1985 (10) TMI 104 - AT - Customs

Court Grants Appeals: Appellants Qualify for Open General License Under A.M.-82 Import Policy for Fiber to Yarn Conversion.

ORIENTAL IMPORTERS AND EXPORTERS, GWALIOR AND ANOTHER Versus COLLECTOR OF CUSTOMS, BOMBAY

ORIENTAL IMPORTERS AND EXPORTERS, GWALIOR AND ANOTHER Versus COLLECTOR OF CUSTOMS, BOMBAY - 1986 (23) E.L.T. 451 (Tribunal) Issues Involved:1. Eligibility for the benefit of Open General License (OGL) under Serial No. 1 of Appendix 10 of the A.M.-82 Import Policy.2. Definition and interpretation of 'actual user' and 'intermediate processing.'3. Jurisdiction of the Bench.4. Applicability of previous judgments and recommendations.Issue-wise Detailed Analysis:1. Eligibility for the benefit of OGL under Serial No. 1 of Appendix 10 of the A.M.-82 Import Policy:The primary issue was whether an actual user who imports raw materials and gets a product manufactured on a job-work basis by an outside agency, and then uses the manufactured product in their own premises for further manufacture of the final product, qualifies for the benefit of OGL as per Serial No. 1 of Appendix 10 of the A.M.-82 Import Policy. The appellants argued that the imported viscose staple fiber was used for manufacturing knitted fabrics, which aligns with the OGL policy. The department contended that the imported fiber was used to manufacture yarn, which was then used to make the final product, thus disqualifying the appellants from OGL benefits.2. Definition and interpretation of 'actual user' and 'intermediate processing':The term 'actual user' was defined in the A.M.-82 Import Policy as a person who imports goods for their own use and not for trade. The appellants argued that they met this definition as they used the imported fiber for their manufacturing process. The term 'intermediate processing' was also debated. The appellants claimed that converting fiber into yarn was an intermediate process in manufacturing hosiery goods. The department argued that intermediate processing should be limited to processes where the raw material does not undergo significant transformation.The judgment concluded that the appellants' interpretation was correct, stating that the term 'intermediate processing' should be understood in the context of the entire production effort. The imported fiber was considered a raw material for the final product, and the conversion into yarn was an intermediate process.3. Jurisdiction of the Bench:The jurisdiction issue arose from the Supreme Court decision in Javed Ahmed Abdul Hamid Pawala v. State of Maharashtra, which held that a larger bench should not overrule a smaller bench's decision. This issue was already disposed of in CEGAT Miscellaneous Order Nos. 94-95/85-C dated 1-4-1985, and therefore, did not require further consideration.4. Applicability of previous judgments and recommendations:The appellants cited the West Regional Bench decision in Godrej Ltd., Vikhroli, Bombay v. Collector of Customs, Bombay, which supported their case. The department countered with the decision in Kashyap Zip Industries Pvt. Ltd. v. Collector of Customs, Bombay, which had a similar issue but ruled in favor of the department. The judgment noted that the recommendation from the Chief Controller of Imports and Exports (CCIE) in the Godrej case weighed heavily in favor of the appellants. However, it was argued that the recommendation could be seen as an authoritative interpretation of 'actual use.'The judgment emphasized that interpretations by high-level government authorities, such as the Textile Commissioner and the General Manager, District Industries Centre, should be given due consideration. These authorities had issued certificates supporting the appellants' case, which the judgment found no reason to ignore.Conclusion:The judgment allowed the appeals, concurring with the West Regional Bench's order of 1st October 1983. It held that the appellants were eligible for the benefit of OGL under Serial No. 1 of Appendix 10 of the A.M.-82 Import Policy. The interpretation of 'actual user' and 'intermediate processing' favored the appellants, and the certificates from high-level authorities were deemed significant. The judgment stressed the need for consistent interpretations to avoid unnecessary harassment to the trade and to support the government's objectives of promoting industry and exports.