Supreme Court of India
M/S. GAMMON INDIA LTD.versusCOMMISSIONER OF CUSTOMS, MUMBAI
- Citation
- 2011 INSC 468
- Decided
- 6 July 2011
- Disposal
- Disposed off
- Bench
- D K JAIN
Holding
The Supreme Court held that neither Gammon nor the Gammon‑Atlanta joint venture fulfilled Condition 38; consequently, the exemption did not apply.
Summary
Gammon India Ltd. and Atlanta Infrastructure Ltd. formed a joint venture (Gammon‑Atlanta JV) to bid for a National Highways Authority of India (NHAI) road contract, which was awarded to the JV. Gammon imported a concrete batching plant and claimed exemption from customs duty under Notification No. 17/2001 (Condition 38), which permits exemption only for goods imported by a "person who has been awarded a contract". The Customs authority rejected the claim; the Commissioner of Appeals allowed it, but the Customs, Excise and Gold (Control) Appellate Tribunal reversed, holding that the JV was not a "person" for the purpose of the notification. The Supreme Court affirmed the Tribunal’s view, stating that neither Gammon nor the JV satisfied Condition 38, that exemption provisions must be construed strictly, and dismissed the appeal.
Issues considered
- The import by Gammon can be treated as an import by a "person" awarded the NHAI contract under Condition 38 of Notification No. 17/2001.
- Whether a joint venture constitutes a "person" for the purpose of the exemption notification.
- Whether exemption provisions in tax statutes are to be given a liberal or strict construction.
Legislation cited
- Customs Act, 1962s. 130-E(b), s. 25(1)
- Customs Tariff Act, 1975
- Indian Partnership Act, 1932
Subjects
Customs duty exemptionJoint venture as legal personInterpretation of tax statutesStrict constructionCondition 38Road construction contractImport of machineryPrecedent and judicial discipline
Judgment
[2011) 7 S.C.R. 195
M/S. GAMMON INDIA LTD. A
v.
COMMISSIONER OF CUSTOMS, MUMBAI
(Civil Appeal No. 5166 of 2003)
JULY 6, 2011
B
[D.K. JAIN AND H.L. DATIU, JJ.]
Customs Act, 1962: Exemption Notification No. 1712001-
cuScdated.1..3.2001 '."'.A~ per .Co.ndition 38 of the Notification,
a person who tiasbeen.awarded'a 'contractfor the construction c
of roads in India by or on behalf of the NHAI is entitled to
exemption from basic customs duty and additional customs
duty in respect of specified machines - Appellant and another
company entered into a joint venture agreement for
submitting a bid for award of a contract for construction of road D
on National Highway- Contract given to the said joint venture
company - Import of machinery specified in the Notification
by appellant - Claim by appellant for exemption under the
Notification - Entitlement for - Held: Not entitled - Contract
was granted to joint venture company and not to the appellant E
- Import of the specified machine by appellant could not be
considered to be an import by joint venture company "a
person who has been awarded a contract for construction of
the roads in India", so as to fulfill Condition No.38, laid down
in Exemption Notification No.1712001/Cus - Therefore, F
neither appellant nor joint venture company fuifilled the
requisite requirement stipulated in Condition No.38 of the
Exemption Notification No. 1712001/Cus..
Joint venture: Connotation of - Discussed.
G .
Interpretation of statutes: Taxing statutes - Strict
construction - Held: A provision providing for an exemption
has to be construed strictly.
195 H
•
196 SUPREME COURT REPORTS [2011] 7 S.C.R..
A Judicial discipline: Precedents - Binding effect - Held:
If a Bench of a Tribunal, in identical fact-situation, is permitted
to come to a conclusion directly opposed to the conclusion
reached by another Bench of the Tribunal on earlier occasion,
that would be destructive of the institutional integrity itself - If
B a Bench of the Tribunal wishes to take a view different from
the one taken by the earlier Bench, the propriety demands
that it should place the matter before the President of the
Tribunal so that the case is referred to a larger Bench, for
which provision exists in the Act itself - A subordinate court
c is bound by the enunciation of law made by the superior
courts - A Coordinate Bench of a Court cannot pronounce
judgment contrary to declaration of law made by another
Bench - It can only refer it to a larger Bench if it disagrees
with the earlier pronouncement.
D The appellant-company (Gammon) and M/s Atlanta
entered into a joint venture agreement on 18th
September, 2000 for the purposll of submitting a bid to
the National Highways Authority of India (NHAI) for award
of.a contract for construction of 31.40 Kilometers of road
E on National Highway-5. The joint venture was named and
styled as "Gammon Atlanta JV". In terms of the
agreement, each of the said parties was to share financial
responsibilities in the form of guarantees, securities etc.
to the extent of 50% of the project value and the venture
F was to be managed by setting up of a management board
consisting of a Chairman and one Director to be
nominated by Gammon and a Joint Chairman and
another Director to be nominated by Atlanta. Although
Gammon was to be designated as the lead partner to the
G venture but both the companies were to be jointly and
severally liable to NHAI for due execution of the contract.
The bid tendered by the said joint venture was
accepted by NHAI and agreement dated 20th December,
2000 was executed between NHAI as the "Employer" on
H
GAMMON INDIA LTD. v. COMMISSIONER OF 197
CUSTOMS, MUMBAI
the one part and M/s Gammon-Atlanta JV as the A
"contractor", on the other. On behalf of Gammon-Atlanta
JV, the agreement was signed by the representatives of
both the companies, i.e. Gammon and Atlanta. On 1st
March, 2001, an Exemption notification no.17/2001 cus
was issued exempting from basic customs duty and B
additional customs duty certain goods required for
construction of roads. Gammon imported the specified
"Concrete Batching Plant" from Germany and filed Bill of
Entry for its clearance at nil rate of duty under the
Notification. The Department rejected the claim on the c
ground that the exemption was available only if the
goods were imported by "a person who has been
awarded the contract" by NHAI (or construction of roads
in India by or on behalf of Ministry of Surface Transport
and since the goods were imported by Gammon to whom 0
no contract was awarded by the authorities, the appellant
was not entitled to the benefit of exemption notification
in their capacity. as a partner in the joint venture, to whom
the contract had been awarded.The appellate authority,
however allowed the appeal filed by Gammon holding
that Gammon having been nominated as the lead partner E
in the joint venture for due performance of the contract
awarded by NHAI, with authority to incur liabilities and to
receive instructions for and on behalf of the joint venture,
and the machine having been imported on behalf of the
joint venture for the purpose of road construction, the F
benefit of the said exemption notification could not be ·
denied to it. On appeal, the Tribunal held that the benefit
of Exemption Notification cannot be availed of by a joint
venture because it was nothing more than an association
of two persons, having no identity in law. G
The question which arose for determination in the
instant appeal was whether import of the specified
machine by Gammon could be considered to be an
import "by a person who has been awarded a contract H
198 SUPREME COURT REPORTS [2011) 7 S.C.R.
A for construction of the roads in India", so as to fulfill
Condition No.38, laid down in Exemption Notification
No.17/2001/Cus dated 1st March, 2001.
Dismissing the appeal, the Court
B HELD: 1.1. Though under agreement dated 18th
Septem_ber, 2000, Gammon was notified as the lead
partner but agreement dated 20th December, 2000
executed between NHAI as the "employer" and Gammon-
Atl a nta JV as "contractor" was signed by the
C representatives of both the companies viz. Gammon. and
Atlanta, meaning thereby that so far as NHAI was
concerned, for them the.contractor was Gammon-Atlanta
JV and not Gammon or Atlanta individually. [Para 14]
[209-E-G]
D
1.2. Joint venture connotes a legal entity in the nature
of a partnership engaged in the joint undertaking of a
particular transaction for mutual profit or an association
of persons or companies jointly undertaking some
E commercial enterprise wherein all contribute assets and
share risks. It requires a community of interest in the
performance of the subject-matter, a right to direct and
govern the policy in connection therewith, and duty,
which may be altered by agreement, to share both in
profit and losses. In view of that M/s Gammon-Atlanta JV,
F the joint venture could be treated as a 'legal entity', with
· the character of a partnership in which Gammon was one
of the constituents. [Paras 17, 18] [211-F-H; 212-D-E]
New Horizons Limited & Anr. v. Union of India & Ors.
G (1995) 1 SCC 478: 1994 (5) Suppl. SCR 310 - relied on.
1.3~ The import of "Concrete batching plant 56 cum/
hr" by Gammon cannot be considered as an import by
· Mis Gammon-Atlanta JV, "a person" who had been
H awarded contract for construction of the roads in India.
GAMMON INDIA LTD. v. COMMISSIONER OF 199
CUSTOMS, MUMBAI
It was not the case of the appellant before the A
Adjudicating ~uthority or before the Appellate Authority
or before this court nor it was suggested by the
documents viz. the supply order or the bill of entry, that
the import of the machine was by or on behalf of the joint
venture. On the contrary, the Tribunal recorded in its B
order that when questioned, the appellant clarified that
correspondence with the supplier of goods and
placement of order was done by Gammon and not by the
joint venture or on their behalf and that the payment for
the machine had not been made from the joint venture c
account but from the funds of Gammon. Therefore,
neither Gammon Atlanta JV nor Gammon fulfill the
requisite requirement stipulated in Condition No.38 of the
Exemption Notification No. 17/2001/Cus dated 1st March,
2001. [Paras 20, 21] [213-A-E]
D
2. It is well settled that a provision providing for an
exemption has to be construed strictly. Since in the
instant case the language of condition No.38 in the
Exemption Notification is clear and unambiguous, there
is no need to resort to the interpretative process in order E
to determine whether the said condition is to be imparted
strict or liberal construction. [Paras 22, 23] [213-F-G; 214-
F]
Novopan India Ltd., Hyderabad v. Collector of Central F
Excise& Customs, Hyderabad 1994 Supp (3) SCC 606-
relied on.
3.1. The two Benches of the Tribunal while deciding
appeals in the cases of IVRCL Infrastructures & Projects Ltd.
and Techni Bharathi Ltd. noticed the decision of a co- G
ordinate Bench and still proceeded to take a view totally
contrary to the view taken in the earlier judgment, thereby
creating a judicial uncertainty with regard to the
declaration of law involved on an identical issue in
H
200 SUPREME COURT REPORTS [2011] 7 S.C.R.
A respect of the same Exemption Notification. If a Bench of
a Tribunal, in identical fact-situation, is perrriitted to come
to a conclusion directly opposed to the conclusion
reached by another Bench of the Tribunal on earlier
occasion, that will be destructive of the institutional
B integrity itself. What iF. important is the Tribunal as an
institution and not the personality of the members
constituting it. If a Bench of the Tribunal wishes to take
a view different from the one taken by the earlier Bench,
the propriety demands that it should place the matter
c before the President of the Tribunal so that the case is
referred to a larger Bench, for which provision exists in
the Act itself. [Para 24) [214-G-H; 215-A-C]
IVRCL Infrastructures & Projects Ltd. v. C. C., Chennai
(Sea) 2004 (166) E.L.T. 447 (Tri.-Del.); Techni Bharathi Ltd.
D v. Commissioner of Customs, Mumbai-II 2006 (198) E.L.T.
33 (Tri.-Bang) - referred to.
3.2. Precedents which enunciate rules of law form the
foundation of administration of justice under our system.
E This is a fundamental principle which every presiding
officer of a judicial forum ought to know, for consistency
in interpretation of law alone can lead to public
confidence in our judicial system. Precedent law must be
followed by all concerned; deviation from the same
F should be only on a procedure known to law. A
subordinate court is bound by the enunciation of law
made by the superior courts. A Coordinate Bench of a
Court cannot pronounce judgment contrary to
declaration of law made by another Bench. It can only
G refer it to a larger Bench if it disagrees with the earlier
pronouncement. [Para 24) [215-F-H; 216-A-B]
Sub-Inspector Roop/al & Anr. v. Lt. Governor & Ors.
(2000) 1 sec 644: 1999 (5) Suppl. SCR 310 - relied on.
H 4. The decision of the Tribunal, holding that the
GAMMON INDIA LTD. v. COMMISSIONER OF 201
CUSTOMS, MUMBAI
appellant was not entitled to the benefit of Exemption A
notification No. 17/2001-Cus dated 1st March, 2001,
cannot be flawed. [Para 25] [216-D]
Ganpati RV- Tafleres Alegria Track Private Limited Vs.
Union of India & Anr. (2009) 1 SCC 589: 2008 (17) SCR 215; B
Commissioner of Customs (Preventive), Mumbai Vs. M.
Ambalal & Co. (2011)2 SCC 74: 2010 (15) SCR 937; C.K.
Gangadharan & Anr. Vs. Commissioner of Income Tax,
Cochin (2008) 8 SCC 739: 2008 (11) SCR 52; Sub-Inspector
Roop/al & Anr. Vs. Lt. Governor & Ors. (2000) 1 SCC 644: C
1999 (5) Suppl. SCR 310 - referred to.
Case Law Reference:
1994 ( 5) Suppl. SCR 310 referred to Para 8,9,15,
16, 17,18,20 D
2008 (17 ) SCR 215 referred to Para 9
2004 (166) E.L.T. 447 (Tri.-Del.) referred to Para 9,24
2006 (198) E.L.T. 33 (Tri.-Bang) referred to Para 9, 24
E
2010 (15) SCR 937 referred to Para 9
1994 Supp (3) sec 606 relied on Para 11, 22
2008 (11) SCR 52 referred to Para 9
1999 (5) Suppl. SCR 310 referred to · Para 9 F
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
5166 of 2003.
From the Judgment & Order dated 4.4.2003 of the
Customs, Excise and Gold (Control) Appellate Tribunal, West G
Zonaf Bench, Mumbai in Appeal No. C/298/02-Mum.
J.S. Sinha, Braj Kishore Mishra, Vikas Malhotra, Aparna
Jha, Abhishek Yadav, M.P. Sahay, Vikram Patralekti for the
Appellant. H
202 SUPREME COURT REPORTS [2011) 7 S.C.R.
A Harish Chander, Kiran Bhardwaj, A. Deb Kumar, B.
Krishna Prasad for the Respondent.
The Judgment of the Court was delivered by
D.K. JAIN, J. 1. This Civil Appeal, under Section 130-E(b)
B of the Customs Act, 1962 (for short "the Act"), is directed
against order dated 4th April, 2003 passed by the Customs,
Excise and Gold (Control) Appellate Tribunal, as it then existed,
(for short "the Tribunal"), in Appeal No. C/298/02-Mum. By the
impugned order, the Tribunal has allowed the appeal preferred
C by the Commissioner of Customs, Mumbai, holding that the
appellant is not entitled to claim the benefit of Exemption
Notification No. 17/2001/Cus (General Exemption No. 121),
issued by the Ministry of Finance, Government of India on 1st
March, 2001.
D
2. Briefly stated, the facts, material for adjudication of the
issue arising in this appeal, are as follows:
The appellant namely, Mis Gammon India Ltd. (for short
"Gammon") and one Mis Atlanta Infrastructure Ltd., Mumbai, (for
E short "Atlanta") both incorporated as Public Limited
Companies, entered into a joint venture agreement on 18th
September, 2000. The joint venture was named and styled as
"Gammon Atlanta JV". The agreement was entered into for the
purpose of submitting a bid to the National Highways Authority
F of India (for short "NHAI") for award of a contract for construction
of 31.40 Kilometers of road on National Highway-5. The terms
of the agreement, inter-alia, provided that: each of the said
parties would share financial responsibilities in the form of
guarantees, securities etc. to the extent of 50% of the project
G value; the venture would be managed by setting up of a
management board consisting of a Chairman and one Director
to be nominated by Gammon and a Joint Chairman and
another Director to be nominated by Atlanta. Although Gammon
was to be designated as the lead partner to the venture but both
H
GAMMON INDIA LTD. v. COMMISSIONER OF 203
CUSTOMS, MUMBAI [D.K. JAIN, J.]
the companies were to be jointly and severally liable to NHAI A
for due execution of the contract.
3. The bid tendered by the said joint venture was accepted
by NHAI and an agreement dated 20th December, 2000 was
executed between NHAI, referred to as the "Employer" on the
8
one part and Mis Gammon-Atlanta JV, referred to as the
"contractor", on the other part. On behalf of Gammon-Atlanta
JV, the agreement was signed by the representatives of both
the companies, i.e. Gammon and Atlanta.
4. On 1st March, 2001, in exercise of the powers conferred C
by sub-section (1) of Section 25 of the Act, the Central
Government, issued the afore-noted Exemption Notification,
inter alia, exempting the goods of the description specified in
Column (3) of the Table given thereunder, read with the relevant
List appended thereto and falling within the Chapter, Heading D
no. or sub-heading no. of the First Schedule to the Customs
Tariff Act, 1975, as specified in the corresponding entry in
Column (2) of the said Table. Serial No. 217 of the said Table
granted full exemption from basic Customs duty and additional
Customs duty, on the goods falling under Chapter 84 specified E
in List 11, required for construction of roads. However, the said
exemption was subject to certain conditions, enumerated in the
said notification. Condition No. 38, relevant for this case, reads
as follows:
"38. lf,- F
(a) the goods are imported by-
(i) the ministry of Surface Transport, or
(ii) a person who has been awarded a contract for the G
construction of roads in India by or on behalf of the
Ministry of Surface Transport, by the National ·
Highway Authority of India, by the Public Works
Department of a State Government or by a road
construction corporation under the control of the H
204 SUPREME COURT REPORTS [2011) 7 S.C.R.
A Government of a State or Union Territory; or
(iii) a person who has been named as a sub-contractor
in the contract referred to in (ii) above for the
construction of roads in India by or on behalf of the
Ministry of Surface Transport, by the National
B
Highway Authority of India, by Public Works
Department of a State Government or by a road
construction corporation under the control of the
Government of a State or Union Territory;
c (b) the importer, at the time of importation, furnishes an
undertaking to the Deputy Commissioner of
Customs or the Assistant Commissioner of
Customs, as the case may be, to the effect that he
shall use the imported goods exclusively for the
D construction of roads and that he shall not sell or
otherwise dispose of the said goods, in any
manner, for a period of five years from the date of
their importation; and
(c) in case of goods of serial nos. 12 and 13 of List
E
11, the importer, at the time of importation of such
goods, also produces to the Deputy Commissioner
of Customs or the Assistant Commissioner of
Customs, as the case may be, a certificate from an
officer not below the rank of a Deputy Secretary to
F the Government of India in the Ministry of Surface
Transport (Roads Wing), to the effect that the
imported goods are required for construction of
roads in India."
G 5. It appears that the appellant approached NHAI for issue
of the certificate, as contemplated in para (c) of Condition
no.38, for import of one 'Concrete batching plant 56 cum/hr'
covered under Item No. 13 of List 11, referred to at Serial No.
217 in the said Exemption Notification. Vide letter dated 3rd
H August, 2001 NHAI forwarded a Certificate, issued by the
GAMMON INDIA LTD. v. COMMISSIONER OF 205
CUSTOMS, MUMBAI [D.K. JAIN, J.]
Deputy Secretary, Government of India, Ministry of Road A
Transport and Highways, addressed to the Assistant·
Commissioner of Customs, Mumbai, certifying that the said
equipment was required for construction of roads and
recommending its duty free import.
B
6. Equipped with the said certificate, Gammon, the
appellant herein, imported the specified Concrete Batching
Plant from Germany and filed Bill of Entry (for home
consumption) for its clearance at 'nil' rate of duty under
Notification No.17/2001-cus, dated 1st March, 2001. The C
Deputy Commissioner of Customs, by his order dated 5th
October, 2001 rejected the claim of the appellant for exemption
from payment of Customs duty on the ground that the appellant
had failed to comply with the conditions stipulated at Serial No.
38 appended to the exemption notification. According to the
Adjudicating Authority, as per the said condition, the exemption D
is available only if the goods are imported by "a person who
has been awarded the contract" by NHAI for construction of
roads in India by or on behalf of Ministry of Surface Transport,
but in the present case the goods have been imported by
Gammon to whom no contract had been awarded by the E
authorities specified in the notification. Admittedly, the contract
had been awarded in the name of joint venture - M/s Gammon-
Atlanta JV. Thus, the adjudicating authority came to the
conclusion that the appellant was not entitled to the benefit of
exemption notification in their capacity as a partner in the joint F
venture, to whom the contract had been awarded.
7. Aggrieved thereby the appellant preferred an appeal to
the Commissioner of customs (Appeals). The Commissioner
(Appeals) was of the view that Gammon having been G
nominated as the lead partner in the joint venture fo·r due
performance of the contract awarded by NHAI, with authority
to incur liabilities and to receive instructions for and on behalf
of the joint venture, and the machine having been imported on
behalf of the joint venture for the purpose of road construction,
H
206 SUPREME COURT REPORTS [2011] 7 S.C.R.
A the benefit of the said exemption notification could not be
denied to the appellant. lnter-alia, observing that the appellant
was not an outsider and perhaps due to some technical reasons
the machine had been imported in the name of the appellant,
the Commissioner held that outright denial of the benefit of the
B said notification was not warranted. Accordingly, he allowed the
appeal.
8. Being dissatisfied with the decision of the
Commissioner (Appeals), the revenue carried the matter in
C further appeal to the Tribunal. As aforestated, by the impugned
order the Tribunal has allowed the said appeal. Distinguishing
the case of New Horizons Limited & Anr. Vs. Union of India
& Ors.1, relied on behalf of the importer, the Tribunal has come
to the conclusion that the benefit of Exemption Notification
cannot be availed of by a joint venture because it is nothing
D more than an association of two persons, having no identity in
law. The Tribunal has gone on to observe that had such a bill
of entry been filed even by a joint venture, the department would
have been justified in rejecting it on the ;round that the identity
of the real importe,r was not known. Aggrieved, Gammon is
E before us in this appeal.
9. We have heard learned counsel for the parties.
10. Mr. J.S. Sinha, learned counsel appearing on behalf
F of the appellant, strenuously urged that in light of the decision
of this Court in the case of New Horizons (supra), wherein the
concept of a joint venture has been explained and the same
has been subsequently followed in Ganpati RV-Tal/eres Alegria
Track Private Limited Vs. Union of India & Anr. 2 , the view
taken by the Tribunal is clearly erroneous. It was contended that
G since a joint venture is a legal entity with all the trappings of a
partnership under the Indian Partnership Act, 1932, the general
principles of the said Act were applicable to the joint venture
1. (1995) 1 sec 478.
H 2. c2009) 1 sec 589.
GAMMON INDIA LTD. v. COMMISSIONER OF 207
CUSTOMS, MUMBAI [D.K. JAIN, J.]
and, therefore, any one of the two partners of the joint venture, A
viz. Gammon and Atlanta was competent to import the subject
machinery for and on behalf of the contractor viz. the joint
venture for execution of the road project under contract between
the joint venture and NHAI. It was argued that the eligibility
certificate dated 3rd August 2001, issued by the Ministry of B
Road Transport and Highways, stating that: the subject machine
would be imported by the appellant herein, will sustain the
eligibility of the joint venture in view of the law laid down by this
Court in New Horizons (supra). It was submitted that in view of
an inclusive definition of the word "person" in the Export and c
Import policy for the years 1997-2002, which includes a "legal
person", the import of machinery by the appellant for and on
behalf of the joint venture is as good as an import by the joint
venture who has been awarded the contract for construction of
roads, thus fulfilling condition No.38 of the' Exemption
Notification. Learn'ed counsel asserted that since in identical D
fact situations in the cases of IVRCL Infrastructures & Projects .
Ltd. Vs. C. C., Chennai (Sea)3 and Techni Bharathi Ltd. Vs.
Commissioner of Customs, Mumbai-11, 4 when machinery for
a road project was imported by one of the constituents' of the
joint venture, the benefit of the same Exemption Notification had E
been granted by the Tribunal. It was argued that the said orders
of the Tribunal having been accepted by the revenue, it cannot
be permitted to take a different stand on the same point in the
case of the appellant. Lastly, relying on the decision of this
Court.in Commissioner of Customs (Preventive), Mumbai Vs. F
M. Amba/al & Co., 5 learned counsel submitted that a beneficial
and promotional exemption notification has to be construed
liberally.
11. Per contra, Mr. Harish Chander, learned senior counsel G
appearing on behalf of the revenue, supporting the decision of
the Tribunal, submitted that the joint venture and Gammon being
3. 2004 (166) E.L.T. 447 (Tri-Del.)
4. 2006 (198) E.L.T. 33 (Tri-Bang.)
5. (2011) 2 sec 74: 2010 (260) E.L.T. 487 (S.C.). H
208 SUPREME COURT REPORTS [2011] 7 S.C.R.
A two independent entities, the eligibility certificate dated 3rd
August, 2001 issued in favour of the latter was of no
consequence in so far as the Exemption Notification was
concerned because the contract for construction of roads had
not been awarded to Gammon, who had imported the machine
B but to the joint venture. It was .stressed that Gammon, on their
own, were not entitled to import any goods for the execution of
road works under the contract awarded to the joint venture by
NHAI. Placing reliance on the decision of this Court in Novopan
India Ltd., Hyderabad Vs. Collector of Central Excise &
c Customs, Hyderabad6, learned counsel contended that the
Exemption Notification has to be construed strictly. Responding
to the allegation of pick and choose policy adopted by the
revenue, learned counsel urged that non-filing of an appeal in
a similar case does not operate as a bar for the revenue to
prefer an appeal in another case. In support, learned counsel
0
commended us to the decision of this Court in C.K.
Gangadharan & Anr. Vs. Commissioner of Income Tax,
Cochin7 • It was thus, asserted that the decision of the Tribunal
did not warrant any interference and the appeal deserved to
be dismissed.
E
12. The short question for determination is whether import
of the specified machine by Gammon can be considered to be
an import "by a person who has been awarded a contract for
construction of the roads in India", so as to fulfill Condition
F No.38, laid down in Exemption Notification No.17/2001/Cus
dated 1st March, 2001?
13. In order to appreciate the contentions advanced on
behalf of the parties on the question in issue, it would be
G expedient and useful to once again notice the salient features
of agreement dated 18th September, 2000 entered between
Gammon and Atlanta.
6. 1994 Supp (3) sec 606.
H 7. (2008) 8 sec 739 : (2008) 228 ELT 497.
GAMMON INDIA LTD. v. COMMISSIONER OF 209
CUSTOMS, MUMBAI [D.K. JAIN, J.]
14. Agreement dated 18th September, 2000 provided that: A
financial responsibilities of each of the parties to be shared
equally in the form of guarantees, securities, etc. of the joint
venture would be 50% of the project value; the Management of
the joint venture would be subject to the overall control of the
Management Board, consisting of a Chairman, to be nominated B
by Gammon, a Joint Chairman to be nominated by Atlanta and
one Director each to be appointed by both of them; joint venture
bank account would be operated under joint signatures of the
. authorized representatives of Gammon and Atlanta and neither
party would be entitled to borrow for or on behalf of the joint c
venture or to acknowledge any liability without express prior
consent in writing of the other party except to the extent of its
share of work; Gammon being most experienced party would
be the lead partner of the joint venture for the performance of
the contract; the partner-incharge would be authorized to incur 0
liabilities and to receive instructions for and on behalf of the
partners of the joint venture, whether jointly or severally, and
entire execution of the contract including receiving payment
would be carried out exclusively through the partner-incharge
but any financial commitment required by the lead partner, on
E
behalf of the joint venture, would always be previously discussed
and agreed upon by the parties. As stated above, though under
agreement dated 18th September, 2000, Gammon was notified
as the lead partner but agreement dated 20th December, 2000
executed between NHAI as the "employer" and Gammon-
Atlanta JV as "contractor" was signed by the representatives F
of both the companies viz. Gammon and Atlanta, meaning
thereby that so far as NHAI was concerned, for them the
contractor was Gammon-Atlanta JV and not Gammon or
Atlanta individually.
G
15. According to the adjudicating authority, it was clear
from both of the said agreements that the contract of
construction of roads in India was awarded to the joint venture
and, therefore, Gammon was not entitled to avail of the benefit
of the Exemption Notification as an independent entity. On the H
210 SUPREME COURT REPORTS [2011] 7 S.C.R.
A contrary, the Commissioner (Appeals) allowed the benefit of the
Exemption Notification to the appellant on the ground that the
Exemption Notification should be given a liberal interpretation
and that the revenue should not try to take advantage of
ignorance of law and procedure on the part of Gammon. It is
B the Tribunal which has dealt with the issue .in detail by taking
into consideration certain factual aspects pertaining to the
import of machine like placement of the supply orders by
Gammon and not by the joint venture and its payment by
Gammon from its own account and not from the joint venture
c account provided for in the joint venture agreement. Rejecting
the plea of the appellant that in light of the decision of this Court
in New Horizons (supra) wherein it has been held that a joint
venture is a legal entity in the nature of a partnership, the import
of the machinery by Gammon is to be considered as having
D been done on behalf of the joint venture, the Tribunal has
allowed revenue's appeal.
16. Since the stand of the appellant is that the issue arising
in the present appeal stands concluded in their favour by the
decision of this Court in New Horizons (supra) and a
E subsequent decision of this Court as also of the Tribunal, in
which the said decision has been relied upon, it would be
necessary to discern the ratio of the decision in New Horizons
(supra).
F 17. In New Horizons (supra), a joint venture company,
consisting of a few Indian companies (with 60% share capital)
and a Singapore based company (with 40% share capital), had
participated in tender proceedings floated by the Department
of Telecommunications for printing and binding of telephone
G directories of Delhi and Bombay. The tender submitted'by New
Horizons Ltd; (for short "NHL") was not accepted by the tender
.evaluation committee, apparently, on the basis of the fact that
the successful party had more technical experience than any
one of the constituent companies of NHL. Aggrieved by the
H said decision, NHL filed a writ petition in the Delhi High Court
GAMMON INDIA LTD. v. COMMISSIONER OF 211
CUSTOMS, MUMBAI [D.K. JAIN, J.]
against the decision of the Department of Tele-communications. A
The said writ petition was dismissed rejecting the plea of the
NHL that the technical experience of the constituents of the joirlt.
venture was liable to be treated as that of the joint venture. NHL
brought the matter to this Court. Explaining the concept of joint
venture in detail, it was held that a joint venture is a legal entity 8
in the nature of a partnership engaged in the joint undertaking
of a particular transaction for mutual profit or an association of
persons or companies jointly undertaking some commercial
enterprise wherein all contributed assets and shared risks. It
was observed that a joint venture could take the form of a C
Corporation wherein two or more persons or companies might
join together. Accordingly, the appeal of NHL was allowed and
it was held that it was a joint venture company in the nature of
a partnership between the Indian group of companies and
Singapore based company which .had jointly undertaken the
commercial venture by contributing assets and sharing risks. D
Applying the principle of "lifting the corporate veil". it ~as held
that the joint venture companies' technical experience could only
be the experience of the partnering companies and the
technical experience of all constituents of NHL was liable to be
cumulatively reckoned in the tender proceedings and any one E
of the constituents was competent to act on behalf of the joint
venture company. Highlighting the concept of joint venture, the
Court observed thus:
"24. The expression "joint venture" is more frequently used F
in the United States. It connotes a legal entity in the nature
of a partnership engaged in the joint undertaking of a
particular transaction for mutual profit or an association of
persons or companies jointly undertaking some
commercial enterprise wherein all contribute assets and G
share risks. It requires a community of interest in the
performance of the subject-matter, a right to direct and
govern the policy in connection therewith, and duty, which
may be altered by agreement, to share both in profit and
losses. (Black's Law Dictionary, 6th Edn., p. 839) H
212 SUPREME COURT REPORTS [2011] 7 S.C.R.
A According to Words and Phrases, Permanent Edn., a joint
venture is an association of two or more persons to carry
out a single business enterprise for profit (p.117, Vol. 23).
A joint venture can take the form of a corporation wherein
two or more persons or companies may join together. A
B joint venture corporation has been defined as a
corporation which has joined with other individuals or
corporations within the corporate framework in some
specific undertaking commonly found in oil, chemicals,
electronic, atomic fields. (Black's Law Dictionary, 6th Edn.,
p. 342) ...................."
c
18. In short, New Horizons (supra) recognises a joint
venture to be a legal entity in the nature of a partnership of the
constituent companies. Thus, the necessary corollary flowing
from the decision in New Horizons (supra), wherein the
D partnership concept in relation to a joint venture has been
accepted, would be that Mis Gammon-Atlanta JV, the joint
venture could be treated as a 'legal entity', with the character
of a partnership in which Gammon was one of the constituents.
In that view of the matter, the next question for consideration is
E whether being a legal entity i.e. a juridical person, the joint
venture is also a "person" for the purpose of Condition No.38
of the Exemption Notification, stipulating that the goods should
be imported by "a person" who had been awarded a contract
for construction of goods in India by NHAI?
F
19. In support of his submission that the joint venture is a
"person" as contemplated in the Exemption notification, learned
counsel for Gammon had relied on the definition of the word
"person" as given in para 3.37 of the Export and Import policy
G for the year 1997-2002. It reads thus:
"3.37-"Person" includes an individual, firm, society,
company, corporation or any other legal person".
20. The argument was that since a joint venture has been
H declared to be a legal entity in New Horizons (supra), it squarely
GAMMON INDIA LTD. v. COMMISSIONER OF 213
CUSTOMS, MUMBAI [D.K. JAIN, J.]
falls within the ambit of the said definition of the word "person". A
We are of the opinion that even if the stated stand on behalf of
the appellant is accepted, mercifully, on stark facts at hand, it
does not carry their case any further. Neither wa$ it the case
of the appellant either before the Adjudicating Authority or
before the Appellate Authority or before us, nor is it suggested B
by the documents viz. the supply order or the bill of entry, that·
the import of the machine was by or on behalf of the joint
venture. On the contrary, the Tribunal has recorded in its order
that when questioned, learned counsel for the appellant clarified
that correspondence with the supplier of goods and placement c
of order had been done by Gammon and not by the joint
venture or on their behalf. He also admitted that payment for
the machine had not been made from the joint venture account,
which had been provided for the contract but from the funds of
Gammon. · D
21. Thus, the inevitable conclusion is that import of
"Concrete batching plant 56 cum/hr" by Gammon cannot be
considered as an import by M/s Gammon-Atlanta JV, "a
person" who had been award~d contract for construction of the
roads in India and therefore, neither Gammon Atlanta JV nor E
Gammon fulfill the requisite requirement stipulated in Condition
No.38 of the Exemption Notification No. 17/2001/Cus dated 1st
March, 2001.
22. As regards the plea of the appellant that the Exemption F
Notification should receive a liberal construction to further the
object underlying it, it is well settled that a provision providing
for an exemption has to be construed strictly. In Novopan India
Ltd. (supra), dealing with the same issue in relation to an
exernption notification, a three-Judge Bench of this Court, stated G
the principle as follows:
"16. We are, however, of the opinion that, on principle, the
decision of this Court in Mangalore Chemicals- and in
Union of India v. Wood Papers referred to therein -
represents the correct view of law. The principle that in H
214 SUPREME COURT REPORTS [2011) 7 S.C.R.
A case of ambiguity, a taxing statute should be construed in
favour of the assessee - assuming that the said principle
is good and sound - does not apply to the construction
of an exception or an exempting provision; they have to
be construed strictly. A person invoking an exception or
B an exemption provision to relieve him of the tax liability
must establish clearly that he is covered by the said
provision. In case of doubt or ambiguity, benefit of it must
go to the State. This is for the reason explained in
Mangalore Chemicals and other decisions, viz., each
c such exception/exemption increases the tax burden on
other members of the community correspondingly. Once,
of course, the provision is found applicable to him, full
effect must be given to it. As observed by a Constitution
Bench of this Court in Hansraj Gordhandas v. H.H. Dave
that such a notification has to be interpreted in the light of
D
the words employed by it and not on any other basis. This
was so held in th~ context c:.f the principle that in a taxing
statute, there is no room for any intendment, that regard
must be had to the clear meaning of the words and that
the matter should be governed wholly by the language of
E the notification, i.e., by the plain terms of the exemption."
23. Applying the above principles, we are of the opinion
that since in the instant case the language of condition No.38
in the Exemption Notification is clear and unambiguous, there
F is no need to resort to the interpretative process in order to
determine whether the said condition is to be imparted strict
or liberal construction.
24. Before parting, we wish to place on record our deep
concern on the conduct of the two Benches of the Tribunal
G deciding appeals in the cases of IVRCL Infrastructures &
Projects Ltd. (supra) & Techni Bharathi Ltd. (supra). After
noticing the decision of a co-ordinate Bench in the present
case, they still thought it fit to proceed to take a view totally
contrary to the view taken in the earlier judgment, thereby
H
GAMMON INDIA LTD. v. COMMISSIONER OF 215
CUSTOMS, MUMBAI [D.K. JAIN, J.]
creating a judicial uncertainty with regard to the declaration of A
law involved on an identical issue in respect of the same
Exemption Notification. It needs to be emphasised that if a
Bench of a Tribunal, in identical fact-situation, is permitted to
come to a conclusion directly opposed to the conclusion
reached by another Bench of the Tribunal on earlier occasion, B
that will be destructive of the institutional integrity itself. What
is important is the Tribunal as an institution and not the
personality of the members constituting it. If a Bench of the
Tribunal wishes to take a view different from the one taken by
the earlier Bench, the propriety demands that it should place c
the matter before the President of the Tribunal so that the case
is referred to a larger Bench, for which provision exists in the
Act itself. In this behalf, the following observations by a three
Judge Bench of this Court in Sub-Inspector Roop/al & Anr. Vs.
Lt. Governor & Ors8. are quite apposite : D
"At the outset, we must express our serious dissatisfaction
in regard to the manner in which a Coordinate Bench of
the Tribunal has overruled, in effect, an earlier judgment of
another Coordinate Bench of the same Tribunal. This is
opposed to all principles of judicial discipline. If at all, the E
subsequent Bench of the Tribunal was of the opinion that
the earlier view taken by the Coordinate Bench of the same
Tribunal was incorrect, it ought to have referred the matter
to a larger Bench so that the difference of opinion between
the two Coordinate Benches on the same point could have F
been avoided. It is not as if the latter Bench was unaware
of the judgment of the earlier Bench but knowingly it
proceeded to disagree with the said judgment against all
known rules of precedents. Precedents which enunciate
rules of law form the foundation of administration of justice G
under our system. This is a fundamental principle which
every presiding officer of a judicial forum ought to know,
for consistency in interpretation of law alone can lead to
public confidence in our judicial system. This Court has laid
s. c2000) 1 sec 644. H
216 SUPREME COURT REPORTS [2011] 7 S.C.R.
A down time and again that precedent law must be followed
by all concerned; deviation from the same should be only
on a procedure known to law. A subordinate court is bound
by the enunciation of law made by the superior courts. A
Coordinate Bench of a Court cannot pronounce judgment
B contrary to declaration of law made by another Bench. It
can only refer it to a larger Bench if it disagrees with the
earlier pronouncement."
We respectfully concur with these observations and are
C confident that all the Courts and various Tribunals in the country
shall follow these salutary observations in letter and spirit.
25. In view of the foregoing discussion, the decision of the
Tribunal, holding that the appellant was not entitled to the benefit
of Exemption notification No. 17/2001-Cus dated 1st March,
D 2001, cannot be flawed. The appeal being bereft of any merit
is dismissed accordingly, with costs, quantified at
Rs. 50,000/-.
D.G. Appeal dismissed.
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