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Bombay High Court
Hindustan Lever Ltd. vs Collector Of Customs & C. Ex. on 1 January, 1800
Bench: P Desai, R Jayaraman


R. Jayaraman, Member (T)

1. This appeal is directed against the order of the Collector of Customs & Central Excise, Kandla Free Trade Zone, bearing No. FTZ/Cus/IMP? 83-84/1979 dated 21-3-1984.

2. The brief facts necessary for the disposal of this appeal can be stated as below :

3. The appellants, who have set up their unit for export production of Lipstick and cosmetics in the Kandle Free Trade Zone imported second hand machinery for the manufacture of Lipstic. They sought for clearance in terms of Appendix 21 of the Policy. However, the same was objected to on the ground that the goods were not figuring in Appendix 2 eligible for import under OGL. The goods were, therefore, ordered confiscation but allowed redemption. There were three consignment covered by three different Bills of Entry. The total redemption fine imposed in respect of the three consignments is Rs. 12,284.00. The appeal is against the order of confiscation and imposition of redemption fine.

4. Shri Gupta, on behalf of the appellants, contended that the units working in the Free Trade Zone are governed entirely by the Open General Licence indicated in Appendix 21. He took us through the said O. G. L. order and stated that this is specifically applicable to the actual located in the respective Free Trade Zones for the import of goods including Capital Goods. He maintained that so long as the Development Commissioner is satisfied that the machinery imported is meant for the purpose of production in the unit which has been approved in the Zone, they will be covered by Appendix 21. He also took us through the procedure for import of Capital Goods referred to in Appendix 21. He contended that Appendix 2 lists out the Capital Goods permitted under OGL. This list is of no relevance for the units working in the Free Trade Zone because if the units in the Free Trade Zone are to go by this list, Significance of Appendix 21 exclusively meant for those units is without any meaning. He. therefore, pleaded that the order of confiscation be set aside and the appellants be granted refund of the fine paid.

5. Shri Mondal, on Behalf of the department, contended that the units working in the Free Trade Zone also form a category of importers. He invited our attention to pars 230 of the Policy AM 83-84 according to which details of items which can be imported under OGL by various categories of importer are given in Appendix 10. According to Appendix 10. only Capital goods figuring in Appendix 2 can be imported under O. G. L. Since the goods imported do not figure in Appendix 2 the Collector was justified in ordering confiscation.

6. Shri Gupta , however, contended that the categories of importers are specified in Appendix 2 itself. Hence the units in the Free Trade Zone cannot come under the various categories referred to in para 230. In the case of units functioning under Free Trade Zone, they are distinctly covered by Appendix 21 for import of their requirements.

7. After hearing both sides and perusing the available records. We find that the question to be decided in this case is whether Appendix 21 is exclusive for the units in the Free Trade Zone. Even if they satisfy the conditions and procedural requirements for the import of goods as prescribed under Appendix 21, whether they are also bound by the conditions of import under Appendix 2. As per the order issued under Appendix 21, in Para 5 it is stated that the licence is without prejudice to the application to any goods of any other prohibition or regulation effecting the import that may be in force at the time when such goods are imported. This is the only prohibition given in that OGL Appendix 21. This prohibition, in our view only refers to prohibition or regulation affecting import under various other acts they are required to comply with. It cannot be taken to mean that they are bound by the list of Capital Goods referred to in Appendix 2. If it were so, referred to Appendix 10 or Appendix 2 should have been made in the O. G. L. order itself and not in Appendix 21. We are also in agreement with Shri Gupta that so long as the Development Commissioner of the Zone is satisfied that the machinery imported is meant for the purpose of export production in the approved unit, there is no other restriction imposed under this Appendix 21, On this find that the Collector himself is satisfied that the Capital Goods imported are meant for export production in the approved unit in the Zone. In the context of the findings of the Collector, it is clear that the import was squarely within the purview of Appendix 21, Hence it is immaterial for us to look into whether this item figure in Appendix 2 or not, so long as there is no such restriction mentioned, either in Appendix 21 or anywhere else. Para 230 talks about various categories of importers which are specified in Appendix 10 itself, Hence we are unable to appreciate the argument of Shri Mondal that para 230 includes the imports made by the units in the Free Trade Zone as a category. In this view of the matter and taking note of the positive findings of the Collector that the goods are meant for export production in the approved unit, we do not find any reason to justify the order of the Collector. If there had been any doubt on this matter, the Collector would have in his findings referred to the absence of the approval by the Development Commissioner with regard to the import. We. therefore, set aside the order and allow this appeal.

8. The appellants be granted consequential relief.

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