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TMI Blog1992 (4) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs. Act, 1962 read with Customs Tariff Act, 1975. There is no dispute in this regard. The controversy is only in regard to the tariff heading under which these goods would fall and the rate of duty. 3. Prior to 28th February, 1986, the relevant heading of the Tariff Act, 1975 was Heading No. 84.66, which provided for levy of duty at a concessional rate of 40% on import of machineries required for initial setting up of a unit or substantial expansion thereof, popularly referred to as "Project Import". The availability of the benefit of lower rate of duty under this heading was, however, subject to fulfilment of certain conditions. One of the conditions was that the goods in question should be imported against one or more specific contracts, which had been registered with the appropriate Customs House in the manner prescribed by the Regulations, which the Central Board of Excise and Customs might make under Section 157 of the Customs Act. The aforesaid Heading No. 84.66 read as under : "84.66(i) All items of : (a) Machinery including prime-movers, (b) Instruments, apparatus and appliances, (c) Controlgear and transmission equipment, (d) Auxiliary equipment, as well a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent under Section 25(1) of the Customs Act in respect of goods falling under the said heading. This position continued till 28th February, 1986. On and from this date the First Schedule (the Import Schedule) to the Customs Tariff Act, 1975 was repealed by the Customs Tariff (Amendment) Act, 1985 (Act 8 of 1986) and substituted by a new Schedule. 5. The relevant heading in the new tariff schedule, corresponding to the old Heading No. 84.66 is Heading No. 98.01. It is in Chapter 98, which refers to Project Import etc. Heading No. 98.01 reads : Heading No. Description of Articles Rate of Duty (1) (2) (3) 98.01 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, required for the initial setting up of a unit, or the substantial expansion of an existing unit, of a specified: (1) industrial plant, (2) irri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... boratories, 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; (a) xx xx xx (b) xx xx xx (Emphasis supplied) 9. The petitioners wanted to import industrial system for the purpose of their photographic studios and/or photographic film processing laboratories and applied for registration of the relevant contracts under the 1986 Regulations to avail of the benefit of assessment of duty at the concessional rate under Heading No. 98.01. The contracts were not registered by the Customs Authorities, as according to them, the goods sought to be imported by the petitioners did not fall under Heading No. 98.01 in view of the definition of 'industrial plant' given in "1986 Regulations", which specifically provided that the expression 'industrial plant' would not include such goods. Aggrieved by non-registration of the contracts under the aforesaid Regulations thereby disentitling them from the benefit of assessment of goods imported by them at the concessional rates of duty under Heading No. 98.01, the petitioners approached ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e condition relevant for the purpose of the goods covered by heading No. 98.01 is that contained in Note 2, viz., the goods should be imported in accordance with the regulations made under Section 157 of the Customs Act. It is also clear from the latter part of the same note that expressions used in Heading No. 98.01 would have the meaning assigned to them in the Regulations. 13. The real controversy, therefore, revolves round the interpretations of goods falling under Heading No. 98.01 read with the Note 2 and the 1986 Regulations. Before proceeding to decide the same, it may be expedient to observe some of the special features of the Customs Tariff Act, 1975, which will have a material bearing on the interpretation of tariff items contained therein including those under Heading No. 98.01. In the first schedule, the principles which should govern the classification of the goods therein have been laid down. Principle 1 which is most relevant for our purpose reads as follows :- "1. The titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med up as under :- (1) The words 'industrial plant' used in Heading No. 98.01 should be given their ordinary meaning. Chapter Notes are not to be read as necessarily altering the definitions or description as ordinarily understood. The Chapter Note is not intended to fundamentally alter, expand or constrict that concept unless there is clear language in the section or chapter notes to that effect. Chapter Note 2 does not define 'industrial plant' and the same being defined under 1986 Regulations, such definition cannot be made applicable to heading No. 98.01. (2) If it is held that the Board has power to frame Regulations, the definition of 'industrial plant' being contrary to the term as defined under the analogous statutes passed by the Parliament, 1986 Regulations, is ultra vires and the powers conferred on the Board under Section 157 of the Customs Act and Chapter Note 2 of Chapter 98 of the Customs Tariff Act. (3) 1986 Regulations do not have any legislative sanction. These are not even subordinate legislation in the true sense of the term. They have been made only for regulating the procedure for registration of contracts under the Tariff Heading No. 98.01. It is beyond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n its wisdom decided to do so by means of two enactments. These two enactments, therefore, form a composite legislation or an integrated code. It is only for convenience and simplicity that instead of providing tariff in the Customs Act itself, a separate enactment has been made for that purpose. In this view of the matter, the powers conferred on the Board under Section 157 of the Customs Act to make regulations to carry out "the purposes of the Act" have to be interpreted as "for the purposes of both the Customs Act and the Customs Tariff Act". The Board, therefore, has the power to make regulations in respect of matters which are specified in sub-sections (1) and (2) of Section 157 of the Customs Act for the purposes of Customs Tariff Act also. This section, however, is not the sole repository of such power. Power to make regulations may be conferred, in express or implied terms, by any other provision of either of the two Acts and in that event it shall have the power to frame regulations in respect of such other matters also. Chapter 98 of the Customs Tariff Act read with Note 2 thereof clearly contemplates making of regulations by the Board under Section 157 of the Customs Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on parlance. But that is not so in the instant case in view of the legislative scheme itself. The legislature in Heading No. 98.01, has used certain expressions but has given power to the Board, while making the regulation under Section 157 of the Customs Act to regulate the import of such goods falling under that heading, to assign meaning to the expressions used therein and has made it abundantly clear that "expression used in this heading shall have the meaning assigned to them in the said regulation". The legislature has thus specifically conferred the power of defining the expressions used by it in the Tariff Heading No. 98.01 on the Board and also made it clear that such meaning shall be the meaning attributable to the particular expression for the purposes of the Act. In such a case, it cannot be said that the common parlance meaning shall prevail over the meaning assigned by the Board. The Board has assigned a meaning to the expression 'industrial plant' by defining the same in clause (a) of Regulation 3. In view of specific provision contained in Note 2 this expression in Heading No. 98.01 shall have the same meaning as contained in the aforesaid definition. If that be so, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Chapter containing that item neither there was a Note like Note 2 nor the 1965 Regulations contained any definition like the one contained in clause (a) of Regulation 3 of the 1986 Regulations excluding the goods imported by the petitioners from the definition of 'industrial plant'. In the absence of such a definition, 'industrial plant' had to be given ordinary meaning and in that view of the matter the goods imported by the petitioners were held to be 'industrial plant'. But since 28-2-1986, the position has changed completely. Chapter 98 is different because of Note 2 thereof, which has conferred express power on the Board to define the expression used under Heading No. 98.01 and has also made it clear that the meaning assigned by the Board shall be the meaning for the purpose of the said heading. The Board has defined the expression and that definition is applicable for the purpose of Customs Tariff Act. Under the said definition the goods imported by the petitioners are excluded from the expression 'industrial plant'. The position, as it stood prior to 1986, therefore, does not in any way help us in interpreting Heading No. 98.01. In view of foregoing discussion, it is clear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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