9911796707
TMI Blog1991 (2) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... flush doors. 3. The firm was reconstituted on January 1, 1974, and two minors, Thomman Jacob and Philip Jacob, were admitted to the benefits of the partnership. The reconstituted firm started manufacturing decorative Veneers of 3 mm thickness by manual sawing operations. In July 1978, the appellant decided to diversify its business by manufacturing sophisticated decorative Veneers of thinner varieties and they decided to import a Horizontal Veneers Slicer and spares from Japan. The appellant obtained an import licence dated February 14, 1979, for the CIF value of Rs. 8,70,413/- bearing a specific endorsement "Project Import" from the Deputy Chief Controller of Imports & Exports, Cochin. After obtaining the said licence, the appellant placed orders with the foreign supplier in Japan and opened a Letter of Credit on April 12, 1979. Since the financial resources of the appellant were not quite adequate to meet the financial commitments required for importation of the machinery as well as for purchase of raw materials, the appellant, consulted Mr. T.K. Jacob and his wife Mrs. Sally Jacob, the parents of the two minor partners in the appellant, who had financial interests in the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Japan. By his letter dated November 26, 1979, the Deputy Chief Controller of Imports & Exports informed the appellant that since the shipment of the capital goods covered by the import licence dated December 14, 1979, had already been effected the question of transfer of the licence does not arise. On the arrival of the goods the appellant filed the bill of Entry on November 12, 1979, which contained a declaration signed by the partner of the appellant. The appellant also submitted an application dated November 21, 1979, for registration under Project Import (Registration of Contracts) Regulations, 1965, wherein it was stated that the goods to be imported are for the substantial expansion of an existing plant and that the existing installed capacity was 25,000 sq. mtr. per annum and after expansion the said capacity would be 10,98,000 sq. mtr. decorative veneers per annum. On the basis of the aforesaid declaration in the Bill of Entry as well as the statement contained in the Application for Registration under Project Import (Registration of Contracts) Regulations, 1965 submitted by the appellant that goods had been imported for the purpose of substantial expansion of an existing u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct levy of the customs duty on the goods imported and therefore it was proposed to invoke the provisions of sub-section (1) of Section 28 of the Act. In the said show cause notice it was also stated that the suppression and wilful misstatement of facts and the attempt made by the appellant to claim clearance of the goods in question at the concessional rate applicable to project imports when the goods were not actually meant for the said purpose make the goods liable to confiscation under Clauses (m) & (o) of Section 111 of the Act and the appellant was liable to penalty under Section 112 of the Act. The appellant was called upon to submit its written representation in the matter to show cause as to why the assessment made earlier should not be revised and why the goods in question should not be treated as liable to confiscation and why penalty should not be imposed on it. By another show cause notice dated June 17, 1982, the Assistant Collector of Customs (Import) Department informed the appellant that the customs duty amounting to Rs. 2,00,000/- was short levied in respect of the consignment imported by it and the appellant was required to show cause why the said amount should no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal filed by the appellant. 6. Shri Avadh Bihari appearing for the appellant had submitted that there was no suppression or wilful misstatement on the part of the appellant and that soon after the execution of the agreement dated July 31, 1979 a joint application dated August 31, 1979, was submitted on behalf of the appellant and the Company whereby the Deputy Chief Controller of Imports & Exports was informed about the transfer of business of the appellant to the Company and it was requested that the import licence dated February 14, 1979, may be transferred in favour of the Company. Shri Avadh Bihari has also laid stress on the joint letter dated September 18, 1979, addressed by the appellant and the Company to the General Manager, District Industries Centre, Ernakulam, informing him with regard to transfer of business by the appellant to the Company as well as the letter dated November 20, 1979, sent by the General Manager, District Industries Centre, Ernakulam to the Deputy Chief Controller of Imports & Exports, Ernakulam, recommending that the project is eligible to avail concessional rate of import duty, if rules permit, since the machinery which is imported is for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the agreement dated July 31, 1979, entered into by the appellant and the Company with regard to transfer of business can have no bearing on the action taken by the customs authorities for the contravention of the provisions of the Act. The decision of this Court in East India Commercial Company Ltd., Calcutta and Another (supra) is not applicable because the action that has been taken by the customs authorities is not for breach of the conditions of the import licence but for the contravention of the provisions of the Act. 8. With regard to the contravention of the provisions of the Act, it would be necessary to refer to Heading No. 84.66 in Chapter 84 of the Schedule to the Customs Tariff Act, 1975 which reads as under : Heading No. Sub-heading No. and description of article Rate of duty Standard Areas Preferential Duration when rates of duty are protective (1) (2) (3) (4) (5) 84.66 (i) All items of: 40% (a) machinery including prime-movers (b) instruments, apparatus and appliances, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecified industrial plant. In order to avail this concessional rate of customs duty it was necessary to have the contract registered with the appropriate Customs House in the manner prescribed by the Regulations made by the Central Board of Excise and Customs under Section 157 of the Act. The Project Import (Registration of Contracts) Regulations, 1965 were such regulations made by the Central Board of Excise and Customs. 10. In the instant case, the appellant had obtained the import licence dated February 14, 1979 for expansion of its business on the recommendation of the Director of Industries, Kerala State and the said import licence contained specific endorsement of "Project Import". When the goods arrived at the port in India the appellant filed the Bill of Entry on November 12, 1979, with the customs authorities which contained a declaration signed by a partner of the appellant. In addition, the appellant submitted an application form dated November 21, 1979, before the customs authorities for Registration under Project Import (Registration of Contracts) Regulations, 1965, wherein it was stated that the goods to be imported were for substantial expansion of an existing plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployee of the importer or exporter. Here the relevant date was December 7, 1979, the date on which the duty was paid and the enhanced period of five years prescribed under the proviso to sub-section (1) of Section 28 was invoked by the customs authorities to issue the show cause notice dated June 4,1982, to the appellant. The present case falls within the ambit of the said proviso because the appellant had cleared the goods from the customs on payment of concessional rate of duty under Heading No. 84.66 of the Customs Tariff by making a misstatement in the application form dated November 21, 1979, for registration under the Project Import (Registration of Contracts) Regulations, 1965, that the machinery that had been imported was for substantial expansion of the existing industrial unit of the appellant and by suppressing the fact that under Agreement dated July 31, 1979, the appellant had agreed to transfer the said machinery to the Company. In the circumstances the Collector was justified in directing that the goods in question should be re-assessed to duty on merits under the appropriate heading of the Customs Tariff without giving the benefit of the assessment under Heading 84 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agree with this submission. The expression "exempted" in Clause (o) does not mean full exemption from duty because under Section 25 of the Act power has been conferred to grant exemption from the whole or any part of the duty of customs leviable on the goods specified in the notification. This means that Clause (o) would also cover cases where partial exemption from duty has been granted in respect of the goods in question. This was a case where partial exemption from duty, in the form of concessional rate had been granted under Heading No. 84.66 of the Customs Tariff and the said exemption was available subject to the conditions laid down in the said Heading. The appellant obtained the benefit of the said concession and got the goods cleared from customs on payment of concessional rate of duty by making a declaration that the goods were required for substantial expansion of the existing industrial unit of the appellant. The said declaration of the appellant was not correct inasmuch as the goods were not to be used for substantial expansion of the unit of the appellant but were to be used for setting up a new unit by the Company. The appellant, after getting goods cleared from the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
