TMI Blog1984 (9) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under Notification No. 82/60, dated 6th August, 1960 issued under section 23 of the Sea Customs Act, 1878 (hereinafter referred to as "the said Exemption Notification"). 4. The respondent-company carries on the business of manufacture of internal combustion engines which are also known as diesel engines. The relevant part of the said Exemption Notification runs thus : "...... the Central Government hereby exempt component parts of any machinery when imported into India or the State of Pondicherry and proved to the satisfaction of the Customs Collector to be required for the purpose of the initial setting up of the machinery or for its assembly or manufacture, from so much of the customs duty leviable thereon under the Indian Tariff Act, 1934 (32 of 1934), as is in excess of the rate applicable under the last mentioned Act to the said machinery when imported complete subject to the following conditions... ..." The conditions provide the Development Wing of the Ministry of Commerce and Industry must be satisfied and certify that the component parts in question were or would be required for the purposes specified above in the said Notification and recommended grant of the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vehicular type of diesel engines. We propose to deal only with the demand of Rs. 9,91,537.14 which amount we propose to refer hereinafter as "the amount demanded" as that is the only demand we are concerned with. The respondent appealed against the said decision to the Appellate Collector of Customs and also requested that the payment of the amount demanded may be waived pending the appeal. This request, however, was not granted and the respondent had to deposit the amount demanded as a condition precedent to the maintainability of its appeal. The appeal was dismissed by the Appellate Collector on 22nd December, 1972 and the aforesaid amount demanded which was deposited by the respondent on 3rd February, 1970, as set out earlier, was appropriated by the Customs Authorities. In June 1973, the respondent preferred a revisional application which was rejected on 19th March, 1976. Before filing the said revision application, the respondent filed the aforesaid writ petition in this Court on 10th April, 1973 praying that the order of the Appellate Collector dated 25th November, 1969 as well as the other orders impugned be set aside and the appellants be directed to refund to the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ariff entry No. 72(a) of the Indian Tariff Act, 1934. The contention of the Department, that is of the appellants herein, on the other hand, was that the diesel engines manufactured by the respondent which were fitted on dumpers would fall within the entries Nos. 75(10) to 75(12) of the Indian Tariff Act. The contention of the respondent that the diesel engines in question fell within tariff entry No. 72(a) was accepted by the learned Judge. It was held by the learned trial Judge that the view taken by the Customs Authorities as set out eartrial was entirely erroneous and could be set aside in a petition under Article 226 of the Constitution. It is the correctness of this conclusion which is challenged before us. 6. The first submission of Mr. Sethna, learned Counsel for the appellants is that the respondent is not entitled to the benefit of the said Exemption Notification dated 6th August, 1960 in respect of such components imported by the respondent as were utilised in the assembling of such diesel engines which were fixed on dumpers. Curiously enough, they have also taken the same stand in respect of the components utilised by the respondent in the manufacture of diesel engine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inery" as used in item 72(a). The only submission of Mr. Sethna was that the diesel engines in question were not covered within the said entry, because they were otherwise specified in the said Tariff and the definition of machinery in item No. 72 itself took out of its scope articles which were otherwise specified. In response to the query as to where else in the said tariff the diesel engines could be said to be specified, Mr. Sethna drew our attention to sub-items (9) to (12) of item No. 75. Item 75, it may be mentioned, is in section 17 of the said tariff and deals with transport materials. Sub-items (9) to (11) of item 17 need not detain us, because the plain reading thereof makes it clear that these items could only cover components of diesel engines and not diesel engines themselves. As far as item 75(12) is concerned, the material portion thereof runs as follows : "Articles other than rubber types, tubes, batteries and such other components as are specified in Items Nos. 72(35), 75(9), 75(10), 75(11), 75(14), 75(15), 75(16) and 75(18)(b)(ii) adapted for use as parts and accessories of motor vehicles other than motor cycles and motor scooters." It appears to us that a pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classification to which the carbon arcs belong. That is determined by their ordinary or commonly known purpose or user. 7. The next submission of Mr. Sethna was that whatever might be the position under the Exemption Notification, the respondent had committed a breach of the conditions of the bonds executed by them at the time of importing the said component parts ; for the purpose of securing the benefit of the Exemption Notification the respondent had in the bills of entry described the said components as "component parts of diesel engines for assembly of stationary type under Notification 82/60" as set out earlier whereas the aforestated diesel engines were fitted on vehicles and hence the Customs Authorities or the Department was entitled to forfeit the bonds and recover the amounts thereunder. It is not necessary to set out the entire form of the bond here. The bond inter alia recites that at the request of the importer and on production of a certificate from the authority prescribed under the said Exemption Notification at the time of clearance to the effect that the component parts to be imported from time to time during the period in question as were required for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omponent parts to be imported as required for the manufacture or assembly of diesel engines of stationary type and to the extent set out earlier they had used them for the purposes of manufacture of diesel engines of vehicular type and hence they have committed a breach of the bills of entry. It was also submitted by him that the bond must be read as describing the machinery of the same type as described in the bill of entry. There is no merit whatsoever in any of these submissions. In the first place, we fail to see why the machinery referred to in the bond should be limited to the machinery described in the bill of entry, because the bond nowhere refers to the bill of entry at all. What is more important still is that all the diesel engines manufactured by the respondent out of the imported component parts were of the same type and hence the words "stationary type" used in the bill of entry are meaningless. In fact looking to the normal use of these diesel engines one could say that all the diesel engines manufactured by the respondent out of the component parts were diesel engines of the stationary type. None of them had been adapted specially for using them in vehicles. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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