CONTINENTAL EXPORTERS Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner-firm is engaged in the export of ready-made garments. They imported a consignment of stapling machines from Japan. Actually the goods are described as "Max HD-10 Staplers" valued at Rs. 2,88,793.10 against four REP licences and sought clearance of the goods as Capital Goods in terms of paragraph 175 of the import Trade Control Policy for April-March 1978-79. The fourth respondent was of the opinion that under the said paragraph 175 only import of capital goods in Part-A of Appendix 2 in the said Policy for April-March 1978-79, was permitted. According to him the subject goods are ordinary small appliances used in offices, homes and shops. They are not used in industries. He therefore, felt the subject goods cannot be treated as capital goods or as packing machines falling under Serial No. 6(68) of Part-A of Appendix 2 referred to above. The goods being in the nature of consumer goods falling under Serial No. 750 of Appendix 3 of the I.T.C. Policy, they were banned for import. After issuing a show cause notice and getting explanation of the petitioner he passed an order on 10.8.1979 confiscating the goods under Section 111(d) of the Custom Act (hereinafter called "the Act") read with Section 3(2) of the Imports and Exports (Control) Act, 1947. He gave the petitioner an option to redeem the goods on payment of a fine of Rs. 4,30,000/- and levied a personal penalty of Rs. 10,000/-. However, on appeal to the third respondent, the petitioner succeeded. The 3rd respondent came to the conclusion that the subject goods were classifiable under capital goods/packing machines. The appeal was therefore allowed on 14.3.1980. The fourth respondent preferred a review under Section 131(3) of the Act and after the amendment to the Customs Act, the same was transferred to the second respondent and treated as an appeal under Section 131(B) of the Act. The second respondent, in turn, set aside the order of the third respondent and restored the order of the fourth respondent. However, the personal penalty of Rs.10,000/- was deleted, upholding the order of confiscation and the levy of redemption fine. It is this order of the second respondent which is sought to be quashed in this writ petition.

(2.) A counter affidavit has been filed by the respondents stating that the subject goods do not conform to the description of either capital goods or packing machines. The definition of the words "capital goods" indicates a plant, machinery, equipment or accessories required by an investor for the production of goods or for rendering services including those required for replacing or expansion. They also refer to the meaning of the words "capital goods" in the Webster's Third New International Dictionary which is as follows:

(3.) The only contention that is urged before me, is, that the issue involved in this case, is squarely governed by the judgment in W.A. No. 451 of 1985 dated 28.6.1985. A careful perusal of the judgment of the Division Bench in WA No. 451 of 1985 shows that the Division Bench was concerned with totally a different issue. In that case the assessee imported staple pins. The question was whether the staple pins will fall under the Heading 73.31 under the Chapter "Iron and steel and articles thereof or whether they will fall under the Heading 83.01/15(2) under the Chapter "Miscellaneous articles of base metal." The department in that case wanted to bring the staple pins under the heading 83.01/15(2) whereas the assessee wanted to bring the staple pins under heading 73.31. The Division Bench posed the question "The controversy between the parties is under which heading the staples imported by the respondents fell." The Division Bench came to the conclusion that Chapter 73 of the Customs Tariff Act dealt with iron and steel articles whereas Chapter 83 dealt with Miscellaneous articles of base metal after referring to this aspect of the case. The Division Bench observed.