Ballarpur Industries Ltd. Vs. Commissioner of Customs - Court Judgment

Excerpt:
1. the appellants imported fly knife and dead knife for use in duplex sheet cutter and claimed clearance thereof as 'spares' under a specific licence enabling them to import non-permissible spares. the assistant collector held that the imported goods were not spares but tools enumerated in entry serial no. 647 of appendix 3 of itc policy am 1980 and held that the goods were imported without a valid licence. he ordered confiscation but permitted redemption on a fine of rs. 25,000/-. the collector (appeals) having upheld the order, the present appeal is before us.2. the case for the appellants was argued by ms. mukti sinha, advocate.revenue was represented by shri k. srivastava, senior departmental representative.3. ms. sinha referred to the definition of 'parts' and 'spares' and argued that the knives were essential parts of the cutting machines and that the impugned goods had been imported to replaced the worn out knives. she claimed that earlier also they had imported the same goods which had been permitted clearance under similar licence. it was claimed that actual users were permitted to import even non-permissible spares for which they had the licence. she stated that when the goods had been imported in the belief that they were spares and were covered under licence, the imposition of a high fine was not justified. shri sirvastava, on the other hand, maintained that the impugned goods were specifically described as tools in both policy and the cta. according to him the officers were correct in holding that the goods were not permissible imports.5. knives and cutting blades are classified under heading 82.08 of the cta as 'tools'. the entry referred to in the lower order in appendix 3 also specifically described these goods in those terms. the definition of 'parts' as given in the policy covers 'components', 'spares' or an 'accessory' but does not cover the tools. the manner in which the policy is be interpreted is given in chapter 22 thereof. in paragraph 194(c), it is stipulated that an item with a generic description in appendix 3 would prevail over an item with a generic description in appendix 5. on perusal of the policy and the classification of the goods, both in the policy and the tariff, it is clear that the impugned goods are 'tools' and not 'spares' and, therefore, not covered under the licence. the orders of their confiscation were correctly made. at the same time we observe that it was submitted by the appellants before the lower authorities that the same goods had earlier been permitted to be imported by the customs as spares and that the present importation was in the same belief. given the situation, we find that the quantum of fine at about 100% was excessive. we reduce the quantum of fine to rs. 5,000/- subject to this modification, the appeal is rejected.

Judgment:
1. The appellants imported fly knife and Dead knife for use in duplex sheet cutter and claimed clearance thereof as 'spares' under a specific licence enabling them to import non-permissible spares. The Assistant Collector held that the imported goods were not spares but tools enumerated in Entry Serial No. 647 of Appendix 3 of ITC Policy AM 1980 and held that the goods were imported without a valid licence. He ordered confiscation but permitted redemption on a fine of Rs. 25,000/-. The Collector (Appeals) having upheld the order, the present appeal is before us.

2. The case for the appellants was argued by Ms. Mukti Sinha, Advocate.

Revenue was represented by Shri K. Srivastava, Senior Departmental Representative.

3. Ms. Sinha referred to the definition of 'parts' and 'spares' and argued that the knives were essential parts of the cutting machines and that the impugned goods had been imported to replaced the worn out knives. She claimed that earlier also they had imported the same goods which had been permitted clearance under similar licence. It was claimed that actual users were permitted to import even non-permissible spares for which they had the licence. She stated that when the goods had been imported in the belief that they were spares and were covered under licence, the imposition of a high fine was not justified. Shri Sirvastava, on the other hand, maintained that the impugned goods were specifically described as tools in both Policy and the CTA. According to him the officers were correct in holding that the goods were not permissible imports.

5. Knives and cutting blades are classified under Heading 82.08 of the CTA as 'tools'. The Entry referred to in the lower order in Appendix 3 also specifically described these goods in those terms. The definition of 'parts' as given in the Policy covers 'Components', 'Spares' or an 'Accessory' but does not cover the tools. The manner in which the Policy is be interpreted is given in Chapter 22 thereof. In paragraph 194(c), it is stipulated that an item with a generic description in Appendix 3 would prevail over an item with a generic description in Appendix 5. On perusal of the Policy and the classification of the goods, both in the Policy and the Tariff, it is clear that the impugned goods are 'tools' and not 'spares' and, therefore, not covered under the licence. The orders of their confiscation were correctly made. At the same time we observe that it was submitted by the appellants before the lower authorities that the same goods had earlier been permitted to be imported by the Customs as spares and that the present importation was in the same belief. Given the situation, we find that the quantum of fine at about 100% was excessive. We reduce the quantum of fine to Rs. 5,000/- subject to this modification, the appeal is rejected.