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Saraswati Stores Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1985)(5)LC1891Tri(Delhi)
AppellantSaraswati Stores
RespondentCollector of Customs
.....required machinery for initial setting up of their new industrial unit. they also requested for project import endorsement for assessment of duty under heading no. 84.66 of section xvi of the customs tariff act, 1975. their request for the import licence was processed on the basis of the recommendation of the industrial development committee, consisting of joint-chief controller of imports and exports, madras, director of industries and commerce, madras, representative of director general of technical development at madras and director of small scale industries, service institute, madras.their project was cleared for the issue of necessary import licence.their import licence was also duly endorsed as for project import for assessment under heading no. 84.66 of section xvi of the.....
1. This is a matter, which was filed as a Revision Application before the Government of India by the appellants, against Order-in-Appeal No.C. 3/1255/1980, dated 21-11-1980, passed by the Appellate Collector of Customs, Madras. This has since been transferred to the Tribunal and is being treated as an Appeal before us.

2. Shri V. Veeraraghavan, Advocate, has appeared on behalf of the appellants and Shri S.C. Rohatgi, JDR, on behalf of the respondents.

3. The appellants claim that they are a small-scale industry for production of cassettes/pre-recorded cassettes, duly registered with the Government of Tamil Nadu, Madras. They had applied for an Import Licence for the required machinery for initial setting up of their new industrial unit. They also requested for Project Import endorsement for assessment of duty under Heading No. 84.66 of Section XVI of the Customs Tariff Act, 1975. Their request for the Import Licence was processed on the basis of the recommendation of the Industrial Development Committee, consisting of Joint-Chief Controller of Imports and Exports, Madras, Director of Industries and Commerce, Madras, representative of Director General of Technical Development at Madras and Director of Small Scale Industries, Service Institute, Madras.

Their Project was cleared for the issue of necessary Import Licence.

Their Import Licence was also duly endorsed as for project Import for assessment under Heading No. 84.66 of Section XVI of the Customs Tariff Act, 1975. It is only subsequently that at the level, first of the Assistant Collector and later the Appellate Collector of Customs, a different view was taken in the matter and concessional assessment under Heading No. 84.66-CTA was rejected. As per the Order-in-Original of the Assistant Collector of Customs, the main grounds for rejection of the appellants' claim is that it has been held that transfer of recorded matter from one tape to another cannot be regarded as a manufacturing process. At the level of the Appellate Collector also, a similar view appears to have been taken and it has been stated that for inclusion of such items under Heading 84.66, there is need for special Notification by the Central Government "having regard to the economic development of the country". Appellants have specially emphasised that Heading 84.66 covers all items of machinery, instruments, apparatus, etc. relating to Project Import. It has also been emphasised that manufacture of pre-recorded cassettes is certainly a manufacturing activity and the cassettes produced are manufactured products, which are bought and sold on such a scale that it has become one of the major flourishing trading activities.

4. On behalf of the respondents, the stand taken in the Order-in-Appeal as well as the Order-in-Original is virtually reiterated. It has been urged before us that re-producing of records into tape cassettes cannot be considered as a project and that expansion/setting up of machinery and appliance for duplicating the sound track would not get covered under Heading 84.66 of CTA/1975. The point is specially made that as per Heading No. 84.66, items covered are those required for the initial setting up of a unit or substantial expansion of a unit or an industrial plant. It is stated that, in so far as the equipments imported by the appellants is concerned, it cannot be stated that it involves the setting up of or expansion of an industrial plant. It is stated that an industrial plant must imply an establishment where manufacturing processes involved a series of operations to produce an Article.

5. The learned JDR has also furnished before us meanings of the words.

"Industry" and "Plant" from the Webster's Dictionary. These are reproduced below : "Industry" has been defined as (a) systematic labour especially for creation of value (b) a Department or branch of a craft art business or manufaeture: a division of productive or profit-making labour: especially one that employs a large personnel and capital especially in manufacturing (c) a group of productive or profit making enterprises or organisation that have a similar technological structure of production and that produces or supply technically substituted pools, services or sources of income, and so on.

"Plant" has been defined as (a) the land, building, machinery, apparatus, and fixtures employed in carrying on a trade or a mechanical or other industrial business (b) a factory or workshop for the manufacture of a particular product (an automobile) (an ice-cream) (c) the total facilities available for production or service in a particular country or place(s) a piece of equipment or a set of machine parts function together for the performance of a particular operation (a couple of experts armed with drills an oxyacetyline and other strange tools.-F.W. crafts)." 6. The learned JDR has also submitted extracts from "Words and Phrases, Vol. 21", relevant extracts of which are produced below : "Industrial Activities" : Commonly means the treatment or processing of raw products in factories-Kubby v. Hammed, 198 p2d, 134, 137, 68 Ariz 17.

1. Industrial Plant: The law can do no better than to define an 'Industrial Plant' as that type of an establishment which the ordinary man thinks of as such. Messenger Pub. Co. v. Board of Property Assessment. Appeals and Review of Alleg heavy Country, 132 A 2d 708, 768,769, 183 pa. Super 407.

(2) Fact that theatre, cab companies service stations, automobile repair companies, restaurants, stores, office buildings, hotels, beauty shops, banks and self service laundries are sometimes generally called "industries" does not require that these business establishments can be considered "industrial plants" within the meaning of "assembled industrial plant doctrine....

7. Apart from the foregoing submissions on both sides relating to what constitutes an industrial plant, industry, production, etc., the appellants have filed before us a copy of the judgment of the High Court of Adjudicator, Madras, in the case of Das Colour Lab. v.Assistant Collector of Customs, Appellate Collector of Customs and Collector of Customs, Madras (Writ Petition No. 8398 of 1984). In this case, on import of automatic computerised equipment for developing of colour films, printing, enlarging and processing of colour photo films, the benefit of concessional assessment as project import was allowed to the appellants. We observe that, in that case, the same doubts had been expressed as regards whether the goods imported could be related to an industrial plant or whether the project could be considered to be industrial activity. It would appear that, on these issues, the Ministry of Finance, Department of Revenue, Govt. of India, consulted the Director General, Technical Development, and, on the basis of advice tendered, issued a clarification on the 4th of November, 1983, that the project import facility was admissible to an automatic colour film processing laboratory. It has been argued before us that, in view of this decision of the Madras High Court, it would not be open to the department to raise any doubts here as regards whether the goods imported in their case, namely tape duplicators, cassette masters, etc.

would constitute an industrial plant or whether duplication of cassettes would constitute an industrial activity. The appellants have also pointed out that in the case of other importers of identical goods, the facility of registration of contract under the project import has been duly allowed. In this case, reference has been made to the order of the Assistant Collector, Bombay, dated 9-10-80, in the case of M/s. Tharangini Studios and another order in the case of M/s.

Leela Chitnis Studios, Bombay.

8. We have carefully considered the facts of the case and the submissions made before us. In view of the judgment of the Madras High Court in the case of M/s. Das Colour Lab. and, in the absence of any judgment of another High Court or the Supreme Court, taking a contrary view, we feel that we do not need to go into the merits put forward by the department, in this case, since these are similar to the arguments that were put forward in the case decided by the Madras High Court.

Accordingly, we set aside the order of the Collector of Customs, Madras, and allow the appeal with consequential relief to the appellants.

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