ORDER
K.S. Venkataramani, Vice President
1. Aggrieved by the order-in-appeal, dated 17-3-1993 of Commissioner of Customs (Appeals), Mumbai, the Appellants have preferred this appeal who are manufacturers of Linear Alkyl Benzene (LAB). They imported Pacol Catalyst DEH-7 which is required in the manufacture of LAB. This catalyst is based on platinum. The Appellants imported the catalysts in three consignments on 30-10-1987 and 8-2-1988. The spent catalyst 5060 Kg. and 8580 kgs. were exported to the suppliers in UK under Shipping Bills dated 13-11-1991 and 11-3-1991 for recovery of platinum and reprocessing the catalyst to be re-imported by the Appellant. Three consignments of reprocessed catalyst were imported on 4-4-1992, 13-1-1992 and 3-12-1991 and these were allowed clearance by Customs accepting Appellants claim for exemption for the goods under Notification 204/76 on the ground that it was an article re-imported into India after having been re-exported for repairs and exempted from duty in excess of duty leviable on the fair cost of repairs carried out. The Custom House, however, did not allow clearance of the fourth and fifth consignments for which Bill of Entry was filed on 9-4-1992 and 9-7-1992. The Custom House took the view that the process involved in making of the catalyst from the spent catalyst is an elaborate chemical process which amounted to manufacture of new catalyst and was not repairing of spent catalyst and that hence exemption under the above said Notification 204/76 cannot be extended to the goods imported. After obtaining the Appellants explanation the Assistant Commissioner of Customs, Mumbai Custom House passed an order in assessment dated 1-7-1992 holding the Pacol Catalyst DEH-7 imported the Appellants has been manufactured after recovering platinum from the spent catalyst and adding deficient quantity of platinum and the bulk of alumina oxide and subjecting them to chemical processing which amounted to manufacture and not just repairs. Therefore the Assistant Commissioner ordered that the goods be assessed to duty without extending the benefit of exemption under Notification 204/76. The Assistant Commissioner’s order was upheld by the Commissioner of Customs (Appeals), Mumbai who passed the impugned order.
2. The learned Senior Counsel Shri J.J. Bhatt appearing along with learned Counsel Shri Rohan Shah for the Appellants contended that the catalyst DEH-7 is platinum based. The life of this catalyst is for 30 days. But it could be regenerated and recycled. The recycling process involves first the recovery of basic metal and redepositing on the carrier. The process of such regeneration is referred to in the impugned order of the Commissioner of Customs (Appeals). The learned Senior Counsel urged that the process of recovery of platinum from the spent catalyst, addition of some platinum to make good the process loss, and re-building the catalyst is only a process of reconditioning or repair covered by the Notification 204/76. The learned Senior Counsel in this context cited and relied upon the Bombay High Court judgment in the case of Century Spinning & Manufacturing v. U.O.I -1981 E.L.T. 676 which is comparable on facts with the Appellants case wherein the High Court has held, interpreting the predecessor Notification 58/61, that merely because the goods under consideration in that case, spinnerets, were melted and repaired, it cannot be said that a new product was manufactured so as to deny the exemption. The learned Senior Counsel further submitted that the DGTD the designated authority under the notification has certified that the repairs to be carried out cannot be done in India, and relying upon the Supreme Court judgment in the case of Auto Tractors v. Collector – 1989 (39) E.L.T. 494, the learned Senior Counsel argued that the Customs authorities cannot go behind that certificate to conclude that what was undertaken abroad was not repairs. The learned Senior Counsel also pleaded that though by Notification 141/94-Cus., dated 1-7-1994 an Explanation has been added to exclude goods subjected to re-manufacturing or re-processing through melting, recasting or recycling from the purview of notification, such an exclusion can have only prospective effect, and, the learned Senior Counsel urged, it cannot be classificatory of a notification issued in 1976.
3. Shri S.V. Singh, the ld. DR contended that the process of recovery of platinum and making of new catalyst by re-deposit thereof on to alumina carrier material is not a process of repair, but one of manufacture of a new catalyst. Reference was made to para 18 of Assistant Commissioner’s order. The ld. DR cited and relied upon Tribunal decision in the case of Shri Ram Pistons v. CCE – 1983 (14) E.L.T. 1927 wherein after considering the Bombay High Court judgment in the case of Century Spinning & Weaving (Supra) the Tribunal held that the process or re-making should be such that it falls short of manufacture. The ld. DR further argued that the DGTD certificate only indicates that the repairing of the spent catalyst cannot be done in India. It also says that the end result of the process carried out abroad is the emergence of a new catalyst and, as such, the lower authorities had rightly held that the goods imported is not eligible for exemption under Notification 204/76. The intention behind the exemption, the ld. DR urged, stands fully clarified by Notification 141/94 wherein the Explanation bars the exemption to goods subjected to reprocessing or re-manufacturing through melting recycling or recasting. The present case is one of recycling and is hit by the Explanation which is clarificatory of the scope of the term ‘repair’ occurring in Notification 204/76 and is hence retrospective, according to ld. DR.
4. Submissions made by both the parties have been considered. Notification 204/76, provides that articles when re-imported into India after having been exported for repairs, from so much of Customs duty which would be leviable if the value of such re-imported goods were made up of the fair cost of repairs carried out, insurance and freight charges both ways. The notification further provides that the importer must furnish a certificate from the duly authorised officer of the Directorate General of Technical Development, Ministry of Industry in respect of the article to the effect that the repairs to be done to the goods in respect of which exemption is claimed are such as cannot be carried out in India. The notification further provides that the importer would be entitled to the exemption provided that the Assistant Collector of Customs is satisfied inter-alia of the identity of the goods.
5. In the present case the Assistant Commissioner of Customs has found that the purpose of sending spent catalyst to the supplier is recovery of platinum. Once the material is recovered, the main process of manufacture of the catalyst starts which involves dissolution of platinum metal in acidic solvent and redeposition of platinum metal in alumina carrier. The Assistant Commissioner observed from the technical write up that the process involved various stages which, according to him, amounted to a manufacturing process at the end of which the platinum metal is impregnated into the new carrier. Hence it was concluded by the Assistant Commissioner that the process carried out by the supplier on the spent catalyst is not one of repair so as to be eligible for exemption under Notification 204/76. The Assistant Commissioner also distinguished the Bombay High Court judgment in the case of Century Spinning & Manufacturing Company by holding that the present case is distinguishable as follows:
“The ratio of this judgment however is not applicable in the present case. While in the case of spinnerets, the specifications and weight of the worn out spinnerets and the repaired spinnerets were almost 100% the same, in the case of the catalyst, the only material thing common between the spent catalyst and the re-manufactured catalyst is less than 2% in the form of platinum metal. The rest 98% is absolutely fresh material. As a matter of fact, the diegent catalyst loses its identity and what is re-imported as fresh catalyst cannot be identified with the spent catalyst sent abroad. Therefore even the identity cannot be established in the instant case. Moreover, while repair of spinnerets involves only remelting and refining of the worn out spinnerets, in the present case the making of fresh catalyst involves an elaborate and complex process even after recovery of platinum and as much as 98% fresh material is used in the process. This process can be called nothing but only manufacture.”
6. On a perusal of the High Court judgment we are of the view that the facts of the present case are comparable. The High Court in that case was construing an identically worded Notification 58/61 for articles re-imported after being exported for repairs. There also the Departmental authorities had taken the view that the identity of the imported spinnerets could not be established with those exported for repairs and that the spinnerets sent out for repairs are remanufactured and in the process the identity of the goods has been lost. However the High Court found considerable substance in the importer’s argument that it was an error on the part of the Customs authorities to hold that the identify of the goods is changed merely because the material of worn out spinnerets was melted and the new spinnerets were manufactured.
7. The High Court held that the importers were right in this contention of theirs. Therefore, we hold that the ratio of the Bombay High Court judgment is applicable to the present case and in this context the certificate furnished from the DGTD has also to be looked into. It reads as follows :
“Certified that the machine (s) component (s) of the machine mentioned above, cannot be repaired in the country at present.
Pacol catalyst is proprietary item of M/s. UOP Ltd., U.K. During its utilisation, it has lot its efficacy. This spent catalyst is being sent by the firm for recovery of platinum which will be used subsequently for manufacture of new catalyst abroad. Facility for manufacture of this variety of catalyst is not yet streamlined in the country. In this process, the firm will have to incur foreign exchange in sending the spent catalyst to M/s. UOP, U.K. – recovery cost of platinum and putting make up quantity platinum and impregnating this platinum into new carrier to form the new catalyst. After this, the firm will bring back the catalyst. To meet this cost, the firm requires import licence for export of spent catalyst and re-import new catalyst. The firm will bear the import duty as per the Rule.”
8. ‘ The lower authorities have read the DGTD certificate to mean that it would indicate that a new catalyst is manufactured from the platinum recovered and that hence the DGTD certificate from the wording thereof does not advance the Appellants’ case. However a perusal of their application for the purpose of obtaining the licence for re-import of catalyst shows that by a separate Annexure ‘C to the application the Appellants have given the detailed statement of the defects noticed and the nature of repair work necessary with reasons why the work cannot be carried out in India. It is after an examination of such data that the certificate has come to be granted. The import licence to the Appellants has also been issued in pursuance of the certificate and the description of the goods therein show export of spent catalyst for recovery of platinum and reprocessing of catalyst and re-import the same after reprocessing. There is a further endorsement in the import licence that the licence is for the second cycle of reprocessing of the catalyst imported against licence dated 14-8-1987 and for which licence dated 6-7-1988 was issued for reprocessing/first cycle/and re-import. It is therefore evident that the licensing authorities have consciously granted the licence considering the activity carried out abroad as one of re-processing of the spent catalyst. The procedure prescribed for the purpose in Para 99 of the Handbook of Procedures 1988-91 prescribed that the importer should secure import licence in advance and goods for export should be exported only after obtaining licence for the re-import from the licensing authority. Therefore the licence dated 21-12-1990 for the re-import has been issued after satisfying themselves that the Appellants were eligible for such a licence. The DGTD as a technical authority has issued the certificate after perusal of the relevant material as noted above and DGTD is also the authority designated in the notification to certify that the repairs to be done on the goods exported are such as cannot be carried out in India. There is also nothing on record to show whether any proceedings have been initiated against the Appellants by the licensing authorities to cancel the import licence and the licence was valid and subsisting at the time of import. In the result, we are of view that the DGTD certificate for the above said reasons has to be given due consideration and does support the Appellants’ case.
9. Therefore it is held that the Appellants will be eligible for exemption under Notification 204/76 applying the ratio of Bombay High Court judgment in the case of Century Spinning & Manufacturing Company (supra). The interpretation of the provisions of the notification by the Bombay High Court will hold good until issue of the Notification 141/94, dated 1-7-1994 wherein the Explanation thereto has been added specifically excluding activities in which the goods are subjected to remanufacturing or re-processing through melting, recycling or recasting, from the scope of the exemption under the notification. We find it difficult to accept the contention that this 1994 notification is retrospective being clarificatory of notification issued nearly two decades earlier in 1976. In this view of the matter, therefore, we set aside the impugned order and allow the appeal.