1. This is an appeal directed against the Order-in-Original No.S/10-115/84H dated 6.7.84 passed by the Additional Collector of Customs, Bombay. The point of dispute in this case is whether the import licence granted to the appellants, in their capacity as a manufacturing unit Actual Users (Industrial), was valid for the goods imported by them from Japan in the subject consignment.
2. The licence permitted the appellants to import "components of typewriters". The Additional Collector, who adjudicated the case, recorded the finding, after examining a sample of the goods himself, that what the appellants had imported were not components but the main body of a fully assembled electronic typewriter, that the appellants were guilty of mis-declaring the goods in the bill of entry as components, that even if the goods were considered components (which in fact they were not), the licence was yet invalid because it permitted import of components of ordinary typewriters and not of electronic typewriters and that the appellants had resorted to the sharp tactics of importing the few missing minor parts from the main body of the typewriter in the same vessel but against a different bill of lading to show it as a separate consignment. The Addl. Collector held the licence as invalid, confiscated the goods valued Rs. 2,32,426/- on that score as well as on the charge of mis-declaration but allowed the appellants an option to have them redeemed on payment of a fine of Rs. 6 lakhs.
3. We have heard both sides, gone through the record and given our earnest consideration to all the arguments pressed before us. The appellants stated at the outset that the allegation that they had imported electronic typewriters in assembled condition had not been made in the show cause notice issued to them. We perused the SCN and found their statement incorrect on facts; the allegation was very much there in the statement of allegations annexed to the SCN. The appellants next stated that what they had imported was not an electronic typewriter. We found this statement of theirs too wrong on facts. As stated in the SCN, the foreign manufacturer had clearly marked the goods as "KOFA, Electronic Typewriter Model Electronic I, AC 220 V, 50 HZ, 60 W, Made in Japan" and the catalogue of the goods described them as Electronic 1 Model of KOFA Brand Typewriters, containing such electronic components as TAB memory, Automatic correction and Electronic control.
4. We, however, agree with the appellants that in the absence of any stipulation in the licence to the contrary, the Additional Collector was not correct in drawing a distinction between ordinary typewriters and electronic typewriters. Ordinary typewriters, electric typewriters and electronic typewriters are all different varieties of typewriters.
We also agree with the appellants that their licence was specific for "components of typewriters" and that there was nothing in the licence nor in the entry No. 466 of Appendix 5 of the relevant import policy book, which meant that the appellants could import components only of ordinary typewriters and not those of electric or electronic typewriters. The Addl. Collector as well as the SDR cited entries 563 and 564 of Appendix 3 of the Policy according to which a specific licence was needed for import of electronic items or their kits, sub-assemblies etc. Bus inspite of our asking we were not informed as to how these entries could apply to the appellants when there was nothing mentioned about them in their licence. We are, therefore, of the view that, going by their licence, as it read, no fault could be found with the appellants if they had imported components of electronic typewriters against the licence description "components of typewriters".
5. This brings us to the real bone of contention whether what they had imported were components or something else. The relevant policy, in para 5(10) on page 2, defines components as under: (10) "Component" means one of the parts or sub-assemblies or assemblies, of which a manufactured product is made up and into which it may be resolved and includes an accessory (or attachment).
6. A sample of the goods was shown to us during the hearing. The illustrated catalogue of the foreign manufacturer was also produced before us. from what we saw, we cannot help agreeing with the Addl.
Collector's conclusion as to the nature of the goods imported. The goods were a fully assembled electronic typewriter minus the following four parts: 7. The Dust cover, according to the catalogue, is an optional accessory and not an essential part of the typewriter. The function of roller cover and printer cover is only a protective one. They have no operational function in the typewriter. The typing disc is a replaceable one because it depends upon the user's choice of the script The nature of these parts is such that any person trained to handle an electronic typewriter in an office could easily put them in place. The appellants were, no doubt, a newly set up unit. One could understand that in the initial stage they would need to import all the hundred percent parts and assemble them in India, the so-called screw driver technology. But instead what they imported did not require any assembly or manufacturing work. The appellants told us, when questioned, that they bad imported all hundred percent parts in various lots and that they themselves were not going to manufacture any part in the beginning. What they actually imported was a fully assembled typewriter with the four above parts taken out and sent to the appellants in a different lot. So much so, that even the outer case (brief case type) was also there which is supplied only with the complete equipment. The goods bore the Japanese manufacturer's serial number for the complete typewriter. The foreign manufacturer's name plate showing his brand name, the model number and the inscription "Made in Japan" were all there on a silver plate affixed to the outer cover. The appellants had been granted the subject licence as a small scale industrial unit. We wonder what manufacturing or assembly work was left for them to do to make the goods as of their manufacture and as "Made in India". The goods were certainly not components as ordinarily understood. They were not components even as per the aforesaid definition given in the policy as there was nothing into which the imported goods were going to be resolved. Though examples are odious, we may explain the situation with a simple illustration. It is as if a person were to import a complete colour television with one or two switches removed (which could easily be put back later) and then claim its clearance as component because the T.V. could not function without those switches, We are not impressed by the appellant's argument that the goods, in the condition imported, were not capable of functioning as a typewriter and hence they were only a component. As already held by us, the goods were not components. At best, they could be described as an incomplete electronic typewriter. For situations like this, interpretative Rule 2(a) of the Customs Tariff Act, 1975, is applicable. This Rule says that an incomplete or unfinished article shall be classified as a complete or finished article provided that, as imported, the article has the essential character of the complete or finished article. From what we have seen and described above, there could be no doubt that the imported goods had the essential character of a complete electronic typewriter. This Rule of the Customs Tariff is equally applicable to the Import also by virtue of Para 244 of the Policy. We conclude, therefore, that the goods imported by the appellants were electronic typewriters in assembled condition and not components of typewriters.
Their licence was, therefore, not valid to cover the goods.
8. The appellants relied on the Supreme Court's judgment in the case of Tarachand Gupta and Brothers 1983 ELT 1456 (SC)(ECR C 539 SC. In the case before the Supreme Court the importers had imported all parts of mopeds in different consignments against their licence for parts and accessories of motor cycles and scooters. The department had concluded that they had imported mopeds in CKD condition in different lots and that their licence was not valid. The Supreme Court ruled that the department was not justified in adopting the procedure of joining up different lots and that there was nothing in the importers licence which prevented them from importing all hundred percent parts. The facts in the appellant's case before us are quite different Since they possessed a licence for "components of typewriters" without any further stipulation, no objection could have been taken if they had imported all hundred percent parts of typewriters in one or more consignments.
The thrust of the Addl. Collector's finding as well as that of ours is not as to why they have imported all hundred percent parts but that what they have imported are not parts or components but electronic typewriters in assembled condition. The Supreme Court's judgment relied upon does not advance the appellant's case. The department's representative stated that the Addl. Collector had not joined the two consignments of the appellants for proceeding against them. As a matter of fact, at the time the show cause notice was issued to them, the department had no knowledge of the second consignment. The deptt.
learnt about it later in the course of proceedings that the few parts missing from the assembled electronic typewriters had been imported by the same vessel but against a different B/L.
9. The Deptt's representative also stated on the basis of the records produced before us that the appellants applied for import licence of the value of Rs. 5.50 lakhs. Their licence application stated that this quantity was required by them for manufacturing 1500 typewriters.
According to the appellant's own application, their requirement worked out to about Rs. 365 per unit for a typewriter, Their sponsoring authority in the Directorate of Industries cut down their requirement to half in value terms, i.e. Rs. 2.75 lakhs for 1500 typewriters. The licensing authority granted import licence to the appellants for this value of Rs. 2.75 lakhs which came to about Rs. 183 per unit. With the unit value of Rs. 365 or Rs. 183, the appellants could have manufactured only ordinary typewriters. It is thus evident that according to their manufacturing programme as declared by them to the sponsoring authority and the licensing authority and also according to the authorization of these authorities they were to manufacture only ordinary typewriters. Instead, they utilised the licence for importing electronic typewriters at the rate of Rs. 2700 per unit. The deptt.'s representative, by stating all this, wanted to show that the appellants had played a fraud on the sponsoring authority as well as the licensing authority. But, as we have already discussed above, we have to go by the licence of the appellants as it reads. Since the licence permitted them to import components of typewriters without any further stipulation, no fault could be found with the appellants if they had imported components of electronic typewriters. We have held their importation was not covered by the licence not on that ground but on the ground that what they imported were not components but electronic typewriters in assembled condition and identifiable as such.
10. In the result, we find no justification to interfere with the Addl.
Collector's order and reject this appeal.