2001 (8) TMI 122 - SC - Customs

Imported technical documents not classified as printed books/manuals; subject to 10% duty. Tribunal decision overturned.

The court concluded that the imported goods, printed drawings, designs, and plans, were not considered 'printed books' or 'printed manuals' under the ... Printed books - printed manuals - plans, drawings and designs - exemption notification - technical know-how - ordinary/common parlance - functional testPrinted books - printed manuals - plans, drawings and designs - exemption notification - technical know-how - ordinary/common parlance - functional test - Whether printed drawings, designs and plans imported under a Foreign Transfer of Technology Agreement are entitled to exemption under Serial No. 10 (printed books and printed manuals) or fall under Serial No. 15 (plans, drawings and designs) of Notification No. 25/95-Cus., dated 16-3-1995 - HELD THAT: - The Court examined the ordinary grammatical and trade meanings of the terms used in the notification and contrasted the characteristics of 'printed books' and 'printed manuals' with 'plans, drawings and designs'. It held that 'plan', 'drawing' and 'design' denote technical representations and sketches used as part of technical know-how, and that the imported materials, being installation and planning documentation under a transfer of technology agreement, are technical specifications forming part of the transferred technology. The Court applied the ordinary/common parlance and the 'functional test' (as discussed in Scientific Engineering House) and concluded that mere presence of writings on sheets does not convert technical documentation into a 'book' or a 'manual' in the ordinary sense (a literary or handy reference work). The Tribunal's reliance on Scientific Engineering House was found to be misplaced; that decision, when read in context, does not support treating such technology transfer drawings and designs as 'books' within the notification. Consequently, the imported materials do not satisfy the ordinary meaning of 'printed books' or 'printed manuals' and instead fall within the scope of 'plans, drawings and designs' in Serial No. 15 of the exemption notification. [Paras 14, 15, 17, 18, 19]The imported printed drawings, designs and plans are not exempt as 'printed books' or 'printed manuals' under Serial No. 10 and instead fall within Serial No. 15 of the Notification; the Tribunal's order was set aside and the Commissioner of Customs' order restored.Final Conclusion: The appeals are allowed; the Court answers the question in the negative - the printed drawings, designs and plans imported under the transfer of technology agreement are not entitled to exemption under Serial No. 10 and are covered by Serial No. 15 of Notification No. 25/95-Cus.; the Tribunal's order is set aside and the Commissioner of Customs' order is restored. Issues Involved:1. Whether the benefit of exemption under Notification No. 25/95-Cus., dated 16-3-1995, as amended, is available to the goods i.e. printed drawings, designs, and plans under the Foreign Transfer of Technology Agreement imported by the respondent.Issue-Wise Detailed Analysis:Issue 1: Exemption Under Notification No. 25/95-Cus.The primary question for consideration was whether the benefit of exemption under Notification No. 25/95-Cus., dated 16-3-1995, as amended, is available for printed drawings, designs, and plans imported under a Foreign Transfer of Technology Agreement. The respondent contended that the imported goods fell under Sl. No. 10 of the Notification, which had a 'Nil' rate of duty, while the Revenue argued that they fell under Sl. No. 15, attracting a 10% ad valorem duty.Factual Background:The respondent imported printed drawings, designs, and plans for setting up a plant to manufacture Polyester, Polyester Filament Yarn, and Polyester Staple Fibre. The Revenue classified these goods under Chapter 49.11, valuing them at DM - 32,66,900.00 (equivalent to Rs. 7,50,61,438.00) and imposed penalties for non-payment of duty. The Tribunal, however, concluded that the materials were books under Tariff Item 49.01, falling under Sl. No. 10 of the Exemption Notification, thus exempt from duty.Interpretation of Terms:The court had to interpret the terms 'printed books,' 'manuals,' 'plans,' 'drawings,' and 'designs' as used in the notification. The terms 'plan,' 'drawing,' and 'design' were analyzed for their common meanings and legal definitions, concluding that they had distinct attributes but conveyed a common meaning in the context of the notification.Attorney General's Argument:The Attorney General argued that the features of a book in trade parlance included having an author, publisher, price, availability to the public, lack of confidentiality, a subject matter, serially numbered pages, and an ISBN code. The imported goods did not meet these criteria and were instead documentation with vendor's drawings and operating and maintenance manuals.Tribunal's Reliance on Scientific Engineering House Case:The Tribunal relied on the Supreme Court's decision in Scientific Engineering House Pvt. Ltd. v. Commissioner of Income Tax, Andhra Pradesh, where it was held that certain documents could collectively be treated as a book. However, the Supreme Court in the present case found that the Tribunal misapplied this decision, as the documents in question did not meet the functional test of being a book.Conclusion:The court concluded that the imported goods were not 'printed books' or 'printed manuals' under Sl. No. 10 of the notification but were technical documents related to the transfer of technology, falling under Sl. No. 15. The goods were thus subject to a 10% ad valorem duty. The Tribunal's judgment was reversed, and the Commissioner's order was restored.Final Judgment:The appeals were allowed, and the Tribunal's order was negated. The court answered the question in the negative, ruling that the benefit of exemption under Notification No. 25/95-Cus. was not available to the imported goods. There was no order as to costs.