.
4. The petitioner challenged the Customs authorities view by Writ Petitioners which resulted in the remand of the case by this court for a decision by the Government of India. Accordingly the matter was decided by the Government of India by the written order dated 9/15th March, 1972. Though it is a long and apparently well considered order the crucial point is dealt with at page 70 of the paper-book at the end of paragraph 13 of the impugned order in the following words:
"It is not anybody's case that these motors have any use outside the rayon spinning machines. But the question is whether by being a component part of a spinning machine it cases to be an Electric motor for purposes either of the Customs or Central Excise Tariff."
On this issue the Government took the view that pot motors were nevertheless electric motors. The validity of this order has been challenged by the present writ petition.
5. Mr. Bhatt learned counsel for the petitioner points out that if the pot motors are component parts of the spinning machines, then they are component parts of the spinning machines, then are covered by Entry 72 (3) and cannot be covered by Entry 73 (21) .It is quite clear to us that the nature of these pot motors are, to be decided by the dominant nature of these machines. Either they are a component part of a machine or they are an independent electric motors and cannot be used except as component of these pot motors is a component part of the spinning machine part from which they cannot be used at all. Obviously an item like electric motors separately listed could not have been meant to refer to something which is not independently useable at all. This is specially so when Entry. 72(3) particularly deals with component part of machines specially designed as are essential for the working of the machine or apparatus and have been given some special shape on quality which would not be essential for their use for use for any other purpose.
6. There is another reason why the pot motors fell under Entry 72(3) and not Entry 73. The latter entry applied only when the excise duty for the time being leviable on like articles if produced or manufactured in India where such duty is leviable at different rates, the highest duty is leviable at different rates, the highest duty, if such articles are produced or required in India. Since it is also an admitted case that such or like articles are not manufactured in India Entry 77(21) is not applicable. If applied a strange result would follow because no duty would be chargeable at all on pot motors under Entry 72(21) which would be a result which certainly would not be contemplated by the Customs Authorities.
7. The contention of the petitioner is further borne out by the decision of the Supreme Court in The Siemens Engineering and Manufacturing Co. of India v. The Union of India-. In the present case one of the certificates given to describe the nature of pot motors is by the same Siemens Engineering and Manufacturing Company of India. This decision, therefore, covers the facts of the case completely.
8. We are well aware of the scope of judicial review by us of a decision of the Government of India in a matter of assessment where entries involving technical description have to be construed. I Collector of Customs, Madras v. K. Ganga Setty-, the Supreme Court has laid down that it is primarily for the Import Control Authorities (or the Customs Authorities in this case) to determine the head or entry under which any particular commodity fell; but that if in doing so, these authorities adopted a construction which no reasonable person could adopt, i.e if the construction was perverse then it was a case in which the court was competent to interfere.
9. We are of the view that the reasons given by the Government of India was such as no reasonable person could adopt and was perverse. This compels us to interfere with the decision. The impugned order is, therefore, quashed and the writ petition is allowed. We further quash the other impugned orders, dated 30th December, 1961, 10th September, 1962, 1st February, 1965 and 7th May, 1965 and direct the respondent to refund to the petitioner the aggregate sum of Rs. 1,98,116.84 collected from the petitioner as countervailing duty on pot motors imported by the petitioners. The petitioner has stated on page 9 of the writ petition that the duty under Entry 72(3) has already been paid by it. No order as to costs.