TMI Blog2003 (9) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... imported components. Therefore, for conducting study and also for development of the component parts in India, the petitioners imported a fully built car from South Africa in December, 1995. 5.After importation of car, while conducting the study and research, it was driven within the factory premises. Further, for the purpose of export, the car was driven from Pune to Mumbai. The car had thus clocked a mileage of 232 Kms. The said car, after conducting studies of various components in India came to be exported on 17-2-1997, under cover of shipping bill for export of goods under claim for drawback. 6.The petitioners on 27-5-1997 filed drawback claim with respondent No. 4 claiming drawback @ 98% as provided in Section 74(1) of the Customs Act, 1962 amounting to Rs. 18,85,868.88. On 13-4-2000, the petitioners were granted drawback @ 60% amounting to Rs, 11,52,648/- in terms of Section 74(2) of the Customs Act, read with Notification No. 19/65, dated 6-2-1965 issued thereunder, holding that the car was used in India prior to its exportation and hence the petitioners are not entitled for 98% drawback. 7.Not being satisfied with the grant of duty drawback @ 60% an appeal was prefe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.According to Shri Shreedharan, under Section 39 of the Motor Vehicles Act, any car prior to its use, must be registered with the authorities specified therein. In other words, car could not have been put to use on road without its registration. The car in question was never used by plying on road after its registration under Motor Vehicles Act. In the instant case, no such registration was ever obtained since car was to be exported back. He also contended that the car was never meant for use in India. For this reason also, the car cannot be said to have been used after importation in India. He placed reliance on the judgment of the Supreme Court in the case of Anwarkhan Mahboob Co. v. State of Bombay, AIR 1961 SC 213 and in the case of Kathiawar Industries Ltd. v. Jaffarabad Municipality, 1979 (4) SCC 56 to contend that the car only be said to have been used, if it is used for the purposes for which it was intended. Therefore, on the facts of this case, there is no use of car within the meaning of Section 74(2) of the Act as such petitioners are entitled for duty drawback @ 98% of the duty paid by them. Per Contra : 12.In a persuasive address by Shri Rana, learned Senior C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h have been used after the importation thereof shall be such as the Central Government, having regard to the duration of use, depreciation in value and other relevant circumstances, may, by notification in the Official Gazette, fix." The aforesaid sub-section (2) of Section 74 provides that the rate of drawback shall be such as may be fixed by the Central Government by Notification issued in that behalf. Notification No. 19/65-Cus., dated 6-2-1965 has been issued by the Government of India, in supersession of the notification of the Government of India, Ministry of Finance (Department of Revenue), Customs No. 48, dated 1st February, 1963. The Central Government fixed the rate as mentioned in column 2 of the table reproduced hereinbelow, as the rates at which drawback of import duty is to be allowed in respect of goods used which have been out of Customs control for the period mentioned therein, the details of which are as under : Length of period between of clearance for home consumption and the date when the goods are placed under Customs control for export. Percentage of import duty to be paid as drawback. Not more than 6 months 85% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that under Section 74(2) of the Act 'use' contemplated is commercial use of the imported goods prior to its export. In other words, is it necessary for the purposes of Section 74(2) that the goods must be used prior to its export for the purpose for which it was intended. Can it be said that in absence of such included user the goods were not used or that there was no use within the meaning of Section 74(2) of the Act. In order to answer these questions, undisputed facts noticed are : The petitioners were desirous of manufacturing car spare parts to avoid depending on imported components. In order to carry out study and research in that behalf with a view to develop technique of manufacturing spare parts in India, the import of car was made from South Africa in December, 1995. While conducting study, the car, was driven within the factory premises. It was further driven from Pune to Mumbai for the purposes of export. The car had thus clocked a mileage of 232 Km. The word 'use' is not defined in the Act. It must, therefore, carry its ordinary meaning subject to such modification as the context requires. 17. Let us examine the ordinary meaning of the word 'use'. In Shorter Oxford ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Customs Act and not under Section 74(1). The decision which has been relied on by the learned Counsel for the petitioner has no application, because, in that case, the machineries were not put to any use at all, and distinctions were drawn between the provisions of Sections 74 and 75 of the Customs Act. Section 75 of the Customs Act refers to the use in the manufacture of goods. There is no such contemplation under Section 74 and, therefore, the use for exhibition would be covered under the term used under Section 74(2). The refund has rightly been granted. No case for interference is made out. Writ petitions are dismissed accordingly." The above case can be said to be little closer to the facts of the present case. We respectfully propose to follow the above view taken by the Karnataka High Court. 20. The Supreme Court recently had an occasion to consider the similar issue in case of Director of Entry Tax v. Mainbrace Mahindra, 2001 (5) Supreme 394. Interpretation of the word use in the light and context of taxes of Entry of Goods into Calcutta Metropolitan Area Act, 1972 (the 'Act of 1972' for short) was required to be considered. The respondents therein had brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its manufacture in India. The car was driven within factory premises for the said purpose. In our opinion, on the factual matrix of this case, which is not in dispute, the car was used for the purpose for which it was imported, taking advantage of free importability permitted by the export policy of the country. Use of the car for the purpose of research can also be said to be use for commercial purpose. As a matter of fact, petitioners, in our opinion, are stopped from canvassing any contrary contention. The impugned order though did not take this view, which Revenue could, persuade us to support the ultimate conclusion reached in the impugned order may be for the different reasons recorded herein. The impugned order thus can be sustained for the reasons recorded herein, in addition to the reason given by the authorities below. 21. Alternatively, assuming that the above use is not contemplated in Section 74(2) of the Act; even then the petitioners cannot be said to be in a better position. Petitioners are not right in contending that the car was not used for the purpose for which it was meant. They are also not right in contending that the vehicle was not put to commercial use p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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