TMI Blog2010 (3) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant. Shri R.B. Pardeshi, for the Respondent. [Judgment per : V.C. Daga, J.]. - Heard. Perused reference. This is a Reference arising out of common order dated 28th July, 1995 [1996 (81) E.L.T. 109 (Tri. - Mumbai)] made by the Customs, Excise and Gold (Control) Appellate, Tribunal, Mumbai ("Tribunal" for short) in exercise of powers under Section 130-D of the Customs Act, 1962 ("the Customs Act" for short) to seek opinion of this Court on the following two substantial questions of law : (a) Whether in the facts and circumstances of the case the judgment of this Court in Bussa Overseas and Properties (Pvt.) Ltd. v. Union of India - 1991 (53) E.L.T. 165 ("Bussa Overseas" for short) being a direct judgment on the issues involved in the present case prevails over the judgment of this Court in SVA Udyog Viniyog Ltd. v. Union of India - 1993 (65) E.L.T. 20 (Bom.) = 1993 (46) ECR 376 ("SVA Udyog" for short)? (b) Having followed the judgment of this Court in Bussa Overseas (Supra) in the case of Bussa Export Corporation v. Collector of Customs - 1994 (50) ECR 256 when the judgment of this Court in SVA Udyog Viniyog Ltd. was available, whether the Tribunal was correct in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to Synthetic Organic Dyes including organic pigments. Exim Policy 8. The provisions relating to the Exim policy for registered exporters are to be found in Chapter XIV of the Exim policy 1985-88. The clauses relevant for the purposes of deciding issues involved herein read as under : 188. The object is to provide to the Registered Exporters, by way of import replenishment, the materials (all or some) required in the manufacture of the products exported. 189(1) Exports made of products appearing in Appendix 17 will qualify for the grant of import replenishment only if such exports are made accordance with the export policy in force. 193(1) The extent of import replenishment permissible against each product enumerated in column 2 of Appendix 17 shall be that set out in column 3 thereof. These percentages will apply in the case of exports made on or after 1-4-1985 except for registered contracts to which the relevant provisions would apply. 195(1) The items permissible for import against each export product covered by this policy are given in column 4 of the policy statement given in Appendix 17, read with column 5. 226. The transfer of the licence will not require a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only against export of Sulphur black covered by Export product in Col. 2 (Emphasis supplied) 10. The aforesaid Appendix 17 needs to be read in the light of para 8 of the general conditions of the import policy meant for registered exporters, which read as under : 8. Against certain export products, e.g. Sl. No. A.64, Sl. No. B.11.1 etc. Col. 4 permits the import of items appearing in the Appendices 3 and 5 without mentioning the specific items. In such cases, the export product in Col. 2 covers more than one product and it is difficult to mention in Col. 4 itself the specific items of raw materials and components which go into the production of each of the export products covered by the particular Serial Number or Sub-Serial Number. Therefore, in such cases, while applying for REP licence, each exporter should submit with the import application the list of such items as are actually used as raw materials/components in the manufacture of the product(s) exported except items which have been specifically excluded in Col. 4 or Col. 5. It should be also ensured that only those items are included in the list which are actually used as raw materials and components in the manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsferee was not bound by any of the conditions imposed on the original licencee, inter alia as to "nexus". In his submission, the transferee could import any article that was mentioned in the list of raw material/components. The underlying principle for not imposing the nexus condition vis-à-vis the transferee emanates from Para 225 of the EXIM Policy, which states that the REP Licence shall not be subject to an "actual user" condition. According to him, the scheme of REP Licence inherently assumes transferability and an import by a transferee. The transferee may or may not be a manufacturer of the very product, and it may have been exported by the original licencee but once the licence is transferred, the transferee need not manufacture or export any article. It may merely be a trader. It follows that the transferee importer cannot be required to satisfy the nexus test, i.e., the test of use of the imported goods in the product exported by the original licencee. He submits that this principle is judicially recognised through the Hon'ble Supreme Court upholding the decision of the Tribunal in Goodluck Industries v. Commissioner of Customs [1999 (108) E.L.T. 818 (Tri.)], as reported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to import the almonds-in-shell. According to him, the facts of the present case are different, inasmuch as the Applicant is a transferee and the words "Ethyl Alcohol" used in the licence are not qualified or restricted. According to him, this distinction, in fact, was noticed by the Division Bench of this Hon'ble High Court in SVA Udyog Viniyog Limited (supra) wherein in para 5 of the judgment, it was held that the decision in Bussa Overseas would not apply in the facts of SVA Udyog Viniyog as in the case of Bussa, the licence "...was issued simpliciter for Ethyl Alcohol without restricting its meaning or scope, the import for whatever purposes cannot be faulted. In the present case, the expression 'seeds' though is a generic term, the plain reading of item G-2 under Appendix 17 establishes that the expression is used for restricting its meaning". The Applicant submits, that the Division Bench of this Court has therefore, reconciled the judgments in Bussa Overseas and SVA Udyog Viniyog. 16. On the above premise, Mr. Baya submits that the Tribunal was in error in not following Bussa Overseas, which was a judgment directly on the issue before it, and misdirected itself by followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liance is placed on Chapter Heading 2207 to justify two categories i.e. denatured and undenatured Etyhyl Alcohol. He also placed reliance on the rules framed by the Ministry of Finance, Government of India in exercise of powers under Section 24 and 158 of the Customs Act, 1962 so as to demonstrate two categories of Ethyl Alcohol. He submits that the use of Whiskey is not at all economically viable for use in manufacturing dye. 20. Mr. Pardeshi further submits that the statutory provision in para No. 8 of the Appendix 17 of the Exim Policy clearly states that such goods have to be actually used in the export product. According to Mr. Pardeshi, the whiskey sought to be imported under name Malt Spirit against REP licence cannot be and could not be allowed to be imported against the said REP licence held by importer for want of its use in export product. Reliance is placed on the judgment of S.V. Udgyog (supra). 21. Mr. Pardeshi urged that the Apex Court has confirmed the judgment of this Court in S.V. Udyog (supra). According to him, the said judgment is the only judgment which is applicable to the facts of the present case. He submits that the judgment in the case of M/s. Bussa O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and dye intermediates. According to him, the Revenue is proceeding on an erroneous construction of the REP Licence scheme as it then was in vogue as also the law laid down by this Court in both Bussa Overseas and SVA Udyog Viniyog. He submits that the technical documentation as regards 'denaturing' ethyl alcohol is entirely irrelevant, for the reasons stated above. Consideration : 25. Having heard both parties at length, perusal of Clause 1(iii) relating to Dye and Dye intermediates, makes it clear that the material permitted for import under clause 4 are those which had nexus to the goods which were exported and for the export of which REP licence was granted. Each of the item covered under (a) to (u) leaves no manner of doubt that it had direct nexus or relation to the export product of synthetic organic dyes including organic pigments. Clause (a) under Item 4 refers to Dye Intermediate and Chemicals in Appendix 3 and use in manufacture of products exported. It is, thus, obvious that the expression dye intermediate and chemical shown in Appendix 3 must be used or capable of being use in manufacture of product exported. 26. The submission of Mr. Baya that Ethyl Alcohol shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Appendix of Import Policy AM 8588 period have been actually used as raw material and its components in the manufacture of products exported during the month of February, 1985." (Emphasis supplied) 28. On the face of the above declaration and for the reasons stated hereinabove, the submissions made by Mr. Baya cannot be accepted. 29. Having said so, it is necessary to find whether the judgment of this Court confirmed by the Apex Court in SVA Udyog (supra) and M/s. Bussa Overseas (supra) has any application to the facts of the present case. 30. In the said decision of M/s. Bussa Overseas (supra), items permitted to be imported under REP licence were described by the generic term of Ethyl Alcohol. The Division Bench in the said judgment observed that as the licence was issued simplicitor for Ethyl Alcohol without restricting its meaning or scope, as such import for any purpose cannot be faulted. The specific wording appearing in the said judgment in this regard are as under : "In this connection, it may be noted that whenever the Licensing Authorities are empowered to and consider it necessary to specify the kind of commodity with reference to the use to which it is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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