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Prashaw Automobile Co. Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Mumbai
Decided On
Reported in(1986)(8)LC605Tri(Mum.)bai
AppellantPrashaw Automobile Co.
RespondentCollector of Customs
.....on behalf of the respondents.3. the appellants stated that they had imported 50 cartons - wiper motors valued at rs. 1,77,679/- c1f". as per the bill of entry clearance was sought against export house additional import licence no.0353038 dated 27-1-1982 issued in favour of m/s. muthuswamy gunder & co. with letter of authority in favour of the appellants. in this bill of entry the goods were sought to be classified under cta 85.02. later on, however, the appellants took the stand that though the imported goods were described as wiper motors these were not electric motors covered by heading 85.01 cta but these were wiper systems which were parts of wind screen wipers covered by heading 85.09 cta. it was also submitted that the goods were covered by the licence in terms of.....
1. This is an appeal against the order of the Additional Collector of Customs, Bombay, No. S/10-251-82 G dated 16-6-1982.

2. Shri N.R. Kantawala, Advocate appeared on behalf of the appellants and Shri G.D. Pal, Sr. Dept. Representative on behalf of the Respondents.

3. The Appellants stated that they had imported 50 cartons - Wiper Motors valued at Rs. 1,77,679/- C1F". As per the Bill of Entry clearance was sought against Export House Additional Import Licence No.0353038 dated 27-1-1982 issued in favour of M/s. Muthuswamy Gunder & Co. with letter of authority in favour of the appellants. In this Bill of Entry the goods were sought to be classified under CTA 85.02. Later on, however, the appellants took the stand that though the imported goods were described as wiper motors these were not electric motors covered by heading 85.01 CTA but these were wiper systems which were parts of wind screen wipers covered by heading 85.09 CTA. It was also submitted that the goods were covered by the licence in terms of sub-para 8 of para 186 of AM 81-82 Policy Book. The Appellants also claimed that since the goods were exclusively designed for use on motor vehicles, they are not covered by Appendix 30 of AM 81-82 Hand Book.

The Customs however, took a view that the imported goods figured in Appendix 30 as non-permissible spares read with para 186(8) of Chapter 18 of AM-82 Policy Book as amended vide 1TC Public Notice 51/16-10-81 which disallowed items figuring in Appendix 30. Since the letter of credit was opened on 23-3-1982 and the policy had bean amended on 16-10-1981, the importers were asked to explain how their licence referred to above could be considered as valid for covering the import.

The importers thereupon furnished another Export House Additional Licence No. 0456551 dated 4-9-1981 issued in favour of M/s. Prabhat Industries, Bombay, with letter of authority to the importers. This was not accepted by the Customs who held that as the firm commitment in this case was made on 23-3-1982 i.e. after amendment of policy, the licence produced was not valid to cover the goods.

4. The appellants have stated that the classification of the goods as 'Electric Motors' is erroneous and it cannot be stated that their import is not permissible as per SI. No. 2 of Appendix 30 of AM 81-82.

While conceding that the goods were described as wiper motors in the import documents, it is claimed that this has been done in a loose sense since the items supplied the motive power for the movement of wipers on the wind screen. It was contended that the term electric motors should refer to motors designed to work on normal electric voltage of 230 V and 440 V circuits whereas the impugned goods worked on power of 12 V and 24 V only. It was, however, stated that the goods imported are wiper motor assemblies or systems consisting of not only a motor, but also an inbuilt gear train as well as extended armature shaft. In fact it was stated that these are complete wind screen wipers minus arms and blades. It was stated that since these items have no other use except as parts of wind screen wipers they have to be treated as wind screen wipers assemblies in terms of Rule 2(a) of Rules for the Interpretation of the First Schedule of Import Tariff. ' 5. On the question of the validity of second Licence No. 0456551 dated 4-9-1981 the appellants have cited para 186(9) of AM 81-82 Policy.

According to the policy the spares imported against the licence can be sold to any person. It was contended that while at the time of placement of the order, -the appellants have acted as a letter of Authority holder but they later on purchased the goods on High Seas Sale Deed. It was claimed that before importation of the goods the ownership of the goods passed on to the appellants and the appellants were entitled to clear the goods against any valid licence in their possession. There is, therefore, also no justification for imposition of such a heavy penalty.

6. The appellants have laid special emphasis on 'Generalia specialibus non derogant' that is to say that special description would prevail over the generic description. It was stated that the goods imported should be deemed to be covered not by generic description of the item No. 2 of Appendix 30, but the specific description in item 85.08 of Schedule 1 of the Imports (Control) Order 1955.

7. The appellants have cited the following case law in their favour.

(1) Delhi High Court decision in the case of Century Spinning and Manufacturing Company Limited v. Union of India (1980 ELT 721) and (2) CEGAT decision in Appeal No. CD (BOM) 290 of 1984 Order No. 61/85 'dated 5-1-1985.

8. On behalf of the Respondents, it has been pointed out that the claim of the appellants for classification under different headings of the Customs Tariff is not understandable in view of the fact that in their own case Bill of Entry No. 496/43 of 22-5-1982 relating to import of some product, they had claimed assessment under heading 85.01 (1) CTA on the ground that the motor imported was one with inbuilt gear system.

The Custom House, however, decided that only internal gear motors fell under heading 85.01 (1) CTA. In the case of the products of the appellants, it was observed that the motors were not internally geared but there was a separate reduction gear box coupled by the motor. Hence it was held that the goods would be assessable under heading 85.02 (2) CTA. The Respondents have also referred to CCCN Explanatory Notes relating to 85.01 (1) and have pointed out that the heading covers electric motors of all types from low horse power motors tor use in instruments, clocks, time switches, sewing machines etc. upto large powerful motors for rolling mills etc. with the exception of starter motors for internal combustion engines covered by heading 85.08 and motors for toys- covered by Chapter 27. Motors equipped with pulleys or with gears or gear boxes are covered under this heading.

9. In so far as the validity of the second licence offered by the importers to cover the impugned goods is concerned, it was pointed out on behalf of the respondents that as per para 382 of Hand Book of Import-Export Procedures, 1981-82 it is evident that wherever the licence holder is given the authority to appoint any person as his Agent for arranging the imports permitted by the licence, the functions of the holder of such letter of authority shall be limited to place orders, to open letter of credit, to make remittance of payment for importing the goods etc. on behalf of the licensee and any other related matters connected with the operation of the licence in question. There is, therefore, no question of accepting the second licence for covering the goods in question.

10. We have carefully considered the facts of the case, the evidence on record and the submissions made before us. We find that the appellants are importing goods which were described in the Bill of Entry as 'wiper motors'. The relevant invoice and import licence as well as the catalogue furnished by the manufacturers described the product as wiper motors. It is also observed that in cases of earlier import the appellants have themselves claimed that the correct classification of the item would be under heading 85.01(1) CTA. It appears, that only when they got into difficulty in respect of the import of the impugned goods in view of the amendment of the policy that they have taken recourse to arguments seeking different classification. In seeking alternative classification they have, in fact, made claim giving the goods a completely different identity. It was stated that the goods are not, in fact, wiper motors but what is called wiper system. It was even urged that the goods should be considered as windscreen wipers minus wiper arms and blades, and classified accordingly. On the basis of these arguments it was urged that the goods are not electric motors and would not be covered by Appendix 30 of the Policy Book. It follows, therefore, that the goods would be duly covered by both the licences submitted by the appellants. In support of their submissions, the appellants have cited the decision of the Delhi High Court in the case of.Century Spinning and Manufacturing Co. Ltd. v. Union of India (1980 ELT 721). We/ find in that case it was held that the product imported was pot motors which could not be used independently as electric motors but only used as component parts of spinning machines. It was, therefore, held that such imports were classified under heading 72(3) of ICT as component parts of machines and not under 73(21) as electric motors all sorts and parts thereof. We do not think that the decision in the Century Spinning and Manufacturing Co. Ltd., can afford guidance in this matter for the reason that in that case it was shown that pot motors had been given a special shape and design for the purpose of collecting yarn and giving a twist to it on the spinning machine. They were, in fact, integral component parts of the spinning machines and could not be used outside the rayon spinning machines. It has been argued before us in the present case that the wiper motors that are being imported are integral part of a machine in such a way that they do not have an independent identity outside the machine. In fact, they function, as separate parts of the wiper assemblies. What is more, it has not been argued before us that these motors have been given special shape or design for use exclusively in wiper systems and that they cannot be used for any other purposes.

11. Looking at the Explanatory Notes of CCCN relating to 85.01, we feel that there is hardly any doubt that the impugned goods are covered by this item. We take note here of the fact that there is no doubt whatsoever as regards the identity of the goods in view of the description in the relevant Bill of Entry in the Invoice and in the literature of the manufacturer furnished by the appellants, all of which refer to the goods as wiper motors.

12. In so far as the validity of the licence is concerned, we have seen the order passed by the Single Member,WRB Appeal No. CD(Bom) 290 of 1984 dated 5-1-1985 in the case of Continental Marketing Pvt. Ltd., New Delhi v. Collector of Customs, Bombay which has been cited by the appellants in support of their contention that it supports the principle "Generalia specialibus non derogant" that is to say that the special decription of the goods contained in Schedule 1 of Imports (Control) Order 1955 would prevail over the generic description against the item No. 2 of Appendix 30. While we do not dispute the principle of interpretation, there is no automatic applicability of the ratio of that decision to the facts of this case which pertain to a different product altogether. We would also like to emphasise here that the validity for additional licence is derived -from 186(8) which on the one hand refers to the generic description contained in Schedule 1 of the Imports (Control) Order 1955 and at the same time specifically excludes from its purview items appearing, interalia, in Appendix 30 of the Policy. In view of this specific exclusion no question of applicability of the principle of "Generalia specialibus non derogant" arises.

13. Finally, we agree with the view that the only licence, the validity of which can be considered by the department is the first one i.e. No.0353038 dated 27-1-1982 standing in the name of M/s Muthuswamy Gounder & Co. against which the letter of credit was opened by the importers on 23-3-1982. Since in the meantime as per para 186(8) of AM-1982 Policy Book there was an amendment vide ITC Public Notice 51/16-10-1981, disallowing items figuring in Appendix 30, the said licence was no longer valid as the firm commitment was made after the amendment of this Policy on 23-3-1982. We agree with the finding of the Addl.

Collector that, in the circumstances, it was not open to the appellants to offer an alternative licence from another Export House as such a licence would not be valid to cover the import of the goods in guestion.

14. In view of our findings, we uphold the order of the Addl. Collector and dismiss this appeal.

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