- (1.) This appeal by special leave is in challenge of an order passed by the Government of India, in exercise of their revisional power under the Customs Act, 1962 (for short the Act). As per the impugned order Government annulled the order passed by the appellate Collector of Customs in favour of the appellant on 6-12-1978. Facts are, in brief, these : Appellant firm has a factory for manufacturing sewing machines and accessories at Faridabad, with an approved capacity for making both domestic as well as industrial sewing machines. Appellant imports components for manufacturing such sewing machines from foreign suppliers. In October, 1977, appellant imported components of industrial sewing machines - "rotating hooks complete with bobbin case". some of which required 1/3 H. P. and the other required 1/2 H. P. for their operation. According to appellant such imported components were dutiable at the rate of 40 per cent to customs duty as per item 94-41 (1) of the Customs Tariff Schedule, and hence appellant was paying customs duty in accordance with it. But the Assistant Collector of customs (Foreign Post), New Delhi charged higher duty by treating those goods as components for domestic sewing machines as prescribed under Clause (2) of heading 84.2 of the Schedule. Appellant paid the higher duty under protest and got the goods released and later applied for refund of the excess amount paid (i. e. Rs. 1,78,208/-.) The Assistant Collector rejected the application reiterating that the goods imported were components for domestic sewing machines.
(2.) Appellant then filed a statutory appeal before the appellate Collector of Customs who allowed the appeal holding that the goods imported were not for domestic sewing machines and as such they were classifiable under item 84.41 (1) of the Schedule. Thus the appellant became entitled to refund of the amount paid in excess. But appellant failed to get the refund applied for, in spite of pursuing the applications filed for that purpose. So a writ petition was filed in the High Court of Delhi for appropriate directions. Notice was served on the Central Government. They proposed to review the order for which a notice was given to the appellant to show cause why it should not be reviewed. Appellant submitted its detailed reply. Central Government after hearing the appellant passed the impugned order.
(3.) Appellate Collector concurred with the importers's stand that the components were intended for industrial sewing machines on the strength of a variety of reasons and on its own satisfaction when the difference was demonstrated before him, during the time of hearing. He noticed that "the rotating hook in the industrial machine had higher speed than the domestic sewing machine and if the rotating pin of the industrial sewing machines were to be attached to the domestic sewing machines, it would not withstand the speed and would break." Appellate Collector, therefore, was convinced that the hooks imported by the appellant were not for domestic sewing machine and were "Solely and principally for the use in machines operated with more than 1/4 H.P. and as such are classifiable under I. C. T. 84 41 (1)";