1996 (8) TMI 106 - SC - Customs

Benefit of the concessional rate of duty provided by an Exemption Notification (No. 70/89) denied Held that - The Tribunal mis-directed itself. There is no question of reading the word and disjunctively here. The Exemption Notification must be read plainly as an ordinary man would read it and so read Sl. No. 6(a) says that cups of roller bearings are liable to the duty applicable to the bearings of which they are part and cones of roller bearings are liable to the rate of duty applicable to the bearings of which they are part. There is no justification for reading the entry conjunctively in the sense that the rate of duty applicable to the bearings of which they are part will apply only when the cups and cones of roller bearings are imported together but not if they are imported separately. Insofar as valuation is concerned the Collector was right in rejecting the transaction value of the goods because plainly it was a totally unrealistic value. For the purpose of placing a value on the goods however the Collector resorted to very tenuous reasoning which we cannot uphold. At the same time we must say that we do not approve of the findings of the Tribunal in this behalf which we have referred to above. It may in a given case be necessary to value unbranded goods on the basis of the known price of branded goods and also the goods of one country of origin on the basis of the known price of the goods of another country of origin but the linkage must be appreciable and proximate. Thus the matter of valuation of the goods must go back to the Collector and the respondents and appellants should have the opportunity to place before him material as may enable him to arrive at their assessable value.The appeal is allowed.

Summary

Issues:
Classification of imported goods under the Customs Tariff Act, 1975 and Exemption Notification (No. 70/89) - Sl. No. 6(a) vs. Sl. No. 6(c)
Valuation of goods based on transaction value and comparison with similar goods
Interpretation of legal terms 'cups and cones' and 'and' in the Exemption Notification
Appeal against the Collector's findings on classification and valuation

Analysis:
The case involved the classification and valuation of imported goods under the Customs Tariff Act, 1975, and Exemption Notification (No. 70/89). The respondents imported cups as parts of taper roller bearings and claimed the benefit of a concessional rate of duty under the Exemption Notification. The dispute arose regarding the correct classification of the goods under Sl. No. 6(a) or Sl. No. 6(c) of the Notification. The Collector of Customs determined the value of the goods based on comparisons with different brands of similar goods, rejecting the transaction value as unrealistic. The Tribunal found that cups and cones together constitute a bearing and classified the goods under Sl. No. 6(c), disagreeing with the Collector's valuation method.

The Tribunal's interpretation of the term 'cups and cones' and the legal significance of 'and' in the Exemption Notification were crucial aspects of the case. The Tribunal held that cups and cones are major component parts of roller bearings, leading to the classification of the goods under Sl. No. 6(c). However, the Supreme Court disagreed with this interpretation, stating that the Notification must be read plainly as an ordinary person would read it. The Court emphasized that the duty applicable to the bearings should apply even if cups and cones are imported separately, not just together.

Regarding valuation, the Court criticized the Collector's reasoning for determining the value of the goods based on comparisons with branded goods from different countries. The Court found the linkage between unbranded and branded goods, as well as goods from different countries, to be unacceptable. The Court concluded that the matter of valuation should be reassessed by the Collector, allowing both parties to present relevant material for determining the assessable value of the goods.

In the final judgment, the Supreme Court allowed the appeal, set aside the Tribunal's order, and remanded the case to the Collector of Customs for reassessment. The Collector was directed to classify the goods under Sl. No. 6(a) of the Exemption Notification and determine the Customs duty payable based on the reassessed value of the goods. The Court made no order as to costs in this matter.