Customs, Excise and Gold Tribunal - Delhi
Ranbaxy Laboratories Ltd. vs Collector Of Customs on 6 November, 1989
Equivalent citations: 1990(28)ECR489(TRI.-DELHI)
ORDER P.C. Jain, Member (T)
1. Hon'ble High Court of Delhi vide its order dated 3.4.1989 in Customs Act case No. 6/88 relating to Ranbaxy Laboratories Ltd. v. Customs, Excise and Gold (Control) Appellate Tribunal has directed this Tribunal to refer the following question of law and state the case therefor:
Whether because of the use of both the expressions 'fabrics' (at Serial No. 31 Part B Appendix 2) and 'non-woven fabric' (at Serial No. 289 Part A Appendix 3) in the same Import Trade (Control) Policy, the Tribunal was justified in face of the Supreme Court judgment in the case of Union of India and Ors. v. Gujarat Woollen Belt Mills 1987 ELT J. 24 : ECR C 503 SC holding that 'fabrics mean woven material' and, in coming to the conclusion that the general expression 'fabrics' used in Serial No. 31 Part B Appendix 2 of ITC Policy 1985-86 would include fabric of both varieties i.e. woven and non-woven and not confined to woven fabric only as claimed by the applicant on the grounds that if Serial No. 31 Part B Appendix 2 were to cover both woven and non-woven fabrics, the Entry at Serial No. 289 Part A Appendix 3 would appear to be redundant?
2. The applicants M/s. Ranbaxy Laboratories Ltd. imported the goods described as 'non-woven surgical dressing bandages' claimed as covered by entry at s.No. I of appendix 6 of the ITC Policy April 1985-March 1988. This appendix relates to items under open general licence. Entry at s. No. 1 reads as follows:
Raw materials, components and consumables (non-iron and steel items) other than those included in the appendices 2, 3 part-A, 5 and 8 and the eligible category of importer is actual users (industrial).
The appellant contends that the aforesaid goods are covered by the aforesaid entry and therefore, no licence is required for import of the aforesaid goods.
2A. On the other hand, the department contends that the goods are covered by entry at s. No. 31 of appendix 2-part B which reads as follows:
Fabrics, made from man-made fabrics/yarns (excluding uninked nylon ribbon/tape from 1/2" to 18-1/4" both the ends electrically welded required for the manufacture of typewriter/computer ribbons).
Against this entry CCCN Code given is 51.04/56.07.
2B. The appellant contended before the adjudicating authority whose order is impugned before the Tribunal that fabric can refer only to woven materials as supported by the Oxford Dictionary. Since the goods in question are admittedly non-woven, therefore, s. No. 31 of appendix 2-Part B would not apply to the goods. These are required for manufacture for life saving surgical tapes. These are, therefore, well covered by entry at No. I of appendix 6. He also contended that wherever non-woven fabric was intended to be used that has been so used in the Policy. In support of this plea he invited the attention to s. No. 289 of appendix, 3-Part A which reads as "non-woven fabrics used as interlinings both plain, fusible and polyester waddings". It has, therefore, been contended that the expression "fabrics" used in s. No. 31 appendix 2-Part B mutt relate to woven fabrics.
2C. It was also contended before the lower authority that the product micro-pore is imported into the country under OGL appendix 6 list 2 Item 38 under the group of life saving equipment. The importers are manufacturing identical product after importing non-woven which is the basic raw material for this tape. He also contended that the goods imported are not manufactured into the country and that they are in technical collaboration approved by the Government of India and that the manufacture of the final product out of imported non-woven material will save valuable foreign exchange.
2D. Dealing with the above contention the impugned order has held that the expression "fabric" used in appendix 2-Part B s.No. 31 cannot be confined to woven fabrics alone particularly when the Policy itself describes in s. No. 289 appendix 3-Part A mentioned supra certain items requiring licence as "non-woven fabrics". The learned adjudicating authority has also relied on the literature produced by the appellant herein during the course of personal hearing before him. The literature, according to the said authorities states "these products are based mainly on storelene non-woven fabric". He has, therefore, held in view of the fact that the material is of man-made fibre (nylon fibre) that the goods are covered by appendix 2 Part B s. No. 31 requiring licence from the competent Import Control authorities. He has considered the other arguments as not relevant to the issue. Accordingly, the adjudicating authority has confiscated the goods under Section 111(d) of the Customs Act, 1962 with an option to the appellant to get them redeemed on payment of a fine of Rs. 120,000/-. Penalty of Rs. 5000/- has also been imposed on the appellant.
3. On appeal the learned advocate more or less reiterated the aforesaid pleas before the Tribunal re-inforcing his arguments with the authorities of the Supreme Court judgment in the case of Porrits & Spencer (Asia) Ltd. v. State of Haryana 1983 ELT 1607 SC : 1989 (25) LCR 443 as well as with Delhi High Court's judgment in the case of the Same Company y. Union of India repotted in 1980 ELT 679 : 198 Cen-Cus 489D.
3A. Paras 5 and 6 of the Supreme Court judgment mentioned supra were relied upon by the learned advocate to put forth his proposition that fabric is woven and therefore, the goods under import are covered under OGL. Considering this contention the Tribunal observed as follows:
We have gone through this judgment. We feel that this judgment has no relevance to the present matter. Supreme Court's judgment mentioned supra expounds upon the word 'textiles' appearing in item 30 of Schedule B to the Punjab General Sales Tax Act, 1948. The Court has held that the word 'textiles' is derived from the Latin 'texere' which means 'to weave' and it means any woven fabric. This judgment, therefore, does not categorically say that fabric necessarily means a woven material. What it says is that the expression 'textiles' is a woven farbric.
3B. Delhi High Court's judgment mentioned supra interprets the expression 'cotton fabrics' and 'woollen fabrics' in the CET as given in Tariff Items 19 and 21 at the relevant period. Para 8 of this judgment wherein reference to Supreme Court's judgment in tlve case of Union of India and Ors. v. Gujarat Woollen Felt Mills 1977 ELT J 24 : Cen-Cus 1977 page 58D : ECR C 503 SC has been made states as follows:
In the said Supreme Court's decision what was in question was as to whether the non-woven felts could be regarded as woollen fabrics or not. Supreme Court observed that 'fabric moans woven material'. It was held that non-woven material cannot be regarded as fabric and as such the felts manufactured by Gujarat Woollen Felt Mills were not exigible to excise duty under entry No. 21.
We observe that this judgment would not strictly apply.
3C. The Supreme Court was considering the scope of woollen fabrics in Tariff Entry 21 of the CET. There was no opposite expression as it is in the ITC Policy in the instant case relating to non-woven fabric. The use of both the expressions 'fabrics' (at s. No. 31 Part B appendix 2) and 'non-woven fabric' (at s. No. 289 Part A appendix 3) in the same Policy would imply that the ITC Policy itself makes a distinction between woven faerie and non-woven fabric. Therefore, the general expression 'fabric' used in s. No. 31 Part B appendix 2 would include fabrics of both varieties i.e. woven and non-woven. Finding of the adjudicating authority is, therefore, correct in this respect. Once the goods are covered under appendix 2 they automatically go out of the scope of s. No. 1 appendix 6 as reproduced above.
3D. Another contention of the learned advocate is that the CCCN Code against s. No. 31 Part B appendix 2 given is 51.04/56.07 which pertains to woven fabrics and therefore, according to him the scope of the expression 'fabrics' in this s. No. should be limited to woven fabrics. We are unable to agree with this contention of the learned advocate. The CCCN Code against the various s.nos. in appendix 2 is merely to facilitate collection of data. This is not to be taken as guidance for the scope of interpretation of the various items in the ITC Policy. This is apparent from Note No. 1 at page 122 of the relevant ITC Policy Vol. I which states as follows:
The ITC Rule 2 and CCCN Code Nos. have been assigned to facilitate collection of data only Notes 3 and 4 make the position further clear which state that these Codes will not be binding on Customs authorities for classification for tariff purposes and that interpretation of the Import Export Policy will continue to be as per description of the items given in the appendices and not according to the Code Nos. assigned.
4. In view of the aforesaid Statement of the case the matter is referred to the Hon'ble High Court of Delhi for deciding the question mentioned at the outset of this Statement.