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TMI Blog1993 (5) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... uty equal to excise duty. Chapter 98 was introduced in the Schedule with effect from February 28, 1986. It relates to "Project Imports; Laboratory Chemicals; Passengers Baggage, Personal Importation by air or post; Ship Stores". Chapter 98 provides a concessional rate of duty in respect of articles and items specified therein. Chapter Note (1) declares, "this chapter is to be taken to apply to all goods which satisfy the conditions prescribed therein, even though they may be covered by a more specific heading elsewhere in this Schedule." In other words, if a particular article mentioned in Chapter 98 also falls under some other chapter/heading, still such item will be governed by Chapter 98 and not by that other chapter/heading. So far as photographic machinery is concerned, it is not disputed that it falls under Chapter 90 where the rate of duty is far higher. Chapter Note (2) which is of crucial relevance herein reads : "Heading No. 98.01 is to be taken to apply to all goods which are imported in accordance with the regulations made under Section 157 of the Customs Act, 1962 (52 of 1962) and expressions used in this heading shall have the meaning assigned to them in the said reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Heading No. 98.01. Regulation (3) defines certain expressions including the expression "industrial plant". The definition reads as follows : "Industrial Plant" 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." 7. A perusal of the definition of "industrial plant" makes it clear that it seeks to exclude industrial systems meant for "establishments designed to offer services of any description". It mentions certain service establishments by way of illustration. Photographic studios and photographic film processing laboratories happen to be mentioned specifically as some of the establishments designed to offer services. 8. Once the Project Imports Regulations came into fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in the sense that they are not required to be laid on the floor of the Houses of Parliament under Section 159. Evidently, Regulations were not supposed to deal with any matters of substance. (2) While enacting Section 157, Parliament could never have contemplated delegating, to the Board, the power to cut down the field and ambit occupied by the provisions of the Customs Act or, Customs Tariff Act. Regulations made by the Board stand on an inferior footing to the rules made by the Central Government under Section 156. The regulation-making power was intended to be utilised for the purpose of providing procedural and peripheral provisions but certainly not for making a substantive provision cutting down the content and ambit of the provisions of the Act. (3) Even if it is held for some reason that such a power was intended to be and was delegated to the Board, it would be bad .since it amounts to excessive delegation of legislative power. Regulation (3) of the new Regulations which defines the expression "industrial plant", is clearly outside the province of regulation-making power conferred by Section 157. The legislative history of Tariff Entry 98 militates against any such po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o which the transhipment of all or any goods under sub-section (3) of Section 54, the transportation of all or any goods under Section 56 and the removal of warehoused goods from one warehouse to another under Section 67 may be allowed without payment of duty; (c) the conditions subject to which any manufacturing process or other operations may be carried on in a warehouse under Section 65." 12. Section 156 confers upon the Central Government the power to make rules "consistent with this Act generally, to carry out the purposes of this Act". Sub-section (2) of Section 156 again specifies certain matters with respect to which rules can be made. The specification in sub-section (2) is without prejudice to the generality of the power conferred by sub-section (1). 13. The Parliament has appointed two authorities i.e.. Central Government and the Board to make rules/regulations to carry out the purposes of the Act generally. The character of Rules and of the Regulations made under Sections 156 and 157 respectively is the same - both constitute delegated legislation. The Regulations are subject to an additional limitation viz., they should not be contrary to the Rules made under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Note (2), vested the power to define "the expressions occurring in Chapter 98 in the Board. In this scheme of things, we cannot accept the argument of Shri Salve with respect to some kind of an inherent limitation upon the regulation-making power of the Board. We cannot say that the said power is confined only to, what the learned counsel calls, peripheral and/or procedural matters. 14. There is another and perhaps more simpler answer to the attack upon the validity of the said Regulations. They are relatable not only to Section 157 of the Customs Act but more particularly to Chapter Note (2) of Chapter 98 of the Customs Tariff Act. Chapter Note (2) expressly states that the expressions used in Heading 98.01 shall have the meaning assigned to them in the said regulations. In accordance with the said Chapter Note, Project Imports Regulations have been made excluding "establishments designed to offer services of any description" from the purview of "industrial plant". If the said regulations are good and valid, there can be no escape from what they say; the photographic equipment does not fall within the ambit of "industrial plant". In this view of the matter, the relevance of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stration of the Act, along with and subject to the guidance of the Central Government. 16. In Vasantlal Maganbhai Sanjanwala v. State of Bombay [1961 (1) SCR 341], it is observed by this Court that "self-effacement of legislative power in favour of another agency either in whole or in part is beyond the permissible limits of delegation". At the same time, it is held, "it is for a court to hold on a fair, generous and liberal construction of an impugned statute whether the legislature exceeded such limits. But the said liberal construction should not be carried by the courts to the extent of always trying to discover a dormant or a latent legislative policy to sustain an arbitrary power conferred on executive authorities. It is the duty of the court to strike down without any hesitation any arbitrary power conferred on the executive by the legislature". These words were quoted with approval in a subsequent decision of the Constitution Bench in Devidas v. State of Punjab [1967 (3) SCR 557]. 17. Krishna Iyer, J. emphasised this very aspect in the context of a taxing statute in Avinder Singh v. Punjab [1979 (1) SCR 845]. The learned Judge said: ''....the legislature cannot s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad, in this connection to the decisions of this Court in State of Tamil Nadu v. Hind Stone [1981 (2) SCR 742]. Section 15 of the Mines and Minerals (Regulation and Development) Act, 1957 empowers the State Government to make rules for regulating the grant of quarry lease, mining lease and other mineral concessions in respect of minor minerals and purposes connected therewith. In exercise of the said power, the Government of Tamil Nadu framed Tamil Nadu Minor Mineral Concession Rules, 1959. Rule 8 of the Rules prescribed the procedure for lease of quarries to private persons. Rule 8(C), which was introduced in the year 1977, imposed a prohibition on the grant of lease of quarries in respect of black granite to private persons. The Rule provided that notwithstanding anything to the contrary contained in the said rules, no lease for quarrying black granite shall be granted to private persons on or after 7th December, 1977. It could be granted only to the State Government or to a corporation wholly owned by it. The validity of Rule 8(C) was challenged on the ground that it travels beyond the purview of the Act inasmuch as the power to make rules conferred upon the State Government by S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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