2005 (8) TMI 657 - SC - Customs

Supreme Court clarifies printed book classification under Customs Tariff, remits case for review

The Supreme Court set aside the decision of CEGAT classifying imported goods as printed books and remitted the case to CESTAT for reconsideration. The ... Whether the goods and materials imported by the Company in the form of FEEP comprising of Equipments, Drawings, Designs and Plans are classifiable under Chapter Heading 49.01 or 49.06 of Schedule I of the Customs Tariff Act, 1975 and the Company is entitled to the benefit under Notification Nos. 107/93-Cus. and 38/94-Cus. or they are classifiable under Chapter Heading 4911.99 as contended by the department? Held that:- The Counsel is right in submitting that when the expression ‘book’ is not defined in the Act, natural and ordinary meaning of the said expression must be kept in view. According to him, nowhere it is provided that all the nine characteristics or ingredients as highlighted by the learned Attorney General in Parasrampuria Synthetics Ltd. and referred to by this Court in paragraph 10 must be considered essential or sine qua non. As CEGAT has disposed of all the appeals merely on the basis of Larger Bench decision in Parasrampuria Synthetics Ltd. [2000 (5) TMI 66 - CEGAT, COURT NO. III, NEW DELHI] and has not considered rival contentions on merits nor recorded findings thereon, it would be appropriate and in the fitness of things to remit the matters to CEGAT, now to Customs, Excise and Service Tax Appellate Tribunal (CESTAT) to decide them on all points in accordance with law in the light of observations made in this judgment. Appeal allowed. Issues Involved:1. Classification of imported goods under the Customs Tariff.2. Applicability of exemption notifications.3. Imposition of custom duty and penalties.Detailed Analysis:1. Classification of Imported Goods:The primary issue was whether the goods imported by the Company, specifically the Front End Engineering Package (FEEP) comprising technical documentation, designs, and drawings, were classifiable under Chapter sub-heading 4911.99 or as 'Printed Books' under Chapter Heading 49.01 of the Customs Tariff.The Commissioner of Customs held that the goods were classifiable under Chapter sub-heading 4911.99, as they were not covered by the exemption for printed books under Chapter Heading 49.01. This classification was based on the nature of the documents, which were considered technical manuals and brochures rather than books.CEGAT, however, relying on a Larger Bench decision in Parasrampuria Synthetics Ltd., classified the goods under Chapter Heading 49.01, thus exempting them from customs duty. This decision was challenged by the Revenue, which argued that the decision in Parasrampuria Synthetics Ltd. had been overturned by the Supreme Court in Commissioner of Customs, New Delhi v. Parasrampuria Synthetics Ltd., where it was held that such technical documents did not qualify as books.The Supreme Court, upon reviewing the case, noted that the definition of 'book' should be understood in its ordinary sense and context. The Court referred to various dictionary definitions and previous judgments, emphasizing that the functional and physical characteristics of the documents should be considered.2. Applicability of Exemption Notifications:The Company argued that the imported goods were exempt from customs duty under Notification Nos. 107/93-Cus. and 38/94-Cus., which provided exemptions for printed books. The Commissioner of Customs rejected this claim, stating that the goods did not qualify as printed books under the relevant Chapter Heading.CEGAT, following the decision in Parasrampuria Synthetics Ltd., held that the goods were indeed printed books and thus entitled to the exemption. The Supreme Court, however, highlighted that the decision in Parasrampuria Synthetics Ltd. had been overturned and that the correct classification should be under sub-heading 4911.99, which did not qualify for the exemption.3. Imposition of Custom Duty and Penalties:The Commissioner of Customs imposed a duty demand of Rs. 4,18,12,425/- and penalties on the Company and its directors under Section 112 of the Customs Act, 1962. The penalties were Rs. 1 crore on the Company, Rs. 50 lakhs on the Chairman-cum-Managing Director, and Rs. 25 lakhs on the Director.CEGAT set aside these penalties based on its classification of the goods as printed books. The Supreme Court, noting the error in CEGAT's reliance on the overturned decision, remitted the matter back to CESTAT for reconsideration of the classification and the imposition of penalties.Conclusion:The Supreme Court allowed the appeals, set aside the order passed by CEGAT, and remitted the matter to CESTAT for reconsideration. The Tribunal was directed to decide the issues afresh, considering the correct classification of the goods and the applicability of exemption notifications, in light of the observations made in the judgment.