1989 (8) TMI 84 - HC - Customs

Summary

Issues Involved:
1. Legality of conditions imposed by the Customs Authorities for the release of imported goods.
2. Applicability and interpretation of Exemption Notification No. 224/85-Cus., 158/85-Cus., and 225/85-Cus.
3. Requirement of producing manufacturer's catalogues/literature.
4. Requirement of providing an explanation regarding valuation in terms of surface area.
5. Necessity of End Use Bond and Bank Guarantee.

Issue-wise Detailed Analysis:

1. Legality of Conditions Imposed by the Customs Authorities:
The petitioner challenged the conditions imposed by the Customs Authorities for the release of imported goods, arguing they were "wrongful, illegal and without jurisdiction." The Customs Authorities required the petitioner to produce an End Use Bond, a Bank Guarantee for the difference between standard and concessional rates of duty, manufacturer's catalogues/literature regarding the use in the leather industry, and an explanation regarding valuation in terms of surface area. The Court found that the conditions imposed by the Customs Authorities were not stipulated in the exemption notifications and thus could not be strictly supported in law. The Court emphasized that administrative acts cannot go contrary to statutory notifications.

2. Applicability and Interpretation of Exemption Notification No. 224/85-Cus., 158/85-Cus., and 225/85-Cus:
Both parties admitted that the exemption notifications provided benefits to importers of stamping foils for use in the leather industry. The petitioner argued that the Customs Authorities had no jurisdiction to demand compliance with conditions not provided in the notifications. The Court agreed, referencing the case of Modi Rubber Limited v. Union of India, which established that conditions for exemption should be part of the notification itself and not imposed through administrative directions or guidelines.

3. Requirement of Producing Manufacturer's Catalogues/Literature:
The Customs Authorities demanded the production of manufacturer's catalogues to verify the use of stamping foils in the leather industry. The petitioner contended that this requirement was unreasonable and not mandated by the exemption notifications. The Court ruled that the production of manufacturer's catalogues was not relevant at the time of the release of goods. It was held that the onus of proving the use of stamping foils in the leather industry could be met through the execution of an End Use Bond, making the demand for catalogues unnecessary.

4. Requirement of Providing an Explanation Regarding Valuation in Terms of Surface Area:
The Customs Authorities also required an explanation regarding the valuation of stamping foils in terms of surface area. The petitioner argued that this requirement was not stipulated in the exemption notifications. The Court agreed, finding no necessity for such an explanation for the release of the imported goods. The Court held that the End Use Bond would suffice to ensure that the stamping foils were used in the leather industry.

5. Necessity of End Use Bond and Bank Guarantee:
The Court found that the requirement for an End Use Bond was justified and necessary to ensure that the stamping foils were used in the leather industry. However, the requirement for a Bank Guarantee was deemed unnecessary, as previously determined by both the Trial Court and the Appeal Court. The Court concluded that the End Use Bond and other necessary documents would adequately safeguard the interests of the revenue.

Conclusion:
The writ petition was allowed in part. The Customs Authorities were directed not to insist on the production of manufacturer's catalogues/literature or explanations regarding valuation in terms of surface area for the release of the imported goods. However, the petitioner was required to execute an End Use Bond and other necessary documents to the satisfaction of the Customs Authorities, ensuring that the stamping foils would be used in the leather industry. There was no order as to costs.