1998 (11) TMI 286 - AT - Customs

Appeals rejected for machinery duty exemption under Notification 118/80-Cus. Strict interpretation applied.

FORMICA INDIA DIVISION Versus COLLECTOR OF CUSTOMS, BOMBAY

FORMICA INDIA DIVISION Versus COLLECTOR OF CUSTOMS, BOMBAY - 1999 (109) E.L.T. 787 (Tribunal) Issues Involved:1. Eligibility for concessional duty under Notification No. 118/80-Cus.2. Interpretation of the term 'used in the Electronic Industry.'3. Relevance of subsequent amendments to the Notification.4. Consideration of recommendations and clarifications from the Department of Electronics.5. Applicability of case laws cited by the appellants.Detailed Analysis:1. Eligibility for Concessional Duty under Notification No. 118/80-Cus:Both appellants imported 'Trimming plant for cutting Copper clad laminates with accessories' and claimed a refund under Sr. No. 163 of Notification No. 118/80-Cus. The authorities rejected this claim, arguing the benefit is only for goods used in the Electronic Industry. The appellants contended that their products, copper clad laminates, are extensively used in the Electronic Industry, and thus, they should qualify for the concessional rate.2. Interpretation of the Term 'Used in the Electronic Industry':The appellants argued that the term 'used in the Electronic Industry' implies the final product manufactured from the imported machinery should be utilized by the Electronic Industry. They highlighted that their copper clad laminates are used in making Printed Circuit Boards, a crucial component in the Electronic Industry. The authorities, however, maintained that the exemption is only for machinery used directly in the Electronic Industry, not for machinery used in industries producing intermediate goods for the Electronic Industry.3. Relevance of Subsequent Amendments to the Notification:The appellants pointed out that subsequent amendments to the Notification removed the condition 'used in the Electronic Industry,' suggesting the initial Notification should be interpreted similarly. They argued that these amendments were clarificatory and should apply retrospectively. The authorities countered that the amendments were prospective and did not alter the conditions of the original Notification.4. Consideration of Recommendations and Clarifications from the Department of Electronics:The appellants presented letters and certificates from the Department of Electronics supporting their claim for concessional duty. These documents stated that the copper clad laminates are used almost exclusively in the Electronic Industry and recommended extending the concessional rate to such imports. The authorities, however, did not accept these recommendations, arguing that the appellants' units were not registered as Electronic Industries and thus did not qualify for the exemption.5. Applicability of Case Laws Cited by the Appellants:The appellants cited several case laws to support their interpretation of the Notification and the eligibility for concessional duty:- K.P. Varghese v. Income-Tax Officer: Emphasized avoiding absurd and unjust results in statutory interpretation.- Deccan Sales Corporation and Another v. R. Parthasarthy and Others: Highlighted the importance of contemporaneous understanding of policies.- Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax: Stressed avoiding redundancy in legislative construction.- Madura Coats v. Collector of Customs: Supported a plain reading of Notifications without adding conditions not explicitly stated.- J.K. Synthetics Limited v. Union of India: Advocated for a plain reading of Notifications and not denying benefits based on supposed intentions.- Union of India v. Tarachand Gupta & Bors.: Stressed the importance of adhering to the clear language of policy entries.- Steel Authority of India v. Collector of Central Excise: Emphasized giving due effect to the clear language of exemption conditions.Separate Judgments:Order by Member (J):The Judicial Member favored the appellants, arguing that the Notification did not explicitly require registration as an Electronic Industry. The plain reading of the Notification implied that machinery manufacturing goods used in the Electronic Industry should qualify for the exemption. The amendments to the Notification were seen as clarificatory, supporting the appellants' eligibility for concessional duty.Order by Member (T):The Technical Member disagreed, stating the appellants were not an Electronic Industry and used the imported machinery for manufacturing laminates, which were then used by the Electronic Industry. He argued that the exemption should apply strictly to machinery used directly in the Electronic Industry, not intermediate goods manufacturers. The subsequent amendments were not seen as clarificatory for the original Notification.Majority Order:The third Member agreed with the Technical Member, emphasizing strict interpretation of exemption Notifications. The appellants, not being an Electronic Industry, did not qualify for the exemption under the original Notification. The appeals were thus rejected based on the majority view.Conclusion:The appeals were rejected, affirming that the imported machinery used by the appellants, not being directly in the Electronic Industry, did not qualify for concessional duty under Notification No. 118/80-Cus.