1979 (7) TMI 102 - HC - Central Excise

Data Processing Machines (AS IS Machines) - Precedent - Revisionary order - Binding effect - Data processing machines

Issues Involved:
1. Legality of countervailing duty on "AS IS Machines" under Item 33-D of the Central Excise Tariff.
2. Whether "AS IS Machines" retain their identity as machines and are liable to countervailing duty.
3. Applicability of previous Government of India decision on valuation to the current case.
4. Relevance of the explanation to Item 33-D regarding the usability of machines in offices, shops, factories, or workshops.

Detailed Analysis:

1. Legality of Countervailing Duty on "AS IS Machines" under Item 33-D:
The core issue revolves around whether the levy of countervailing duty at the rate of 10% under Item 33-D of the Central Excise Tariff for the import of Data Processing Machines (AS IS Machines) is legal and valid. The Petitioners argued that "AS IS Machines" are not complete machines and thus should not attract countervailing duty. They relied on a previous decision by the Government of India dated January 3, 1969, which held that such machines, in their imported condition, cannot be considered as machines for valuation purposes.

2. Whether "AS IS Machines" Retain Their Identity as Machines and Are Liable to Countervailing Duty:
The Petitioners contended that the imported "AS IS Machines" are beyond economic repair, not saleable, and only imported for salvaging usable parts. They argued that these machines do not perform any function and cannot be considered as machines. The Customs authorities, however, maintained that despite being old or used, the machines retain their identity as Data Processing Machines and are thus liable for countervailing duty. The court found that the machines were indeed imported for disassembling and salvaging parts, indicating they were not in a usable condition. It was concluded that the assumption by Customs that the "AS IS Machines" were machines was misconceived.

3. Applicability of Previous Government of India Decision on Valuation to the Current Case:
The Petitioners relied heavily on the Government of India's decision from January 3, 1969, which addressed the valuation of "AS IS Machines" and concluded that they should not be treated as machines. The court agreed that this decision was binding unless new material justified a different view. The Customs authorities' valuation method, which added 140% to the ICBP price, further supported the Petitioners' claim that the consignment was not treated as machines.

4. Relevance of the Explanation to Item 33-D Regarding the Usability of Machines:
The Petitioners argued that even if "AS IS Machines" were considered machines, they would not attract countervailing duty under Item 33-D because they were not capable of being used in offices, shops, factories, or workshops for data processing. The court did not delve deeply into this argument, as it had already concluded that the imported consignment did not qualify as machines. However, it acknowledged that the Petitioners' contention that the machines were not used, hired, or sold in the country was sound, further supporting their case against the applicability of countervailing duty.

Conclusion:
The court concluded that the consignment imported by the Petitioners were not machines and thus not liable to countervailing duty. The Customs authorities' refusal to grant a refund of the countervailing duty was based on irrelevant and extraneous factors. The Petitioners were entitled to the reliefs sought, and the rule was made absolute in their favor. The court dismissed the argument that two views were possible on the facts, affirming that the only conclusion was that the consignment was not machines and not liable to countervailing duty. The Petitioners' success resulted in the rule being made absolute without any order as to costs.

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