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Century Spinning and Manufacturing Company Limited Vs. Union of India - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtMumbai High Court
Decided On
Case NumberMiscellaneous Petition No. 1288
Judge
Reported in1981(8)ELT676(Bom)
ActsCentral Excises and Salt Act, 1944
AppellantCentury Spinning and Manufacturing Company Limited
RespondentUnion of India
Appellant AdvocateF.H.J. Taleyarkhan, ;K.H. Bhabha, ;A. Hidaytullah and ;C.M. Mehta, Advs.
Respondent AdvocateR.L. Dalal, ;V.C. Kotwal and ;S. G. Shah Advs.
Excerpt:
.....as required and after requisite certificates was issued by director petitioner exported worn out spinneret's - worn out spinneret's were sent out for remelting, refining and remarking - certificate unmistakably stages such repairs cannot be carried out - assistant collector by pass certificate as authority who issued certificate issued by proper authority - applications submitted by petitioners for permission to export worn out spinneret's specifically gives specification and weights of components which are sent out for repairs and invoices - spinneret's imported by petitioners are identical one which were exported for purpose of repairs - held, petitioners entitled to advantage of notification. - section 3: [s.b. mhase, d.s. bhosale & a.s. oka, jj] offences of atrocities ..........outside the country for being repaired. the petitioners have secured licences for the export of worn out spinneret's and the licences for their re-import from the licencing authorities from time to time. 2. the petitioners are required to make applications in the prescribed form to the director general of technical development, ministry of industrial development and company affairs stating the necessary particulars for the export of the worn out spinneret's for the purpose of repairs. the petitioners have submitted such applications from the year 1968 till the year 1970 and the applications clearly stated that the old unserviceable worn out spinneret's were being sent outside the country for re-melting, refining and re-marking of new spinneret's. the petitioners are required to give.....
Judgment:

1. The petitioners are the proprietors of Messrs Century Rayon, a registered Company, carrying on the business of manufacture of cloth and rayon yarn. During the spinning of Viscos yarn, the petitioners use special spinneret's which are components of rayon spinning machines. The spinneret's are small articles made of gold and platinum alloy and are very costly items of the machinery. It is not possible to repair the spinneret's in the country after they lose their shape and they are required to be sent outside the country for being repaired. The petitioners have secured licences for the export of worn out spinneret's and the licences for their re-import from the Licencing authorities from time to time.

2. The petitioners are required to make applications in the prescribed form to the Director General of Technical Development, Ministry of Industrial Development and Company Affairs stating the necessary particulars for the export of the worn out spinneret's for the purpose of repairs. The petitioners have submitted such applications from the year 1968 till the year 1970 and the applications clearly stated that the old unserviceable worn out spinneret's were being sent outside the country for re-melting, refining and re-marking of new spinneret's. The petitioners are required to give the detailed particulars of the components which are sent out for being repaired. After the application is submitted by the petitioners, the Director General of Technical Development issues a certificate certifying that the components of the machine cannot be repaired in the country and on such certificate being issued, the petitioners are entitled to export the worn out spinneret's for being repaired to the foreign country. Accordingly, the petitioners filed necessary applications and obtained the certificate of the Director General of Technical Development and thereafter exported the worn out spinneret's to Germany for being repaired.

3. The petitioners also secured a licence as per the Import Trade Control from the C.C. of Imports and Exports for importing the spinneret's modifications after repairs under Tariff Item No. 65(5)iii/v-I/44. The worn out spinneret's which were sent out for repairs were imported and the Bills of Entries were lodged on August 31, 1968, July 19, 1969, and March 20, 1970. It is not in dispute that the spinneret's which were imported under these Bills of Entries were of the same specifications and of the weight as those which were sent out for repairs.

4. The Government of India published a notification No. 58 of 1961 in the Official Gazette under Section 23 of the Sea Customs Act, 1878 on May 27, 1961 providing that articles, when re-imported into India after having been exported for repairs, are exempt from the payment of so much of the Customs duty leviable thereon as is in excess of the duty which would be leviable if the value of such re-imported goods were made up of the fair cost of repairs carried out, insurance and freight charges both ways. This notification further provides that the Importer must furnish a certificate from the Development Wing of the Ministry of Commerce and Industry in respect of any other article to the effect that the repairs to be done to the goods in respect of which exemption can be claimed are such which cannot be carried out within India. The notification further provides that the Importer would be entitled to an advantage of the notification provided the Customs Collector is satisfied of the identity of the goods and certain other conditions which are not relevant for the present petition.

5. After the goods were imported, the petitioners sought exemption under this notification but the Assistant Collector of Customs turned down the claim of the petitioners on the ground that the identity of the imported spinneret's could not be established with those exported for repairs and, therefore, the petitioners were not eligible for advantage of the notification. The order passed by the Assistant Collector was challenged in appeal but the Appellate Collector of Customs dismissed the appeal holding that the spinnerettes sent out for repairs were imported and are re-manufactured and in the process the identity of the goods has been lost. The petitioners carried revision before the Government but by an order dated February 12, 1973, the same came to be dismissed with a cryptic order that the worn out spinneret's exported by the party are remelted and the precious metal of the spinneret's is recovered and this amounts to a change of identity of the goods and the notification No. 58 of 1961 is not applicable to such import. The revisional order also states that earlier in similar situations, Government had allowed the revision applications in certain cases but that was on an erroneous view of law. The petitioners have filed the present proceedings to challenge the legality and validity of the orders passed by the authorities below refusing to give advantage of the notification to the petitioners.

6. Mr. Bhabha, the learned counsel appearing in support of the petition rightly contended that the entire action of three authorities below is illegal and cannot be sustained. The learned counsel urged that the petitioners had submitted the application to the Director General of Technical Development as required and after the requisite certificate was issued by the said Director, the petitioner exported the worn out spinneret's. The learned counsel further pointed out that in the application submitted to the Director General, it was specifically mentioned that the worn out spinneret's are sent out for remelting, refining and remarking and the certificate unmistakably stages such repair cannot be carried out in the country. Mr. Bhabha then pointed out that in the Import Licence granted to the petitioners, it is specifically mentioned that the petitioners are entitled to import the repaired spinneret's and the invoices of the German firm clearly set out that the specification and the weight of the imported spinneret's was identical to the one which was sent out of the country for being repaired. Mr. Bhabha rightly contended that it was an error on the part of the Customs authorities to hold that the identity of the goods is changed merely because the material of the worn out spinneret's was melted and the new spinneret's were manufactured. I find considerable substance in the argument of the learned counsel.

7. On behalf of the respondents. Mr. M. S. Rajappa, Assistant Collector of Customs, Bombay has filed a return and it is claimed that these spinneret's are not capable of being repaired at all. The Assistant Collector further states in his return that the repairs of the spinneret's is not possible either in this country or in the foreign countries and the spinneret's imported by the petitioners are really the new spinneret's and are not entitled to an exemption under Notification No. 58 of 1961.

8. In my judgment, the Assistant Collector is clearly in error in assuming that the spinneret's cannot be repaired at all. The Assistant Collector has by-passed the certificate issued by the Director General of Technical Development by merely observing that it would not lend any support to the claim of the petitioners. The Assistant Collectors should have been more careful before by-passing the certificate as the authority who has issued the certificate is obviously the proper authority to determine whether the article which is to be exported and to be re-imported thereafter can be repaired in this country or not. The assumption of the Assistant Collector that the spinneret's cannot be repaired is wholly unwarranted by the facts and circumstances of this case.

9. There is one more aspect in this connection which must be noticed. The application submitted by the petitioners for permission to export the worn out spinneret's specifically gives the specification and weight of the components which are sent out for repairs and the invoices, a specimen of which is produced by the petitioners on record, indicate that the goods imported are of identical weight and exact description. Merely because the worn out spinneret's are melted for the purpose of repair, it cannot be concluded that the said spinneret's have lost their identity.

10. Mr. Kotval, the learned counsel for the respondents, faintly contended that once the work of repairing involves the alloying, it must be held that it is a new spinnerette and not the repaired spinnerette which the petitioners have imported back to this country. There is no merit in this contention. The facts and circumstances as pointed out hereinabove leave no manner of doubt that the spinneret's imported by the petitioners under the Import Licence are the identical one which were exported for the purpose of repairs. The authorities below have clearly taken a perverse view of the facts and circumstances of the case and their orders cannot be sustained. The petitioners are entitled to the advantage of notification No. 58 of 1961 and denial of the same is entirely illegal and unjust.

11. In the result, the petition succeeds and the rule is made absolute in terms of prayers (a) and (b) of paragraph 19 of the petition. The respondents shall pay the costs of the petition. At this stage, Mr. Kotval requests that the writ should be held back for a period of 4 weeks to enable the department to file an appeal before the Division Bench. The prayer is rejected.


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