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TMI Blog1992 (3) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... before this Court, as it has agreed and conceded before the adjudicating authority, that excepting for the photo-copier drum these separate consignments could be assembled into the complete photo-copying machines of the above description, (of course, without the drums). 6. It is agreed also by the petitioners that the value of the drums in relation to the machines would not exceed roughly 10 per cent of the total machine cost. As such, in my opinion, it has to be assumed for the legal purpose of disposal of the instant application that substantially all the parts of the photo-copier machine were imported by the petitioner in a knocked down or disassembled condition. 7. The further admitted position is that the petitioners possess licences on the phased manufacturing programme, known as the PMP basis, by virtue of which they are entitled to import component parts to the extent of roughly 20 per cent of the value of the machines. It is also not in dispute that at the time of importation it was permissible for the petitioners to buy within the country import licence of other individuals and parties if necessary, at a premium, which could be utilised by the petitioner for further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same should be communicated to the petitioners. The petitioners undertake that the bank guarantee to be furnished will be renewed from time to time upon giving 15 days prior notice to the respondents before such expiry. The goods shall be released upon keeping samples of all items. Liberty is given to the parties to mention and apply. All parties including the Special Officers to act on the signed Xerox copy of this dictated order on the usual undertaking." 10. Pursuant to the aforesaid order, an order of the Collector of Customs has now been made and published and the same was relied upon in its entirety before me by both the petitioners and the respondents. The date of the order is 9-12-1991. It would be better to set out the entirety of the order as part of this judgment, but for the purpose of saving some length, I set out only the portion occurring at the end thereof which also is the most-material portion for our purpose. "Coming now to the allegation in the show-cause notice that 400 Nos. complete BD-5110 machines, and 1000 Nos. BD-3110 machines have been imported in violation of the ITC Policy, the fact of such import of full machine (without drums) has not been den ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mponents M/s. HCL have retained the emphasis and focus on the machines in their assembled form. Shri T.C. Prabhu, while being questioned regarding the basis on which the components were valued in the respective invoices of Redington and other Singapore parties, has clearly conceded in his statement dated 27-11-1990 that these values cannot be exactly justified with reference to the PMP declared values and the SKD/CKD price lists of Toshiba, since M/s. HCL have not negotiated with M/s. Redington for individual components, but for recovery of total cost plus margin of profit for the full machines by M/s. Redington. Similarly, Shri M. Raghunandan in his statement dated 24-11-1990 has deposed that the values declared in the invoices are based on the full value of the machines plus Redington's costs. M/s. HCL had the option of importing the components either in SKD form or in CKD form, directly from M/s. Toshiba of Japan, but since according to their calculations import at the Toshiba quoted prices would be uneconomical, M/s. HCL adopted the expedient of importing the full machines to Singapore, where they would be disassembled into SKD form and shipped on to India. This procedure a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of SKD components. This has been a deliberate attempt on the part of M/s. HCL, as is evidenced by the fact that the entire transaction has been shrouded in secrecy, and there is no written contract or other correspondence between the parties indicating the whole operation of import of full machines into Singapore, and their further shipment to India in dismantled form. The clandestine nature of this device is further evidenced by the fact that the disassembled parts have been split up under 12 separate invoices drawn by three separate consignors in Singapore, and have been shipped to India as 9 separate consignments arriving at different times at three different ports/airports in India. Therefore, the components totally valued at ¥ 122,029,800 (CIF) covered by 11 of the invoices, and which put together constitute 400 Nos. of BD-5110 photocopying machines and 1000 Nos. of BD-3110 photocopying machines are liable to confiscation under Section 111(d) of the Customs Act, 1962. The importers are, therefore, also liable to penalty under Section 112(a) of the Customs Act. "ORDER The goods totally valued at ¥ 122,029,800 (CIF) equivalent to Rs. 1,37,88, 678 (CIF) covered by invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a procedure as was adopted by the petitioner is permitted in law. The first thing to note in this regard is that there is nothing in the law of the land to prevent by express words importation by the petitioner of component parts of the photocopier machine, as such components, even if the same could be assembled into whole photocopier machines. 14. One matter must be clarified here. Even though no letter of the law prohibits such importation of knocked down parts which could be assembled into the whole machine, yet the law does prohibit such importation in case of a consignment which, though described as a knocked down component, is not in reality such a knocked down component at all, but is in essence the photocopier machine itself. Indeed, the same would cover the case of misdescription of the consignment as a knocked down component. 15. The letter of the law which prevents importation of such whole machine under the misdescription of an SKD item is clause 2(a) of the first schedule of the Customs Tariff Act of 1985 [1]. The said sub-clause is reproduced below: "2(a) Any reference in a heading to an article shall be taken to include a reference to that article incompl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me within the four corners of the express words of the fiscal or taxing statute, that person would not be guilty in law; whatever other description might be appropriate to such a person does not concern us in the Court of Law. 19. If what I have ventured to state above is correct, then it would automatically follow that there is no general law in fiscal and taxing matters which prohibits the doing of something indirectly in case the same could not be done directly. What cannot be done directly is prohibited by the letter of the law. What cannot be done indirectly, is prohibited by some matter of discretion or some such other power which is exercised on principles which are not exactly formulated by words and letters. These situations are ordinarily situations arising in matters where the Old Courts of Equity would intervene. Those are a far cry from writ courts when those courts are dealing with customs entries or taxing entries or other law relating to formulation of the economic policy of any particular financial year. 20. The above discussion upon the general aspect of the matter would be enough to exonerate the petitioner from all charges whatsoever. The Collector in his or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atutory appellate forum and cannot be resolved before the writ court itself at the time the petitioner approaches it. On the other hand, if the issue is a pure matter of law and the facts are not in dispute then the same issue would remain open to be challenged in a writ court notwithstanding the decision of another statutory Appellate Tribunal. Under these circumstances compelling the exhaustion of such an alternative remedy would be a futile exercise because one party or the other would be still free to approach the Court for a rectification of the error in law already apparent on the face of the records of the case. 24. Now for the authorities regarding importation of component parts which can be assembled into a whole notwithstanding the whole being unimportable for some particular law operating at the time of import. The first case is the case of Girdharilal Banshidhar reported in A.I.R. 1964 Supreme Court page 1519. 25. In that matter, certain nuts and bolts were sought to be imported by the importer and it was held that there was a certain misdescription of the consignments. A certain 'Jackson type' goods was completely prohibited from importation at that time. The consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not be imported." 26. The case next in point of time is the case of Tarachand Gupta which is reported in A.I.R. 1971 Supreme Court at page 1558 = 1983 (13) E.L.T. 1456 (S.C.). The case concerns importation of component parts which was permitted under Entry 295. In Entry 294 the whole goods could also be imported but under separate and different importation documents which the importer in that case did not possess. 27. It was held in that case that notwithstanding the possibility of creating the whole goods from the imported parts the importer could not be held guilty of violation of any provision of law. The following passage occurs at the beginning of the 13th paragraph of the said judgment :- "The argument apparently looks attractive. But the question is what have the respondents done indirectly what they could not have done directly. In the absence of any restriction in Entry 295, namely, that a licence in respect of goods covered by Entry 295 would not be valid for import of parts and accessories which, when taken together, would make them motor-cycles and scooters in C.K.D. condition, the respondents could import under their licence all kinds and types of parts and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was against an importer holding a licence in respect of the goods covered by Entry 294 under which he could import complete and assembled motor-cycles and scooters and not against an importer who had a licence to import parts and accessories under Entry 295. (2) When the Collector examines goods imported under a licence in respect of goods covered by Entry 295, what he has to ascertain is whether the goods are parts and accessories and not whether the goods, though parts and accessories, are so comprehensive that if put together would constitute motor-cycles and scooters in C.K.D. condition, because, it would then mean that there is in the entry a limitation against importation of all parts and accessories of motor-cycles and scooters. Such an approach, would be acting contrary to and beyond Entry 295, and in non-compliance of the entry and would lead to the anomalous result that even if the importer had sold away one consignment or part of it, the Collector could still say that had the importer desired it was possible for him to assemble all parts and make motorcycles and scooters in C.K.D. condition." On the same principle, counsel submits, so long as the present appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw Times page -640. 31. In this case three separate consignments were brought in and those consignments together would comprise a whole photocopier machine. The position in law prevailing at the time of import upon which the Supreme Court's decision was made was substantially different from the position obtaining at the time of present import. As will be clear from paragraphs 9 and 12 of the said judgment in Sharp, at the time of those importations it would not be possible to import, in accordance with law, more than 62% of the copier machine notwithstanding whatever purchase of import quotas or licence might have been made by the importer within the country. The importation of the whole copier machine for the Sharp import was, therefore, a violation of the letter of the law. The relevant portion of paragraph-9 is set out below :- "The company in the present case not only violated the terms and conditions of licence but also committed a complete fraud in importing fully finished copiers which was a totally prohibited item, in the guise of separate components and accessories by dismantling the fully finished copiers." 32. The entire 12th paragraph of the said Sharp decision is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, comprising the whole machine, would be illegal. It would be illegal not because of violation of any spirit of the policy but because of violation of the letter of ban upon the import. But that is not so. There is no ban by any letter of the law which the petitioner has violated. 35. Under these circumstances, in my opinion, the importer/writ petitioner cannot be held to be guilty of breaking either Section 111(d) or 112(a) of the Customs Act, 1962 since the consignments were imported in accordance with the licences held by the petitioner and since even after assembly the importer did not achieve something which the importer could not have legally achieved in any view of the matter. Accordingly the writ petition succeeds. 36. The order of the Collector, insofar as it exonerates writ petition is to stand good, as the entire order has been found as acceptable by the respondents. The relief that the writ petitioner would be entitled to is the relief for quashing only that part of the order of the Collector dated 9th December, 1991 whereby the goods have been sought to be confiscated and whereby penalty has been sought to be imposed under Sections 111(d) and 112(a) of the Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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