COMMISSIONER OF CUSTOMS (GENERAL), NEW DELHI ETC. ETC. versus M/S. GUJARAT PERSTORP ELECTRONICS LTD. ETC. ETC.

Citation: [2005] SUPP. 2 S.C.R. 389 · Decided: 05-08-2005 · Supreme Court of India · Bench: RUMA PAL · Disposal: Appeal(s) allowed

Judgment (excerpt)

COMMISSIONER OF CUSTOMS (GENERAL), 
NEW DELHI ETC. ETC. 
v. 
MIS. GUJARAT PERSTORP ELECTRONICS LTD. ETC. ETC. 
AUGUST 5, 2005 
[RUMA PAL, ARlJIT PASAYAT AND C.K. THAKKER, JJ.] 
Customs and Tariff Act, 1975-First Schedule-Chapter Headings 
49.06 and 49.11-Customs Act, 1962-Section 28(/), 11 l(m) and /12-
Dra1vings, designs and plans imported under technical "Know Ho1v" and 
"Basic Engineering Agree1nent"-Assessee clain-1ed exemption from custor.1s 
duty placing imported goods as ''printed books" under chapter heading 
49. 06-Revenue placed them under Chapter 49.11 holding them to be 
manuals or brochures pertaining to processes-Duty demanded was confirmed 
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B 
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and pena/ities imposed-CEGAT allowed appeal on the. basis of its larger 
Bench judgment-larger Bench judgment of CEGAT overruled later on, in 
another matter-On appeal, niatter referred to a larger Bench owing to 
subsequent overruling of the judgment followed by CEGA T and conflicting 
ratios of certain judgments-Held, a clear error of law con1mitted while 
overruling the larger Bench decision followed by CEGAT-Facts and 
circumstances of a case should decide whether draiving, designs and plans 
could be said to be a "book" or not-49.01 is the basic heading dealing with 
''printed books" and 49.11 covers other printed 111aterial, maJ.. ·ng, it a 
residual entry-Priority to be given to the n1ain enlly and not the residual 
entry-if covered by a specific item, the residuary item has no application-
Matters remitted back as other rival contentions lvere not considered in the 
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backdrop of the larger Bench judgment of CEGAT-Export and Import 
Policy, 1992-1997-Para 14. 
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E 
Mis. P, Ltd. set up a new plant on the basis of a technical "Know 
How" and "Basic Engineering Agreement" with Mis Z of Germany, 
Revenue Intelligence was informed that Mis. P, Ltd. had imported actual 
goods under the Export Promotional Capital Goods Scheme (EPCG) at 
a concessional rate of duty and thereafter diverted some of the goods to 
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the local market, violating conditions of import under Para 14 of the 
Export and Import Policy 1992-97. All documents and details were 
scrutinized along with physical inspection of imported goods, which 
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389 
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B 
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390 
SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R. 
indicated no such divergence. However, it was noticed that designs, 
drawings and plans were imported under the said agreement without 
payment of the appropriate amount of customs duty. A show cause notice 
was issued under Section 28 (1) of the Customs Act, 1962 asking as to why, 
the requisite duty should not be demanded; an amount of Rs. 20,00,000 
deposited voluntarily should not be adjusted against the duty demanded; 
the goods i.e. drawings, designs, plans etc. imported in three consignments 
should not be held liable to confiscation under Section 111 (m) of the Act 
and penalty should bot be imposed under Section 112 of the Act. The 
reply stated that as per the Bill of Entry, the imported goods were in the 
category of "books" under Chapter Heading 49.06 in the First Schedule 
to the Custom and Tariffs Act, 1975, exempted by various Government 
notifications. Therefore, reassessment under Chapter Heading 49.11 was 
refuted as drawings, design plants etc. could be classified as "printed 
books". 
The Commissioner of Customs held that the imported goods pertained 
to processes and were in the shape of manuals, brochures or leaflets, 
distinguishable from printed books, making them liable for customs duty. 
The duty demanded was confirmed, the voluntary deposit was adjusted, 
a penalty of Rs. 1 Crore was imposed along with penalizing the Chairman-
cum-Managing Director and the Director of M(s. P. Ltd. They and Mis. 
P. Ltd. filed three appeals in CEGAT, whereas the Revenue filed two 
cross appeals for enhancement of penalties. CEGAT noted that a previous 
decision of its larger Bench of the same issues was binding on it, therefore, 
set aside the order in challenge and also dismissed the cross appeals. 
Aggrieved by this order th~ Revenue prefer~ed these appeals, which were 
referred to a larger Bench owing to overruling of the judgment upon 
which CEGAT had based its order. The judgment, overruling the larger 
Bench of CEGAT also fell in conflict with the ratio of a later judgment. 
The appellants contended that as the judgment upon which CEGAT 
had based its order had been overruled so the present appeals deserve 
to be allowed; and that in the alternative re

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