Full Judgment Text
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.951 OF 2004
COMMISSIONER OF CUSTOMS (IMPORT), MUMBAI. APPELLANT
VERSUS
M/S.KONKAN SYNTHETIC FIBRES RESPONDENT
O R D E R
1.This Civil Appeal is directed against the
judgment and order passed by the Customs,
Excise and Service Tax Appellate Tribunal (for
short 'CESTAT'), Mumbai in Appeal No.C/43/02-
Mumbai, dated 04.09.2003. By the impugned
judgment and order, the CESTAT has granted
relief to the assessee by giving a liberal
interpretation to the beneficial Notification
No.17/01-Cus dated 1.3.2001, as amended by
Notification No.44/01-Cus, dated 26.4.2001.
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2.
The assessee is an importer. It has imported
one unit of equipment which was declared as
“Kari Mayer High Speed Draw Warping Machine
with 1536 ends along with essential spares”.
On such importation, it had presented the Bill
of Entry No.207814 dated 25.9.2001 before the
Customs authorities, inter alia, seeking
clearance of the same by extending the benefit
of the Notification No.17/01-Cus dated
1.3.2001, as amended by Notification No.44/01-
Cus, dated 26.04.2001. The Customs authorities
had refused to accept the request of the
assessee and accordingly, had directed the
assessee to pay the duty under the provisions
of the Customs Act, 1962 (“the Act” for
short). Therefore, the assessee was
constrained to pay the duty in order to clear
the goods. The said payment was made under
protest so that it could carry the matter
further in appeal before the First Appellate
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Authority.
3.In the appeal filed, the First Appellate
Authority has confirmed the view of the
Customs authority. Dissatisfied with the
order so passed, the assessee had carried the
matter in appeal before the CESTAT and the
CESTAT has granted relief to the assessee.
4.The Revenue, being aggrieved by the same is,
before us in this appeal.
5.We have heard Shri. V.Shekhar, learned senior
counsel assisted by Smt. B.Sunita Rao for the
Revenue and Shri. S.K.Bagaria, learned senior
counsel for the assessee.
6.Shri. Shekhar, learned senior counsel for the
Revenue, after bringing to our notice the
Notification under which the assessee had
claimed benefit for the imported goods, would
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submit, that, what was imported by the
assessee was not in consonance with the
exemption notification and, therefore, the
authorities under the Act were justified in
denying the benefit available under the
notification to the assessee. The learned
senior counsel further submits, what is
imported by the assessee is High Speed Draw
Warping Machine with yard tensioning without
the pneumatic suction device but with a
drawing machine. The learned counsel would
submit, since what was imported is not in
accordance with Entry 8 of the table appended
to the Notification, the assessee is not
entitled to the benefit of the exemption
notification.
7.
Per contra, Shri Bagaria, learned senior
counsel would submit that the beneficial
notification should be given a liberal
construction and if it is done, then, what is
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imported by the assessee would fall within
Entry 8 of the table appended to the exemption
notification.
8.
The Central Government, in exercise of its
power under Section 25(1) of the Act, has
issued an exemption notification in public
interest, exempting certain articles notified
under the table appended to the notification
from payment of the duty under the Act.
Several items are enumerated under the table.
Entry 130 of the table speaks of drawing
machine. Entry 8 of the notification speaks
of the High Speed Warping Machine with yarn
tensioning, pneumatic suction devices and
accessories. A reading of the said entry
would indicate that the said machine is a
composite machine. The pneumatic suction
devices are machines used for the purpose of
sucking of vapour/gas, while the High speed
warping machine is activated or warped. There
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is no dispute that the assessee has imported
High speed warping machine but without
pneumatic suction device, but with drawing
unit. The textile commissioner, who is well
conversant with these machines, has stated
vide his letter dated 27.9.2001 that the goods
imported by the assessee are covered under
Entry-8 of the Table appended to the
notification. He further stated vide his
letter dated 24.10.2001 that drawing unit is
just an essential accessory to the machines
imported by assessee and, therefore, is
covered under said Entry. The opinion so
furnished is taken note of by the Tribunal
while granting relief to the assessee.
9.
It is a settled proposition in a fiscal or
taxation law that while ascertaining the scope
or expressions used in a particular entry, the
opinion of the expert in the field of trade,
who deals in those goods, should not be
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ignored, rather it should be given due
importance. In Collector of Customs v. Swastic
Woollens (P) Ltd., 1988 Supp SCC 796, this
Court has observed thus:
”4. We are of the opinion that when no
statutory definition is provided in
respect of an item in the Customs Act or
the Central Excises Act, the trade
understanding, meaning thereby the
understanding in the opinion of those who
deal with the goods in question is the
safest guide. See Union of India v. Delhi
Cloth & General Mills . South Bihar Sugar
Mills Ltd. v. Union of India , Dunlop India
Ltd. v. Union of India , In re Colgate
Palmolive (India) Pvt. Ltd. , CST v. S.N.
Bros., Kanpur , and also the famous
observations of Justice Cameron in His
Majesty The King v. Planters Nut and
Chocolate Co. Ltd. ”
10.
Before we discuss the issue involved, we
intend to notice how this Court has construed
beneficial notifications issued under the Act.
In Commissioner of Customs (Preventive),
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Mumbai v. M. Ambalal and Company, (2011) 2 SCC
74 , (in which one us was the party) has
observed that the beneficial notification
providing the levy of duty at a concessional
rate should be given a liberal interpretation:
“16. It is settled law that the
notification has to be read as a whole. If
any of the conditions laid down in the
notification is not fulfilled, the party
is not entitled to the benefit of that
notification. The rule regarding
exemptions is that exemptions should
generally be strictly interpreted but
beneficial exemptions having their purpose
as encouragement or promotion of certain
activities should be liberally
interpreted. This composite rule is not
stated in any particular judgment in so
many words. In fact, majority of judgments
emphasise that exemptions are to be
strictly interpreted while some of them
insist that exemptions in fiscal statutes
are to be liberally interpreted giving an
apparent impression that they are
contradictory to each other. But this is
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only apparent. A close scrutiny will
reveal that there is no real contradiction
amongst the judgments at all. The
synthesis of the views is quite clearly
that the general rule is strict
interpretation while special rule in the
case of beneficial and promotional
exemption is liberal interpretation. The
two go very well with each other because
they relate to two different sets of
circumstances.”
11.In Commissioner of Sales Tax v. Industrial
Coal Enterprises, (1999) 2 SCC 607, this Court
has observed:
“11. In CIT v. Straw Board Mfg. Co. Ltd.
this Court held that in taxing statutes,
provision for concessional rate of tax
should be liberally construed. So also in
Bajaj Tempo Ltd. v. CIT it was held that
provision granting incentive for
promoting economic growth and development
in taxing statutes should be liberally
construed and restriction placed on it by
way of exception should be construed in a
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reasonable and purposive manner so as to
advance the objective of the provision.”
12.In Commissioner of Central Excise, Shillong
v. North-Eastern Tobacco Co. Ltd., (2003) 1
SCC 161, this Court has held:
[
“10. The other important principle of
interpreting an exemption notification is
that as far as possible liberal
interpretation should be imparted to the
language thereof, provided no violence is
done to the language employed.”
13.In Associated Cement Companies Ltd. v. State
of Bihar, (2004) 7 SCC 642, this Court while
explaining the nature of the exemption
notification and also the manner in which it
should be interpreted has held:
“12. Literally “exemption” is freedom from
liability, tax or duty. Fiscally it may
assume varying shapes, specially, in a
growing economy. In fact, an exemption
provision is like an exception and on
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normal principle of construction or
interpretation of statutes it is construed
strictly either because of legislative
intention or on economic justification of
inequitable burden of progressive approach
of fiscal provisions intended to augment
State revenue. But once exception or
exemption becomes applicable no rule or
principle requires it to be construed
strictly. Truly speaking, liberal and
strict construction of an exemption
provision is to be invoked at different
stages of interpreting it. When the
question is whether a subject falls in the
notification or in the exemption clause
then it being in the nature of exception is
to be construed strictly and against the
subject but once ambiguity or doubt about
applicability is lifted and the subject
falls in the notification then full play
should be given to it and it calls for a
wider and liberal construction. (See Union
of India v. Wood Papers Ltd. and Mangalore
Chemicals and Fertilisers Ltd. v. Dy.
Commr. of Commercial Taxes to which
reference has been made earlier.)”
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14.
In G.P. Ceramics Private Limited v.
Commissioner, Trade Tax, Uttar Pradesh, (2009)
2 SCC 90,this Court has observed thus:
“29. It is now a well-established
principle of law that whereas
eligibility criteria laid down in an
exemption notification are required to
be construed strictly, once it is found
that the applicant satisfies the same,
the exemption notification should be
construed liberally. [See CTT v. DSM
Group of Industries (SCC para 26);
TISCO v. State of Jharkhand (SCC paras
42 to 45); State Level Committee v.
Morgardshammar India Ltd. ; Novopan
India Ltd. v. CCE & Customs ; A.P. Steel
Re-Rolling Mill Ltd. v. State of Kerala
and Reiz Electrocontrols (P) Ltd. v.
CCE .]”
15.Since the Tribunal has taken note of the
correct principles enunciated by this Court
while granting relief to the assessee, we
cannot find fault with the impugned judgment.
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Accordingly, the appeal requires to be
rejected and it is rejected. No costs.
Ordered accordingly.
...................J.
(H.L. DATTU)
...................J.
(ANIL R. DAVE)
NEW DELHI;
FEBRUARY 29, 2012
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