Auto Tractors Limited, Pratapgarh v. Collector of Customs (appeal), Bombay

RANGANATHAN, J. The appellant, M/s Auto Tractors Limi· ted, is a company manufacturing tractors. For purposes of manufac· lure, the company imports certain parts and components from abroad. There are two notifications on the Government of India granting B certain concessions from the levy of customs duty which are applicable to such goods as have been imported by the appellant. The first of these, namely, Notification No. 200/79 dated 28.09.1979 (as amended from time to time) exempts components "required for the manu­ factµf~ of heavy commercial motor vehicles . · ..... or of tractors" from so much of the customs duty as is in excess of 25 per cent ad valorem and the whole of the additional duty leviable thereon. The C grant of the concession was subject to the fulfillment of certain condi­ tions specified in the notification. The second notification was Notifi· cation No. 179/80 dated 4.9.1980 (as amended from time to time). This notification confers an exemption in respect of parts of articles falling under specific headings in the First Schedule to the Customs Tariff D Act, 1975. These admittedly included parts required for the purposes of the initial setting up or for the assembly or manufacture of "tractors", this being an article falling under heading No. 87 .01(1) of the First Schedule above referr~d to. This exemption was in respect of so much of the customs duty as is in excess of the rate applicable to the said article (i.e". tractor) when imported complete. This concession was E again subject to a certificate and recommendation from certain specified authorities, one of whom is the Directorate General of Tech· nical Development (DGTD). The relief available to the assessee under the first notif_ication of 1979 is, apparently, larger than the one avail­ able under the second notification of 1980. The appellant company imported three consignments. Each of the consignments was cleared after production of a certificate from the DGTD in the following terms: "Certified that M/s Auto Tractors Ltd., Lucknow are hold- ing a valid Industrial Licence for the manufacture of G agricultural tractors and have an approved manufacturing programme. It is rurther certified that the above compo· nents of agricultural tractors, whicq fi!!l !!llP~f JCT No. 87 .01 (1) qualify for concession;il rn\e of imPRr! d!!tY !!I terms of Custom's Notification No, 179/f No, 37Q/99/79- CUS. I df!!eq 4.9.1989." . H (underlining ours). 284 SUPREME COURT REPORTS 11989] 1 S.C.R. Apparently, since the certificates of the DGTD referred only to Notifi­ cation No. 179/80, the appellant was granted the concession available under the said Notification. The appellant cleared the goods, availing itself of the said concession, in March, May and June 1981. Subsequently, the appellant appears to have realised that it was entitled to the larger concession available under Notification No. 200 of 1979 and that it had erred in clearing the goods after payment of duty subject only to the smaller concession available under Notifica- tion No. 179 of 1980. The appellant therefore filed three refund appli- cations in August, September and October 1981 claiming refund to the extent of Rs. 1,55,342.50, Rs.1,28,350.05 and Rs.6,46,415.44, being the difference between the entitlements on concession under the two notifications in question. It also appears that the appellant subse- quently applied to the DGTD for an amendment of the original certifi- cates to make it clear that the goods imported by the appellant were eligible for the concession under notification No. 200 of 79. The DGTD on such application issued a certificate to the following effect: "Certified that M/s. Auto Tractors Ltd. Pratapgarh are holding an Industrial Licence to manufacture Agricultural Tractors and have an approved manufacturing programme. It is further certified that the items listed above are compo- nents of agricultural tractors falling under ITC No. 87.01 (1) and are eligible for concessional rate of import duty under custom notification No. 200/79 and 52/81 as exten- ded by Custom's notification No. 81/81 and 82/81 both dated 28.3.1981. This supersedes the earlier duty concession certificate issued by !his office vide Notification No. 179/F No. 370/ 99/79-CUS. I dated 4.9.1980 under this office letter No. DD-II/5(49)/79 Ag dated 16.1.81." These amended certificates were also produced before the Customs authorities. The assessee's prayer for refund was however rejected by the Assistant Collector of Customs on the ground that the assessee had failed to produce "end-use" certificates. The assessee's appeals to the Collector of Customs (Appeals) also failed. There were. further appeals to the Customs, Excise and Gold (Control) Appellate Tri- bunal, which by its order dated 23.10.1987, dismissed the appeals of :i ·~ )< J. J ~ AUTO TRACTORS v. COLLECTOR OF CUSTOMS [RAN GANA THAN, J. [ 285 I<; the Appellants and hence the present appeals. A .. The Tribunal disposed of the assessee's claim by a short order. It observed that the Notification No. 200/79 entitled an assessee to the concessions therein ll)_entioned on the fulfillmenrof three conditions: (i) A manufacturing programme as duly approved by the B Director General of Technical Development (D.G.T.D.) should be produced at the time of clearance of the goods. (ii) The list of components and goods should be produced duly certified by the D.G.T.D.; and (iii) An End-use certificate from the same Directorate to be pro­ duced in due course in regard to the consumption of goods in the manufacture of the motor vehicles or tractors, etc. The Tribunal proceeded to observe: "The first statutory condition of the notification that the manufacturing programme of the appellants as approved by the D.G.T.D. should have been produced before the Assistant Collector at the time of clearance of the goods was not fulfilled by the appellants. As a matter of fact at the time of clearance of the goods there was no claim even E by the appellants under Notification Nos. 200 and 201/79- Cus. Their claim at that time was under a different notifica­ tion No. 179/80-Cus. Which contained no requirement to produce an approved manufacturing programme. Since the statutory wording of the notification made it imperative for the appellants that the approved· manufacturing prog- F ramme should have been produced at the time of clearance and since this condition was not fulfilled, the entitlement of the appellants to the exemption is not accepted. 5. The approved manufacturing programme was available all along with the appellants yet they did not pro- G duce it at the time of clearance before the Assistant Collector." (underlining ours) We have heard the learned counsel for the appellant as well as learned Additional Solicitor General and we are of the opinion that H 286 SUPREME COURT REPORTS 119891 1 s,c.R. the Tribunal has erred in denying the appellant the benefit of the ~ . A Notification No. 200 of 1979. This notification made the availability of the concession thereunder subject to three conditions of which one alone is relevant for our· purposes. The Tribunal t_hought that this condition was that the approved manufacturing programme shoulcj . . . have been produced at the time of clearance and it has denied the B assessee the benefit of the concession, even though satisfied that the approved manufacturing programme was all along available with the assessee, because such programme was not produced at _the time of the clearance. The Tribunal has committed an error in its reading of the } relevant condition of the notification. The condition is not that the manufacturing programme should be produced but that "the importer should produce evidence to the Assistant Collector of Customs at the ; \ c time of clearance of the components or.the goods that they have a ---( programme duly approved by the Ministry of Industry and the Indust· rial Adviser or Additional Industrial Adviser of the ,Directorate Gen- era! of Technical Development of the Ministry of Industry for the manufacture of such ·motor vehicles ...... or of tractors" .. In other D words, the importer had only to satisfy the customs authorities that it had an approved industrial programme for the manufacture of tractors by production of a certificate from the DGID. It is indeed common ground before us that the second set of certificates issued by the DGID constitutes sufficient evidence that would entitle the appellant )-to the concession under.Notification No. 200/.1979. But the argument E is that the amended certificates \verc produced not at the time of the ' clearance. of the goods but only. much later and that therefore the appellant is not entitled .to the concession under the said notification. There is a fallacy in.this approach, for, even ignoring the subsequent amendment of the certificates, we are of the opinion that the produc- ti on of the original ~et. of certificates at the time of clearance of the F goods was sufficient compliance with the terms. of the notification in question.• We have extracted the. terms of this certificate earlier. It is an unequivocal certificate. by the DGID that the appellant holds a . valid industrial licence for the manufacture of agricultural tractors and that it also bas an approved manufacturing programme. That is all the second set also says. There is therefore no doubt that the assessee had G produced evidence, in the form of the said certificate, of the fact that _ the appellant had an approved industrial programme. This was _the ~ only requirement of the notification and this requirement has, in our· opinion, been complied with. The further words in the first set of certificates that the assessee was eligible for the concession under 1980 notification were mere surplusage. The omission of the assessee to H request the DGID. to refer to the assessee's entitlement under _the )( ";.L ' I I I AUTO TRACTORS v. COLLECTOR OF CUSTOMS [RANGANATHAN, J. I 287 I 1979 notificatic\n or the omission of the DGTD to refer to the asses­ see's entitlement under the 1979 notification cannot take away the assessee's rights. The grant of concession depends on a certificate that the assessee had an approved manufacturing programme-which is there-and not the reference therein to the notifications that can be availed of by the assessee. We are therefore of the opinion that the order of the Tribunal should be set aside and that the assessee should be held entitled, in respect of the three consignments referred to earlier, to the concession available under Notification No. 200 of 79. We direct accordingly. The appeals are allowed but having regard to the circumstances we make no order as to costs. P.S.S Appeals allowed.