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CASE NO.: Appeal (civil)  8683 of 2001

PETITIONER: M/s Gaurav Distributors (P) Ltd.

RESPONDENT: Commissioner of Customs, New Delhi

DATE OF JUDGMENT: 11/08/2004

BENCH: S. N. VARIAVA & ARIJIT PASAYAT

JUDGMENT: J U D G M E N T

S. N. VARIAVA, J.

               This Appeal is against the Judgment of the Customs,  Excise and Gold (Control) Appellate Tribunal (CEGAT) dated 24th  August, 1001.                 Briefly stated the facts are as follows: One M/s. SKF Bearing (I) Ltd. Bombay had exported under  bonds, ball bearings, vide Shipping Bill Nos. 481120 dated 22nd  August, 1994, 494274 dated 9th November, 1994, 503510 dated 9th  December, 1994 and  506157 dated 19th December, 1994.  These ball  bearings were subsequently purchased by the Appellants and re- imported in India vide two Bills of Entries dated 14th March, 1995.    There appears to be no dispute that the goods which have been  imported are the same which had been exported by SKF Bearing (I)  Ltd.   The Appellants claimed benefit of the proviso Section 20 of the  Customs Act, 1962, the relevant portion of which reads as follows:

"Section 20- Re-importation of goods:-  If goods are  imported into India after exportation therefrom, such  goods shall be liable to duty and be subjected to all the  conditions and restrictions, if any, to which goods of the  like kind and value are liable or subject, on the importation  thereof:

       Provided that if such importation (other than  importation of goods exported in bond or of goods  produced or manufactured in a free trade zone) takes  place within three years after the exportation of such  goods and it is shown to the satisfaction of the Assistant  Collector of Customs that the goods are the same which  were exported, the goods may be admitted-

a)      in any case where at the time of exportation of  the goods, drawback of any customs or excise  duty levied by the Union or both was allowed, on  payment of customs duty equal to the amount of  such drawback;

b)      in any case where at the time of exportation of  the goods, drawback of any excise duty levied by  a State was allowed, on payment of customs duty  equal to such excise duty leviable at the time and  place of importation of the goods;

c)      in any other case, without payment of duty:

Provided further ........................................."

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The Assistant Commissioner of Customs held that as the goods had  been exported in bonds the Appellants were liable to pay the custom  duty at the same rate to which the goods of the like kind and value  would be subject.   CEGAT has upheld the decision and held that the  Appellants are not covered by the proviso to Section 20 inasmuch as  the goods had been exported in bond.                 Mr. Ganguli submitted that Section 20 appears in the  Customs Act.  He submitted that the Customs Act deals with matters  pertaining to custom duty and therefore when the Section uses the  words "goods exported in bond" it necessarily refers to goods which  were exported under a customs bond.  He submitted that goods  exported under an excise bond would not be covered by the words  "goods exported in bond" in Section 20.  He submitted that on  principle of interpretation the words "exported in bond" must be  restricted to mean goods exported under a customs bond.  Mr. Ganguli  further submitted that the Proviso to Section 20 refers to excise duty.   He submitted that wherever the Legislature wanted to refer to excise  duty it specifically said so. He submitted that the Legislature has  knowingly not used the words "goods exported in excise bond", as  they wanted the Proviso to apply to goods exported under an excise  bond.   In support of his submission, he relied upon the Judgment of the  High Court of Madras dated 18th March, 1983 in Writ Petition No. 20 of  1979, wherein Section 20 of the Customs Act has been interpreted.  At  that time, Section 20 reads as follows: "Section 20.  Re-importation of goods produced or  manufactured in India.-  (1) If goods produced or  manufactured in India be imported into India after  exportation therefrom, such goods shall be liable to duty  and be subject to all the conditions and restrictions, if any,  to which goods of the like kind and value not so produced  or manufactured are liable or subject, on the importation  thereof :

       Provided that if such importation, other than  importation of goods produced or manufactured in a free  trade zone, takes place within three years after the  exportation of such goods and it is shown to the  satisfaction of the Assistant Collector of Customs that the  goods are the same which were exported, the goods may  be admitted \026

a)      in any case where at the time of exportation of  the goods, drawback of any customs or excise  duty levied by the Union or both was allowed, on  payment of customs duty equal to the amount of  such drawback;

b)      in any case where at the time of exportation of  the goods, drawback of any excise duty levied by  a State was allowed, on payment of customs duty  equal to such excise duty leviable at the time and  place of importation of the goods;

c)      in any case where the goods were exported  in bond, without payment of \026

(i)     the customs duty leviable on the  imported materials, if any, used in the  manufacture of the goods, or

(ii)    the excise duty leviable on the  indigenous materials, if any, used

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in the manufacture of the goods,  or

(iii)   the excise duty, if any, leviable on  the goods.

on payment of customs duty equal to the  aggregate amount of all such duties calculated at  the rates prevailing at the time and place of  importation of the goods;

(d) in any other case, without payment of duty.

       Provided further that if the Central Government is  satisfied that it is necessary in the public interest so to do,  it may, by order in each case, extend the aforesaid period  of three years for such further period as it may deem fit.

       (2)     For the purposes of this section goods shall be  deemed to have been produced or manufactured in India,  if at least twenty-five per cent of the total cost of  production or manufacture of the goods has been incurred  in India.

       Explanation 1. \026 Where in respect of any goods  produced or manufactured in a free trade zone, any duty  leviable under this sub-section is leviable at different rates,  then, such duty shall be leviable at the highest of those  rates.

       Explanation 2. \026 For the purposes of this sub- section, "free trade zone" has the same meaning as in  Explanation 2 to sub-section (1) of section 3 of the Central  Excises and Salt Act, 1944 (1 of 1944)."         [Emphasis supplied]

The High Court of Madras held that the Customs Act and the Central  Excises and Salt Act were different.  It held that the Customs Act  related to levy and collection of customs duties and the Central Excise  Act related to duties of excise and salt.   It held that the words "goods  exported in bond" occurred in Section 20 of the Customs Act and,  therefore, they cannot be given an extended meaning to include an  excise bond also.  It held that as the Sections appears in the Customs  Act the meaning of the expression "in bond" must be confined only to  a customs bond.  It held that principle of construction of statute  required that the words "in a particular statute" should be interpreted  and construed only with reference to that statue, unless a different  intention is clearly expressed.  It held that statutes imposing pecuniary  burdens must be subjected to rules of strict construction and that  unless the language of the statute clearly imposes an obligation the  language must not be strained in order to tax a particular transaction.                     Mr. Ganguli submitted that this Judgment was upheld by  the Division Bench of the Madras High Court and that thereafter this  Court dismissed the SLP filed against the Order of the Division Bench.                 At this stage itself it must be mentioned that the dismissal  of the SLP against the Order of the Division Bench was on entirely  different ground.  This Court, whilst dismissing the SLP clarified that  the precise connotation of a bond under the Customs Act was not  being considered.  The SLP was dismissed because the Court was  satisfied, on the facts of that case, that excise duty had already been  collected and that, therefore, there could be no double taxation.  The interpretation given by the Madras High Court is  clearly erroneous.  As has been highlighted above, sub-clause (c)(ii) of

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the Proviso to Section 20, as it then stood, set out that where goods  were exported in bond, excise duty leviable on the indigenous  materials, if any, used in the manufacture of the goods had to be paid.   It also provided in sub-clause (c)(iii) that the excise duty, if any,  leviable on the goods exported in bond had to be paid.    This clearly  indicated that the goods which were exported in bond were locally  manufactured, with or without use of the indigenous material. On  export of local goods, no customs duty is payable. Thus, at the time of  export there would be no customs bond in respect of such goods.    Locally manufactured goods would be exported only on an excise  bond.  Thus, the words "goods exported in bond" in Section 20, as it  then stood, clearly included goods exported on an excise bond.  We fail  to understand how, without reading the words of the Section, the  Madras High Court could have on general principles held to the  contrary.  It is settled law that if the statute is clear and unambiguous  then effect must be given to its words.   We, therefore, hold that the  above mentioned decision of the Madras High Court is erroneous and  stands overruled.                 We are unable to accept the submission of Mr. Ganguli that  Section 20, as it stood at the time the goods were re-imported only  referred to "goods exported under a customs bond".  The words used  are "goods exported in bond". It is well known that goods can be  exported both under a customs bond as well as an excise bond.  If the  Legislature intended that only goods exported under a customs bond  were to be covered it would have said so specifically.  The Legislature  had in mind the fact that at the time the goods were exported, the  excise duty may not have been paid or that drawback may have been  allowed on excise duty.  They still used the words "goods exported in  bond" without any qualification.  This clearly indicates that the  intention was to include goods exported under a customs bond or an  excise bond.  If the Legislature wanted to restrict these words only to  goods exported under a customs bond they would have had to say so  specifically.  In the absence of any restrictive words the expression  must be given its full meaning and must include goods exported either  under a customs bond or an excise bond.                 There is another reason why the interpretation sought to  be given cannot be accepted.  Section under consideration came into  effect in June 1994 and operated upto 26th May, 1995.  Prior to that  Section 20 was as construed by the Madras High Court.  As is set out  hereinabove, the earlier Section clearly included goods exported under  an excise bond.  When the Legislature was changing the Section, if  they wanted to depart from the earlier position they would have had to  do so in express words.  The use of wide words "goods exported in  bond" indicates that no departure was being made.  It must also be  mentioned that with effect from 26th May, 1995, Section 20 was again  changed. The proviso to Section 20 was omitted.   However, by a  Notification it was inter alia clarified that if goods were "exported in  bond" without payment of central excise duty, the amount of the  central excise duty, which had not been paid, would have to be paid.   Thus the subsequent Section 20, read with the Notification, also  indicates that even though the provision is in the Customs Act the  words includes goods exported under an excise bond "goods exported  in bond".  As prior and subsequent to Section 20 under consideration  the position was that goods exported even under an excise bond were  covered, it is not possible to accept the submission that during the  relevant period the Legislature had made a departure.                  Mr. Ganguli next submitted that the earlier Section 20  clearly provided that in cases of goods exported under an excise bond  the customs duty payable would be equal to the excise duty which had  not been paid.  He submitted that even by the Notification, for the  subsequent period, it has been clarified that on re-importation what  would have to be paid is the amount of excise duty which had not  been paid.  He submitted that, during the period under consideration,  it could not have been the intention of the Legislature that the entire  customs duty payable on the like goods be paid.   He submitted that

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the excise duty, which would have been payable, was only Rs.  9,21,627.48, whereas, the customs duty which is payable is Rs.  61,62,848.40.  He submitted that such an interpretation would render  the Section unreasonable.   Mr. Ganguli further submitted that the interpretation given  would also lead to treating similarly situated persons differently.  He  submitted that goods could be exported under Rule 12 or 13 of the  Central Excuse Rules. He pointed out that Rule 12 permits parties to  take a rebate after first paying the duty.  He submits that goods  exported under Rule 12 would be re-imported without payment of any  excise duty.  He submitted that it has been consistently held that there  is no difference between parties, who export either under Rule 12 or  13.  He submitted that the interpretation given would lead to unfair  discrimination between persons in identical position. He submitted that  for this reason also such an interpretation should not be given.                  In these proceedings, the question of vires of Section 20  does not arise.   As the wording of the Section is clear, the Court is  bound to interpret it as it stands.  It is clarified that we are not saying  that any discrimination or hardship arises.  All that we are saying is  that this is not a point which arises for consideration in this Appeal.                 Under the circumstances, we see no infirmity in the  Judgment of CEGAT.  We see no reason to interfere.  The Appeal  stands dismissed.  There will be no order as to costs.