1.The revision application under Section 131 of the Customs Act, 1962 against Order-in-Appeal No. 1109/82 dated 27-2-1982 passed by the Appellate Collector of Customs, Bombay, has been transferred to the Tribunal for disposal under the provisions of Section 131-B (2) of the said Act.
2. The appellants are a small scale industrial unit registered with the Director of Industries, Rajasthan, for manufacturing opthalmic lenses and other optical goods. They imported two cases said to contain one optical profile grinding machine, along with accessories, and presented a Bill of Entry on 3-11-1980 in which they declared the classification as "84.45/48" and sought clearance under OGL Appendix 2 Part 'A' Serial No. 1(39) of A.M. 81 Policy Book which covers "Optical Profile Grinding Machine". The Assistant Collector of Customs observed that the machine imported was for mass production of spherical optical lenses and is not covered by Serial No. 1(39). Thereafter, on 30-12-1980 the Collector of Customs ordered confiscation of the goods under Section lll(d) of the Customs Act read with Section 3 of the Import & Export (Control) Act, 1947 and allowed them to be redeemed on payment of a fine of Rs. 75,000/-. Accordingly, the Bill of Entry was completed on 1-1-1981 assessing the main machine under heading 84.45/48 and the other accessories on merits. On 26-3-1981, the appellants requested the Asstt. Collector for registration of contract for availing the benefit of project import assessment under heading 84.66 and produced, a certificate dated 31-10-1980 from the Joint Director (Project), District Industries Centre, Alwar, indicating that the optical profile grinding machine imported is eligible for assessment under heading 84.66. Since the Collector had already decided that the goods were not covered by the claimed Appendix and the certificate refers to optical profile grinding machine, whereas the goods are for mass production of spherical optical lenses, and the conditions prescribed under the Project Imports (Registration of Contract) Regulations, 1965 are not satisfied, the Assistant Collector held the goods were not eligible for assessment under heading 84.66. The Appellate Collector upheld this decision. With regard to the order of the Central Board of Excise and Customs No. 338/81 dated 14-7-1981 giving the benefit of doubt and remitting the fine imposed by the Collector with caution, he held that the point raised and discussed therein is not strictly relevant to the registration of contract and it is clearly stated therein that the "Optical" attachment does not refer to machines designed to work according to the rules of Optics as contended by the appellant. He rejected the appeal.
3. The grounds of the present appeal are that the impugned order is not a speaking order and that no reason has been given why the application for registration under the Project Imports (Registration of Contract) Regulations, 1965 was not accepted for classification under heading 84.66 C.T.A. As the goods were covered by OGL, there was no import licence and the Joint Director (Project) enclosed two leaflets showing the picture of 124 T Tray Feed Spherical Generator which he described as "optical profile grinding machine". He had no doubt that such a machine was imported and was entitled to a concession under heading 84.66, The appellate authority has given no reason why he has not accepted, this evidence. He could have made further enquiries as empowered under Section 128(2) and allowed registration on provisional basis; but the order shows that he did not make any attempt in this regard. The observation in the Board's order relied upon by the Appellate Collector states "optical grinding machines are known in the trade as machines for tool and gauge making, and the term 'optical' used in describing such machines has reference to the optical attachment and does not refer to machines designed to work according to the rules of optics as contended by the appellants". It is contended that such facile generalization is erroneous. Earlier, in this order, there is reference to a machine manufactured in Budapest, and described in the catalogue as "Optical Profile Grinding Machines" with projection screen. This catalogue states that profile grinders are indispensable not only in tool and gauge making but also in the electrical and precision engineering and mechanical engineering branches. High precision machining of components is rendered possible by the projection type optical equipment. To conclude from this catalogue that the optical grinding machine does not refer to machine designed to work according to the rules of optics is to ignore the trade parlance in other parts of the world and in India. The test certificate issued by the manufacturer clearly certifies that they despatched one optical profile grinding machine. This is a generic description which includes Curve Generators, Smoothing Machines and Polishing Machines. The Director General of Technical Development has clarified to M/s, National Instrument Ltd., Jadavpur, that type 124A Sphere Generator (similar to the one imported by the appellants) would be covered by the OGL but this evidence came to light after the appeal was preferred.
Since the Board had also allowed clearance of the goods under OGL on a caution, the Customs authorities could not have any valid objection to accept the recommendation of the sponsoring authority for concessional rate of duty as project import. Finally, the Regulations do not make any provision for certification or attestation by the Import Trade Control or other authorities for goods covered by OGL, unlike goods imported under ITC Licences, which require such endorsement. In other words, registration in such cases has to be automatic if Clauses (3) and (4) of Rule 3 of the Regulations are complied with. It is, therefore, prayed that the Order-in-Appeal be set aside, the concessional rate of duty allowed and the refund of the excess realised from the appellants granted.
4. Shri Chatterjee, relying on these contentions, cited a decision by the Tribunal reported in 1983 May E.L.T. 829, Saurashtra Cement and Chemical Industries v. Collector of Customs, Ahmedabad, which gives a practical and harmonious interpretation to Heading 84.66, namely, that it has an overriding application to cases when imports of machinery, instruments, components and raw material are required for initial setting up or substantial expansion of a unit subject to registration of the contract before clearance from the Customs. The goods in the present case were required for initial setting up of the unit.
Registration was applied for and supported by a recommendation from the sponsoring authority. When the Board had allowed import under OGL, there cannot be any legal justification for refusal by the lower Customs authorities to register the contract and allow the concession under Heading 84.66 on the ground that the goods were not covered by Appendix 2. The learned Consultant further pointed out a finding of the Tribunal that Import Licence and customs duty are separate and distinct and governed by two laws; one is not dependent on the other. For these reasons, registration of the contract may be ordered to be allowed and the goods classified under Heading 84.66 with consequential relief.
5. For the Department, Shri Chander Mouli supported the action of the lower authorities. The Board's order was clear that the goods were not covered by OGL and required an ITC licence, hence they allowed clearance on caution. This was because the goods were not banned. The Project Imports (Registration of Contract) Regulations, 1965 had not been complied with as application was required to be made before the import and after obtaining the Import Licence.
6. In reply, Shri Chatterjee argued that in Devi Match Factory v. Union of India (1983 E.L.T. 99), the Madras High Court held that if two classes of manufacturers are taxed differently, the class which is discriminated against is entitled to get the same concession and the discriminatory provision need not be set aside. Here there was discrimination against a whole class of importers of goods which fell under OGL and were for setting up or expanding projects. The appellants, having fulfilled other requirements, should not be denied the benefit of Heading 84.66.
7. We have carefully considered the matter. Regulation 3(0 requires an application to the proper officer of Customs at the port where the goods are to be imported for registration of the contract. Clause (2) requires the application to be made immediately after obtaining the ITC licence for import of articles covered by the contract. Clause (3) requires the application to specify the location of the plant or project, the description of articles to be manufactured, the installed or the designed capacity and such other particulars as may be considered necessary by the proper officer for purposes of assessment under Heading 84.66. A plain reading of these provisions shows that the application should be made prior to import and soon after obtaining the Import Licence. In this case, it is clear from the Board's finding that an import licence was necessary. This was not obtained. Having failed to obtain the required licence, it is not sufficient if a mere recommendation is obtained from the District Industries Centre.
8. We also notice that a provisional registration certificate was given on 7-6-1980 for manufacture of opthalmic lenses and other optical goods. On 31-10-1980, the District Industries Centre mentions import under OGL and says the project is quite independent and complete and recommends assessment under Heading 84.66 of the optical profile grinding machine. According to the Board's order on which Shri Chatterjee strongly relies, the imported machine is not covered by this description but is a machine tool. Moreover, the Industrial licence was issued on 18-12-1980 whereas the Bill of Entry had been filed on 3-11-1980 and application for registration of the contract was made only on 26-3-1981, while the order for the goods appears to have been placed prior to 9th July, 1980, as seen from the ACKNOWLEDGMENT OF ORDER from M/s. Autoflow. The regulations contemplate determining the entitlement to the benefit of project import in advance of the import and it appears to us that the claim for project import in this case is an after thought.
9. We accordingly hold that the prescribed regulations not haying been complied with, the goods are not entitled to assessment under Heading 84.66. We, therefore, reject the appeal.