UNION OF INDIA Vs. DINDIGUL SPINNERS ASSOCIATIONS

JUDGEMENT

(1.) This batch of intra court appeals are filed by the revenue, aggrieved by the order of the learned Judge in setting aside the Notification No.2/2002-Customs dtd. 8/1/2002 issued by the Central Government in exercise of the power under Sec. 8A of the Customs Tariff Act, 1975, as invalid inasmuch as the circumstances/conditions precedent for the Central Government to issue such a notification, do not exist.

(2.) Originally, the batch of writ petitions were filed by the Dindigul Spinners Association and a number of individual Mills, who are respondents in this batch of Writ Appeals filed by the revenue. The members of the respondent association/mills and the other individual mills are engaged in the manufacture of yarn both cotton as well as synthetic. Their main raw material is cotton and the major component in their input cost is the price of cotton, which works out to about 40% to 50% of their production cost.

(3.) The respondent mills use different varieties of cotton for manufacture of different counts of yarn. Cotton being a seasonal product, the mills are forced to procure the required quantity of cotton in advance, as and when it is available on the basis of the orders placed on the mills and also on the basis of the prospective orders and market requirements, which include both local and international. The respondent mills import cotton in view of the fact that adequate quantity of cotton may not be available within the country. Importantly, it is submitted by the respondent association/mills that the duty element is taken into account, while deciding the import and also offering quotation to its customers. The orders on the foreign exporters are normally placed 5 to 6 months in advance and the prices are fixed on the basis of the duty prevailing on the date on which such orders are placed.