http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 12  

PETITIONER: THERMAX PRIVATE LIMITED

       Vs.

RESPONDENT: COLLECTOR OF CUSTOMS (BOMBAY) NEW COUSTOMS HOUSE

DATE OF JUDGMENT19/08/1992

BENCH: RANGNATHAN, S. BENCH: RANGNATHAN, S. RAMASWAMI, V. (J) II JEEVAN REDDY, B.P. (J)

CITATION:  1993 AIR 1339            1992 SCR  (3) 943  1992 SCC  (4) 440        JT 1992 (5)   281  1992 SCALE  (2)212

ACT:      Customs Tariff Act, 1975/Central Excises & Salt Act, 1944:      Section  3(1) Section 8(1)/Rules 8(1), and Rule 192  in Chapter  X-additional  duty  on article  imported  equal  to excise duty leviable on a like  article-Exemption/concession granted  to  a  like  article under  Rule  8(1)  extends  to additional duty-Procedure specified in Chapter X-Extends  to additional  duty on import_Concession available to  importer for  supplying them to Indian  manufacturers-Explanation  to S.3(1)-Applicable   only  where goods of  exactly  the  same description  attracted different rates of duty-Highest  rate of duty-Applicability of.

HEADNOTE:      The appellant-assessee imported certain goods and  paid the customs duty and additional duty at the appropriate rate under  the relevant entry of the customs tariff but  claimed exemption from the additional duty of customs leviable under S.3(1)  of the Customs Tariff Act, 1975 on the basis of  two notifications  issued  u/s.8 of the Act, and refund  of  the additional  customs  duty paid by it.  Since the  claim  was rejected  by  the Assistant Collector by  his  orders  dated 25.2.85  and 30.9.85 the assessee preferred appeals  to  the Collector,  who allowed one appeal and dismised  the  other. The assessee as well as the Revenue preferred appeals before the Tribunal against the respective order which went against them.   The  Tribunal allowed the appeal  preferred  by  the Revenue  and dismissed the assessee’s appeal.  Aggrieved  by the  Tribunal’s  orders,  the  assessee  has  preferred  the present  appeals, contending that even if the  tribunal  was right  in its conclusion that the procedure of Chapter X  of the  rules cannot be complied with, the exemption under  the notification dated 27.7.87 could not be denied.      On  behalf  of the Revenue it was contended  that  even assuming  that  the goods fulfilled the  conditions  of  the notification, the rate of duty applicable would be 80% being the highest rate by virtue of Explanation to                                                        944 S.3(1) of the Customs Tariff Act.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 12  

    Disposing of the appeals, this court      HELD:1.1 The benefit of Chapter X of the Central Excise Rules,  1944  will  no  doubt  generally  be  claimed  by  a manufacturer  in  which  event  he will  have  to  make  the application,  get the licence and give the assurances,  bond or  guarantee  required  by the rules but  it  can  also  be claimed by other persons.  The language of the rule  applies to  any person, not necessarily a manufacturer,  wishing  to obtain remission of duty sanctioned by a notification  under rule 8 on excisable goods in a specified industrial process. [955-C]      1.2.  There  is nothing in the scheme of the  Rule  192 which  makes it inapplicable to an importer of  goods.   The assessee has imported the goods and is selling them for  use in a factory, a use which qualifies for the concession under the notifications issued u/s. 8.  The types of use specified in the concessions notified could be of any kind.  Only, for claiming a concession in excise duty the user should be  the manufacturer himself or he must have made the purchase  from a manufacturer liable to pay excise duty on the item whereas in  regard to a claim for additional duty (CVD)  concession, the  supplier  will  be an importer.   the  latter  will  be entitled to sell the goods at the concessional rate of  duty (or  at nil rate if there is an exemption) if the  purchaser from him who puts the goods to the specified use (whether  a manufacturer or not) fulfills the requirements of Rule  192. Since the concession under Rule 192 turns only on the nature and  use to which the goods are put by the user or purchaser thereof  and  on whether he has gone through  the  procedure outlined in Chapter X, it would not be correct to deny it to a manufacturer.  That aspect is provided for by S.3(1) which specifically  mandates  that the CAV will be  equal  to  the excise duty for the time being leviable on a like article if produced or manufactured in India.  If the person using  the goods  is  entitled to the remission, the importer  will  be entitled  to say that the CVD should only be the  amount  of concessional duty and, if he has paid more, will be entitled to  ask for a refund.  The Tribunal was in error in  holding that  the  assessees  could not get  a  refund  because  the procedure  of  Chapter  X of the rules  is  inapplicable  to importers as such. [955G,H; 956A-G]      1.3.  The board is right in observing that the  benefit of exemption or                                                        945 concession  should be granted wherever the intended  use  of the material can be established by the importer or by  other evidence.   However, the entitlement will depend on  whether the  purchaser  is the holder of an L-6 licence  (or  C.T.-2 certificate)  or  not.   The  goods  were  supplied  by  the assessee to two firms of which one was the holder of an  L-6 licence.   The  grant of concession in respect of  the  firm having  L-6 licence is , therefore, correct.  In respect  of the  other  firm the assessee produced no material  to  show that   the  "beneficiary"  factory  was  eligible  for   the concession  under  Rule  192, and so  the  benefit  of  such concession  to  the assessee was therefore  rightly  denied. [957G,H; 958A,B]      2. It is no doubt true that Item 29A of the Schedule to the  Central  Excises and Salt Act, 1944 is  very  wide  and covers  various articles.  The notification also deals  with various categories of articles falling under that item.  But there  has  been no dispute at any stage that the  goods  in question  fall  under  item  with serial  no.  8(3)  of  the notification.    So  far  as  this  category  of  goods   is concerned,  there is only one rate of duty mentioned in  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 12  

notification.    The  fact  that  certain  other  parts   of refrigerating and air-conditioning appliances and  machinery may  fall under item with S. No. 4 (3) or  elsewhere  cannot attract  the higher duty in respect of the  goods  presently under consideration.  The Explanation to the notification is applicable only where goods of exactly the same  description attract different rates of duty. [958F-H]      Collector   of   Customs  v.  Western   India   Plywood Manufacturing Co. Ltd., [1989] Supl. 2 SCC 515 and Collector of  Customs  v.  Hansur  Plywood  Works,  [1989]  Suppl.   2 S.C.C.520, relied on.

JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.  4693- 94 (NM) of 1990.      From  the Order dated 11.5.1990 of the Customs,  Excise and  Gold  (Control),  Appellate  Tribunal,  New  Delhi   in C/2636/86-B2 and C/1281/85-B2. (Order Nos. 283 & 284/90-B2).      V.  Sridharan, R. Madhava Rao and V.  Balachandran  for the Appellant.      A.K.Ganguli,  Dilip Tandon and P.Parmeshwaran  for  the Respondent.      The Judgment of the Court was delivered by                                                        946      RANGANATHAN,  J.  These two appeals by  Thermax  (Pvt.) Ltd.  (hereinafter  referred to as ’the assessee’)  raise  a question  of  interpretation of  two  similar  notifications issued  under  S.8 of the Central Excises & Salt  Act,  1944 (’the Act’, for short).      The assessee imported goods described as "Sanyo  Single Effect Chiller" from Japan for the purpose of using the same for  refrigeration/air  conditioning  of  the  factories  of Indian  Rayon Corporation at Veraval and  Nirlon  Synthetics Fibre and Chemicals Ltd..  It paid the customs duty leviable thereon at the appropriate rate under the relevant entry  of the customs tariff but claimed exemption from the additional duty of customs leviable under S.3(1) of the Customs  Tariff Act, 1975 (C.T. Act, in short).  The relevant portion of the said section reads thus:          "3.  (1) Any article which is imported  into  India          Shall,in addition,be liable to a duty (hereafter in          this  section referred to as the  additional  duty)          equal  to  the  excise duty   for  the  time  being          leviable   on    like  article   if   produced   or          manufactured in India and if such excise duty on  a          like article is leviable  at  any percentage of its          value,  the additional duty to which  the  imported          article  shall be so liable shall be calculated  at          that  percentage  of  the  value  of  the  imported          article.          Explanation  :-  In this  section,  the  expression          "the  excise duty for the time being leviable on  a          like article if produced or manufactured in  India"          means  the excise duty for the time being in  force          which  would  be  leviable on  a  like  article  if          produced  or manufactured in India, or, if  a  like          article  is not so produced or manufactured,  which          would  be  leviable on a class  or  description  of          articles to which the imported article belongs, and          where such duty is leviable at different rates, the          highest duty"                                           (Underlining Ours)  In  view  of  the language of the above  provision,  it  is

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 12  

common  ground  between  the parties  that  notifications of exemption from central excise duty issued from time to  time under S.8.(1) of the Act would be applicable, in the case of imported  goods,  for  determining the  leviability  of  the additional  duty  under S.3(1)  above-mentioned.   In  other words,  if  any  goods  are  entitled  to  full  or  partial exemption from payment of central excise under                                                       947 any  such  notification, the exemption or  concession  would also  extend to the additional duty payable under S.3(1)  of the C.T. Act, subject, of course, to the fulfillment of  any conditions or requirements that may have to be complied with for   availing   the   exemption   under   any    particular notification.      The assessee, in the present case, cleared the imported goods  after  paying  the  customs  duty  as  well  as   the additional  duty (hereinafter referred to as ’CVD’) but,  on second  thoughts,  decided  that it should  have  claimed  a concession  in  respect  of  the  CVD  on  the  strength  of notifications  nos. 63/85 and 63/85 and 93/76  issued  under S.8 of the Act.  It, therefore, made applications for refund of  the  CVD  but  these  were  rejected  by  the  Assistant Collector  of  Customs  by  his  orders  dated  25.2.85  and 30.9.85.       The  assessee  appealed to the  Collector  of  Customs (Appeals)  from  these orders.  The  Collector  allowed  the appeal  from the order dated 25.2.85 but  his  successor-in- office,  who dealt with the appeal from the later  order  of 30.4.85, took a different view and dismissed the  assessee’s appeal.   The assessee as well as the  department  preferred appeals  from the respective order which went against  them. The Tribunal accepted the department’s appeal but  dismissed the  assessee’s  appeal.  Hence these  two  appeals  by  the assessee.      It  is common ground that customs duty is  payable  and has  been  paid on the imported goods under  customs  tariff item no. 84.17(1) at 40% of the value of the imported  goods plus  a surcharge of 25% thereon.  The rate of CVD,  however has  to  be determined on the basis of item no. 29A  of  the central excise tariff.  It is common ground that  "chillers" fall  under  sub-item  (3) of item 29A and  that  the  basic excise duty payable thereon was at 80%  of the value of  the goods under the above item read with notification 42/84-C.E. dated 1.3.84.      However,  the  S.8. notifications referred  to  earlier provide a further concession.  Notification no. 93/76-C.E is relevant  for  the  purposes  of  the  first  appeal   while notification  no.63/85-C.E. is relevant for the purposes  of the  second.   The notifications  are  somewhat  differently worded.   It  is,  however,  common  ground  that  the   two notifications are worded alike in all respects material  for the  purposes  of  the present  appeals.   It  is  therefore sufficient  if  the terms of notification  no.  63/85  dated 17.3.85 are extracted here.  It reads :                                                        948                       EFFECTIVE RATES                    63/85-CE, Dt.17.3.1985      "Effective rates of duty on Refrigerators,  Evaporative type of Coolers, Air-conditioning appliances, etc. and parts thereof prescribed.      In  exercise  of the powers conferred by  sub-rule  (1) rule  8  of  the Central Excise  Rules,  1944,  the  Central Government hereby exempts goods of the description specified in column (3) of the Table hereto annexed and falling  under the sub-item specified in the corresponding entry in  column

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 12  

(2) of the said Table, of Item No. 29A of the First Schedule to the Central Excises and Salt act, 1944 (1 of 1944),  from so  much  of the duty of excise leviable thereon  under  the said Act at the rate specified in the corresponding entry in column  (4) of the said Table subject to the conditions,  if any,  laid  down in the corresponding entry  in  column  (5) thereof.                            TABLE ------------------------------------------------------------ Sl. | Sub |    Description       |   Rate  | Condition No. | Item|                      |         |     | No. |                      |         | ------------------------------------------------------------ 1.  |  2. |         3.           |    4.   |      5. ------------------------------------------------------------ 1.  | (1) | Refrigerators and    |         |     |     | other refrigerating  |         |     |     | appliances-          |         |     |     | (i) Water-coolers    |  Nil    |     |     | (ii) Domestic        |Twenty   |     |     | refrigerators of      |five per |     |     |capacity not exceeding|cent ad  |     |     |165 litres            |valorem. |     |     | (iii) Others         |Fifty per|  2. | (2) |Evaporative type of   |cent ad  | If-     |      |coolers              |volorem  | (i)  the  said  3. | (2) |Air conditioners and  |Thirty pe|goods  are  so     |     |and other airconditio |rcent ad | used;     |     |ning appliances       |volorem  |(ii)  the  said     |     |including package type|Twenty-  | goods are not     |     |airconditioners;      |five per | resold within     |     |split unit aircondi-  |cent ad  | a  period  of     |     |tioners, the cooling  |valorem. | five years     |     |or room unit and      |         | from the     |     |condensing unit there-|         |     |     |fore required for use |         |     |     |in any of the follow- |         |     |     |ing namely :-         |         | ------------------------------------------------------------                                                        949 ------------------------------------------------------------ Sl. |Sub  |   Description          |  Rate   |    Condition No. |Item |                        |         |     |No.  |                        |         | ------------------------------------------------------------     |     |(i)  Computer Rooms.    |         |date  of  in-     |     |(ii) Research and Devel-|         |stallation and     |     |  opment Laboratories.  |         |(iii)  the     |     |(iii) Animal Houses.    |         | procedure     |     |(iv) Telephone Exchanges|         | specified     |     |(v) Broadcasting Studios|         | in Chapter     |     |(vi) Trawlers.          |         | X of the     |     |(vii) Dams.             |         | Central     |     |(viii) Mines and Tunnels|         | Excise Rules,     |     |(ix) Thermal or hydel   |         | 1944, is     |     |    power stations.     |         | followed.     |     |(x) Techinical Building |         |     |     |of Military Engineering |         |     |     |Services and Mobile Tro-|         |     |     |po and Mobile Radar Unit|         |     |     |under the Ministry of   |         |     |     |Defence.                |         |     |     |(xi) Any hospital run by|         |     |     |Central Government,State|         |     |     |Government or a Local   |         |

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 12  

   |     |Authority.              |         |     |     |(xii) Any hospital run  |         |     |     |by a Public Charitable  |         |     |     |Institution, the income |         |     |     |from which is exempt    |         |     |     |under sub-section (22A) |         |     |     |of section 10 of the    |         |     |     |Income Tax Act, 1961    |         |     |     |(43 of 1961).           |         |     |     |(xiii) Any factory.     |         |     |     |(xiv) Electricity load  |         |     |     |despatch centres.       |         |     |     |(xv) Indian Naval Ships |         |  4. | (3) |Parts of refrigerating  |         |     |     |and airconditioning     |Eight    |     |     |appliances and machinery|per cent |     |     |all sorts, the following|ad valorem     |     |namely:-                |         | ------------------------------------------------------------                                                        950 ------------------------------------------------------------ Sl.  |Sub |      Description       |  Rate   |  Condition No.  |Item|                        |         |      |No. |                        |         | ------------------------------------------------------------      |    |(i) Cooling coils or ev-|         |      |    |aporator.               |         |      |    |(ii) Compressor         |         |      |    |(iii) Condenser.        |         |      |    |(iv) Thermostat.        |         |      |    |(v) Cooling unit (exclu-|         |      |    |ding the room unit of   |         |      |    |split unit air-condition|         |      |    |er), and in the case of |         |      |    |absorption types of     |         |      |    |refrigerators in which  |         |      |    |there is no             |         |      |    |compressor, heater      |         |      |    |including burners and   |         |      |    |baffles in a karosene   |         |      |    |operated absorption type|         |      |    |refrigerator.           |         |      |    |(vi) Starting relay     |         |      |    |controls (including     |         |      |    |expansion valve and     |         |      |    |solenoid valves) and    |         |      |    |pressure switches.      |         |      |    |(vii)Overload protection|         |      |    |/thermal rely.          |         |      |    |(vii) Cabinet.          |         |   5. | (3)|Parts of refrigerating  |         |      |    |and air-conditioning ap-|         |      |    |pliances and machinery, |  Nil    |      |    |all sorts, other than   |         |      |    |those specified inS.No.4|         |      |    |above.                  |         |   6. | (3)| Parts of refrigerating |Twenty   |If-      |    |machinery as specified  |five per |(i) the said      |    |in S.No.4 above and     |cent ad  |parts are used      |    |required for use in a   |valorem. |in  the  said      |    |cold storage for storage|         |cold storage;      |    |and preservation of the |         |and      |    |food stuffs specified in|         |(ii)the      |    |paragraph 3 of the Cold |         |procedure      |    |Storage Order,1964 dated|         |specified in

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 12  

    |    |the 3rd September, 1964 |         |Chapter X  of      |    |                        |         |the Central      |    |                        |         |Excise Rules,      |    |                        |         |1944 is fol-      |    |                        |         |lowed. ------------------------------------------------------------                                                        951 ------------------------------------------------------------ Sl.  |Sub |     Description        |   Rate   |   Condition No.  |Item|                        |          |      |No. |                        |          | ------------------------------------------------------------ 7.   | (3)|Parts of refrigerating  |Twenty fiv|If-      |    |appliances and machinery|e percent |(i) the said      |    |of the description speci|ad valorem|parts are so      |    |fied in S.No.4 above and|          |used;and      |    |required for use in the |          |(ii) the      |    | manufacture of-        |          |procedure      |    |(a)refrigerating vans,  |          |specified in      |    |including wagons for    |          |Chapter X of      |    |transport of perishables|          |the Central      |    |food and dairy products;|          |Excise Rules,      |    |(b)ships,  including    |          |1944   is      |    |frigates where provision|          |      |    |is made for the preser- |          |      |    |vation of perishable    |          |      |    |goods in transport.     |          |   8. | (3)|Parts of refrigerating  |Twenty fiv|If-      |    |and air-conditioning app|eper cent |(i)the said      |    |liances and machinery of|ad valorem|parts are so      |    |the description specifie|          |used;and      |    |d  in  S.No.4 above and |          |(ii)the      |    |required for use in refr|          |procedure      |    |igerating or air-conditi|          |specified in      |    |ng appliances or machine|          |Chapter X  of      |    |ry conditioning applianc|          |Central      |    |es or machinery in any  |          |Excise Rules,      |    |of the following,namely:-          |1944   is      |    |                        |          |followed.      |    |(i) Computer Rooms.     |          |      |    |(ii)Research and Devel- |          |      |    |opment Laboratories.    |          |      |    |(iii) Animal Houses.    |          |      |    |(iv)Telephone Exchanges.|          |      |    |(v) Broadcasting Studios|          |      |    |(vi) Trawlers.          |          |      |    |(vii) Dams.             |          |      |    |(viii) Mines and Tunnels|          | ------------------------------------------------------------                                                        952 ------------------------------------------------------------ Sl.  |Sub |    Description         |  Rate   |    Condition No.  |Item|                        |         |      |No. |                        |         | ------------------------------------------------------------      |    |(ix) Thermal or hydel   |         |      |    |power stations.         |         |      |    |(x) Techinical Building |         |      |    | of Military Engineering|         |      |    | Services and Mobile    |         |      |    | Tropo and Mobile Radar |         |      |    | Unit under the Ministry|         |      |    | of Defence.            |         |      |    |(xi) Any hospital run by|         |      |    | the Central Government,|         |

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 12  

    |    | State Government or a  |         |      |    | Local Authority.       |         |      |    |(xii) Any hospital run  |         |      |    | by a Public Charitable |         |      |    | Institution, the income|         |      |    | from which is exempt   |         |      |    | under sub-section (22A)|         |      |    | of section 10 of the   |         |      |    | Income Tax Act, 1961   |         |      |    | (43 of 1961).          |         |      |    |(xiii) Any factory.     |         |      |    |(xiv) Electricity load  |         |      |    | despatch centres.      |         |      |    |(xv) Indian Naval Ships.|         |    9.|    |Compressors used in the |   Nil   |If such use is      |    |manufacture of water    |         |elsewhere than      |    |coolers.                |         |in the factory      |    |                        |         |of  production      |    |                        |         |of  the  said      |    |                        |         |compressors      |    |                        |         |then procedure      |    |                        |         |prescribed      |    |                        |         |under Chapter      |    |                        |         |X of the      |    |                        |         |Central Excise      |    |                        |         |Rules, 1944 is      |    |                        |         |is followed. ------------------------------------------------------------                                                   953      It  will  be  seen  that  the  goods  set  out  in  the notification  are  mostly  exigible to excise  duty  at  the concessional  rate  of  25% ad valorem  provided  that  they fulfill  the conditions set out in column (5) of  the  above table.   It  is again common ground that the item  of  goods presently in  question is one of those mentioned in  S.NO.8, sub-item  no.   (3)  of the notification and  that  it  also conforms  to the description of the said item as set out  in column  (3) of the above table.  Turning to column  (5),  it requires  the fulfillment of two conditions  to  enable  the assessee to get the concession :          (i) that the said parts should be so used i.e. used          in refrigerating or air-conditioning appliances  or          machinery in any one of the places set out as items          (i) to (xv) column (3) against item 8(3); and          (ii)  that the procedure specified in Chapter X  of          the Central EXcise Rules, 1944 is followed.      Here  parties are agreed that the chillers imported  by the  assessee are used in a factory-vide item (xiii)  -  and that,  therefore  the  first of these  conditions  has  been fulfilled.      These  assessee’s  claim for concession  has,  however, been rejected not on the ground that the second of the above conditions has not been fulfilled but on the broader  ground that  the procedure of Chapter X is designed  to  facilitate clearances only for the purposes of central excise and  that the said procedure cannot be fulfilled at all in the case of an  importer.  In other words, the view was that the  second condition  was such that it was attracted only for  purposes of central excise and could not at all be invoked to claim a concession  in CVD.  It is the correctness or  otherwise  of this conclusion that has to be determined in these appeals.      This  takes us to a consideration of the  provisions of Chapter  X of the Central Excise Rules, 1944.  This  Chapter provides  for a "remission of (central excise) duty on goods used  for  special industrial purposes".  Rule  192  is  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 12  

principal rule in this Chapter which reads thus:          "Rule 192. - Application for concession - Where the          Central Government has, by notification under  rule          8 sanctioned the                                                        954          remission  by  duty on excisable goods  other  than          salt,  used in a specified industrial  process  any          person wishing to obtain remission of duty on  such          goods,  shall make application to the Collector  in          the  proper  Form  stating  the  estimated   annual          quantity  of the excisable goods required  and  the          purpose for and the manner in which it is  intended          to  use them and declaring that the goods  will  be          used  for such purpose and in such manner.  If  the          Collector  is  satisfied that the  applicant  is  a          person  to  whom  the  concession  can  be  granted          without  danger  to  the  revenue,  and  if  he  is          satisfied,  either   by personal inspection  or  by          that  of  an officer subordinate to  him  that  the          premises  are suitable and contain a secure  store-          room suitable for the storage of the goods, and  if          the  applicant  agrees  to bear the  cost  of  such          establishment   as  the  Collector   may   consider          necessary  for supervising operation  his  premises          for the purposes of this Chapter, the Collector may          grant the application, and the applicant shall then          enter into a bond in the proper Form with a  surety          or  sufficient security, in such amount  and  under          such conditions as the Collector approves.   Where,          for   this  purpose,  it  is  necessary   for   the          application  along  with the proof for  payment  of          licence fee and shall then be granted a licence  is          the  proper  Form.  The  concession  shall,  unless          renewed  by the Collector, cease on the  Expiry  of          the Licence.                Provided   that,  in  the  event  of   death,          insolvency or insufficiency of the surety, or where          the amount of the bond is inadequate, the Collector          may,  in his discretion, demand a fresh  bond:  and          may,  if the security furnished for a bond  is  not          adequate, demand additional security".      Rules 193 to 196-BB make provisions for proper  packing and  transport of the goods in question to the  premises  of the  applicant,  their storage in a  distinct  and  separate place under the control of the applicant, the maintenance of proper  accounts  in respect thereof,  controls  over  their transfer and movement and finally regarding the disposal  of such  goods  where  they  are found  to  be  in  surplus  or defective or damaged and even                                                        955 of  the  refuse resulting from their use  in  the  specified industrial  process.   It  is unnecessary  to  go  into  the details  of  these  provisions  for  our  present  purposes. Though the latter part of Rule 192 also enables an applicant where  necessary, to obtain a licence in Form L-6  and  also prescribes  a form of application (From AL-6) for  grant  of duty   concession  on  goods purchased for  the  process  of manufacture  during the period of currency of  the  licence, the  opening words of the rule are very wide  and  general. The benefit of Chapter X will no  doubt generally be claimed by  manufacturer  in which event he will have  to  make  the application,  get the licence and give the assurances,  bond or  guarantee  required  by the rules but  it  can  also  be claimed by other persons.  The language of the rule  applies to  any  person, not necessarily  manufacturer,  wishing  to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 12  

obtain remission of duty sanctioned by a notification  under rule 8 on excisable goods in a specified industrial process. The  industrial processes specified in Column (2)  are  also not  very complicated or elaborate in every  case.   Even  a purchase  by a person for use of the part in question  in  a factory could be covered by the scope  of Column (2).   Such a  person  has only to make an application setting  out  the quantity of goods required as well as the manner and purpose of  their use and give a declaration that they will be  used for  the  specified purpose.  Thereupon  the  Collector,  if satisfied that the concession can be granted without  danger to  the  revenue may grant the application  subject  to  the conditions  set out in the section.  He may grant a  licence in Form L-6 in appropriate cases and, in others, direct  the grant of a certificate in Form CT-2.  The possession of  the licence  or the production of the CT-2  certificate  enables the applicant to secure the necessary concession.      It will at  once  be seen that there is nothing in  the scheme  of  the  rule  which makes  it  inapplicable  to  an importer of goods.  The assessee here has imported the goods and  is  selling  them for use in a factory,  as  use  which qualifies  for the concession under the  S.8  notifications. The types of use specified in the concessions notified could be  of  any  kind and, even in the notifications  under  our consideration,  they  are  many and varied.  In  respect  of items,  falling  under S.Nos. 3 and 8,  in  particular,  the actual users may be                                                        956 private individuals or authorities and need not  necessarily be  manufacturers  using  the  goods   in  question  in   an "industrial  process" in a narrow sense of that  term.   For instance, any computer room, hospital or factory  purchasing parts  of refrigerating and air-conditioning appliances  and machinery for use in the computer room,  hospital or factory would  be entitled to claim the concession by following  the prescribed  procedure.  Only, for claiming a  concession  in excise  duty the user should be the manufacturer himself  or he must have made the purchase from a manufacturer liable to pay excise duty on the item whereas in regard to a claim for CVD  concession,  the  supplier will be  an  importer.   The latter   will  be  entitled  to  sell  the  goods   at   the concessional  rate  of duty (or at nil rate if there  is  an exemption)  if the purchaser from him who puts the goods  to the  specified use (whether a manufacturer or not)  fulfills the  requirements or Rule 192.  Since the  concession  under Rule 192 turns only on the nature and use to which the goods are  put by the user or purchaser thereof and on whether  he has  gone  through the procedure outlined in Chapter  X,  it would not be correct to deny it to a supplier of such  goods on the ground that he is an importer and not a manufacturer. That  aspect is provided for by S.3(1) of C.E.T.  Act  which specifically  mandates  that the CAV will be  equal  to  the excise duty for the time being leviable on a like article if produced or manufactured in India.  In other words, we  have to  forget  that the goods are imported,  imagine  that  the importer  had manufactured the goods in India and  determine the  amount  of excise duty that he would have  been  called upon to pay in that event.  Thus, if the person to the using the goods is entitled to the remission, the importer will be entitled  to say that the CVD should only be the  amount  of concessional duty and, if he has paid more, will be entitled to  ask for a refund.  In our opinion, the Tribunal  was  in error  in holding that the assessees could not get a  refund because  the  procedure  of  Chapter  X  of  the  rules   is inapplicable to importers as such.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 12  

    Learned  counsel  for the  assessee  however  contended that,  even  if  the conclusion of  the  Tribunal  that  the procedure of Chapter X of the rules cannot be complied  with in such cases is correct, the exemption under the                                                        957 notification  cannot  be denied.  He relied, in  support  of this submission on a letter of the Central Board of Excise & Customs  (F.No.332/65/86  TRV dated  27.7.87)  the  relevant portion of which runs as under :          "The Board is of the view that it would legally not          be correct to levy additional (counter-valing) duty          is  actually payable in respect of such goods  when          manufactured in India (sic).  It follows therefore,          that when there is no excise duty, there can be  no          additional  (counter-valing) duty.  The  conditions          in  the relevant Central Excise Notifications  that          in respect of use of the material elsewhere than in          the  factory of manufacture, the procedure set  out          in Chapter X of the Central Excise Rules should  be          followed   is  condition  relating  to   procedural          requirement which obviously cannot be satisfied  by          the imported goods.           In  view of the above, it would not be correct  to          deny  the  benefit  of  exemption  notification  to          imported   goods   only  because   the   procedural          condition  in the notification is not satisfied  by          the imported goods.  It has therefore, been decided          that wherever the intended use of the material  can          be  established  by  the importer who  may  be  the          manufacturer  of chemicals or from other  evidence,          the  benefit  of  exemption  under  the   exemption          notification should not be denied to imported goods          only because the procedural condition of  following          Chapter X procedure is not complied with."      It  will be seen that this letter also proceeds on  the same  view as that of the Tribunal that Chapter X  procedure cannot be satisfied in the case of imported goods.  This  is at variance with the interpretation which we have placed  on rule  192.  We, however, agree with the observation  of  the Board that the benefit of exemption or concession should  be granted  wherever  the intended use of the material  can  be established by the importer or by other evidence.      This  conclusion however does not entitle the  assessee to  the  concession  claimed in  both  these  appeals.   Its entitlement  will  depend on whether the  purchaser  is  the holder of an L-6 licence (or C.T.-2 certificate) or not.                                                        958 The tribunal has pointed out that the goods were supplied by the  assessee  to Indian Rayon Corporation  and  M/s  Nirlon Synthetics  Fibre and Chemicals, Ltd., of which  the  latter was the holder of L-6 licence.   The position in  regard  to the former is not known.  The grant of concession in respect of  the  former  by the Collector (Appeals)   in  the  first appeal  is, therefore, correct and is upheld. So far as  the other appeal is concerned, the assessee produced no material to show that the "beneficiary" factory was eligible for  the concession  under rule 192.  The benefit of such  concession to  the assessee must therefor be held to have been  rightly denied in that appeal.      Shri  A.K. Ganguly, on behalf of the Revenue, raises  a contention  that,  even assuming that the goods  fulfill the conditions of the notification referred to earlier, the  CVD rate applicable would be 80% by virtue of the Explanation to S.3(1)  of  the  C.E.T.  Act.  He  submits  that  the  goods imported  by  the assessee are "parts of  refrigerating  and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 12  

air-conditioning   equipment".   They  are   chargeable   at different rates of duty accordingly as they fall under  item with  serial no.4 (80%) or that with serial no. 5  (Nil)  or that  with serial no. 6 (20%) or that with serial no 7  &  8 (25%).  In such a situation, he says, the provisions of  the Explanation  to S.3(1) are attracted and hence the  assessee will  be  liable to duty at the highest rate of 80%  we  are loth to permit the Department to raise at this stage a fresh contention  not taken before the Tribunal or earlier.   That apart,  we do not think it is well-founded.  It is no  doubt true  that Item 29A of the Schedule to the C.E. Act is  very wide  and  covers various articles.  The  notification  also deals with various categories of articles falling under that item.   But there has been no dispute at any stage that  the goods  we  are concerned with fall under item   with  serial 8(3) of the notification.  So far as this category of  goods is  concerned, there is only one rate of duty  mentioned  in the  notification.   The fact that certain  other  parts  of refrigerating and air-conditioning appliances and  machinery may  fall  under  item with S.No.4(3)  or  elsewhere  cannot attract   the   higher  duty  the  goods   presently   under consideration.   The  Explanation  to  the  notification  is applicable only where goods of exactly the same  description attract  different rates of duty.  See, in this  connection, the                                                        959 decisions on analogous provision in Collector of Customs  v. Western Indian Plywood Manufacturing Co.  Ltd. and Collector of  Customs v. Hansur Plywood Works, [1989] Suppl. 2  S.C.C. 515 and 520.  We therefore, reject this contention.      For  the  reasons stated above, we allow  C.A.  4693/90 treating it as the appeal arising out of the order passed by the  Tribunal  from the order of the  Collector  of  Customs dated  16.4.85.  C.A. 4694/90 will however  stand  dismissed but, in the circumstances, without costs. G.N.                                 C.A.   4693/90 allowed,                                      C.A. 4694/90 dismissed.                                                        960