Full Judgment Text
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PETITIONER:
THE AHMEDABAD ADVANCE MILLS LTD., MIHIR TEXTILE LTD.
Vs.
RESPONDENT:
COLLECTOR OF CUSTOMS, BOMBAY
DATE OF JUDGMENT: 29/04/1997
BENCH:
SUHAS C. SEN, K.T. THOMAS
ACT:
HEADNOTE:
JUDGMENT:
WITH
CIVIL APPEAL NO:1003 OF 1988
J U D G M E N T
THOMAS, J.
In both these appeal the question involved is regarding
the relief entitlement of the claimants to customs duty
payable at the time of clearance of the imported
commodities. Under entry No:84.66 of the customs Tariff
items of machinery, including industrial plants can get
Clearance on payment of a concessional rate of 40%, if the
goods are imported under certain conditions specific
contract registered with the Customs House. The grievance of
the appellants herein is that such relief was not granted to
them.
Appellants in one of these appeals had imported 1 Air
Jet Looms along with there accessories and the goods arrived
at the Bombay port on 18-3-1983. Appellant got them cleared
from the port on 31-3-1983 on payment of full duty which was
little above 52 lacs of rupees. On 13-4-1983 he applied to
the Collector of Customs for granting registration of his
contract with the buyer as envisaged in Entry No: 84.66 of
the Customs Tariff and he got the registration on 22-4-1983.
Then he filed a refund application on the promise that he is
liable to pay custom duty only at the concessional rate
shown in the aforesaid entry. But the claim for refund was
rejected by the Assistant Collector and then he filed an
appeal before the Collector of Customs (Appeal) and got the
order of the Assistance Collector set aside holding that
appellant is entitled to refund. However, the department
filed a further appeal before Customs, Excise &
Gold(Control) Appellate Tribunal (CEGAT) and as per the
order impugned before us CEGAT restored the Assistant
Collector’s order.
The main contention in the aforesaid appeal is that
application for registration could not be made to the
Collector of Customs before he got clearance of the goods
from the port since he could get the recommendation from the
Textile Commissioner only by 7-4-1983. Thus, for no fault on
his part he could not avail himself of the concessional duty
at the time of clearance.
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The position in the other appeal is slightly different
and the facts are in brief, these Appellant therein got
imported licence on 22-10-1980 for importing "Sandzimar
Planatory Mill". On the strength of the said import licence
he contracted with a foreign seller at Sweeden to despatch
the aforesaid Mill. On 20-3-1981 he addressed a letter to
the Government requesting that the licence might be endorsed
for "Project Import". When the imported goods arrived at
Bombay Port in 1981 he got them cleared by payment of full
duty (which is a little less than 20.5 lacs rupees).
Appellant got the required endorsement on 14-8-1981 and then
he made an application for refund of the duty paid by him.
The application was made on the premise that he was liable
to pay Customs duty only at the concessional rate prescribed
under entry No: 84.66 of the Customs Tariff. Assistant
Collector of Customs rejected his refund claim on the main
ground that he had not obtained registration of the import
contract as "a Project Import". Appellant filed an appeal
before Collector of Customs (Appeal) and when that was
rejected he went before CEGAT in further appeal and that too
was dismissed by the impugned order.
The contention adopted by both the appellants is
identical, that as they had done their part in obtaining the
registration of the import contract as a project import it
was quite improper to have denied the benefit of the
concessional relief prescribed in Entry No: 84.66 to the
importers.
For appreciating the said contention it is necessary to
extract the aforesaid Entry No:84.66 herein (only material
portion)."
"84.66 (i) All item of :
(a) Machinery, including prime
movers,
(b) Instruments, apparatus and
appliances,
(c) Control gear and transmission
equipment,
(d) Auxiliary equipment as well as
all components (whether finished or
not ) or raw material for the
manufacture of the aforesaid items
and their components, required for
the initial setting up of a unit,
or the substantial expansion of an
existing unit, of a specified:
(1) industrial plant.....
Provided these are imported
(where in one or in more than one
consignment) against one or more
specific contracts which has been
registered with the appropriate
Customs House in the manner
prescribed by Regulations which the
Central Board of excise and Customs
may make under section 157 of the
Customs Act.1962 (52 of 1962) and
such contract or contracts has or
have been so registered before any
order is made by the proper officer
of Customs permitting the clearance
for home consumption, or deposit in
a warehouse of items, components or
raw materials."
The proviso prescribes, principally, there conditions
to be satisfied for entitlement of the concessional rate
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shown in the aforesaid entry. They are :-(1) Goods should
have been imported against a specific contract registered
with the appropriate Customs House,(2) Such registration
should have been made in the manner prescribed by the
regulations,(3) Registration of the contract should have
been obtained before the order (granting permission for
clearance of the goods) was passed. Unless all the three
conditions are satisfied no importer can claim, as a matter
of right, the concessional relief provided in the entry. In
these cases the contracts were not registered at all before
the order of clearance was passed. That fact is not disputed
before us and as the appellants were aware of position they
choose to pay full Customs duty for making the clearance.
Learned counsel contended that the importer is not to
be blamed for non-compliance with the conditions prescribed
in the entry because all what should have been done by them
and what remained to be done was only that part which the
authorities had to do in the matter. Obviously the aforesaid
contention has no legs to stand at least in one case wherein
no application was made at all for registration of the
contract before the goods were cleared.
In the other appeal it was submitted on behalf of the
appellant that as a matter of fact the appellant had made
the application before the goods arrived at the port.
Counsel for the appellant invited our attention to a letter
which appellant has addressed to "Ministry of Industry,
Udyog Bhawan, Maulana Azad Road, New Delhi" as proof of such
application. Learned Additional Solicitor General contended
that the said letter could not be treated as the application
contemplated in the proviso to Entry 84.66, as the ministry
of Industry is not the prescribed authority for granting
registration.
Even assuming that the said letter should have been
treated as the application contemplated in the proviso can
the appellant legally claim the relief of concessional duty?
Two circumstances have been highlighted against his claim.
First is that though the appellant got the import licence on
22-10-1980 he did not make any application for registration
for almost six months thereafter. Second is that even the
letter which he claims to be the prescribed application was
sent only a month before clearance of the goods from the
port and during the remaining period he could not except the
Central Government to rush through all the formalities
necessary for granting registration. If any hasty steps were
adopted on the application the resultant order would have
been vulnerable to be assailed as an act done with undue
haste. In this context learned Additional Solicitor General
referred us to the following observations made by Jeevan
Reddy, J in S.B. International Ltd & others vs. Assistant
Director General of Foreign Trade & others, 1996 (2) SCC
439:
"On receipt of the application, the
authorities have to satisfy
themselves about the correctness of
the contents of the application.
They also have to satisfy
themselves that the application
satisfies all the requirements of
the scheme and the other applicable
provisions of law, if any. In a
country like ours, where abuse of
such facilities is rampant,
reasonable time has to be afforded
to the authorities to process the
application. What is a reasonable
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time, of course, depends on the
facts of each case. No hard and
fact limit can be prescribed".
Learned counsel for the appellant raised an alternative
contention that the deficiency in the contract for obtaining
the concessions should not have been taken so seriously and
the Customs Authorities should have granted the reliefs as
the appellants had performed their part complying with the
conditions. Non-compliance of the conditions, according to
the counsel, was only due to the lapses on the part of the
authorities concerned. This contention was expatiated to the
extent that the conditions prescribed in the proviso to
entry No. 84.66 are merely directory and not mandatory.
According to the counsel, the conditions prescribed, if
interpreted strictly, would result in the denial of
concessional reliefs which statute has conferred on the
citizen.
In support of that contention, counsel invited our
attention to the decision of a Constitution Bench of this
Court in State of U.P. vs. Manbodhan Lal Srivastava 1958 SCR
533, wherein their Lordships were considering the
implication of non-compliance with the conditions provided
in Article 320(3) of the Constitution on an order imposing
punishment to a Government servant without reference to the
Public Service Commission. While considering that question
learned Judges made a reference to the Privy Council
decision in Montreal Street Railway Company vs. Normandin
AIR 1917 PC 142 and the Federal Court decision in Biswanath
Khemka Vs. Rmperor AIR 104 & FC 67. The Constitution Bench
held that the provisions of Article 320(3) are not mandatory
and non-compliance of those provisions does not afford any
cause of action in a court of law. Privy Council in the
above quoted decision has observed that the question whether
provisions in a statute are directory or imperative depends
upon the object of the statute and no general rule can be
laid down. "When the provisions of the statute relate to the
performance of a public duty and the case is such that to
hold null and void sets done in neglect of this duty would
work serious general inconvenience or injustice to person
who have no control over those entrusted with the duty and
at the same time would not promote the main object of the
legislature, it has been the practice to hold such
provisions to be directory." This is not a case where a
certain provision is mandatory or directory. Here the
question is whether concessional relief of duty which is
made dependent on the satisfaction of certain conditions can
be granted without compliance of such conditions. No matter
even if the conditions are only directory.
In Formica India Division vs. Collector of Central
Excise, 1955 (77) ELT 511, non-compliance with Rule 56A of
the Central Excise Rule, 1944 was held to be insufficient to
deny the benefit of a notification to the assessee. But the
said benefit was afforded on the special circumstances of a
case as could be seen from the following words.
The circumstances in which the
appellants did not pay the duty on
the intermediary product before
putting the same to the captive
consumption for producing that
stage, the appellants contested the
correctness of the classification
and had, therefore, not paid the
duty on the intermediary product.
When it was found that they were
liable to pay duty on the
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intermediary product and had not
paid the same, but had paid the
duty on the end product, they could
not ordinarily have complied with
the requirement of Rule 56A.
Nor can we find support from the ratio in BOI Finance
Ltd. vs. The Custodian & others, JT 1997(4) 15, that
"infringements of the instructions issued by the Reserve
Bank of India under the Banking Regulations Act prohibiting
the banks from entering into buy-back arrangements do not
invalidate such contracts entered into between the banks and
it’s customers" as it involved a question of invalidation of
the contract. Here neither the contract nor the import is
invalid or illegal and the question is only whether the
importer is entitled to the concessional duty.
There is no legal foundation for both the appellants to
secure the reliefs prescribed in Entry No. 84.66 of the
Customs Tariff. Accordingly we dismiss these appeals.