1992 (3) TMI 67 - HC - Customs

Import - Finished or complete article - Essential character of - Interpretation - Fiscal statute

Summary

Issues Involved:
1. Legality of importing photocopier components in semi-knocked down (SKD) condition.
2. Compliance with Import Trade Control (ITC) Policy.
3. Validity of penalties and confiscation under Sections 111(d) and 112(a) of the Customs Act, 1962.

Issue-wise Comprehensive Details:

1. Legality of Importing Photocopier Components in SKD Condition:
The petitioners, Hindustan Copiers Ltd., imported 1,400 copier machines in SKD condition, which were later assembled in India. The court noted that the importation of component parts is not expressly prohibited by law, even if these parts can be assembled into whole machines. The court emphasized that there is no general law in fiscal and taxing matters prohibiting indirect actions that cannot be done directly, provided the letter of the law is not violated.

2. Compliance with Import Trade Control (ITC) Policy:
The Collector of Customs argued that the importation of complete machines disguised as components violated the ITC Policy. The court, however, found that the petitioners did not violate the letter of the law as there was no ban on importing all component parts under the petitioner's licenses. The court distinguished this case from previous cases like Girdharilal Banshidhar and Sharp Business Machines, where specific bans on whole items or percentage limitations were present.

3. Validity of Penalties and Confiscation under Sections 111(d) and 112(a) of the Customs Act, 1962:
The court held that the petitioners were not guilty of violating Sections 111(d) and 112(a) of the Customs Act, 1962, as the consignments were imported under valid licenses, and the assembly of components into whole machines was a legal manufacturing activity. Consequently, the court quashed the Collector's order of confiscation and penalties.

Conclusion:
The court exonerated the petitioners from all charges, quashed the order of confiscation and penalties under Sections 111(d) and 112(a) of the Customs Act, 1962, and directed the discharge of bonds and bank guarantees furnished by the petitioners. The court emphasized the importance of adhering to the letter of fiscal and taxing statutes and clarified that no punishment or action could be taken against a citizen for violating the spirit of such statutes.