1. The appellants; namely, M/s Chowgule Matrix Hobs Ltd., on importation of a machine described as : One No. KOEPFER RELIEF GRINDING MACHINE, TYPE 230 S.No. 11457, claimed clearance thereof at concessional rate of duty under Notification No. 40/78-Cus., dated 1-3-1978, and also its clearance against Open General Licence (OGL for short) by virtue of Entry: Serial No. 24, Appendix I, Part B, in Vol. 1 of the Import Policy for AM 1964-85. A Bill of Entry to that effect was filed on 20-7-1984, but Customs authorities declined to accept the claim for concessional rate of customs duty, as filed, as also for clearance under the OGL. A notice to show cause was thereupon issued on 17-8-1984, conveying tentative view of the Department to the effect that the machine imported by the party was a multiple-purpose one and was not exclusively used for grinding of hobs, so as to be treated as a hob-grinder within the meaning of the Entry Serial No. 24 of Appendix I, Part B of AM Policy for 1984-85, nor a hob-cutting or sharpening machine, as covered by Serial No. 22 of the Customs Notification, on which the party placed reliance. It was, thus, conveyed to the party that the machine, being a capital equipment not covered by Appendix I, would require a specific Licence for its importation, and that full customs duty, with reference to the relevant Tariff Entry, would be payable.
2. The party repudiated this position by means of reply to this show cause dated 20-8-1984, by urging that the machine was basically a hob-cutter/grinder and that the mere fact that it could, in addition, according to the manufacturers' catalogue, perform other functions, would not take it from the category of a hob-grinder and, further, that they had industrial licence only for manufacture of hobs and the machine imported by them was intended to be used exclusively for hob-cutting and, as such, had to be treated as a hob-grinder so far as their importation was concerned.
3. They added that though a hob-grinding machine could perform functions of cutting/grinding other tools but the reverse was not true; namely, simple machines meant for the manufacture of thread mills or taps, etc., could not be used as hob-grinders. They thus reiterated their claim for concessional rate of duty by referring to Entry No. 22 of Customs Notification No. 40/78, and also for entitlement to import under the OGL.
4. The matter was adjudicated by the Addl. Collector of Customs, Bombay, by his order dated 3-9-1984, after taking note of all the contentions, set forth in reply to show cause notice, as well as during personal hearing. He rejected the contention that imported machine, being basically a hob-cutter, was entitled to be treated as a hob-cutting/sharpening machine, as contemplated by Entry Serial No. 22 of the Notification 40/78 or Entry Serial No. 24 Appendix I of AM Policy 1984-85 as, in his view, the imported machine was a versatile machine tool, which fact was established from manufacturers' catalogue.
He opined that the .entry in the Notification and, similarly, that of the Appendix, was a specific entry only meant for specific type of machines, and would not cover machines which could perform diverse functions and was, on the face of the description, a versatile machine.
He, therefore, did not accept the plea for benefit of concessional rate of duty under Notification No. 40/78. He further directed confiscation of the machine on the ground that the importation against OGL being not permissible, a specific licence was required and, in the absence of that, the importation was to be treated as being in contravention of the provisions of Section 3(2) of the Imports & Exports (Control) Act, 1947. He, however, taking note of the fact that, so far as appellants were concerned; they were the actual users for hobs only, and that no such versatile machine tool was manufactured in India, took a lenient view and allowed an option to the party to pay, in lieu of such confiscation, a fine of Rs. 3,00,000/-, and have the goods cleared for home consumption.
5. The appellants have come up in this appeal against the aforesaid order of the Additional Collector reiterating the contentions that the subject-machine was a machine which is used for grinding of hobs which fact, according to them, was clearly mentioned in the literature. While conceding that it could also be used for grinding of angulr cutters, tread mills, taps, etc., they contend that it would be indeed a waste of highly expensive machine to manufacture such ordinary tools, and that the predominent use of the imported machine remains that of hob cutting/grinding and that the Additional Collector failed to appreciate this fact of predominent function of the machine. The appellants further contend that the Additional Collector has erred in treating it to be a versatile machine, capable of several uses. They placed reliance on a certificate issued by the Director General of Technical Development (DGTD) after the Customs Department had taken adverse view, and over that according to certificate, issued by the office of the DGTD, dated 16-10-1984 (which they have appended as Exhibit-K), it has been certified that this machine would be covered by Serial No. 24 of Appendix I, Part B of Import Policy, Vol. I for AM 1984-85. The appellants contend that this letter of the DGTD was a conclusive proof of the fact that the imported machine was essentially a hob-grinder, as claimed by the appellants, and is, therefore, eligible not only for being passed under OGL but also for the concessional rate of duty under Notification No. 40/78-Cus., dated 1-3-1978. They also plead that similar machines have been cleared against OGL, and at concessional rate of duty as now claimed by them, and they have enclosed copies of the Bill of Entry (Exhibit-H) to substantiate this contention, besides asserting that before effecting this particular import, they had sought advice of the Customs Deptt. after submitting full details of the machine to be imported enclosing a catalogue in respect thereto, and they were advised by means of letter dated 21-2-84, that concessional rate of duty would be applicable to such a machine, which letter has been annexed as Exhibit-G.6. Shri R.K. Habbu, Advocate represented the appellants during hearing and reiterated the contentions set-forth in the grounds of appeal, and the appellants' reply to show cause notice. He laid emphasis on the fact that the appellants hold industrial licence for the manufacture of hobs and that it was apparent from the impugned order of the Additional Collector that they were actual users of the machine as a hob-grinder and that this was conceded even in the order that the imported machine was basically a ' hob-cutter. Shri Habbu argued, therefore, that the order under appeal, suffered from an error to the effect that the Catalogue-indicating some other uses of the machine, even and above that of hob-cutting or grinding, would make it forfeit benefit of the concessional rate of duty, and further, that the description, as given in the catalogue, indicating additional uses of the machine, would take it out of the category of goods, importation whereof was permitted under, OGL by virtue of Entry in Appendix-I, Part B, Serial No. 24, in Vol. I of AM Policy for 1984-85. He also placed reliance on the advice issued by Customs Department in response to Party's letter dated 20-12-1983, and also on another importation by them of goods, which he described to be identical, though imported from Italy, as evidenced by Bill of Entry and accompanying catalogue (Exhibit-H Collectively), which has been allowed to be cleared against OGL and also on concessional rate of duty under Notification 40/78.
7. He assailed the approach made by the adjudicating authority while characterising the machine to be a versatile-machine, contending that: the doubt had been set at rest by a letter issued from the office of the DGTD categorically certifying that this machine, described as 'Koepfer Relief Grinding Machine Type 230-S', will be covered by Serial No. 24 of Appendix-I, Part B of Import Policy, Vol. I for AM 1984-85, and took us through the letter issued on 16-10-1984, bearing the date 15-ID-1984, under signatures of Industrial Adviser in the office of the DGTD. He argued, placing reliance on a CEGAT decision quoted in 1987 (31) E.L.T. 103 (Tribunal) (Bharat Heavy Electricals Ltd. v. Collector of Bombay), that the certificate of the DGTD was enough to prove party's claim for benefit of Customs Notification for concessional rate of duty. He, therefore, contended that, on the same principles, the DGTD certificate in this case should also be treated as conclusive evidence of the fact that the imported machine was a hob-cutting/sharpening machine, as required by Customs Notification 40/78, and also a hob-grinder within the contemplation of AM policy.
8. Shri K.V. Kunhikrishnan, DR, appearing for the respondent, countered these arguments by highlighting the description of the machine in the catalogue, which the appellants themselves have supplied, and contended that the concessional rate of duty was meant to be operative for single-purpose simple machines, and not for machines having multiple uses as the machine under reference was, and that, similarly, the description in the AM policy was also confined to simple hob-grinders, and not versatile-machines as the subject-machine. He characterised the letter, issued by office of the DGTD, to be only in the nature of mere advice issued op requisition of the appellants, and, in no way, having a bearing, so far as interpretation of the Customs Notification was concerned, to the rate of duty applicable.
9. We have given our careful thought to the matter in the light of the contentions canvassed before us and the material placed on the appeal file. We find that it is not disputed, even in the grounds of appeal, that the imported machine does have functions over and above that of hob-cutting/grinding; the only plea being that it, nevertheless, remains basically a hob-grinder or hob-cutting machine and that, in any case, keeping in view the end-use of the machine acquired by the appellants, this importation was to be treated as that of hob-grinder or hob-cutting machine only.
10. We have considered the matter in all its respects, and find that the duty aspect has to be examined separately from the question of licencing-requirement for the purpose of importation. It is manifest from the manufacturer's catalogue that this particular machine is not a simple hob-grinder but has been described expressely 19 be a machine which, besides functions of hob-grinding, is designed for use in angular cutters, thread mills, taps, etc., and to be used for grinding high precision profiles especially of relief tools. A reading of this description in the catalogue justifies the view taken by the Customs authorities to the effect that it was a general purpose versatile tool grinding machine. The appellants are claiming benefit of concessional rate of duty, as against the normal duty under the relevant Tariff Entry and the onus is on them thus to establish that it entirely fits the description as contemplated by the said Notification. We do not find this onus descharged. The appellants, no dount, place reliance on a judgement of the Tribunal in the case of M/s Bharat Heavy Electricals Ltd. (supra) but on a reading of the said order, it is apparent that the Notification itself had incorporated that on production of 'End Use' affidavit and DGTD Certificate, the requirement for purpose of concessional rate of duty under that Notification would be deemed to have been satisfied. As against that Notification No. 40/78, under which the appellants are now claiming benefit in this case, does not make any such reference to the DGTD certificate, and is based on plain description of the machine itself. We, therefore, do not think that the appellants can urge, on the basis of the said judgment of the Tribunal, that DGTD certificate in all cases should be accepted as a conclusive circumstance.
11. For the same reason, we do not think that any letter, issued by the Customs authorities as is now put forward, can be determinative of the matter because the adjudicating authorities are entitled to give an independent finding on the basis of material placed before them. Shri Habbu has rightly conceded that this letter, issued by the Customs authorities, was not being pleaded as an estoppel, against the Customs Department nor does the other instance of 1982-importation (Exhibit-H collectively), cited by the appellants, lend any assistance to the apellants' cause because the name and description of the machine is different and so are the manufacturers, and the source of origin, and the Bill of Entry indicates that the machine there was described as plain hob-grinding and does not reveal any multiple function as the catalogue of the present machine does. As a general machine tool, the machine in the present case has been rightly held to be falling under T.1.84.45/48 of the Customs Tariff. We, therefore, so far as the Customs classification and consequential assessment of duty is concerned, do not find any ground for interference. However, so far as the licencing requirement is concerned, the appellants have a point in urging that the certificate issued by the DGTD has a conclusive force in this regard because it is not disputed before us that AM Policy is framed in consultation with the DGTD. This certificate (Exhibit-K), issued on 16-10-1984, after detailed description of functions of the imported machine had been highlighted in appellants' tetter dated 10-10-1984 (Exhibit-J), categorically certifies that the import of this machine will be covered by Serial No. 24, Appendix I, Part B of the Import Policy (Vol.I) for 1984-85 subject, however, to other conditions laid down in the said policy. There is no indication that any other conditions of the Import Policy remained to be satisfied.
12. We, therefore, are of the considered view that, in the face of this certificate of the DGTD, the view, that the importation of this machine cannot be allowed under OGL, is not sustainable. As a result, the order of confiscation of the machine, as passed by the Additional Collector, is not sustainable. We thus allow the appeal partly to the effect that whereas the order of confiscation is set aside, and so also the consequential imposition of redemption fine of Rs. 3 lakhs; the claim for benefit of concessional rate of customs duty under Notification No.40/78-Cus. dated 1-3-1978 is rejected.