Operation of machinery during exhibition constitutes use, making it ineligible for refund under Section 74(1) of the Customs Act.

( 1 ) THE petitioner has claimed a refund of Rs. 91,908/- in respect of the machineries imported and re-exported in accordance with the provisions of Section 74 of the Customs Act. It is undisputed that the said equipments were imported by the petitioner for exhibition and demonstration and thereafter, re-exported. Under sub-section (1) of Section 74 of the Customs Act, 98% of the duty is refundable. This refund is subject to the conditions mentioned therein. Under sub-section (2) of Section 74, if the goods have been used after importing, then, the refund is permissible as per the notification issued, the notification dated 6-2-1965, as amended by notifications dated 8-11-1969 and 2-5-1970 have been issued in this respect by the respondents. According to this notification, if the imported goods have been re-exported within a period of 6 months, then refund of 85% alone is permissible. It is submitted by the learned Counsel for the petitioner that the provisions of Section 74 (2) are not applicable as the goods have not been put to use and exhibition or demonstration of the goods does not amount to use of goods.

( 2 ) RELIANCE is placed on the judgment given in the case of ABC India Limited v Union of India.

( 3 ) ARGUMENTS of both the learned Counsels for the parties heard.

( 4 ) THE short point to be decided is as to whether demonstration and exhibition of the machinery/equipment amounts to use of the goods:

( 5 ) THE Assistant Collector of Customs found that the instruments were used during exhibition for demonstration. A contention was raised that the items were not commercially used. It was found that the demonstration tantamounts to usage as the equipments imported are required to be operated and appropriately regarded as used. No evidence was put forth to prove that the instruments were not operated during the course of exhibition. Against the order of the Assistant collector dated 30-1-1991, an appeal was preferred with the Collector of Customs and Central excise (Appeals) which was dismissed on 28-11-1991. The Appellate Authority found that the demonstration in an exhibition involves use of the goods as without the use of the goods, demonstration is not possible. The revision preferred before the Government of India was also rejected on 24-8-1992, wherein it was held that, when once the goods were out of customs charge, it is neither practical nor possible for the customs authorities to know the exact nature and extent of use to which such goods are put. Use for demonstration was also considered as a use.

( 6 ) THERE is a difference between display and demonstration. It is not the case of the petitioner that the machineries imported were kept in tact and were not operated. No evidence to this effect was submitted. Once the machinery is operated, may be for a shorter time for demonstration or exhibition to show its performance etc. , the machinery is used. If a machinery is put to use in exhibition, for sometime, then, it does not remain as a new machinery. Even the machineries which are brought for exhibition, after display, normally they are sold at lesser price. There is always depreciation of the machinery. The finding which has been recorded that the machineries were operated is not challenged. Once there is operation of a machinery, it amounts to its use and as such, the refund could be claimed only under Section 74 (2) of the Customs Act and not under section 74 (1 ). The decision which has been relied on by the learned Counsel for the petitioner has no application, because, in that case, the machineries were not put to any use at all, and distinctions were drawn between the provisions of Sections 74 and 75 of the Customs Act. Section 75 of the Customs Act refers to the use in the manufacture of goods. There is no such contemplation under Section 74 and therefore, the use for exhibition would be covered under the term used under Section 74 (2 ). The refund has rightly been granted. No case for interference i

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