1994 (5) TMI 115 - AT - Customs

Summary

Issues Involved:
1. Classification of imported Arriflex 35 111 Camera under Heading 84.66 of the Customs Tariff Act, 1975.
2. Determination of whether the film production unit qualifies as an "industrial plant."
3. Compliance with the Project Imports (Registration of Contract) Regulations, 1965.

Detailed Analysis:

1. Classification of Imported Camera:
The respondents imported an Arriflex 35 111 Camera with accessories and sought its classification under Heading 84.66 C.T.A., 1975, which pertains to machinery required for the initial setting up or substantial expansion of an industrial plant. The Assistant Collector of Customs denied this classification, arguing that the camera is professional equipment and not covered under the specified items in Heading 84.66. The lower appellate authority, however, ruled in favor of the respondents, recognizing the film production unit as an industrial plant and thus eligible for the lower assessment under Heading 84.66. The Revenue appealed this decision, asserting that the camera does not fit the criteria for industrial plant equipment specified under Heading 84.66.

2. Determination of Whether the Film Production Unit Qualifies as an "Industrial Plant":
The lower appellate authority recognized the film production unit as an industrial plant, citing evidence that both the Government of India and the Government of Andhra Pradesh have acknowledged film production as an industrial activity. The authority noted that the film industry is a significant employer and has been recognized globally as a center of industrial activity. The respondents argued that the camera converts raw film stock into exposed films, thus qualifying as machinery for the production of goods. The Tribunal, however, found that the film production unit does not produce tangible goods and thus does not qualify as an industrial plant under Heading 84.66.

3. Compliance with the Project Imports (Registration of Contract) Regulations, 1965:
The Assistant Collector of Customs also denied the benefit of Heading 84.66 because the respondents did not register their contract before importing the camera, as required by the Project Imports (Registration of Contract) Regulations, 1965. The respondents filed the application for registration after the import, which does not comply with the regulations. The Tribunal emphasized that the registration of the contract prior to importation is a sine qua non for classification under Heading 84.66. The larger bench in Toyo Engineering India Ltd. v. Collector of Customs, Bombay, and the Bombay High Court in Subhash Photographics v. Union of India, supported this view, stating that the absence of a specific contract and prior registration disqualifies the importer from the benefits of Heading 84.66.

Separate Judgments:
- Majority Opinion (S.L. Peeran and Lajja Ram): The majority held that the imported camera does not fall under any of the items described in Heading 84.66. They emphasized that the film production unit does not qualify as an industrial plant and that the respondents did not comply with the necessary conditions for registration under the Project Imports (Registration of Contract) Regulations, 1965. Consequently, they ruled in favor of the Revenue, allowing the appeal.
- Dissenting Opinion (P.C. Jain): P.C. Jain disagreed, arguing that the film production unit qualifies as an industrial plant and that the camera is necessary for the production of goods (i.e., exposed films). He believed that the respondents satisfied the conditions for assessment under Heading 84.66 and thus should be granted the benefit.

Final Order:
In view of the majority opinion, the appeal of the Revenue was allowed, and the benefit under Heading 84.66 was denied to the respondents.