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Madura Coats Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1986)(6)LC600Tri(Delhi)
AppellantMadura Coats
RespondentCollector of Customs
Excerpt:
.....us.3. shri habibullah badsha, learned counsel for appellants, submitted before us that the belting ducks manufactured by the appellants were an essential component in the manufacture of conveyor and transmission belts. the belting ducks are supplied to belting manufacturers like dunlop who rubberise the belting ducks and manufacture belting. the belting ducks had no use other than in the manufacture of beltings. the appellants would be able to establish the use of the imported goods in the manufacture of belting ducks and ultimately of beltings. the notification did not require that beltings should be manufactured by the importer of nylon filament yarn himself. all that is required is that the imported yarn must be used in the manufacture of belting for machinery.4. smt. dolly saxena,.....
Judgment:
1. This is an appeal arising out of and directed against Order-in-Appeal No. C3/3251/81 dated 28-2-1983 passed by the Collector of Customs (Appeals), Madras. By this order the appeal filed before her against the Assistant Collector's Order No. S59/47/81-Gr. I(PX) dated 28-9-1981 was rejected.

2. The facts of the case, briefly stated, are that the M/s. Madura Courts Ltd. Bangalore, (the appellants before us) imported at the port of Madras two consignments of Nylon Filament Yarn from the U.S.A. and filed two bills of entry for clearance of the goods. It was represented by the appellants that the goods would be used in the manufacture of belting ducks which would be ultimately used in the manufacture of belting for machinery. The appellants, therefore, claimed the benefit of customs notification No. 389/76-Cus., dated 2-8-1976. The Assistant Collector, however, denied the benefit of the notification on the ground that the appellants were licensed to manufacture inter alia belting ducks but not finished belting for machinery. The goods were accordingly assessed to the full rate of basic duty of customs Without applying the concessional rate under heading No. 51.01/03 of the First Schedule to the Customs Tariff Act, 1975. In appeal, the Collector of Custom's (Appeals) recorded the finding that since the appellants were manu-facturihg only belting ducks, an intermediate product, and no direct manufacture of belting for machinery was involved, the provisions of the aforesaid notification would not apply. She further found that the imported yarn was also used for manufacture of tyre cord. On this basis, the appeal was rejected and it is against this order of rejection that the appellants are presently before us.

3. Shri Habibullah Badsha, learned Counsel for appellants, submitted before us that the belting ducks manufactured by the appellants were an essential component in the manufacture of conveyor and transmission belts. The belting ducks are supplied to belting manufacturers like Dunlop who rubberise the belting ducks and manufacture belting. The belting ducks had no use other than in the manufacture of beltings. The appellants would be able to establish the use of the imported goods in the manufacture of belting ducks and ultimately of beltings. The notification did not require that beltings should be manufactured by the importer of Nylon filament yarn himself. All that is required is that the imported yarn must be used in the manufacture of belting for machinery.

4. Smt. Dolly Saxena, the learned Senior Departmental Representative, defended the orders of the lower authorities for the reasons stated therein. She further submitted that the appellants had not produced end-use certificates.

5. We have considered the submissions of both sides. Customs Notification No. 389, dated 2-8-1976 exempts yarn of man-made fibres, falling under heading Nos. 51.01/03 and 56.05/06 of the First Schedule to the Customs Tariff Act (there is no dispute about the classification of the subject imported yarn)j when imported into India for the manufacture of belting for machinery from basic customs duty in excess of 40% ad valorem. The exemption is subject to execution of a bond binding the importer to pay the differential duty on such quantity of yarn as is hot proved to the satisfaction of the Assistant Collector of Customs, to have been used for the aforesaid purpose. It is clear that the notification, on the face of it, does not require that the importer of yarn must himself manufacture belting using such yarn. 'What is required is that the imported yarn must be Used in the manu-facture of belting for machinery. The contention of the appellants that belting ducks are an essential component for the manufacture Of belting for machinery has not been controverted before us. Therefore, what remains to be done by the appellants is to satisfy the Assistant Collector of Customs that the imported yarn has been ultimately accounted for as having been used in the manufacture of belting for machinery. They will naturally have to pay the differential duty on such quantity of imported yarn as is not accounted for in the above manner.

6. Another way in which the problem can be looked at is to consider a situation where the importer himself under his own roof manufactures first the belting ducks and then the belting. Since it is an admitted position that belting ducks constitute an essential intermediate product in the manufacture of belting from yarn, the benefit of the notification, in our opinion, would be available to such on importer.

If this be so, it does not stand to reason why, if the belting is manufactured by another manufacturer, and so long as such use is established, the benefit of the notification should not be available to the importer of the yarn who has also manufactured the belting ducks.

7. We allow the appeal with consequential relief. The relief will, however, be limited to that quantity of the imported Nylon filament yarn which the appellants establish to the satisfaction of the Assistant Collector as having been used in the manufacture of belting for machinery.

8. When this decision was announced in the open Court, the Counsel for the appellants did not pursue another line of argument which he had earlier canvassed that belting duck would be covered by the expression "belting". As such we are not expressing any view on this aspect of the matter.


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