2000 (11) TMI 149 - HC - Customs

Issues Involved:

1. Entitlement to registration of project contracts under Project Imports (Registration of Contract) Regulations, 1965.
2. Classification of Graphic Art Films under Tariff Entry 84.66(i) or 84.66(ii).
3. Interpretation of "initial setting up of a unit" and "maintenance of the plant or project".
4. Relevance and statutory value of the Director General - Technical Development's recommendation.

Detailed Analysis:

1. Entitlement to Registration of Project Contracts:

The petitioner challenged the orders dated 23-12-1985 and 9-1-1986 by the Assistant Collector of Customs and Collector of Customs, respectively, which denied the registration of the project contract for Graphic Art Films. The petitioner sought registration under the Project Imports (Registration of Contract) Regulations, 1965, claiming entitlement to lesser duty under Entry 84.66. The learned single Judge initially allowed the writ petition, granting registration for the Graphic Art Films, considering them necessary for setting up the unit and testing the imported machinery. However, this decision was appealed by both the Collector of Customs and the petitioner.

2. Classification of Graphic Art Films under Tariff Entry 84.66(i) or 84.66(ii):

The core issue was whether Graphic Art Films fell under Entry 84.66(i) or 84.66(ii). The petitioner consistently claimed their entitlement under Entry 84.66(ii), which pertains to spare parts, raw materials, or consumable stores essential for the maintenance of the plant or project. The learned single Judge, however, classified the Graphic Art Films under Entry 84.66(i), which covers items necessary for the initial setting up of a unit. The appellate court found this classification incorrect, noting that the Graphic Art Films could not be associated with machinery, instruments, apparatus, or auxiliary equipment listed under clauses (a), (b), and (c) of Entry 84.66(i).

3. Interpretation of "Initial Setting Up of a Unit" and "Maintenance of the Plant or Project":

The appellate court emphasized that the language of Entry 84.66(i) specifically refers to items necessary for the initial setting up of a unit, which does not include Graphic Art Films. The court also rejected the argument that the films were necessary for testing the machinery as part of the initial setup. Regarding Entry 84.66(ii), the court agreed with the learned single Judge that Graphic Art Films were not essential for the maintenance of the plant or project. The court held that interpreting the entry to include the films would require ignoring the specific language "for the maintenance of," which is not permissible.

4. Relevance and Statutory Value of the Director General - Technical Development's Recommendation:

The court addressed the petitioner's reliance on the recommendation of the Director General - Technical Development. It was clarified that the recommendation did not have statutory force under Regulation No. 3(2) of the Project Imports Regulations. The concurrence of the Director General is necessary only for imports by government entities, not private petitioners. Therefore, the recommendation, even if obtained, was not binding on the customs authorities and held no persuasive legal value.

Conclusion:

The appellate court concluded that the learned single Judge's judgment was incorrect. The Graphic Art Films did not qualify for registration under either Entry 84.66(i) or 84.66(ii). Consequently, the appeal by the Collector of Customs was allowed, and the appeal by the petitioner was dismissed. The judgment granting registration for the Graphic Art Films was set aside, and the petitioner's claim for lesser duty under the disputed entries was denied.

← Previous Next →