:1: bgp bgp bgp IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION WRIT WRIT WRIT PETITION NO.116 OF 1988 PETITION NO.116 OF 1988 PETITION NO.116 OF 1988 Spie Capag, a Company incorporated in accordance with the laws in force in France having its registered office at Immeuble Oslo, 2 Place de 1’ Equerre, 94588 Rungis, France and a site office at Kadeswari Mandir Road, Near Mount Mary Steps, Bandra (West), Bombay - 400 050. ..Petitioner Versus Versus Versus 1. Union of India 2. The Assistant Collector of Customs (Contracts Cell) having his office at New Customs House, Ballard Estate, Bombay - 400 038. ..Respondents Mr.E.P.Bharucha, Senior Advocate a/w.Mr.Lubin Behramkamdin a/w.Mr.Vivek Vashi and Ms.Maneesha Kangovi i/b.Bharucha & Partners for the Petitioner. Mr.P.S.Jetly a/w.Mr.Y.R.Mishra for the Respondents. CORAM CORAM CORAM :- DR.S.RADHAKRISHNAN & :- DR.S.RADHAKRISHNAN & :- DR.S.RADHAKRISHNAN & S.J.KATHAWALLA, S.J.KATHAWALLA, S.J.KATHAWALLA, JJ. JJ. JJ. DATE DATE DATE : 12TH AUGUST, 2008 : 12TH AUGUST, 2008 : 12TH AUGUST, 2008 JUDGMENT JUDGMENT JUDGMENT (PER : DR.S.RADHAKRISHNAN,J.) (PER : DR.S.RADHAKRISHNAN,J.) (PER : DR.S.RADHAKRISHNAN,J.) 1. Heard the learned Senior Counsel for the Petitioner and the learned Counsel for the Respondent Union of India. Perused the judgment dated 3rd March,2008 passed by the Hon’ble Supreme Court in Appeal No.1761 of 2008 filed by the present Petitioner against the Union of India-Respondent herein. :2: 2. The brief facts of the case are, that the Petitioner is a French Company renowned in the field of underground and underwater construction applied through a tender to the Municipal Corporation of Greater Mumbai for constructing three ocean outfalls as a part of the sewerage project. The work was granted to the Petitioner in or about 1990. 3. Mr.Bharucha, the learned Senior Counsel submitted that a Notification dated 2nd August,1976 was issued by the Government notifying the project as one under sub item 6 of clause (d) of heading 84.66(i) of the first schedule to the Customs Tariff whereby a flat rate of 40% customs duty was charged on all items relating to the project. Heading 84.66, inter alia states that the machinery imported should be required "for the initial setting up of a unit, or the substantial expansion of an existing unit". This heading specifically mentions and includes (i) all items of; (a) machinery including prime movers (b) instruments, apparatus and appliances (c) control gear and transmission equipments, (d) auxiliary equipments, as well as all components (whether finished or not) or raw materials for the manufacture of the aforesaid items and their components, required for the initial setting up of a unit, or the substantial expansion of an existing unit, of a specified: (1) industrial plant (2) irrigation project (3) power project (4) mining project (5) project for the exploration for oil :3: or other minerals, and (6) such other projects as the Central Government may, having regard to the economic development of the country, notify in the Official Gazette in this behalf: Provided these are imported (whether in one or in more than one consignment) against one or more specific contracts, which have been registered with the appropriate Customs House in the manner prescribed by Regulations which the Central Board of Excise and Customs may make under section 157 of the Customs Act,1962 (52 of 1962) and such contract or contracts has or have been so registered before any order is made by the proper officer of Customs permitting the clearance for home consumption, or deposit in a warehouse of items, components or raw materials; . All spare parts, other raw materials (including semi-finished materials), or consumable stores imported, as a part of a contract or contracts, registered in terms of sub-heading (i), provided the total value of such spare parts, raw materials, and consumable stores does not exceed 10% of the value of the goods covered by sub-heading (i) and further, provided that such spare parts, raw materials or consumable stores are essential for the maintenance of the plant or project mentioned in sub-heading(i). 4. It is further contended by the learned Senior Counsel for the Petitioner, that in view of the fact that in the case of similar projects, the Government had totally exempted imported equipments from incidence of customs duty under Section 25 of the Customs Act, therefore the Petitioner had applied for :4: a similar exemption by an application dated 1st October,1984 however the same was not granted. It is also contended by the learned Senior Counsel for the Petitioner that the Central Board of Excise and Customs (for the sake of brevity "CBEC") by its order dated 18th October, 1984 had informed the Petitioner that not only the Petitioner was entitled to the benefit of the Notification dated 2nd August,1976 but that once the Petitioner re-exports the goods it would be entitled to duty drawback. 5. It is the contention of Mr.Bharucha that the goods required for the project were imported by the Petitioner and the same were cleared on a provisional basis by the Petitioner executing bonds backed by bank guarantees to the Customs Authorities during the period 17th April,1983 to 8th April,1987. 6. The learned Senior Counsel for the Petitioner further contended that on 21st September,1987, the 2nd Respondent had issued a Show Cause Notice to the Petitioner alleging that the goods imported by the Petitioner did not form a part of the project and thus were ineligible for the discounted customs duty rate under Notification 2nd August,1976 or under Heading 84.66. 7. It is also submitted that though the CBEC forwarded to the 2nd Respondent its aforesaid order :5: dated 18th October,1984, by its letter dated 5th October,1987, the 2nd Respondent had issued a second Show Cause Notice dated 28th October,1987 and had showed that he had pre-decided the issue against the Petitioner and therefore aggrieved thereby, the Petitioner approaches this Court by way of the present Writ Petition. 8. Mr.Bharucha, the learned Senior Counsel for the Petitioner submitted that the Petitioner had imported several equipments for the construction of the project like bull dozers, hydraupull hydraulic pumps, hydraulic jacks, etc. These equipments were essential for the construction of the project and the same would be re-exported after the completion of the project. These equipments were ex-facie covered by the 84.66 read with the Notification dated 2nd August,1976 and the order dated 18th October,1984 of the CBEC. 9. In reply to the submissions made by the learned Senior Counsel for the Petitioner, Mr.Jetly, the learned Counsel appearing on behalf of the Respondents contended; a) that the equipments imported did not form part of the project but were only required at the time of erection of the project and were then to be re-exported. :6: b) that the equipments imported were "ancillary equipments" and thus not entitled to the discounted import duty. c) that the equipments imported were not "prime movers" and thus not entitled to the benefit of the project import regulations. 10. Mr.Bharucha, the learned Senior Counsel for the Petitioner has strongly relied on the judgment of the Hon’ble Supreme Court in the case of Commissioner Commissioner Commissioner of of of Customs, Mumbai Vs. Toyo Engineering India Ltd. Customs, Mumbai Vs. Toyo Engineering India Ltd. Customs, Mumbai Vs. Toyo Engineering India Ltd. (2006) (2006) (2006) 7 SCC 592 7 SCC 592 7 SCC 592, wherein in paragraph Nos.6,7,12 and 14 it is observed as under: 6. Heading 98.01 of the Tariff Act reads as under: 98.01 - All items of machinery including prime movers, instruments, apparatus and appliances, control gear and transmission equipment, auxiliary equipment (including those required for research and development purposes, testing and quality control), as well as all components (whether finished or not) or raw materials for the manufacture of the aforesaid items and their components, required for the initial setting up of a unit, or the substantial expansion of an existing unit, of a specified: 1) Industrial Plant, 2) Irrigation project, 3) Power project, 4) Mining project, 5) Project for the exploration for oil or other minerals, and 6) Such other projects as the Central Government may, having regard to the economic development of the country notify in the Official Gazette in this behalf; and spare parts, other raw materials (including semi :7: finished material), or consumable stores not exceeding 10% of the value of the goods specified above provided that such spare parts, raw materials or consumable stores are essential for the maintenance of the plant or project mentioned in (1) to (6) above." 7. Heading 98.01 covers all the items of machinery including prime movers, instruments, apparatus and appliances, control gear and transmission equipment, auxiliary equipments besides components and raw materials required for the initial setting up of a unit or the substantial expansion of an existing unit of a specified industrial plant. The industrial plant would include fertilizer plant as well as it is designed to be employed directly in the performance of processes necessary for manufacture of fertilizer. Since the fertilizer plant is covered by the industrial plant specified in Heading 98.01 of the Tariff Act all the "auxiliary equipments" which are required for the initial setting up of the unit could be imported under the project import scheme. 12. It is not disputed that construction equipments imported by the Respondent were used in the initial setting up of the plant. The Assistant Collector and the Appellate Authority denied the facility of the project import as the ownership of the imported goods would not pass to the project authority and that the machinery imported could be utilized elsewhere in the setting up of any other plant. What is required under Heading 98.01, Tariff Act is that the machinery imported should be required "for the initial setting up of a unit, or the substantial expansion of an existing unit". This heading specifically mentions and includes "auxiliary equipment". The "auxiliary equipment" has not been defined under the Tariff Act. As per dictionary meaning, extracted above, it is an equipment which aids or helps. Any equipment which aids or helps in the setting up of an industrial plant would fall and be covered under Heading 98.01 of the Tariff Act. The mere possibility of its being used subsequently for other project would not debar the Respondent from availing the facility of project import. If the contention of the Revenue is accepted, then resultant effect as put by the Tribunal would be: . ".....no equipment can be imported for projects like Konkan Railway Project, Road Development Projects of the National Highway :8: Authority of India, etc. specified under Heading 98.01 of CTA." 14. We do not find any substance in this submission. In that case this Court did not consider the vehicles imported to be an item of auxiliary equipment required for setting up of an initial unit on the ground that it was used only in shifting of the transformers which would not constitute an integral part of the power project. The vehicles imported were required for transportation of the transformers from railway yards to the erection sites and had no relation to power generation or power project. After transporting the specified number of transformers to the site of sub-station the utility of the vehicles would be over at the end of such transport and thereafter the vehicles could certainly be used for other purposes of the assessee. That the vehicles, which are used in the shifting of the transformers, would not constitute integral activity of the project. In the present case goods imported by the Respondent are hydle truck cranes, excavator, shovel loader, truck, forklift truck, power generators, diesel welder, welding rectifier, containers, tools and tackles instruments, level nako with tripod, theodolite nako with accessories and tripod besides window air conditioners, electric typewriter and camera with flash (the total cost of last three items is only Rs.70,000/- which is negligible). In fact, it was not disputed before the Tribunal or before us as well that the construction equipments imported by the Respondent were used in the initial setting up of the plant. The goods imported by the Respondent such as hydle truck cranes, excavator, shovel loader, truck, forklift truck, power generators, diesel welder, welding rectifier, containers, tools and tackles instruments, level nako with tripod and theodolite nako with accessories and tripod would certainly be auxiliary equipments which would help in the initial setting up of the industrial plant. The facility of the project import was denied to the Respondent because the ownership of the imported goods did not pass to the project authority. Since it is not disputed that the construction equipments imported by the Respondent were used in the initial setting up of the plant, then, as per the provisions of Heading 98.01 of the Tariff Act the Respondent could not be denied the benefit of the project import. :9: 11. It is also pertinent to note that the CBEC had passed an order dated 18th October,1984, Exhibit-"C" to the Petition and had confirmed that the goods which were being imported into the country on re-export basis were entitled to the benefit of concessional rate of duty under the Notification No.269/76. The CBEC had also stated that the Petitioner could avail the benefit of duty drawback under Section 74 of Customs Act,1962 in respect of the duty which they would have to pay on a concessional basis. 12. The learned Senior Counsel Mr.Bharucha for the Petitioner pointed out that the order dated 18th October,1984 passed by the CBEC was binding on the Respondents and the impugned show cause notices are wholly without jurisdiction. In support of his contention, the learned Senior Counsel relied on the decision in the case of Guest Keen Williams Ltd., Guest Keen Williams Ltd., Guest Keen Williams Ltd., Howrah Howrah Howrah Vs. Collector of Central Excise, Calcutta, Vs. Collector of Central Excise, Calcutta, Vs. Collector of Central Excise, Calcutta, 1985(22) 1985(22) 1985(22) ELT 504 ELT 504 ELT 504, wherein it is held that while it is correct that a quasi-judicial authority must act independently and impartially and is not bound by the executive and administrative instructions of others, they are undoubtedly bound by the decisions of higher authorities delivered in their quasi-judicial capacity. The learned Senior Counsel also relied on the decision in the case of Sun Export Corporation Vs. Sun Export Corporation Vs. Sun Export Corporation Vs. Collector Collector Collector of Customs 1989 (42) ELT 308 of Customs 1989 (42) ELT 308 of Customs 1989 (42) ELT 308, wherein it is observed that in a tier system, decisions of higher :10: authorities are binding on lower authorities and quasi-judicial tribunals are also bound by this discipline. 13. Under the aforesaid facts and circumstances, we are clearly of the view that as CBEC being a higher authority than the 2nd Respondent, this order of the CBEC is binding on the 2nd Respondent. The two Show Cause Notices issued by the 2nd Respondent (being Exhibits G at page 40 and J at page 46 to the Petition) are thus bad being contrary to the order of a higher authority viz. CBEC. The said Show Cause Notices are contrary to the settled interpretation of Tariff Item 84.66 read with Notification No.269/76. The said Show Cause Notices are thus not binding on the Petitioners. As a result, we are clearly of the view that the Petitioners are entitled to the benefit of the project import. 14. As far as the contention of the learned Counsel for the Respondent Mr.Jetly that the Petitioner has an alternate remedy by way of an Appeal cannot be sustained for the following reasons: a. In the case of Hirday Narain Vs. IT Hirday Narain Vs. IT Hirday Narain Vs. IT Officer Officer Officer Bareilly, AIR 1971 SC 33 Bareilly, AIR 1971 SC 33 Bareilly, AIR 1971 SC 33, the Hon’ble Supreme Court has held that "we are unable to hold that because a revision application could have been moved for an order correcting the :11: order of the Income Tax Officer under Section 35 but was not moved, the High Court would be justified in dismissing as not maintainable the Petition, which was entertained and heard on merits". b. In the case of Proctor & Gamble India Proctor & Gamble India Proctor & Gamble India Limited Limited Limited Vs. Municipal Corporation of Greater Vs. Municipal Corporation of Greater Vs. Municipal Corporation of Greater Bombay Bombay Bombay 2004 (1) Mh.L.J.406 2004 (1) Mh.L.J.406 2004 (1) Mh.L.J.406, this Court has held that "........it is well settled that once the Petitions are admitted for final hearing, without any reservation of right in favour of the Respondents to raise plea of non maintainability of the Petitions on account of any such alternative remedy being available to the Petitioners, the Respondents cannot be allowed to non-suit the Petitioners, at the final stage, merely on such a technical plea and more particularly when the Petitioners have a good case on merits. Applying the same rule to the case in hand, the objection relating to the availability of alternative remedy is rejected." c. In a Division Bench Judgment of this Court in the case of Century Spinning & Manufacturing Century Spinning & Manufacturing Century Spinning & Manufacturing Vs. Vs. Vs. Union of India 1993 (67) ELT 224, Union of India 1993 (67) ELT 224, Union of India 1993 (67) ELT 224, it is observed that "at this stage of final hearing Shri.R.V.Desai, the learned Counsel for the :12: Department urged that since thee is an alternate statutory remedy available to the Petitioner of preferring an Appeal to the Tribunal, this Writ Petition should not be entertained by this Court under Article 226 of the Constitution of India. This submission is merely to be stated to be rejected for the simple reason that rule was issued after hearing both the parties in the year 1979 and it is too late in the day at the stage of final hearing of the Petition in the year 1992 to take a preliminary objection for the exercise of our extra ordinary powers under Article 226 of the Constitution. d. In another decision of this Court in the case of MRF Ltd. Vs. Union of India 1985 MRF Ltd. Vs. Union of India 1985 MRF Ltd. Vs. Union of India 1985 (22) (22) (22) ELT 5 (Bom) ELT 5 (Bom) ELT 5 (Bom), this Court has held that ".......this Writ Petition was admitted after hearing the Respondents on 14th December,1983. Thereafter, on 7th March,1983, this Court had granted interim relief to the Petitioners...... Now, as held by this Court in Leukoplast (India) Private Limited, following the decision of the Hon’ble Supreme Court in L.Hirday Narayan’s case (AIR 1971 SC 33), when an alternative remedy exists and the High Court entertains a Petition and hears it on merits in spite of such alternative remedy :13: having not being availed of, the Petition cannot be rejected on the ground that a statutory remedy was not availed of. In the above circumstances, we feel loath to decline to exercise our writ jurisdiction and are of the considered opinion that this is one of those cases where the High Court should act under such extra ordinary jurisdiction." e. In the case of T.M.Corporation Calcutta T.M.Corporation Calcutta T.M.Corporation Calcutta Vs. Vs. Vs. I.T.Commissioner, W.B. AIR 1977 SC 1134 I.T.Commissioner, W.B. AIR 1977 SC 1134 I.T.Commissioner, W.B. AIR 1977 SC 1134, the Hon’ble Supreme Court has held that "........there is no rule of law that High Court should not entertain a Writ Petition where an alternative remedy is available to a party. It is always a matter of discretion with the Court and if the discretion has been exercised by the High Court not unreasonably or perversely, it is settled practice of this Court not to interfere with the exercise of discretion by the High Court. The High Court in the present case entertained the Writ Petition and decided the question of law arising in it and in our opinion rightly." 15. Under the aforesaid facts and circumstances of the case, specially in the light of the aforesaid judgment of the Hon’ble Supreme Court in Commissioner Commissioner Commissioner of of of Customs, Mumbai Vs. Toyo Engineering India Customs, Mumbai Vs. Toyo Engineering India Customs, Mumbai Vs. Toyo Engineering India :14: Ltd.(Supra) Ltd.(Supra) Ltd.(Supra), wherein it is clearly mentioned that the Petitioner could avail duty drawback under Section 74 in respect of the duty which they would have to pay on the concessional basis with regard to the goods which were imported into the country on re-export basis are fully entitled to the benefit of concessional duty under Notification No.269/76. 16. Under these circumstances, Rule is made absolute in terms of prayer clauses (a), (b) and (c), however, the bank guarantee given by the Petitioner shall be kept alive for the further period of 24 weeks, from this date. (S.J.KATHAWALLA,J.) (S.J.KATHAWALLA,J.) (S.J.KATHAWALLA,J.) (DR.S.RADHAKRISHNAN,J.) (DR.S.RADHAKRISHNAN,J.) (DR.S.RADHAKRISHNAN,J.)