Case: British Machinary Supplies Company Vs. Union of India &amp; Others

Facts are, in brief, these: Appellant firm ha 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 others 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 84.41(1) of the 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 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 sewingthen filed a statutory appeal before the Appellate Collector of Custom who allowed the appeal holding that the goods imported were not for domestic sewing m achines 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, inspite 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.Appellate collector concurred with the importers 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 noticedthe rotating book in the industrial machine had higher speed than the domestic sewing machine and if the rotation pin of the industrial sewing machines were to be attached to the domestic sewing machines, it would not withstand the speed and would break."Collector, therefore. was convinced that the hooks imported by the appellant were not for domestic sewing machines and were "solely" and principally for use in machines operated with more than 1/4 H.P. and as such are classifiable under ICTof India differed form the above conclusion, mainly on the premises that (1) "the rotating hooks complete with bobbin case" find their use in domestic as well as other sewing machines, but their principal use lies in domestic sewing machines, (2) the term sewing machine should have been understood in the manner it is understood in international market/trade for purposes of customs classification. and (3) the corresponding heading in the Brussels Tariff Nomenclature (BTN) covers to w types of sewing machines, namely (a) ordinary sewing machines used in homes or by tailors or dress-makers etc.. (b) special machines which can be used only for certain other kinds of sewing (as enumerated therein).

Court's reasoning:
If the imported components were for domestic sewing machines then the Central Government is right in insisting on the customs duty realised form the appellant. The language in which the item in the schedule is couched indicates that one category relates to a specific specie i.e. "domestic sewing machines", and the other is a general category i.e. "not elsewhere specified". Apparently the burden is on the revenue if they want to include the imported materials within the specific category to substantiate that those materials arereliance is sought to be made on this circular. The only conclusion that can be arrived at, if the said circular has any use, is that the imported materials in this case are usable for industrial sewingin this case there is no material to show that a sewing machine fitted with the type of components imported by the appellant is generally used in household work.We find that the observations made by the Special Bench of CEGAT in Para Engineering Works, New Delhi vs. Collector of Customs, New Delhi, as more appropriate to the facts of this case. A manufacturer, importing some components of industrial sewing machines with a motor of 1/4 H.P. had to approach the Special Bench as similar question was raised by the custom officials. The Tribunal noted that each Bill of Entry pertaining to the import in that case contained reference to the invoices which were properly co-related with the bills. Those documents contain the description that the components were for industrial sewing machines. Assessment made under a different item inspite of such invoices was held to b e unsustainable. The position in this case is almost similar. From the above discussion we come to the conclusion that Government of India have wrongly exercised revisional powers by interfering with the decision of the appellate Collector.