Court rules in favor of petitioners in duty dispute over imported alcohol concentrates

BUSSA OVERSEAS AND PROPERTIES (PVT) LTD. Versus UNION OF INDIA

BUSSA OVERSEAS AND PROPERTIES (PVT) LTD. Versus UNION OF INDIA - 1991 (53) E.L.T. 165 (Bom.) Issues Involved:
1. Whether the imported goods answer the description 'Ethyl Alcohol' in the REP licences.
2. Whether the Gin and Whisky concentrates imported are 'Gin or Whisky' attracting higher duty.
3. Whether wooden casks used for Whisky concentrate are containers of permanent nature liable to duty.

Summary:

Issue 1: Description of Imported Goods as 'Ethyl Alcohol'
The primary issue in several writ petitions was whether the imported goods, primarily Whisky, Gin, or Brandy concentrates, answer the description 'Ethyl Alcohol' mentioned in the REP licences. The court concluded affirmatively, referencing an affidavit by Shri S.P.S. Pundir, Dy. Collector of Customs, which confirmed that the goods imported are covered by the description 'Ethyl Alcohol'. The court noted that the function of the Customs Authorities is to verify whether the goods imported are covered under the REP licence, not to determine the specific use of the goods by the Registered Exporter. The court also highlighted that REP licences are freely transferable and are not subject to the "actual user" condition, thus allowing the import of goods covered by such licences. The court rejected the Customs Authorities' contention that the imported goods must be of the kind used in the manufacture of Dyes and Dye-intermediates.

Issue 2: Classification of Gin and Whisky Concentrates
The second issue was whether the Gin and Whisky concentrates imported are classifiable as 'Gin or Whisky' under higher duty sub-headings. The court found that the imported goods, known as concentrated Whisky or Gin, are not consumable as such and are used by distilleries to produce marketable alcoholic beverages. The court held that the goods are classifiable under sub-heading 3 of Heading 22.09 (compound alcoholic preparations for the manufacture of beverages) and not under sub-heading 2 (Whisky, Brandy, and Gin), thus not attracting higher duty.

Issue 3: Duty on Wooden Casks
The final issue was whether wooden casks used for importing Whisky concentrate are containers of permanent nature liable to duty. The court referred to Exemption Notification No. 184/76, which exempts packages or containers from duty if certain conditions are met. The court found that the wooden casks used are not suitable for repeated use and are not economically viable for re-shipping, thus qualifying for exemption from duty under the notification.

Conclusion:
The court allowed all the petitions, ruling that the imported goods answer the description 'Ethyl Alcohol' in the REP licences, the concentrates are not classifiable under higher duty sub-headings, and the wooden casks qualify for exemption from duty. The court ordered the discharge of bank guarantees and ITC bonds and the refund of duties already paid. The operation of the order relating to the discharge of guarantees and refund of duties was stayed for six weeks.