Holding

The appellant is entitled to the concession available under Notification No. 200/79 as the requirement of an approved manufacturing programme was satisfied by the DGTD certificate, irrespective of the timing of the reference to the notification.

Summary

Auto Tractors Ltd imported three consignments of tractor components and cleared them with a DGTD certificate that referenced Notification No. 179/80, thereby receiving a smaller customs duty concession. The company later discovered it was eligible for a larger concession under Notification No. 200/79, obtained amended certificates indicating eligibility, and filed refund claims for the duty differential. The Assistant Collector and the Customs Tribunal rejected the claims, holding that the approved manufacturing programme was not produced at the time of clearance and that an end‑use certificate was missing. The Supreme Court held that the requirement under Notification No. 200/79 is merely to produce evidence of an approved manufacturing programme, which was satisfied by the original DGTD certificates, and that the timing of the reference to the specific notification or the absence of an end‑use certificate does not defeat the entitlement. Accordingly, the appeals were allowed and the appellant was entitled to the concession under Notification No. 200/79.

Issues considered

The appellant's entitlement to the duty concession under Notification No. 200/79 despite the certificate referencing Notification No. 179/80 at the time of clearance.
Whether the requirement to produce an approved manufacturing programme must be fulfilled at the exact moment of clearance.
Whether the lack of an end‑use certificate bars the claim for refund of duty.

Legislation cited

Customs Tariff Act, 1975

Subjects

customs dutyconcessionNotification No. 200/79import of componentsindustrial licencemanufacturing programmerefund claimend‑use certificate

Judgment

AUTO TRACTORS LIMITED, PRATAPGARH
~. I v.
A
COLLECTOR OF CUSTOMS (APPEAL), BOMBAY

JANUARY 19, 1989

[SABYASACHI MUKHARJI AND S. RANGANATHAN, JJ.] B
~
Customs, Tariff Act, 1975: First Schedule JCT No. 87.01 (I) and
Customs Notifications Nos. 200/79 dated 28.9.1979 and 179/80 dated
4.9.1980--Company manufacturing agricultural tractors-Components
-j imported to be used in the manufacture thereof-Entitlement to con-
cessional rate of duty-Validity of.
c
Customs Notification No. 200/79 dated 28.9.1979 exempts com-
~ ponents required for the maoufacture of heavy commercial motor vehi-
cles or of tractors from customs duty in excess of 25 per cent ad valorem
and whole of the additional duty leviable thereon. Notification No. 179/
80 dated 4.9.1980 exempts components required for the purpose of D
initial setting up or for the assembly or maoufacture of tractors, an
article falling under Heading No. 87 .01(1) of the First Schedule of the
Act from so much of the customs duty as is in excess of the rate ap-
plicable to the said article when imported complete.
~
The appellant-company imported three consignments of com-
E
ponents of agricultural tractors. The Directorate General of Technical
Development issued certificate in terms of notification No. 179/80 stat-
• ing that the appellaot-compaoy was holding a valid industrial licence
for the manufacture of agricultural tractors and have an approved
manufacturing programme. The appellant cleared the goods availing

~ itself of the said concession. Having realised later that it was entitled to
the larger concession available under Notification No. 200 of 1979, it
filed three applications in respect of the said consignments claiming
F

refund to the extent of the difference between the entitlements to con-
cession under the two notifications. The DGTD issued certificates in
terms of notification No. 200of1979 in its favour.
The Assistant Collector of Customs rejected assessee's prayer on G
the ground that it had failed to produce end-use certificate. Its appeals
~ before the Collector of Customs (Appeals) failed. The Customs, Excise
and Gold (Control) Appellate Tribunal dismissed the appeal on the
ground that the appellaot did not produce the approved manufacturing
programme at the time of clearance of the goods as required under
Notification No. 200of1979. H
281
282 SUPREME COURT REPORTS [1989] 1 S.C.R.

In these appeals it was contended for the respondents that since
A
the amended certificates were not produced at the time of clearance but
only much later the assessee was not entitled to the concession under
Notification No. 200of1979.

Allowing the appeals,
B
HELD: 1. The assessee is entitled to the concession available
under Notification No. 200 of 1979. [2878-C]

2.1 The grant of concession depends on production of evidence by
the importer to the Assistant Collector of Customs at the time of clear-
ance of the components or the goods that they have a programme duly
c approved by the Ministry of Industry and the Industrial Adviser or
Additional Industrial Adviser of the Directorate General of Technical
Development of the Ministry of Industry for the manufacture of such
motor vehicles or of tractors and not on the reference in the certificates to
the notifications that can be availed of by the assessee. [286C-D; 287B I
D
2.2 In the instant case, the assessee had produced unequivocal
evidence in the form of original set of certificates from DGTD at
the time of clearance of the goods of the fact that the appellant held a
valid industrial licence for the manufacture of agricultural tractors and ~
that it also had an approved manufacturing programme. That was
E sufficient compliance with the terms of the notification in question. The
omission of the assessee to request the DGTD to refer to the assessee's
entitlement under the 1979 notification or the omission of the DGTD to
refer to the assessee's entitlement under the 1979 notification cannot
take away the assessee's rights. The order of the Tribunal is, therefore, ...
set aside. [286F-H; 287A] -""'I
1
F
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 850-
852 of 1988.

From the Order dated 23.10.87 of the Customs Excise and Gold
(Control) Appellate Tribunal, New Delhi in Appeal No. 830/83-B2
G and C/3105 & 3105 of 87/B-2. Order Nos. 2091to2093/87-B.

A.N. Haksar, H.S. Anand and Mrs. M. Karanjawala for the )-
Appellants.

G. Ramaswamy, Additional Solicitor General, Ashok K.
H Shrivasiava and P. Parmeswaran for the Respondent.
AUTO TRACTORS v. COLLECTOR OF CUSTOMS [RANGANATHAN, J.[ 283

The Judgment of the Court was delivered by
A
RANGANATHAN, J. The appellant, M/s Auto Tractors Limi·
ted, is a company manufacturing tractors. For purposes of manufac·
lure, the company imports certain parts and components from abroad.

There are two notifications on the Government of India granting B
certain concessions from the levy of customs duty which are applicable
to such goods as have been imported by the appellant. The first of
these, namely, Notification No. 200/79 dated 28.09.1979 (as amended
from time to time) exempts components "required for the manu-
factµf~ of heavy commercial motor vehicles .·..... or of tractors"
from so much of the customs duty as is in excess of 25 per cent ad
valorem and the whole of the additional duty leviable thereon. The C
grant of the concession was subject to the fulfillment of certain condi-
tions specified in the notification. The second notification was Notifi·
cation No. 179/80 dated 4.9.1980 (as amended from time to time). This
notification confers an exemption in respect of parts of articles falling
under specific headings in the First Schedule to the Customs Tariff D
Act, 1975. These admittedly included parts required for the purposes
of the initial setting up or for the assembly or manufacture of
"tractors", this being an article falling under heading No. 87 .01(1) of
the First Schedule above referr~d to. This exemption was in respect of
so much of the customs duty as is in excess of the rate applicable to the
said article (i.e". tractor) when imported complete. This concession was E
again subject to a certificate and recommendation from certain
specified authorities, one of whom is the Directorate General of Tech·
nical Development (DGTD). The relief available to the assessee under
the first notif_ication of 1979 is, apparently, larger than the one avail-
able under the second notification of 1980.
F
The appellant company imported three consignments. Each of
the consignments was cleared after production of a certificate from the
DGTD in the following terms:

"Certified that M/s Auto Tractors Ltd., Lucknow are hold-
ing a valid Industrial Licence for the manufacture of G
agricultural tractors and have an approved manufacturing
programme. It is rurther certified that the above compo·
nents of agricultural tractors, whicq fi!!l !!llP~f JCT
No. 87 .01 (1) qualify for concession;il rn\e of imPRr! d!!tY !!I
terms of Custom's Notification No, 179/f No, 37Q/99/79-
CUS. I df!!eq 4.9.1989." . H
(underlining ours).
284 SUPREME COURT REPORTS 11989] 1 S.C.R.

Apparently, since the certificates of the DGTD referred only to Notifi-
A cation No. 179/80, the appellant was granted the concession available
under the said Notification. The appellant cleared the goods, availing
itself of the said concession, in March, May and June 1981.

Subsequently, the appellant appears to have realised that it was
B entitled to the larger concession available under Notification No. 200
of 1979 and that it had erred in clearing the goods after payment of
duty subject only to the smaller concession available under Notifica-
:i
tion No. 179 of 1980. The appellant therefore filed three refund appli-
cations in August, September and October 1981 claiming refund to the ·~
extent of Rs. 1,55,342.50, Rs.1,28,350.05 and Rs.6,46,415.44, being
the difference between the entitlements on concession under the two
c notifications in question. It also appears that the appellant subse-
)<
quently applied to the DGTD for an amendment of the original certifi-
cates to make it clear that the goods imported by the appellant were
eligible for the concession under notification No. 200 of 79. The DGTD
on such application issued a certificate to the following effect:
D
"Certified that M/s. Auto Tractors Ltd. Pratapgarh are
holding an Industrial Licence to manufacture Agricultural
Tractors and have an approved manufacturing programme.
It is further certified that the items listed above are compo-
J.
nents of agricultural tractors falling under ITC No. 87.01
E (1) and are eligible for concessional rate of import duty
under custom notification No. 200/79 and 52/81 as exten-
ded by Custom's notification No. 81/81 and 82/81 both
dated 28.3.1981.

This supersedes the earlier duty concession certificate
issued by !his office vide Notification No. 179/F No. 370/
J
F
99/79-CUS. I dated 4.9.1980 under this office letter
No. DD-II/5(49)/79 Ag dated 16.1.81."

These amended certificates were also produced before the Customs
authorities.
G
The assessee's prayer for refund was however rejected by the ~
Assistant Collector of Customs on the ground that the assessee had
failed to produce "end-use" certificates. The assessee's appeals to the
Collector of Customs (Appeals) also failed. There were. further
appeals to the Customs, Excise and Gold (Control) Appellate Tri-
H bunal, which by its order dated 23.10.1987, dismissed the appeals of
AUTO TRACTORS v. COLLECTOR OF CUSTOMS [RANGANATHAN, J. [ 285

I<; the Appellants and hence the present appeals.
A

The Tribunal disposed of the assessee's claim by a short order. It
observed that the Notification No. 200/79 entitled an assessee to the
concessions therein ll)_entioned on the fulfillmenrof three conditions:

(i) A manufacturing programme as duly approved by the B
Director General of Technical Development (D.G.T.D.) should
be produced at the time of clearance of the goods.

(ii) The list of components and goods should be produced duly
certified by the D.G.T.D.; and

(iii) An End-use certificate from the same Directorate to be pro- c
duced in due course in regard to the consumption of goods in the
manufacture of the motor vehicles or tractors, etc.

The Tribunal proceeded to observe:
D
"The first statutory condition of the notification that the
manufacturing programme of the appellants as approved
by the D.G.T.D. should have been produced before the
Assistant Collector at the time of clearance of the goods
was not fulfilled by the appellants. As a matter of fact at
the time of clearance of the goods there was no claim even E
by the appellants under Notification Nos. 200 and 201/79-
Cus. Their claim at that time was under a different notifica-
tion No. 179/80-Cus. Which contained no requirement to
.. produce an approved manufacturing programme. Since the
statutory wording of the notification made it imperative for
the appellants that the approved· manufacturing prog- F
ramme should have been produced at the time of clearance
and since this condition was not fulfilled, the entitlement of
the appellants to the exemption is not accepted.

5. The approved manufacturing programme was
available all along with the appellants yet they did not pro- G
duce it at the time of clearance before the Assistant
Collector."
(underlining ours)

We have heard the learned counsel for the appellant as well as
learned Additional Solicitor General and we are of the opinion that H
286 SUPREME COURT REPORTS 119891 1 s,c.R.

~
. A the Tribunal has erred in denying the appellant the benefit of the
Notification No. 200 of 1979. This notification made the availability of
the concession thereunder subject to three conditions of which one
alone is relevant for our· purposes. The Tribunal t_hought that this
condition was that the. approved . manufacturing. programme shoulcj
have been produced at the time of clearance and it has denied the
B assessee the benefit of the concession, even though satisfied that the
approved manufacturing programme was all along available with the
assessee, because such programme was not produced at _the time of the
clearance. The Tribunal has committed an error in its reading of the
relevant condition of the notification. The condition is not that the
manufacturing programme should be produced but that "the importer ; \
}
should produce evidence to the Assistant Collector of Customs at the
c time of clearance of the components or.the goods that they have a ---(
programme duly approved by the Ministry of Industry and the Indust·
rial Adviser or Additional Industrial Adviser of the ,Directorate Gen-
era! of Technical Development of the Ministry of Industry for the
manufacture of such ·motor vehicles ...... or of tractors" .. In other
D words, the importer had only to satisfy the customs authorities that it
had an approved industrial programme for the manufacture of tractors
by production of a certificate from the DGID. It is indeed common
ground before us that the second set of certificates issued by the
DGID constitutes sufficient evidence that would entitle the appellant
to the concession under.Notification No. 200/.1979. But the argument )-
E is that the amended certificates \verc produced not at the time of the
clearance. of the goods but only. much later and that therefore the
' appellant is not entitled .to the concession under the said notification.
There is a fallacy in.this approach, for, even ignoring the subsequent
amendment of the certificates, we are of the opinion that the produc-
ti on of the original ~et. of certificates at the time of clearance of the
F goods was sufficient compliance with the terms. of the notification in
question.• We have extracted the. terms of this certificate earlier. It is
an unequivocal certificate. by the DGID that the appellant holds a .
valid industrial licence for the manufacture of agricultural tractors and
that it also bas an approved manufacturing programme. That is all the
second set also says. There is therefore no doubt that the assessee had
G produced evidence, in the form of the said certificate, of the fact that _
the appellant had an approved industrial programme. This was _the
only requirement of the notification and this requirement has, in our· ~
opinion, been complied with. The further words in the first set of
certificates that the assessee was eligible for the concession under 1980
notification were mere surplusage. The omission of the assessee to
H request the DGID. to refer to the assessee's entitlement under _the
'
I

I
I

AUTO TRACTORS v. COLLECTOR OF CUSTOMS [RANGANATHAN, J. I 287
I

1979 notificatic\n or the omission of the DGTD to refer to the asses- A
see's entitlement under the 1979 notification cannot take away the
assessee's rights. The grant of concession depends on a certificate that
the assessee had an approved manufacturing programme-which is
there-and not the reference therein to the notifications that can be
availed of by the assessee. We are therefore of the opinion that the
order of the Tribunal should be set aside and that the assessee should
B
)( be held entitled, in respect of the three consignments referred to
earlier, to the concession available under Notification No. 200 of 79.
We direct accordingly. The appeals are allowed but having regard to
the circumstances we make no order as to costs.

P.S.S Appeals allowed. c

";.L