Commissioner
of Customs, New Delhi Vs. M/S. Parasrampuria Synthetics
Ltd. [2001] Insc 444 (30
August 2001)
S.V.
Patil, U.C. Banerjee Banerjee, J.
In the
light of the contentions raised and submissions made on behalf of either side,
the following question arises for consideration and decision in these appeals:-
"Whether the benefit of exemption under Notification No.25/95 dated
16.3.1995, as amended, is available to the goods i.e. printed drawings, designs
and plans under the Foreign Transfer of Technology Agreement imported by the
respondent?" On the factual score it appears that the respondent imported
certain printed drawings, designs and plans under an agreement for transfer of
technology for the purpose of setting up a plant to manufacture Polyester, Polyester
Filament Yarn and Polyester Staple Fiber: whereas the assessee contended that
the goods so imported are covered under Sl. No.10 of the Notification No. 25/95
cus dated 16.3.1995 having 'Nil' rate of duty: The Revenue contended that the
goods fall under Sl.No.15 of the notification attracting 10 per cent ad valorem.
Before proceeding further with the matter the variable rate of duty chargeable
as appears from the table in the Exemption Notification and in particular
Sl.Nos.10 and 15 thereof are noted hereinbelow:
TABLE
_____________________________________________________ S. Chapter Description of
goods Rate Conditions No. or heading No. or sub- heading No.
(1)
(2) (3) (4) (5) .............................................
10. 49
Printed books (including Nil ___ covers for printed books) and printed manuals
including those in loose- leaf form with
binder...........................................
15.
49.06 Plans, drawings and 10% ad ___ and designs valorem 49.11
....................................
The factual
score further depicts that by reason of the classification of the goods in
question by the revenue authorities as falling under Chapter 49.11, the goods
imported were valued at DM - 32,66,900.00 equivalent to Rs.7,50,61,438.00 for
the purpose of duty thereon. The Commissioner of Customs however took the view
that by reason of non-payment of duty as presented in the Table as above, the
goods are liable to be confiscated and since the same were not available for
such confiscation, he imposed penalty of Rs.10 lakhs on the importer under
Section 112 of the Customs Act and further penalty of Rs.5 lakhs each on three
of the Directors of the Company being the importer herein and hence the appeal
before the Tribunal (CEGAT). The Tribunal however, on a detailed judgment came
to the conclusion that the materials imported by the appellant are books coming
under Tariff item 49.01 and thus coming within the ambit of Sl. No.10 of the
Exemption Notification by reason wherefor question of levy or payment of any
duty for the same would not arise as for the articles so imported rate of duty
was 'Nil' in terms of the Exemption Notification. The order of the Commissioner
of Customs thus stood reversed in its entirety including that of the penalties
imposed and hence the appeal by way of a special leave petition by Commissioner
of Customs, New Delhi and the subsequent grant of leave by this Court.
Incidentally,
in view of certain conflicting decisions of the Tribunal, the matter was
referred to the larger Bench of the Tribunal and the latter upon consideration
of the relevant facts and materials on record, came to the conclusion as
regards entitlement of the assessee under the exemption notification as
detailed above.
Significantly,
in this appeal, we have to decipher the true intent and meaning of the words
"printed books' and "manuals" as covered under Serial No.10 as
also 'plan', 'drawing' and 'designs' as covered under Serial No.15 of the
concerned notification.
Let us
first analyse as to the true grammatical meaning of the words included in Sl.
No.15 to wit: "plan, drawings and design".
"Plan"
in common acceptation means 'a drawing or diagram made by projections on
horizontal plane'. The Law Lexicon attributes it to be a design or a sketch and
is a draft or form of representation and its synonyms are sketch and design.
Corpus Juris Secundum (Vol.70) attributes a meaning in the similar vein as 'a
draft or form or representation of a horizontal section of anything, as of
machinery; a map....a scheme; a project; also a method of action, procedure, or
arrangement.
The
word 'drawing' in common acceptation however, mean and include 'art of
representing by line, delineation without colour or with single colour' and
Corpus Juris Secundum defines it as meaning a representation on a plane
surface, by means of lines and shades.
The
third expression viz., ' design' in popular parlance is used as a synonym with
plan and includes a sketch. Some times it has also been held to be synonymous
with 'figure'. The expression 'design' has within its ambit many facets
including a criminal design which connotes an evil desire, obviously exemption
notification cannot possibly mean and imply a meaning which can be attributed
to be an evil one.
The
three words 'plan, drawing and design' however, convey more or less a common
attribution and identical meaning, though however, in a larger spectrum, three
words used in the exemption notification have three individual attribute by
reason wherefor, legislature thought it fit to specifically refer to each of these
words.
Turning
attention on to Serial No.10, be it noted that in Chapter 49 'printed books'
and 'printed manuals' including those in loose-leaf form with binder, has been
specifically referred to a 'Nil' duty article. It is in this context that the
learned Attorney General in support of the appeal contended that in general
trade parlance a book is known by feature like
(i) a
book has an author,
(ii) A
book has a publisher,
(iii)
A book is a priced publication,
(iv)
The book is available to all and sundry who pay for it,
(v)
The book does not have a Memorandum of Understanding;
(vi)
There is no confidentiality about the book;
(vii)
A book has a subject to deal with;
(viii)
the pages are serially numbered and neatly bound; and
(ix) the
last but not the least, it should have ISBN Code i.e. International Books
Subscriber Nomenclature.
As a
matter of fact, it has been the contention of the appellant that Serial No.10
has been incorporated in the exemption notification to cover literary works of
all kinds, text books and technical publication. Mr. Attorney General rather
strongly contended that a perusal of the volume presented in Court, by itself
depicts and lends credence to his contention that imported goods cannot come
within the ambit of 'printed books' : It is a documentation with vendor's
drawings and operating and maintenance manuals and a close look would depict
that the same is an installation and planning manual issued by Zimmer. Whilst
on the subject it has further been contended that through Revenue intelligence
it was discovered that the Respondents imported drawing, design and plans under
the Foreign Transfer of Technology Agreement but had not paid any customs duty
on such import and by reason therefor, a show cause notice was issued as to why
an amount of Rs.76,66,494/- should not be demanded under Section 28 (1) of the
Customs Act, 1962 and as to why penalty should not be imposed.
The
Commissioner in his order upon recording the submissions of the respondents,
herein observed that out of 97 volumes of imported materials, 23 volumes
contained pictorial drawings and designs, while 46 volumes contained textual
materials with a few drawings and designs. The Commissioner of Customs in his
elaborate and considered order dated 31.10.1997, while referring to the various
documents and statements of various persons/directors of the assessee, in para
63 has stated thus:- "63. In this case, the statements of Shri Om Prakash Parasrampuria,
Director, Dr. S.C. Rustagi & Shri Alok Parasrampuria were recorded under
section 108 of Customs Act, 1962 wherein all these inter alia admitted that the
technical documents, as per the said agreement had been brought into India and no duty was paid. They also
admitted that the importation of technical documents in the form of drawings
and designs, attracts duty under chapter heading 4906/4911 at the relevant
period of time. I further observe that M/s. Parasrampuria Synthetic Ltd. has
already deposited 30 lakhs of rupees as duty liability in anticipation of
adjudication by the department. Since the clandestine import of technical
documents and subsequent non-payment of duty applicable on such goods had been
admitted by M/s. Parasrampuria Synthetic Ltd., through the statements of Shri, Om
Prakash Parasrampuria, Shri Alok Parasrampuria and Dr. SC Rustagi, I do not
want to go in details on the issue whether the goods under reference attracted
any duty at the relevant period of time. There is also no denying the fact that
at the relevant period of time, the importation of technical documents in the
form of design and drawing were chargeable to duty under Tariff heading
No.4906/4911." The Tribunal, however, while dealing with the issue, placed
strong reliance on the decision of this court in Scientific Engineering House
Pvt. Ltd. v. Commissioner of Income Tax, Andhra Pradesh : 1986 (1) SCC 11 (AIR
1986 SC 338). The Tribunal upon appreciation of the contents of the judgment of
this Court in Scientific Engineering (supra) came to a conclusion that the
imported goods are printed books and they come under Chapter 49 and as such
they are entitled to complete exemption as per the general exemption No.121
covered by S. No.10 of the Notification as noticed hereinbefore.
While
relying upon the judgment in Scientific Engineering (supra), the Tribunal
placed reliance on the observations of this Court viz. 'it cannot be disputed
that these documents regarded collectively will have to be treated as a book'
and came to a conclusion as noticed above. It appears that reliance was placed
on two lines of this Court's decision and has been used in support of the
finding totally out of context. As a matter of fact, in our view paragraph 13
of the Report, runs counter to the findings of the Tribunal and it is in this
context, paragraph 13 is noticed as below:
"13.
If the aforesaid test is applied to the drawings, designs, charts, plans,
processing data and other literature comprised in the 'documentation service'
as specified in Clause 3 of the agreement it will be difficult to resist the
conclusion that these documents as constituting a book would fall within the
definition of 'plant'. It cannot be disputed that these documents regarded
collectively will have to be treated as a 'book', for, the dictionary meaning
of that word is nothing but "a number of sheets of paper, parchment, etc.
with
writing or printing on them, fastened together along one edge, usually between
protective covers; literary or scientific work, anthology, etc., distinguished
by length and form from a magazine, tract, etc." (vide Webster's New World
Dictionary). But apart from its physical form the question is whether these
documents satisfy the functional test indicated above.
Obviously
the purpose of rendering such documentation service by supplying these
documents to the assessee was to enable it to undertake its trading activity of
manufacturing theodolites and microscopes and there can be no doubt that these
documents had a vital function to perform in the manufacture of these
instruments;
In
fact it is with the aid of these complete and up- to-date sets of documents
that the assessee was able to commence its manufacturing activity and these
documents really formed the basis of the business of manufacturing the
instruments in question. True, by themselves these documents did not perform
any mechanical operations or processes but that cannot militate against their
being a plant since they were in a sense the basic tools of the assessee's
trade having a fairly enduring utility, though owing to technological advances
they might or would in course of time become obsolete. We are, therefore,
clearly of the view that the capital asset acquired by the assessee, namely,
the technical know-how in the shape of drawings, designs, charts, plans,
processing data and other literature falls within the definition of 'plant' and
therefore a depreciable asset." (Emphasis supplied) While there is some
factual divergence as noticed above but the factum of the drawings etc. not
forming part of a book within the exemption notification stands accepted in Scientific
Engineers (supra) as would be evident from the emphasised portion in paragraph
13 noticed above. In this view of the matter, the aforesaid decision of this
Court in Scientific Engineers (supra) does not lend any assistance to the assessee,
rather runs counter to the respondent's contentions. As can be seen from one of
the volumes produced before us, it contains documents in loose sheets merely
put up in a folder. It has none of the characteristics of a book known in the
common trade parlance. At any rate, the principal interest in the goods is
related to transfer of technology to the assessee in the form of drawings,
designs and plans for setting up plant to manufacture polyester, polyester
filament yarn and polyester staple fiber. Thus viewed from any angle, the goods
imported by the assessee are not covered by Sl. No.10 but are covered by Sl.
No.15 of the said exemption notification.
Incidentally,
the decision of the High Court of Gujarat in the case of Commissioner of Income
Tax, Gujarat v. Elecon Engineering Co. Ltd. (1974 (96) ITR 672) has been
strongly relied upon by the Tribunal and it has also been recorded in the order
impugned that the decision was subsequently approved by this Court. While it is
true that Elecon Engineering (supra) stand approved by this Court but paragraph
14 in the decision in Scientific Engineering (supra) would make the situation
clear enough to indicate that the same does not convey what the learned
Tribunal wanted to convey. Paragraph 14 as noticed above reads as below:
"14.
Counsel invited our attention to the decision in CIT v. Elecon Engineering Co.Ltd.
where the Gujarat High Court, has, after exhaustively reviewing the case law on
the topic, held that drawings and patterns which constitute know-how and are
fundamental to the assessee's manufacturing business are 'plant'. We agree and
approve the said view." The question thus arises as to whether articles
imported satisfy the requirement of Serial No.10 of the notification.
Incidentally,
this Court in Scientific Engineering (supra) categorically posed a question as
to whether apart from the physical form, the documents satisfy the functional
test! Basic issue thus would be the nature of articles imported: now what these
documents are: Admittedly in terms of the agreement between the parties, these
documents cannot but be attributed to be technical know-how in the shape of
drawing, design, plan and other literature: It is a literature or specification
for a particular plant to manufacture Polyester, Polyester Filament Yarn and
Polyester Staple Fiber: Even without adverting to the general trade parlance of
the word 'book' and its known features, a plain look at the book itself denotes
it to be a Installation and Planning Manual.
The documents
though loosely kept in a binder is known as Zimmer Documentation as regards the
Fisher-Rosemount Systems.
It is
a technology transfer agreement which stands documented in a folder. The
heading itself record "Installing CHIP Products and Application
Software". The heading itself thus indicative of not being a work of art
by an author - it is a record of scientific progress achieved and this
particular achievement is being transferred by way of Transfer of Technology
Agreement between the two parties and thus cannot but be termed to be a "technical
know-how in the shape of a drawings, designs, charts, plans and other
literature" - these items have been ascribed to be a part of the plant for
the purposes of Depreciation Allowance in terms of Section 32 and 43 (3) of the
Income Tax Act. Merely by reason of the factum of certain writings on various
sheets of papers one cannot ascribe the documentation to be a 'book': The word
'book' has not been defined in the Act but the 'book' in common acceptation is
a literary composition from which one may extend or advance his or her
knowledge and learning:
In any
event, one of the basic cannon of interpretation of statute is that the
legislature intends to ascribe the ordinary common parlance and meaning to the
words used therein. In the matter under consideration, the legislature has used
the word 'printed books' and clarified it by inclusion of covers - the intent
thus seems to be rather obvious to mean books in ordinary sense and not any
other meaning. The legislature has also included 'printed manuals' and
explained it by express words "including those in the loose leaf form with
binder". Can the articles imported be termed to be 'printed manuals' in
'loose leaf form with binder', unfortunately, the answer cannot be in the
affirmative. It contains specifications in terms of a technology transfer
agreement, it is not a collection of various articles in trade journals but a
definite importation of technology transfer which obviously was not intended to
mean by the user of the word 'manual'. The word 'manual' means and implies 'a
small book for handy use and includes a reference book, a hand-book as also a
text book (vide Concise Oxford Dictionary) and on attribution of the same
meaning, the words used by the legislature cannot identify to be a product of technology
transfer between two countries. Ordinary common parlance ought to be attributed
for the expressions used by the legislature and on attribution thereof one
cannot possibly come to a conclusion that the exemption notification ever aimed
at extending the meaning to the extent as has been effected by the Tribunal.
The decision of this Court in Scientific Engineering (supra) has been totally
misread and misapplied in the contextual facts - Scientific Engineering (supra)
on the contrary lends all possible credence to the contentions as propagated by
the appellants and not the Respondents. The decisions of this Court in the case
of Collector of Central Excise, Baroda v. Indian Petro Chemicals [1997 (92)
E.L.T. 13 (S.C.)] and H.C.L. Limited v. Collector of Customs, New Delhi [2001
(130) E.L.T.405 (S.C.)] do not in any way lend any support to the contentions
of the respondent herein by reason of the special fact situation as above and
in any event we are not concerned with two notifications, one of which confers
benefit on to the assessee.
Thus
reliance thereon is totally misplaced in the facts of the matter under
consideration.
In the
view as expressed above, we are not inclined to lend concurrence to the
judgment of the Tribunal and as such these appeals succeed. The order of the
Tribunal stands negated and that of the Commissioner, Customs restored. We thus
answer the question noticed above in the negative. There will be no order
however, as to costs.
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