1987(05)LCX0045

BEFORE THE CEGAT, SPECIAL BENCH ‘B-2’, NEW DELHI

Shri Harish Chander, Member (J) and Shri I.J. Rao, Member (T)

INDUSTRIAL CABLES (INDIA) LTD.

Versus

COLLECTOR OF CUSTOMS, BOMBAY

Order No. 914/1987-B2, dated 4-5-1987

Advocated By : Shri H.K. Kochhar, Advocate, for the Appellant.

Shri J. Gopinath, S.D.R., for the Respondent.

[Order per : Harish Chander, Member (J)]. - Industrial Cables (India) Ltd., Bombay had filed a Revision Application to the Joint Secretary, Government of India, Ministry of Finance, Department of Revenue, New Delhi being aggrieved from order in appeal No. S/49-294/80R, dated 31-3-1980 passed by Appellate Collector of Customs, Bombay. The said Revision Application stands transferred to the Tribunal in terms of the provisions of Section 131B of the Customs Act 1962 to be disposed of as an appeal.

2. Briefly the facts of the case are that the appellants had imported linear capstan, overhead traverse shaftless take up Ex.s.s. Egidia vide Bill of Entry Cash No., 1469 dated 7-6-79. The appellant had claimed its assessment at concessional rate of duty in terms of the provisions of Notification No. 40-Cus/78, dated 1-3-1978 as amended from time to time. The learned Assistant Collector had rejected the refund claim of the appellant on the ground that Serial No. 14 of the table covers “plastic extruder above 150mm screw diameter”. The notification covers only complete plastic extruder and does not cover parts and/or accessories, parts/accessories if not charged separately and imported along with the main equipment worth chargeable at the same rate of duty as the main equipment. He had further observed that the goods were imported separately and not with the plastic extruder and when the goods were imported separately, the same were not eligible for concessional assessment under Notification No. 40-Cus/78. He had rejected the claim. Being aggrieved from the aforesaid order the appellant had filed an appeal before the learned Appellate Collector of Customs. The Appellate Collector of Customs had held that the benefit of the notification could not be extended to other accessories which were actually independent machines having their own functions and had rejected the appeal. Being aggrieved from the aforesaid order the appellant has come in appeal before the Tribunal.

3. Shri H.K. Kochhar, the learned Advocate has appealed on behalf of the appellants. He has reiterated the facts and the contentions made in the Revision Application. He has pleaded that the appellant had imported linear capstan, overhead traverse shaftless take up vide Bill of Entry Cash No. 1469, dated 7-6-79. He has referred to item Nos. 3 and 5 of the invoice. Shri Kochhar has pleaded that the goods were classified and assessed to Customs Duty under Heading 84.45/48. He has pleaded that the appellant is entitled to the benefit of Notification No. 40-Cus/78, dated 1-3-78 and has referred to S. No. 14 of the notification. He has also referred to the invoice and has pleaded that the invoice is common; and extruder is entitled to the benefit of the notification and not parts. He has referred to an earlier order of the Tribunal in appellant’s own case vide Order No. 440-B/84, dated 1-5-84. In that case the Tribunal had accepted the appeal of the appellant. Shri Kochhar stated that the appellant does not possess the catalogue. He has referred to the opinion of the D.G.T.D. where the D.G.T.D. has opined that 200mm extruder along with accessories like pay-off, capstan, in line voltage tester, take-up unit forms a complete extrusion line. It is understood that Custom has held up the consignment as in the policy the word extruder has been mentioned. An extruder is useful for production only when the accessories mentioned above are also there as otherwise the extruder is of no use and it cannot be used for production. Therefore the intention of putting extruder of above 150mm in OGL Scheme for I.T.C. purpose seems to permit importation of complete extrusion line. Even otherwise these extruders of 200mm along with its accessories do not have indigenous angle and in case the firm would have approached the Government, they could have got clearance. Shri Kochhar states that the above opinion of the D.G.T.D. fully supports the appellant’s case. In support of his arguments he has also referred to earlier judgment of the Board in their own case vide Order No. 925 of 1980, dated 12-11-80 which appears at page 42 of the paper book and the Board had allowed the appellant’s appeal on the ground that extruder can be useful for production only and accessories like pay-off system, capstan, in line voltage tester and take up units are also there, as otherwise the extruder would be of no use and cannot be used for production. Therefore, the intention of Chief Controller of Imports and Exports appears to be quite clear that by putting “extruder of above 150mm screw dia. “What they had in mind was a complete extrusion line and this was fully borne out by the fact that in the subsequent policy this extruder was placed in part “A”(1) and note quoted above made applicable to it. The Board had given benefit of doubt and had allowed the appeal. Shri Kochhar states that the appellant’s case is fully supported by another judgment of the Tribunal in the case of Accumax Ltd., reported in 1983 ELT 2029 where the Tribunal had held that “The appellants have adduced enough technical evidence to show that the essential function of the Rolling Gear Tester is that of an eccentricity tester. Due regard has also to be given to the DGTD clarification and the manufacturers’ certificate, specially since the department has not refuted the contentions by reference to any authorities or documents. In the result we allow the appeal and set aside the impugned order". Shri Kochhar states that the earlier order of the Board though not binding on the Tribunal, has got persuasive value. He has also referred to another judgment of the Tribunal in the case of Veg. Oils Ltd., Bombay v. Collector of Central Excise, Bombay reported in 1983 ELT 1822 where the Tribunal had held that although the Govt. of India’s decision in exercise of its reversionary powers is not binding on the Tribunal, yet the Tribunal would be slow to disturb it unless there was a judicial decision against it or it was based on fallacious reasoning and is manifestly wrong. During the course of arguments it was enquired from Shri Kochhar whether he is having the detailed price list of each part. To this query Shri Kochhar conceded that he does not possess the same. He also stated that detailed catalogue was not available with him and as such the same could not be filed. Shri Kochhar has pleaded for the acceptance of the appeal.

4. Shri J. Gopinath, the learned S.D.R., who has appeared on behalf of the respondents, has pleaded that the appellants had placed a combined order for six types of goods and a set of machine has been imported for the manufacture of cables. He has referred to page 23 of the appellant’s paper book which is invoice and has drawn attention of the Bench to item Nos. 3 and 5 which are disputed items. He has referred to para No. 6 of the Tribunal’s Order bearing No. 440-B/84, dated 1-5-84 in appellant’s own case where the Tribunal had observed that “We are somewhat surprised that the appellants have not produced the catalogue or the operating manual for this expensive machinery. The invoice also shows that it is at the dictates of the importer (c.f. reference to OGL scheme etc. on the body)”. Shri Gopinath has referred to para No. 14 of the copy of the purchase order which appears on page 30 of the paper book wherein it was mentioned that particulars and nomenclature of the material in the invoice and all the other documents should confirm exactly to the description given in Annexure ‘A’. He has also referred to the refund claim of the appellants which appears on page 181 of the paper book and in the refund claim there is mention of accessories of plastic extruder not of parts. He has also referred to pages 8 to 11 of the paper book filed by the appellants which is in fact the order in appeal. Shri Gopinath states that the order of the Appellate Collector is very well reasoned. He has also referred to page 35 of the appellant’s paper book which is Annexure ‘A’ to the order placed by the appellant and contains details. Shri Gopinath states that extruder is part of the system of machines. He has referred to the extract from Mc Graw Hill Science and Technology Vol. 10, page 530 which appears on page 1 of the respondent’s paper book. Shri Gopinath has referred to items 3 and 5 of the invoice. He has pleaded that the goods imported by the appellant are independent machines. He has also referred to Accessories Condition Rules 1963. He has referred to Order Nos. 25 and 26 of 1985/B2, dated 7-1-86 in the case of Lokmat Newspapers Ltd. and M/s Dara Printocrats Ltd. v. Collector of Customs, Bombay where the Tribunal had held that the notification covers only photo composing machine, key board was not their accessories. The Tribunal had held that what had been imported were independent units performing independent functions and had rejected the appeal. Shri Gopinath states that in the present matter before the Tribunal the machines imported by the appellant are independent and can be independently used and as such the appellants cannot have the benefit of Notification No. 40-Cus/78, dated 1-3-78. He has also referred to a judgment of the Hon’ble Bombay High Court in the case of Jenson and Nicholson (India) Ltd. v. Union of India and Others reported in 1981 ELT 128 where the Tribunal had held that the meaning to be given to that notification must depend primarily on the terminology used in that notification and meaning to be given to the words will not be controlled by any Rulewhich requires the same manufacturer to have separate licence for separate places of business. He has also referred to another judgment of the Hon’ble Madras High Court in the case of Indian Organic Chemicals Ltd. v. Union of India and Others reported in 1983 ELT 34 where the Hon’ble Madras High Court had held that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words. Therefore, it is not open to the court to go behind the language of the Notification and find out what the real intention of the authors of the Notification was. He has also referred to another judgment of the Madras High Court in the case of Witco Match Works, Kalugumalai and Another v. Union of India and Another reported in 1983 ELT 345 where the Hon’ble Madras High Court had held that a provision in the exemption notification must normally be interpreted in its ordinary, natural and grammatical sense and to import any notion of policy or to enlarge the exemption to categories which are not expressly covered therein is not admissible in law. Shri Gopinath has argued that the recommendation of the DGTD does not help the appellant as the same relates to the import policy and it has got nothing to do with the benefit of the notification which the appellant claims under the Customs Act. He has also stated that the judgment of the Board in favour of the appellant relates to the import trade policy and does not relate to the benefit under the exemption notification. Shri Gopinath states that the earlier order passed by the Tribunal in appellant’s case is not binding on the present Bench as the basic documents which may be considered by the Bench were missing and the judgment of the Tribunal was arrived at on account of the absence of the basic documents. He has referred to paragraph 6 of the said judgment. Shri Gopinath has pleaded for the dismissal of the appeal.

5. In reply Shri Kochhar, the learned Advocate, has pleaded that the accessory Rule s mentioned by the learned S.D.R. are not applicable. He has referred to Note 3 to Section XVI of the Customs Tariff Act which clearly lays down that unless the headings otherwise required, composite machines consisting of two or more machines fitted together to form a whole or other machines adopted for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function. Shri Kochhar states that the extruder cannot work without the parts and accessories imported by the appellant and as such the appellant is entitled to the benefit of the notification. The other machines do not have independent functions. He has again referred to the earlier order of the Tribunal in favour of the appellant and pleads that there is no reason why the appellant should be denied the benefit of the earlier order. Shri Kochhar states that earlier he had referred to note 3 of Section XVI and appellant’s case is fully covered by that. He has pleaded for the acceptance of the appeal.

6. We have heard both the sides and have gone through the facts and circumstances of the case. The appellants had imported linear capstan, overhead traverse shaftless take up vide Bill of Entry No. 1469 dated 7-6-1979. The description of the goods imported in the Bill of Entry is given below :-

“linear capstan, overhead traverse shaftless take up”

The appellants have claimed the benefit of Notification No. 40/78-Cus., dated 1-3-1978 as amended from time to time. In terms of the said notification the duty is to be levied at the rate of 25% and the benefit is only available if the imported item appears in the schedule to the notification. Item No. 14 of the said schedule is “plastic extruder above 150mm diameter”. Description of the goods does not tally with the description given in. the Bill of Entry. The appellant has placed heavy reliance on the order, dated 11-11-78. A simple perusal of the order reflects that the value has been shown at DM 6,91,460/-. The order does not contain the bifurcation of the price of the goods mentioned in the order and even the invoice of John Royal and Sons does not contain the bifurcation of the price of the extruder as well as accessories/parts. Shri Kochhar, the learned Advocate, has relied heavily on an earlier order of the Tribunal bearing No. 440/B-84, dated 1-5-84. In paragraph No. 6 of the said order our learned Brothers had observed that -

“We are somewhat surprised that the appellants have not produced the catalogue or the operating manual for this expensive machinery. The invoice also shows that it is at the dictates of the importer (c.f. reference to OGL scheme etc. on the body). At the same time, their plea that they sent the photos and technical write-up on 15-12-79 is not contested”

The Tribunal had allowed the appeal of the appellant. In the earlier appeal of the appellants there was mention of the photos and the technical write up sent by the appellants. In the present matter before us there is no such evidence on record. During the course of arguments Shri Kochhar had conceded that even at this stage the appellant is not having a catalogue. In the absence of catalogue, photos and technical write up, we cannot agree that the facts of the present matter are not different from the earlier order. The earlier order therefore does not become a precedent to be followed. Note 3 of Section XVI is reproduced below :-

“Unless the Headings otherwise require, composite machines consisting of two or more machines fitted together to form a whole and other machines adapted for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function.”

We would have no hesitation in following the provisions of Note 3, had there been any evidence on record to the effect that imported item is a composite machine consisting of two or more machines adapted for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function. The only evidence on record is the copy of the order for complete 200mm screw diameter plastic extruder containing the specification and description. The invoice is also a consolidated one. In paragraph No. 6 of Order No. 440/B/84, there is an observation that the invoice is at the dictates of the importer. Since the appellant has not taken any care in placing on record the catalogue, technical write-up, we hold that the lower authorities had correctly rejected the appellant’s claim for the benefit of Notification No. 40/78-Cus, dated 1-3-1978. In the earlier consignment which was imported vide Bill of Entry No. 127, dated 9-4-1979, the appellant had imported plastic extruder as well as spares and accessories. The Customs authorities had bifurcated the same for granting the benefit of notification in respect of plastic extruder and declined the benefit of notification to the other items whereas in the matter before us, it is an independent bill of entry. Plastic extruder was not imported along with linear capstan overhead traverse shaft less take-up. It is settled law that the provisions of notification have to be construed very strictly. Since the imported item does not appear in the notification No. 40/78-Cus, dated 1-3-1978, we hold that the goods were correctly assessed to customs duty under heading 84.45/48 and the appellant is not entitled to the benefit of the notification. In the earlier matter before the Tribunal virtually there were no arguments by the respondent and as such it does not become a precedent. It is a settled law that “Precedents sub silentio or not fully argued will not have a binding effect. Extract from Salmond on Jurisprudence, 12th Edition edited by P.J. Fitzerald at pages 153 and 154, is given below :-

“A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind. The court may consciously decide in favour of any party because of point A, which it considers and pronounces upon. It may be shown, however, that logically the court should not have decided in favour of the particular party unless it also decided point B in his favour; but point B was not argued or considered by the court. In such circumstances, although point B was logically involved in the facts and although the case had a specific outcome, the decision is not an authority on point B. Point B is said to pass sub silentio.

A good illustration is Gerard v. Worth of Paris Ltd. (k). There, a discharged employee of a company, who had obtained damages against the company for wrongful dismissal, applied for a garnishee order on a bank account standing in the name of the liquidator of the company. The only point argued was on the question of the priority of the claimant’s debt, and, on this argument being heard, the Court of Appeal granted the order. No consideration was given to the question whether a garnishee order could properly be made on an account standing in the name of the liquidator. When, therefore, this very point was argued in a subsequent case before the Court of Appeal (1), the court held itself not bound by its previous decision. Sir Wilfrid Greene, M.R. said that he could not help thinking that the point now raised had been deliberately passed sub silentio by Councel in order that the point of substance might be decided. He went on to say that the point had to be decided by the earlier court before it could make the order which it did; nevertheless, since it was decided “without argument, without reference to the crucial words of the Rule, and without any citation of authority”, it was not binding and would not be followed.

The Rule that a precedent sub silentio is not authoritative goes back at least to 1661 (m), when Councel said : “An hundred precedents sub silentio and without argument are of no mement.” This Rule has ever since been followed (n).

(k) (1936) 2 All E.R. 905 (C.A.)

(l) Lancaster Motor Co. v. Bremith Ltd. (1941) 1 K.B. 675 at 677 (C.A.)

(m) R. v. Warner (Ward) 1 Keb. 66, 1 Lev. 8.

(n) O’Shea v. O’Shea and Parnel (1890) 15 P.D. 59 at 64 (C.A.) (point deliberately withheld from court, the parties not wishing it to be raised); Ankin v. L.N.E. Ry. (1930) 1 K.B. 527 at 537; Lindsey C.C. v. Marshall (1937) A.C. 97 at 125; Yelland v. Powell Duffryn Colieries (1944) 1 All E.R. 278 at 295 (a stage of the case not reported in (1941) 1 KB.B 154); notes by D.W. Logan (1940) 3 M.L.R. 225; Williams (1944) 7 M.L.R. 136, n. 43; Tylor (1947) 10 M.L.R. 398 (but see, for a different interpretation of the particular decision. Marsh in (1952) 68 L.Q.R, 235); Alien Law in the Making (7th ed.) 333; Warnbaugh, The Study of Cases, 26. Nearly every decision sub silentio can be regarded, from another point of view, as a decision per incuriam, because the failure of Councel to argue the point will generally mean that relevant cases or statutes are not brought to the attention of the court. See Lancaster Motor Co. v. Bremith Ltd. (1941) 1 K.B. 675 at 678 (C.A.); bradley. Hole v. Cusen (1953) 1 Q.B. 300 at 305 (C.A.)."

7. The Tribunal in the case of Motiram Tola Ram v. Collector of Customs, Bombay 1986(11)LCX0035 Eq 1987 (029) ELT 0278 (Bom.), vide Order No. 676-714/86-C, dated 28-11-1986 did not follow the earlier decision of the Bombay High Court in the case of Pan Asia Commercial Enterprises and Another v. Union of India and another reported in 1986(025) ELT 0508 (Bom.). The Tribunal had taken the view that in the earlier decision Bombay High Court had found this condition fulfilled for failure of the Councel of the Revenue to give out the basis of his this statement and specific denial of the petitioner’s averments in the counter, to the petition. Relevant extract from page 16 of the said judgment is reproduced below :-

“From the portions extracted it would be seen that the Bombay High Court found this condition fulfilled for failure of Shri Bulchandani to give out the basis of his this statement and specific denial of the petitioners averment in the counter to the petition. It is not that the Hon’ble High Court said that even if raw naptha or chemicals derived therefrom had not paid appropriate amount of duty of excise then also benefit of concession under the notification is to be given. Bombay High Court found the condition fulfilled due to peculiar state of pleadings and the arguments advanced. This decision could be only with respect to consignments relating to that decision and does not lay down any law that every consignment of HDPE on the strength of the decision has to be given concession under the Notification.

In the instance appeals there is neither any averment nor proof that raw naptha or chemicals derived therefrom which went into manufacture of HDPE had paid appropriate duty of excise. In fact as the goods are imported they could not have done so. Therefore, decision with respect to the consignments relating to the present appeals before the Tribunal would not help the appellants."

8. In view of the above discussion, we do not follow the earlier decision of the Tribunal in appellant’s own case and the appeal is dismissed.

9. [Per: I.J. Rao, Member (T)]. - I have gone through the order passed by my learned brother. While I agree with the conclusion that this appeal should be dismissed, I would like to add that the decision is not because we do not follow the earlier decision but because the present matter can be distinguished on facts which have been recorded in detail in paragraph-VI.

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Equivalent 1987 (30) ELT 562 (Tribunal)