1993 (1) TMI 139 - HC - Customs

Issues Involved:
1. Applicability of Tariff Heading 98.01 to photographic machinery.
2. Validity of the definition of "industrial plant" in the Project Imports Regulations, 1986.
3. Application of the doctrine of promissory estoppel.
4. Excessive delegation and the power of the Board to define terms.
5. Interpretation of fiscal statutes and the principle of strict construction.
6. Impact of prior government orders and notifications.
7. Alleged violation of Article 14 of the Constitution of India.

Issue-wise Detailed Analysis:

1. Applicability of Tariff Heading 98.01 to Photographic Machinery:
The core issue is whether Tariff Heading 98.01 applies to photographic machinery imported by the petitioners. The petitioners argued that their machinery should be assessed under Heading 98.01, benefiting from concessional duty. However, the customs authorities assessed the machinery under Heading 90.10, which prescribes a higher duty rate. The court noted that Chapter 98 is for special use and provides concessions based on the user of goods. The conditions set out in Chapter 98 must be satisfied to claim the benefit. The court concluded that the machinery imported by the petitioners falls outside Chapter 98 and is governed by Heading 90.10 due to the definition of "industrial plant" in the Project Imports Regulations, 1986.

2. Validity of the Definition of "Industrial Plant" in the Project Imports Regulations, 1986:
The petitioners challenged the validity of the definition of "industrial plant" in the Project Imports Regulations, 1986. The court held that the Legislature has entrusted the function of defining expressions used in Chapter 98 to the Board of Central Excise and Customs. The Board's definition excludes photographic studios and film processing laboratories from the scope of "industrial plant." The court found no merit in the contention that the Board's definition reduces the scope of Heading 98.01. The court upheld the validity of the definition contained in the regulations.

3. Application of the Doctrine of Promissory Estoppel:
The petitioners argued that the principle of promissory estoppel should apply, preventing the authorities from applying the new definition since they had acted based on the old regulations. The court rejected this argument, stating that the principle of estoppel cannot override the clear provisions of Section 15 of the Customs Act, which specifies the relevant date for determining the rate of duty. The court emphasized that the legality of the import was not questioned, only the quantum of duty payable.

4. Excessive Delegation and the Power of the Board to Define Terms:
The petitioners contended that the Legislature cannot delegate its legislative functions to the Board to alter the scope of the legislation. The court dismissed this argument, stating that the Legislature has conferred the power to define expressions used in Chapter 98 to the Board. The Board's regulations are consistent with the statute, and there is no excessive delegation of legislative power. The court referred to the judgment in M/s. Babu Ram v. State of Punjab, which upheld the delegation of power to local authorities or the Executive Government.

5. Interpretation of Fiscal Statutes and the Principle of Strict Construction:
The petitioners argued that fiscal statutes should be strictly construed, and no equitable considerations should arise in interpreting such statutes. The court agreed that fiscal statutes must be interpreted strictly according to the natural construction of their words. The court emphasized that there is no room for any intendment or equity in taxing statutes, and the subject must be taxed according to the clear words of the law.

6. Impact of Prior Government Orders and Notifications:
The petitioners contended that a prior government order dated 4-11-1983 extended the project import facility to their machinery, and the Board cannot act contrary to it. The court rejected this argument, stating that the Parliament has entrusted the function of defining expressions to the Board with effect from 30-3-1986. The notification of the Central Government dated 4-11-1983 ceased to be effective after the introduction of the new regulations by the Board on 3-4-1986.

7. Alleged Violation of Article 14 of the Constitution of India:
The petitioners argued that the definition of "industrial plant" in the regulations is arbitrary and violates Article 14 of the Constitution of India. The court found no merit in this contention, stating that the expression "industrial plant" in Heading 98.01 can only have the meaning assigned to it by the Board in the regulations. The court held that there is no discrimination or violation of Article 14, and the exclusion of certain establishments from the definition is not arbitrary.

Conclusion:
The court dismissed the writ petitions, upholding the validity of the Project Imports Regulations, 1986, and the definition of "industrial plant" contained therein. The court rejected the application of the doctrine of promissory estoppel and emphasized the principle of strict construction in interpreting fiscal statutes. The court found no merit in the arguments of excessive delegation, violation of Article 14, or the impact of prior government orders. The petitioners are required to pay the higher duty prescribed under Heading 90.10.

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