1. In all these appeals common question of law and facts are involved, hence they are taken up for disposal as per law.
2. The appellants are engaged in the manufacture of "Pendulum Arms", which are used in the textile machinery. They imported 'component parts', which are required for manufacture of "Pendulum Arms". They sought the benefit of exemption Notification No. 155/86-Cus. dt.
1.3.1986 in respect of Appeal No. C/2533/90-B2, Notification No.181/87-Cus. in respect of Appeal No. C/3391/90-B2 and Notification No.179/86 in respect of Appeal Nos/C/3220-3221/89-B2.
3. In Appeal Nos. C/3220-3221/89-B2, their claim was rejected by the Assistant Collector on the ground that the Bill of Entry has been provisionally assessed and therefore, the claim for refund at that stage cannot be considered. The Collector noted that in two claims the period of importation is different i.e. dt. 16.8.1985 and dt. 19.6.1986 and in the later importation, the Notification No. 179/86 was rescinded and a new Notification No. 94/86 dt. 1.3.1986 came into force. He has held that they did not produce the D.E.C. certificate as mentioned in the Notification. They had also not produced the end use certificate from the Textile Commissioner. The Collector noted that the appellants along with their letter dt. 10.7.1989 submitted two different certificates issued by Deputy Director in the office of the Textile Commissioner. Both the certificates had recommended refund of duty in terms of Notification No. 155/86 for the consignments of 1985 and Notification 155/86 for the goods imported in 1986. These certificates had been issued on 5.7.1989. He, therefore, held that the details of these certificates clearly showed that the appellants did not have required duty exemption certificates at the time of imports. Therefore, he rejected their claim on the ground that they cannot claim benefit of a Notification on the basis of certificates issued after 3-4 years of import.
4. In Appeal No. C/2533/90-B2, the Collector also rejected the claim on the ground that the certificate from the Textile Commissioner should have been produced at the time of clearance of the goods and the same had not been produced in this case. He has noted the judgment of the Tribunal rendered in the case of BHEL, wherein it had been observed that where it is not possible to produce a certificate at the time of clearance of the goods, the importer should at least produce evidence that he has applied for the said certificate before the importation of the goods and the said certificate had actually been issued and submitted to the Assistant Collector within a period of 6 months from the date of importation of the goods. He has noted that in the instant case, the appellants had not even applied for the certificate recommending grant of exemption at the time of clearance. He has noted that the application as well as production of certificate are subsequent to the clearance of the goods and their actual consumption, and hence they have not complied with the requirements listed under Notification No. 155/86 dt. 1.3.1986, even though they had substantively complied with the requirements.
5. In Appeal No. /3391/90-B2, the Learned Collector has rejected their claim on the same ground, as noted above. He has further observed that the end use certificate did not link with the sale of Pendulum Arms. He has observed that the appellants should have furnished a certificate from the Supdt. of Central Excise to this effect, but no certificate whatsoever had been produced by them. Hence they are eligible to the benefit of Notification No. 181/87.
6. As can be seen from these appeals, the question that arises for consideration is as to whether, the appellants are eligible for the benefit of Notification, even if they had applied for the eligibility certificate after the date of importation and submitted, subsequently along with the end use certificate to prove its utilisation in the manufacture of the end product? There is no dispute in these appeals pertaining to other requirements of the Notification except, the points noted by the authorities below, which has been brought out as above.
7. Arguing for the appellants, Shri Shiraz P. Rustamjee, the Learned Advocate submitted that the issue is no longer res Integra inasmuch as the Tribunal in a series of judgments have noted in similar cases, that even if party had filed the application, belatedly for obtaining eligibility certificate, even after the importation the same be produced for utilising the benefit and it cannot be denied so long as the end use certificate had been produced and the other substantive portion of the Notification had been complied with. It is his submission that the authorities below were not justified in rejecting the claim in the light of well settled proposition laid down in several judgments. In this regard he relied on the following judgments:-- 1. LM Ven Moppes Diamond Tools India Ltd. v. Government of India 1981 ELT 165 : 1980 Cen-Cus 223D MadrasVaz Forwarding Pvt. Ltd. v. Collector of Customs 1983 ELT 2049 : 1983 ECR 1334D (T) 3. Birla Institute of Technology v. Collector of Customs Bharat Earth Movers Ltd. v. Collector of Customs 8. It is further contended that the Assistant Collector was not justified in rejecting the claim in respect of Appeal Nos.
C/3220-3221/90-B2 on the ground of provisional assessment of the Bill of Entry, as the appellants had produced the certificates even before the goods had been cleared. Therefore, there was no question of rejecting the same by the Collector in these two claims.
9. The Learned DR submitted that the application filed after importation and obtaining eligibility certificate in terms of Notification, after importation is not valid. It is his contention that in the cited judgments, the case was that the appellants had already filed their application and it was pending consideration and therefore, in that circumstances, the Tribunal had held that the benefit cannot be denied. He submitted that the situation is different in this case, as the appellants had applied after importation and obtained eligibility certificate and therefore, such eligibility certificate obtained after the lapse of time will not satisfy the substantive portion of the Notification and it cannot be considered as a procedural lapse. In this connection, he relied on the judgments rendered in the case of Webel Telematic Ltd. v. Collector of Customs as reported in 1995 (60) ECR 466, India Photographic Co. Ltd. v. Collector of Customs, as and Electronic Industries v. Collector of Customs, as per Order No. 137-139/95-B2.
10. We have carefully considered the submissions made by both the sides and have perused the records and citations referred to before us.
11. The issue in these appeals lies in a very short compass inasmuch as to whether the importer can file application before the concerned authorities for obtaining eligibility certificate, after the import of the goods and whether such a certificate issued will be substantive compliance of the Notification? It has been argued by the Counsel that the issue is covered by number of judgments, while the Learned DR relied on the judgment rendered in the case of Webel Telematic Ltd. In reply, it was pointed out that in the Webel Telematic Ltd. case there has been no serious contradiction from the earlier rulings but the certificate was rejected on the ground that the certificate issued was valid for 12 months after the date of issue and it was found that the certificate did not comply with the terms of the Notification in question. In order to answer this question, it is necessary to examine the case law cited before us. The Hon'ble Madras High Court in the case of LM Ven Moppes Diamond Tools India Ltd. (supra), has noted specifically therein the finding of the Assistant Collector that the petitioner did not follow the procedure for executing a bond at the time of import, but it paid entire duty as per the Indian Tariff Act, and further it had used the synthetic grifts for the manufacture of grinding wheels, claimed the refund of excess duty paid on the basis of the notification. It is also noted that the Assistant Collector rejected this claim as unsubstantiated on the ground that despite sufficient time having been allowed, the petitioner had not produced the necessary documents satisfying the conditions relating to user of the imported material. The petitioner had filed a revision petition before the Government of India, Ministry of Finance. By the time the revision petition was filed, the petitioner was able to secure the 'End use Certificate' from the Director of Industries and Commerce, Madras and it produced the same before the Government of India. However, the Government of India, rejected the revision petition on entirely different grounds from that on which they were dismissed by the Assistant Collector and the Appellate Collector of Customs. The grounds mentioned by the Government of India in the impugned order were that the petitioner did not execute the bond at the time of importation as per the proviso to the Notification. Secondly, the petitioner had not produced any certificate from the manufacturers regarding the nature of the goods whether they are synthetic or natural. Thirdly, the consumption certificate produced before the High Court did not cover the entire quantity and it had been produced nearly two years after the importation of the goods and the delay cannot be condoned. The Hon'ble High Court noted the new grounds taken for rejection of revision authority and also affidavit filed by the petitioner explaining the delay in filing the certificate due to some labour trouble and intermittent lockouts or closures from November, 1971. The High Court appreciated the various facts and accepted the petitioners contentions.
The High Court observed that the production of the certificate itself does not create the right, but the right to refund arises by reason of its uses in the manufacture. In these circumstances, even if the evidence is produced, in the appellate and revisional stages, it should have been accepted by the revisional or appellate authorities. The High Court compared the issue by observing that this is something similar to the production of "C" forms in sales tax matters in order to be eligible for a dealer to pay concessional rate of sales tax and the High Court also noted the Courts' consistent view that though normally a dealer is expected to produce the "C" form at the time of assessment, even if it is produced in the appellate or revisional stages or even when a further revision in this Court is pending, that will have to be taken into account and the relief granted. In High Court ultimately held that the substance of the notification is that if an imported material is intended for use in the manufacture of some other product, then concessional rate of duty should be available. So construed, if the petitioner had paid full amount, there is no duty on its part to execute a bond and if it wants to claim the concessional rate, it is enough if it produces evidence at the time of claiming refund of the excess duty paid on the ground that the material which it had imported had been used in the manufacture of the products mentioned in the notification.
12. In the case of Vaz Forwarding Pvt. Ltd. (supra), the Three Member Bench of the Tribunal noted the ground of rejection of refund claim inasmuch as that the appellants had applied for "NMI" certificate on 21.1.1990, when the goods had been shipped on 10.1.1980. However, the Bill of Entry had been filed on 7.2.1980. Considering the entire facts and circumstances of the case, the Bench felt that a highly technical view in the matter should not be taken as the appellants though later had fulfilled all the conditions of the Notification. Therefore, the Tribunal has held that the appeal deserved to be allowed by granting the benefit of the Notification in question. As can be seen from this citation the application had been filed after the shipment of the goods.
13. In the case of Birla Institute of Technology (supra), the Three Member Bench of the Tribunal again in a similar circumstances, allowed the claim by applying the ratio of the judgment rendered in the case of Vaz Forwarding Pvt. Ltd. Further it was noted that the application dt.
17.10.1988 for issuance of NMI certificate for the Text Processing Package was in continuation of the application filed on 8.10.1983 for the entire system including the Text Processing Package prior to its importation into the country. The Bill of Entry had been filed on 24.9.1983. A further submission had been made in that case, which was considered by the Tribunal, was that even it is assumed that the application for NMI certificate was filed after the importation of the disputed item, the exemption under Notification No. 70/81-Cus. dt.
26.3.1981 was admissible to the goods in question.
14. In the case of Bharat Earth Movers Ltd. also the Tribunal allowed the claim on the production of the End-use certificate. In this citation, the Bill of Entry was filed on 24.9.1983 and prior to the importation they had applied to DGTD for a "Not Manufactured in India" certificate i.e. on 9.8.1983. The Certificate was issued thereafter.
The Tribunal held that the NMI certificate issued to the appellants after the clearance of the goods was acceptable for the purpose of exemption Notification No. 70/81-Cus. dt. 26.3.1981.
15. The Learned DR has relied on the other set of judgment. It is appropriate to examine the same.Oil India Ltd. v. Collector of Customs as reported in 1992 (57) ELT 447 : 1992 (40) ECR 487 (T), the Tribunal held that an Essentiality Certificate though not produced at the time of clearance was produced subsequently; the certificate signed by the Member Secretary, Empowered Committee had been issued with the same description of goods certifying that goods are considered essential for the purpose of on-shore exploration and exploitation. The only fault is that the essentiality certificate was not produced at the time of clearance. It further noted that the application to the Empowered Committee seeking the essentiality certificate had been already submitted to the Empowered Committee which was pending with that authority which has been issued only subsequent to the clearance of the goods. Therefore, the Tribunal held that it can reasonably be held that there has been substantial compliance with the conditions of the notification and the non-production of the Essentiality Certificate at the time of clearance as stipulated in the notification need not be fatal to the claim of exemption under that notification. In this regard, judgment of Hon'ble Supreme Court in the case of Union of India v. Wood Papers Literally exemption is freedom from liability, tax or duty and in fact an exemption provision is like an exception and on normal principle of interpretation of statutes it is construed strictly either because of legislative intention or On economic justification of inequitable burden or progressive approach of fiscal provisions intended to augment state revenue. But once exception or exemption becomes applicable no rule of principle requires it to be construed strictly.
17. The further observation of the Supreme Court was noted which is as follows: Do not extend or widen the ambit at the stage of applicability. But once that hurdle is crossed, construe it liberally.
18. The Tribunal held that it will be in the interests of justice and reasonable to hold in the facts of the present case that a liberal interpretation of the notification is called for, and held that the non-production of the Essentiality Certificate at the time of clearance as stipulated in the notification need not be fatal to the claim for exemption under that notification on the facts and in the circumstances of the present case. The Tribunal dealt with these points and all the judgments cited before us in great detail in the case of Webel Telematic Ltd. The facts noted by the Tribunal are that the different Bills of Entry were 10.1.1992 and 1.1.1992 which is much before the date i.e. 29.1.1992 and therefore, held that the ratio of the judgment cited and relied by the application among 3 appeals in respect of remanding 3 Bills of Entry subsequent from the date of application made to the DGTD. The Tribunal examined the judgment of Birla Institute of Technology (supra) and held that comparing the facts in two cases, the Tribunal observed that none of the conditions was satisfied in the instant case inasmuch as neither the essentiality certificate was produced nor any claim was made for such benefit at the time of clearance of the goods. In this regard, the Tribunal noted the Hon'ble Supreme Court's judgment rendered in the case of Liberty Oil Mills as , wherein it was held that if there was a doubt in the interpretation of any Notification, the benefit of doubt should be given to the Government. The Tribunal further held that there is no doubt but presuming that there is doubt in view of the rulings of the Hon'ble Supreme Court, the Tribunal held that there was no compliance of the conditions of the Notification permitting concessional rate of duty. The Tribunal also noted the judgment of the Hon'ble Supreme Court rendered in the case of Mangalore Chemicals and Fertilisers Ltd. as reported in 1993 (49) ECR 23, wherein the Apex Court had held that a distinction between provisions of the statute which are of substantial character and were built in with certain specific objective of policy on the one hand and those which are merely procedural and technical in their nature on the other, must be clearly distinguished. The Tribunal observed that whereas the essentiality certificate was required to ascertain the total quantity to be imported and used, there was a requirement that an undertaking should have been given in the Bill of Entry at the time of clearance of the goods that they are substantive in nature for availing the concession under the Notification. The Tribunal agreed with the finding of the Assistant Collector that the essentiality certificate produced by the appellant was valid for only 12 months from the date of its issue, i.e. 6.4.1992.
The Tribunal agreed with the finding that this certificate was not even otherwise valid for the goods imported and cleared before 6.4.1992. It noted the judgment in the case of Hindustan Machine Tools as reported in 1990 (64) ELT 434, wherein the Tribunal allowed the appeal on the ground that the appellants had done whatever was required by them to be done to get the certificate and right from the beginning it could therefore be seen that their case is that the importation was intended for the purpose for which DGTD certificate was applied for. In the case the DGTD certificate applied for was for the goods imported and the same was issued for that purpose. Therefore, it held that it did not see any reason why this certificate should not be accepted. The Tribunal noting this portion of the judgment of Hindustan Machine Tools observed that the appellants in that case had made an application before the importation of the goods and the certificate issued covered the imported goods. However, the Tribunal noted that no doubt application was made on 29.1.1992, but the certificate was issued on 6.4.1992 and was made valid for 12 months after the date of issue and that ground held that there is a failure of substantive compliance of the Notification. The Tribunal noted in the case of HECL as , wherein non-production of the essentiality certificate becomes only forgivable procedural failure and not an insurmountable lapse. In the instant case, the Tribunal observed that even the application for obtaining the essentiality certificate in respect of three appeals was made subsequent to the date of clearance of the goods. The Tribunal again noted the case of Himson Textiles Engg. Industries as , wherein the Tribunal held that when there has been substantial compliance with the conditions laid down in the Notification, any procedural deficiency should not stand in the way of the relief which is otherwise admissible to the appellants. The Tribunal noted that the certificate issued on 6.4.1992 covered only imports after 6.4.1992, and therefore, there was valid certificate even produced subsequently.
19. On examination of all these judgments, it is clear that in Vaz Forwarding Pvt. Ltd. case although application had been made on 21.1.1980 after the date of shipment i.e. 10.1.1980 but however, it had been made earlier to the filing of the Bill of Entry i.e. 7.2.1980 and therefore, in that context, held that this marginal delay can be overlooked, as a highly technical view cannot be taken in the facts and circumstances of the case. In the case of L.M. Ven Moppes Diamond Tools India Ltd. (supra), it was a case of production of end use certificate and not a case of applying for eligibility certificate prior to the importation. In the case of Birla Institute of Technology (supra), it was also noted that on application had been filed prior to the importation and certificate had also been issued on 3.8.1983 earlier to the filing of the Bill of Entry on 24.9.1983. However, as there was some discrepancy, a fresh certificate had been obtained thereafter; therefore, in those circumstances, the Tribunal applied the ratio of Vaz Forwarding case. In the case of Indian Oil Corporation (supra) also application had already been filed prior to the importation. In the case of Webel Telematik Ltd., on examination of all these ratios, the Tribunal held that in the cited cases there was only delayed production of certificate, but application had already been filed for obtaining the same prior to the import. The Tribunal applied the ratio of Mangalore Chemicals and Fertilisers Ltd. and Liberty Oil Mills, wherein it was observed that the benefit of doubt should be given to the Government. Production of certificate and its compliance of terms of Notification is substantive in nature for availing the concession under the Notification and not a mere procedural lapse. Therefore, we notice that in Webel Telematik Ltd. case the Tribunal has not differed from the earlier judgments but has examined threadbare and noted that in earlier cases, application had already been filed before the concerned authorities prior to the filing of Bill of Entry and the delay in obtaining the certificate, was a mere procedural lapse. In the present case, the situation is totally different inasmuch as that application for seeking the benefit had been filed before the concerned authorities after the importation of the goods and the certificates have obtained long thereafter. Therefore, the ratio rendered in the case of Webel Telematik Ltd. fully covers the present case and this judgment is not distinguishable. We have to further observe that the Tribunal's observations that applying for an eligibility certificate prior to importation is a substantive requirement, has been laid down in the light of the Hon'ble Supreme Court's judgment noted therein, which have all been rendered subsequent to the rendering of the judgment cited by the Learned Advocate. In all the judgments cited by the Learned Advocate, the Hon'ble Supreme Court's judgments have not been cited or examined. In view of clear law laid down in Webel Telematik Ltd. case, in the light of Hon'ble Supreme Court's judgment, we have to hold that filing an application for an eligibility certificate prior to importation is a substantive requirement and its production subsequently after a lapse of time is not a mere procedural lapse. In that view of the matter, we have to reject Appeal No. C/3391/90-B2 and Appeal No. C/253/90-B2. As regards the Appeals No. C/3220-3221/89-B2, the claims had been rejected by the Assistant Collector on the ground that the assessment had been provisional. However, the Collector has examined it on merits and found that both the certificates dt.
25.2.1985, the authorities had recommended refund of duty in terms of Notification 179/80 for the consignment of 1985 and Notification 155/86 for 155/86 for the goods imported in 1986. The Collector noted the date of issue as 5.7.1989 and observed that the certificates clearly showed that the appellants did not obtain duty exemption certificates at the time of import and therefore, they cannot claim the benefit of a Notification on the basis of certificates issued after 3-4 years of import. In view of this clear finding, the ratio of the Webel Telematik Ltd. also apply to these appeals. Thus, all the appeals are also required to be rejected and we order accordingly.
1. The notification exempts goods required for the purpose, of initial setting up or for assembly or manufacture of any article specified in the Table annexed to notification when imported into India and proved to the satisfaction of the Asstt. Collector to be so required. The notification also requires the authorities specified therein that they are satisfied and certify regarding goods etc. and recommend grant of exemption. The substantive requirement of Law therefore is that goods are required for the purpose of initial setting up or for assembly or manufacture of the specified article. The certificates required are only in the nature of the evidence that these are so required. Once the fact of exemption, which is the substantive part of the law, is satisfied the certificates- assume a purely procedural character. It is not disputed that the goods are required for the specified purpose and the necessary certificates had been subsequently furnished. In fact, series of decisions referred to earlier point out that Tribunal has been taking a consistent view that the benefit of exemption if the requirements of notification otherwise have been substantially complied with cannot be denied.
2. I do not find any stipulation regarding application being filed before importation of goods in the notification itself. The distinction made between the case discussed in case of Vaz Forwarding Pvt. Ltd. where they had applied for the certificate before the shipment of the goods and Webel Telematik Ltd. where it has been held that application should have been made before clearance of goods is not understood. What is central to the issue is whether goads as such are eligible to exemption. The certificates arc in the nature only of supporting material. Since entitlement to exemption on merits is not disputed and certificates have been produced though subsequently, I order the matter to be remanded for deciding the case-afresh in the light of certificates now produced.
In view of the difference of opinion between the members, the 'following questions arises for determination by a third member on reference, by Hon'ble President: (1) Whether the appeals are required to be dismissed in terms of the finding rendered by Member (J) (2) Whether the appeals are required to be remanded for de nova in terms of the order recorded by Member (T).