Commissioner Of Customs vs Reliance Industries Ltd. on 23 September, 1998

Customs, Excise and Gold Tribunal – Mumbai
Commissioner Of Customs vs Reliance Industries Ltd. on 23 September, 1998
Equivalent citations: 1999 (107) ELT 494 Tri Mumbai


Gowri Shankar, Member (T)

1. The question for consideration in both appeals is common.

2. Each of the respondents imported goods stated to be centrifugal gas compressor. Clearance was claimed under an Open General Licence under entry 20(2) of Appendix 1 Part B of the Import Policy 1988-91. The department thought that the goods were air compressors and not gas compressors and that centrifugal air compressors would be covered by Entry 479 of Appendix III Part A had required a licence which was not produced. Notices were accordingly issued. After considering the contentions raised the Collector in his order which framed three questions for consideration. These were whether the goods were centrifugal gas compressors or air compressors; if they were air compressors they would be covered by Entry 20(2) of Appendix 1 Part B or Entry 479 of Appendix 3A and if they were covered by the latter entry whether the fact that they were imported as capital goods would be relevant in deciding whether the goods fell within the scope of Appendix 3 Part A. He found that the goods were air compressors but covered by Entry 20(2) and that even if on the assumption that they were not so covered, restriction regarding import in Appendix 3 Part A would not apply. These contentions are challenged by the department.

3. The departmental representative adopts the reasonings in the appeal.

4. Entry 20(2) of Appendix 1 Part B reads “centrifugal gas compressors”. Entry 479 in Appendix 3 reads “air and gas compressors”. The importer’s contention was that air is nothing other than a mixture primarily of two gases, nitrogen and oxygen and that the term “gas compressor” in Appendix 1 entry would include air compressors. The Chief Controller of Imports Exports when initially asked by the Custom House stated in his letter dated 20-8-1990 that gas compressors in that appendix would not include compressors intended for compressing air. Subsequently however at the instance of the importer the Director General of Technical Development (DGTD) examined the issue, and after perusing the various documents including the letter from the manufacturer of the goods and the Chartered Engineer’s certificate said that since the compressors are capable of compressing gases like nitrogen also they would possibly be covered in the category of gas compressor. Once again dated 10-2-1992 the licensing authority was asked for his opinion. While the Collector refers to his opinion in his order he has not reproduced it.

5. The Collector notes that the compressors are physically designed as air compressors. He however says that would still come within the category of gas compressors, for the reason that air is nothing but a kind of gas. He further notes that while Entry 479 in Appendix 3 speaks of air compressors and gas compressors there is no such separate mention in Appendix 1 entry. Therefore he concludes that the goods are covered by this entry.

6. The contention in the appeal that there is “inbuilt distinction in the configuration of air compressor and gas compressor” is totally unsupported by any evidence. On the contrary the DGTD had, after considering the technical material, noted that the imported compressors were capable of compressing gases like nitrogen and this is not rebutted.

7. It stands to reason that compressor capable of compressing air which is 70% nitrogen and 30% oxygen would have the technical capability to even press a gas with characteristics similar to nitrogen. This has in any event been confirmed by the DGTD. The fact Appendix 3 entry includes only centrifugal gas compressors and Appendix 1 entry and gas compressor cannot also be overlooked. In the light of the DGTD’s opinion and in the absence of any material to the contrary, the Collector’s view cannot be found fault with.

8. This would be sufficient to settle the issue and the gas would have to be held valid for import unless the policy prohibited the import elsewhere. It is contended in the appeal in view of the provisions of Para 21 (c) and (f) the import could not be allowed under Appendix 1 for the reason that they figure in Appendix 3. Para 21(c) provides that an item with a specific description in Appendix 2 Part B or Appendix 3 Part A will prevail over an item with a generic description in any of these appendices. This item governs interpretation interse between these two appendices, as Para 21 makes clear. This will therefore not be relevant in the present situation. Para 21 (f) provides that any item in appendices 2, 3, 5 and 8 with a specific or generic entry preclude eligibility to its import under OGL except where the policy allows this clearly. This is answered in two manners that import of gas compressors was specifically permitted in Part B Appendix 1 and therefore the reference to air/gas in Appendix 3 will not preclude import under Appendix 1. In fact the Appendix 3 entry is for air and gas compressors whereas Appendix 1 is for particular kind of centrifugal compressors. It could therefore be concluded that the Appendix 3 entry will not include centrifugal compressors which merit special mention in Appendix 1(b) as permissible for import.

9. The second answer is the one that the Collector has given. Appendix 1 governs import of counted goods under OGL whereas Appendix 3 is for raw material, components and (sic). The Collector has referred to Para 20 of the policy in support. That paragraph makes clear the distinction between capital goods on the one hand and raw materials and consumables on the other. He has also referred to the clarification dated 20-6-1989 of the licensing authority and a clarification by Mr. D.R. Mehta. Chief Controller of Imports Exports that classification in the import policy of goods as components or of capital goods depends on end use. These letters clarify that goods which might be components and as such be covered by the appendices in which they are listed as components might, notwithstanding be imported as accounted goods if the policy permits such import. The Collector’s view that since the goods were imported for installation in the important factories for manufacturing other goods they are to be considered as capital goods and therefore Appendix 3 has no relevance cannot be questioned.

10. The contention that the Collector in coming to his conclusion about whether the goods were air or gas compressors should have relied on one clarification which was available to the department and should not have relied on the other is again not acceptable. In the event of a conflict in views the benefit of the doubt has to go to the importer.

11. The Collector’s order holding that the goods were eligible under 9801 is only on the ground that they were not entitled under OGL. Since his view has been confirmed this ground has no merits.

12. We therefore see no reason to interfere. Appeals dismissed.

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