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TMI Blog1989 (4) TMI 193X X X X Extracts X X X X X X X X Extracts X X X X ..... certain equipments imported for research and development purposes under various notifications issued since 1969 and the latest relevant notification for this purpose being Notification No. 70-Cus., dated 26th March, 1981. The contents of the notification have undergone marginal changes over the years. Whereas under the 1969 notification the exemption was in respect of educational and research institutions, under the 1981 notification the exemption was restricted to research institution only. There was a further requirement then that the educational/research institution was to be approved for that purpose by the Central Govt. The Research Development Unit of the Indian Telephone Industries Ltd. was recognised as an institution vide Government of India, Ministry of Finance, New Delhi letter F. No. 11/79/66-Cus. V, dated 29-11-1966 addressed to all the Collectors of Customs. This recognition has not been revoked till date. However, under the 1981 notification there is no such need for recognition by the Central Government. The Assistant Collector has issued notices under sub-section (1) of Section 28 of the Customs Act, 1962 which has formed the demand. Being aggrieved from the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .D.R. in the earlier order of the Tribunal. He has referred to the judgment of the Tribunal reported in 1987 (30) E.L.T. 523 and also the subsequent orders passed by the Tribunal vide order Nos. 1283 to 1878/87-B.2, dated 19th August, 1987. Shri Kumar, the learned SDR has pleaded for the rejection of the appeals. In reply Dr. Gauri Shankar, the learned Advocate states that the appellant is having a separate Research Development Unit and for all purposes it is a separate Unit and the benefit has to be extended. He has pleaded for the acceptance of the appeals. 4. We have heard both the sides and have gone through the facts and circumstances of the case. The Tribunal had occasions earlier to deal with the same issue in two batches of appeals filed by the same appellant. The earlier order was reported in 1987 (30) E.L.T. 523 and the latter order of the Tribunal was passed vide Order Nos. 1283 to 1878/87-B.2 in appeal Nos. C-1475 to 1484/87-B2, C-1671 to 2255/87-B.2 and C-2321/87-B.2. In the order reported in 1987 (30) E.L.T. 523 the Tribunal had formulated the following three principles for consideration :- (i) whether the R D Unit of the appellants was a research institution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k) called into existence to translate the purpose as conceived in the minds of the founders into a living and active principle .... A public library may, I think, be properly called an institution in that sense. Manchester Corpn. v. Ac. Adam (1896) A.C. 500, per Lord Mac-naghten, at pp. 511, 512. Australia. - It is true that the name is often popularly applied to the building appropriated to the work of a benevolent or educational institution; but this is rather a transferred sense. The existence of a distinctive building is not, I think, essential to the word institution . Young Men s Christian Assocn. of Melbourne v. Federal Comr. of Taxation (1926), 37 C.L.R. 351 per Higgins, J., at p. 361. Canada. - [Section 4(e) of the Income War Tax Act (Canada) 1927 exempted from taxation the income of (inter alia) any charitable institution .] It is by no means easy to give a definition of the word institution that will cover every use of it. Its meaning must always depend upon the context in which it is found. It seems plain, for instance, from the context in which it is found in the sub-section in question that the word is intended to connote something more than a mere trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D Unit but by M/s. I.T.I., the appellant who was not a research institution and who was also engaged in commercial activity and as such the importations did not satisfy the conditions of the exemption notification that the goods should be imported by a Research institution. Before we come to any conclusion we would like to examine the matter afresh. For the appreciation of the correct legal position, Notfn. No. 70/81-Cus., dated 26th March, 1981 is reproduced below :- GSR 208 (E) - In exercise of the powers conferred by sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962) and in supersession of the notification of the Government of India in the Department of Revenue and Banking No. 211 - Customs, dated the 2nd August, 1976, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all scientific and technical instruments, apparatus and equipment; including spare parts, component parts and accessories thereof, but excluding consumable - items, imported by a research institution, from the whole of the duty of customs leviable thereon under the First Schedule of the Customs Tariff Act, 1975 (51 of 1975) and the whole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ificate. The same is reproduced below :- This is to certify that the import of goods in respect of which the exemption is claimed in essential for the R D work of Research and Development Unit of Indian Telephone Industries Limited, Bangalore and the imported goods will be used for Research and Development only and the Research and Development of Indian Telephone Industries Limited, Bangalore, is not engaged in any commercial activity. 10. A Simple perusal of the second condition will show that the Institution should not be engaged in any commercial activity. In para No. 7 of the judgment in the appellant s own case reported in 1987 (30) E.L.T. 523, the Tribunal had observed as under :- 7. Though M/s. I.T.I. were indisputably a commercial undertaking, their R D Unit as such was not engaged in any commercial activity. There are any number of certificates granted by the Department of Science and Technology as well as the Department of Telecommunications of the Government of India to that effect. We find no reason to disbelieve the certificates. We hold that the R D Unit of the appellants was a Research Institution and was not engaged in any commercial activity as suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re in fact stock in trade. A sum of Rs. 3,71,34,106.65 has been debited to the profit loss account on account of consumption of stores and spare parts and a sum of Rs. 24,95,322.11 has been debited on account of the work-in-progress and stock in trade. 12. From the above it is seen that the appellant has been receiving payments for the equipments manufactured by them and supplied to P T Department. This goes to show that they are a consumer oriented unit catering to the needs of a specific customer. They have not shown that their research programme is planned otherwise than for Departments like P T who pay for them their services. 13. On the third issue whether the articles in question were imported by the said R D Unit we reproduce below the earlier findings of the Tribunal in Order Nos. 1283 to 1878/87.B.2 dated 19th August, 1987 :- 7. Before proceeding with the discussion, it would be worth while noticing our earlier conclusions on this point. We reproduce below paragraph 8 of our earlier order :- 8. While we agree with the appellants on the above two points, we find it difficult to accept that the imports in question were made by a Research Institution, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anisation who is charged with the function of procuring those items and supplying them to the various indenting sections and departments. In such a system, it cannot be said that the various sections or departments have purchased the goods; the correct view would be to say that the Central purchase section purchased and supplied the goods to them. The same system was broadly followed in the case of the appellants. Since the indent on the foreign supplier was placed by M/s. I.T.I., since the foreign supplier made out the import invoice in the name of M/s. I.T.I. and since M/s. I.T.I. filed the customs Bills of Entry and cleared the goods, it was M/s. I.T.I. who was the importer and not their R D Unit. Under Section 46 of the Customs Act, 1962, the importer of the goods has to file the Bill of Entry and to subscribe to the statutory declaration therein. Unless in a particular case the goods have been lawfully purchased by such importer on high sea sale basis, it also follows that the import invoice should be in the name of the importer. The Import Invoice has to be submitted along with the Bill of Entry. This is also a statutory requirements of Section 46. In terms of the statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell accepted principle of interpretation that no words are superfluous in a piece of legislation and every word has to be given its due meaning. Therefore, when in place of the words in the earlier notification imported by or against the order of the Research Institution , the present notification used the modified expression imported by a Research Institution , the modification in the language used has to be given due weight and consideration. The record shows that M/s. T.T.I., imported the goods for their R D Unit. 14. During the course of arguments, Dr. Gauri Shankar, the learned Sr. Advocate had referred to Para 25 of the judgment of the Supreme Court in the case of Tata Tea Ltd. v. State of West Bengal reported in Taxman-Tax Reports (Vol. 39 page 76). Para No. 25 of the said judgment does not help the appellant. In the foregoing paragraphs we have given our detailed observations as to the profit and loss account of the R D Unit of the appellant. It is settled law that the terms of the notification have to be interpreted strictly. Since the appellant has not satisfied the conditions laid down in the Notification, we hold that the appellant is not entitled to the benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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