V. Ramaswami, J.
1. This writ petition coming on for hearing on Thursday, the 28th day of February, 1980 and on this day upon perusing the petition and the affidavit filed in support thereof the order of the High Court, dated 28.10.1977 and made herein, and the counter affidavit filed herein and the records relating to the order No. 3228 of 1975, dated 23.9.1975, of the first respondent comprised in the return of the respondents herein to the writ made by the High Court, and upon hearing the arguments of Mr. T. Dulip Singh for M/s. King and Partridge, Advocates for the petitioner, and of Mr. U.N.R. Rao, Senior Central Government Standing counsel on behalf of the respondents, the court made the following order:
The petitioner is a manufacturer of synthetic Diamond Tools and Wheels. The petitioner's factory was originally at Madras and now at Coonoor. They imported a consignment of Synthetic Diamond Grits bearing parcel No. 12052/72 from the United Kingdom of the value of 2653-21 under Import Licence No. P/A/1335278/C/XX/42/M/33-34. It was cleared by the petitioner on payment of full duty on 25.5.1972. They use the Synthetic Diamond grits for the manufacture of grinding wheels. The synthetic diamond grits are subject to customs duty under the Indian Tariff Act (item 87). For this item the standard rate of duty payable was 60 per cent ad valorem. It appears there was a reduction of this rate later, but that is not material for our purpose. Under Notification No. 2 dated 1.1.1969 issued by the Government of India, Ministry of Finance, Synthetic abrasive grains or powder imported for the manufacture of grinding wheels or coated abrasives are exempt from the payment of customs duty leviable thereon which is specified in the Indian Tariff Act, as is in excess of 27 per cent ad valorem, 'provided that the importer, by the execution of a bond in such form and in such sum, as may be prescribed by the Assistant Collector of Customs, binds himself to pay on demand in respect of such quantity of the Synthetic abrasive grams or powder as is not proved, to the satisfaction of the Assistant Collector of Customs to have been used for the aforesaid purpose, an amount equal to the difference between the duty leviable on such quantity but for the exemption contained herein and that already paid at the time of importation'. But the petitioner did not follow this procedure of executing a bond at the time of import, but it paid the entire duty as per the Indian Tariff Act and after it had used the Synthetic Grits for the manufacture of grinding wheels, claimed the refund of excess duty paid on the basis of the notification. In respect of consignment No. 12052/72 from the United Kingdom also after it was used for the manufacture of grinding wheels, the petitioner applied to the Assistant Collector of Customs for refund of the excess amount of duty paid on the basis of its actual user for the manufacture of grinding wheels. But by order dated 19.2.1973 the Assistant Collector rejected this claim as unsubstantiated on the ground that despite sufficient time having been allowed, the petitioner had not produced the necessary documents satisfying the conditions relating to user of the imported material. The petitioner preferred an appeal to the Appellate Collector of Customs and that was also dismissed on 28.3.1974 on the ground that the petitioner had not produced the 'End Use Certificate' for the levy of concessional rate and refund. The petitioner filed a revision petition before the Government of India, Ministry of Finance. By the time the revision petition was filed, the petitioner was able to secure the 'End Use Certificate' from the Director of Industries and Commerce, Madras and it produced the same before the Government of India. But, the Government of India rejected the revision petition on entirely different grounds from that on which they were dismissed by the Assistant Collector and the Appellate Collector of Customs. The grounds mentioned by the Government of India in the impugned order were that the petitioner did not execute the bond at the time of importation as required in the terms of the proviso to the Notification under which they are claiming re-assessment of the impugned goods. Secondly, the petitioner had not produced any certificate from the manufacturers regarding the nature of the goods whether they are synthetic or natural. Thirdly, the consumption certificate now produced by the petitioner did not cover the entire quantity and it has been produced nearly two years after the importation of the goods and the delay cannot be condoned.
2. As already stated, none of these grounds was mentioned by the Assistant Collector when he dismissed the refund application. So far as the certificate from the manufacturers regarding the nature of the goods, whether they are synthetic or natural is concerned, it is seen from the counter affidavit that it is now accepted that the parcel contained Synthetic Diamond Grits and that therefore that ground is not available for rejecting the claim. So far as the delay in producing the 'End Use Certificate' is concerned, it is stated in the affidavit filed in support of the petition that the consignment was cleared on payment of full duty on 25.5.1972. There was some labour trouble and intermittent lockouts or closures from November 1971. On 15.6.1972 the company was again closed and it was later shifted to Coonoor and reopened only in October 1972. During that period, the 'End Use Certificate' was prepared and sent to the Assistant Director of Industries and Commerce, Coimba-tore, for his signature as required, but that officer delayed it for more than one year. Even after he forwarded the same to the Director of Industries and Commerce, Madras, the Director has delayed it for a period of six months. But the Assistant Collector of Customs as also the Appellate Collector of Customs, would not wait for the production of that certificate. That was the reason for the delay in producing the certificate. These facts are not denied in the counter-affidavit filed in this case. It may be seen from the facts of the case that the petitioner was not guilty of any laches, but it is the Assistant Director of Industries and Commerce, Coimbatore and the Director of Industries and Commerce, Madras, that have delayed the issue of 'End Use Certificate'. The petitioner did not wait for the 'End Use Certificate' and promptly applied for refund of the duty even on 14.11.1972, which was received by the Assistant Collector of Customs on 18.11.1972, Even when the appeal was pending the petitioner informed the Appellate Collector of Customs that though 'the 'End Use Certificate' was scrutinised by the Assistant Director of Industries and Commerce, Coimbatore, about a year ago and they confirm having forwarded them to the Deputy Director of Industries and Commerce (Mechanical) for his counter-signature, on checking up with the Deputy Director of Industries and Commerce, we understand that they have not received these certificates at all. We have taken up this matter with the Assistant Director of Industries and Commerce, Coimbatore and we shall be pleased if you can bear with us for some more time.' I am therefore satisfied that the delay, if any, in producing the 'End Use Certificate' was bona fide and was beyond the control of the petitioner.
3. Further, the right to obtain the relief of lower rate of customs tariff arises to the petitioner by use of the Synthetic Diamond Grits in the manufacture of grinding wheels and the production of the 'End Use Certificate' is only an evidence proving such user of the material for the manufacture of grinding wheels. The production of the certificate itself does not create the right, but the right to refund arises by reason of its user in the manufacture. In those circumstances, even if the evidence is produced in the appellate and revisional stages, it should have been accepted by the revisional or appellate authorities. This is something similar to the production of 'C forms in sales-tax matters in order to be eligible for a dealer to pay concessional rate of sales-tax. This court has been taking a consistent view that though normally a dealer is expected to produce the 'C form at the time of assessment, even if it is produced in the appellate or revisional stages or even when a further revision in this Court is pending, that will have to be taken into account and the relief granted. In the circumstances, therefore, the non-production of 'End Use Certificate' even at the time when the application for refund was made before the Assistant Collector of Customs does not dis-entitle the petitioner from claiming the benefits of the exemption mentioned in the notification.
4. The other ground on which the Government of India had dismissed the revision petition was, as already stated, on the ground that the petitioner did not execute a bond at the time of importation. In so far as this ground is concerned, the learned Counsel for the petitioner contended that the need for executing a bond is to see that the importer is not given the benefit of a concessional rate, without he actually utilising the same for the manufacture of grinding wheels and in order to get the concessional rate even at the time of import, If the importer chooses to pay the entire duty and later produce the evidence of its user in the manufacture, then there is no need to follow the procedure of executing the bond. 1 think, the learned Counsel for the petitioner is well founded in this contention. The substance of the notification is that if an imported material is intended for use in the manufacture of some other product, then concessional rate of duty should be available. So construed, if the petitioner had paid the full amount, there is no duty on its part to execute a bond and if it wants to claim the concessional rate it is enough if it produces evidence at the time of claiming refund of the excess duty paid on the ground that the raw material which it had imported had been used in the manufacture of the products mentioned in the notification. In the circumstances, therefore, the refund application could not be rejected on the ground that the petitioner had not executed a bond at the time of import.
5. It was then contended by the learned Counsel for the respondents that the petitioner had not produced the 'End Use Certificate' in respect of the entire quantity of the Synthetic Grits imported and that the certificate originally produced at the time of revision covered only a portion of the quantity. The learned Counsel for the petitioner stated that the petitioner has now got the certificate for the entire quantity. Learned Counsel for the petitioner also contented that even if the 'End Use Certificate' did not cover the entire quantity he should have been given the refund in respect of that portion of the quantity imported which was shown as having been used in the i manufacture of grinding wheels. The first respondent had not considered this question. Under the notification, if the procedure of executing a bond had been followed, then the importer would have been liable to pay the difference between the duty leviable on such quantity of Synthetic Grits as is not proved to the satisfaction of the Assistant Collector of Customs to have been used in the manufacture of grinding wheels. In other words, even if the bond covered a larger quantity of imported material, only with respect to that portion which has not been proved to have been used in the manufacture, the importer will be liable to pay the duty. Therefore, the petitioner is entitled to claim that portion of customs duty, which was paid on the Synthetic Grits, which are now proved to have been used in the manufacture by the production of the 'End Use Certificate'. Accordingly, the first respondent will now have to consider the quantity that is covered by the 'End Use Certificate' produced by the petitioner and the duty in respect of which it would be eligible for the concessional rate and refund.
6. For this purpose alone the matter is remitted to the first respondent. The petitioner will produce whatever material it has, before the Government of India, in order to prove its claim for refund. The writ petition is accordingly allowed and the impugned order of the first respondent is set aside and the matter is remitted to the first respondent for reconsideration in the light of the observations made in this order. No costs.