IN THE SUPREME COURT OF INDIA
N.M.
Kasliwal and S.C. Agrawal, JJ.
SHARP BUSINESS MACHINES PVT. LTD.
Versus
COLLECTOR OF
CUSTOMS
Civil
Appeal Nos. 2403-05 of 1989, decided on 24-8-1990[i][1]
Valuation (Customs) - Misdeclaration - Under-valuation -
Valuation on the basis of quotations instead of invoices - Invoice value Rs.
99,612/- while quotations for the same goods from the same supplier shows value
as Rs. 7,15,485/- - Value in quotations to be the assessable value - Invoice price
ignorable - Import of Plain Paper Copiers in SKD/CKD form in the guise of parts
and accessories - Section 14 of the Customs Act. -
As per Section 14 of the Customs Act, value of the goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation, in the course of international trade where the seller and buyer have no interest in the business of each other and the price is the sole consideration for sale or offer for sale. In the present case the Company itself has produced copies of the quotations in relation to the items imported by them, thus they cannot dispute the correctness of the prices therein nor the importer has produced any other material to show that the value mentioned in the invoices was correct market value of the goods imported at the relevant time. Tims there is nothing wrong if value for the purpose of Customs duty is determined on the basis of quotations, specially when the supplier has been the authorised Agent of the manufacturer and the prices given in the quotations were based on the prices given by the manufacturer. Thus, there cannot be a question of supplying the components on a lesser price than given by the manufacturers themselves. Moreover, the importer had a special relationship with the supplier as a sort of a collaborator with no formal agreement.[paras 10, 11]
Confiscation and penalty - Import Policy - Import of Plain Paper Copiers in SKD/CKD conditions in the guise of parts and accessories under the phased manufacturing scheme of Import Policy - Confiscation and penalty justified - Section 111(d), 111(m) and 112 of the Customs Act, 1962. -
The
importer has purchased fourteen fully finished Plain Paper Copiers and then
dismantled them for marketing the same in the guise of components of Copiers.
The Company had submitted application for approval of their phased
manufacturing programme to the Development Commissioner, Small Scale
Industries. The intent and purpose of the phased manufacturing programme under
the Import Policy was to give incentive and encouragement to the new
entrepreneurs establishing small scale industries and to permit in the first
phase to import 62% of the components and the balance of the 38% was to be manufactured
by them indigenously. According to Import Policy this 62% was to be reduced in
subsequent years. The Import Policy was not meant for such entrepreneurs who
instead of importing 62% of the components, imported 100% of the components of
fully finished and complete goods manufactured in a foreign country. It is an
admitted position that fully finished Plain Paper Copiers were prohibited item
for import and thus the device adopted by the Company in the present case was a
complete fraud on the Import Policy itself because the fully assembled Copiers
are the end-products of the importer and hence cannot be imported by them.
Consequently confiscation of the goods in question and imposition of penalty
both on the Company and the Managing Director are justified and do not call for
any reduction. [paras 12, 13, 19]
UNION OF INDIA
v. TARACHAND GUPTA - AIR 1971 S.C. 1558___________[PARAS 6,14,16]
COLLECTOR v.
MISUNY ELECTRONIC WORKS - 1987 (30) E.L.T. 345________[PARA 6]
D.P. ANAND v.
T.M. THAKORE & CO. - C.A. NO. 4/1959 DECIDED ON 17-8-1960 (H.C.) [PARA 14]
REPRESENTED BY : Mr. S.K. Dholakia
and Mr. S.K. Kulkami, Advocates, for the Appellant.
Mr. Kapil Sibal, Additional Solicitor
General, Mr. P. Parmeswaran, and Mrs. R. Rangaswamy, Advocates with him, for
the Respondent.
[Judgment per
: Kasliwal, J.]. - All these
appeals under Sec. 130(e) of the Customs Act, 1962 (hereinafter referred to as
the Act) are directed against the common order made by the Customs, Excise and
Gold (Control) Appellate Tribunal, New Delhi dated 31-10-1988 in C.A. Nos. 808
to 810/87-A.
2. Brief facts of the case are that M/s. Sharp Business
Machines (Pvt.) Ltd., Bangalore (hereinafter referred to as the company) is a
small scale unit duly registered as such since 1984. The company had started
the phased manufacture of plain paper copiers and obtained a licence in this
regard dated 25-11-1986 for Rs. 4,94,500/- from the licensing authority. The
company imported components and consumables in SKD/CKD for plain paper copiers.
Three consignments were imported from M/s. Paralax Industrial Corp., Hongkong
under airways bill numbers 098, 4960, 3120; 098, 4960, 3116; and 098, 4960,3105
all dated 21-1-1987. The goods were received at the air cargo complex,
Bangalore. The company sought the clearance of the imported goods under bills
of entry Nos. 2044, 2045 and 2046 all dated 3-2-1987. Similarly, the goods were
also imported from M/s. Alpha Papyrus Trading Co. Pvt. Ltd., Singapore under
airway bill No. 098, 4925, 4914 dated 19-2-1987. The clearance for this
consignment was sought under bill of entry No. 4993 dated 11-3-1987. The
company had declared the value of each of the consignments at Rs. 32,182/-
Rs.43,359, Rs.5,412/- and Rs. 18,659/- respectively in respect of the
above-mentioned bills of entry Nos. 2044, 2045, 2046 and 4993. The total value
declared was Rs. 99,612/- under all the four bills.
3. Proceedings were held before the Appraiser of Customs air
cargo complex Bangalore for verification of the goods and their valuation etc.
and the statements of the company’s Managing Director Sh. Sadanand were also
recorded on 11-2-1987,10-3-1987 and 18-3-1987 under Sec. 108 of the Act. The
Collector of Customs issued a notice to the company under Sec.124 of the Act on
4-3-1987 relating to the first consignment. In the said notice it was stated
that 4 items were not covered by the licence and the same were liable for
confiscation. However, on 30-3-1987 the Collector issued another notice in
supersession of the earlier notice dated 4-3-1987. Notice was also issued on
the same date in respect of bill of entry dated 11-3-1987. By the said notices
the Collector proposed to enhance the value of the goods imported and further
proposed to confiscate the entire goods imported and also to levy a fine and
other penalties. The company was accused of misdescription of the goods,
misdeclaration of value, suppression of the relationship with the suppliers,
suppression of the place of origin of goods etc.
4. The Collector by his order dated 13-4-1987 decided all the
points against the company. The Collector held that the quotations given by
M/s. Shun Hing Technology Ltd. alongwith the application for approval of their
PMP during July 1986 should be taken as the correct value of the goods
imported, and the plea of the company that it had received a special discount
in view of the bulk purchases and promise of future purchases was not accepted.
The Collector in these circumstances determined the price of the goods at Rs.
7,15,485/- for the purposes of Sec. 14(1) of the Act. The Collector thus held
that there was a misdeclaration of the value to the tune of Rs. 6,15,873/- and
the duty payable thereon would be Rs. 10,96,228.20P. The Collector further held
that the entire goods imported were liable to confiscation under Sec. 111(m) of
the Act. The Collector also held that the goods imported were fully finished
copiers in SKD/CKD form and as such there was a misdeclaration that the
imported goods were only parts of the copiers. The Collector also held that
description of most of the items in the invoices had been deliberately
manipulated to suit the description in the licence. The goods covered by three
bills 2044, 2045 and 2046 were held to be one consignment and one AWB and thus
viewed as one consignment, it amounted to the import of ten copiers. The goods
imported under the 4th bill No. 4993 were four fully finished copiers in
SKD/CKD form. The Collector further held that in terms of note (i) to Imports
Control Order, 1955 and Customs Tariff Act, 1975, these goods will be deemed to
be fully assembled copiers for the purpose of valuation and licence. Thus the
goods imported as fully assembled copiers were not permissible to be imported
and this was a clear violation of the Act and the terms of the licence. It was
also held in the alternative that even if all the parts imported were viewed
individually, none of the items tally with the licence. The Collector in this
regard gave detailed reasons for arriving at this conclusion. The Collector
also held that the value of the parts imported for the purposes of Sec. 14(1)
of the Act would be Rs. 5,63,332/- whereas the importers were permitted to
import goods worth Rs. 4,94,500/-. There was thus an excess of Rs. 68,832/- and
as such the goods were liable to confiscation under Sec. 111(d) of the Act. The
Collector in these circumstances passed an order for confiscation of the entire
goods with an option to the company to redeem them on payment of a fine of Rs.
3 lacs. The Collector also imposed a fine of Rs. 1 lac on the company and Rs. 1
lac on Sh. Sadanand, the Managing Director of the Company.
5. The company filed two appeals aggrieved against the common
order of the Collector relating to both the notices and a separate third appeal
was preferred by the Managing Director before the Customs, Excise and Gold
(Control) Appellate Tribunal. The Tribunal dismissed all the three appeals by a
common order dated 31-10-1988. The company and the Managing Director aggrieved
against the order of the Tribunal have filed the abovementioned three appeals
before this Court.
6. One of the arguments raised before the Tribunal was that
the Collector erred in treating SKD/CKD parts of the copiers imported, as
assembled copiers for the purpose of Schedule I to the Imports (Control) Order,
1955 and the case Union of India v. Tarachand Gupta & Bros[ii][2].
AIR 1971 S.C. 1558 applied on all force to the instant case. The Tribunal in
this regard set aside the finding recorded by the Collector and placing
reliance on a decision of the Calcutta High Court in Collector of Customs, Calcutta v. Misuny Electronic Works[iii][3]
held that one has to look into the respective licence and not to the fact that
if all the consignments covered by all the bills of entry are assembled
together, there will be complete machines. The Tribunal, however, upheld the
other findings recorded by the Collector to the effect that even if all the
imported parts contained in SKD/CKD packs of copiers were viewed individually
the licence produced was not valid for any of the items imported. The Tribunal
thus held that the Collector was right in holding that the imported goods were
not covered by the valid licence. The Tribunal also held that the Collector was
right in rejecting the price shown by the company in the invoices. The Tribunal
also rejected the contention made by the counsel for the company that the
valuation made by the Collector was exorbitant. As regards the question of
imposing fine and penalty also the Tribunal found the order of the Collector as
correct, and did not find any cogent reason to interfere in the order of the
Collector.
7. We have heard Mr. Dholakia for the appellants and Mr. Kapil
Sibbal learned Addl. Solicitor General for the respondents.
8. It was argued by Mr. Dholakia that the Tribunal committed a
serious error in holding that the invoices submitted by the company were
undervalued and could not be relied upon for determining the correct value of
the goods imported. It was contended that the Collector Customs was not correct
in determining the value of the imported goods on the basis of the quotations
of M/s. Shun Hing Technology Ltd., Hongkong. The quotation of Shun Hing
indicated prices at Hongkong and not the place of importation. There was no
other material on record to determine the value of the imported goods. It was
thus contended that in the absence of any other relevant material, the invoice
price has to be taken as the basis for valuation. It was also submitted that
there was no justification in discarding the price shown in the invoices which
contained the correct value of the goods imported and in case the Customs
authorities were not placing reliance on such prices mentioned in the invoices,
then the burden lay on the Customs department to find out the correct value of
the goods by collecting material and other adequate evidence before enhancing
the value of the imported goods. The onus to prove the charge of
under-valuation against the company was on the Customs department and the
evidence relied upon by them, as contained in the adjudication order, is not at
all sufficient to discharge that onus. It was further argued that any reliance
placed on the quotations furnished at the time of submitting the application
for grant of licence was wholly erroneous. At the time of submitting the
application for grant of licence the prices are quoted for fixing the upper
limit of the value of the licence. When the actual purchase transactions were
entered into, the company negotiated for the price and having regard to the
quantum of purchase and the prospects of future sales, the company was given
25% discount by the suppliers. It was also submitted that the prices quoted by
M/s. Shun Hing Technology Ltd., Hongkong were not the value of the components
imported by the company in SKD/CKD form of plain paper copiers. Thus any price
quoted by M/s. Shun Hing can never form any basis for arriving at a proper and
correct valuation of the goods imported by the company in the present case.
9. On the other
hand it was submitted by the learned Addl. Solicitor General that it has been
admitted by Sh. P.N. Sadanand, Managing Director of the company in his
statement dated 10-3-1987 that the goods imported in the present case by the
company were of Japanese origin and manufactured by M/s. Matushita Electric
Company Ltd., Japan. M/s. Shun Hing Technology Ltd., Hongkong were the
authorised agents of M/s. Matushita Electric Co. Ltd., Japan, who are the
manufacturers of Panasonic copiers. He further admitted that normally the
Panasonic copiers were supplied to Hongkong in fully assembled form and then
they were dismantled in Hongkong by the agents and thus supplied in India in
SKD/CKD form. Sh. Sadanand admitted to have visited Hongkong during January,
1987 alongwith his Engineer Sh. K.S. Radhakrishan for purchase of 10 copiers -
6 Nos. Model FB 1300 and 4 Nos. Model FP 2625 and that he along with the
Engineer dismantled the fully assembled copiers. It was submitted that the
goods contained in the cartons comprised of all the parts required for full and
complete assembly of copiers. At the time of examination of the goods covered
by Bill of Entry No. 4993 dated 11-3-1987, it was found that out of the six
cartons, four cartons were the original cartons used for packing fully
finished/assembled copiers Model FP 2625. The description, model number, brand,
manufacturer and country of origin/manufacture of the copier (viz. Plain Paper
Copier FP 2625 Panasonic, Matushita Electric Co. Ltd. and Japan respectively)
were clearly marked on these four cartons, one set of cassettes, trays, covers,
one drum, one developer unit and a bottle of developer. It was thus argued that
the original packing cartons used for packing fully finished copiers are
normally supplied only if fully finished copiers are purchased. It was
submitted that the adjudicating authority has given detailed reasons for
showing that the goods imported were not components of plain paper copiers as
declared. In fact, the company had purchased 14 fully finished copiers 10 in
Hong Kong and 4 in Singapore and had then dismantled for importing the same in
the guise of components of copiers. The company had submitted
application for approval of their phased manufacturing programme to the
Development Commissioner, Small Scale Industries Govt. of India, New Delhi in
July, 1986 and along with this application they had also submitted the
quotations received by them from M/s. Shun Hing Technology Ltd., Hong Kong
which covered all the items imported except a few items like toner drum and
table for model FP 2625. 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. In the above circumstances the adjudicating authority was fully
justified in not believing the value mentioned in the invoices and in placing
reliance on the prices mentioned in the quotations given by M/s. Shun Hing
Technology Ltd., Hong Kong. It was further argued by Mr. Sibbal that the prices
quoted by M/s. Shun Hing were based on the prices given by the manufacturers
i.e. M/s. Matushita Electric Co. Ltd., Japan and there was no question of
supplying the components of the copiers on a lesser price than given by the
manufacturers themselves. The company had a special relationship with M/s. Shun
Hing Technology Ltd., Hongkong as a sort of collaborator with no formal
agreement and that M/s. Paralax Industrial Corp., Hongkong were in turn agents
of M/s. Shun Hing Technology Ltd., Hongkong.
10. We have considered the submissions made by learned counsel
for the parties. Section 14 of the Act provides for valuation of goods for the
purpose of assessment. Section 14(1) which is relevant for our purposes reads
as under :
"Valuation of goods for
purposes of assessment:
(1)
For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law
for the time being in force whereunder a duty of customs is chargeable on any
goods by reference to their value, the value of such goods shall be deemed to
be the price at which such or like goods are ordinarily sold, or offered for
sale, for delivery at the time and place of importation or exportation, as the
case may be, in the course of international trade, where the seller and the
buyer have no interest in the business of each other and the price is the sole
consideration for the sale or offer for sale:
Provided
that such price shall be calculated with reference to the rate of exchange as
in force on the date on which a bill of entry is presented under Section 46, or
a shipping bill or bill of export, as the case may be, is presented under Sec.
50."
11. According to
the above provision the value of the goods shall be deemed to be the price at
which such or like goods are ordinarily sold, or offered for sale, for delivery
at the time and place of importation, in the course of international trade
where the seller and the buyer have no interest in the business of each other
and the price is the sole consideration for the sale or offer for sale. In the
present case the company itself had produced a copy of the quotations received
by them from M/s. Shun Hing Technology Ltd., Hongkong in respect of the copiers
and other items imported alongwith their application for approval of their
phased manufacturing programme. The company itself having produced these
quotations, they cannot dispute the correctness of the prices mentioned
therein. The company has not only not disputed the correctness of these
quotations but has not produced any other material on record to show that the
value mentioned in the invoices was the correct market value of the goods
imported at the relevant time. The adjudicating authority in these
circumstances was perfectly justified in taking the prices mentioned in the
quotations as a basis for determining the correct value of the imported goods.
12. Mr. Dholakia next contended that the Tribunal itself had
set aside the finding of the adjudicating authority on the question of treating
SKD/CKD packs of the copiers imported comprised of all the 100% components of
copiers. The company had tried to practise a fraud in defeating the import
policy itself. The intention and purpose of the import policy was to give
incentive and encouragement to the new entrepreneurs establishing small-scale
industries and in the first phase to import 62% of the components of the
copiers and the balance of 38% was to be manufactured by them indigenously.
According to the import policy this percentage of 62% was to be reduced in the
subsequent years. The import policy was not meant for such entrepreneurs who
instead of importing 62% of the components, imported 100% of the components of
a fully finished and complete goods manufactured by a foreign country. It is an
admitted position that fully finished plain paper copiers were a prohibited
item for import and thus the device adopted by the company in the present case
was a complete fraud on the import policy itself. Apart from the above
circumstances in our view the Tribunal was not right in setting aside the
finding of the adjudicating authority and in taking the view that one has to
look into the respective licence and not to the fact that if all the
consignments covered by all the bills of entry assembled together, there will
be a full and complete machinery.
13. It is an admitted position that goods covered by the three
bills of entry Nos. 2044, 2045 and 2046 were all dated 3-2-1987 and had been
shipped from Hongkong on the same day i.e. on 21-1-1987. The entire goods had
arrived on the same day and by the same flight on 30th January, 1987. The goods
covered under the three bills of entry have been supplied by the same supplier
viz. M/s. Paralax Industrial Corp., Hongkong. The goods covered by these bills
of entry are ten numbers copiers in SKD/CKD condition, accessories, spares,
consumables and excess items. The goods covered by the 4th bill of entry are
four numbers copiers in SKD/CKD condition and consumables. The licence produced
is valid for certain components and is not valid for fully assembled copiers.
The fully assembled copiers are the end products of the importers and hence
cannot be imported by them. Plain Paper Copiers are electronic equipments.
14. The case Union of
India v. Tara Chand Gupta & Bros.
(supra) lends no assistance to the appellants in the facts and
circumstances of the present case. In the above case Tara Chand & Bros.
held an import licence dated July 10,1956 permitting them to import parts and
accessories of motorcycles and scooters as per Appendix XXVI of the Import
Policy Book for July-December, 1956. Under the said licence, the respondents in
that case imported certain goods which arrived in two consignments, each
containing 17 cases by two different ships. According to the respondents, the
goods so imported by them were motorcycle parts which their licence authorised
them to import. The Customs authorities, on the contrary held, on the
examination of the goods, that they constituted 51 sets of “Rixe Mopeds
complete in a knocked down condition”. After holding an inquiry the Deputy
Collector directed confiscation of the said goods with an option to the
respondents to pay certain sums in lieu of confiscation and also personal
penalties. That order was passed on the basis that the goods imported were not
parts and accessories of motorcycles and scooters presumably under entry 295 of
the Schedule to the Import (Control) Order but were motorcycles/scooters in
completely knocked down conditions, prohibited under remark II against entry
294, a licence in respect of goods covered by it would authorise import of
motorcycles and scooters. The Deputy Collector held that though the goods were
not in completely knocked down condition it made no difference as the tyres,
tubes and saddles were easily obtainable in India and their absence did not
prevent the machines being otherwise complete. He also found that there was a
trade practice under which traders were supplying motorcycles without tyres,
tubes and saddles unless the purchaser specially asked for these parts.
According to him the goods could not be regarded as spare parts but were “Moped
in disassembled condition.” The respondents in the above case filed a civil
suit and the matter went in appeal to the High Court. The Letters Patent Bench
of the High Court held that the Collector’s jurisdiction was limited to
ascertain whether or not the goods imported by the respondents were spare parts
and accessories covered by entry 295 in respect of which they undoubtedly held
the licence, and therefore, he could not have lumped together the two
consignments which, though imported under one licence, arrived separately and
were received on different dates and could not have come to the conclusion that
the plaintiffs had imported 51 “Rixe” Mopeds in completely knocked down
condition. The respondents were entitled to import the said goods and
therefore, Section 167(8) of the Sea Customs Act did not apply and the
respondents consequently could not have been held guilty of breach either of
that Section or Section 3 of the Imports & Exports (Control) Act. It was
further held that the decision of this Court in Girdhari Lal Bansi Dhar v. Union
of India[iv][4]
did not overrule but only distinguished judgment in D.P. Anand v. M/s. T.M.
Tliakore & Co.[v][5]
and therefore, the binding force of that decision remained unshaken. The Union
of India came in appeal to this Court by grant of certificate. This court held
as under :
“Under
entry 295, except for rubber tyres and tubes for whose import a separate
licence could be obtained under entry 41 of Part V, there are no limitations as
to the number or kind of parts or accessories which can be imported under a
licence obtained in respect of the goods covered thereunder. Prima facie, an importer could import
all the parts and accessories of motor cycles and scooters and it would not be
a ground to say that he has committed breach of entry 295 or the licence in
respect of the goods described therein, that the parts and accessories imported,
if assembled, would make motor cycles and scooters in C.K.D. condition. There
are no remarks against entry 295, as there are against entry 294, that a
licence in respect of goods covered by entry 295 would not be valid for import
of spares and accessories which, if assembled, would make motor cycles and
scooters in C.K.D. condition. Apart from that, the goods in question did not
admittedly contain tyres, tubes and saddles, so that it was impossible to say
that they constituted motorcycles and scooters in C.K.D. condition. The first
two could not be imported and were in fact not imported because that could not
be done under the licence in respect of goods covered by entry 295 which
expressly prohibited their import and a separate licence under entry 41 of Part
V would be necessary. The third, namely, saddles were not amongst the goods
imported. No doubt, there was, firstly, a finding by the Collector that a trade
practice prevailed under which motorcycles and scooters without tyres, tubes
and saddles could be sold. Secondly, the tyres and tubes could be had in the
market here and so also saddles, so that if an importer desired, he could have
sold these goods as motorcycles and scooters in C.K.D. condition. The argument
was that since there was a restriction in entry 294 against imports of
motorcycles and scooters in C.K.D. condition, the importer could not be allowed
to do indirectly what he could not do directly.
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 restrictions 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 accessories. Therefore, the mere fact, that
the goods imported by them were so complete that when put together would make
them motor cycles and scooters in C.K.D. condition, would not amount to a
breach of the licence or of entry 295. Were that to be so, the position would
be anomalous as aptly described by the High Court. Suppose that an importer
were to import equal number of various parts from different countries under
different indents and at different times, and the goods were to reach here in
different consignments and on different dates instead of two consignments from
the same country as in the present case. If the contention urged before us were
to be correct, the Collector can treat them together and say that they would
constitute motor cycles and scooters in C.K.D. condition. Such an approach
would mean that there is in entry 295 a limitation against importation of all parts
and accessories of motorcycles and scooters. Under that contention, even if the
importer had sold away the first consignment or part of it, it would still be
possible for the Collector to say that had the importer desired it was possible
for him to assemble all the parts and make motor cycles and scooters in C.K.D.
condition. Surely, such a meaning has not to be given to entry 295 unless there
is in it or in the licence a condition that a licensee is not to import parts
in such a fashion that his consignments, different though they may be, when put
together would make motor cycles and scooters in C.K.D. condition. Such a
condition was advisedly not placed in entry 295 but was put in entry 294 only.
The reason was that import of both motor cycles and scooters as also parts and
accessories thereof was permitted, of the first under entry 294 and of the
other under entry 295. A trader having a licence in respect of goods covered by
entry 294 could import assembled motor cycles and scooters, but not those vehicles
in C.K.D. condition, unless he was a manufacturer and had obtained a separate
licence therefor from the Controller of Imports who, as aforesaid, was
authorised to issue such a licence on an ad hoc basis. Thus the restriction not
to import motorcycles and scooters in C.K.D. condition was against an importer
holding a licence in respect of goods covered by entry 294 under which he could
import complete motor cycles and scooters and not against an importer had a
licence to import parts and accessories under entry 295.
If
Dr. Syed Mohammad’s contention were to be right we would have to import remark
(ii) against entry 294 into entry 295, a thing which obviously is not
permissible while construing these entries. Further, such a condition, if one
were to be implied in entry 295, would not fit in, as it is a restriction
against import of motor cycles and scooters in C.K.D. condition and not their
parts and accessories. There is, therefore, no question of a licensee under
entry 295 doing indirectly what he was not allowed to do directly. What he was
not allowed to do directly was importing motorcycles and scooters in C.K.D.
condition under a licence under which he could import complete motor cycles and
scooters only. That restriction, as already observed, applied to a licensee in
respect of goods described in entry 294 and not a licensee in respect of goods
covered by entry 295.
The
result is that 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. Were he to adopt such an approach, he
would be acting contrary to and beyond entry 295 under which he had to find out
whether the goods imported were of the description in that entry. Such an
approach would, in other words, be in non-compliance of entry 295."
15. This Court distinguished the case of Girdhari Lal Bansi
Dhar (supra) by making the following
observation:
“It
will be noticed that the Bombay decision in D.P. Anand’s case was not dissented
from but only distinguished, and therefore, the High Court in the present case
was justified in following it. It is true, however, that counsel for the
appellant there relied on that decision in support of his proposition that a
ban on completed article cannot be read as a ban on the importation of its
constituents, which, when assembled, would result in the prohibited article,
and this Court pointed out in answer that in D.P. Anand’s case, the imported
components could not have when assembled, made up the completed article because
of the lack of certain essential parts which admittedly were not available in
India and. could not be imported. The real distinction, however, between the
two cases was that the decision of the Collector in D.P. Anand’s case was not,
as was the decision in Girdhari Lal’s case under which of the two competing
entries the imported goods fell but that the imported goods in question, if
assembled together, would not be the goods covered by the entry, and therefore,
not the goods in respect of which the licence was granted. Further, the
articles in question, even when assembled together, were not prohibited
articles as in Girdharilal’s case. Girdharilal case is clearly distinguishable
because it is not as if motorcycles and scooters are prohibited articles as was
the case there. The restriction is not against licensees importing motor cycles
and scooters under entry 294 and parts and accessories under entry 295 but
against the licensees under entry 294 importing motor cycles and scooters in
C.K.D. condition. The question in the instant case was not under which of the
two entries, 294 or 295, the goods fell, but whether the goods were parts and
accessories covered by entry 295.”
16. In our view the Tribunal was not correct in placing
reliance on the case of Union of India v. Tara Chand Gupta & Bros. (supra) in the facts and
circumstances of the present case. In the case before us the import of fully
assembled copiers was prohibited. The appellants was only entitled to import 62%
of the components. As already mentioned above, the device adopted by the
appellant in the present case was a complete fraud on the Import Policy and the
appellant was doing indirectly what he was not permitted to do directly. We are
further of the view that the facts in the present case are more akin and similar
to the facts of the case Girdhari Lal of Bansi Dhar v. UOI (supra) which
was distinguished in the case of UOI v. Tara Chand Gupta & Bros. (supra).
17. Mr. Dholakia also tried to assail the finding recorded by
the Collector and upheld by the Tribunal and argued that the components imported
by the appellant tallied with the parts which were permitted under the licence.
We do not find any force in this submission. The Collector has given detailed
reasons for holding that the imported goods were not covered by the valid
licence and the Tribunal having upheld such finding, the same cannot be
challenged by the appellant before this Court.
18. Mr. Dholakia also submitted that in the facts and
circumstances of the case the order confiscating the goods and imposing fine and
penalty both on the company and Sh. Sadanand, the Managing Director was too high
and ought to be reduced.
19. We find no force in this submission as well. This is a
case where the appellant had not only violated the terms and conditions of the
licence but also committed a fraud on the Import Policy itself. Thus we find no
ground or justification to reduce the penalty or fine.
20. In the result we find no force in these appeals and the
same are dismissed with one set of costs.
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