1988 (3) TMI 76 - HC - Customs

Court rules fabric printing machine not a transfer printing machine for garment industry.

The High Court upheld the decision of the tax authorities regarding the confiscation of a transfer printing machine by the Collector of Customs. The court ... Machinery for garment Industry - Transfer Printing Machine - Import - Precedents Issues:Interpretation of the term 'Transfer Printing Machine' under the Import Policy for the year 1978-79.Validity of confiscation of the machine by the Collector of Customs under Section 111 (g) of the Customs Act.Appeal to the Central Board of Excise and Customs under Section 129 of the Customs Act.Challenge under Article 226 of the Constitution of India regarding the decision of the authorities under the Customs Act.Consistency in decision-making by tax authorities.Analysis:1. The judgment concerns the importation of a transfer printing machine by a private limited company engaged in the garment industry, which was confiscated by the Collector of Customs. The dispute arose from the classification of the machine under the Open General Licence (OGL) list of the Import Policy for the year 1978-79.2. The Collector of Customs issued a show cause notice to the petitioners, stating that the imported machine did not qualify as a transfer printing machine for the garment industry. The Collector confiscated the machine but allowed redemption upon payment of a fine. The petitioners contended that the machine indirectly served the garment industry by printing fabrics used in garment production.3. The petitioners appealed to the Central Board of Excise and Customs, which upheld the Collector's decision. Subsequently, the Government of India declined to revise the decision, leading the petitioners to challenge the decision under Article 226 of the Constitution of India before the High Court.4. The main argument presented was that the authorities incorrectly applied the concept of 'direct use' to the description of the machine in the OGL list. The petitioners claimed that the machine, though not directly used in garment production, had an indirect connection to the industry through fabric printing.5. The High Court rejected this argument, emphasizing that the machine was solely used for fabric printing and not garment printing. The court held that the OGL list intended to include machinery specifically used in the garment industry, not machinery indirectly related to it.6. The court dismissed the notion that a machine used in the fabric industry automatically qualified as a garment industry machine. It clarified that the focus should be on whether the machine was primarily intended for garment production, regardless of its use in other industries.7. Additionally, the court declined to consider new factual arguments raised during the petition, stating that technical questions should have been addressed at lower levels. It highlighted that items listed under machinery for the garment industry should serve that specific purpose.8. The judgment also addressed the petitioners' argument regarding the clearance of a similar machine by Bombay Customs under OGL without penalty. The court upheld the government's decision, emphasizing the need for consistency in taxation matters despite the lack of legal principles like res judicata in departmental proceedings.9. Ultimately, the High Court dismissed the petition, affirming the decisions of the lower authorities and imposing costs on the petitioners. The court concluded that the machine did not qualify as a transfer printing machine for the garment industry under the OGL list.