Tractors Limited, Pratapgarh Vs. Collector of Customs (Appeal), Bombay  INSC 23 (19 January 1989)
S. Rangnathan, S.
1989 AIR 1065 1989 SCR (1) 281 1989 SCC Supl. (1) 667 JT 1989 (1) 102 1989
Tariff Act, 1975: First Schedule ICT No. 87.01 (1) and Customs Notifications
Nos. 200/79 dated 28.9.1979 and 179/80 dated 4.9.1980--Company manufacturing agricultur-
al tractors--Components imported to be used in the manufac- ture thereof--Entitlement
to concessional rate of duty----Validity of.
Notification No. 200/79 dated 28.9.1979 exempts components required for the
manufacture of heavy commercial motor vehicles or of tractors from customs duty
in excess of 25 per cent ad valorem and whole of the additional duty leviable
thereon. Notification No. 179/ 80 dated 4.9.1980 exempts components required
for the purpose of initial setting up or for the assembly or manufacture of
tractors, an article falling under Heading No. 87.01(1) of the First Schedule
of the Act from so much of the customs duty as is in excess of the rate
applicable to the said article when imported complete.
appellant-company imported three consignments of components of agricultural
tractors. The Directorate General of Technical Development issued certificate
in terms of notification No. 179/80 stating that the appellant-company was
holding a valid industrial licence for the manufacture of agricultural tractors
and have an approved manufacturing programme. The appellant cleared the goods
availing itself of the said concession. Having realised later that it was
entitled to the larger concession available under Notifica- tion No. 200 of
1979, it filed three applications in respect of the said consignments claiming
refund to the extent of the difference between the entitlements to concession
under the two notifications. The DGTD issued certificates in terms of
notification No. 200 of 1979 in its favour.
Assistant Collector of Customs rejected assessee's prayer on the ground that it
had failed to produce end-use certificate. Its appeals before the Collector of
Customs (Appeals) failed. The Customs, Excise and Gold (Control) Appellate
Tribunal dismissed the appeal on the ground that the appellant did not produce
the approved manufacturing programme at the time of clearance of the goods as
required under Notification No. 200 of 1979.
these appeals it was contended for the respondents that since the amended
certificates were not produced at the time of clearance but only much later the
assessee was not entitled to the concession under Notification No. 200 of 1979.
1. The assessee is entitled to the concession available under Notification No.
200 of 1979. [287B-C]
The grant of concession depends on production of evidence by the importer to
the Assistant Collector of Customs at the time of clearance of the components
or the goods that they have a programme duly approved by the Minis- try of
Industry and the Industrial Adviser or Additional Industrial Adviser of the
Directorate General of Technical Development of the Ministry of Industry for
the manufacture of such motor vehicles or of tractors and not on the refer- ence
in the certificates to the notifications that can be availed of by the assessee.
the instant case, the assessee had produced unequivocal evidence in the form of
original set of certifi- cates from DGTD at the time of clearance of the goods
of the fact that the appellant held a valid industrial licence for the
manufacture of agricultural tractors and that it also had an approved
manufacturing programme. That was sufficient compliance with the terms of the
notification in question.
omission of the assessee to request the DGTD to refer to the assessee's
entitlement under the 1979 notification or the omission of the DGTD to refer to
the assessee's entitle- ment under the 1979 notification cannot take away the
asses- see's rights. The order of the Tribunal is, therefore, set aside.
APPELLATE JURISDICTION: Civil Appeal Nos. 850852 of 1988.
the Order dated 23.10.87 of the Customs Excise and Gold (Control) Appellate
Tribunal, New Delhi in Appeal No.
and C/3 105 & 3 105 of 87/B-2. Order Nos. 2091 to 2093/87-B.
H.S. Anand and Mrs. M. Karanjawala for the Appellants.
Additional Solicitor General, Ashok K. Shrivastava and P. Parmeswaran for the
The Judgment of the Court was delivered by RANGANATHAN, J. The appellant, M/s
Auto Tractors Limit- ed, is a company manufacturing tractors. For purposes of
manufacture, the company imports certain parts and compo- nents from abroad.
are two notifications on the Government of India granting certain concessions
from the levy of customs duty which are applicable to such goods as have been
appellant. The first of these, namely, Notification No. 200/79 dated 28.09.1979
(as amended from time to time) exempts components "required for the
manufacture of heavy commercial motor vehicles ...... or of tractors" from
so much of the customs duty as is in excess of 25 per cent ad valorem and the
whole of the additional duty leviable there- on. The grant of the concession
was subject to the fulfill- ment of certain conditions specified in the
second notification was Notification No. 179/80 dated 4.9.1980 (as amended from
time to time). This notification confers an exemption in respect of parts of
articles falling under specific headings in the First Schedule to the Customs
Tariff Act, 1975. These admittedly included parts required for the purposes of
the initial setting up or for the assem- bly or manufacture of
"tractors", this being an article falling under heading No. 87.01(1)
of the First Schedule above referred to. This exemption was in respect of so
much of the customs duty as is in excess of the rate applicable to the said article
(i.e. tractor) when imported complete.
concession was again subject to a certificate and recommendation from certain
specified authorities, one of whom is the Directorate General of Technical
Development (DGTD) The relief available to the assessee under the first
notification of 1979 is, apparently, larger than the one available under the
second notification of 1980.
appellant company imported three consignments. Each of the consignments was
cleared after production of a cer- tificate from the DGTD in the following
that M/s Auto Tractors Ltd., Luc- know are holding a valid Industrial Licence
for the manufacture of agricultural tractors and have an approved manufacturing
further certified that the above compo- nents of agricultural tractors, which
fall under ICT No. 87.01 (1) qualify for conces- sional rate of import duty in
terms of Cus- tom's Notification No. 179/F No. 370/99/79CUS.
dated 4.9.1980." (underlining ours).
Apparently, since the certificates of the DGTD referred only to Notification
No. 179/80, the appellant was granted the concession available under the said
Notification. The appel- lant cleared the goods, availing itself of the said conces-
sion, in March, May and June 1981.
the appellant appears to have realised that it was entitled to the larger
concession available under Notification No. 200 of 1979 and that it had erred
in clearing the goods after payment of duty subject only to the smaller
concession available under Notification No. 179 of 1980. The appellant
therefore filed three refund applica- tions in August, September and October
1981 claiming refund to the extent of Rs. 1,55,342.50, Rs. 1,28,350.05 and
Rs.6,46,415.44, being the difference between the entitle- ments on concession
under the two notifications in question.
also appears that the appellant subsequently applied to the DGTD for an
amendment of the original certificates to make it clear that the goods imported
by the appellant were eligible for the concession under notification No. 200 of
79. The DGTD on such application issued a certificate to the following effect:
that M/s. Auto Tractors Ltd. Pra- tapgarh are holding an Industrial Licence to
manufacture Agricultural Tractors and have an approved manufacturing programme.
It is fur- ther certified that the items listed above are components of agricultural
tractors falling under ITC No. 87.01 (1) and are eligible for concessional rate
of import duty under custom notification No. 200/79 and 52/81 as extended by
Custom's notification No. 81/81 and 82/81 both dated 28.3. 1981.
supersedes the earlier duty concession certificate issued by this office vide Notifi-
cation No. 179/F No. 370/ 99/79-CUS. I dated 4.9.1980 under this office letter No.
DD- II/5(49)/79 Ag dated 16.1.81." These amended certificates were also
produced before the Customs authorities.
prayer for refund was however rejected by the Assistant Collector of Customs on
the ground that the assessee had failed to produce "end-use"
certificates. The assessee's appeals to the Collector of Customs (Appeals) also
failed. There were further appeals to the CUstoms, Excise and Gold (Control)
Appellate Tribunal, which by its order dated 23.10.1987, dismissed the appeals
of 285 the Appellants and hence the present appeals.
Tribunal disposed of the assessee's claim by a short order. It observed that
the Notification No. 200/79 entitled an assessee to the concessions therein
mentioned on the fulfillment of three conditions:
manufacturing programme as duly approved by the Direc- tor General of Technical
Development (D.G.T.D.) should be produced at the time of clearance of the
The list of components and goods should be produced duly certified by the
D.G.T.D.; and (iii) An End-use certificate from the same Directorate to be
produced in clue course in regard to the consumption of goods in the
manufacture of the motor vehicles or tractors, etc.
Tribunal proceeded to observe:
first statutory condition of the notifi- cation that the manufacturing programme
of the appellants as approved by the D.G.T.D. should have been produced before
the Assistant Col- lector at the time of clearance of the goods was not
fulfilled by the appellants. As a matter of fact at the time of clearance of
the goods there was no claim even by the appel- lants under Notification Nos.
200 and 201/79Cus. Their claim at that time was under a different notification
No. 179/80-Cus. Which contained no requirement to produce an ap- proved
manufacturing programme. Since the statutory wording of the notification made
it imperative for the appellants that the ap- proved manufacturing programme
should have been produced at the time of clearance and since this condition was
not fulfilled, the entitlement of the appellants to the exemption is not
approved manufacturing programme was available all along with the appellants
yet they did not produce it at the time of clearance before the Assistant Collec-
tor." (underlining ours) We have heard the learned counsel for the
appellant as well as learned Additional Solicitor General and we are of the
opinion that 286 the Tribunal has erred in denying the appellant the benefit of
the Notification No. 200 of 1979. This notification made the availability of
the concession thereunder subject to three conditions of which one alone is
relevant for our purposes. The Tribunal thought that this condition was that
the approved manufacturing programme should have been pro- duced at the time of
clearance and it has denied the asses- see the benefit of the concession, even
though satisfied that the approved manufacturing programme was all along
available with the assessee, because such programme was not produced at the
time of the clearance. The Tribunal has committed an error in its reading of
the relevant condition of the notification. The condition is not that the manufac-
turing programme should be produced but that "the importer should produce
evidence to the Assistant Collector of Cus- toms at the time of clearance of
the components or the goods that they have a programme duly approved by the
Ministry of Industry and the Industrial Adviser or Additional Industrial
Adviser of the Directorate General of Technical Development of the Ministry of
Industry for the manufacture of such motor vehicles ..... or of tractors".
In other words, the importer had only to satisfy the customs authorities that
it had an approved industrial programme for the manufacture of tractors by
production of a certificate from the DGTD. It is indeed common ground before us
that the second set of cer- tificates issued by the DGTD constitutes sufficient
evidence that would entitle the appellant to the concession under Notification
No. 20)/1979. But the argument is that the amended certificates were produced
not at the time of the clearance of the goods but only much later and that
there- fore the appellant is not entitled to the concession under the said
notification. There is a fallacy in this approach, for, even ignoring the
subsequent amendment of the certifi- cates, we are of the opinion that the
production of the original set of certificates at the time of clearance of the
goods was sufficient compliance with the terms of the noti- fication in
question. We have extracted the terms of this certificate earlier. It is an
unequivocal certificate by the DGTD that the appellant holds a valid industrial
licence for the manufacture of agricultural tractors and that it also has an
approved manufacturing programme. That is all the second set also says. There
is therefore no doubt that the assessee had produced evidence, in the form of
the said certificate, of the fact that the appellant had an approved industrial
programme. This was the only requirement of the notification and this
requirement has, in our opinion, been complied with. The further words in the
first set of certif- icates that the assessee was eligible for the concession
under 1980 notification were mere surplusage. The omission of the assessee to
request the DGTD to refer to the asses- see's entitlement under the 287 1979
notification or the omission of the DGTD to refer to the assessee's entitlement
under the 1979 notification cannot take away the assessee's rights. The grant
of conces- sion depends on a certificate that the assessee had an approved
manufacturing programme--which is there--and not the reference therein to the
notifications that can be availed of by the assessee. We are therefore of the
opinion that the order of the Tribunal should be set aside and that the assessee
should be held entitled, in respect of the three consignments referred to
earlier, to the concession available under Notification No. 200 of 79. We
direct ac- cordingly. The appeals are allowed but having regard to the
circumstances we make no order as to costs.