ORDER
Rajamanickam, Member
1. The Appeal is against the order of the Collector of Customs(Appeals) in C3/983/85 dated 17-12-1985, who has allowed the benefit of the Notification No. 70/81 to the Respondents.
2. The facts in brief are: the Respondents M/s. Bharat Heavy Electricals Limited filed a bill of entry for clearance of “Tubular Alumina Balis” and claimed exemption under the Notification No. 70/81. The Notification was found not applicable to R & D Unit attached to Industrial Undertaking and a demand for Rs. 7,00,177.90 was issued and confirmed by the Assistant Collector. On appeal to the Collector of Customs (Appeals), the respondents’ appeal was allowed, against which the Revenue, has filed the appeal before the Tribunal.
3. In their grounds of appeal, the appellants have contended that the Notification No. 70/81 is applicable for duty free import for certain specified goods provided it is imported by Research Institution, subject to fulfillment of the conditions of the notification. The R & D Unit of M/s. B.H.E.L. cannot be considered as a Research Institution as stated in Notification No. 70/81, it is a Research and Development Unit attached to B.H.E.L. which is a commercial organisation.
The Tariff Circular No. 32/84 has been circulated explaining the scope of the term “Research Institution” and the benefit of the Notification cannot be extended to research units attached to Public Sector Undertakings like B.H.E.L.
The notification envisages that the research institution shall furnish to the Assistant Collector of Customs, a certificate from the concerned Ministry that the goods are essential for research and the institution is not engaged in any commercial activity. In the present case the Ministry has certified that the M.H.D. Research Project is not engaged in any commercial activity. But the certificate does not state that the R & D Unit of B.H.E.L. is not engaged in commercial activity. Further, the goods imported are for a research project sponsored by the Govt, of India and the project is executed by B.H.E.L. and Bhaba Atomic Research Centre. That a research project cannot be considered as a Research Institution and hence Notification No. 70/81 is not applicable.
4. Shri Rajesh Dhingra, Ld. S.D.R appearing for the department has reiterated the above grounds and emphasised that the B.H.E.L. is a commercial undertaking and the conditions in the Notification No. 70/81 have not been fulfilled.
5. The Respondents have filed cross-objections wherein they have rebutted the points raised in the appeal. The M.H.D. Project is an independent research institute as evidenced by the Department of Science and Technology, that the administrative Ministry, which is the Ministry of Science and Technology has given the Essentiality Certificate and also a certificate that the research project is not engaged in any commercial activity. That the importer is M.H.D. Project, which is a research institute and the B.H.E.L. acted only as an agent of the Ministry of Science & Technology for executing the project. The appeal by the department coming to the erroneous conclusion that the import is made for the R & D Unit of B.H.E.L., is incorrect.
6. Representing the Respondents, S/Sh. P.K. Srivastava, Manager (CA&CC) and R. Subramanian, Consultant, during their oral submissions reiterated the points raised in the cross-objections and further stated that they had enclosed the letters received from the Govt, of India that they were eligible for availing the benefit of the Notification No. 70/81 dated 26-3-81 and as amended and the Assistant Collector has in his letter dated 15-10-1986 informed them that their M.H.D. Research Project will be eligible to avail the, benefit of the notification and the imports made by the M.H.D. Research Project in terms of the notification will be extended the benefit subject to the conditions of the Notification. The relevant case law on the subject was cited as – Indian Telephone Industries Ltd. v. C.C. Madras.
7. The consignment imported was “Tubular Alumina Balls”. The Respondents had at the time of import cleared the goods free in terms of the Notification No. 70/81 which was re-assessed to duty and demand for Rs. 7,00,177.90 raised. The Collector(Appeals) has allowed the appeal of the respondents on the ground that M.H.D. is a research project totally funded by the Ministry of Science and Technology and has an independent existence, that B.H.E.L. is only an agent for executing the project and the benefits of research work of M.H.D. project will not accrue to M/s. B.H.E.L. for their commercial exploitation and hence the benefit of Notification No. 70/81. should accrue to the subject import. By so allowing the appeal, the Collector (Appeals) has tried to spell out the outcome of (he benefits available from the exemption. The Notification. No. 70/81 is extracted below:
Scientific/Technical Instruments etc, imported by approved non-commercial research institutions: In exercise of the powers conferred by Sub-section(1) of Section, 25 of the Customs Act, 1962 (52 of 1962) and in supersession of the notification of the Government of India in the Department of Revenue and Banking No. 211 Customs, dated the 2nd August, 1976, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all scientific and technical instruments, apparatus and equipments including spare parts, component parts, and accessories thereof, but excluding consumable items, imported by a research institution from the whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the whole of the additional duty leviable thereon under Section 3 of the said Customs Tariff Act, subject to the conditions that
(i) A duly authorised officer of the Directorate General of Technical Development certifies in each case that the goods in respect of which the exemption is claimed are such as are not manufactured in India and such certificate is produced at the time of clearance or within such period as the Assistant Collector of Customs, may, on sufficient cause being shown, allow In each case; and
(ii) the research institution shall furnish a certificate to the Assistant Collector of Customs from an officer not below the rank of an Under Secretary in the Ministry administratively concerned with the said institution to the effect that the import of the goods in respect of which the. exemption is claimed is essential for research and the imported goods shall be used only for such purposes by the said institution and the said institution is not engaged in any commercial activity.
This notification shall come into force forthwith and shall remain in force upto and inclusive of the 31st day of March, 1983.
(Notification No. 70-Cus dt. 26-3-81 as amended by Notification No. 98/83-Cus dtd. 31-3-1983).
The salient features of this Notification is that the goods referred to should be imported by a research institution, a certificate from the D.G.T.D. that the goods are not manufactured in India should be produced and a certificate should be produced by the Ministry administratively concerned that the goods are essential for research and the imported goods shall be used for such purpose by the institution and the said institution is not engaged in any commercial activity.
8. Therefore, the above conditions whether or not fulfilled has to be seen. The import has been made by M/s. B.H.E.L. as per the bill of entry, address is given as M.H.D. Project. The project is stated by the Respondents to be conducting research on producing energy for electrical power generation, it is sponsored by the Department of Non-Conventional Energy and the project is executed by M/s. B.H.E.L. and Bhaba Atomic Research Centre. As per the Notification, import has to be made by the research institution. The case law cited – Indian Telephone Industries v. Collector of Customs, Madras, has gone into length about the definition of the term ‘Institution’, which is reproduced below:
The appellants argued that an institution need not necessarily be a separate Legal body. Therefore, it is first necessary to examine as to what is an ‘institution’. Some guidance on the point is available from certain extracts from the judgements of the British, Australian and Canadian Courts. We reproduce below those extracts from pages 66-67 of the book “Words and Phrases Legally Defined” Volume-3, 1-N, 2nd Edition, by John B. Saunders:-
Instinuion:
This Act applies to every institution established whether before or after the passing of this Act, for effecting all or any of the following purposes, that is to say….; (i) To give technical instruction; (ii) To provide the training, mental or physical, necessary for the above purpose; (iii) In connection with the purposes before mentioned, to provide workshops, tools, scientific apparatus and plant of all kinds, libraries, reading rooms, halls for lectures, exhibitions and meetings, gymnasiums, and swimming baths, and also general facilities for mental and physical training, recreation and amusement, and also all necessary and proper accommodation for persons frequenting the institutions (Technical and Industrial Institutions Act, 1892, Section2).
“Institution” includes any trust or undertaking (Charities Act 1960, Section 46).
“It is a little difficult to define the meaning of the terms ‘institution’ in the modern acceptation of the word. It means, I suppose, an undertaking formed to promote some defined purpose having in view general the instruction or education of the public. It is the body (so to speak) called into existence to translate the purpose as conceived in the minds of the founders into a living and active principle…. A public library may, I think, be properly called an ‘institution’ in that sense.” Manchester Corporation. v. Mc Adam (1896) AC. 500 per Lord Macnaghten, at pp. 511, 512.
Australia: It is true “that the name is often popularly applied to the building appropriated to the work of a benevolent or educational institution; but this is rather a transferred sense. The existence of a distinctive building is not, I think, essential to the word ‘institution’.” Young Men’s Christian Assocn. of Melbourne v. Federal Coinr. of Taxation (1926) 37 C.L.R. 351, per Higgins, J. at p. 361.
Canada: [Section 4(e) of the Income Tax Act (Canada) 1927 exempted from taxation the income of (inter alia) any charitable “institution”.] “It is by no means easy to give a definition of the word “institution” that will cover every use of it. Its meaning must always depend upon the context in which it is found in the sub-section in question that the word is intended to connote something more than a mere trust…. In view of the language that has in fact been used, it seems to (heir Lordships that the charitable institutions exempted are those which are institutions in the sense in which boards of trade and chambers of commerce are institutions, such for example, as a charity organisation society, or a society for the prevention of Cruelty to Children.” Minister of National Revenue, v. Trusts & Guarantee Co. Ltd (1940) A.C. 138, P.C. per cur., at pp 149, 150.
In the light of the above extracts, we agree with the appellants that to be an institution, it is not necessary that the body in question should have a separate legal status. In the concept of ‘institution’, the stress is more on the purpose behind setting up of that body. Thus, the public library, though a part of Municipal Corporation, was held to be an institution. On the same reasoning, a school or a hospital or a club set up by a large company or trust would also be an institution in its own right. So was the R & D unit of the appellants.
The conclusion drawn from the above decision is that an institution need not have a separate legal status and the R & D Unit of I.T.I, was a research institution in its own rights. The position here is whether the import has been made by the research institution. The importers in this case is B.H.E.L., an agent for M.H.D. Project, will a project be considered as an institution? It is found to be a project for conducting research on producing energy and the project is executed by B.H.E.L. and Bhaba Atomic Research Centre. From the literature produced, the following is the extract:
As a part of national programme on energy research, the Department of Science & Technology, Government of India has set up a Research Project for undertaking studies related to coal based MHD steam power plant on a pilot scale at Tiruchy. Bharat Heavy Electricals Limited and Bhaba Atomic Research Centre together with the assistance from USSR are actively engaged in setting up the MHD pilot plant at Tiruchirapalli. The pilot plant is slated for commissioning soon. Indian MHD pilot plant being installed is designed for 5 MW(T) input which with a view modification can be upgraded to 15MW input(T) in the second phase of work. In the pilot plant various component designs like air preheaters, combustors, Nozzles, MHD generator etc. Will be tested and developed. Development of MHD components requires intensive R & D efforts in the field of gas dynamics, plasma physics, heat transfer, materials development etc.
It is seen that intensive R & D efforts in the field of gas dynamics, plasma physics, heat transfer, materials development etc. is required. There is, therefore no doubt that it conforms to the scope of the term “Institution” for doing research work, but the importation has to be made by the research institution and certificate has to be produced that the institution is not engaged in any commercial activity. The importation in this case has been made by B.H.E.L. Again referring to the case law cited supra Mis. I.T.I, v. Collector of Customs, the decision is as follows:
While we agree with the appellants on the above two points, we find it difficult to accept that the imports in question were made by a Research Institution, namely, the said R & D Unit. Two specimen copies of the bills of entry and the import invoice are available on the record. We find that in the bills of entry the name of the importer has been declared as M/s. Indian Telephone Industries. In the import invoice also, M/s. Indian Telephone Industries are mentioned as the purchaser. The bills of entry and the Import Invoice are the two most important documents required to be statutorily submitted by the importer under Section 46 of the Customs Act, 1962. We do not find any mention of the R & D Unit of the appellants in these import documents, nor do we find any mention therein that the goods under import are for the use of the R & D Unit. Going by the record, the only conclusion possible is that the importer of the goods was M/s I.T.I. In the earlier notifications of 1969 and 1976, the language permitted import of the goods ‘by or against the order’ of the Research Institution but the notification with which we are concerned now uses a different language. It refers only to the goods ‘imported by a Research Institution’. When there is a deliberate departure from the wording used earlier, we take it that the requirement of the present notification is that the Research Institution should directly import the goods. We cannot ignore the plain wording of the notification and go in search of any supposed contrary intention. Indeed, if there is a contrary contention, it is for the two concerned departments of the Govt, of India, namely, the Department of Revenue and the Department of Telecommunications to sort out the matter and to amend the wording of the notification to bring out the intention clearly.
The above ratio is squarely applicable. The importer is M/s. B.H.E.L. and no certificate to the effect that it is not engaged in commercial activity has been given. Instead certificate issued by the Ministry indicating that M.D.H. Project is not engaged in any commercial activity will not serve the purpose for fulfilling the conditions of the Notification. It is well-settled law that a Notification has to be strictly interpreted, in the decision of the Hon’ble Supreme Court in the case of M/s. Hemraj Gordhandas v. H.H. Dave, Asstt. Collector of C.E. & Customs, Surat and Ors., reported in (1978 E.L.T. (Vol-2) J350), to quote: “Place of intendment in a taxing statute – It is well established that in a taxing statute there is no roomi for any intendment but regard must be had to the clear meaning of the words.” Whatever be the intendment one has to go strictly by the Notification and not by the implied benefit that will accrue. The respondents have cited the letter written by the Government of India, it is not known whether these were produced before the lower authorities. These letters only refer to availability of Notification to the Research Project that the “import made by M.H.D. Research Project in terms of the Notification will be extended the benefit, subject to the conditions of the notification.” There is no infirmty or contradiction, the project is entitled to the exemption provided it has imported the goods subject to the conditions. As M/s. Bharat Heavy Electricals Limited is the actual importer, it is not entitled to the benefits, in view of the conditions laid down in the notification not being fulfilled.
9. In consequence, the appeal is allowed. The cross objections filled are also disposed of.