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Gujarat Machinery Manufacturers Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Mumbai
Decided On
Reported in(1986)(26)ELT616Tri(Mum.)bai
AppellantGujarat Machinery Manufacturers
RespondentCollector of Customs
Excerpt:
.....public notice. the board held that the public notice was brought to the notice of the trade by a trade notice dated 16-8-78. the board, however, observed that the shipment was not made within the validity period of the letter of credit but was extended after the letter of credit had ceased to be valid on 1-12-78 and not before that date. in the above view of the matter, the board while upholding the confiscation reduced the fine in lieu of confiscation from rs. 75,000/-to rs. 35000/-. feeling aggreived by the order of the board, as stated earlier, the appellants preferred a revision application before the government of india, which is considered as an appeal here.4. during the hearing of this appeal, shri v.n. deshpande firstly contended that the licence produced was valid for the.....
Judgment:
1. The revision application filed before the Government of India against Order No. 1115/80 of 1980 dated 20-12-1980 passed by the Central Board of Excise & Customs, statutorily stood transferred to the tribunal for being heard as an appeal.

The appellants, M/s. Gujarat Machinery Manufacturers Ltd., imported a consignment of Hydrogen Compressors with Motors and spares and claimed clearance against import licence No. 1435300 dated 3-7-1978. The customs, however, objected to the clearance; firstly, on the ground that the compressors are capital goods and cannot be considered as components of Hydrogen Gas generating plant; and secondly, the item imported could not be correlated to any item listed in Appendix 5. The appellants by their letter dated 8-10-79 informed the Customs that the compressors were required for the hydrogen gas plant which they were manufacturing and supplying to Madhya Pradesh Electricity Board. They also contended that earlier they had been importing such compressors which were cleared.

3. The Collector of Customs, Bombay who held the enquiry recorded a finding that the compressors appeared in appendix 5 serial No. 496 of A-M 79 policy. They were however removed from Appendix 5 by a public notice 53/78. He further held that the letter of' credit was opened after the issue of the public notice. The importation was therefore not covered by the licence produced. Having regard to his findings, he ordered confiscation of the goods but allowed redemption on payment of a fine of Rs. 75,000/-. The appellants carried the matter in appeal to the Board. The Board disagreed with the view of the Collector that the letter of credit was opened after the public Notice. The Board held that the Public Notice was brought to the notice of the trade by a trade notice dated 16-8-78. The Board, however, observed that the shipment was not made within the validity period of the letter of credit but was extended after the letter of credit had ceased to be valid on 1-12-78 and not before that date. In the above view of the matter, the Board while upholding the confiscation reduced the fine in lieu of confiscation from Rs. 75,000/-to Rs. 35000/-. Feeling aggreived by the order of the Board, as stated earlier, the appellants preferred a revision application before the Government of India, which is considered as an appeal here.

4. During the hearing of this appeal, Shri V.N. Deshpande firstly contended that the licence produced was valid for the import of items appearing in Appendix 5 of A-M 79. The Public Notice 53/78 dated 28-7-78 was brought to the notice of the trade by a trade notice dated 16-8-78. It has no effect of invalidating the import. He contended that since the Public Notice, as has been rightly held by the Board, became effective from the date of trade notice, viz. 16-8-78 and much earlier to that the appellants had opened a Letter of Credit, import could not be objected to on the ground that the Public notice deleted entry No.496 in appendix 5. Secondly, Shri Deshpande contended that the Collector had held that the compressors imported by the appellants are components. The appellants being actual users (Industrial) could import components as OGL items under Appendix 10(1) of the policy A-M 79. Shri Deshpande urged that even if the licence was not valid, since the import could have been made under OGL, the order of confiscation and imposition of fine in lieu of confiscation are bad in law.

5. Shri G.D. Pal, the learned Departmental Representative on the other hand contended that the licence issued was for components required for the manufacture of appellants' end product which was given as Hydrogen and Oxygen gas generating plant, whereas the compressors imported are not components but 'capital goods' appearing in item No. 496(19) and further the components permitted are those required for the use in the gas and air separation plant and not gas generating plant. On this ground alone the import was impermissible. Shri Pal further contended that the policy A-M 79 was amended by P.N. 53/78 which was brought to the notice of the trade on 16-8-78 but the shipment as well as opening of L/C was subsequent to 16-8-78 and therefore the licence was invalid for the import in question.

6. The short question for consideration whether the Collector and the Board committed an error in holding that the licence was not valid for the import in question? In order to answer the above question it would be necessary to refer to the licence, the provisions of the policy and Public Notice as well as the Trade Notice relied on by the department.

The licence bears No. 1435300. It is dated 3-7-78. The licensing period is 12 months. Therefore the licence was valid upto 2-7-1979.

Chapter XIV of the Hand Book of Imports-Export Procedures 1978-79 deals with unauthorised import. Paragraph 398 of this Chapter reads : Import is validly covered by a licence when the description, value and the quantity of imported goods are in accordance with the licence and when the shipment/despatch of the goods from the supplying country takes place within the period of validity of the licence." There was no dispute as to the description, value and quantity of the imported goods. The dispute was with regard to the opening of letter of credit and the date of shipment. The shipment had taken place on 19-5-1979. The letter of credit was originally opened on 4-8-78 valid to cover shipment upto 1-12-78. The date of shipment was however extended upto 19-5-79. The Board was of the view that the L/C originally opened did not cover the shipment dated 19-5-1979 and therefore the import was unauthorised. This unauthorisation was on account of Public Notice 53/78 dated 28th July 1978, published in the trade notice on 16-8-78. If the Public Notice is excluded the import would not be invalid or unauthorised because the opening of letter of credit as well as the shipment had taken place within the period of the validity of the licence, viz. before 2-7-79.

7. The question for consideration is whether Public Notice 53/78 governs the licence in question? As has been stated earlier, the licence is dated 3-7-78. In the licence it was stated- "This licence will be subject to the conditions in force relating to the goods covered by the licence as described in the Import Trade Control Policy Book for the period during which the licence has been issued, or any amendments thereof made upto and including the date of issue of the licence, unless otherwise specified." So it is only such of the amendments which were made in the policy before the issue of the licence that would be relevant for construing the licence, not amendments made subsequent to the issue of the licence. The public notice is admittedly issued after the issue of the licence. The Public Notice was not given any retrospective effect. It comes into operation if at all from the date of its publication, which according to the Board took place on 16-8-78 the date of which Trade Notice No. 85/78 was published. The licences that were issued after 28th Duly, 1978 would alone be govern by the Public notice and not the licences which were issued earlier to the date of Public Notice. The above proposition was settled by the decision of the Supreme Court in M/s. Bharat Barell & Drums Manufacturing Co. Pvt. Ltd. v. Collector of Customs, Bombay and Anr. AIR-1971-SC-page 704. In the Supreme Court case, the licence was issued on June 1962. At the time of the licence neither the licence nor the policy provided that the steel sheets required to be imported should be of prime quality. But by Public Notice No. 1/1-5/62 dated December 6th, 1962 required that the steel sheets should be of prime quality. Based on that Public Notice the import of sheets by the manufacturers therein were held to be unauthorised, by the Collector as well as the Central Board of Excise & Customs. The manufacturers carried the matter in revision before the Government of India. The revisional authority was of the view that the Public Notice dated 6-12-1962 had no retrospective operation and the condition of prime quality could not be applied to the sheets imported under the licence issued before that date. The Supreme Court held that the view taken by the revisional authority was right.

8. Having regard to the above decision of the Supreme Court the view taken by the Collector and the Board that the import in question was invalid is erroneous in as much as the Public Notice 53/78 dated 28.7.78 has no retrospective effect and that cannot govern the licence issued before the date of Public Notice.

9. In this view of the matter, the order passed by the authorities below is required to be set aside. But then then authorities below did not investigate as to whether the goods imported did or did not comply with the terms of the licence. Therefore, it is necessary to remand the matter to the Collector of Customs for consideration afresh.

10. In the result this appeal is allowed, the orders of confiscation as well as the levy of fine in lieu of confiscation are set aside. The matter is remanded to the Collector of Customs, Bombay for consideration afresh in the light of the observations contained in this order.


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