Full Judgment Text
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CASE NO.:
Appeal (civil) 8683 of 2001
PETITIONER:
M/s Gaurav Distributors (P) Ltd.
RESPONDENT:
Commissioner of Customs, New Delhi
DATE OF JUDGMENT: 11/08/2004
BENCH:
S. N. VARIAVA & ARIJIT PASAYAT
JUDGMENT:
J U D G M E N T
S. N. VARIAVA, J.
This Appeal is against the Judgment of the Customs,
Excise and Gold (Control) Appellate Tribunal (CEGAT) dated 24th
August, 1001.
Briefly stated the facts are as follows:
One M/s. SKF Bearing (I) Ltd. Bombay had exported under
bonds, ball bearings, vide Shipping Bill Nos. 481120 dated 22nd
August, 1994, 494274 dated 9th November, 1994, 503510 dated 9th
December, 1994 and 506157 dated 19th December, 1994. These ball
bearings were subsequently purchased by the Appellants and re-
imported in India vide two Bills of Entries dated 14th March, 1995.
There appears to be no dispute that the goods which have been
imported are the same which had been exported by SKF Bearing (I)
Ltd. The Appellants claimed benefit of the proviso Section 20 of the
Customs Act, 1962, the relevant portion of which reads as follows:
"Section 20- Re-importation of goods:- If goods are
imported into India after exportation therefrom, such
goods shall be liable to duty and be subjected to all the
conditions and restrictions, if any, to which goods of the
like kind and value are liable or subject, on the importation
thereof:
Provided that if such importation (other than
importation of goods exported in bond or of goods
produced or manufactured in a free trade zone) takes
place within three years after the exportation of such
goods and it is shown to the satisfaction of the Assistant
Collector of Customs that the goods are the same which
were exported, the goods may be admitted-
a) in any case where at the time of exportation of
the goods, drawback of any customs or excise
duty levied by the Union or both was allowed, on
payment of customs duty equal to the amount of
such drawback;
b) in any case where at the time of exportation of
the goods, drawback of any excise duty levied by
a State was allowed, on payment of customs duty
equal to such excise duty leviable at the time and
place of importation of the goods;
c) in any other case, without payment of duty:
Provided further ........................................."
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The Assistant Commissioner of Customs held that as the goods had
been exported in bonds the Appellants were liable to pay the custom
duty at the same rate to which the goods of the like kind and value
would be subject. CEGAT has upheld the decision and held that the
Appellants are not covered by the proviso to Section 20 inasmuch as
the goods had been exported in bond.
Mr. Ganguli submitted that Section 20 appears in the
Customs Act. He submitted that the Customs Act deals with matters
pertaining to custom duty and therefore when the Section uses the
words "goods exported in bond" it necessarily refers to goods which
were exported under a customs bond. He submitted that goods
exported under an excise bond would not be covered by the words
"goods exported in bond" in Section 20. He submitted that on
principle of interpretation the words "exported in bond" must be
restricted to mean goods exported under a customs bond. Mr. Ganguli
further submitted that the Proviso to Section 20 refers to excise duty.
He submitted that wherever the Legislature wanted to refer to excise
duty it specifically said so. He submitted that the Legislature has
knowingly not used the words "goods exported in excise bond", as
they wanted the Proviso to apply to goods exported under an excise
bond.
In support of his submission, he relied upon the Judgment of the
High Court of Madras dated 18th March, 1983 in Writ Petition No. 20 of
1979, wherein Section 20 of the Customs Act has been interpreted. At
that time, Section 20 reads as follows:
"Section 20. Re-importation of goods produced or
manufactured in India.- (1) If goods produced or
manufactured in India be imported into India after
exportation therefrom, such goods shall be liable to duty
and be subject to all the conditions and restrictions, if any,
to which goods of the like kind and value not so produced
or manufactured are liable or subject, on the importation
thereof :
Provided that if such importation, other than
importation of goods produced or manufactured in a free
trade zone, takes place within three years after the
exportation of such goods and it is shown to the
satisfaction of the Assistant Collector of Customs that the
goods are the same which were exported, the goods may
be admitted \026
a) in any case where at the time of exportation of
the goods, drawback of any customs or excise
duty levied by the Union or both was allowed, on
payment of customs duty equal to the amount of
such drawback;
b) in any case where at the time of exportation of
the goods, drawback of any excise duty levied by
a State was allowed, on payment of customs duty
equal to such excise duty leviable at the time and
place of importation of the goods;
c) in any case where the goods were exported
in bond, without payment of \026
(i) the customs duty leviable on the
imported materials, if any, used in the
manufacture of the goods, or
(ii) the excise duty leviable on the
indigenous materials, if any, used
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in the manufacture of the goods,
or
(iii) the excise duty, if any, leviable on
the goods.
on payment of customs duty equal to the
aggregate amount of all such duties calculated at
the rates prevailing at the time and place of
importation of the goods;
(d) in any other case, without payment of duty.
Provided further that if the Central Government is
satisfied that it is necessary in the public interest so to do,
it may, by order in each case, extend the aforesaid period
of three years for such further period as it may deem fit.
(2) For the purposes of this section goods shall be
deemed to have been produced or manufactured in India,
if at least twenty-five per cent of the total cost of
production or manufacture of the goods has been incurred
in India.
Explanation 1. \026 Where in respect of any goods
produced or manufactured in a free trade zone, any duty
leviable under this sub-section is leviable at different rates,
then, such duty shall be leviable at the highest of those
rates.
Explanation 2. \026 For the purposes of this sub-
section, "free trade zone" has the same meaning as in
Explanation 2 to sub-section (1) of section 3 of the Central
Excises and Salt Act, 1944 (1 of 1944)."
[Emphasis supplied]
The High Court of Madras held that the Customs Act and the Central
Excises and Salt Act were different. It held that the Customs Act
related to levy and collection of customs duties and the Central Excise
Act related to duties of excise and salt. It held that the words "goods
exported in bond" occurred in Section 20 of the Customs Act and,
therefore, they cannot be given an extended meaning to include an
excise bond also. It held that as the Sections appears in the Customs
Act the meaning of the expression "in bond" must be confined only to
a customs bond. It held that principle of construction of statute
required that the words "in a particular statute" should be interpreted
and construed only with reference to that statue, unless a different
intention is clearly expressed. It held that statutes imposing pecuniary
burdens must be subjected to rules of strict construction and that
unless the language of the statute clearly imposes an obligation the
language must not be strained in order to tax a particular transaction.
Mr. Ganguli submitted that this Judgment was upheld by
the Division Bench of the Madras High Court and that thereafter this
Court dismissed the SLP filed against the Order of the Division Bench.
At this stage itself it must be mentioned that the dismissal
of the SLP against the Order of the Division Bench was on entirely
different ground. This Court, whilst dismissing the SLP clarified that
the precise connotation of a bond under the Customs Act was not
being considered. The SLP was dismissed because the Court was
satisfied, on the facts of that case, that excise duty had already been
collected and that, therefore, there could be no double taxation.
The interpretation given by the Madras High Court is
clearly erroneous. As has been highlighted above, sub-clause (c)(ii) of
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the Proviso to Section 20, as it then stood, set out that where goods
were exported in bond, excise duty leviable on the indigenous
materials, if any, used in the manufacture of the goods had to be paid.
It also provided in sub-clause (c)(iii) that the excise duty, if any,
leviable on the goods exported in bond had to be paid. This clearly
indicated that the goods which were exported in bond were locally
manufactured, with or without use of the indigenous material. On
export of local goods, no customs duty is payable. Thus, at the time of
export there would be no customs bond in respect of such goods.
Locally manufactured goods would be exported only on an excise
bond. Thus, the words "goods exported in bond" in Section 20, as it
then stood, clearly included goods exported on an excise bond. We fail
to understand how, without reading the words of the Section, the
Madras High Court could have on general principles held to the
contrary. It is settled law that if the statute is clear and unambiguous
then effect must be given to its words. We, therefore, hold that the
above mentioned decision of the Madras High Court is erroneous and
stands overruled.
We are unable to accept the submission of Mr. Ganguli that
Section 20, as it stood at the time the goods were re-imported only
referred to "goods exported under a customs bond". The words used
are "goods exported in bond". It is well known that goods can be
exported both under a customs bond as well as an excise bond. If the
Legislature intended that only goods exported under a customs bond
were to be covered it would have said so specifically. The Legislature
had in mind the fact that at the time the goods were exported, the
excise duty may not have been paid or that drawback may have been
allowed on excise duty. They still used the words "goods exported in
bond" without any qualification. This clearly indicates that the
intention was to include goods exported under a customs bond or an
excise bond. If the Legislature wanted to restrict these words only to
goods exported under a customs bond they would have had to say so
specifically. In the absence of any restrictive words the expression
must be given its full meaning and must include goods exported either
under a customs bond or an excise bond.
There is another reason why the interpretation sought to
be given cannot be accepted. Section under consideration came into
effect in June 1994 and operated upto 26th May, 1995. Prior to that
Section 20 was as construed by the Madras High Court. As is set out
hereinabove, the earlier Section clearly included goods exported under
an excise bond. When the Legislature was changing the Section, if
they wanted to depart from the earlier position they would have had to
do so in express words. The use of wide words "goods exported in
bond" indicates that no departure was being made. It must also be
mentioned that with effect from 26th May, 1995, Section 20 was again
changed. The proviso to Section 20 was omitted. However, by a
Notification it was inter alia clarified that if goods were "exported in
bond" without payment of central excise duty, the amount of the
central excise duty, which had not been paid, would have to be paid.
Thus the subsequent Section 20, read with the Notification, also
indicates that even though the provision is in the Customs Act the
words includes goods exported under an excise bond "goods exported
in bond". As prior and subsequent to Section 20 under consideration
the position was that goods exported even under an excise bond were
covered, it is not possible to accept the submission that during the
relevant period the Legislature had made a departure.
Mr. Ganguli next submitted that the earlier Section 20
clearly provided that in cases of goods exported under an excise bond
the customs duty payable would be equal to the excise duty which had
not been paid. He submitted that even by the Notification, for the
subsequent period, it has been clarified that on re-importation what
would have to be paid is the amount of excise duty which had not
been paid. He submitted that, during the period under consideration,
it could not have been the intention of the Legislature that the entire
customs duty payable on the like goods be paid. He submitted that
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the excise duty, which would have been payable, was only Rs.
9,21,627.48, whereas, the customs duty which is payable is Rs.
61,62,848.40. He submitted that such an interpretation would render
the Section unreasonable.
Mr. Ganguli further submitted that the interpretation given
would also lead to treating similarly situated persons differently. He
submitted that goods could be exported under Rule 12 or 13 of the
Central Excuse Rules. He pointed out that Rule 12 permits parties to
take a rebate after first paying the duty. He submits that goods
exported under Rule 12 would be re-imported without payment of any
excise duty. He submitted that it has been consistently held that there
is no difference between parties, who export either under Rule 12 or
13. He submitted that the interpretation given would lead to unfair
discrimination between persons in identical position. He submitted that
for this reason also such an interpretation should not be given.
In these proceedings, the question of vires of Section 20
does not arise. As the wording of the Section is clear, the Court is
bound to interpret it as it stands. It is clarified that we are not saying
that any discrimination or hardship arises. All that we are saying is
that this is not a point which arises for consideration in this Appeal.
Under the circumstances, we see no infirmity in the
Judgment of CEGAT. We see no reason to interfere. The Appeal
stands dismissed. There will be no order as to costs.