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TMI Blog1993 (9) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that nearly 30% of the yarn manufactured by the petitioners are being exported out of India, earning precious foreign exchange. The Export and Import Policy for the period 1992-97 has introduced in Chapter VI an "Export Promotion Capital Goods Scheme" (hereinafter called the EPCG Scheme). The Scheme provides for the import of Capital goods at concessional rates of duty, subject to an export obligation of four times the c.i.f. value of the import. The petitioners made an application on 18-12-1991 for the grant of licence for importing certain capital goods and a licence was issued on 17-1-1992. The licence covered the import of 2 Nos. Autoconer Machines and 4 Nos. REITER HIGH SPEED DRAW FRAME MODEL RSB 851 WITH AUTOLEVELLER. The licence entitled the petitioners to import the capital goods at concessional rate of customs duty namely 15% instead of 50%. The licence value was Rs. 1,70,39,165/-. The goods could be imported within 24 months from the date of licence. The petitioners had applied for certain amendments and the licence as amended was communicated to the petitioners on 11-11-1992. The petitioners placed a firm order with a Company at Germany for the shipment of 2 Nos. Draw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Face Value of the Import Licence. 2. The first respondent has filed a counter-affidavit stating that the Notification No. 160 of 1992 granting exemption of Customs duty in respect of goods imported under the EPCG Scheme required the following conditions to be fulfilled :- "(i) that the capital goods are imported under, and in accordance with a licence, under Export Promotion Capital Goods (EPCG) scheme in terms of Export and Import Policy. (ii) that the Importer at the time of clearance shall produce to the Assistant Collector of Customs a certificate from the licensing authority for having executed a bond order under paragraph 45 of the policy. (iii) that the Importer at the time of clearance shall make a declaration before the Assistant Collector of Customs binding himself to pay on demand an amount equal to the duty leviable on such goods, but for the exemption contained if he does not comply with the conditions contained in the table." According to the first respondent the petitioner had not fulfilled the conditions and therefore, the permission could not be granted to clear the goods. In a separate counter-affidavit filed by respondents 3 and 4 it is pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest at the rate of 24% per annum for a period of six years. (b) A Bank Guarantee for an amount equal to 50% of the value of duty saved, for a period of three years, where the importer is not an Export House/Trading House/Star Trading House. (c) Where the export obligation has not been fulfilled at least to the extent of 50% of the total export obligation imposed, within a period of two and a half years from the date of issue of the licence, the bank guarantee shall be enforced and forfeited unless the same is renewed for another three years by the licence holder on his own well before the expiry of the bank guarantee." 4. Mr. C. Natarajan, learned Counsel for the petitioners says that the proper way of interpreting the said Clause 102 and the words "for an amount equal to 50% of the value of the duty saved", are with reference to the amount actually saved and not an amount based on the Face Value of the licence. In other words, it is open to the petitioners to import part of the machineries mentioned in the licence and claim the concessional rate of duty. There is no obligation to import all the machineries at the one and the same time. The duty incidence is only on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt all the items. The export obligation is only in respect of C.I.F. value of the goods actually imported. When an importer does not import all the items mentioned licence, he does not save any duty on the items, not exported. (5) Insistence on the furnishing of bank guarantee for 50% of the licence value would defeat the very object of the Scheme. In support of his argument Mr. C. Natarajan, has also cited several judgments on the manner of interpretation of an exemption notification. On the other hand, Mr. T. Srinivasamoorthy for the respondents has also cited a number of judgments to suggest that the petitioner has not complied with the prerequisite conditions for the grant of the concessional duty and therefore cannot get the benefit of the notification. 5. I will first refer to the judgment relied on by the counsel for the respondents in Bakul Cashew Co. v. Customs Officer, Quilon - [1978 Tax Law Reporter - Page 2102]. The following passage is relied upon :- "In order to earn exemption under the terms of the notification, the appellant has to comply strictly with the conditions and the terms imposed by the notification. That notification requires, inter alia, that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid Clause 102 and not whether any of the conditions referred to therein are applicable or not. In my opinion therefore the above judgments do not touch the real issue in this case. Before referring to the judgments relied on by the petitioner one other case cited by the respondent may be looked into. That is Century Enka Limited and Others v. Union of India and two others [1982 (10) E.L.T. 64 (Bom.)]. In that case in the affidavit filed in support of the petition the party contended that the entire material imported was to be used in the factory of the party for manufacture of nylon yarn. Thus, it was contended that exemption notification did apply to the said party. The respondents in that case had not cared to contest the said statement. Therefore, the Bombay High Court held that the conditions mentioned in the exemption notification were satisfied and the party was entitled to relief. 8. On the other hand, the argument of Mr. C. Natarajan, for the petitioner is, that when a question arises whether a subject falls within a notification granting exemption, it must be construed strictly and against the subject. However, when once the ambiguity or doubt about the applicability of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty, but I do think it can be estopped from relying on a technicality and this is a technicality [See Wells v. Minister of Housing and Local Government 1967 1 W.L.R. 1000 at 1007]." The Apex Court also referred to a passage in Francis Bennion in his Statutory Interpretation, 1984 edition, and referred to the following passage at page 683 :- "Unnecessary technicality : Modern courts seek to cut down technicalities attendant upon a statutory procedure where these cannot be shown to be necessary to the fulfilment of the purposes of the legislation." They also approved of the passage quoted by me earlier in 83 S.T.C. Page 251. 9. An analysis and scrutiny of the above judgments leaves one with the impression that once the notification in this case namely Notification 160 of 1992 read with clause 102 of the E.P.C.G. Scheme applies to the case of the petitioners, the manner of interpreting the words "value of the duty saved" should be wider and the importer should be given the benefit of any doubt or lacuna. In doing so, I am reminding myself about the object of the E.P.C.G. scheme. The whole idea is that there should be an incentive for export of more and more goods. I have alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not see any difficulty in the exemption notification being applied in respect of the goods which are imported in instalments separately to each of the instalments. 11. One other difficulty which is expressed is that the licence does not mention the value of each machinery to enable the customs authority to give effect to the exemption notification. In my opinion, this is an argument based on desperation because the Customs Act and the Rules give enough power to value the goods imported ignoring the value cleared by the importer. Therefore, if the respondents 1 and 2 doubt the C.I.F. value of the two items imported, it is certainly open to them to assess the correct value and demand the execution of the bank guarantee for the duty saved on the basis of the value arrived at by the respondents. Therefore, this cannot be an insurmountable hurdle in allowing the clearance of the goods. 12. There is, however, one argument of the respondents which relates to the applicability of the exemption notification itself. This is found in clause 102 of the Handbook of Procedures, already quoted by me. It says that before clearance of goods through customs, "but not late than six months from t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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