Back
2004(5) Supreme 533
SUPREME COURT OF INDIA
(From Central Excise and Gold (Control) Appellate Tribunal, East Zonal Bench at Kolkata)
S.N. Variava & Arijit Pasayat, JJ.
Commissioner of Customs, Kolkata -Appellant
versus
M/s. Rupa and Co. Ltd. -Respondent
Civil Appeal No. 5944 of 2002
With
C.A.No. 1975/2003, C.A.Nos. 3538-3562/2003, C.A. Nos. 3761-3763/2003, C.A. No. 4190/2003, C.A.Nos. 9306-9311/2003, C.A.Nos. 9565-9569/2003, C.A.Nos. 1277-1283/2004, C.A.Nos. 1284-1285/2004 & C.A.No. 2619/2004
All Decided on 21-7-2004
Counsel for the Parties :
For the Appellant : A.K. Ganguli, Sr. Advocate, Dileep Tandon, P. Parmeswaran, Om Prakash, B.K. Prasad, Advocates.
For the Respondents : Sudhir Chandra, S. Balakrishnan, R. Mohan, T.R. Andhyarujina, Sr. Advocates, Parijat Sinha, Snehasish Mukherjee, S.C. Ghosh, Mrinal Kanti Mandal, Subramonium Prasad, Abhay Kumar, R. Gopalakrishnan, J.M. Khanna, A. Sathath Khan, Ms. Shefali Sethi, T.N. Bhat, S.B. Kumar, R. Nedumaran, Rakesh K. Sharma, Shankar Divate, Advocates.
Held : This Notification is very clear. The 100% exemption is given to capital goods required for manufacture of, amongst others, "textile garments". The term "capital goods" has been defined in the Notification. The term "capital goods" means goods which are used in the manufacture of that product and also goods which would be required for manufacture or production of other goods including packaging machinery and equipments. The term also includes instruments for testing, research and development. The term includes machines for pollution control, refrigeration, power generating sets etc. Thus, for example, if after manufacturing of textile garments the same have to be packed, the machinery required for packing would be capital goods required for manufacture of textile garments. Similarly, refrigeration machinery for refrigerating the plant would also fall within the term capital goods required for manufacture of textile garments. If such sort of equipments and machinery get covered by the term "capital goods" we fail to understand as to how machinery required for knitting, dyeing, compacting are not covered. For the purposes of manufacture of garments it cannot be said that only stitching and knitting machines are required. Apart from stitching and cutting the manufacturer may himself manufacture the yarn or fabric. The quality of the yarn or fabric would have to be tested. Machines would be required for that. Similarly, machines for dyeing and/or drying the fabric or yarn, machines for inspecting the defects etc. would be required. The term "capital goods" required for manufacture of textile garments would thus include all machines required for the ultimate manufacture of the garments. The Notification has its own safeguards. The import can only be under a license issued under the EPCG Scheme. The license would contain a condition that garments must be exported by the importer. The Notification also contains a condition that the capital goods (which are imported) are installed in the importers factory or premises and a certificate to that effect has to be produced within 6 months of the date of the import. (Paras 8 and 9)
JUDGMENT
S.N. Variava, J.-All these Appeals are being disposed of by this common Judgment as the facts are identical and they all involve a common point.
2. In all these Appeals the Respondents are manufacturers of textile garments. By Notification bearing No. 29/97-Cus dated 1st April, 1997 exemption from custom duty was granted to capital goods, components and spares thereof etc. imported under the Export Promotion Capital Goods Scheme (for short EPCG Scheme). The relevant portion of the Notification reads as follows:
"Exemption to capital goods, components and spares thereof etc. imported under EPCG Scheme.- In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods specified in the Table annexed hereto from whole of the duty of customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and from so much of the additional duty leviable thereon under section 3 of the said Customs Tariff Act, as is in excess of the amount calculated at the rate of 10% of the value of goods:
Provided that where the said goods are required for-
(i) the manufacture of leather garments, textile garments (including knitwears), agro products and products of horticulture, floriculture, poultry and bio-tech products, or
(ii) rendering services to hotel industry,
such goods shall be exempted from the whole of the additional duty leviable thereon under section 3 of the said Customs Tariff Act.
xxx xxx xxx
xxx xxx xxx
6. The capital goods imported, assembled or manufactured as in stalled in the importer s factory or premises and a certificate from the jurisdictional Assistant Commissioner of Central Excise or independent Chartered engineer, as the case may be, is produced confirming installation and use of capital goods in the importer s factory or premises, within six months from the date of completion of imports or within such extended period as the said Assistant Commissioner of Customs may allow.
xxx xxx xxx
xxx xxx xxx
Explanation-In this notification-
(1) "Capital goods" means,-
(i) any plant, machinery, equipment and accessories required for-
(a) manufacture or production of other goods, including packaging machinery and equipments, refractories, refrigeration, equipment, power generating sets, machine tools, catalysts for initial charge, and equipment and instruments for testing, research and development, quality and pollution control;
(b) use in manufacturing; mining agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, viticulture and sericulture; and
xxx xxx xxx
xxx xxx xxx
(4) "export obligation"-
(i) in relation to importers other than hotel industry rendering services, means export to a place outside India of products manufactured with the use of capital goods imported, assembled or manufactured in terms of this notification or making of supplies of such products in terms of clauses (a), (b), (d), (e), (f) and (g) of paragraph 10.2 of the Export and Import Policy; and
xxx xxx xxx
xxx xxx xxx"
3. Thus capital goods imported under the EPCG Scheme were exempted from payment of customs duty and so much of additional duty as was in excess of 10% of the value of the goods. Under the proviso if the capital goods were imported for manufacture of items mentioned therein then they were
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
