Open iDraf
Indian Express Newspapers (Bombay) Pvt Ltd & Another v. Union Of India & Others

Indian Express Newspapers (Bombay) Pvt Ltd & Another
v.
Union Of India & Others

(High Court Of Judicature At Bombay)

Writ Petition No. 54 Of 1988 | 20-08-2002


J.P. Devadhar, J.

The issue raised in this petition is whether the Customs Authorities are justified in denying the benefits of exemption Notification Bearing Nos. 114/1980 and 113/1987 available to the goods falling under Chapter 84 of the First Schedule to the Customs Tariff Act, 1975 (C.T.A. for short) merely because the Petitioners had registered their contract to import the said goods as project import falling under Chapter 98 of the C.T.A. In other words, the issue involved is whether an item falling under Chapter 84 on account of the registration of the Contract, the said item is classifiable under Chapter 98 of the C.T.A.

2.The facts having bearing on the subject-matter of the present petition are as follows :

The Petitioner No.1 Company is engaged in the business of printing and publication of newspapers and periodicals in number of cities, including inter alia Bombay, Ahmedabad, Delhi and Chandigarh, etc. During the period relevant for the present petition, the Petitioners, with a view to modernise and avail benefit of updated printing technology decided to import 4 Web Fed High Speed Offset Rotary machine from three different parties.

3.Under the Customs Act, 1962 (Act for short) the rates at which the duties are leviable on imported goods are specified in the First and Second Schedule to the C. T. A. Chapters 1 to 97 of the First Schedule of the C.T.A. classifies various goods and specifies the rate of duty leviable thereon. Chapter 98 of the C.T.A. deals with the project imports wherein the importers are entitled to import all machineries, and other articles required for their project by registering their contract under the Project Import Regulations framed under the Act. Under this Chapter 98, even though the machineries or other goods and articles required for the project are appropriately classifiable under different Chapters 1 to 97 of the First Schedule to the C.T.A., then, on account of registration under Project Import Regulations, all these machineries, articles and goods required for the project falling under different Chapters are classifiable and liable to duty under Chapter 98 of the C.T.A.

4.In the instant case, there is no dispute that the Petitioners had registered the contract for importation of four Web Fed High Speed Offset Rotary machines (machines for short). These machines falling under Chapter 84 of the C.T.A. were, however classifiable under Chapter 98 due to its importation as project import. Out of the four machines under the project import, one machine was imported by the Petitioners by air in June, 1987. On arrival of the said machine at the International Airport at Delhi, the Petitioners filed a Bill of Entry seeking clearance of the goods by availing the benefit of Exemption Notification No.114/80 dated 19.6.1980 and Exemption Notification No. 113/87 dated 1.3.1987 available to the said machine under Chapter 84 of the C.T.A. According to the Petitioners, by Notification No.114/80, the basic Customs duty in excess of 35% was exempted and by virtue of Notification No.113/87, there was total exemption from the payment of auxiliary duty. Thus, according to the Petitioners, the effective rate of duty on the said machine was 35%. The Customs Authorities at the International Airport at Delhi accepted the contention of the Petitioners and allowed clearance of the said machine on payment of basic customs duty at 35%.

5.On arrival of the remaining 3 machines by ship at Bombay, the Petitioners filed the Bills of Entry seeking clearance of those three machines on payment of basic duty of 35% by availing the benefit of Notification Nos. 114/80 and 113/87. The Customs Authorities, however objected to the Petitioners availing the benefit of Exemption Notifications No. 114/80 and 113/87. According to the Customs Authorities, the contract for importation of these machines being registered as project imports under the Project Import Regulations, the goods are liable to be classified under Chapter 98 of the C.T.A. and could be released only on payment of the duty set out under Chapter 98 of the C.T.A. It was the contention of the revenue that the basic custom duty under Chapter 98.01 of the C.T.A. is 60% ad valorem. According to the revenue, Exemption Notification No. 132/85 dated 19.4.1985 as amended from time to time was applicable to the machinery imported by the Petitioners. The said notification, as amended, exempted the goods falling under the heading No. 84. 66 of the First Schedule to the C.T.A. when imported into India for the Industrial plants or projects in excess of 45% of the basic customs duty. Since there was no exemption for payment of auxiliary duty, it was contention of the revenue that the machineries imported by the Petitioners are liable to be cleared on payment of customs duty @ 45% C.T.A. and auxiliary duty @ 45% under Chapter heading 98.01 of the C.T.A. In view of the controversy, the Petitioners sought to keep the said machines in bonded warehouse and filed the present petition challenging the action of the Respondents. While admitting the petition, this Court permitted clearance of the goods on certain terms. Initially, there was also a dispute regarding the printing capacity of these machines in question. However, at the hearing of the Writ Petition, it is conceded by the Customs Authorities that they are satisfied about the printing capacity of the machines imported and the only dispute now remains to be adjudicated upon in this Writ Petition is with regard to the availability of the benefits of the Exemption Notification Nos. 114/80 and 113/87 to the goods imported by the Petitioners.

6.Mr. Madon, learned Counsel appearing on behalf of the Petitioners submitted that merely because the machineries classifiable under Chapter 84 of the C.T.A. are imported into India for the industrial plant or projects were registered as project imports, it cannot be said that the Petitioners are not entitled to get the benefit of the exemptions available in respect of the said machineries under Chapter 84 of the C.T.A. Counsel for the Petitioners referred to the relevant portion of the Notification No. 132/85 (Exhibit T-1 to the Petition) which reads as under :

"Nothing contained in this notification shall affect the exemption granted under any other notification of the Government of India for the time being in force from the duty of customs specified in the said First Schedule in respect of the goods referred to in this notification."

7.By relying upon the aforesaid portion of the Notification, it was contended that even though the machines in question were to be imported as project imports under Chapter 98 of the C.T.A. from the expressed words used in the Notification No. 132 of 1985, it was evident that the Petitioners were entitled to avail the benefits of the Exemption Notification Nos. 114/ 80 and 113/87 which were available to the said machines if they were not registered under the Project Import Regulations. Learned Counsel for the Petitioners by relying upon the decisions of Apex Court in the case Abrol Watches Put. Ltd. vs. Collector of Customs, Bombay (1997) 11 SCC 321, and Collector of Customs, Bombay vs. Mahavir Aluminium Ltd. (1998) 3 SCC 161 = AIR 1998 SC 2959 submitted that the Apex Court considering the very same issue has held that even though the machineries falling under Chapter 84 of the C.T.A. were registered and cleared under heading 98.01 of the C. T. A., benefit of exemption available to the said machines under Chapter 84 cannot be denied merely because the machines were registered as project imports. In the case of Abrol Watches Pvt. Ltd., (supra) the Apex Court considered the very same Notification dated 19.4.1985 and held that in view of the clause contained in the said Notification, the exemption granted under project import would not effect the right to avail exemption granted in respect of the customs duty, under any other Notification. It was held that though the assessee cleared the goods under 98.01, in view of the specific clause containing the Notification No. 132/85 dated 19.4.1985, the Petitioners were entitled to the benefit of exemption Notification applicable to horological machines under Notification dated 28.2.1985. This Judgment of the Apex Court was subsequently followed by the Apex Court in the case of Mahavir Aluminium Ltd. (supra) and it was held that the machines falling under Chapter 84 even if cleared under the heading 98.01 as project imports, would still be entitled to avail the benefit of exemption Notification available to the machines cleared under Chapter 84 of the C. T. A. In the light of these aforesaid two binding decisions of the Apex Court, it is submitted that the Petitioners are entitled to succeed in this petition.

8.Mr. Jetly, learned Counsel appearing on behalf of the Respondents, on the other hand submitted that the second clause in the Notification No. 132/85 has to be construed to mean that availing the benefit of the said Notification No.132 of 1985 will not affect the exemption granted under any other notification under Chapter 98 of the C.T.A. In other words, the submission was that in view of the non obstante clause contained, the Notification No.132 of 1985, the goods will be entitled to benefit of Notification No. 132 of 1985 as well as any of the exemption notifications that might be issued by the Court in respect of the said goods falling under Chapter 98 of the C.T.A. It was submitted that if the exemption Notification is issued under any Chapter heading other than 98, then the benefit of exemption under 98.01 would alone be available. In support of his submission, Mr. Jetley relied upon the decision of the Apex Court in the case of Tamil Nadu Newsprint & Papers Ltd. v. Appraiser, Appraiser Dept., Cus. House, 2000 (116) E.L.T. 3 (SC) = AIR 2000 SC 728 and submitted that in a similar case where the importer had registered the contract and cleared the machineries by availing the benefit of exemption available under the project imports, the Apex Court had held that the benefit of exemption under Chapter other than Chapter 98 will not be available to the said machines. In that case, the Apex Court held that once the imported goods were cleared by availing the benefit of the exemption available to the registered contract under Chapter 98 of the C.T.A., it was not open to the importer later on to claim that the machinery in question is covered by the Tariff Item 84.31 and seek total exemption from payment of auxiliary duty. In the light of the aforesaid decision of the Apex Court, it was submitted that once the contract was registered, the machineries under the contract could be cleared by classifying the goods under Chapter 98 of the C.T.A. and by availing the benefit of the exemption available to the registered contract. In other words, it was submitted that once the contract was registered under Chapter 98 of the C.T.A. the machineries imported under the project import were liable to be classified under Chapter 98 and could avail the benefit of Notification available to the goods falling under Chapter 98 of the C.T.A. only. It was submitted that in the instance case, since the goods contract was registered as project imports, the same could be cleared by availing the concessional rate of duty available to the registered contract under Chapter 98 and not for availing the benefit available to the machineries under Chapter 84 of the C.T.A.

9.We have heard both Counsel and carefully perused the records and decisions of the Apex Court placed before us. Though apparently the decisions of the Apex Court relied upon by the Petitioners and the Respondents appear to be conflicting, on close scrutiny it can be seen that there is no conflict and the said decisions of the Apex Court operate in different fields. In the case of Tamil Nadu Newsprint and Papers Ltd. (supra), the exemption Notification No. 61/83 applicable to the registered contract did not contain the non obstante clause as contained in exemption Notification No. 132/85 dated 19.4.1985. In view of the absence of the clause namely "Nothing contained in this notification shall affect the exemption granted under any other notification of the Government of India for the time being in force from the duty of customs specified in the said First Schedule in respect of the goods referred to in this notification." In exemption Notification No.61/83, the said decision of the Apex Court in the case of Tamil Nadu Newsprint and Papers Ltd., (supra) is distinguishable on facts. However, in the case of Abrol Watches Co. Pvt. Ltd. and Mahavir Aluminium Ltd. (supra) the Apex Court directly dealt with the clause in the exemption Notification, which is akin to the present case. In these two decisions the Apex Court has analysed the above clause contained in the Notification and held that the non obstante clause in the notification did not refer to other notifications issued under Chapter 98 only but referred to any other notification issued under Chapter 1 to 98 of the C.T.A. In the light of the decisions of the Apex Court in these two decisions, it has to be held that the machines imported and cleared by the Petitioners under Chapter 98 of the C.T.A. are entitled to the benefit of exemption Notification Nos. 114/80 and 113/87, applicable to the machines falling under Chapter 84 of the C.T.A.

10.Mr. Jetley, learned Counsel appearing for the Respondents further contended that although prior to April, 1987, the Respondents were allowing the benefits of the Notifications issued under any other heading to the goods cleared under project import, the Ministry of Finance by its letter dated 8.8.1987 has clarified that the goods once classified under the Tariff heading 98.01, will not be entitled to any other exemption provided to similar goods by way of Notification under any other Chapter heading. In our opinion, there is no merit in this contention raised by the revenue, because the exemption Notification No.132/85 dated 19.4.1985 issued by the Government of India in exercise of powers conferred under section 25(1) of the Customs Act, 1962 could be rescinded, modified or altered only by exercise of powers under that section or any other enabling provisions conferred by the Government of India. The Respondents have not been able to establish the source of power under which the Ministry of Finance by its letter dated 8.8.1987 had sought to modify, alter or clarify the contents of the Notification No.132/85 in exercise of powers u/s.25(1) of the Customs Act, 1962. In the absence of any source of power, the clarificatory letter dated 8.8.1987 issued by the Ministry of Finance would have no legal efficacy and the words contained in the exemption Notification No.132/85 issued under Section 25 of the Customs Act, 1962 shall prevail. Since the Apex Court in the case of Abrol Watches Pvt. Ltd. and Mahavir Aluminium Ltd. (supra) has considered the scope and ambit of the non obstante clause contained in Notification No. 132/85, the contentions to the contrary raised by the revenue based on the Finance Ministrys letter dated 8.8.1987, cannot be entertained. The Apex Court in the case of M/s. Hindustan Aeronautics Ltd. vs. C.I.T., J. T.2000 (7) SC 82 = AIR 2000 SC 2178 had held that although the circulars or instructions issued by the Board are binding, when the Supreme Court or the High Court has declared the law on the question arising for consideration, it will not be open to a Court to direct that a circular should be given effect to and not the view expressed in a decision of the Supreme Court or the High Court. In the instant case, since the Apex Court in the case of Abrol Watches Pvt. Ltd. and Mahavir Aluminium Ltd. (supra) has considered the scope and ambit of Notification No.132 of 1985 in the wider perspective, it will not be possible to accept the narrower construction sought to be placed by the revenue on the basis of Finance Ministrys letter dated 8.8.1987.

11.For the aforesaid reasons, we hold that even though the machines imported by the Petitioners were registered as project imports so as to classify the same under Chapter heading 98.01, in the light of the non obstante clause contained in the exemption Notification No.132/85 (Exhibit-T-1 to the petition), the Petitioners are entitled to avail the benefits of the exemption Notification Nos.114/86 and 113/87 and to pay the Custom duty @ 35% p.a. only.

Petition is disposed of in the above terms. However, in the facts and circumstances of the case, there will be no order as to costs.

Advocates List

Mr. D.D. Madon with Ms. A. Kalyanram and Ms. P. Kamani, for Petitioners. Mr. P.S. Jetly with Mr. R.V. Desai, Sr. Counsel, for Respondent Nos.1 to 4. Mr. K.J. Gandhi i/b M/s. Mulla & Mulla C.B. & C.. for Respondent No. 5.

For Petitioner
  • Shekhar Naphade
  • Mahesh Agrawal
  • Tarun Dua
For Respondent
  • S. Vani
  • B. Sunita Rao
  • Sushil Kumar Pathak

Bench List

HON'BLE MR. JUSTICE V.C. DAGA

HON'BLE MR. JUSTICE J.P. DEVADHAR

Eq Citation

2002 (104) (4) BOMLR 854

2002 (105) ECR 584 (BOM)

2003 (1) BOMCR 667

2003 (1) MHLJ 31

2003 (86) ECC 422