M.J. Electricals Vs. Collector of Customs - Court Judgment

Excerpt:
1. these stay applications are filed in four main appeals bearing nos.c/1719-1722/96-b2. since the applicant is common and issue is the same, these four applications were heard together and are being disposed of by this common order.2. shri r.k. habbu, advocate appeared for the appellant. the department was represented by shri r.a. shiekh, jdr. the appellants are an export oriented unit located in kandla free trade zone. they imported capital goods in four different consignments and filed bills of entry for clearance thereof. the jurisdictional additional collector held that these goods were imported in excess of the projected value and that at the time of importation thereof, the prior approval of the development commissioner of the free trade zone had not been obtained. after hearing the present appellant, the additional collector proceeded to order confiscation of the goods in each case and prescribed redemption fines in addition to appropriate duty payable. the appellants filed four appeals against these orders and also filed applications under section 129e of the customs act, 1962 for stay and waiver of the pre-deposit of duty. the applicants were heard by the tribunal on 9-2-1993 and it was observed that redemption fine and duty were payable only at the time of the clearances of the goods from the customs. since no penalty has been imposed upon the appellants, there was no requirement for pre-deposit and as such the said applications were premature. on a later date the appellant sought early disposal of the case. the case was accordingly heard on 23-12-1994. during this hearing, the tribunal held that before the appellants could be heard on merits, they had to deposit the disputed amount of duty unless such a deposit was stayed or waived by the tribunal. vide order dated 21-12-1994, the tribunal recalled the earlier order dated 3-6-1994, permitted the appellants to file a fresh stay application and a fresh application for out of turn hearing. the case was again heard by the tribunal on 11-7-1995. the tribunal held that since no deposit of duty had been made and since no application for stay had been made, the appeal did not survive and order was accordingly passed dismissing the four appeals. the appellants then filed civil appeal no. 10727-10730 of 1995 in the supreme court. the hon'ble supreme court vide their order dated 19-3-1996 directed the appellants to make required applications for waiver and stay under section 129e of the customs act and directed the tribunal to consider the applications and to dispose of the same according to law.4. in pursuance of the order of the hon'ble supreme court, the present stay applications have been filed.5. shri habbu, ld. advocate claimed that the assistant collector had erred in the interpretation of notification no. 77/80-cus., dated 17-4-1980. he had held that under the notification, a valid licence was required which the appellants did not have. he submitted that vide the provisions of ogl no. 19/88, dated 13-3-1988, the capital goods for their use, imported by actual users into free trade zone did not require a licence. the same provisions existed in the later order no.20/1993 also. since the goods were available under ogl, the additional collector has really made an error in holding that the goods were unauthorisedly imported. he stated that there should be no dispute about his client being actual user of the impugned goods. as regards the second condition about the satisfaction of the development commissioner that the goods would be used in connection with the production of export goods, ld. advocate submitted that the notification does not prescribe prior approval of the development commissioner. his satisfaction could rise after the importation of the goods also. the necessary permission was requested from the development commissioner vide the appellant's letter dated 29-1-1990. he submitted that they had requested the customs authority not to take any action on any of the impugned goods pending receipt of approval from the development commissioner. subsequently vide letter dated 19-2-1992, the ministry of commerce accorded the necessary permission. ld. advocate therefore, submitted that the appellants had contravened the provisions of neither the impugned notification nor of the import and export control act or the import and trade order 1955.6. ld. advocate submitted that the appellants had filed the appeal in august, 1992. the goods were still under the control of the customs.during the last two years his client was subjected to undue hardship due to the conflicting judgments of the tribunal. he therefore, requested for grant of stay. shri r.a. shiekh, ld. jdr maintained that the additional collector was correct in holding that for the benefit of notification no. 77/80-cus. to be extended, prior approval of development commissioner was necessary. it is the stipulated in condition no. 4 requiring the importer to execute a bond. since the importer had not done so, the contravention was clearly established.7. we have carefully considered the submissions made by both sides and have also perused the cited documents.8. the impugned notification permitting duty free importation of goods in free trade zone prescribes a number of conditions to be fulfilled by the importer. the original authority has questioned the compliance of the two conditions on the observation that the importer appellant did not have a licence for the import of the goods and that they had not taken prior permission of the development commissioner. the ld.advocate has shown that the goods were capital goods, imported into free trade zone were covered under the open general licence. therefore, there was no necessity for obtaining a separate licence to cover the importation of the goods. the plain reading of the impugned notification also does not fully establish the belief of the original authority that specific and written approval of the development commissioner was a condition precedent to the importation. in our opinion the ld. advocate has made a very strong case for the appellants. we, therefore dispense with the pre-deposit of duty demanded and confirmed in the lower orders and stay the enforcement of the impugned orders.

Judgment:
1. These stay applications are filed in four main appeals bearing Nos.

C/1719-1722/96-B2. Since the applicant is common and issue is the same, these four applications were heard together and are being disposed of by this common order.

2. Shri R.K. Habbu, Advocate appeared for the appellant. The department was represented by Shri R.A. Shiekh, JDR. The appellants are an export oriented unit located in Kandla Free Trade Zone. They imported capital goods in four different consignments and filed Bills of Entry for clearance thereof. The jurisdictional Additional Collector held that these goods were imported in excess of the projected value and that at the time of importation thereof, the prior approval of the Development Commissioner of the Free Trade Zone had not been obtained. After hearing the present appellant, the Additional Collector proceeded to order confiscation of the goods in each case and prescribed redemption fines in addition to appropriate duty payable. The appellants filed four appeals against these orders and also filed applications under Section 129E of the Customs Act, 1962 for stay and waiver of the pre-deposit of duty. The applicants were heard by the Tribunal on 9-2-1993 and it was observed that redemption fine and duty were payable only at the time of the clearances of the goods from the Customs. Since no penalty has been imposed upon the appellants, there was no requirement for pre-deposit and as such the said applications were premature. On a later date the appellant sought early disposal of the case. The case was accordingly heard on 23-12-1994. During this hearing, the Tribunal held that before the appellants could be heard on merits, they had to deposit the disputed amount of duty unless such a deposit was stayed or waived by the Tribunal. Vide order dated 21-12-1994, the Tribunal recalled the earlier order dated 3-6-1994, permitted the appellants to file a fresh stay application and a fresh application for out of turn hearing. The case was again heard by the Tribunal on 11-7-1995. The Tribunal held that since no deposit of duty had been made and since no application for stay had been made, the appeal did not survive and order was accordingly passed dismissing the four appeals. The appellants then filed Civil Appeal No. 10727-10730 of 1995 in the Supreme Court. The Hon'ble Supreme Court vide their order dated 19-3-1996 directed the appellants to make required applications for waiver and stay under Section 129E of the Customs Act and directed the Tribunal to consider the applications and to dispose of the same according to law.

4. In pursuance of the order of the Hon'ble Supreme Court, the present stay applications have been filed.

5. Shri Habbu, ld. Advocate claimed that the Assistant Collector had erred in the interpretation of Notification No. 77/80-Cus., dated 17-4-1980. He had held that under the notification, a valid licence was required which the appellants did not have. He submitted that vide the provisions of OGL No. 19/88, dated 13-3-1988, the capital goods for their use, imported by actual users into Free Trade Zone did not require a licence. The same provisions existed in the later Order No.20/1993 also. Since the goods were available under OGL, the Additional Collector has really made an error in holding that the goods were unauthorisedly imported. He stated that there should be no dispute about his client being actual user of the impugned goods. As regards the second condition about the satisfaction of the Development Commissioner that the goods would be used in connection with the production of export goods, Ld. advocate submitted that the notification does not prescribe prior approval of the Development Commissioner. His satisfaction could rise after the importation of the goods also. The necessary permission was requested from the Development Commissioner vide the appellant's letter dated 29-1-1990. He submitted that they had requested the Customs authority not to take any action on any of the impugned goods pending receipt of approval from the Development Commissioner. Subsequently vide letter dated 19-2-1992, the Ministry of Commerce accorded the necessary permission. Ld. advocate therefore, submitted that the appellants had contravened the provisions of neither the impugned notification nor of the Import and Export Control Act or the Import and Trade Order 1955.

6. Ld. advocate submitted that the appellants had filed the appeal in August, 1992. The goods were still under the control of the Customs.

During the last two years his client was subjected to undue hardship due to the conflicting judgments of the Tribunal. He therefore, requested for grant of stay. Shri R.A. Shiekh, ld. JDR maintained that the Additional Collector was correct in holding that for the benefit of Notification No. 77/80-Cus. to be extended, prior approval of Development Commissioner was necessary. It is the stipulated in Condition No. 4 requiring the importer to execute a bond. Since the importer had not done so, the contravention was clearly established.

7. We have carefully considered the submissions made by both sides and have also perused the cited documents.

8. The impugned notification permitting duty free importation of goods in Free Trade Zone prescribes a number of conditions to be fulfilled by the importer. The original authority has questioned the compliance of the two conditions on the observation that the importer appellant did not have a licence for the import of the goods and that they had not taken prior permission of the Development Commissioner. The ld.advocate has shown that the goods were capital goods, imported into Free Trade Zone were covered under the Open General Licence. Therefore, there was no necessity for obtaining a separate licence to cover the importation of the goods. The plain reading of the impugned notification also does not fully establish the belief of the original authority that specific and written approval of the Development Commissioner was a condition precedent to the importation. In our opinion the ld. advocate has made a very strong case for the appellants. We, therefore dispense with the pre-deposit of duty demanded and confirmed in the lower orders and stay the enforcement of the impugned orders.