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D.R. Enterprises Ltd. Versus Assistant Collector of Customs And Others

2015 (8) TMI 579 - SUPREME COURT

Import of Printing Machine at concessional rate – High Court refused to allow import of Web Printing Machine on concessional rate of custom duty – However Interim relief sought for release of machinery was allowed but petition was kept pending – Whether High Court was competent to decide matter – Held that:- interim prayer for release of machinery was allowed by High Court – No doubt, when High Court passed interim order in favour of appellant, High Court could have dispose of petition – It was .....

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pellant to claim exemption under Notification No. 114/80-CUS in this behalf was correct and plausible – Burden of proof was on appellant to establish that machine imported by it generates more than 35,000 composite impressions or copies per hour which appellant failed to do so – Appeal dismissed – Decided against Assesse. - Civil Appeal No. 4417 of 2003 - Dated:- 12-8-2015 - A. K. Sikri And N. V. Ramana,JJ. For the Appellant : Ms. Praveena Gautam, Adv. Mr. L.K. Asthana, Adv. Ms. Reena Khair Asth .....

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f the aforesaid machine under Open General Allowance (for short, 'OGL') with the aid of Notification No. 114/80-CUS, dated 19.06.1980. The High Court has held that the said Notification is not applicable in the instant case as the appellant has not been able to satisfy one particular eligibility condition contained therein. To put it pithily, one of the conditions needs to be satisfied to avail the concessional rate of duty @ 35% ad valorem under the aforesaid Notification is that the ma .....

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let us traverse through the facts in some more details. 3) The appellant herein had imported one printing machine of make 'Harris Graphic V-15H Model' which arrived at Mumbai airport on 24.10.1987. Custom house agent of the appellant filed Bill of Entry for Home Consumption under OGL on 13.11.1987 and claimed concessional rate of duty under Notification No. 114/80-CUS. 4) On 26.11.1987, the Appraiser of Customs House, Bombay issued a query memo with regard to the printing capacity of the .....

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ed customs duty. Accordingly, the imported machine was warehoused. 6) Thereafter, some queries regarding the output of the machine were raised and the appellant tried to meet them. It also filed communications received from the manufacturer explaining that the machine was custom-made for Indian purposes, i.e, for the appellant enhancing its capacity to 36,000 copies per hour as against normal capacity of 25,000 copies, which is the normal product manufactured by the said manufacturer. On that ba .....

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Bombay High Court (being Civil Writ No. 2229/1988) praying for a declaration that the imported machine was covered by OGL and was entitled to the concessional rate of customs duty under Notification No. 114/80-CUS and for directing the respondents to permit clearance of the same. Interim relief of release of the machinery was also prayed for. 8) The Assistant Commissioner of Customs (S.I.I.B.), Bombay, filed an affidavit opposing the admission of the petition and grant of interim relief. 9) On .....

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rials was served by the customs authorities on the appellant and no adjudication order was passed, the learned Single Judge of the Bombay High Court passed an order directing the parties to inspect and test the consignment under the supervision of the Court Appointed Officer within 5 days from 02.09.1988 and directing the Adjudicating Authority to pass an order within 7 days from the inspection and testing. It was not done and further time was sought. However, when the needful was not done even .....

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imported printing machine had been in use by the appellant for all these years. The learned counsel appearing for the appellant, in these circumstances, impressed upon the High Court to decide itself the issue involved, namely, whether imported machine could print 36,000 copies per hour or its speed was less than 30,000 copies per hour and whether the appellant was not entitled to the benefit of the concerned Notification. The High Court went into the issue and by its detailed judgment it has de .....

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complete adjudication machinery to adjudicate this issue. Learned senior counsel referred to the provisions of Section 28 of the Act, as per which the authorities are supposed to issue show cause notice to the importer and after giving opportunity to the importer to meet the allegations contained in show cause notice, the Adjudicating Officer is to pass an Order-in-Original deciding the case stated in the show cause notice. He pointed out that against the order of the Adjudicating Authority the .....

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llant, even otherwise, the High Court, while exercising its extraordinary writ jurisdiction under Article 226 of the Constitution, was not competent to decide the disputed questions of facts. (ii) Mr. Rao also impressed upon the fact that it was not open to the Department now to contend that the machine in question was incapable of producing 36,000 copies per hour and have the matter adjudicated when by this time the matter had become time barred. In this behalf, it was pointed out that in the w .....

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e appellant because of embargo of limitation coming in their way, the High Court was equally incompetent to decide the said issue on merit and passing the liability upon the appellant in respect of time barred claim. (iii) Another submission of Mr. Rao was that the writ petition was filed in the year 1988 in which interim order was granted in favour of the appellant. The High Court was forced to pass such an order directing release of the machine to the appellant when the authorities failed to g .....

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sing that the High Court was merely influenced by the leaflets containing the literature about the machine and did not appreciate other material produced by the appellant, including the clarifications furnished by the manufacturer itself stating that advance version of the machine, with modification, was manufactured and supplied to the appellant and insofar as machine in question is concerned it had the printing capacity of 36,000 copies per hour. He, thus, submitted that even on merits, the fi .....

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e appellant was estopped from raising such an issue when the appellant itself invited the judgment on merits. According to Mr. Panda, this fact would also negate the contention of the appellant predicated on limitation. His submission in this behalf was that the appellant had itself raised this issue in the High Court in its petition which was pending adjudication. That was a reason that the Revenue authorities did not initiate any action as per the adjudicatory mechanism provided in the Act. Th .....

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hich is less than 30,000 copies that is needed to avail the benefit of the Notification. He, therefore, pleaded for the dismissal of the appeal. 13) We have considered the respective submissions of the learned counsel for the parties on either side with reference to the record. In a matter like this, it is necessary in the first instance to take note of the scope of the writ petition that was filed by the appellant in the High Court which is dismissed by the judgment impugned. A copy of the said .....

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as 36,000 copies per hour. On that basis, contention raised in the writ petition was that action of the Department in not allowing the appellant to clear the machine was illegal. The appellant also alleged failure and refusal on the part of the customs authorities in not permitting the appellant to effect clearance for an inordinately long period of time after the machine was landed. On the basis of these pleadings, following main relief was claimed in the prayer clause: The petitioner, therefor .....

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the time the same is cleared by the appellant. In addition, interim prayer for immediate clearance of the machine by the appellant and issuance of detention certificate were also made pending the hearing and final disposal of the writ petition. 15) As mentioned above, this interim prayer was allowed by the High Court. However, the writ petition was still kept pending for the obvious reason that the appellant had sought the main relief of declaration that it was, in law, entitled to import and c .....

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ion in motion via Section 28 route. For some reason, that was not done and it was more so as the appellant had itself prayed for declaration to this effect in the writ petition, which means it called upon the High Court to decide this issue. 17) In the aforesaid scenario, when the writ petition was pending, wherein this issue was raised, probably for this reason the Department also stayed its hands off. No doubt, there was no stay of adjudication proceedings and the competent authority could go .....

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order it had got the printing machine cleared from the customs authorities and was using the same. However, it did not choose to do so. Had it done so, and thereafter received show cause notice under Section 28 of the Act, it could have defended that notice raising the plea of limitation as well. Only then question would have arisen as to whether the period during which the writ petition remained pending had to be excluded or not, for the purpose of computing limitation period. However, for the .....

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ating authorities under the Act to determine the disputed questions of fact. Left with no other alternative, we are constrained to decide this matter on merits on appreciation of evidence for the following reasons: 18) Then, as many as seven reasons were given by the High Court which compelled the High Court to decide the issue on merits. After noting those reasons, the High Court recorded as follows: In the aforesaid circumstances, though we initially thought of getting the issue adjudicated th .....

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(28) ELT 53 (SC) so as to contend that show cause notice cannot be issued beyond six months under Section 11-A [(sic); Section 28] of the Act, and that after 14 years petitions cannot be asked to face the adjudication process. This is how the petitioners pressed for the decision on merits. 19) It shows that High Court was not oblivious of Section 28 of the Act and that determination of such an issue is to be more appropriately in the hands of Adjudicating Authority. It also appears that High Cou .....

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s entertained, kept pending for 14 years and when it is being heard on merits. He also raised a contention that the availability of alternate remedy does not affect the jurisdiction of the Court to issue writ. He also brought to our notice judgment of this Court in the case of Nehawas Steel Traders Vs. Union of India, 1993 (68) ELT 721 (Bom.). The petitioners therein were permitted to clear the assignment on certain terms under interim order which specifically provided that the respondents would .....

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erits and finding that the decision has gone against the appellant, contrary argument is nothing but a desperate attempt to chicken out of the situation which is appellant's own creation. This kind of somersault, taking completely reverse stand before us, cannot be countenanced. We, therefore, reject the contention of the appellant that High Court was not competent to decide the issue in exercise of its writ jurisdiction. 21) The position would have been different if it was a case of inheren .....

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nent is that it is the appellant which not only made a prayer in the writ petition for deciding the issue in question, even at the time of hearing (as noted above), it is the appellant which pressed for the decision with the submission that existence of alternate remedy should not deter the Court to render the decision on merits. In such a situation, the objection, if any, to the maintainability of the writ petition could have been taken by the respondent and it does not behove the appellant to .....

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this argument have already surfaced while discussing the preceding submission. However, we would like to recapitulate them with focus on the issue at hand which is being addressed now. 24) The issue as to whether the import of Web Printing Machine was covered by Notification No. 114/80-CUS dated 19.06.1980 was pending in the High Court in respect of which petition was filed by the appellant itself way back in the year 1988 raising this issue. The appellant even got the interim order in its favou .....

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f the provisions of Section 28. That is categorically recorded in the impugned judgment. Curiously, it is the appellant who, pointing this very reason, invited the decision on merits. Now, therefore, issue of limitation is not even open for the appellant to urge before us. 25) Other arguments of Mr. Rao were on the merits of the case. Now we shall advert to those submissions. 26) As pointed out above, the case of the appellant is that the High Court has given undue weightage to the two leaflets .....

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y be divided into parts. One part of the document consists of two leaflets furnishing technical data and description of the printing machine in question along with Bill of Entry and certificate showing date 08.02.1987 issued by the manufacturer of the machine M/s. Harris Graphics Corporation, USA. The other part of the document is nothing but a correspondence made by the appellant, its Clearing and Holding Agent and one M/s. S.L. Kulkarni & Co., which deals in printing machinery, projecting .....

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ther part of documents is basically the reproduction of documents supplied by the appellant itself. 27) Thereafter, the High Court formulated the question as to whether the appellant had discharged its burden to prove that the subject printing machine imported by it under OGL was having an output of more than 35,000 copies per hour so as to entitle it to claim exemption under Notification No. 114/80-CUS, as amended from time to time. On that touchstone, the High Court has examined, appreciated a .....

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which were found along with the machine, are discussed: 38. The bare reading of the above certificate gives a picture that Model-15-H is with JF-25, JF-4, JF-10. If this certificate is read in the light of leaflets referred to hereinabove, the relevant portions of which are extracted in the above par, it would be clear that the manufacturer wants to suggest that the folder JF-25-B has been upgraded to JF-25, with additional folders JF-4 and JF-10. Firstly, as already stated, the leaflets do not .....

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ine furnished by the Customs based on the inspection completed before 28th September, 1988 shows that the folder base of the machine in question was found as JF-25-B model. Had the folder been upgraded from JF-125-Bto JF-25 then the machine in question ought to have been with modified folder JF-25 and could not have been with folder base JF-25-B. Fourthly, other modified folders JF-4 and JF-10 are not to be found in the inspection note, obviously, for want of such machine or model with such modi .....

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due to higher speed, the horse power of the machine has also been suitably modified is the case sought to be made out. We have already observed and recorded our finding that no evidence is available on record to establish modifications of the folder base of the machine or model in question. If this be our finding, then the logical conclusion is that no modifications have been made in the folder base of the machine or model in question. If that be so, then in absence of modification of the folder .....

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