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Kashyap Zip Industries Pvt. Ltd. Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Mumbai
Decided On
Reported in(1983)LC457DTri(Mum.)bai
AppellantKashyap Zip Industries Pvt. Ltd.
RespondentCollector of Customs
Excerpt:
.....argued that their import of 738 cartons of polyester filament yarn was wrongly penalised by the addl. collector by denying them the benefit of import without the licence under appendix 10, sr. no. 1. as per para 6 of appendix 10, the importers had registered their contract for import of the yarn with the textile commissioner. however, the benefit of the o.g.l. was denied to the importers by the addl. collector merely on the ground that the yarn was used in the manufacture of tapes and sewing threads and these were final manufacturer products and therefore, the yarn in question could not be treated as a raw material or as component or consumable for the manufacture of zip fasteners. the importers were a small scale manufacturer and they would exceed the limit of investment permitted.....
Judgment:
1. This is an appeal under Section 129-A of the Customs Act filed by M/s. Kashyap Zip Industries Pvt. Ltd. against the order No.' S/10-55/82/'E' dated 21-8-82 of the Addl. Collector of Customs, Bombay.

The appellants have argued that their import of 738 cartons of Polyester Filament Yarn was wrongly penalised by the Addl. Collector by denying them the benefit of import without the licence under Appendix 10, Sr. No. 1. As per para 6 of Appendix 10, the importers had registered their contract for import of the yarn with the Textile Commissioner. However, the benefit of the O.G.L. was denied to the importers by the Addl. Collector merely on the ground that the yarn was used in the manufacture of tapes and sewing threads and these were final manufacturer products and therefore, the yarn in question could not be treated as a raw material or as component or consumable for the manufacture of zip fasteners. The importers were a small scale manufacturer and they would exceed the limit of investment permitted for small scale industries if they had to instal looms for weaving the tapes in their factory. It was for this reason that the importers gave the yarn to jobbers for converting the yarn into tapes and threads.

This was quite in keeping with the definition of the actual user as contained in para 5(1) of the Policy Book A.M. 1982. The learned Advocate read this definition of actual user and pointed out that as per this definition it was open to the importer to send out the raw materials for processing on job work basis. The learned Advocate further, submitted that the reliance of the Addl. Collector of Customs on certain definitions like the one for 'manufacture' under Section 2(f)of the Central Excises & Salt Act, 1944 in interpreting the import policy was incorrect. The various contexts in which words and phrases were used in statutes like the Central Excises and Salt Act, 1944 and Customs Act, 1962 cannot be used in interpreting the import policy.

This has to be interpreted in the way it is understood in the ordinary sense of the term. In this behalf, the learned Advocate referred to the definitions 'process' and 'processing'on pages 184 and 185 of Butterworths Words and Pharases Legally Defined Volume 4. The conversion of yarn into tapes and thread was an intermediate process permitted under para 5(1) of the Policy Book and it could be done outside the actual user's own premises. It was, therefore, incorrect on the part of the Addl. Collector to deny the appellants benefit of the OGL and he requested that the Addl. Collector's orders be set aside and the amount of fine be refunded to them. The departmental representative has opposed the submissions on the ground that the yarn in question could not be treated as an immediate raw material for the manufacture of zip fasteners. Under the OGL only the immediate raw materials could be permitted import and in this view the benefit of OGL was correctly denied to the importers. He has also pointed out that the actual users of the yarn was not the importer who did not have looms as per their own admission and hence the Addl. Collector's order was quite correct.

He submitted that the same should be upheld.2. We have considered the submissions. We find that there is considerable force in the argument of the departmental representative that the actual user of the yarn is not the importer. It is the tape which is the component for the zip fastener and not the yarn. When Chapter 2, para 5 defines actual user, it implies that the jobbing work carried out on the component should not transform its physical form which is the case in the manufacture of tapes out of the imported yarn.

Besides, para 6 under Appendix 10 gives an indication that the actual users of yarn should acquire their requirement from the canalizing agency. Considering these circumstances, we find that the import of yarn is not permissible under OGL in question to the appellants. In the aforesaid View, the Addl. Collector's order is legal and correct. The same is confirmed and the appeal is rejected.


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