Full Judgment
2. Learned Counsel stated that this case relates to importation of synthetic rubber of the type of Butyl rubber under the advance licence (DEEC scheme) claiming benefit of exemption Notification No. 159/90.
3. At this stage there was no dispute regarding the description, quantity or value of the goods because the material had been correctly declared as... synthetic rubber and the small (negligible) difference in quantity has already been condoned by the Collector and there is no dispute regarding value.
4. The Collector has, however, still invoked section 111 (m) against them on the ground that they had wrongly claimed the benefit of this exemption notification knowingly as the Butyl rubber had not been used in the manufacture of cycle tubes and tyres which had been exported and with reference to which this importation was being made.
5. First and foremost it was their contention that no misdeclaration was involved and merely because they had claimed the benefit of an exemption notification which in their opinion was relevant and applicable in their, case it cannot be said that there was a misdeclaration on their part.
6. Secondly, the above exemption notification not merely allows the importation of the material actually used in the exported articles but also for replenishment of material having similar technical specifications and technical characteristics as those actually used in the manufacture of the products exported as well as for import of material for the purpose of manufacture of goods to be exported or both.
7. It was their contention that although they had not used Butyl rubber as such in the manufacture of tyres themselves but they had used synthetic rubber for the manufacture of air bags without which the tyres cannot be manufactured. They had actually used synthetic rubber, although not of the butyl rubber, also in the manufacture of tubes and tyres. In this connection he would draw attention to their reply to the show cause notice and this contention has not been contradicted or found to be wrong.
8. Learned D.R. reiterated the department's view point as contained in the Order-in-Original and in particular drew attention to para 3.9 of the Collector's orders whereas he has given reasons for treating the claim under the notification 159/90 as having been knowingly made wrongly.
9. We have considered the above submissions. We find that the contentions of the Learned Counsel have a strong force. We have perused the bills of entry which gives description of the goods as 'synthetic rubber (Exxonbutyl 268)' and we take note of the fact that there is no dispute regarding the correctness of the description, quantity and value at this stage (The minor difference in quantity having been ignored at the original level). All that remains, therefore, is to see whether mere mention of Notification 159/90 and claiming benefit thereof could be construed as mis-declaration in terms of section 111 (m) in the circumstances of this case. We observe in this respect that since admittedly the bill of entry described the product as synthetic rubber and since there is no dispute that their advance licence permitted importation of synthetic of rubber (subject of course to the fulfilment of the conditions mentioned therein) and the appellants' contention that they had used synthetic rubber (although not of Butyl rubber variety) in the manufacture of the ex ported articles has not been found to be wrong, therefore, it cannot be said that there was any mis-declaration on their part. In fact, merely claiming the benefit of a particular heading or sub-heading or a notification does not by, itself amount to a mis-declaration; And in this case furthermore, no malafides have been proved or established. The interpretation of a notification of course was different matter and the parties and the departments could differ but merely because the departments' interpretation on view point was different from that of an assessee, it could not be said that the assessee had mis-declared.
10. Hence, we hold that the charge of section 111(m) is not established and the appellants were not liable to confiscation and penalty on that score.
11. In so far as the duty is concerned, again we find that the Notification No. 159/90 "exempts goods imported into India against an Advance Licence issued under the Import (Control) Order, 1955, being materials required to be imported for the purpose of manufacture of products (thereinafter referred to as the resulted products) or replenishment of materials having identical specifications and technical characteristics as these actually used in the manufacture of the resulted products exported".
12. Therefore, once the appellants' contention that they had used synthetic rubber although not of the Butyl rubber variety in the manufacture of exported articles has not been contradicted or found to be wrong, the importation of synthetic rubber of Butyl variety would amount to a material which could be imported for purpose of replenishment or further manufacture in terms of the language of the Notification reproduced above. Hence, the appellants were entitled to the benefit of this exemption Notification (subject of course to the fulfilment of other conditions mentioned therein but there is no such dispute before us). We therefore, hold that no duty was chargeable.
13. In view of the above position we set aside the impugned order and accept the appeal with consequential relief.