Full Judgment
2. The facts, as gathered from the file, are that the respondents herein, took clearance of 12 Nos. of Air Jet Looms vide B/E No. 7785 dated 31.3.1983, alongwith its accessories and certain parts, after paying duty on merits. Thereafter, a contract for 'Project Import' benefit under T.I. 84.66 was submitted to the Collector of Customs, Bombay on 7.4.1983, with reference to the original contract dated 26.11.1982 for 24 Nos. of Air Jet Weaving Machines, as confirmed by the suppliers vide letter dated 2.12.1982. Since this application dated 7.4.1983 satisfied conditions of 'project Import Regulations', and was accompanied by all requisite papers including recommendation of the sponsoring authority - that being the Textile Commissioner, Bombay, in this case, - and on a statement by the party that this was for substantial expansion of their existing weaving capacity; the contract was registered which, according to the 'statement of facts' appended by the party with their memo of appeal to the Collector of Customs (Appeals), Bombay, was allowed. Registration of the contract was recorded on 18.4.1983, and the importers informed accordingly vide letter dated 22.4.1983. Thereafter, the importers cleared remaining 12 Nos. of Air Jet Looms. It appears that the 24 Looms, stated in the application for registration dated 7.4.1983, included the 12 'Air Jet Looms' already cleared on 31.3.1983. The remaining 12 looms arrived subsequent to the registration of contract on 22.4.1983 and were accorded benefit of 'Project Import' under T.I. 84.66, as claimed.
3. In so far as the duty paid in full on the 12 'Air Jet Looms', cleared earlier to the application for registration of contract; namely, that of the subject-B/E, where duty was paid in full on merits on 31.3.1983, a refund application was filed on 27.4.1983. This refund claim was rejected by the Assistant Collector vide order dated 31.10.1983 on the grounds that the appellants had stated themselves that the 'Project Import Contract was not registered before the clearance of these goods on the ground that they could not obtain recommendation of the Textile Commissioner for concessional rate of duty, which was delayed well beyond their expectation and that, in terms of Notification No. 183-Custom dated 18.11.1965, as amended from time to time, a party, in order to be eligible for concessional assessment, has to fulfil the following conditions :- (1) The goods should be imported as per contract registered in the Customs House (3) The contract should be registered in the manner provided in the regulations; and (4) Such registration of contract should be made before an order permitting clearance of the goods is made by the proper officer.
4. On appeal being taken to the Collector of Customs (Appeals), the order was set aside on the observations that a perusal of the order of the Assistant Collector made it amply clear that the said Assistant Collector was grossly confusing the issue involved in this case, and was not clear as to what he was talking about. The Collector (Appeals) proceeded on the assumption that the 'Project Import Contract' had been registered in the Custom House, and that the benefit of concessional rate of duty had been withheld only because the licence has not been endorsed by the I.T.C. authorities. It was on this assumption that the Collector (Appeals) held that endorsement of the I.T.C. authorities being not required in this case because of the fact that the goods were covered under O.G.L., and that there was no necessity for the Assistant Collector to have denied the facility of 'Project Import' as the "appellants had already registered this as project import even prior to the importation of the goods". He also observed that "in this case, the appellants have applied for registration of the prospective import but the recommendation of the sponsoring authority had arrived late, i.e., after the. importation of the goods. This could not have prevented, according to my candid opinion the registration of the goods in the Custom House for project import". In view of this, the appeal was allowed and the appellants before him (respondents herein) were held entitled to refund of excess duty paid, holding it to be a fit case for assessment under 'Project Import'.
5. Feeling aggrieved by this order, the Collector of Customs, Bombay has come up in appeal before this Tribunal. It is contended that the.
Assistant Collector had rightly held that the goods should be imported as per contract registered in the Custom House, and that they should be imported against a specific contract which should be registered in the manner provided in the regulations made, and such registration of the contract should be made before an order permitting clearance of the goods is made by the proper officer. The terms of the Proviso to Chapter Heading 84.66 of the C.T.A. have been reproduced in the grounds of the appeal and it is urged that, in this case, application for registration of contract having been made after clearance on 31.3.1983, of these 12 Nos. of Air Jet Looms; this importation could not have been entitled to the project import ben(sic), and that the appellate order was un-sustainable.
6. During hearing before us, Shri J. Gopinath, SDR, appeared for the Appellate Collector whereas the respondent was represented by Shri S.Ganesh, Advocate, accompanied by Shri R.N. Karanjwala, Advocate. The Learned SDR reiterated the contentions set-forth in the grounds of the appeal stating that, according to the papers filed by him, the application for registration of the contract was made by the importers on 8.4.1983, whereas the clearance for home-consumption of 12 Nos. of Air Jet Looms, for which refund is being claimed in this case, took place on 31.3.1983, after full payment of duty on merits, and without indicating any intention to claim benefit of project import. He argued that the terms of Proviso to T.I. 84.66 were very specific to the effect that the import had to be against a specific contract and that contract had to be registered with the Customs authorities after following the prescribed formalities, before the date of importation.
7. Shri Gopinath added that this, being a statutory requirement, could not be over-ridden by any other consideration and that the Tribunal has already held in a matter, arising out of the review notice, issued by the Central Government in exercise of power under Section 131(3) of the Customs Act, 1962 as then prevailing, treated as an appeal before the Tribunal in the case of : Collector of Customs, Bombay v. Adarsh Products Pvt. Ltd., Ahmedabad, reported as '1983 ECR 923D1, that in the absence of any evidence of the party having applied for registration of their contract under the regulations, the importers were not held entitled to the benefit of lower rate of duty laid down in heading 84.66 of the CTA. According to Shri 3. Gopinath, this case was on all fours with the facts of the reported case because, here also, the contract itself has not been registered before the date of clearance and that the Department has proceeded without any prejudice inasmuch as for the 12 Nos. of Air Jet Looms, cleared subsequent to the registration of the contract, full benefit of project import has been allowed.
8. Shri S. Ganesh, Advocate, appearing for the respondents, argued that the respondents had taken all steps towards registration of the contract much before the. date of importation inasmuch as they applied to the Textile Commissioner, Bombay, who was the sponsoring authority, for the issuance of requisite recommendation in terms of the "Project Import Regulations', and that the contract could not be registered because of the delay caused in the Office of the said Textile Commissioner in issuing the recommendatory letter and that, since, in the meantime, the goods arrived, the appellants paid duty and got them cleared so that they do not have to suffer heavy demurrage. He, however, added that before that, they had entered a protest with the Collector of Customs vide letter dated 28.3.1983.
9. The learned counsel laid emphasis on the fact that, in terms of para 177(3) of the Import-Export Policy 1982-83; benefit of concessional rate of duty for import of machinery under "Open General Licence' could be allowed by the Custom Officer on the recommendation of the sponsoring authority concerned, and that there was evidence, in the form of an order of the Appellate Collector of Customs, Bombay, reported in '1980 ELT 303', that the Custom House did not entertain applications for registration unless there is recommendation of the' sponsoring authority and that, for that reason, the application could not be made unless this letter of the sponsoring authority came into the hands of the importers. He, thus, contended that there was no default on the part of the respondents, and that they had taken all necessary steps well within time and that, in such cases, where the assessee had done all that was within his control, and the formalities could not be completed because of some delay having occurred in some other Government agency, then that default had to be condoned or ignored, and appropriate relief allowed to the party. He cited, in this connection, a judgement of Calcutta High Court in the case of Commissioner of Income Tax (Central I) Calcutta v. Birla Brothers Pvt.
Ltd., reported as '(1982) 133 ITR 373', where it was held that there may be cases wherein certain provisions "shall and have to be read as of directory nature and whenever there is a broad compliance, on the facts and circumstances of the cases, the statutory provisions, with a strict adherence thereto, may not be insisted upon." 10. Shri S. Ganesh cited another judgement, which he described as being in the realm, of Central Excise Laws, with reference to the provisions of Rule 56A, laying down certain procedures for Performa benefit, as given by Delhi High Court, reported as '1981 ELT 496, to the same effect. He cited another judgement of Madras High Court, reported as '1981 ELT 165' (re: L.M. Ven Moppes Diamond Tools India Ltd., Madras v.Government of India), laying down similar principles, and added that even Government of India have held in case re : National Co. Ltd. reported as "1982 ELT 579', that where it was not possible for a party to comply with certain formal procedures, then a short delay may be condoned. Shri S. Ganesh concluded that, in view of this position, the requirement of registration has to be treated as directory and that, in the alternative, the registration given subsequently must date back to the clearance that has already taken place in respect to part of the goods imported under the same contract.
11. Shri Gopinath, in a short rejoinder, contended that the cases cited by the learned Counsel were all distinguishable and did not apply to the facts of the present case where the terms and conditions entitling an importer to concessional rate of duty as 'Project Import' were subject to mandatory conditions laid down in the proviso to the Tariff Heading 84.66, and that they were not capable of being construed as of being of a directory nature.
12. We have given our careful thought to the respective contentions canvassed by the learned SDR and the Counsel for the respondents. The whole controversy centres on the question as to whether the fact, that respondents had, admittedly, not registered, the contract for project import with the Customs authorities before the date of importation, as required in terms of Proviso to T.I. 84.66 itself, would make any difference to their plea for re-assessment on concessional rate in the background of the plea that they had moved their sponsoring authority - the Textile Commissioner - for a letter to recommend the grant of project import benefit. The thrust of the arguments advanced on behalf of respondents is that the Customs authorities do not entertain an application for registration of the contract unless a duly endorsed 'import licence' or a recommendation from the' sponsoring authority, as the case may be, is produced by the importers. Shri Ganesh has cited, as proof of such a practice, an order of an Appellate Collector of Bombay reported in '1980 E.L.T. 303'. On referring to this report, we find that this order was passed on 29.11.79 in relation to a matter where application for registration of contract had been made on 22.12.77'. The Appellate Collector in this case has castigated the lower authorities for their insistence on a letter from sponsoring authority or endorsement on the import licence and their consequential refusal to register the contract, as a practice not having backing of law and, thus, wholly unsustainable. This authority is, thus, no more than a piece of evidence in support of the plea explaining failure to apply for registration of contract but cannot be pressed into service on the facts of this case where even an application for registration of contract had not been moved.
13. It is pertinent to note that the application for refund made on 27.4.83, i.e., about 4 weeks after the date of clearance of the goods which was on 31.3.83, admits the position that no application to register the contract before clearance of the 12 Nos. of Air Jet Looms had been made. For facility of reference, and in order to appreciate the true import thereof, we would like to reproduce the Proviso which reads as under :- Provided these are imported (whether in one or in more than one consignment) against one' or more specific contracts, which have been registered with the appropriate Custom House in the manner prescribed by regulations which the Central Board of Excise and Customs may make under Section 157 of the Customs Act, 1962 (52 of 1962) and such contract or contracts has or have been so registered before any order is made by the proper officer of customs permitting the clearance for home consumption, or deposit in a warehouse of items, components, or raw-materials;" 14. A bare reading of this Proviso makes it manifest that it has been couched in a pre-emptory and affirmative language, and speaks of no exception or saving-situation. Rather the emphasis is on compliance of three conditions in relation to the contract cumulatively; namely, that the import, whether in one or in more than one consignment, is against one or more specific contracts, which contract has been registered with the appropriate Custom House in the manner prescribed by regulations on the subject and that such a contract or contracts has or have been so registered before any order is made by the proper officer of Customs permitting the clearance for home-consumption (emphasis supplied). The proviso is, thus, very emphatic that before the clearance of the goods takes place, a specific contract is registered before the Customs authorities and the import is disclosed to be against such a specific contract which should be registered, before claiming project import benefit, before the clearance of the goods, and all this should be an accomplished-fact before the goods are cleared for home-consumption. In face of such a triple emphasis on the filing and registration of a contract, it is not possible to entertain the plea that such a condition can be read to be of a directory nature so that its adherence could be waived. Even if there was a practice at one time in the Custom House, as the order passed in 1979 indicates, (although there is no evidence that this practice continued upto 1983, even after such a strong order having been passed by the Appellate Collector, even then the minimum which the party could have done was to do what was within their power; namely, to file the contract, against which the import was to be made, with the Customs authorities and apply for registration, adding that letter of sponsoring authority was awaited. In such an event, it could be said that there had been a broad compliance, and in case the Customs authorities had dilly-dallied on the point of registration of the contract, it was open to the respondents to urge that they had done whatever was within their power to do towards compliance with the provisions of the Proviso to T.I. 84.66.
15. Having not done anything of the sort, we do not think that mere fact of application having been made to the Taxtile Commissioner -which requirement does not figure in the Tariff itself - would replace statutory terms of the Proviso built in the Tariff itself. We also cannot forget that it is a case where the importers did not even care to indicate the fact on the B/E that they wanted to take benefit of project import, which it was incumbant upon them to do and disclose their intention to avail of the concessional rate of duty, which was subject to certain statutory conditions being fulfilled, so that the Custom authorities could have adequate precautions by way of examination of documents or scrutiny of the contract. The letter, written independently to the Collector on 28.3.83, without disclosing any such fact to the clearing authority, cannot be deemed to be a replacement of the requirement of filing of the specific contract against which the import was being made, or registration of the contract.
16. It is further significant to note that the clearance of the goods took place on 31.3.83, without indication of any intention to avail of the benefit of project import, whereas the permission of the Taxtile Commissioner is stated to have been received on 2.4.83. A party, wanting to have benefit of concessional rate of duty, which is subject to positive conditions being fulfilled, cannot have it both ways. Even if the respondents were keen to avoid demurrage charges, they could have removed the goods to the warehouse, which is a situation contemplated in Proviso to T.I. 84.66 but, instead of adopting that course they chose to clear the goods on full payment of duty, without taking any steps towards fufilling any of the conditions of the Proviso, which they must be taken to have done at their own risk. The fact that they subsequently registered the contract, by a letter dated 7.4.83, cannot make any difference to the case because, apart from the fact that terms of the Proviso do not permit of any retrospective effect to the factum of registration; even otherwise, the contents of the letter dated 7.4.83 reveal that, while applying for registration, the fact was nowhere disclosed that benefit is sought to be obtained even for the 12 Nos. of Air Jet Looms already cleared after full payment of duty. The Customs authorities as well could have given this contract registration on the impression being created that this was meant for prospective importation in the normal course because, as already observed, there is not even a hint of any intent to stake claim for benefit of concessional duty for the goods already cleared, prior to the application for registration, much less registration itself.
17. The learned Counsel for the appellants vehemently argued that there have been situations where it has been held that where compliance with certain provisions of law, dependent upon an assessee performing certain acts, which were not within his control but lay with some Government agency, then, in that event, the directions of statutory provisions should not be given a mandatory effect. The case on which he laid utmost emphasis was one from Calcutta High Court; namely, 'Commissioner of Income Tax (Central I) Calcutta v. Birla Brothers Private Limited', but a careful reading of this judgement makes it clear that their Lordships laid emphasis on the fact that the question, as to whether the character of a statutory provision is mandatory or directory would depend upon the facts and circumstances of each case.
In 'this case, the approval, which was to be given by the Central Government to the agreement with the foreign company, had already been given with restrospective effect and the law did not prohibit such a retrospective operation. In the background of this situation, their Lordships held that the approval having been subsequently recorded and allowed to operate from the date from which it was required to be given, the mere fact that it had not been issued on the date of the application, ought not to make any difference. This case was decided on the wording of the relevant statute, with an attempt to strike balance between two fundamental principles of construction; namely, that although fiscal laws had to be strictly construed but that was in the light of a fundamental proposition that all provisions should be so construed as to fulfil the purpose of the said provisions and, on a cumulative reading of the relevant provisions, their Lordships came to the conclusion that the time-factor, by which the approval had to be recorded, was not of a mandatory nature, unless some additional words were imported in the provisions because the words did not necessarily imply that the approval must be recorded before a given date.
18. As against that, the terms of the Proviso to Section TI 84.66 as already noticed, are couched in such a way that there is no other interpretation possible than the one that the import has to be shown to be against a specific contract which, in turn, should be filed with the Custom-authorities for scrutiny before the date of importation, and lastly, such contract must be registered for such a benefit before the date of clearance. With so many conditions getting together, all to be performed without exception in a time-bound limit, it is hard to endorse the proposition that such a provision could be waived completely, as in the present case, where not only the application for registration of the contract was not made, even the contract was not filed, and even an indication to take benefit of project import was not given on the duty-assessment papers.
19. The other cases cited by the learned Counsel for the respondents are likewise distinguishable. In the case of Madras High Court; namely, 'L.M. Ven Moppes Diamond Tools India Ltd., Madras v. Government of India' reported in '1981 E.L.T. 165 (Mad.)' which was a case where terms of certain notification required furnishing of a bond in case the importer wanted to avail of concessional rate of duty, in terms of the given notification, which were subject to certain conditions, as to end-use of the goods, and it was in that context that the Hon'ble High Court held that when, initially, the importer had paid full duty and cleared the goods and, only subsequently, claimed refund; there was no bar to his being so allowed on a proper evidence of end-use being produced because the question of having executed the bond in terms o the notification did not arise when at the time of clearance he had paid full duty, when, apparently, the bond was required only in the event of clearance being made at a concessional rate.
20. The case before Delhi High Court; namely, 'Electronics Limited v.Union of India and Ors.', reported in '1981 E.L.T. 496 (Del.)', was of an entirely different nature because, there, the application for proforma benefit had been made with the concerned authorities and they had delayed disposal thereof, and it was only in that background that it was held that the authorities should not take any undue advantage of their own delay. This judgement can be no authority for the present case where the appellants are guilty of a complete default towards compliance with the requirements of law.
21. As against that, the view has been constantly held that where even an application for registration was not made, the question of allowing benefit of project import, on a subsequent application being made to that effect, did not arise. This proposition was set by the Tribunal as early as in an appeal decided on 27.5.83, reported in '1983 E.C.R. 923 (CEGAT)' in the case of 'Collector of Customs, Bombay v. Adarsh Products Pvt. Ltd., Ahmedabad'. We find no reason to differ from the view taken at that time.
22. In the light of the fore-going discussion, though the constraints of judicial sobriety hold us back from using a strong language, but we find that the order-in-appeal passed by the Collector of Customs (Appeals) smacks of utter lack of application of mind, and he has been wholly indiscreet in the use of language against the lower officer, whose order was under appeal before him. He has dubbed that order as full of confusion and criticised the officer concerned as not understanding what he was talking about. We, on the other had, find the Assistant Collector's order well-reasoned and fully analysing the position in law of the provisions of Proviso to T.I. 84.66 in the background of facts of this case, whereas the Collector of Customs (Appeals) has, from the outset, taken his facts wrong and proceeded to dispose of the appeal on such glaringly erroneous assumptions. For instance, although it is an admitted fact-that the application for registration of the contract had not been filed, much less the contract being registered, but the Collector (Appeals), for reasons best known to him, goes on to record, "The appellants have already registered this as project import even prior to the importation of the goods". This observation is manifestly against the record. Had the Collector of Customs (Appeals) not proceeded on this premise, than his conclusion was bound to be different. He has also made passing observations that it was not clear as to whether these goods have been cleared before the project import had been registered in the Custom House or whether the Assistant Collector had not accepted the appellants' request for project import merely because the licence had not been endorsed by the I.T.C. authorities. Neither of these observations would arise had the Assistant Collector's order been read with due care.
23. There is another palpably wrong observation in the impugned order to the effect that the Assistant Collector had rejected the appellants' request for registration of import under the 'Project-import Registration of Contract' Regulations, whereas the fact remains that no such application had even been made prior to the importation or clearance of goods, and the Assistant Collector was only dealing with refund claim filed subsequent to the registration of the contract, for which application had been made long after the clearance of the goods.
24. For all these reasons, the order of the Collector in this case is wholly unsustainable and liable to be set aside, We, accordingly, accept the appeal and restore the order passed by the Assistant Collector of Customs dated 31.10.83 rejecting the refund claim of the appellants.