Sharp
Business Machines Pvt. Ltd Bangalore Vs.
Collector of Customs, Bangalore [1990] INSC 254 (24 August 1990)
Kasliwal, N.M. (J) Kasliwal, N.M. (J) Agrawal, S.C. (J)
CITATION:
1990 SCR Supl. (1) 28 1991 SCC (1) 154 JT 1990 (4) 74 1990 SCALE (2)435
ACT:
Customs
Act, 1962: Ss. 14(1), 111(d), 111(m), 112 & 130(e)--Import of copiers in
SKD/CKD form--Confiscation of for misdescription and misdeclaration of
value--Validity of Personal penalties-Justification for.
HEAD NOTE:
Section
14(1) of the Customs Act, 1962 provides that where a duty of customs is
chargeable on any goods by refer- ence to their value, the value of such goods
shall be deemed to be the price at which such or like goods are ordinarily sold
or offered for sale. for delivery at the time and place of importation. in the
course of international trade.
The
appellant-company, a small scale manufacturer of plain paper copiers. had
submitted. alongwith their applica- tion for approval of the phased
manufacturing programme, the quotations received by them from their foreign
collaborators based in Hongkong in respect of the various components and
obtained a licenee in this regard for Rs.4,94,500. Subse- quently, they
imported three consignments of components and consumables in SKD/CKD form from
suppliers at Hongkong and another consignment from Singapore. The total value declared under the
four bills of entry was Rs.99,612.
The
Collector of Customs found that the invoices submit- ted by the company were
undervalued and determined the price of goods at Rs.7,15,485 with reference to
the quotations, for the purposes of s. 14(1) of the Act. He thus held that
there was a misdeclaration of value to the tune of Rs.6,15,873, that the duty
payable thereon would be Rs.10,96,228.20 and that the entire goods were liable
to confiscation under s. 111(m) of the Act. He also held that the goods
imported were fully finished copiers in SKD/CKI) form and as such there was a misdeclaration
that the import- ed goods were only parts of the copiers, that description of
most of the items in the invoices had been deliberately manipulated to suit the
description in the licence, that fully assembled copiers were not permissible
to be imported and this was a clear violation of the Act and the terms of the licence.
In the alternative he held that even if all the parts contained in SKD/CKD
packs were 29 viewed individually, none of the items was covered by the licence.
He further held that the value of the parts import- ed for the purposes of s.
14(1) of the Act would be Rs.5,63,332, whereas the importers were permitted to
import goods worth Rs.4,94,500, that there was thus an excess of Rs.68,832 and
as such the goods were liable to confiscation under s. 111(d) of the Act.
Consequently, he directed con- fiscation of the entire goods with an option to
the company to pay Rs.3 lakhs in lieu thereof and also Rs.2 lakhs in personal
penalties. The Customs, Excise and Gold (Control) Appellate Tribunal dismissed
their appeals.
In
these appeals under section 130(e) of the Act, it was contended for the
appellants that the quotations had indi- cated prices at Hongkong and not the
place of importation, that at the time of submitting the application for grant
of licence the prices were quoted for fixing the upper limit of the value of
the licence, that when the actual purchase transactions were entered into the
company negotiated for the price and having regard to the quantum of purchase
and the prospects of future sales the company was given 25 per cent discount by
the suppliers, and that in the absence of any other material on record the
invoice price alone could form the basis of valuation of the imported goods.
For the respondents, it was contended that the prices quoted by the
collaborators were based on the prices given by the manufac- turers. and there
was no question of supplying the compo- nents on a lesser price than given by
the manufacturers themselves, that the goods imported were not components of
plain paper copiers as declared, that the cartons in fact comprised of all the
parts required for full and complete assembly of 14 copiers, that the company
in importing them in the guise of separate components and accessories had not
only violated the terms and conditions of the licence but also committed a
complete fraud, that in the circumstances the adjudicating authority was fully
justified in placing reliance on the prices mentioned in the quotations.
Dismissing
the appeals under s. 130(e) of the Act, the Court,
HELD:
1.1 According to S. 14(1) of the Customs Act, 1962 for purposes of assessment
the value of the imported goods is to be deemed to be the price at which such
or like goods are ordinarily sold, or offered for sale, for delivery at the
time and place of importation, in the course of interna- tional trade, where
the seller and the buyer have no inter- est in the business of each other and
the price is the sole consideration for the sale or offer for sale. [36G-H]
1.2 In
the instant case the appellant-company itself had produced 30 a copy of the
quotations received by them from their collab- orators at Hongkong in respect
of the copiers and other items imported, alongwith their application for
approval of their phased manufacturing programme. They, therefore. could not
dispute the correctness of the prices mentioned in the said quotations. Not
only that, they have also failed to produce any other material on record to
show that the value mentioned in the invoices was the correct market value of
the goods imported at the relevant time. The adjudicating authority in these
circumstances was perfectly justified in taking the prices mentioned in the
quotations as a basis for determining the correct value of the imported goods.
[37A-C]
2.1
The goods covered by the three bills of entry dated 3rd February, 1987 had been shipped from Hongkong on the same day i.e. on 21st January, 1987. The entire goods had arrived on
the same day and by the same flight on 30th January, 1987. These goods had been supplied by
the same supplier. They comprised of ten numbers copiers in SKD/CKD condition,
accessories, spares, consumables and excess items. The goods covered by the 4th
bill of entry were four numbers copiers in SKD/CKD condition and consumables.
If assembled together these would constitute full and complete copiers. The licenee
produced was valid for certain compo- nents and was not valid for fully
assembled copiers. The appellant-company was thus doing indirectly what they
were not permitted to do directly under the licence. [37H; 38A-B] Girdbari Lal Bansi
Dhar v. Union of India, [1964] 7 SCR 62. referred to. Union of India v. Tarachand
Gupta & Bros., AIR 1971 SC 1558. distinguished.
2.2
The intention and purpose of the import policy was to give incentive and
encouragement to the new entrepreneurs establishing small scale industries and
in the first phase to import 62% of the components of the copiers and the
balance of 38% was to be manufactured by them indigenously.
This
percentage of 62% was to be reduced in the subsequent years. The import policy
was not meant for such entrepre- neurs who instead of importing 62% of the
components, im- ported 100% of the components of a fully finished and com- plete
goods manufactured by a foreign country. Fully fin- ished plain paper copiers
were the end product of the im- porters and hence could not be imported by
them. The device a, looted by the company in the instant case was thus a
complete fraud on the import policy itself. [37D-F] 31
2.3
The order confiscating the goods and imposing fine was, therefore, rightly
made. [43A]
CIVIL
APPELLATE JURISDICTION: Civil Appeal Nos. 2403-05 of 1989 From Orders Nos. 568
to 570/88-A dated 31.10.1988 of the Customs Excise and Gold (Control) Appellate
Tribunal, New Delhi in Appeal No. C/A. No. 808 to 810 of 1987-A and C/Misc. No.
390 of 1987-A. S.K. Dholakia and S.K. Kulkarni for the Appellant.
Kapil Sibal,
Additional Solicitor General, P. Parmeswa- ran and Mrs. R. Rangaswamy for the
Respondent.
The
Judgment of the Court was delivered by KASLIWAL, J. All these appeals under
Sec. 130(e) of the Customs Act, 1962 (hereinafter referred to as the Act) are
directed against the common order made by the Customs, Excise and Gold
(Control) Appellate Tribunal, New Delhi
dated 31.10.88 in C.A. Nos. 808 to 8 10/87-A.
Brief
facts of the case are that M/s. Sharp Business Machines (Pvt.) Ltd., Bangalore (hereinafter referred to as the
company) is a small scale manufacturing unit duly regis- tered as such since
1984. The company had started the phased manufacture of plain paper copiers and
obtained a licence in this regard dated 25.11.86 for Rs.4,94,500 from the licens-
ing authority. The company imported components and consuma- bles in SKD/CKD for
plain paper copiers. Three consignments were imported from M/s. Paralax
Industrial Corp., Hongkong under airways bill numbers 098, 4960, 3120; 098,
4960, 3116; and 098, 4960, 3105 all dated 21.1.87. The goods were re- ceived at
the air cargo complex, Bangalore. The company sought the clearance
of the imported goods under bills of entry Nos. 2044, 2045 and 2046 all dated
3.2.87. Similarly, the goods were also imported from M/s. Alpha Papyrus Trading
Co. Pvt. Ltd., Singapore under airway bill No. 098 4925 4914 dated 19.2.87. the
clearance for this consignment was sought under bill of entry No. 4993 dated
11.3.87. The company had declared the value of each of the consignments at
Rs.32,182 Rs.43.359), Rs.5,412 and Rs.18,659 respectively in respect of the
above mentioned bills of entry Nos. 2044, 2045. 2046 and 4993. The total value
declared was Rs.99,612 under all the four bills.
32
Proceedings were held before the Appraiser of Customs air cargo complex
Bangalore for verification of the goods and their valuation etc. and the
statements of the company's Managing Director Sh. Sadanand were also recorded
on 11.2.87.10.3.87 and 18.3.87 under Sec. 108 of the Act. The Collector of
Customs issued a notice to the company under Sec. 124 of the Act on 4.3.87
relating to the first consign- ment. In the said notice it was stated that 4
items were not covered by the licence and the same were liable for confis- cation.
However. on 30.3.87 the Collector issued another notice in supersession of the
earlier notice dated 4.3.87.
Notice
was also issued on the same date in respect of bill of entry dated 11.3.87. By
the said notices the Collector proposed to enhance the value of the goods
imported and further proposed to confiscate the entire goods imported and also
to levy a fine and other penalties. The company was accused of misdescription
of the goods, misdeclaration of value, suppression of the relationship with the
suppliers, suppression of the place of origin of goods etc.
The
Collector by his order dated 13.4.87 decided all the points against the
company. The Collector held that the quotations given by M/s. Shun Hing
Technology Ltd. along- with the application for approval of their PMP during
July 1986 should be taken as the correct value of the goods imported. and the
plea of the company that it had received a special discount in view of the bulk
purchases and promise of future purchases was not accepted. The Collector in
these circumstances determined the price of the goods at Rs.7,15,485 for the
purposes of Sec. 14(1) of the Act. The Collector thus held that there was a misdeclaration
of the value to the tune of Rs.6,15,873 and the duty payable there- on would be
Rs.10.96,228.20p. The Collector further held that the entire goods imported
were liable to confiscation under Sec. 111(m) of the Act. The Collector also
held that the goods imported were fully finished copiers in SKD/CKD form and as
such there was a misdeclaration that the import- ed goods were only parts of
the copiers. The Collector also held that description of most of the items in
the invoices had been deliberately manipulated to suit the description in the licence.
The goods covered by three bills 2044, 2045 and 2046 were held to be one
consignment and one AWB and thus viewed as one consignment, it amounted to the
import of ten copiers. The goods imported under the 4th bill No. 4993 were four
fully finished copiers in SKD/CKD form. The Collector further held that in
terms of note (i) to Imports Control Order. 1955 and Customs Tarrif Act, 1975,
these goods will be deemed to be filly assembled copiers for the purpose of
valuation and licence. Thus the goods imported as 33 fully assembled copiers
were not permissible to be imported and this was a clear violation of the Act
and the terms of the licence. It was also held in the alternative that even if
all the parts imported were viewed individually, none of the items tally with
the licence. The Collector in this regard gave detailed reasons for arriving at
this conclu- sion. The Collector also held that the value of the parts imported
for the purposes of Sec. 14(1) of the Act would be Rs.5,63,332 whereas the
importers were permitted to import goods worth Rs.4,94,500. There was thus an
excess of Rs.68,832 and as such the goods were liable to confiscation under
Sec. III(d) of the Act. The Collector in these circum- stances passed an order
for confiscation of the entire goods with an option to the company to redeem
them on payment of a fine of Rs.3 lacs. The Collector also imposed a fine of
Rs.1 lac on the company and Rs. 1 lac on Sh. Sadanand the Manag- ing Director
of the Company.
The
company filed two appeals aggrieved against the common order of the Collector relating
to both the notices and a separate third appeal was preferred by the Managing
Director before the Customs, Excise and Gold (Control) Appellate Tribunal. The
Tribunal dismissed all the three appeals by a common order dated 31.10.88. The
company and the Managing Director aggrieved against the order of the Tribunal
have filed the above mentioned three appeals before this Court.
One of
the arguments raised before the Tribunal was that the Collector erred in
treating SKD/CKD parts of the copiers imported, as assembled copiers, for the
purpose of Schedule I to the Imports (Control) Order. 1955 and the case Union
of India v. Tarachand Gupta & Bros., AIR 1971 SC 1558 applied on all force
to the instant case. The Tribunal in this regard set aside the finding recorded
by the Collector and placing reliance on a decision of the Calcutta High Court
in Collector of Customs, Calcutta v. Misuny Electronic Works, [1987] 30 ELT,
345 held that one has to look into the re- spective licence and not to the fact
that if all the con- signments covered by all the bills of entry are assembled
together, there will be complete machines. The Tribunal, however, upheld the
other findings recorded by the Collector to the effect that even if all the
imported parts contained in SKD/CKD packs of copiers were viewed individually
the licence produced was not valid for any of the items import- ed. The.
Tribunal thus held that the Collector was right in holding that the imported
goods were not covered by the valid licence. The Tribunal also held that the
Collector was right in rejecting the price shown by the company in the
invoices. The Tribunal also rejected the contention made by the counsel for the
34 company that the valuation made by the Collector was exorbitant. As regards
the question of imposing fine and penalty also the Tribunal found the order of
the Collector as correct. and did not find any cogent reason to interfere in
the order of the Collector.
We
have heard Mr. Dholakia for the appellants and Mr. Kapil Sibley learned Addl. Solicitor
General for the re- spondents.
It was
argued by Mr. Dholakia that the Tribunal commit- ted a serious error in holding
that the invoices submitted by the company were undervalued and could not be
relied upon for determining the correct value of the goods imported. It was
contended that the Collector Customs was not correct in determining the value
of the imported goods on the basis of the quotations of M/s. Shun Hing
Technology Ltd., Hongkong.
The
quotation of Shun Hing indicated prices at Hongkong and not the place of
importation. There was no other material on record to determine the value of
the imported goods. It was thus contended that in the absence of any other
relevant material, the invoice price has to be taken as the basis for
valuation. It was also submitted that there was no justifi- cation in
discarding the price shown in the invoices which contained the correct value of
the goods imported and in case of Customs authorities were not placing reliance
on such prices mentioned in the invoices. then the burden lay on the Customs
department to find out the correct value of the goods by collecting material
and other adequate evidence before enhancing the value of the imported goods.
The onus to prove the charge of undervaluation against the company was on the
Customs department and the evidence relied upon by them, as contained in the
adjudication order. is not at all sufficient to discharge that onus. It was
further argued that any reliance placed on the quotations furnished at the time
of submitting the application for grant of licence was wholly erroneous. At the
time of submitting the application for grant of licence the prices are quoted
for fixing the upper limit of the value of the licence. When the actual
purchase transactions were entered into, the company negoti- ated for the price
and having regard to the quantum of purchase and the prospects of future sales,
the company was given 25% ,' count by the suppliers. It was also submitted that
the prices quoted by M/s. Shun Hing Technology Ltd., Hongkong were not the
value of the components imported by the company in SKD/CKD form of plain paper
copiers. Thus any price quoted by M/s. Shun Hing can never form any basis for
arriving at a proper and correct valuation of the goods imported by the company
in the present case.
35 On
the other hand it was submitted by the learned Addl. Solicitor General that it
has been admitted by Sh. P.N. Sadanand, Managing Director of the company in his
statement dated 10.3.87 that the goods imported in the present case by the
company were of Japanese origin and manufactured by M/s. Matushita Electric
Company Ltd., Japan. M/s. Shun Hing Technology Ltd., Hongkong
were the authorised agents of M/s. Matushita Electric Co. Ltd., Japan, who are the manufactur- ers of Panasonic
copies. He further admitted that normally the Panasonic copies were supplied to
Hongkong in fully assembled form and then they were dismantled in Hongkong by
the agents and thus supplied in India in SKD/CKD form. Sh. Sadanand admitted to have visited Hongkong during
January, 1987 alongwith his Engineer Sh. K.S. Radhakrishan for pur- chase of 10
copiers--6 Nos. Model EP 1300 and 4 Nos. Model EP 2625 and that he alongwith
the Engineer dismantled the fully assembled copiers. It was submitted that the
goods contained in the cartons comprised of all the parts required for full and
complete assembly of copiers. At the time of examination of the goods covered
by Bill of Entry No. 4993 dated 11.3.87, it was found that out of the six
cartons, four cartons were the original cartons used for packing fully
finished/assembled copiers Model EP 2625. The descrip- tion, model number,
brand, manufacturer and country of origin/manufacture of the copier (viz. Plain
Paper Copier EP 2625 Panasoni, Matushita Electric Co. Ltd. and Japan respec- tively)
were clearly marked on these four cartons, one set of cassettes, trays, covers,
one drum, one developer unit and a bottle of developer. It was thus argued that
the original packing cartons used for packing fully finished copiers are
normally supplied only if fully finished copiers are purchased. It was
submitted that the adjudicating au- thority has given detailed reasons for
showing that the goods imported were not components of plain paper copiers as
declared. In fact, the company had purchased 14 fully fin- ished copiers 10 in Hongkong
and 4 in Singapore and had then dismantled for importing the same in the guise
of components of copiers.
The
company had submitted application for ap- proval of their phased manufacturing programme
to the Devel- opment Commissioner, Small Scale Industries Govt. of India, New
Delhi in July, 1986 and alongwith this application they had also submitted the
quotations received by them from M/s. Shun Hing Technology Ltd., Hongkong which
covered all the items imported except a few items like toner, drum and table
for model FP 2625. The company in the present case not only violated the terms
and conditions of licence but also com- mitted a complete fraud in importing
fully finished copiers which was a totally prohibited item, in the guise of sepa-
rate components and accessories by dismantling the fully finished copiers. In
the above 36 circumstances the adjudicating authority was fully justified in
not believing the value mentioned in the invoices and in placing reliance on
the prices mentioned in the quotations given by M/s. Shun Hing Technology Ltd.,
Hongkong. It was further argued by Mr. Sibbal that the prices quoted by M/s.
Shun Hing were based on the prices given by the manufactur- ers i.e. M/s. Matushita
Electric Co. Ltd., Japan and there was no question of supplying the components
of the copiers on a lesser price than given by the manufacturers them- selves.
The company had a special relationship with M/s. Shun Hing Technology Ltd., Hongkong
as a sort of collabora- tor with no formal agreement and that M/s. Paralax Industri-
al Corp., Hongkong were in turn agents of M/s. Shun Hing Technology Ltd., Hongkong.
We
have considered the submissions made by learned counsel for the parties.
Section 14 of the Act provides for valuation of goods for the purpose of
assessment. Section 14(1) which is relevant for our purposes reads as under:
14.
"Valuation of goods for purposes of assessment:
(1)
For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law
for the time being in force whereun- der a duty of customs is chargeable on any
goods by refer- ence to their value, the value of such goods shall be deemed to
be the price at which such or like goods are ordinarily sold, or offered for
sale, for delivery at the time and place of importation or exportation, as the
case may be, in the course of international trade, where the seller and the
buyer have no interest in the business of each other and the price is the sole
consideration for the sale or offer for sale:
Provided
that such price shall be calculated with reference to the rate of exchange as
in force on the date on which a bill of entry is presented under Section 46, or
a shipping bill or bill of export, as the case may be, is presented under
Section 50." According to the above provision the value of the goods shall
be deemed to be the price at which such or like goods are ordinarily sold, or
offered for sale, for delivery at the time and place of importation, in the
course of interna- tional trade where the seller and the buyer have no interest
in the business of each other and the price is the sole consideration for the
sale or offer for sale. In the present case the 37 company itself had produced
a copy of the quotations re- ceived by them from M/s. Shun Hing Technology
Ltd., Hongkong in respect of the copiers and other items imported alongwith
their application for approval of their phased manufacturing programme. The
company itself having produced these quota- tions, they cannot dispute the
correctness of the prices mentioned therein. The company has not only not
disputed the correctness of these quotations but has not produced any other
material on record to show that the value mentioned in the invoices was the
correct market value of the goods imported at the relevant time. The
adjudicating authority in these circumstances was perfectly justified in taking
the prices mentioned in the quotations as a basis for determin- ing the correct
value of the imported goods.
Mr. Dholakia
next contended that the Tribunal itself had set aside the finding of the
adjudicating authority on the question of treating SKD/CKD packs of the copiers
imported comprised of all the 100% components of copiers. The company had tried
to practice a fraud in defeating the import policy itself. The intention and
purpose of the import policy was to give incentive and encouragement to the new
entrepreneurs establishing small scale industries and in the first phase to
import 62% of the components of the copiers and the balance of 38% was to be
manufactured by them indigenously.
According
to the import policy this percentage of 62% was to be reduced in the subsequent
years. The import policy was not meant for such entrepreneurs who instead of
importing 62% of the components, imported 100% of the components of a fully
finished and complete goods manufactured by a foreign country. It is an
admitted position that fully finished plain paper copiers were a prohibited
item for import and thus the device adopted by the company in the present case
was a complete fraud on the import policy itself. Apart from the above
circumstances in our view the Tribunal was not right in setting aside the
finding of the adjudicating authority and in taking the view that one has to
look into the respective licence and not to the fact that if all the
consignments covered by all the bills of entry assembled together, there will
be a full and complete machinery.
It is
an admitted position that goods covered by the three bills of entry Nos. 2044,
2045 and 2046 were all dated 3.2.87 and had been shipped from Hongkong on the
same day i.e. on 21.1.87. The entire goods had arrived on the same day and by
the same flight on 30th
January, 1987. The
goods covered under the three bills of entry have been supplied by the same
supplier viz. M/s. Paralax Industrial Corp., Hong- kong. The goods covered by
these bills of entry are ten numbers 38 copiers in SKD/CKD condition,
accessories, spares, consuma- bles and excess items. The goods covered by the
4th bill of entry are four numbers copiers in SKD/CKD condition and
consumables. the licence produced is valid for certain components and is not
valid for fully assembled copiers. The fully assembled copiers are the end
products of the import- ers and hence cannot be imported by them. Plain Paper Copi-
ers are electronic equipments.
The
case Union of India v. Tara Chand Gupta & Bros. (supra) lends no assistance
to the appellants in the facts and circumstances of the present case. In the
above case Tara Chand & Bros. held an import licence dated July 10, 1956 permitting them to import parts and
accessories of motorcycles and scooters as per Appendix XXVI of the Import
Policy Book for July-December, 1956. Under the said licence, the respondents in
that case imported certain goods which arrived in two consignments, each
containing 17 cases by two different ships. According to the respondents, the
goods so imported by them were motorcycle parts which their licence authorised
them to import. The Customs authorities, on the contrary held, on the
examination of the goods, that they constituted 51 sets of "Rixe Mopeds
complete in a knocked down condition". After holding an inquiry the Deputy
Collec- tor directed confiscation of the said goods with an option to the
respondents to pay certain sums in lieu of confisca- tion and also personal
penalties. That order was passed on the basis that the goods imported were not
parts and acces- sories of motorcycles and scooters presumably under entry 295
of the Schedule to the Import (Control) Order but were motorcycles/scooters in
completely knocked down conditions, prohibited under remark II against entry
294, a licence in respect of goods covered by it would authorise import of
motorcycles and scooters. The Deputy Collector held that though the goods were
not in completely knocked down condi- tion it made no difference as the tyres,
tubes and saddles were easily obtainable in India and their absence did not prevent the machines being otherwise
complete. He also found that there was a trade practice under which traders
were supplying motorcycles without tyres, tubes and saddles unless the
purchaser specially asked for these parts. Ac- cording to him the goods could
not be regarded as spare parts but were "Moped in disassembled
condition." The re- spondents in the above case filed a civil suit and the
matter went in appeal to the High Court. The Letters Patent Bench of the High
Court held that the Collector's jurisdic- tion was limited to ascertain whether
or not the goods imported by the respondents were spare parts and accessories
covered by entry 295 in respect of which they undoubtedly held the licence, and
therefore, he could not have 39 lumped together the two consignments which. though
imported under one licence, arrived separately and were received on different
dates and could not have come to the conclusion that the plaintiffs had
imported 51 "Rixe" Mopeds in com- pletely knocked down condition. The
respondents were enti- tled to import the said goods and therefore. Section
167(8) of the Sea Customs Act did not apply and the respondents consequently
could not have been held guilty of breach either of that Section or Section 3
of the Imports & Exports (Control) Act. It was further held that the
decision of this Court in Girdhari Lal Bansi Dhar v. Union of India, [1964] 7
SCR 62 did not over rule but only distinguished judgment in D.P. Anand v. Mls.
T.M, Thakore & Co., C.A. No. 4/1959 decided on August 17, 1960 (H.C.) and
therefore, the binding force of that decision remained unshaken. The Union of
India came in appeal to this Court by grant of certificate. This Court held as
under:
"Under
entry 295, except for rubber tyres and tubes for whose import a separate licence
could be obtained under entry 41 of Part V, there are no limitations as to the
number or kind of parts or accessories which can be imported under a licence
obtained in respect of the goods covered thereunder. Prime facie, an importer
could import all the parts and accessories of motor cycles and scooters and it
would not be a ground to say that he has committed breach of entry 295 or the licence
in respect of the goods described therein, that the parts and accessories
imported. if assem- bled, would make motor cycles and scooters in CKD
condition.
3There
are no remarks against entry 295. as there are against entry 294, that a licence
in respect of goods cov- ered by entry 295 would not be valid for import of
spares and accessories which, if assembled, would make motor cycles and
scooters in CKD condition. Apart from that, the goods in question did not
admittedly contain tyres. tubes and sad- dles, so that it was impossible to say
that they constituted motor cycles and scooters in CKD condition. The first two
could not be imported and were in fact not imported because that could not be
done under the licence in respect of goods covered by entry 295 which expressly
prohibited their import and a separate licence under entry 41 of Part V would
be necessary. The third, namely. saddles were not amongst the goods imported.
No doubt, there was, firstly, a finding by the Collector that a trade practice
prevailed under which motor cycles and scooters 40 without tyres, tubes and
saddles could be sold. Secondly.
the tyres
and tubes could be had in the market here and so also saddles, so that if an
importer desired, he could have sold these goods as motor cycles and scooters
in CKD condi- tion. The argument was that since there was a restriction in
entry 294 against imports of motor cycles and scooters in CKD condition, the
importer could not be allowed to do indirectly what he could not do directly.
The
argument apparently looks attractive. But the question is what have the
respondents done indirectly what they could not have done directly. In the
absence of any restrictions in entry 295, namely, that a licence in respect of
goods covered by entry 295 would not be valid for import of parts and
accessories which. when taken together. would make them motor cycles and
scooters in C.K.D. condition. the respond- ents could import under their licence
all kinds and types of parts and accessories. Therefore, the mere fact. that
the goods imported by them were so complete that when put to- gether would make
them motor cycles and scooters in C.K.D. condition. would not amount to a
breach of the licence or of entry 295. Were that to be so, the position would
be anoma- lous as aptly described by the High Court. Suppose that an importer
were to import equal number of various parts from different countries under
different indents and at different times, and the goods were to reach here in
different con- signments and on different dates instead of two consignments
from the same country as in the present case. If the conten- tion urged before
us were to be correct, the Collector can treat them together and say that they
would constitute motor cycles and scooters in C.K.D. condition. Such an
approach would mean that there is in entry 295 a limitation against importation
of all parts and accessories of motor cycles and scooters. Under that
contention, even if the importer had sold away the first consignment or part of
it, it would still be possible for the Collector to say that had the importer
desired it was possible for him to assemble all the parts and make motor cycles
and scooters in C.K.D. condi- tion. Surely, such a meaning has not to be given
to entry 295 unless there is in it or in the licenee a condition that a
licensee is not to import parts in such a fashion that his consignments,
different though they may be, when put togeth- er would make motor cycles and 41
Scooters in C.K.D. condition. Such a condition was advisedly not placed in
entry 295 but was put in entry 294 only. The reason was that import of both
motor cycles and scooters as also parts and accessories thereof was permitted,
of the first under entry 294 and of the other under entry 295. A trader having
a licence in respect of goods covered by entry 294 could import assembled motor
cycles and scooters, but not those vehicles in C.K.D. condition, unless he was
a manufacturer and had obtained a separate licence therefore from the
Controller of Imports who, as aforesaid. was autho- rised to issue such a licence
on an ad hoc basis. Thus the restriction not to import motor cycles and
scooters in C.K.D. condition was against an importer holding a licence in respect
of goods covered by entry 294 under which he could import complete motor cycles
and scooters and not against an importer had a licence to import parts and acces-
sories under entry 295.
If Dr.
Syed Mohammad's contention were to be right we would have to import remark (ii)
against entry 294 into entry 295, a thing which obviously is not permissible
while construing these entries. further, such a condition, if one were to be
implied in entry 295, would not fit in, as it is a restric- tion against import
of motor cycles and scooters in C.K.D.
condition
and not their parts and accessories. There is, therefore, no question of a
licensee under entry 295 doing indirectly what he was not allowed to do
directly. What he was not allowed to do directly was importing motor cycles and
scooters in C.K.D. condition under a licence under which he could import
complete motor cycles and scooters only.
That
restriction, as already observed,' applied to a licen- see in respect of goods
described in entry 294 and not a licensee in respect of goods covered by entry
295.
The
result is that when the Collector examines goods import- ed under a licence in
respect of goods covered by entry 295 what he has to ascertain is whether the
goods are parts and accessories, and not whether the goods, though parts and
accessories, are so comprehensive that if put together would constitute motor
cycles and scooters in C.K.D. condition.
Were
he to adopt such an approach, he would be acting con- trary to and beyond entry
295 under 42 which he had to find out whether the goods imported were of the
description in that entry. Such an approach would, in other words, be in
non-compliance of entry 295." This Court distinguished the case of Girdhari
Lal Bansi Dhar (supra) by making the following observation:
"It
will be noticed that the Bombay decision in D.P. Anand's case was
not dissented from but only distinguished, and therefore, the High Court in the
present case was justified in following it. It is true, however, that counsel
for the appellant there relied on that decision in support of his proposition
that a ban on completed article cannot be read as a ban on the importation of
its constituents, which, when assembled, would result in the prohibited
article, and this Court pointed out in answer that in D.P. Anand's case, the
imported components could not have when assembled, made up the completed
article because of the lack of certain essen- tial parts which admittedly were
not available in India and could not be imported. The real distinction,
however, be- tween the two cases was that the decision of the Collector in D.P.
Anand's case was not, as was the decision in Gird- bari Lal's case under which
of the two competing entries the imported goods fell but that the imported
goods in question, if assembled together, would not be the goods covered by the
entry, and therefore, not the goods in respect of which the licence was
granted. Further, the articles in question, even when assembled together, were
not prohibited articles as in Girdhari Lal's case. Girdhari Lal case is clearly
distin- guishable because it is not as if motor cycles and scooters are
prohibited articles as was the case there. The restric- tion is not against
licensees importing motor cycles and scooters under entry 294 and parts and
accessories under entry 295 but against the licensees under entry 294 import- ing
motor cycles and scooters in CKD condition. The question in the instant case
was not under which of the two entries, 294 or 295, the goods fell, but whether
the goods were parts and accessories covered by entry 295." In our view
the Tribunal was not correct in placing reliance on the case Union of India v.
Tara Chand Gupta & Bros. (supra) in the facts and circumstances of the
present case. In the case before us the 43 import of fully assembled copiers
was prohibited. The appel- lant was only entitled to import 62% of the
components. As already mentioned above, the device adopted by the appellant in
the present case was a complete fraud on the Import Policy and the appellant
was doing indirectly what he was not permitted to do directly. We are further
of the view that the facts in the present case are more akin and similar to the
facts of the case Girdhari Lal Bansi Dhar v. Union of India, (supra) which was
distinguished in the case of Union of India v. Tara Chand Gupta & Bros.
(supra).
Mr. Dholakia
also tried to assail the finding recorded by the Collector and upheld by the
Tribunal and argued that the components imported by the appellant tallied with
the parts which were permitted under the licence. We do not find any force in
this submission. The Collector has given de- tailed reasons for holding that
the imported goods were not covered by the valid licence and the Tribunal
having upheld such finding, the same cannot be challenged by the appellant
before this Court.
Mr. Dholakia
also submitted that in the facts and cir- cumstances of the case the order
confiscating the goods and imposing fine and penalty both on the company and Sh.
Sada- nand, the Managing Director was too high and ought to be reduced.
We
find no force in this submission as well. This is a case where the appellant
had not only violated the terms and conditions of the licence but also
committed a fraud on the Import Policy itself. Thus we find no ground or justifica-
tion to reduce the penalty or fine.
In the
result we find no force in these appeals and the same are dismissed with one
set of costs.
P.S.S.
Appeals dismissed.
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