ORDER
Pendse, J.
1. A question that falls for determination in this Petition is whether the levy of countervailing duty t the rate of 10% under Item 33-D of the Central Excise Tariff, for import of Data Processing Machines (AS IS Machines) is legal and valid. Few facts which have given rise to the present disputes are as fallows:-
2. The Petitioners are incorporated in the United States of America and have a branch in India with main office at new Delhi. The Petitioners are manufacturers of Data Processing Machines. The Petitioners manufacture in India Data Processing Machines, and for such manufacture, import various components, equipments, and materials from outside the country. One of the items so imported is the Data Processing Machines manufactured outside India and which have outlived their economic life and are beyond economic repair. These disused Date Processing Equipments have been imported by the Petitioners under import licences on “AS IS Condition” for the purposes of salvaging such parts thereof a the still usable for the purpose of being used in the Petitioners manufacturing program in India. Since he imported disused Data Processing Machines or equipment are not in working condition, they are also known as “AS IS Machines”. It is the case of the Petitioners that such machines cannot be repaired or sold or hired in India, and on their import in India the said machines are dis- assembled and all their salvageable parts are used for manufacture of new machines, in India. The Petitioners claim that when such machines are imported, they cannot perform any function at all, and are not saleable and never sold in India.
3. Previously sometime in the year 1966, AS IS Machines were imported in India and a question arose as regards the rate of duties claimed thereon. The dispute was carried in revision right upto the Government of India, and as order was passed on January 3, 1969, whereby it was held that the AS IS Machines cannot be valued on the formula adopted by the Customs House, namely thee new cost less depreciation because the condition is which they are imported they cannot be said to be machines. In the said order, it was further held that since the re- working is in India, and since the addition for value of scrap is only nominal and as an element of manufacturers profit has to be added, as addition to the ICBP Price for these a factors would be necessary. Earlier, the normal leading price was determined at 73% of the ICBP Price. The Government of India decided that for determination of value under Section 14(1)(a) of the Customs Act, 1962, the goods should be re-assessed on the ICBP price plus 140%.
4. The Petitioners are holders of the import licences and the class of importer is actual user. The import licences granted in favor of the Petitioners are for import of “AS IN Machines” as provided by particulars, annexed to the import licences. The import licences were issued in favor of the Petitioners on condition that all items of goods imported shall be used only in the licenceholder’s factory and no portion thereof shall be sold to any of the party. The Petitioners have been importing such “AS IN Machines” right from the year 1963. On March 1, 1970, Item 33-D was included in the First Schedule to the CEntral Excises and Salts Act, 1944 and that provides for the countervailing duty. The said Item 33-D of the First Schedule reads as under:-
“33-D. Office Machines and Apparatus, including Typewriters, Calculating Machines, Cash Registered, Cheque-writing Machines, Accounting Machines, Statistical. Machines, Computers ( including Central Processing Units Peripheral Devices), Intercom devices ( but excluding Telephones), Teleprinters and Auxiliary Machines for the use with such machines, whether in assembled or unassembled condition.
Explanation.- The term “Office machines and apparatus” shall be construed so as to include all machines and apparatus used in offices, shops, factories, workshops, educational institutions railway station, hotels and restaurants for doing office work, for data processing and for transmission and reception of messages.”
5. Since the introduction of Item 33-D in the First Schedule, and upto December 1, 1973, the Petitioners imported a total consignment of 161 disused Data Processing Machines. The Petitioners addressed a letter dated July 7, 1970, to the Assistant Collector of Customs, Bombay, in respect or the consignment of `AS IS Data Processing Machines’ imported under the Licence dated may 12, 1970, and which arrived in Bombay on June 23, 1970. By this letter, the Petitioners pointed out that the counter-vailing duty is not leviable in respect of the “AS IS Machines”, since they cannot be said to be complete machines. The letter further quotes the earlier order passed be by the Government of India on January 3, 1969, and it was pointed out that the “AS IS Machines” imported from abroad have already undergone their useful period of working life. The Petitioners requested the Collector of Customs to permit clearance of consignment without payment of countervailing duty. The request made by the Petitioners was turned down and the Customs authorities collected the countervailing duty on the said consignment. The Petitioners carried an appeal before the Assistant Collector of Customs. But the appeal was dismissed by order dated August 31, 1970. The Petitioners further carried a revision application before the Government of India but the same also ended in dismissal by order date October 1, 1973. The revisional authority took the view that the countervailing duty in required in respect of the Data Processing “AS IS Machines” as, even though they are not in working condition when imported, still they retain their identity as machines. It was also held that the Petitioners had declared the consignment in bills of entries as complete machines falling under Item 72(b) of the Indian Customs Tariff The revision authority further held that if the Petitioners had and claim, the same should have been made before clearness as the actual condition of the machines could have been made before clearance as the actual condition of the machines could have been verified. The revision authority felt that the earlier view taken by the Government of India t6hat the “AS IS Machines” are not machines was only for the purpose of valuation and did not determine the liability for countervailing duty. The order passed by the authorities below refusing the grant refund of the countervailing duty is under challenge in this Petition.
6. Mr. Desai, the learned Counsel appearing in support of the Petition contended that the view taken by the authorities below is entirely erroneous and illegal. It was urged by the learned Counsel that the Data Processing “AS IS Machines” imported by the Petitioners are not machines and would not attract Item 33-D of the First Schedule of the Excise Act. Mr. Desai placed strong reliance upon decision of the Government of India dated January 3, 1969, in support of his submission that “AS IS Machines” are not machines and are not liable for countervailing duty. Mr. Desai, in the alternative, submitted that even assuming that “AS IS Machines” are machines, still the relevant entries under Item 33-D of the First Schedule to the Excise Act would not be applicable in view of the explanation to the said Item. It was urged by the learned Counsel that unless the machines which are imported are such which can be used in offices, shops, factories or workshops for data processing, the same would not attract the countervailing duty. Mr. Desai submitted that on the set of facts available on record, it is impossible to hold that the imported Data Processing Machines could have been used in this country in the condition in which they were imported.
7. In answer to the Petition a return has been filed on behalf of the Respondents sworn by; one Mr. T. S. Panjiwani Assistant Collector of Customs, Bombay. It is contended that the Data Processing Machines which were imported by the Petitioners are capable of being used as such without being dismantled. It is the claim of the Respondents that the machines so imported, though old or used or temporarily not in working condition, still they never lost their identity as DAta Processing Machines. According to the Respondents, the Petitioners are bound by their declaration of description of goods in the bills of entries and it is not open for them now to plead that the machines imported are not really machines and are not liable to countervailing duty. With reference to the previous decision of the Government of India, it is contended that the same relates to the valuation of goods and not classification. In view of these rival contentions, the crucial point for determination is weather Data Processing Machines imported by the Petitioners are machines an d are liable to counervailing duty.
8. Before one adverts to the various aspects pointed out by the learned Counsel, it is necessary to state that the burden to establish that a relevant entry is applicable to the import by the Petitioners is on the Revenue and this position which is well settled was not seriously disputed on behalf of the Respondents. The Petitioners have made averments in the Petition to the effect the “AS IS Machines” imported by them are not in usable condition and the same are sold by the parent company outside India as item and expense required to break them and sort out only the salvageable parts is out of proportion to the worth of those goods. The Petitioners specifically stated that the “AS IS Machines” imported are neither used n the country nor are hired out to any customer. The claim of the Petitioners is that these machines have lost their efficacy, and they are imported into India only with a view to disassemble and salvage the useful parts for being used in manufacture of new machines. The Petitioners, in support of their claim, strongly relied upon the fact that thought the new Data Processing Machines cost more than Ten lacs of rupees, “AS IS Machines” are purchased for a paltry sum of few thousand rupees. I undoubtedly indicates that the machines which were imported could not be in a workable condition. The learned Counsel appearing on behalf of the Petitioners relied upon the bills of entries to point out that the invoice value of machines clearly demonstrate that the machines were purchased for a paltry amount. The submission appears to be right. The main contention urged on behalf of the Respondents in support of the levy of counter failing duty is that the Petitioners have described the Data Processing Machines in the bills of entries ass machines under Item 72(b) of the India Customs Tariff. It is undoubtedly true that they are declared under Item 72(b). But the description of the consignment is Data Processing Machines (AS IS Machines ). The Petitioners have declared in the bills of entries the nature of the consignment, and merely because the consignment is declared under Item No. 72(b) of the Indian Customs Tariff, it cannot be concluded that the Petitioners treated the consignment as machines. It is not disputed on behalf of the Respondents that there is no other Item in the Customs Tariff to cover such kinds of machines which are not in usable condition. Mr. Desai in this connection rightly relied upon the fact that while fixing the value of the consignment, the Customs authorities have fixed the priced by addition 140% to the ICBP price. Mr. Desai submitted that this addition of 140% to the ICBP price is in consonance with the previous order of the Government of India dated January 3, 1969. In fact, the Bills of entries indicate that the Petitioners wanted to fix the value by adding 73% to the ICBP price, as was done earlier. But the Customs authorities fixed the valuation by adding 140% to the ICBP price, as held b the Government of India, by its order dated January 3, 1969. This fact, undoubtedly indicates that on the date of entry of the consignment for name consumption, the Customs authorities did not treat the consignment as machines and now it would not be proper to shut out the Petitioners by holding that their declaration in the Bills of entries of consignment as machinery coming under Item No. 72(b) of the Indian Customs Tariff is conclusive.
9. Mr. Joshi, the learned Counsel appearing on behalf of the Respondents then contended that the “AS IS Machines” which were imported had never lost their identity. It is true that the machines which were imported were not disassembled, but were imported as a unit. In fact, the import was for the purpose of dis-assembling and salvaging the useful parts to be used while manufacturing new machines in India. The mere fact that the identity of the Data Processing Machines was never lost is not sufficient to conclude that the consignment was machines and liable to countervailing duty. In my judgment, the assumption of the Customs Authorities that the “AS IS Machines” which were imported were machines though they were not in useble condition is entirely misconceived. The statements made in the return that the said machines were capable of being used without being dismounted in th4e country and are also capable of being repaired and used in the country are without any basis and cannot be accepted. I am satisfied from the material on record that the machines imported by the Petitioners were rally condemned machines and were imported only for the purpose of dis-assembling and salvaging of useble parts. In this connection, it was urged on behalf of the Respondents that the conditions of the machines could have been inspected by the Customs authorities if the Petitioners had raised their claim before the clearance. The submission is entirely mis-conceived, because the Petitioners did address a letter dated July 7, 1970, to the Customs authorities contending that the Petitioners are to liable to pay the countervailing duty s consignment was not machines and questing clearance.
This letter addressed to the Customs authorities, prior to the clearance of the goods should have put the Customs authorities on the guard and if they felt that the machines imported can be used, then noting prevented them from taking inspection of the same. It is futile now to contend that the machines imported are capable of being repaired and used in this country. The Data Processing Machines are very sensitive machines and the life of the machines, as is well- known, is not very long. In my judgment, the contention of the Respondents that as the Data Processing Machines had not lost their identity, they should be termed as `machines’ is not correct.
10. In this connection, the reliance by the learned counsel for the Petitioners, on the earlier order passed by the Government of India on January 3, 1969 is very appropriate. In the earlier order the dispute was in respect of the refund of duty on “AS IS Machines”. In this order, it appears that the Customs authorities had valued the “AS IS Machines” on the basis of new machines less the depreciation. But the Government did not accept this mode of valuation and held that the condition in which these machines were imported would indicate that they are not machines. Mr. Desai is right in his submission that once the Government of India had given a finding, then it is binding upon the authorities unless some other material is bought to the attention of the authorities to take a contrary view.
11. Mr. Joshi appearing on behalf of the Respondents, very strenuously contended that the decision given a January 3, 1969 was in connection with the valuation under Section 14(1)(a) of the Customs Act, 1962, and the same principle cannot be imported while determining the liability for countervailing duty. I am not impressed by this submission. The nature of the consignment of “AS IS Machines” was for consideration before the revision authority, and the finding thereon is binding on the Government in subsequent proceedings. The mere fact that the said other was in connection with the valuation is not sufficient answer to the claim of the Petitioners that the nature of “AS IS Machines” was determined. In my judgment, the authorities below were clearly in error in holding that “AS IS Machines” imported by the Petitioners were office machines and would attract Item 330D of the First Schedule to the Excise Act for the payment of countervailing duty.
12. In view of this finding, it is really not necessary to determine the alternate contention raised by the Petitioners that even though “AS IS Machines” are treated as `machines’ still they would not attract the liability of payment of countervailing duty, in view of the Explanation to Item 33-D of the First Schedule. Mr. Desai submitted that unless such machines are capable of use in office for data processing, they would not attract the liability. The submission proceeds on the basis that the machines as imported were not in usable condition and are not used or sold or hired in this country. The contention of the Petitioners that the “AS IS Machines” imported are not used, hired or sold in the country, is sound, and consequently, the liability to pay the countervailing duty would not be attracted. I am not entering into detail discussion on this point, as, in may judgment, the consignment imported by the Petitioners are not machines, and therefore the question whether Item 33-D applies or otherwise, does not fall for consideration. In Customs authorities have denied the same by taking into consideration the irrelevant and extraneous factors.
13. It was faintly urged on behalf of the Respondents that two views are possible on the question as to whether the consignment imported by the Petitioners are machines or otherwise, and therefore, I should not disturb the finding of the Customs authorities while exercising jurisdiction under Article 226 of the Constitution. In my judgment, the submission has no merit, because two views are not possible on the set of facts available on record and the only conclusion which must be drawn in that the consignment imported by the Petitioners are not machines and are not liable to countervailing duty.
14. In the result, the Petitioners succeed and the rule is made absolute in terms of prayers (a) and (b) of paragraph 15 of the Petition. In the circumstances of the case, there will be no order as to costs.
