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PETITIONER: AUTO TRACTORS LIMITED, PRATAPGARH

       Vs.

RESPONDENT: COLLECTOR OF CUSTOMS (APPEAL), BOMBAY

DATE OF JUDGMENT19/01/1989

BENCH: RANGNATHAN, S. BENCH: RANGNATHAN, S. MUKHARJI, SABYASACHI (J)

CITATION:  1989 AIR 1065            1989 SCR  (1) 281  1989 SCC  Supl.  (1) 667 JT 1989 (1)   102  1989 SCALE  (1)188

ACT:     Customs, Tariff Act, 1975: First Schedule ICT No.  87.01 (1)  and Customs Notifications Nos. 200/79  dated  28.9.1979 and 179/80 dated 4.9.1980--Company manufacturing agricultur- al tractors--Components imported to be used in the  manufac- ture   thereof--Entitlement   to   concessional   rate    of duty----Validity of.

HEADNOTE:     Customs Notification No. 200/79 dated 28.9.1979  exempts components required for the manufacture of heavy  commercial motor vehicles or of tractors from customs duty in excess of 25  per  cent ad valorem and whole of  the  additional  duty leviable  thereon. Notification No. 179/ 80  dated  4.9.1980 exempts  components  required  for the  purpose  of  initial setting  up or for the assembly or manufacture of  tractors, an  article falling under Heading No. 87.01(1) of the  First Schedule  of the Act from so much of the customs duty as  is in  excess of the rate applicable to the said  article  when imported complete.     The  appellant-company  imported three  consignments  of components of agricultural tractors. The Directorate General of  Technical  Development issued certificate  in  terms  of notification  No. 179/80 stating that the  appellant-company was  holding a valid industrial licence for the  manufacture of agricultural tractors and have an approved  manufacturing programme.  The appellant cleared the goods availing  itself of  the said concession. Having realised later that  it  was entitled to the larger concession available under  Notifica- tion No. 200 of 1979, it filed three applications in respect of  the said consignments claiming refund to the  extent  of the difference between the entitlements to concession  under the two notifications. The DGTD issued certificates in terms of notification No. 200 of 1979 in its favour.     The  Assistant Collector of Customs rejected  assessee’s prayer  on the ground that it had failed to produce  end-use certificate.  Its  appeals before the Collector  of  Customs (Appeals)  failed.  The Customs, Excise and  Gold  (Control) Appellate  Tribunal dismissed the appeal on the ground  that the  appellant  did not produce the  approved  manufacturing programme at the time of clearance of the goods as  required

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under Notification No. 200 of 1979. 282     In  these appeals it was contended for  the  respondents that since the amended certificates were not produced at the time  of clearance but only much later the assessee was  not entitled  to  the concession under Notification No.  200  of 1979. Allowing the appeals,     HELD:  1.  The assessee is entitled  to  the  concession available under Notification No. 200 of 1979. [287B-C]     2.1  The  grant of concession depends on  production  of evidence  by  the  importer to the  Assistant  Collector  of Customs  at the time of clearance of the components  or  the goods that they have a programme duly approved by the Minis- try  of  Industry and the Industrial Adviser  or  Additional Industrial  Adviser of the Directorate General of  Technical Development of the Ministry of Industry for the  manufacture of such motor vehicles or of tractors and not on the  refer- ence  in the certificates to the notifications that  can  be availed of by the assessee. [286C-D; 287B]     2.2  In  the  instant case, the  assessee  had  produced unequivocal evidence in the form of original set of certifi- cates from DGTD at the time of clearance of the goods of the fact that the appellant held a valid industrial licence  for the  manufacture of agricultural tractors and that  it  also had an approved manufacturing programme. That was sufficient compliance  with the terms of the notification in  question. The omission of the assessee to request the DGTD to refer to the  assessee’s entitlement under the 1979  notification  or the omission of the DGTD to refer to the assessee’s entitle- ment under the 1979 notification cannot take away the asses- see’s  rights. The order of the Tribunal is, therefore,  set aside. [286F-H; 287A]

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal Nos.  850852 of 1988.     From the Order dated 23.10.87 of the Customs Excise  and Gold  (Control) Appellate Tribunal, New Delhi in Appeal  No. 830/83-B2 and C/3 105 & 3 105 of 87/B-2. Order Nos. 2091  to 2093/87-B.     A.N. Haksar, H.S. Anand and Mrs. M. Karanjawala for  the Appellants.     G.   Ramaswamy, Additional Solicitor General,  Ashok  K. Shrivastava and P. Parmeswaran for the Respondent. 283 The Judgment of the Court was delivered by     RANGANATHAN, J. The appellant, M/s Auto Tractors  Limit- ed,  is  a company manufacturing tractors. For  purposes  of manufacture,  the company imports certain parts  and  compo- nents from abroad.     There  are two notifications on the Government of  India granting  certain concessions from the levy of customs  duty which are applicable to such goods as have been imported by. the appellant. The first of these, namely, Notification  No. 200/79  dated  28.09.1979  (as amended from  time  to  time) exempts  components "required for the manufacture  of  heavy commercial  motor vehicles  ......  or of tractors" from  so much  of the customs duty as is in excess of 25 per cent  ad valorem and the whole of the additional duty leviable there- on. The grant of the concession was subject to the  fulfill- ment  of certain conditions specified in  the  notification. The  second notification was Notification No.  179/80  dated

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4.9.1980  (as amended from time to time). This  notification confers an exemption in respect of parts of articles falling under specific headings in the First Schedule to the Customs Tariff  Act, 1975. These admittedly included parts  required for the purposes of the initial setting up or for the assem- bly  or  manufacture of "tractors", this  being  an  article falling  under  heading No. 87.01(1) of the  First  Schedule above referred to. This exemption was in respect of so  much of  the customs duty as is in excess of the rate  applicable to  the said article (i.e. tractor) when imported  complete. This  concession  was  again subject to  a  certificate  and recommendation  from certain specified authorities,  one  of whom  is  the Directorate General of  Technical  Development (DGTD) The relief available to the assessee under the  first notification  of  1979 is, apparently, larger than  the  one available under the second notification of 1980.     The appellant company imported three consignments.  Each of  the consignments was cleared after production of a  cer- tificate from the DGTD in the following terms:               "Certified  that M/s Auto Tractors Ltd.,  Luc-               know  are holding a valid  Industrial  Licence               for  the manufacture of agricultural  tractors               and have an approved manufacturing  programme.               It is further certified that the above  compo-               nents  of  agricultural tractors,  which  fall               under  ICT No. 87.01 (1) qualify  for  conces-               sional  rate of import duty in terms  of  Cus-               tom’s Notification No. 179/F No. 370/99/79CUS.               I dated 4.9.1980."                                                       (underlining               ours). 284 Apparently, since the certificates of the DGTD referred only to  Notification No. 179/80, the appellant was  granted  the concession available under the said Notification. The appel- lant cleared the goods, availing itself of the said  conces- sion, in March, May and June 1981.     Subsequently,  the  appellant appears to  have  realised that  it  was entitled to the  larger  concession  available under Notification No. 200 of 1979 and that it had erred  in clearing the goods after payment of duty subject only to the smaller  concession available under Notification No. 179  of 1980.  The appellant therefore filed three  refund  applica- tions in August, September and October 1981 claiming  refund to  the  extent  of Rs.  1,55,342.50,  Rs.  1,28,350.05  and Rs.6,46,415.44,  being the difference between  the  entitle- ments on concession under the two notifications in question. It  also appears that the appellant subsequently applied  to the  DGTD for an amendment of the original  certificates  to make it clear that the goods imported by the appellant  were eligible  for the concession under notification No.  200  of 79. The DGTD on such application issued a certificate to the following effect:               "Certified  that M/s. Auto Tractors Ltd.  Pra-               tapgarh  are holding an Industrial Licence  to               manufacture Agricultural Tractors and have  an               approved  manufacturing programme. It is  fur-               ther certified that the items listed above are               components  of agricultural  tractors  falling               under  ITC No. 87.01 (1) and are eligible  for               concessional rate of import duty under  custom               notification No. 200/79 and 52/81 as  extended               by  Custom’s notification No. 81/81 and  82/81               both dated 28.3. 1981.               This  supersedes the earlier  duty  concession

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             certificate issued by this office vide Notifi-               cation  No. 179/F No. 370/ 99/79-CUS. I  dated               4.9.1980  under  this office  letter  No.  DD-               II/5(49)/79 Ag dated 16.1.81." These  amended  certificates were also produced  before  the Customs authorities.     The assessee’s prayer for refund was however rejected by the  Assistant Collector of Customs on the ground  that  the assessee  had failed to produce "end-use" certificates.  The assessee’s  appeals  to the Collector of  Customs  (Appeals) also  failed.  There were further appeals  to  the  CUstoms, Excise  and Gold (Control) Appellate Tribunal, which by  its order dated 23.10.1987, dismissed the appeals of 285 the Appellants and hence the present appeals.     The Tribunal disposed of the assessee’s claim by a short order. It observed that the Notification No. 200/79 entitled an  assessee  to the concessions therein  mentioned  on  the fulfillment of three conditions: (i) A manufacturing programme as duly approved by the Direc- tor  General of Technical Development (D.G.T.D.)  should  be produced at the time of clearance of the goods. (ii)  The  list of components and goods should  be  produced duly certified by the D.G.T.D.; and (iii) An End-use certificate from the same Directorate to be produced  in  clue course in regard to  the  consumption  of goods in the manufacture of the motor vehicles or  tractors, etc. The Tribunal proceeded to observe:               "The first statutory condition of the  notifi-               cation that the manufacturing programme of the               appellants as approved by the D.G.T.D.  should               have  been produced before the Assistant  Col-               lector  at the time of clearance of the  goods               was  not  fulfilled by the  appellants.  As  a               matter of fact at the time of clearance of the               goods  there was no claim even by  the  appel-               lants   under   Notification  Nos.   200   and               201/79Cus. Their claim at that time was  under               a different notification No. 179/80-Cus. Which               contained  no  requirement to produce  an  ap-               proved  manufacturing  programme.  Since   the               statutory wording of the notification made  it               imperative  for  the appellants that  the  ap-               proved  manufacturing  programme  should  have               been  produced  at the time of  clearance  and               since  this condition was not  fulfilled,  the               entitlement of the appellants to the exemption               is not accepted.                         5.   The    approved   manufacturing               programme   was available all along  with  the               appellants yet they did not produce it at  the               time of clearance before the Assistant Collec-               tor."                                                     (underlining               ours)     We  have heard the learned counsel for the appellant  as well  as learned Additional Solicitor General and we are  of the opinion that 286 the Tribunal has erred in denying the appellant the  benefit of the Notification No. 200 of 1979. This notification  made the  availability  of the concession thereunder  subject  to three  conditions  of which one alone is  relevant  for  our purposes. The Tribunal thought that this condition was  that

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the  approved manufacturing programme should have been  pro- duced at the time of clearance and it has denied the  asses- see  the  benefit of the concession, even  though  satisfied that  the  approved manufacturing programme  was  all  along available with the assessee, because such programme was  not produced  at  the time of the clearance.  The  Tribunal  has committed an error in its reading of the relevant  condition of the notification. The condition is not that the  manufac- turing  programme should be produced but that "the  importer should  produce evidence to the Assistant Collector of  Cus- toms at the time of clearance of the components or the goods that they have a programme duly approved by the Ministry  of Industry and the Industrial Adviser or Additional Industrial Adviser of the Directorate General of Technical  Development of  the  Ministry of Industry for the  manufacture  of  such motor vehicles  .....  or of tractors". In other words,  the importer had only to satisfy the customs authorities that it had an approved industrial programme for the manufacture  of tractors by production of a certificate from the DGTD. It is indeed  common ground before us that the second set of  cer- tificates issued by the DGTD constitutes sufficient evidence that  would  entitle the appellant to the  concession  under Notification  No.  20)/1979. But the argument  is  that  the amended  certificates were produced not at the time  of  the clearance  of the goods but only much later and that  there- fore  the appellant is not entitled to the concession  under the said notification. There is a fallacy in this  approach, for, even ignoring the subsequent amendment of the  certifi- cates,  we  are of the opinion that the  production  of  the original set of certificates at the time of clearance of the goods was sufficient compliance with the terms of the  noti- fication  in question. We have extracted the terms  of  this certificate earlier. It is an unequivocal certificate by the DGTD that the appellant holds a valid industrial licence for the  manufacture of agricultural tractors and that  it  also has  an  approved manufacturing programme. That is  all  the second  set also says. There is therefore no doubt that  the assessee  had  produced evidence, in the form  of  the  said certificate, of the fact that the appellant had an  approved industrial  programme. This was the only requirement of  the notification and this requirement has, in our opinion,  been complied with. The further words in the first set of certif- icates  that  the assessee was eligible for  the  concession under  1980 notification were mere surplusage. The  omission of  the assessee to request the DGTD to refer to the  asses- see’s entitlement under the 287 1979  notification or the omission of the DGTD to  refer  to the  assessee’s  entitlement  under  the  1979  notification cannot take away the assessee’s rights. The grant of conces- sion  depends  on  a certificate that the  assessee  had  an approved  manufacturing programme--which is  there--and  not the  reference  therein  to the notifications  that  can  be availed of by the assessee. We are therefore of the  opinion that the order of the Tribunal should be set aside and  that the  assessee  should be held entitled, in  respect  of  the three  consignments referred to earlier, to  the  concession available  under Notification No. 200 of 79. We  direct  ac- cordingly. The appeals are allowed but having regard to  the circumstances we make no order as to costs. P.S.S                                Appeals allowed. 288