1991 (5) TMI 146 - AT - Customs

Summary

Issues Involved:
1. Validity of the import licenses for the components of ballpoint pens.
2. Whether the imported goods fall under the prohibited category of consumer goods in SKD condition.
3. Applicability of specific entries in the Import Policy AM 1990-93.
4. Relevance of the Supreme Court rulings in Sharp Business Machines Pvt. Ltd. and Tarachand Gupta & Bros.
5. Interpretation of the term "consumer goods" under the Import Policy.

Detailed Analysis:

1. Validity of the Import Licenses:
The appellant imported three consignments of ballpoint pen components (refills, knobs, caps, and barrels) under different purchase orders and invoices, and sought clearance under three different Bills of Entry. The Department alleged that these goods required a specific license under Sl. No. 173 of Appendix 2, Part B of the Import Policy AM 1990-93, as they were considered consumer goods in SKD condition. The appellant argued that the goods were imported as individual components, each covered by valid REP licenses under Sl. Nos. 647 and 665 of Appendix 3, Part A.

2. Classification as Consumer Goods in SKD Condition:
The Department issued a show cause notice alleging that the goods were in SKD condition, requiring a specific license under Sl. No. 173 of Appendix 2, Part B. However, the adjudicating authority did not find the goods to be in SKD condition. Instead, the authority held that if the consignments were considered individually, the licenses were valid. The appellant contended that the goods were components and not consumer goods, as defined in the Import Policy, which states that consumer goods must directly satisfy human needs without further processing.

3. Applicability of Specific Entries in the Import Policy:
The appellant argued that Sl. No. 172 of Appendix 2, Part B excluded goods listed in Appendices 3, Part A, and 5, or those listed for import under Open General License. Sl. No. 647 covers metal caps, clips, barrels for pens, and ballpoint refills, while Sl. No. 665 covers plastic extruded/moulded/fabricated components. The appellant maintained that the imported goods fell under these entries and were therefore excluded from the restrictions of Sl. No. 172.

4. Supreme Court Rulings:
The adjudicating authority relied on the Supreme Court ruling in Sharp Business Machines Pvt. Ltd., which held that what cannot be done directly cannot be done indirectly. However, the appellant argued that the facts of the present case were different from Sharp Business Machines, as the goods were imported on different dates and under different Bills of Entry. The appellant cited the Supreme Court ruling in Tarachand Gupta & Bros., which held that importing parts individually is permissible even if they could collectively constitute a complete product. The Tribunal found the ruling in Tarachand Gupta's case more applicable, as it dealt with the import of parts and accessories, which were not restricted under the relevant entry.

5. Interpretation of "Consumer Goods":
The appellant argued that the imported components did not qualify as consumer goods under the Import Policy, as they could not directly satisfy human needs without further processing. The Tribunal agreed, noting that the definition of consumer goods in the Policy supports the appellant's interpretation. The Tribunal also emphasized that if a Policy is capable of two interpretations, the benefit should go to the importer.

Conclusion:
The Tribunal concluded that the imported goods were covered by the REP licenses produced by the appellant and did not fall under the restricted category of consumer goods in SKD condition. The appeal was allowed, and the impugned order was set aside. The Tribunal emphasized the importance of interpreting the Import Policy in a manner favorable to the importer when ambiguities exist.