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PETITIONER: THE AHMEDABAD ADVANCE MILLS LTD., MIHIR TEXTILE LTD.

       Vs.

RESPONDENT: COLLECTOR OF CUSTOMS, BOMBAY

DATE OF JUDGMENT:       29/04/1997

BENCH: SUHAS C. SEN, K.T. THOMAS

ACT:

HEADNOTE:

JUDGMENT:                             WITH                 CIVIL APPEAL NO:1003 OF 1988                       J U D G M E N T THOMAS, J.      In both these appeal the question involved is regarding the relief  entitlement of  the claimants  to   customs duty payable  at   the  time   of  clearance   of  the   imported commodities. Under  entry No:84.66  of  the  customs  Tariff items of  machinery, including  industrial  plants  can  get Clearance on  payment of  a concessional rate of 40%, if the goods  are   imported  under   certain  conditions  specific contract registered with the Customs House. The grievance of the appellants herein is that such relief was not granted to them.      Appellants in  one of  these appeals had imported 1 Air Jet Looms along with there accessories and the goods arrived at the  Bombay port on 18-3-1983. Appellant got them cleared from the port on 31-3-1983 on payment of full duty which was little above  52 lacs  of rupees. On 13-4-1983 he applied to the Collector  of Customs  for granting  registration of his contract with  the buyer  as envisaged in Entry No: 84.66 of the Customs Tariff and he got the registration on 22-4-1983. Then he filed a refund application on the promise that he is liable to  pay custom  duty only  at the  concessional  rate shown in  the aforesaid  entry. But the claim for refund was rejected by  the Assistant  Collector and  then he  filed an appeal before  the Collector of Customs (Appeal) and got the order of  the Assistance  Collector set  aside holding  that appellant is  entitled to  refund. However,  the  department filed  a   further   appeal   before   Customs,   Excise   & Gold(Control) Appellate  Tribunal (CEGAT)  and  as  per  the order  impugned  before  us  CEGAT  restored  the  Assistant Collector’s order.      The main  contention in  the aforesaid  appeal is  that application for  registration  could  not  be  made  to  the Collector of  Customs before  he got  clearance of the goods from the port since he could get the recommendation from the Textile Commissioner only by 7-4-1983. Thus, for no fault on his part he could not avail himself of the concessional duty at the time of clearance.

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    The position  in the other appeal is slightly different and the  facts are  in brief,  these Appellant  therein  got imported licence  on  22-10-1980  for  importing  "Sandzimar Planatory Mill".  On the strength of the said import licence he contracted  with a  foreign seller at Sweeden to despatch the aforesaid  Mill. On  20-3-1981 he  addressed a letter to the Government requesting that the licence might be endorsed for "Project  Import". When  the imported  goods arrived  at Bombay Port  in 1981  he got them cleared by payment of full duty (which  is  a  little  less  than  20.5  lacs  rupees). Appellant got the required endorsement on 14-8-1981 and then he made  an application  for refund of the duty paid by him. The application  was made  on the premise that he was liable to pay Customs duty only at the concessional rate prescribed under entry  No: 84.66  of  the  Customs  Tariff.  Assistant Collector of  Customs rejected  his refund claim on the main ground that  he had  not obtained registration of the import contract as  "a Project  Import". Appellant  filed an appeal before Collector  of Customs  (Appeal)  and  when  that  was rejected he went before CEGAT in further appeal and that too was dismissed by the impugned order.      The  contention  adopted  by  both  the  appellants  is identical, that as they had done their part in obtaining the registration of  the import  contract as a project import it was quite  improper  to  have  denied  the  benefit  of  the concessional relief  prescribed in  Entry No:  84.66 to  the importers.      For appreciating the said contention it is necessary to extract the aforesaid Entry No:84.66 herein (only material portion)."      "84.66 (i) All item of :      (a)  Machinery,   including   prime      movers,      (b)  Instruments,   apparatus   and      appliances,      (c) Control  gear and  transmission      equipment,      (d) Auxiliary  equipment as well as      all components (whether finished or      not  )  or  raw  material  for  the      manufacture of  the aforesaid items      and their  components, required for      the initial  setting up  of a unit,      or the  substantial expansion of an      existing unit, of a specified:      (1) industrial plant.....           Provided  these  are  imported      (where in  one or  in more than one      consignment) against  one  or  more      specific contracts  which has  been      registered  with   the  appropriate      Customs   House   in   the   manner      prescribed by Regulations which the      Central Board of excise and Customs      may make  under section  157 of the      Customs Act.1962  (52 of  1962) and      such contract  or contracts  has or      have been  so registered before any      order is made by the proper officer      of Customs permitting the clearance      for home consumption, or deposit in      a warehouse of items, components or      raw materials."      The proviso  prescribes, principally,  there conditions to be  satisfied for  entitlement of  the concessional  rate

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shown in  the aforesaid  entry. They  are :-(1) Goods should have been  imported against  a specific  contract registered with the  appropriate Customs  House,(2)  Such  registration should have  been made  in  the  manner  prescribed  by  the regulations,(3) Registration  of the  contract  should  have been obtained  before the  order  (granting  permission  for clearance of  the goods)  was passed.  Unless all  the three conditions are  satisfied no importer can claim, as a matter of right,  the concessional relief provided in the entry. In these cases  the contracts were not registered at all before the order of clearance was passed. That fact is not disputed before us  and as the appellants were aware of position they choose to pay full Customs duty for making the clearance.      Learned counsel  contended that  the importer is not to be blamed  for non-compliance with the conditions prescribed in the  entry because all what should have been done by them and what  remained to  be done  was only that part which the authorities had to do in the matter. Obviously the aforesaid contention has no legs to stand at least in one case wherein no application  was made  at all  for  registration  of  the contract before the goods were cleared.      In the  other appeal  it was submitted on behalf of the appellant that  as a  matter of  fact the appellant had made the application  before  the  goods  arrived  at  the  port. Counsel for  the appellant invited our attention to a letter which appellant  has addressed  to  "Ministry  of  Industry, Udyog Bhawan, Maulana Azad Road, New Delhi" as proof of such application. Learned  Additional Solicitor General contended that the said letter could not be treated as the application contemplated in  the proviso to Entry 84.66, as the ministry of Industry  is not  the prescribed  authority for  granting registration.      Even assuming  that the  said letter  should have  been treated as  the application  contemplated in the proviso can the appellant legally claim the relief of concessional duty? Two circumstances  have been  highlighted against his claim. First is that though the appellant got the import licence on 22-10-1980 he  did not make any application for registration for almost  six months  thereafter. Second  is that even the letter which  he claims to be the prescribed application was sent only  a month  before clearance  of the  goods from the port and during the remaining period he could not except the Central Government  to  rush  through  all  the  formalities necessary for granting registration. If any hasty steps were adopted on  the application  the resultant  order would have been vulnerable  to be  assailed as  an act  done with undue haste. In  this context learned Additional Solicitor General referred us  to the  following observations  made by  Jeevan Reddy, J  in S.B.  International Ltd  & others vs. Assistant Director General  of Foreign  Trade &  others, 1996  (2) SCC 439:      "On receipt of the application, the      authorities   have    to    satisfy      themselves about the correctness of      the contents  of  the  application.      They   also    have   to    satisfy      themselves  that   the  application      satisfies all  the requirements  of      the scheme and the other applicable      provisions of  law, if  any.  In  a      country like  ours, where  abuse of      such   facilities    is    rampant,      reasonable time  has to be afforded      to the  authorities to  process the      application. What  is a  reasonable

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    time, of  course,  depends  on  the      facts of  each case.  No  hard  and      fact limit can be prescribed".      Learned counsel for the appellant raised an alternative contention that the deficiency in the contract for obtaining the concessions  should not have been taken so seriously and the Customs  Authorities should  have granted the reliefs as the appellants  had performed  their part complying with the conditions. Non-compliance  of the  conditions, according to the counsel,  was only  due to the lapses on the part of the authorities concerned. This contention was expatiated to the extent that  the conditions  prescribed in  the  proviso  to entry No.  84.66 are  merely directory  and  not  mandatory. According to  the counsel,  the  conditions  prescribed,  if interpreted  strictly,   would  result   in  the  denial  of concessional reliefs  which statute  has  conferred  on  the citizen.      In support  of that  contention,  counsel  invited  our attention to  the decision  of a  Constitution Bench of this Court in State of U.P. vs. Manbodhan Lal Srivastava 1958 SCR 533,  wherein   their   Lordships   were   considering   the implication of  non-compliance with  the conditions provided in Article  320(3) of  the Constitution on an order imposing punishment to  a Government servant without reference to the Public Service  Commission. While  considering that question learned  Judges  made  a  reference  to  the  Privy  Council decision in  Montreal Street  Railway Company  vs. Normandin AIR 1917  PC 142 and the Federal Court decision in Biswanath Khemka Vs.  Rmperor AIR  104 & FC 67. The Constitution Bench held that the provisions of Article 320(3) are not mandatory and non-compliance  of those  provisions does not afford any cause of  action in  a court  of law.  Privy Council  in the above quoted decision has observed that the question whether provisions in  a statute are directory or imperative depends upon the  object of  the statute  and no general rule can be laid down. "When the provisions of the statute relate to the performance of  a public  duty and  the case is such that to hold null  and void  sets done in neglect of this duty would work serious  general inconvenience  or injustice  to person who have  no control  over those entrusted with the duty and at the  same time  would not  promote the main object of the legislature,  it   has  been   the  practice  to  hold  such provisions to  be directory."  This is  not a  case where  a certain  provision  is  mandatory  or  directory.  Here  the question is  whether concessional  relief of  duty which  is made dependent on the satisfaction of certain conditions can be granted  without compliance of such conditions. No matter even if the conditions are only directory.      In Formica  India Division  vs.  Collector  of  Central Excise, 1955  (77) ELT  511, non-compliance with Rule 56A of the Central Excise Rule, 1944 was held to be insufficient to deny the  benefit of a notification to the assessee. But the said benefit  was afforded on the special circumstances of a case as could be seen from the following words.      The  circumstances   in  which  the      appellants did  not pay the duty on      the  intermediary   product  before      putting the  same  to  the  captive      consumption  for   producing   that      stage, the appellants contested the      correctness of  the  classification      and had,  therefore, not  paid  the      duty on  the intermediary  product.      When it  was found  that they  were      liable   to   pay   duty   on   the

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    intermediary product  and  had  not      paid the  same, but  had  paid  the      duty on the end product, they could      not ordinarily  have complied  with      the requirement of Rule 56A.      Nor can  we find  support from the ratio in BOI Finance Ltd. vs.  The  Custodian  &  others,  JT  1997(4)  15,  that "infringements of  the instructions  issued by  the  Reserve Bank of  India under the Banking Regulations Act prohibiting the banks  from entering  into buy-back  arrangements do not invalidate such contracts entered into between the banks and it’s customers" as it involved a question of invalidation of the contract.  Here neither  the contract  nor the import is invalid or  illegal and  the question  is only  whether  the importer is entitled to the concessional duty.      There is no legal foundation for both the appellants to secure the  reliefs prescribed  in Entry  No. 84.66  of  the Customs Tariff. Accordingly we dismiss these appeals.