Full Judgment
2. Appellants imported two consignments of leather clicking knives on 30-4-90 and cleared the same classifying them under Chapter sub-heading 8208.90 claiming the concessional rate as per Notification No. 59/87.
Subsequently the Department took the view that the items were chargeable to the 'standard rate' and a less charge demand for Rs. 25,617/- was issued. This was contested by the present appellants but the Assistant Collector who adjudicated the matter confirmed the less charge - demand relying on the decision of the Collector's Conference dated 8-3-90.
3. When the matter came up in appeal before the Collector (Appeals) the Collector relying on the Single Bench judgment of the Bombay High Court in Vishal Electronics Pvt. Ltd v. Union of India reported in 1989 (44) E.L.T. 420 held that the expression "rate applicable to" meant the statutory rate i.e. the standard rate specified against the headings in the First Schedule to the Customs Tariff Act and the said words cannot be read to mean the rate of duty which is leviable from time to time having regard to exemption notifications issued under Section 25.
4. On behalf of the appellants it is contended that the Single Bench judgment of the Bombay High Court relied on by the Collector (Appeals) has been reversed by a Two Member Bench of the same High Court.
Reliance is placed on the Larger Bench judgment, namely, Vishal Electronics Pvt. Ltd. v. Union of India [1993 (68) E.L.T. 557] in which the two Member Bench declined to endorse the view taken by the learned Single Judge that the expression "rate of duty applicable" in T.I.90.02 cannot mean the rate of duty leviable from time to time and subject to exemption notifications issued under Section 25. The Larger Bench held that a plain reading of the two tariff items and the exemption notification, left no manner of doubt that the assessee was entitled to the benefit of the notification.
5. Ld. DR reiterated the findings of the lower authorities holding that "rate applicable to" meant the statutory rate charged for the machine or mechanical appliance in which the knife/cutting blade was designed to be used.
6. We have considered the submissions made by both sides. The dispute relates to the rate of duty applicable to clicking knives/blades imported by the appellants and designed to be parts of machines classifiable under Chapter sub-heading 8453.90. The Department's case is that the duty applicable to the knives and blades is the 'standard rate' at which duty on the said machine is payable. Relying on the Single Member Bench decision of the Hon'ble Bombay High Court in Vishal Electronics Pvt. Ltd. v. Union of India (supra) in which the expression "rate of duty applicable to" was held to mean the rate of duty specified in the Customs Tariff Act and not the rate of duty leviable having regard to exemption, if any, given under Section 25, Collector (Appeals) had denied the appellants the benefit of the concessional rate under Notification 59/87. We find that the said judgment has been reversed in Appeal by a Two Member Bench of the Bombay High Court in Vishal Electronics Pvt. Ltd. v. Union of India [1993 (68) E.L.T. 557] referred to above in which it was held that when the rate of duty for goods falling under a heading is to be determined with reference to the rate applicable to goods falling under a different heading, exemption, if any, applicable to the latter should also be taken into account while determining the rate of duty of the former. It is not in dispute that in the instant case the machine to which the imported knives/blades were to be used were eligible for a concessional rate under Notification 59/87.
7. Having regard to the aforesaid factual position we agree with the submissions made on behalf of the present appellants that the recovery of less charge of Rs. 25,617/- is not sustainable.