(1) This Letters Patent Appeal was directed against the judgment of a learned Single Judge of this Court whereby, the petition under Article 226 of the Constitution of India, challenging the demand under section 28 of the Customs Act, 1962, for additional, duty, was dismissed
(2) The petitioner is a Joint Stock Company incorporated under the provisions of Indian Companies Act, 1956, having its registered office in New Delhi. The petitioner is carrying on the business of Litho and Off-set Printing of various types of books and literature, etc. The petitioner for its off-set printing unit imported a scanning unit known as vario chromograph scanner unit from West Germany in pursuance of an import license issued by the Import Control Authority. On arrival the equipment was classified as printing machine component under item No. 72(3) of the Indian Customs Tariff Schedule which attracted Customs t duty on the basis of 40 per cent of the c.i.f. value and the equipment was duly cleared on payment of the requisite duty in June, 1974. On October 29, 1974, an additional demand of Rs. 90,159.20 was raised, by way of additional customs duty on the equipment suo motu review and reclassification. According to the demand notice, it was 'observed' that the chromograph scanner unit is correctly assessable under item No. 77(5) of the Indian Customs Tariff and not under item 72(3) as already assessed. The petitioner filed objections to the demand but the same were turned down after the petitioner being given the opportunity of being heard by the Assistant Collector of Customs on February 6, 1975. The Assistant Collector held that having regard to the mechanical device incorporated in it and its functions the equipment was a photographic instrument within the meaning of item 77(5) of the I.C.T. Schedule. It was further held that the 'equipment could not be described as standard precision process camera and as such it was beyond the scope of Notification No. 23 of 1969 but which exemption had been granted to standard precision process camera.
(3) Dissatisfied with the aforesaid order of the Assistant Collector the petitioner filed an appeal before the Appellate Collector of Customs. It was contended before the Appellate Collector of Customs that the machine imported was not a photographic instrument, apparatus or appliance because it could not be put to any function of photography for the purpose of classification under I.C.T. item No. 77(5) and the machine could be 'classified only as a printing and lithographic material classified under item 77(2) J.C.T. The Appellate Collector of Customs after discussing the arguments advanced by the petitioner and after noticing the note of D.G.T.D. observed :
'From the functions as. described above, it is clear that the instrument does photographic functions. The preparation of colour transparency or preparation of negative and positive even. if for off-set printing cannot be taken to qualify it as a printing machine. In this connection it is observed that the Customs Tariff item 77(5) covers all machines and appliances which employ a photographic principles for the reproduction of copies. There is no doubt that the machine also employs photo electronic principles which is nothing but, photographic principles. The function of preparing colour photo transparencies can only be discharged by a photographic instruments, apparatus or appliances and as such the machine imported by the appellants would fall within the category under Ict 77 (5).'
As regards the petitioner's alternative plea that in any case the machine should be elegible to the concessional rate of assessment admissible to standard precision process cameras, -the Appellate Collector oi Customs observed:
'It is observed that this benefit granted under notification No. 23 Cus/1969 is made specifically applicable to 'standard precision process cameras for preparing process and photo litho blocks and components parts, thereof not capable to being put to any other use.' I find that it cannot be said of vario chromograph that it is only capable of being used in preparing photo litho blocks. It is admitted that vario chromograph is capable of making 4 to 6 items post scanning enlargments from the colour separations. Similarly, colour separations can be enlarged two to three times. The vario chromograph machine is, thereforee, different from that of the process camera and as such the two cannot be equated.'
(4) The appeal of the petitioner was dismissed with the aforesaid observations. Further appeal to the Government of India was also' dismissed by order dated 4-4-1975 with similar observations.
(5) The petitioner challenged the aforesaid orders of the authority by way of petition under Article 226 of the Constitution of India. The main contention before the learned Single Judge was that having regard to the function and the object of the equipment, the use to which it is put and the manner in which ordinarily understood in the printing industry the equipment could not have been legitimately classified as photographic instrument under item 77(5) and could have thereforee been classified either under item 72 ('2) as a printing machine or under item 72(3) as printing machinery components. The learned Single Judge, however, found that the conclusion
'Obviously the equipment in dispute could not be said to be 'a component part' of any of the machineries and equipments listedn 72(2). No doubt it is an additional device which could serve the printing industry but would not nevertheless be treated as component part of any whole. At best it is an independent device that supplements a printing machine in that it is intended to be a completely independent process in aid of printing, ft could not qualify as a printing machine as commonly understood for the trade obviously because it does not printing at all. Being based on photographic principle it is; a photographic instrument or a photographic apparatus and, even though it may be used in aid of printing industry, it does not cease to be a photographic instrument in its nature. An instrument or apparatus which is based on photographic principle does not cease to be photographic instrument if its photographic capability or capacity is not used in photography as an end itself but ill and of a larger process of printing .... .................... The inclusion .of the equipment in dispute, thereforee, under item 77(5) would appear to be wholly justified in spite of the object that may be ultimately sought to be achieved by its employment as an aid to a printing process.'
The alternate submissions of the petitioner with respect , the equipment being treated at par with standard precision process camera was also rejected on the same grounds as were given by the Appellate Collector of Customs. Consequently the writ petition filed by the petitioner was dismissed by ST. order dated July 19, 1976.
(6) In this appeal before us the first contention of Mr. Sen the learned counsel for the petitioner was that the imported equipment should have been classified for the purpose of customs duty on the basis of its function and use and not on the basis of its composition, it was contended that the scanning unit which could be used only in printing industry could only be classified under item 72(3) of the I.C.T. as was originally done. In order to appreciate this argument it would be necessary to reproduce item 72(2) and 72(3) on which reliance was placed by the learned counsel for the petitioner :
'Item No. 72(2) : Printing and Lithographic Material. namely presses, lithographic plates, composing sticks, chases, imposing tables, lithographic stones, stereo blocks, wood blocks, half-tune blocks; electro type blocks, process blocks and highly, polished copper sheets specially prepared for making process blocks, roller moulds, roller frames and stocks, roller composition, lithographic rollers standing screw and hot presses, perforating machines, gold blocking presses, galley presses, proof presses, arming presses, copper plating printing presses, rolling presses, ruling machines, ruling pen making machines, lead cutters, rule cutters, slug cutters, type casting machines, type setting and casting machines, paper in rolls with side perforation to be used after further perforation for type casting, rule bending machines, rule mitreing machines, bronzing machines, sterio-typing apparatus, paper folding machines, paging machines but excluding ink and paper.' . Item No. 72(3) : Component parts of machinery as defined in item Nos. 72, 72(1) and 72(2) and not otherwise specified, namely, such parts only as are essential for the working of the machine or apparatus and have been given for that purpose some special shape or quality which would not be essential for their use for any other purpose but excluding small tools like twist drills and reamers, dies and taps, gear cutters and hacksaw blades : Provided that articles which do not satisfy this condition shall also be deemed to be component parts of the machine to which they belong if they are essential to its operation and are imported with it in such quantities as may appear to the Collector of Customs to be reasonable.'
(7) In order to qualify under item 72(2) the equipment must be printing and lithographic material of various description which have been stated in the said item. The learned counsel for the petitioner was unable to point out any of the machineries which cover the present equipment under item 72(2) and rightly because admittedly the equipment was a new equipment which could not possibly be covered by the said item. Once it goes out of item No. 72(2) it certainly cannot fall under item 72(3) because it cannot be a compocent part of any of the machinery as mentioned in item No. 72(2) which can be said to be essential for the working of the machine or apparatus. The proviso to item 72(3) also is not attracted because admittedly the equipment was not imported along with any machinery as indicated in item 72(2). The learned counsel, however, places reliance on the opinion recorded by an Industrial Advisor, D.G.T.D., Industrial Machinery Division which is annexed to the writ petition. The nature and the function of the equipment as described by the said Industrial Advisor and contained in his letter is :
'Nature and function of the equipment. A vario chromograph comprises a colour scanner which in a layman's language can be described as one parallel lathe with two drums--one drum lakes the coloured transparency and scan each point of light into electrical impulses. Again these electrical impulses' are collected automatically for colour separation In an electronic control box and transferred in the shape of incandescent light in another drum holding a photographic film. In brief, it is essentially a mechanical equipment with electronic sensing system for scanning of colour and their correction for the preparation of negatives and positive for offset printing. It is apparent that it is essentially an item of printing machinery. It, thereforee, follows that the customs duty livable should follow the pattern of duly on printing machinery.'
(8) It is no doubt true that in the aforesaid opinion recorded by the Industrial Advisor, it is mentioned that the equipment is essentially a mechanical equipment with electronic sensing system for scanning of colours and their correction for the preparation of negatives and positive for offset printing but, the further opinion of the Industrial Advisor that it should be classified for the purpose of customs duty on the pattern of duty on printing machineiy is for the Legislature to consider and not for this Court. is fact the Industrial Advisor has recommended to the Government for issuance of Customs Notification bringing down the customs duty of the colour scanner at par with printing machinery. This shows that even the Industrial Advisor is of the same opinion that the equipment does not fall within the existing item No. 72 (.2) or 72(3) of the I.C.T.
(9) The learned counsel for the petitioner has referred to certain literature and passages from Standard Works like Encyclopedia Britania and Glaister's Giossory of the Book: to explain the working and functions of the equipment imported. 'Die said literature and- passages from the Books do support the note of the Industrial Advisor reproduced above and lead to the conclusion that-the equipment is essentially and exclusively used by the printing industry for processing in the same manner as the process camera. But all this does not follow that the equipment is covered by any of the specific items mentioned in 72(2) or can be said to be a component part of any of the equipment mentioned in the said categories so as to qualify under item 72(3) of I.C.T.
(10) The last contention of the learned counsel for the petitioner was that in any event the equipment in question would qualify for the exemption granted to standard precision process cameras in terms of notification No. 21-Customs of March 1, 1970 and notification No. 49-Customs of May 29, 1971. The extract from the Operation Manual of vario Chromograph, the equipment in question, also show that the scanner is a specialised type of process camera for colour scannnig. The scanner has all the ingredients of a process camera and in addition to that it has electronic colour correction device in place of mechanical colour corrections. This gives the scanner some added advantages over the camera through the reflection and transmission principles, though the systems remain the same in both. If the exemption was in respect of 'process camera', probably the petitioners would have had no difficulty in convincing is that he was entitled to the exemption but, according to the notifications the exemption in respect of ''standard precision cameras'. The present equipment was not available in India when the notification regarding exemption was issued and thereforee it can be presumed that the authorities had no occasion to consider the equipment in question while granting exemption to process cameras. As we have found above that the working and the functions of the equipment are similar to that of process camera we would send this-case back to the Appellate Collector of Customs to consider if the equipment can possibly be covered by the notifications granting exemption to standard precision process cameras. It would be open to the Appellate Collector of Customs to consider the entire material that may be placed before him by the parties concerned and then arrive at a proper decision.
(11) For the reasons recorded above, the petition is allowed only to the extent indicated above. In the circumstances of the case the parties are left to .bear their own costs in this appeal.