AI Structured Summary
Not yet generated for this judgment
Judgment
Kanakaraj, J.—The petitioner-firm is engaged in the export of ready-made garments. They imported a consignment of stapling machines
from Japan. Actually the goods are described as ""Max HD-10 Staplers"" valued at Rs. 2,88,793.10 against four REP licences and sought
clearance of the goods as Capital Goods in terms of paragraph 175 of the import Trade Control Policy for April-March 1978-79. The fourth
respondent was of the opinion that under the said paragraph 175 only import of capital goods in Part-A of Appendix 2 in the said Policy for April-
March 1978-79, was permitted. According to him the subject goods are ordinary small appliances used in offices, homes and shops. They are not
used in industries. He therefore, felt the subject goods cannot be treated as capital goods or as packing machines falling under Serial No. 6(68) of
Part-A of Appendix 2 referred to above. The goods being in the nature of consumer goods falling under Serial No. 750 of Appendix 3 of the
I.T.C. Policy, they were banned for import. After issuing a show cause notice and getting explanation of the petitioner he passed an order on
10.8.1979 confiscating the goods u/s 111(d) of the Custom Act (hereinafter called ""the Act"") read with Section 3(2) of the Imports and Exports
(Control) Act, 1947. He gave the petitioner an option to redeem the goods on payment of a fine of Rs. 4,30,000/- and levied a personal penalty of
Rs. 10,000/-. However, on appeal to the third respondent, the petitioner succeeded. The 3rd respondent came to the conclusion that the subject
goods were classifiable under capital goods/packing machines. The appeal was therefore allowed on 14.3.1980. The fourth respondent preferred
a review u/s 131(3) of the Act and after the amendment to the Customs Act, the same was transferred to the second respondent and treated as an
appeal u/s 131(B) of the Act. The second respondent, in turn, set aside the order of the third respondent and restored the order of the fourth
respondent. However, the personal penalty of Rs.10,000/- was deleted, upholding the order of confiscation and the levy of redemption fine. It is
this order of the second respondent which is sought to be quashed in this writ petition.
A counter affidavit has been filed by the respondents stating that the subject goods do not conform to the description of either capital goods or
packing machines. The definition of the words ""capital goods"" indicates a plant, machinery, equipment or accessories required by an investor for
the production of goods or for rendering services including those required for replacing or expansion. They also refer to the meaning of the words
capital goods"" in the Webster''s Third New International Dictionary which is as follows:
Accumulated goods deposited to the production of other goods; facilities or goods used as factors of production.
They also point out that the words ""stapling machine"" are misleading because the Max Staplers imported by the petitioner are merely manually
operated appliance for attaching sheets of papers with wire pins called staple pins. The subject goods do not really bring into being or produce any
other goods. The staplers are used only for fastening sheets of papers or fastening small bags and packets. The type of goods which had been
imported by the petitioner are widely used in the houses and offices for purposes totally unconnected with packing in an industry. These staplers
are purchased in the shops of general merchandise and in stationery shops. It is contended that no reasonable person looking at this handy small
fastening device would call them a plant or machinery for the production of goods. It is also pointed out that nearly two lakhs of pieces are sought
to be imported soon after the import of 2,12,500 pieces in the previous three consignments. Such a large importation of the staplers show that
there is no bona fide use in the production activity of the petitioner. Alternatively, the staplers cannot be called as packing machines and can be
treated only as consumer goods. Therefore, they are not covered by REP licences. The contention of the petitioner that a stapler should be
equated to a packing machines would lead to absurd consequences. The respondents therefore, contend that the impugned order of the second
respondent dated 1.11.1985 is perfectly legal and not liable to be quashed by this Court. It is also contended in the counter affidavit that the
question relates to classification of the articles and the petitioner cannot seek to challenge the classification in a proceeding under Article 226 of the
Constitution of India. It is pointed out that under the provisions of the Act, if at all, a reference application should have been filed if there is any
question of law.
The only contention that is urged before me, is, that the issue involved in this case, is squarely governed by the judgment in W.A. No. 451 of
1985 dated 28.6.1985. A careful perusal of the judgment of the Division Bench in WA No. 451 of 1985 shows that the Division Bench was
concerned with totally a different issue. In that case the assessee imported staple pins. The question was whether the staple pins will fall under the
Heading 73.31 under the Chapter ""Iron and steel and articles thereof or whether they will fall under the Heading 83.01/15(2) under the Chapter
Miscellaneous articles of base metal."" The department in that case wanted to bring the staple pins under the heading 83.01/15(2) whereas the
assessee wanted to bring the staple pins under heading 73.31. The Division Bench posed the question ""The controversy between the parties is
under which heading the staples imported by the respondents fell."" The Division Bench came to the conclusion that Chapter 73 of the Customs
Tariff Act dealt with iron and steel articles whereas Chapter 83 dealt with Miscellaneous articles of base metal after referring to this aspect of the
case. The Division Bench observed.
Looking from this point of view, we are inclined to held that the staples imported by the respondent, would fall only under Heading 73.31. This
conclusion of ours is supported by the note given in Chapter 83�.
I have already referred to the issue before me, which is, whether the staplers imported in this case can be treated as capital goods or packing
machines in terms of paragraph 175 of the I.T.C. Policy 78- 79. Both the counter-affidavit as well as the impugned order clearly describe the
staplers imported under the subject consignment as small appliances used in offices, homes and shops, and come under the category of consumer
goods falling under Serial No. 750 of appendix 3 of the I.T.C. Policy. I am therefore, unable to accept the contention that the judgment in Writ
Appeal No. 451 of 1985 will govern the facts of this case. I accept the description of the goods as found in the counter affidavit and hold that they
are consumer goods falling under Serial 750 of Appendix 3 of the I.T.C. Policy 1978-79 and therefore are banned for import. The size of the
staplers clearly indicates that they are not automatic stapling machines which are bigger in size and which only are used in industries. Secondly, a
large quantity of staplers imported by the petitioner indicates that they are only consumer goods and not capital goods. I have no material before
me to hold otherwise and invalidate the order of the second respondent dated 1.11.1985. The question of classification arising out of factual
consideration cannot be undertaken by this Court especially when a competent Tribunal has analyzed the facts and come to a particular conclusion,
which is not shown to be illegal or perverse. Consequently, the writ petition fails and is dismissed. However, there will be no order as to costs.