1999 (11) TMI 63 - SC - Customs

Whether the appellant is entitled to benefit of Notification No. 13/81 read with Export-Import Policy, 1992-97? Held that - the Import-Export Policy 1992-97 read with Notification No.13/81 gives exemption to the goods imported for the first time in India and does not cover the goods already imported and sent abroad for the purpose of repairs and then re-imported to India. The machinery parts exported for repairs and re-imported thereafter did not require any licence for the import of the goods, which licence is one of the condition precedent to attract applicability of Notification No. 13/81. Same is the inference which flows from the provisions contained in paragraphs 24, 25, 26 and 31 of the Policy. Para 172 of the Policy makes it legal to re-import after repairs abroad the machinery and equipment exported specifically for the purpose of repairs and also allows release of foreign exchange payment for the purpose. Both these things may not have been permissible but for para 172 of the Policy. This is the only effect of para 172. Reliance on para 172 so as to link the Policy with Notification No. 13/81 is misconceived. Para 159, while permitting conversion of an existing DTA into EOU, specifically excludes any concession in duties and tax (under the Policy) being made available to plant and machinery already installed. The parts exported and re-imported by the appellant were of the machinery already installed on the date of promulgation of the Policy. They were certainly not covered thereunder. Appeal dismissed of assessee.

Summary

Issues:
1. Entitlement to benefit of Notification No. 13/81 under Export-Import Policy, 1992-97.

Analysis:
The appellant, a tea company, imported two decanter machines in 1982 from Germany and duly paid the applicable customs duties. In 1992, certain parts of the machine were sent to Germany for repairs, and re-imported in 1993. The appellant claimed exemption from customs duty under Notification No. 13/81, which was denied by the Assistant Collector of Customs. The issue revolved around whether the appellant was entitled to the benefits under Notification No. 13/81 in connection with the Export-Import Policy, 1992-97.

The Export and Import Policy 1992-97 granted benefits to 100% export-oriented units (EOUs). The Government of India declared the appellant as a unit entitled to facilities under the EOU scheme, allowing import of capital goods exempt from customs duty. The appellant had already imported capital goods worth Rs. 225 lacs, with a balance of Rs. 75 lacs still available. The cost of repairs incurred in Germany was declared to be the value of the goods for re-importation under Notification No. 13/81.

Notification No. 13/81 exempted capital goods imported for manufacturing articles for export by 100% EOUs, subject to certain conditions, including the requirement of a necessary license for import. The Import-Export Policy 1992-97 specified conditions for importing second-hand capital goods and goods sent abroad for repairs and re-importation. The Tribunal analyzed these provisions and concluded that the benefits under Notification No. 13/81 did not extend to goods already imported, sent abroad for repairs, and re-imported.

The Supreme Court held that goods sent out of India for repairs and re-imported would be liable to duty as if imported for the first time. The appellant did not meet the conditions under Notification No. 13/81 as the goods did not require a license for import, a prerequisite for the exemption. The Court emphasized that the machinery parts exported and re-imported were not covered under the Policy's concessions, as they were already installed machinery parts. Therefore, the appellant was not entitled to the benefits under Notification No. 13/81 and the appeals were dismissed.