SIEMENS ENGINEERING AND MANUFACTURING CO OF INDIA LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) This appeal by special leave raises a short question as to what is the correct amount of import duty chargeable on pot motors when imported separately from Rayon Spinning frames:do they fall within Item 72 (3) or Item 73 (21) of the First Schedule to the Indian Customs Tariff The facts giving rise to the appeal are few and may be briefly stated as follows:

(2.) Sometime in 1956 a licence for setting up a plant for manufacture of Rayon was granted to one Kesoram Industries and Cotton Mill Ltd., under the Industries Development and Regulation Act, 1951. Since the machinery and equipment required for setting up the plant were not available in India, Kesoram Industries and Cotton Mills Ltd., applied for an import licence and on the basis of this application, import licence was granted to them for importing "complete continuous filament Rayon plant-with spares and accessories" of the C. I. F. value of Rs. 5.50 crores from general currency area excluding South Africa. It appears that Kesoram, Industries and Cotton Mills Ltd. imported, on the strength of this import licence, Rayon Spinning frames, excluding pot motors, from Japan, but so far as pot motors, were concerned, they authorised the appellants to import from Germany 4000 of these motors for initial installation of the Spinning frames. Pursuant to the authority so given, the appellants placed orders for 4000 pot motors with manufacturers in Germany and imported the same in seven different consignments under the Import licence of Kesoram Industries and Cotton Mills Ltd. These seven consignments arrived at Calcutta port between September and December 1961. The appellants claimed before the Customs authorities at the time of assessment of import duty on these seven consignments that pot motors imported by them fell within Item 72 (3) of the First Schedule to the Indian Customs Tariff and were chargeable to import duty under that item at the rate of 15 per cent of their accepted value. This claim was accepted by the Customs Authorities and these seven consignments were allowed to be cleared on payment of import duty under Item 72 (3). However, within a short time thereafter, the Assistant Collector of Customs issued seven separate notices of demand in respect of these seven consignments claiming that customs duty at the rate of 15 per cent, had been short levied, because pot motors were assessable at the rate of 20 percent, and requiring the appellants to pay up the difference within 15 days from the date of demand under Section 39 of the Sea Customs Act. 1878. The appellants sent representations against these notices pointing out that and we are quoting here from the representation dated 8th December, 1961, which is:-

(3.) Though the appellants, initially, when the hearing of the appeal commenced raised two or three contentions against the validity of the order of the Government of India confirming the demand for differential duty, they ultimately pressed only one contention and that related to the category in which the pot motors imported by the appellants fell. The Assistant Collector originally assessed these pot motors to customs duty at the rate of 15 per cent. of their accepted value under Item 72 (3), but later, demanded differential duty from the appellants on the footing that these pot motors were really assessable at the rate of 20 per cent, of their accepted value under Item 73 (21) and this demand was confirmed by the Collector in revision and on further revision, by the Government of India. The appellant disputed the correctness of these orders and contended that the original assessment made by the Assistant Collector was proper and the demand for differential duty was unjustified, because the correct item under which these pot motors were assessable was Item 72 (3), and not Item 73 (21). Item 72 (3), as it stood at the material time, was in the following terms: