AHMEDABAD ADVANCE MILLS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) Petitioner No. 1 is a company registered under the Companies Act and is engaged in the manufacture of cold rolled high carbon alloy steel and special steel strips in India. The petitioners have set up a factory at Navsari where hot rolled strips in coil from are cold rolled to final gauges as required by the customers. Under the Customs Tariff Act, 1975 hot rolled stainless steel strips fall under Tariff Item 73.15(2) and the standard rate of duty is 300% ad valorem. By notification dated January 15, 1982 issued by the Central Government in exercise of powers conferred by Sub-section (1) of Section 25 of the Customs Act, 1982, exemption was granted to the import of hot rolled stainless steel coils of a width exceeding 500 mm. when imported into India for cold rolling, from so much of that portion of the duty of customs leviable thereon and specified in the First Schedule as in excess of 100 per cent ad valorem.

(2.) The petitioners imported hot rolled stainless steel strips in coil form and width exceeding 500 mm. for cold rolling from a foreign supplier. The goods arrived in Bombay on July 24, 1982. The petitioners presented the bill of entry but the Customs Authorities made an endorsement that the petitioners should produce proof that the coils are of 920 mm width as claimed, and furnish bond with bank guarantee for production of end use proof. The petitioners thereupon filed the present petition on August 31, 1982, and by an interim order the goods were cleared on the basis that the exemption granted under the notification is available. The Deputy Collector of Customs, Bombay, subsequently passed the adjudication order dated September 2, 1982, and that order is now under challenge. By the impugned order, the Deputy Collector of Customs directed that the assessment may be finalised without allowing the concession provided for in the notification. The Deputy Collector accepted that the imported coils exceed 500 mm in width and were imported for the purpose of cold rolling in the factory. The advantage of the notification was denied only on the ground that the imported coils were slitted into smaller width before undergoing the process of cold rolling.

(3.) Shri Joshi, learned counsel appearing on behalf of the petitioners, submitted that the view taken by the Deputy Collector is entirely unsustainable. The learned counsel submitted with reference to the exemption notification that the only conditions for securing benefit under the notification were (a) hot rolled stainless steel coils must have width exceeding 500 mm, and (b) the import is for the purpose of cold rolling. Shri Joshi submits that in the present case both the conditions were satisfied, and therefore, the benefit must be given to the petitioners. The submission of the learned counsel is correct and deserves acceptance. It is not in dispute that the hot rolled stainless steel coils imported by the petitioners had a width of 920 mm. and it is also not in dispute that the import was for the purpose of cold rolling. On the coils imported, the petitioners found that the coils with width of 920 mm cannot be directly cold rolled and therefore they were slitted into smaller width before undertaking the process of cold rolling. Shri Rege, learned counsel appearing on behalf of the Department, accepted that the entire import of hot rolled stainless steel coils was utilised for the purpose of cold rolling. Shri Rege urged that by slitting the coils the petitioners undertook different process and therefore the advantage under the notification is not available. It is impossible to accede to this submission. Take for illustration a case where the importer imports the coils of 1100 mm and thereafter slits it into two parts of 600 mm and 500 mm. for the purpose of cold rolling. It is difficult to understand how such slitting would debar the importer from claiming the benefit of the modification. Once it is established that at the time of import the coils were of more than 500 mm and the coils were ultimately used for the purpose of cold rolling, then the importer is entitled to the benefit of the notification. In my judgment, the order passed by the Deputy Collector of Customs is unsustainable and is required to be quashed.