Super Recording Company Pvt. Ltd. vs Government of India

Kanakaraj, J.—This writ Petition coming on for orders as to admission on this day upon perusing the petition and the affidavit filed in

support thereof and upon hearing the arguments of Mr. Habibullah Badsha, Senior Counsel for M/s. E.S. Govindan, R. Sudhakar, and N.

Kirubakaran, Advocate for the petitioner and of Mr. P. Narasimhan, Senior Central Government Standing Counsel on behalf of the respondents,

the court made the following order :-

Mr. Narasimhan, Senior Central Government Standing Counsel, takes notice for the respondents. By consent of both parties, the writ petition itself

is taken up for final disposal.

The writ petition is directed against the order of the third respondent dated 4-1-1991 and to direct the third respondent to register the contract

in question under the provisions of the Project Import Regulations, 1986 and consequently allow the clearance of the goods, extending the benefit

of exemption Notification No. 315/83, dated 26-11-1983.

The short facts necessary for the disposal of this writ petition may be stated as under : The petitioners proposed to set up a new unit for the

manufacture of Pre-recorded Audio Cassettes. They have set out in the affidavit, the raw materials that go into the manufacture of Audio

Cassettes. For the purpose of setting up of the manufacturing unit, the petitioners imported high speed duplicating system. According to the

petitioners, the petitioners sought to register the contract under the Project Import Regulations, 1986 for the purpose of assessment and clearance

of the goods falling under Heading 98.01 of the First Schedule to the Customs Tariff Act, 1975. The necessary portion of Section 3(a) of the

Project Import Regulations, 1986 is as follows :-

Definitions :- For the purpose of these regulations :-

(a) ""industrial plants"" means an industrial system designed to be employed directly in the performance of any process or series of processes

necessary for manufacture, production or extraction of a commodity, but does not include.

(i) establishments designed to offer services of any description such as hotels, hospitals, photographic studios, photographic film processing

laboratories, photocopying studios, laundries, garages and worships; or ...

The petitioners are seeking to claim the concessional duty permitted under exemption Notification 315/83, dated 26-11-1983. It is not disputed

that the concessional rate of duty is available subject only to the condition that a certificate is obtained from a competent Officer referred to in the

said notification such a certificate was produced. By the impugned order dated 4-1-1991, the Assistant Collector of Customs has come to the

conclusion that the imported goods are not eligible for assessment under Project Import Regulations, 1986. According to the Assistant Collector of

Customs, the act of manufacturing Pre-recorded cassettes cannot be considered as an industrial activity. The activity sound duplication on tape to

tape would amount to being characterised as a service industry. Therefore, according to the Assistant Collector, Section 3(1) of the Project Import

Regulations quoted above does not get attracted. It is under these circumstances, the writ petitioners have come forward with the present writ

petition for the relief already referred to by me.

In support of the petitioner''s contention, Mr. Habibullah Badsha, learned senior counsel for the petitioners relies on a judgment of S.

Ramalingam, J. in W.P. No. 5711 of 1982. That was a case where the identical defence was taken by the Revenue and S. Ramalingam, J.,

followed an earlier judgment of this Court in W.P. No. 8398 of 1984 and held that the goods imported are liable to be registered under the

Project Imports Regulations, 1986. No doubt, in the said case, the party had preferred an appeal to the Appellate Collector of Customs. In this

connection, learned counsel for the petitioners relies on a decision of the Collector of Customs and Central Excise (Appeals) rendered on 15-11-

1990. The Appellate Collector has followed the judgment of S. Ramalingam, J., cited above and set aside the order of the lower authority holding

that the similar establishment is designed only to offer services and cannot be considered as an industrial unit. The appellate Collector found that the

activities of the parties in that case amounted to manufacture and not service and accordingly, set aside the order of the Assistant Collector in that

case and permitted the parties to have the benefit of Notification No. 315/83. On the facts and circumstances of the case it is clear that the

petitioners in this case cannot be driven to the remedy of filing an appeal.

Mr. P. Narasimhan, learned counsel for the respondents cannot dispute the judgment of this Court as well as the order of the Appellate

Collector, in the case referred to by the counsel for the petitioner. However, Mr. Narasimhan, learned counsel, says that the order dated 4-1-

1991 challenged in this case has given proper reasons for holding that the act of manufacture of pre-recorded cassettes cannot be considered as an

industrial activity. Mr. Narasimhan, learned counsel contends that the equipments imported are only meant for sound duplication on tape to tape

and would not be eligible for Project Import Benefit under Notification 315/83. As counsel appearing for the Revenue, I do not expect Mr.

Narasimhan, to concede the issue. But, the judgments of this Court as well as the order of the Appellate Collector are clearly on point and cannot

be ignored. In particular, S. Ramalingam, J. was concerned with the import of identical goods and identical point was raised before the learned

Judge. I have no other option except to reject the contention of Mr. Narasimhan and follow the judgment of this Court in the writ petition cited

above because I am in respectful agreement with the learned Judge. On the peculiar facts and circumstances of the case, I do not think it will be

proper to drive the party to remedy of filing an appeal. The legal issues are settled and do not require any further consideration. Accordingly, the

writ petition is allowed. The impugned order is set aside and the respondents are directed to give the benefit of Notification No. 315/83 in respect

of the goods imported in this Case. I direct the respondents to comply with this order by register in the contract and imposing the duty and

consequently, permitting release of the goods on payment of duty on or before 21-1-1991. The writ petition is allowed as prayed for. There will

be no order as to costs.