9911796707
TMI Blog1993 (1) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... ilm, processing and printing and enlargement of the same as a Small Scale Industry. It placed an order for import of two mini colour laboratories from Japan, one for their factory in Madras and the other for their branch in Madurai at a total cost of Rs. 15,62,000/- (c.i.f. value) in October 1985. The Letters of Credit were opened on 23-1-1986 and the dates of shipment were 31-3-1986 and 2-4-1986. The goods arrived at Madras Port in the third week of April, 1986. The petitioner applied to the Director of Industries who was the Sponsoring Authority for recommendation on 22-3-1986. The same was granted on 24-4-1986. But on 3-4-1986, the new Project Imports Regulations, 1986 were issued under Customs Notification No. 230/86 dated 3-4-1986 and they came into force on that day. They defined the expression industrial plant so as to exclude from its scope photographic studios, photographic film processing laboratories, photocopying studios and certain other establishments. Applying that definition to the word Industrial plant occurring in Tariff Heading No. 98.01 in the First Schedule to the Customs Tariff Act, 1975, the Customs authorities refused to assess the duty under the heading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were repealed by the Customs Act. Section 12 of the Customs Act provided that duties of customs shall be levied at such rates as may be specified under the Indian Tariff Act, 1934 except as otherwise provided in that Act or any other law for the time being in force. Indian Tariff Act XXXII of 1934 was enacted to consolidate the law relating to customs duties on goods imported into or exported from British India by sea and by land. Section 2 thereof prescribed for levy and collection of the duties specified in the First and Second Schedules to the Act. The Tariff was mainly based on the Draft League of Nations Nomenclature of 1931. Section 160 of the Customs Act repealed Section 2 of the Indian Tariff Act and substituted it with a new appropriate Section 2. 6. The substantive provisions and the Schedules of the Indian Tariff Act were amended from time to time. The progress made in industrial growth and economic development besides the substantial changes in the composition and pattern of the country s external trade made it necessary to revise the entire nomenclature of the tariff so as to bring in line with the contemporary conditions. The Indian Tariff (Amendment) Act, 1949 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in this case. Section 25 of the Customs Act: enables the Central Government to grant exemptions from payment of duty if it considers necessary in the public interest to do so. Section 157 of the Customs Act empowers the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 to make Regulations consistent with the Act and the rules and generally to carry out the purposes of the Act without prejudice to any power contained elsewhere in the Act. 8. Turning to the Customs Tariff Act, 1975, it was realised that the adaptation of CCCN in the manner done was not quite satisfactory and the Customs Co-operation Council recommended certain measures to be taken with effect from 1978. Hence Amendment Act 26 of 1978 was enacted. There were some more amendments and ultimately Act 8 of 1986 was passed which came into force on 28-2-1986. The entire First Schedule has been replaced. It is based on a system of classification derived from International Convention of Harmonised Commodity Description and Coding System which was approved by the Customs Co-operation Council on 14th June, 1983 with suitable modifications. The Harmonised Commodity Descripti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tute and naturally the Notes found in each chapter are equally so. The provisions contained in the Notes are as much binding as the other parts of the Act and they cannot be ignored unless held unconstitutional. 10. Prior to the introduction of the present First Schedule, that is before 28-2-1986, the goods to which these petitions relate were covered by Heading No. 84.66. Before the passing of the Customs Tariff Act, 1975, they were covered by Heading No. 72-A under the Tariff Act of 1934. Under the present Schedule, they will fall under Heading No. 90.10 and the prescribed rate of duty is 100%. The description of the article is Apparatus equipment for photographic (including cinematographic) laboratories (including apparatus for the projection of circuit patterns on sensitized semi-conductor materials) and specified or included elsewhere in this Chapter, negotoscopes, projection screens. But it is the contention of the petitioners that the goods fall under Heading No. 98.01 and by virtue of Note 1, the applicability of Heading No. 90.10 gets excluded. 11. Chapter 98 deals with Project imports, laboratory chemicals, etc. Note 1 reads :- This Chapter is to be taken to app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s., dated 3-4-1986 framing regulations called the Project Import Regulations, 1986. It superseded the earlier regulations known as Project Imports (Registration of Contract) Regulations, 1965. Clause 2 of the Regulations of 1986 declares that the regulations shall apply for assessment and clearance of the goods falling under Heading No. 98.01 of the First Schedule to the Customs Tariff Act, 1975. Clause 3(a) defines industrial plants as follows :- (a) Industrial Plants" means an industrial system designed to be employed directly in the performance of any process or series of processes necessary for manufacture, production or extraction of a commodity, but does not include - (i) establishments designed to offer services of any description such as hotels, hospitals, photographic studios, photographic film processing laboratories, photocopying studios, laundries, garages and workshops, or (ii) a single machine or a composite machine, within the meaning assigned to it, in Notes 3 and 4 to Section XVI of the said First Schedule." As photographic studios, photographic film processing laboratories and photocopying studios are excluded from the definition of indust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inery of all industrial plants. The entry has to be divided into four parts as follows :- (i) All items of machinery including prime movers, instruments, apparatus and appliances, control gear and transmission equipment, auxiliary equipment (including those required for research and development purposes, testing and quality control), as well as all components (whether finished or not) or raw materials for the manufacture of the aforesaid items and their components; (ii) required for the initial setting up of a unit or the substantial expansion of an existing unit; (iii) of a specified (1) industrial plant, (2) irrigation project, (3) power project, (4) mining project and (5) such other projects as the Central Government may notify in the Official Gazette; (iv) Spare parts etc. The word specified occurring in the third part above is very significant. The Legislature has not made the entry applicable to all industrial plants and projects automatically but the entry can be invoked only if the machinery etc. is for a specified industrial plant, specified irrigation project, specified power project or specified project for the exploration for oil or other minerals. Reading t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lude occurring in a definition clause is considered and it is held that the said word is generally used in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used those words or phrases must be construed as comprehending, not only such things as they signify according to their natural import but also those things which the interpretation clause declares what they shall include. The proposition has no applicability to the present case. 16. Similarly, the ruling in State of Bombay v. Hospital Mazdoor Sabha (AIR I960 SC 610) dealing with the definition of industry in the Industrial Disputes Act has no relevance. I have already dealt with at length the fallacy in the contention that the scope of Heading No. 98.01 is reduced by the definition contained in the Project Import Regulations. The word including used in the Heading is only with reference to the items of machinery and not the industrial plant or the projects mentioned therein. 17. It is next contended that the Legislature cannot be understood to have exceeded its power of delegation and conferred a power on the Board to alter the scope of the legislation itself. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Rules and by-laws as found in the statute, will have no application in this case. 19. It is next contended that the Central Government had by its order dated 4-11-1983 in F. No. 526/52/83-CUS(T.U.) referred to already, decided to extend the facility to the machinery in question and the Board, which is a subordinate authority, cannot act contrary to it and give a definition which will deprive the said machinery of the project import facility. There is no merit in this contention. It is unnecessary to consider whether the Board is subordinate to the Central Government or not. Even if it is so, the Parliament has entrusted the function of defining the expression to the Board with effect from 30-3-1986. If any other authority had given a different meaning to the expressions contained in the Heading earlier, that will become ineffective on the framing of the Regulations by the Board on 3-4-1986. The notification of the Central Government dated 4-11-1983 will automatically cease to be effective after the introduction of the Regulations. No reliance can be placed thereon by the petitioners. Learned counsel referred to a judgment of this Court in Benzex Labs Limited v. Collector of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... la, AIR 1957 SC 657, p.661; CIT v. M G Stores, AIR 1968 SC 200, p.205;/X Steel Ltd. v. Union of India, AIR 1970 SC 1173 p. 1182 = 1978 (2) E.L.T. (J 355) (SC); Ransom (Inspector of Taxes) v. Higgs (1974) 3 All ER 949 (HL) p. 970.] VISCOUNT SIMON quoted with approval a passage from ROWLATT, J. expressing the principle in the following words : In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used . [Cape Brandy Syndicate v. IRC (1921) 1 KB 64, p. 71 (ROWLATT, J.); referred to in Canadian Eagle Oil Co. Ltd. v. R. (1945) 2 All ER 499 (HL), p. 507; Gwsalmi v. CIT, AIR 1963 SC 1062, p.1064; Banarsidas v. ITO, AIR 1964 SC 1742, p.1744. See further, CIT v. Fim Muar, AIR 1965 SC 1216, p.1221; CIT, Patiala v. S1ialzzadanand SOMS, AIR 1966 SC 1342, p.1347; Janapada Sabha, Chhindiwra v. Central Provinces Syndicate AIR 1971 SC 57, p. 60; (1971) 1 SCC 509; Oiven Tlwmas Mangin v. IRC, (1971) 2WLR 39 (PC), p. 42; Controller of Estate Duty v. Kantilal Trikmnlal, AIR 1976 SC 1935, p.1943 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of the law . [IRC v. Duke of Westminister, supra, referred to in Pott s Executors v. IRC, supra, p.80 (LORD NORMAND); C/T, Gujarat v. D.M. Kharwar, AIR 1969 SC 812; ].K. Steel Ltd. v. Union of India, supra, p.1192; CJT, Calcutta v. G. Arbuthnot Co., AIR 1973 SC 989 p.995; (1973) 5 SCC Tax 359 : (1973) 3 SCC 845; Commrs. of Customs v. Top Ten Promotions (1969) 3 All ER 39 (HL) p.90; Ransom (Inspector of Taxes) v. Higgs (1974) 3 All ER 949 (HL) p.970.] Learned counsel also drew my attention to certain passages found in the rulings of the Supreme Court referred to in the foot-notes. I do not find any necessity to refer to them in detail, as the above passage in the text-book as well as the passages in the judgments cited have no application in this case. 21. It is next argued that Note 2 in Chapter 98 does not contain any guidelines to the Board and it will tantamount to excessive delegation. It is also contended that there is no need for the petitioners to challenge the validity of Note 2 as such, as the very conditions precedent for such delegation as contained in Note 2 have not been fulfilled in the present case. Reference is made to the decisions of the Supreme Court in M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wered by Section 157 of the Customs Act only to make Regulations generally to carry out the purposes of that Act. It is submitted that the Customs Act is penal in nature and it is enacted with the object of providing a machinery for collection of duty and prevention of smuggling and it is contended that the Board can make only Regulations for carrying out the objects of the Customs Act and has no power to make Regulations for other purposes. There is no merit whatever in this contention. When Note 2 in Chapter 98 expressly confers the power to make Regulations for project imports and also assign meanings to the expressions found in the Headings, it is futile to contend that the Board can make only such regulations as would fall strictly within the scope of the Customs Act. Apart from that, the relevant provisions of the Customs Act have already been referred to and it has been pointed out that the two Acts viz.. Customs Act and Customs Tariff Act should be read together and the provisions are complementary to each other. Reliance placed by learned counsel on the judgment of the Supreme Court in Amba Lal v. Union of India and Others [AIR 1961 SC 264 = 1983 (13) E.L.T. 1321 (SC)] and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its that the Note does not use the expression Regulations from time to time . He relies on the judgment of the Supreme Court in Hukam Chand v. Union of India (AIR 1972 SC 2427). The question considered in that case was whether the Central Government had been vested by the statute with powers to make rules with retrospective effect. Section 40 of the Displaced Persons (Compensation and Rehabilitation) Act, 1954, was considered by the Court and it was held that the said section did not confer any such power on the Government. The ruling has no bearing in this case. Moreover, it should be remembered that the Project Import Regulations of 1965 did not contain any definition and did not assign any meaning to the expressions found in the Heading 84.66, which corresponded to the present Heading 98.01. The Legislature was undoubtedly aware of the said position when it introduced Note 2 in Chapter 98. Hence, Note 2 refers only to the Regulations to be framed by the Board thereafter. Consequently, the Regulations referred in Note 2 are the Project Import Regulations of 1986. 30. It is next argued that the Regulations except from its purview things done or omitted to be done before the sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel submits that the certificate of the Sponsoring Authority is a sine aua non for an application for registration of the contract. That does not in any way help the petitioner as he ought to have taken steps therefore much earlier. When according to him the Letter of Credit was opened in January 1986, he has to blame himself for applying to the Sponsoring Authority for recommendation only towards the end of March 1986. In this connection reliance is placed on M/s. Dhampur Sugar Mills Ltd. v. Union of India and Others (AIR 1985 Delhi 344). In that case, a notification was issued by the Government under Section 29B of the Industries (Development and Regulation) Act (65 of 1951) exempting sugar industry from certain provisions of the Act and the Rules framed there under. The exemption was applicable for setting up a new industry and the scheme envisaged that the undertaking should merely register itself with the Government without requirement of a licence. The petitioner in that case had made such an application for registration when the Scheme was in force, but the Government delayed the consideration of the same and later withdrew the exemption. The Court held that the undertaking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perusal of the same shows that there is no discrimination in favour of the printing industry as contended by the petitioner. 36. It is then argued that the principle of equitable estoppel would apply and consequently, the new Regulations would not apply to the contracts entered into by the petitioner in October 1985, particularly after he had opened a Letter of Credit in January 1986. Reliance is placed upon the judgment of the Supreme Court in Union of India and Others v. Godfrey Philips India Ltd. [AIR 1986 S.C. 806 = 1985 (22) 306 (SC)], in which it is held that the principle of promissory estoppel is available against subordinate legislation. Reliance is also placed on a recent judgment of mine in W.P. No. 10044 of 1992. It is rightly pointed out by learned counsel for the respondents that the doctrine of promissory estoppel or the principle of equitable estoppel will not apply to this case. It is not the legality of the import that is questioned by the authorities. The validity of the import is accepted. The only question relates to the quantum of duty payable by the petitioner. Section 15 of the Customs Act, to which reference has already been made, has specified the releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is placed on the following passage in Maxwell on The Interpretation of Statutes, 12th Edition at page 256: In a taxing Act", said Rowlatt, ]., one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. But this strictness of interpretation may not always enure to the subject s benefit, for if the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be." 39. Learned counsel for the respondents has drawn my attention to the judgment of the Supreme Court in M/s. Babu Ram v. State of Punjab (AIR 1979 S.C 1475), and contended that the delegation of power to the Board under Note 2 is constitutionally valid and as a fact, the petitioners have not challenged the same in these writ petitions. The following passage in the judgment is relevant and instructive :- 14. A review of the decisions of this Court to some of which we will presently refer shows that the delegation of power by the legislature to a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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