MAHINDRA AND MAHINDRA LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) On 6th August 1960, Government of India issued Notification No. 82/60 (referred to hereafter as "the 1960 Notification") exempting from customs duty, (subject to certain conditions, one of them being the execution of a bond), component parts of any machinery imported into India and proved to the Collector's satisfaction to be required for the purpose of the initial setting up of that machinery or its assembly or manufacture. On 5th January 1963, Government of India issued Notification No. 2/63 (referred to hereafter as "the 1963 Notification"), exempting from customs duty, subject to the execution of a bond, "parts of all tractors when imported into India solely for agricultural purposes."

(2.) The petitioner is the successor in title of one International Tractor Company of India Ltd.", and for convenience is referred to hereafter as "the Company". Since 1964 the Company manufactured agricultural tractors, (declared to be an essential commodity by Government of India, which from time to time fixed the selling price inclusive of manufacturer's profits), for which purpose the Company imported inter alia hydraulic lifts and 3-point linkages. Between December 1964 and July 1968 the Company imported 55 consignments comprising inter alia of hydraulic lifts and 3-point linkages. On the first two consignments of hydraulic lifts which arrived in Bombay in December 1964, the Company filed the requisite Bills of Entry claiming benefit of the exemption under the 1960 Notification. Exemption was declined by the Department on the ground that hydraulic lifts were not parts of agricultural tractors. The Company paid the duty demanded under protest. The Company thereafter sent an undated note to the Department explaining why hydraulic lifts and 3-point linkages should be regarded as components of agricultural tractors attracting exemption under the 1960 Notification. The Company also furnished a statement giving details of an aggregate amount of Rs. 12,17,537.17 being the excess duty recovered by the Department during the period 1964-68.

(3.) On 30th May 1968, the Collector of Customs, Bombay, issued a Public Notice that hydraulic lifts and 3-point linkage should be treated as component parts of agricultural tractors, hence these equipments when imported with tractors should be assessed free of duty under the 1963 Notification. It was further stated that these equipments when imported for initial assembly or manufacture in terms of the 1960 Notification would be entitled to the exemption benefit under that Notification. However when imported as spares separately, they would be assessable to duty on merits.