TMI Blog1981 (10) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and Pyrethrum Flowers Crushed were classified by the Customs Department for the purposes of Customs Duty as a substance falling under Item No. 28 of the Tariff. Item No. 28 is in Section VI of the Schedule which reads as : "Chemical and Pharmaceutical Products; Colours and Varnishes Perfumery; Soap, Candles and the like; Glues and Celatines; Explosives Fertilisers." The articles covered under Item No. 28 are chemicals, drugs and medicines, all sorts not otherwise specified. 3. The petitioners imported Pyrethrum Flowers and Pyrethrum Flowers Crushed during the period commencing from March 1, 1968 till March 15, 1975. The consignments were cleared by the petitioners during the relevant period under Item No. 21 of the First Schedule to the Indian Tariff Act, 1934. After August 1, 1976, when the new Customs Tariff Act, 1975 came into force, the Pyrethrum Flowers are classified under Chapter 12, but it is not necessary for this petition to make reference to the provisions of that Act. The Government of India published a Notification on March 1, 1961 in exercise of the powers conferred by sub-section (1) of Section 25 of the Customs Act, 1962 granting exemption to chemicals for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical Development in respect of the import of consignment after the date of the Notification. The Office of the Directorate General issued the certificates from time to time and a copy of one of the certificates dated May 9, 1969 is annexed as Ex. `H' collectively to the petition. The Directorate General of Technical Development has certified that the chemicals mentioned in the certificate including pyrethrum flowers are required for the manufacture of insecticides and are not produced in India. The Directorate General of Technical Development also issued end-use certificates as required by the Notification from time to time and the copy of the certificate dated May 1, 1970 is annexed as Ex. H. (collectively) to the petition. The said certificate certifies that the chemicals—pyrethrum flowers—was used for the purpose of manufacture of insecticides. There is no dispute that in fact, the entire import of pyrethrum flowers and pyrethrum flowers crushed was used by the petitioners for the manufacture of insecticides. The petitioners executed the required bonds under the Exemption Notification and claimed exemption but the Customs authorities declined to give advantage of the notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where it can be contended that these certificates have been obtained by fraud or under mistake. The Appellate Collector by his order dated February 2, 1976 disposed of 25 appeals, which were consolidated, holding that the petitioners are not entitled to the advantage of the exemption notification. The Appellate Collector held that it is open for the Customs authorities to determine whether the substance imported by the petitioners was a chemical and whether such substance was produced in India and the Customs authorities are not bound to accept the certificates issued by the D.G.T.D. The Appellate authority observed that the product imported does not appear as a chemical in any one of the known technical dictionaries nor is commonly known in trade as a chemical, but on the other hand, it figures in recognised books in Pharmacopoeas like B.P.C.I.P. Patre Pharmacopoea. The Appellate authority further held that the pyrethrum flowers are recognised as a drug under the Drugs Act, 1940. The Appellate authority relied upon the literature produced by the petitioners and held that the certificates of the D.G.T.D. are either obtained by making incorrect representations or were issued under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the pyrethrum flowers are not chemicals and reliance was placed on Merck Index, 9th edition (1976) and The British Pharmaceutical India (1934) to conclude that the product imported was a natural product and not chemical. The petitioners preferred revision application against the dismissal of the remaining three appeals also. 8. The revisions were posted for hearing before respondents Nos. 12 and 13 on March 19, 1976. The respondents Nos. 12 and 13 invited the attention of the petitioners to the Dictionary meaning of "chemicals" and granted time to produce certificates to establish that pyrethrum flowers are chemicals. The petitioners produced three certificates on March 29, 1976 and these certificates were issued by the Director of Agriculture, Maharashtra State, Poona on March 22, 1976; by the Assistant Director(Chemical) of Government of India, Department of Supply on March 27, 1976 and the certificate dated March 29, 1976 by the Director, Central Indian Medicinal Plants Organisation (Council of Scientific Industrial Research). These three certificates, inter alia, state that the pyrethrum flowers are termed and classified as a chemical and it will be in order to classif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were chemicals falling under Item 28 of the Tariff and the jurisdiction cannot be abrogated or deprived by direction of any authority or the certificates issued by any outside agency. The learned Counsel urged that the Customs authorities in exercise of the quasi-judicial authority are not bound to accept any certificate as regards the nature of articles. Shri Chinoy, further submits that in claiming advantage of the exemption notification, the onus is always upon the assessee and on material produced by the petitioners and that taken into consideration by the Department, it is difficult to suggest that the conclusion of the Department was either perverse or patently unreasonable so as to warrant interference under Article 226 of the Constitution of India. The learned Counsel further urged that it is open for the Department to go behind the certificates if it is established that the same were issued on evident error which could be established from the material on record. 11. In view of these rival contentions, the first question which requires determination is whether it was open for the Customs Authorities to go behind the certificates and determine that the product imported b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question as to whether the imported goods were chemicals or mere plants. It was urged that the plain reading of paragraph 2(i) of the Notification indicates that the certifying authority was only required to be satisfied that the goods imported were used for the manufacture of end product insecticides and the goods imported are not produced in India. It is difficult to accept this submission. The notification must be read as a whole and it is obvious that what has been exempted are the chemicals falling under Item No. 28 of the Tariff which are used for the manufacture of insecticides and paragraph 2 provides that exemption shall be available only if the conditions are fulfilled, one of the conditions being production of the certificate. Reading the Notification in its proper perspective, it is obvious that the Directorate General has to certify that goods imported are chemicals and they are required for the manufacture of insecticides and are not produced in India. Shri Chinoy urges that the question as to whether the imported goods are chemicals or not is a mixed question of fact and law and such question could not be left for the determination of the Directorate General and must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age that the goods imported were drugs, there was nothing wrong in the Customs authorities determining whether the goods imported were chemicals or not and not blindly following the certificate issued by the Directorate General. The mere fact that a ground has been raised in the appeal memo filed by the petitioners is not sufficient to hold that the petitioners were claiming that the goods imported were drugs. It is common knowledge that several grounds are taken in the appeal Memo and the craftsman takes an alternate position while lodging an appeal. The grounds urged are always without prejudice to one another and it would be improper to pick up one of the grounds to come to the conclusion that even the petitioners were asserting that the goods imported were not chemicals. In this connection, it would also be necessary to make reference to the claim made by the petitioners in paragraph 5 of the petition. The petitioners have claimed in this paragraph that pyrethrum flowers must be classified as "chemicals all sorts not otherwise specified". It is obvious that the petitioners were all along claiming that the goods imported were chemicals and the Customs authorities cannot re-open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India, Department of Supply, indicates that after Laboratory experiment, it was ascertained that pyrethrum flowers and crushed pyrethrum flowers consist of four different chemicals viz. (l) Fsters-pyrethrin I, (2) Pyrethrin II, (3) Cinerin I and Cinerin II. In my judgment, the certificates produced by the petitioners before the revisional authority support the claim that the goods imported were chemicals. In these circumstances, it was not open for the Customs authorities to ignore the certificates by holding that the same were issued under an error or the D.G.T.D. cannot issue a certificate which has an effect of overriding the substantive part of the Notification in question. The view taken by the authorities below that the quasi-judicial authority is competent to interpret and apply the notification and can ignore the certificates issued by the D.G.T.D. is clearly erroneous. The conclusion recorded by the authorities by ignoring this certificate cannot be accepted. 17. Shri Chinoy submits that the certificate certifying that the goods imported are not produced in India is factually incorrect. It was urged that the appellate authority has very rightly relied upon the literature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orities should independently consider whether the requirements or the conditions of the Notification are complied with. Surely that could not have been the intention of the Government of India and it is clear that the Government desired that the exemption should be granted once the conditions of the Notification including the condition of a certificate from the Directorate General are complied with. In my judgment, the decision of the Customs authorities to go behind the certificate and determine whether the goods imported were chemicals is incorrect. The Customs authorities were bound and concluded by the certificate and were not justified in refusing the refund claim of the petitioners. Shri Teleyarkhan relied upon the decision of the Supreme Court in the case of M.G. Abrol, Additional Collector of Customs, Bombay and another v. M/s. Shantilal Chhotelal and Company reported in A.I.R. 1966 Supreme Court 197 in support of the submission that the certificate given by D.G.T.D. cannot be challenged by the Customs authorities and, in my judgment, the reliance on this decision is very appropriate. 18. Even assuming that it was open for the Customs authorities to go behind the certific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s imported are drugs but it has been classified as a drug under the Notification issued under the Drugs Act. The learned Counsel placed reliance upon the "Brussels Tariff Nomenclature" and submitted that "pyrethrum flowers" are included under Heading 12.07—Plants and Parts (including Seeds and Fruit). It was urged that the products are not put under heading "chemicals" under Chapter 28 or 29 of the "Brussels Nomenclature" and that is indicative of the fact that pyrethrum Bowers are not chemicals but plants. Strong reliance was placed on the explanation to be found on Page 68 of the "Brussels Nomenclature" under heading 12.07 to claim that the goods in question are known in commercial and trade circle as plants and not as chemicals. The explanation reads as under :- "It should also be noted that vegetable products more specifically described in other headings of the Nomenclature are excluded from the present heading, even if they are suitable for use in perfumery, pharmacy, etc." It is difficult from this explanation to conclude that the goods imported are known in trade as plants and not as chemicals. 20. Shri Chinoy also placed reliance on the observation made by the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X
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