M/S. Northern Plastic Limited vs.

Collector Of Customs & Central, 1998

Facts about the case:

Appellant: M/S. Northern Plastic Limited Respondent: Central Board of Excise and Customs

On January 1989, Northern Plastic Limited had imported 59 jumbo rolls of Photographic Color Films (Unexposed) Positive. These goods were entitled to exemption of customs duty according to the appellant. On examination at Kandla Customs House they were found to be "Color films-jumbo rolls" and, therefore, not entitled to the benefit of exemptions. Therefore, the Collector of Customs, Rajkot initiated proceedings for confiscation Under Section 111(m) of the Customs Act, 1962 and imposition of penalty. The appellant was charged for misrelating the goods as "Cinematographic Color Films (Unexposed) Positive", with a view to evade Government revenue to the tune of Rs. 51,89,698.

The Central Board of Excise and Customs found the order passed by the Collector as not legal and proper and, therefore, in exercise of its powers Under Section 129D(1) of the Customs Act, directed the Collector to apply to CEGAT (then, Central Excise and Gold (Control) Appellate Tribunal) for determination of the points specified by the Board in its order.

After careful examination, CEGAT agreed with the findings and it was held that the company had imported jumbo rolls of Photographic Films and not Cinematographic Films. And the court held that Northern Plastic Ltd. had misdeclared the goods for claiming exemptions. It was further held that the appellant was not an actual user (industrial) as it did not have an industrial license issued under the Industries (Development and Regulation) Act, 1951, necessary for claiming the benefit of Open Government License and, therefore, the goods were imported without a valid import license.

The collector charged the company with misdeclaration of goods in order to avail of the exemption benefits and evade payment of customs duty to the tune of Rs.

81,80,698 and ordered confiscation of the 59 rolls, imposed a redemption fine of Rs. 5 lakhs and also imposed a personal penalty of Rs. 10 lakhs on the appellant.

Ruling of the court:

The appellant feet aggrieved by the order of the Collector appealed to CEGAT and challenged the findings regarding misdeclaration and illegality of import.

Mr. Dushyant Dave, a learned counsel appearing for the appellant contended hat the appellant was a small scale industrial unit and was inter alia engaged in "conversion/cutting of jumbo rolls of "Cinematographic Color Films (Unexposed) Positive as ready for production". Since, a small-scale industrial unit could import raw material, components or consumables required by it under OGL on the basis of its industrial license or registration certificate obtained from the appropriate government authority.

The court finally held that neither on the ground of misdeclaration nor on the ground of import being unauthorized or illegal, the goods imported by the appellant were liable to confiscation. Therefore, the appeal was allowed and the order of confiscation and also the order levying fine of Rs. 5 lakhs in lieu of confiscation was set aside.

Maestro Motors Ltd. vs. Collector Of Customs & Central, Bangalore (2004)

Facts about the case: Maestro Motors Ltd. entered into collaboration with M/s. Rover U.K. for manufacture of Montego cars. They imported 217 sets of cars consisting of body assembly (complete with accessories), with gear, engine assembly etc. and also components such as wind screen assembly, wheel rims, glass assembly, radiator assembly, front and back suspension, fuel tank assembly etc. In effect they were importing the entire

car in completely knocked down condition. Maestro Motors Ltd. imported all these items by filing 11 Bills of Entries with the Bombay Customs and the rest 14 Bills of Entries with the Madras Customs. They claimed the goods to be components and also claimed benefit of Notification No. 72/93. The Collector of Customs and Excise held that the company had not complied with the conditions of the Notifications and was charged to pay customs as they imported cars and not just its components.

Ruling of the Court: The Adjudicating Authority held that between the imports in Bombay and Madras entire cars had been imported in completely knocked down condition. The components were thus classified as cars. It was also held that the Company was not entitled to the benefit of Notification No. 72/93 as that Notification only gave benefit to parts and components. Later the court held that they are not components and parts for the purposes of payment of custom duty they would not be components and parts even for the purposes of the Notification. Thus, M/s. Maestro Motors Ltd. was not entitled to the benefit of Notification No. 72/93 ad held to pay the difference in the custom duty.

References: http://indiankanoon.org/doc/81007/ http://indiankanoon.org/doc/1060931/