1. Chased by the phantom of octroi duty, trying to save itself from the clutches of Jaipur Municipal Corporation ('JMC', for short), running from pillar to post to seek justice, the petitioner, the National Engineering Industries Ltd., has sought the refuge of this Court.
2. Aggrieved by the order dated 6.3.1997, passed by the Octroi Commissioner, Jaipur Municipal Corporation ('the learned Commissioner', for short), whereby the learned Commissioner has dismissed the eleven appeals, filed by the petitioner, by a common order and has upheld the octroi duty imposed by the JMC, the petitioner has knocked at the doors of this Court.
3. This case has had a convoluted history: the petitioner is a company incorporated under the Indian Companies Act, 1956. It carries on the business of manufacturing and sale of various products inter alia axle boxes and ball bearings and roller bearings. It has a factory at Jaipur for carrying on the aforesaid activities. Both, for the finished product and for manufacturing various components of the bearings, the Company requires various machineries. Some of these machineries were not available in India. Consequently, the petitioner imported these machineries from abroad. These machineries included radial clearance checking machine, grinding machine for ball bearings, lapping machine for ball bearings etc. It also included indigenous machines called H.M.T. Vertical Machining Center. When these machines entered the municipal limits of Jaipur City, the JMC required the petitioner to pay octroi duty as per Item No. 69(e) and/or Item No. 74 of the Octroi Schedule dated 5.12.1991. Item No. 69(e) deals with "VCR, VCP and its cassettes, remote control and its parts, X-ray machine, electronic machine and its parts, chemotherapy machine Gama, Camera Sonography, CT Scanning ECG apparatus- and other machines of this type or their parts." Item No. 69(e) prescribes an octroi duty of 1% of the value of the machine. On the other hand, Item No. 74(a) deals with "wall clocks, table clocks, simple or electronically run clocks, glass, chain, and other parts of clocks and other items with computer or computer run machine." Item No. 74 prescribes an octroi duty of I% of the value of goods.
4. The petitioner resisted the classification of the machines being imported and claimed that the correct classification is one under Item No. 109 of the Octroi Schedule. Item No. 109 deals with "Every type of machinery, their parts, other tube, counter scale and weighting machine." According to Item No. 109, the excisable duty is Rs. 50 per quintal. Before the Octroi Officers, it was the case of the petitioner that the machines were general machines which at the relevant time were excisable to an octroi duty only at the rate of Rs. 50/- per quintal. However, the Octroi Officers passed certain assessment order while rejecting the stand taken by the petitioner.
5. Faced with an enormous demand of octroi, the petitioner filed a writ petition, namely S.B. Civil Writ Petition No. 4815/1992 before this court, and challenged the classification of the machines under Item Nos. 69(e) and 74 of the Octroi Schedule. According to the petitioner, the machines should be charged octroi duty under Item No. 109 of the Octroi Schedule. A large number of other writ petitions were also filed by the petitioner as and when its consignments of machines were detained by the JMC. While hearing these petitions, this Court passed an interim order directing that "the entry of the goods be allowed within the Jaipur Municipal Corporation on payment of octroi at the rate set out in Item No. 109 along with a bank guarantee for the remainder of the amount being claimed by the JMC.'
6. However, vide judgment dated 27.5.1993, passed in S.B. Civil Writ Petition No. 4815/1992, this Court accepted the preliminary objection raised by the JMC with regard to the maintainability of the writ petitions on two grounds: firstly, the writ petitions involved a disputed question of facts. Secondly, the petitioner had an alternate remedy of challenging the assessment orders under Section 139 of the Rajasthan Municipality Act, 1959 ('the Act', for short) read with Rule 40 of the Rajasthan Municipality (Octroi) Rules, 1962 ('the Rules', for short).
7. Since the petitioner was aggrieved by the said judgment, it filed an intra-court appeal, registered as D.B. Special Appeal (Writs) No. 203/1993 before the learned Division Bench of this Court. Vide judgment dated 8.11.1993, while the learned Division Bench upheld the judgment dated 27.5.1993, it issued certain directions to the JMC with regard to the factors which it should consider while deciding the classification under which the machines in dispute would fall. This court shall deal with this aspect later on.
8. Immediately, after the decision of the learned Division Bench the JMC wanted to invoke the various bank guarantees issued on behalf of the petitioner. However, the petitioner was of the bona fide belief that before the bank guarantees issued on behalf of the petitioner. However, the petitioner was of the bona fide belief that before the bank guarantees could be invoked, the JMC was duty bound to re-assess the amount of octroi duty payable by the petitioner, and to pass fresh Assessment Orders. Therefore, it requested the JMC to desist from invoking the bank guarantees without re-assessing the octroi duty. However, the pleas of the petitioner fell on deaf ears.
9. Therefore, the petitioner filed another writ petition, namely S.B. Civil Writ Petition No. 1472/1994, praying that the JMC should be restrained from invoking the bank guarantees without passing fresh Assessment Orders. However, vide judgment dated 22.8.1994, the learned Single Bench rejected the plea raised by the petitioner. It observed that the learned Division Bench had not given any direction to the JMC to re-assess the octroi duty payable by the petitioner and to pass fresh Assessment Orders. In fact, its directions were for the future assessment and not for the past ones. Moreover, in case there was any confusion in the mind of the petitioner, it should have filed either a review petition or an application for clarification before the learned Division Bench. Lastly, the petitioner was free to challenge the Assessment Orders before the appropriate authority under Section 139 of the Act read with Rule 40 of the Rules.
10. According to the petitioner, it was never served with the copies of the Assessment Orders by the JMC. Therefore, on 27.8.1994 it requested the JMC to provide it with copies of the Assessment Orders so that the same could be assailed before the learned Commissioner. Thereafter, the petitioner filed its appeals before the learned Commissioner, but without the copies of the Assessment Orders. According to the JMC it gave the copies to the petitioner on 30.8.1994. However, the petitioner filed a writ petition, namely S.B. Civil Writ Petition No. 5151/1994, before this court praying that the JMC be directed to give it copies of the Assessment Orders. Meanwhile, on 30.8.1994, the JMC gave copies of the Assessment Orders to the petitioner. Vide order dated 14.9.1994, the learned Single Bench also directed the JMC to provide the copies of the Assessment Orders within a period of fifteen days. On 21.9.1994, the petitioner filed eleven appeals, along with the copies of the Assessment Orders, before the learned Commissioner. By way of abundant caution, it also filed an application under Section 5 of the Limitation Act for condoning the delay in filing of the appeals, as the petitioner was challenging the Assessment Orders of 1992-1993 in the year 1994.
11. However, vide order dated 6.3.1997, the learned Commissioner dismissed the eleven appeals through a common order ostensibly on two grounds: firstly, the appeals are barred by limitation as they have been filed after a delay of almost two years and sufficient cause has not been shown by the petitioner. Secondly, the machineries imported by the petitioner fell within Item No. 69(e) and/or Item No. 74 of the Octroi Schedule, 1991. Therefore, the assessment of the octroi duty, payable by the petitioner, is legal and valid. Hence, this petition before this Court.
12. Mr. Alok Sharma, the learned Senior counsel for the petitioner, has raised the following contentions before this court: firstly, the learned Commissioner is unjustified in holding that the appeals are hit by limitation, as the petitioner had sufficient cause for the delay. For, the petitioner had challenged the Assessment Orders by filing writ petitions before the learned Single Bench of this Court, had filed a Special Appeal against the judgment of the learned Single Bench. Moreover, since it was under a bona fide belief that the JMC had been directed to re-assess the octroi duty, payable by the petitioner, and to pass fresh Assessment Orders, it had not challenged the Assessment Orders by filing appeals against them. It is only after this court had clarified the position vide judgment dated 22.8.1994 that the petitioner realized that it had no option, but to challenge the Assessment Orders under the provisions of the Act read with the Rules. Therefore, immediately after passing of the said judgment, on 30.8.1994, it filed its appeals before the learned Commissioner. Moreover, since it was handicapped for not having the copies of the impugned orders, it again filed a writ petition before this Court. Once, the copies of the assessment orders were made available, again the pits filed eleven appeals' Thus, the petitioner has not only been vigilant about its interest, but also has been pursuing its case with due diligence. It has been running from pillar to post to seek relief. Even if it had entered a wrong arena, even then, the time spent pursuing its remedy before the wrong arena, has to be excluded. Moreover, the hyper-technicalities of the Limitation Act should not prevent the learned Commissioner from doing justice to the petitioner. For, it is often said that procedural law is handmaiden of justice and can never be its master. Furthermore, the "sufficient cause" should have been interpreted liberally in order to do substantial justice to the petitioner. To buttress this contention, the learned counsel has relied on the Cases of the State of W.B. v. Administrator, Howrah Municipality, (1972) 1 SCC 366), and Collector, Land Acquisition v. Katiji (1987) 2 SCC 107).
13. Secondly, the learned Commissioner has ignored the principles governing classification of any entry. While, examining the issue whether a particular product falls within a particular category, the appellate authority should have dealt with the nature of the machine, should have considered how the machinery is known in the trade circles, should have considered the dominant function test, instead of relying upon a concocted report submitted by an Assistant Engineer at the insistence of the JMC.
14. Thirdly, the learned Commissioner has totally ignored the directions issued by the learned Division Bench of this Court in its judgment dated 8.11.1993. Since these directions had been specifically issued for the JMC, the learned Commissioner was duty bound to follow them.
15. Fourthly, according to the directions issued by the learned Division Bench, the appellate authority was directed to consider the classification of the machineries in question under the Customs Act and the Customs Tariff. According to the Customs Tariff, 1997, while Chapter 85 deals with electrical machinery, Chapter 84 deals with the mechanical appliances and parts thereof. The machines are not being imported under Chapter 85, but are being imported under Chapter 84. Thus, according to the Customs authorities, the machines are general in nature and do not fall within the category of electrical machinery.
16. Fifthly, the learned Commissioner has totally ignored the evidence brought on record by the petitioner with regard to the nature of the machines imported by it. Instead, he has relied on the report of an Assistant Engineer- a report which is vague, and general, and concocted. According to the learned counsel, the machines are neither electronic, nor computerized. Therefore, they fall neither in Item No. 69(e), nor in Item No. 74 of the Octroi Schedule, 1991. Instead, they fall under Item No. 109 of the Octroi Schedule, 1991.
17. Sixthly, Item No. 69(e) and Item No. 74 of the Octroi Schedule would have to be interpreted by this Court. A bare perusal of Item No.69 clearly reveals that Item No.69(e) can be divided into two parts: firstly, the instruments or machineries, such as VCR, VCP or their cassettes or remote control or their parts. These machineries deal with equipment used for entertainment. Secondly, machineries such as x-ray machine, chemotherapy machine Gama, Camera, Sonography, CT-Scanning, ECG apparatus. These are machines which are used for medical purposes. The words 'electric machine and equipment' have been placed between the words 'X-ray machine and chemotherapy machine.' Therefore, the words 'electronic machine and their parts' would necessarily take its color from the words 'x-ray machine and Chemotherapy machine.' Thus, the words 'electronic machine and its parts' would have dealt specifically with those machines which are used for medical purposes. Hence, the machines being imported by the petitioner, which are used for making components of ball bearings or for finished product of ball bearings, possibly cannot be included in a category dealing with medical machines.
18. 'Similarly, Item No. 74 deals with watches and clocks or with other items with computer or computer run machine. Even the words 'computer machine' would necessarily have to take their color from the words 'watches and clocks'. The words 'computer machine' cannot be extended to include those machines which are used for manufacturing purpose.
19. Unlike the above mentioned items, Item No. 109 deals with machines of every type, other tube, counter-scale and weighting machines. According to the learned counsel, the words 'machines of every type' creates a residuary category. It would, ipso facto, include the machines being imported and being bought by the petitioner.
20. Sevently, according to the directions issued by the learned Division Bench, in case the appellate authority were to come to the conclusion that the machines fall under Item No. 109, then the excess amount collected from the petitioner should be refunded to it. The learned counsel has pleaded that in. case this Court also comes to the conclusion that the excess amount has been charged and collected by the JMC, then the JMC should be directed to refund the excess amount to the petitioner.
21. Eighthly, various tests have been prescribed by the Hon'ble Supreme Court to decide the nature of the product and the category in which it will fall under. Relying on the case of Ramavatar Budhaiprasad etc. v. Assistant Sales Tax Officer, Akola & Anr. (AIR 1961 SC 1325), the learned counsel has contended that words must be construed not In any technical sense, but as understood in common parlance. If a word has not been defined in an Ac.t and the word is in everyday uses, it must be construed in its popular sense meaning thereby that the sense with which people conversant with tht. subject matter would attribute to it. This particular test laid down by the Apex Court, according to the learned counsel, has been followed recently in the case of Ponds India Ltd. (Merged with H.L. Ltd.) v. Commissioner of Trade Tax, Lucknow (2008) 8 SCC 369).
22. Lastly, relying on the case of Oswal Agro Mills Lts. & Ors. v. Collector of Central Excise & Ors. (1993 Sup. (3) SCC 716), the learned counsel has contended that the provisions of the tariff do not determine the relevant entity of the goods. They deal with under what entry, the identified entity attracts duty. The goods are to be first identified and then the assessing authority should find the appropriate heading, sub-heading under which the identify goods/products would be classified. Therefore, the appellate authority is duty bound to first examine the nature of the goods/products, then to interpret the entry under which such goods or products would fall in order to conclude the amount of duty payable by the petitioner. However, in the present case, the learned Commissioner has failed to do so.
23. On the other hand, Mr. K.K. Mehrish, the learned Senior counsel for the JMC, has raised the following grounds before this court: firstly, the petitioner had challenged the Assessment Orders passed in 19924993 on 30.8.1994 before the learned Commissioner. Thus, it had challenged the orders after an inordinate delay of almost after two years.
24. Secondly, it could not show 'sufficient cause' for the inordinate delay. It has claimed that after the learned Division Bench passed its judgment dated 8.11.1993, it was under a bona fide belief that the JMC is bound to reassess the octroi duty and to pass fresh Assessment Orders. However, the petitioner could not have entertained such a belief as the learned Division Bench neither remanded the case back to the Assessing Officer, nor issued any direction for reassessment of the octroi duty. Hence such a belief was highly misplaced. Such a belief is a mere excuse to save oneself from the limitation period.
25. Thirdly, along with the D.B. Special Appeal (Writ) No. 203/93, the petitioner had filed a stay application. While .filing the reply to the stay application, the JMC had given details of all the Assessment Orders; the reply was submitted on 12.7.1993. Thus, the petitioner knew about the existence of the Assessment Orders from the said date. Yet, still it did not bother to challenge the Assessment Orders before the learned Commissioner within the period of limitation.
26. Fourthly, once an appeal is hit by limitation, the other party's right is fortified. The right so fortified should not be disturbed lightly. Therefore, the learned Commissioner was justified in rejecting the appeal on the ground of limitation as the petitioner had failed to show sufficient cause for the delay.
27. Fifthly, the machines were inspected and assessed at the point of their entry. The documents which were accompanying the machines were also examined and considered. The machines were fitted with electronic controls having P.L.G., power supply, inverters and spares. It is after a inspection and consideration that the JMC concluded that the imported machines are "sophisticated computerized electronic machines for manufacturing of the products produced by the petitioner." Hence, the JMC was legally justified in claiming that the machines fall within Item Nos. 69(e) and 74 of the Octroi Schedule.
28. Sixthly, the learned Commissioner had also noted the detailed report dated 24.9.1994, prepared by the Assistant Engineer, Mr. G.S. Rathore wherein he, too, had concluded that the machines were "sophisticated computerized electronic machines for manufacturing of the products produced by the petitioner." Hence, the reasoning and the conclusion of the learned Commissioner was based on certain data.
29. Seventhly, although the petitioner had submitted a number of certificates issued by experts, and other documents issued by the companies from whom it had bought the machines, but these documents did not relate to the machines in question. Therefore, the learned Commissioner was justified in not considering these documents.
30. Eighthly, the petitioner had relied upon the Customs Tariff 1992-93 in order to show that the machines imported by it fell within Chapters 84 and 90, dealing with machinery and mechanical appliances. These machineries did not fall under Chapter 85 which dealt with 'electronic machines'. However, even this piece of evidence was irrelevant as the Octroi Schedule is a self- contained code, which is.independent of the Customs Tariff.
31. Lastly, if this court were to conclude that the machines fall within Item No. 109 of the Octroi Schedule, even then the court should not direct the JMC to refund the over-charged octrol duty. For, the petitioner has passed off the amount of the duty paid by it to the customers by including the duty in the cost of the finished goods. Therefore, to refund the duty is to cause unjust enrichment to the petitioner. In order to buttress this contention, the learned counsel has relied on the case of Mafatlal Industries Ltd. v. Union of India (1997) 5 SCC 536).
32. In rejoinder, Mr. Alok Sharma has submitted that prior to the report dated 24.9.1994, prepared by the Assistant Engineer, the same person, namely Mr. G.S. Rathore had submitted a report with regard to the same set of machineries on 6.5.1994. In the said report he had clearly claimed that "the machineries are having mechanical functions with electronic controls and are predominantly classified as mechanical machines by nature." However, as. the said report was not in favour of the JMC, the Revenue Officer (Octroi) had directed Mr. Rathore to give a fresh report. It is under the pressure of the JMC that Mr. Rathore had submitted the report dated 24.9.1994. Since it was 'a doctored report', the learned Commissioner should not have relied upon it. Hence, the learned Commissioner has relied upon an unreliable report.
33. Secondly, the learned Division Bench had issued certain directions in its judgment dated 8.11.1993, wherein it had clearly directed the JMC to consider the Customs Tariff, the expert opinion, and the nomenclature by which the machines are known in the trade circle. Therefore, the petitioner was justified in submitting the classification under the Customs Tariff 1992- 1993, the certificates issued by the experts and the documents of the company from whom the machines were bought. However, by ignoring these relevant evidence, the learned Commissioner has ignored the directions issued by the learned Division Bench- directions which the learned Commissioner was bound to follow.
34. Lastly, the learned Commissioner has merely concluded that the machines are "sophisticated computerized electronic machines for manufacturing of their products." However, he has not analyzed the entries in order to see under which entry the machines would fall. Therefore, the learned Commissioner has failed to apply his mind to the controversy involved. Thus, the impugned order deserves to be interfered with.
35. Heard the learned Counsel for the parties, perused the record, examined the impugned order, and considered the case law cited at the Bar.
36. In the case of Administrator, Howrah Municipality (supra) the Hon'ble Supreme Court observed that "the words "sufficient cause" should receive a liberal construction so as to advance substantial justice when no negligence or inaction or want of bona fide is imputable to a party." Similarly in the case of Katiji (supra) the Apex Court held as under: When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay... It must be grasped that judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
37. Moreover, in the case of N. Balakrishnan v. M. Krishnamurthy, (1998) 7 SCC 123 = RLW 1999(1) SC 107 the Apex Court held as under: It is axiomatic that condonation of delay is a matter of discretion of the court. Section 5 of the Limitation Act does not say that such discretion can be exercised only if the delay is within a certain limit. Length of delay is no matter; acceptability of the explanation is the only criterion. Sometimes delay of the shortest range may be uncondonable due to a want of acceptable explanation whereas in certain other cases, delay of a very long range can be condoned as the explanation thereof is satisfactory. Once the court accepts the explanation as sufficient, it is the result of positive exercise of discretion and normally the superior court should not disturb such finding, much less in revisional jurisdiction, unless the exercise of discretion was on wholly untenable grounds or arbitrary or perverse. But it is a different matter when the first court refuses to condone the delay. In such cases, the superior court would be free to consider the cause shown for the delay afresh and it is open to such superior court to come to its own finding even untrammeled by the conclusion of the lower court.
10. The reason for such a different stance is thus: The primary function of a court is to adjudicate the dispute between the parties and to advance substantial justice. The time-limit fixed for approaching the court in different situations is not because on the expiry of such time a bad cause would transform into a good cause.
11. Rules of limitation are not meant to destroy the rights of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. The law of limitation fixes a lifespan for such legal remedy for the redress.of the legal injury so suffered. Time is precious and wasted time would never revisit. During the efflux of time, newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a lifespan must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. The law of limitation is thus founded on public policy. It is enshrined in the maxim interest reipublicae up sit finis litium (it is for the general welfare that a period be put to litigation). Rules of limitation are not meant to destroy the rights of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time.
12. A court knows that refusal to condone delay would result in foreclosing a suitor from putting forth his cause. There is no presumption that delays in approaching the court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi Jain v. Kuntal Kumari (AIR 1969 SC 575) and State of W.B v. Administrator, Howrah Municipality (1972) 1 SCC 366).
38. Further, in the case of State (NCT of Delhi) v. Ahmed Jaan, (2008) 14 SCC 582) after referring to previous case law, the Hon'ble Supreme Court opined as under:
The expression 'sufficient cause' is adequately elastic to enable the court to apply the law in a meaningful manner which subserves (sic) the ends of justice-that being the life purpose for the existence of the institution of courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court. But the message does not appear to have percolated down to all the other courts in the hierarchy. This Court reiterated that the expression ' every day's delay must be explained' does not mean that a pedantic approach should be made. The doctrine must be applied in a rational, common sense, pragmatic manner. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. Judiciary is not respected on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
39. Again dealing with section 5 of the Limitation Act, in the case of Shakuntala Devi Jain v. Kuntal Kumari (AIR 1969 SC 575) the Hon'ble Supreme Court had held that "unless want of bona fides of such inaction or negligence as would deprive a party of the protection of Section 5 is proved, the application must not be thrown out or any delay cannot be refused to be condoned."
40. In Concord of India Insurance Co. Ltd. v. Nirmala Devi (1979) 4 SCC 365) which is a case of negligence of the counsel which misled a litigant into delayed pursuit of his remedy, the Hon'ble Supreme Court condoned the delay.
41. The principles which emerge from the above quoted case law are: firstly, the life purpose of judicial or quasi-judicial body is to do substantial justice with the parties. Secondly, procedural law is the hand-maiden of justice. It can never be the master of justice. Thirdly, the words 'sufficient cause' should receive a liberal interpretation. After all, when the Apex Court observed that 'the delay of each day should be explained," it did not mean that a pedantic view of the situation should be taken. The doctrine must be applied in a rational, common sense, pragmatic manner. Fourthly, unless negligence or inaction or want of bona fide is imputable to a party, the delay should be condoned. Fifthly, if the first court does not condone the delay, it is for the superior court to see if the decision is based on wholly untenable grounds, or is arbitrary or is perverse. If it finds the decision to be so, it can condone the delay. Lastly, if the delay has been caused due to the negligence of the counsel, ordinarily, the delay should be condoned.
42. Of course, Mr. Mehrish has tried to argue that the delay on the part of the petitioner was deliberate. According to him, the repeated filing of the writ petitions before this court by the petitioner was a stratagem to camouflage the delay in filing the appeals against the Assessment Orders. However, the facts belie his assertion. Admittedly, when the JMC started levying the octroi under Item Nos. 69(e) and 74 of the Octroi Schedule, the petitioner challenged the classification by filing S.B. Civil Writ Petition No. 4815/92 and other writ petitions before this court. On 27.5.1993, the said petition, along with other petitions, was dismissed by this court. Immediately, the petitioner filed a Special Appeal against the said judgment before the learned Division Bench. Vide judgment dated 8.11.1993, the learned Division Bench not just dismissed the said appeal, but more so gave certain directions to be followed by the JMC while assessing the Octroi duty. Hence, the petitioner entertained a bona fide belief that the JMC is required to reassess the Octroi duty and to pass fresh Assessment Orders. It was not till 22.8.1994, that this court interpreted the judgment dated 8.11.1993 in S.B. Civil Writ Petition No. 1472/1994; this court opined that the petitioner is free to challenge the Assessment Orders before the learned Commissioner. Once the legal position was clarified by learned Single Bench, immediately on 27.8.1994, the petitioner sought the certified copies of the Assessment Orders in question. The petitioner also filed a writ petition before this court praying that the JMC be directed to give copies of the Assessment Orders to it. although the certified copies of the Assessment Orders were not available with the petitioner, still the petitioner filed the appeals on 30.8.1994 before the learned Commissioner. Subsequently, when the copies were given to the petitioner on 30.8.1994, it immediately filed eleven appeals on 21.9.1994, along with the copies of the Assessment Orders, before the learned Commissioner.
43. Of course, Mr. Mehrishi has argued that the particulars of the Assessment Orders were given to the petitioner in the reply filed by the JMC to the stay application filed by the petitioner before the learned Division Bench in D.B. Special Appeal (Writ) No. 203/1993. Therefore, according to him, the petitioner had the knowledge about the existence of the Assessment Orders as early as 12.7.1993. Yet, the petitioner failed to challenge the same within the limitation period. However, this argument is unacceptable for two reasons: firstly, once an Assessment Order is passed by the JMC, it is the duty of the JMC to communicate the same to the assesse. The assesse cannot be expected to wait hand and foot for seeking the copy of the Assessment Order. After all, the JMC, being an instrumentality of the State, has to be fair and just with the assessee. Secondly, even in its reply the JMC has admitted the fact that vide letter dated 27.8.1994, the petitioner had sought the official copies of the Assessment Orders which were given to the petitioner on 30.8.1994. It further admitted that on 21.9.1994 the petitioner again filed eleven' appeals, along with the copies of the Assessment Orders, before the learned Commissioner.
44. Thus the petitioner has been running from pillar to post trying to protect its rights even since 1992. Initially, it challenged the classification applied by the JMC before this court. After the writ petition was dismissed by this court vide judgment dated 27.5.1993, immediately the petitioner filed an intra-court appeal before the learned Division Bench. As certain directions were issued by the learned Division Bench, the learned counsel for the petitioner entertained a bona fide belief that the JMC is required to reassess the octroi duty and to pass fresh Assessment Orders while keeping in mind the directions issued by this court. It is under this bona fide belief that the learned counsel of the petitioner advised the petitioner not to challenge the Assessment Orders already passed by the JMC. It was only when the position was clarified by this court ii) S.B. Civil Writ Petition No. 1472/1994, vide judgment dated 22.8.1994, that immediately the petitioner filed the first set of appeals, even without the certified copies of the Assessment Orders. The petitioner filed another writ petition praying that the JMC should be directed to give it copies of the Assessment Orders. On 27.8.1994, the petitioner sought the certified copies of the Assessment Orders from the JMC. According to the JMC. the certified copies were given to the petitioner on 30.8.1994. Therefore, on 21.9.1994, the petitioner filed a second set of eleven appeals, along with the certified copies of the Assessment Orders, before the learned Commissioner. Hence, it cannot be said that the petitioner had been negligent, or inactive, or lacked bona fide intention in either challenged the action of the JMC, or in challenging the Assessment Orders. In fact, it had sufficient cause for the delay in filing the appeals before the learned Commissioner. As mentioned above, repeatedly, the Apex Court has opined that the words 'sufficient cause' should be interpreted liberally so as to sub- serve substantial justice. The learned Commissioner should have kept in mind not only the opinion of the Apex Court, but should have also desisted from a pedantic approach. In fact, the learned Commissioner was required to keep "a rational, common sense, and pragmatic" approach in such a case as the present one. Therefore, the learned Commissioner has erred in dismissing the appeals on the ground of limitation.
45. While deciding the D.B. Special Appeal (Writ) No. 203/1993, vide judgment dated 8.11.1993, the learned Division Bench of this court had issued certain directions to the JMC which are as under:
The learned Single Judge therefore, was right that disputed questions of fact are involved in this case which cannot be decided in writ jurisdiction but we cannot lose sight of the petitioner company's appeals that once the Municipal Corporation decides to impose the octroi considering the entire machineries to be computerized and charged the heavy octroi and then leave the parties to contest the case more particularly, when in the matter of heavy duty articles where the executive officers and the administrator/chairman themselves are involved or in cases like the one where the Administrator himself has contested the writ petition and the allegation of bias in favour of the Corporation can always be there. At times this apprehension cannot be removed from the mind of the party that the filing of the appeal may be an idle formality. It is also often seen that assessment orders are not passed at the time of levy of octroi and, therefore, there is no proper application of mind in charging the octroi at the cost and heavy amounts may be charged, it of course, always be subject to refund after assessment or disposal of the appeal. The entire matter has to be considered in accordance with law and the guidelines provided in various judgments including the present one while passing the order of assessment as well as the order in appeal under the Municipal law are quasi-judicial orders passed by the authority in quasi-judicial authority and, therefore, they are expected to consider the case objectively after carefully going through the various documents and the assessing authority requires to look into the papers and then decide as to which particular machinery fall under Item No. 109 and which under 69(e) or 74.
One thing has to be borne in mind that India is a country and that the State and the Municipality have a right to levy the duty in accordance with local laws yet it should not be contradictory to the decision taken by the Government of India as it does not only create anomaly and uncertainty, more particularly in the matter of description. Any goods after careful consideration by the committee constituted for the purpose then it has to be accepted as such unless it is shown that the decision is erroneous for the reasons to be mentioned and, therefore, in the case like the present one when the description of the property has been given by the import authority and the custom duty is levied accordingly, then it behoves the Corporation and the State Government to prima facie accept the same and then make proper inspection and in case of difference record reasons thereof. We are of the opinion that we should not give any final opinion in the matter of description of goods and agree with the view of the learned Single Judge and we hold that there is an alternate forum for adjudication of octroi to be leviable. Still we consider it necessary, that to prevent undue harassment and to see that injustice may not be caused to traders, a direction be issued to the Corporation that in the matter of levying octroi on imported goods, in the first instance octroi should be charged at the octroi post in accordance with description of the goods which is accepted for the purpose of customs duty and a declaration should be obtained from the parties bringing the goods within the municipal limits that it would pay the balance amount immediately after passing the assessment order and appeal may be heard only after the assessment amount is deposited, of course, always subject to the decision of the appeal. Though it appears to be an unusual order but this is essential to strike the balance between the parties bringing the goods within the municipal limits and the Municipal Corporation. It will also be lawful for the Corporation to insist for an undertaking/bank guarantee for payment of balance amount within a week of the passing of the assessment order.
46. The JMC never challenged these directions; they are, thus, binding on it. However, while deciding the appeals filed by the petitioner, the learned Commissioner seems to have ignored these directions. In fact, Mr. Mehrishi has argued before this court that the Customs Tariff 1992-93 was inapplicable as the Octroi Schedule is a self-contained Code. The learned counsel has overlooked the fact that according to the learned Division Bench, the JMC was directed to consider the classification of the machines in question as given in the Customs Tariff. After all, according to the learned Division Bench, India is a single country; the State and the Municipality are bound to consider the classification of the goods as given by the Central Government in the Customs Tariff. For, the said classification is done after it has been approved by a committee. Moreover, the JMC was directed to consider the documents accompanying the goods and other documents submitted by the assesse.
47. A bare perusal of the impugned order clearly reveals that the learned Commissioner has given the following reasons for dismissing the appeals on merit: firstly, the Report dated 24.9.94, prepared by Mr. G.S. Rathore, the Assistant Engineer had concluded that the machines were "highly sophisticated computerized electronic machines". Secondly, according to the different documents, submitted by the company, it was shown that the machines were fitted with "P.L.G. Power point, Inverter, and spares." Thus, because the machines had electronic controls, therefore they are highly sophisticated electronic machines. Thirdly, the machines imported by the company do not fall in the category of "simple machines". Fourthly, the opinions of different persons and committees submitted by the company neither gives any reason for treating the machines as "simple machines", nor given any opinion about the existence of the "fitted electronic controls". Thus, the company does not derive any benefit from these documents. Hence, the machines cannot be treated as "ordinary". Lastly, the machines are useful and important to the company only because they rare fitted with electronic controls. Therefore, the machines fall under Item Nos. 69(e) and 74 and not under Item No. 109.
48. A bare perusal of the reasoning clearly shows that the learned Commissioner has totally ignored the direction of the learned Division Bench vide its judgment dated 8.11.1993 as quoted above. This Court had directed the learned Commissioner to keep in mind the classification as done in the Customs Tariff. Yet, he has failed to do so. Secondly, the learned Commissioner has considered the report of the Assistant Engineer dated 24.9.1994, yet he has ignored the fact that the first report dated 6.9.1994 made by the same person, namely Mr. Rathore had classified the machines as "having mechanical functions with electronic controls and are predominately classified machanical machines by nature." Subsequently, in the report dated 24.9.1994, he had done a somersault and had submitted a contrary report. Hence, the report's veracity is doubtful. Yet, the learned Commissioner had relied upon a doubtful report in order to reach his conclusion. Thirdly, while deciding the issue in which Item of the Octroi Schedule the machine would fall, he has failed to critically analyze the categories. The learned Commissioner should have considered the nature of goods classified in each of the categories and only then should have considered in which particular category the machines would fall under. Instead, he has merely jumped to the conclusion that a highly sophisticated computerized electronic machine ipso facto falls under Item Nos. 69(e) and 74. While classifying the machines as falling under these two heads, the learned Commissioner has ignored a cardinal principle of financial legislation that a given commodity cannot fall within two distinct and different categories. Therefore, the impugned order suffers from the virus of non-application of mind, from the virus of taking into account irrelevant consideration, and from the virus of non-exercise of a jurisdiction vested in him. The impugned order is, thus, unsustainable.
49. According to the directions given by this Court, the learned Commission should have considered the Customs Tariff, 1997 in order to see how the machines are classified by the Central Government. After all, in case the classifications were to change between the classification given by the Central Government and a local body, like the JMC, it may lead to chaos. Thus, the learned Commissioner was legally bound to consider the Customs Tariff, 1997. According to the Customs Tariff, while Chapter 85 deals with electrical machinery, Chapter 84 deals with the mechanical appliances and parts thereof. At the relevant time, the machines were not being imported under Chapter 85, but were being imported under Chapter 84. Thus, according to the Customs authorities the machines are general in nature and do not fall within the category of electronic machinery.
50. Moreover, the learned Commissioner has erroneously opined that the opinions of different persons and committees submitted by the company neither gives any reason for treating the machines as "simple machines", nor gives any opinion about the existence of the "fitted electronic controls." The issue before the learned Commissioner was not whether the machines were "simple machines" or "complex machines"? In fact, the issue was whether the machines in question are "electronic machines," "ordinary machines" or "mechanical machines? In order to buttress its contention that the machines are not "electronic" but are "mechanical", the petitioner had submitted the affidavits of number of experts. The learned Commissioner has ignored these affidavits without considering their contents. The affidavit of Mr. Yogesh G. Lavingia, had dealt with the nature of the machines in great detail. He had clearly pointed out as under:
The earlier models of these machines are (sic) operating entirely on mechanical functioning with nominal electrical and hydraulic controls. Basically all these machines are metal cutting machines which, in the earlier days, were in the form of lathes, milling machines, surface grinder, external and internal grinding and honing machines etc. The present machines can be made to perform its basic function just as well without the electronic sub-system. With the sophistication, i.e. high production rates, better quality and automation, the design of the machines have been updated by introducing electronic controls for precision working and automatic cycles. But, basically these machines still remain mechanical machines the electronics is basically a performance enhancer. Because introduction of electronic controls does not in any way alter the operations objectives of the machines, which is basically mechanical metal cutting, these must be classified as metal cutting machines or allied inspection and assembly machines. Machines like items 18 & 19 per the list have a Video Display unit (VDU), which displays the position of the grinding wheel in the machine. The introduction of the VDU certainly does not classify the machine as a TV. At the same time the machines cannot be said to be fitted with a computer. A VDU may be an essential part of a computer, but it in itself is not a computer.
A complex machine/device can only be classified as per its basic & primary operational application, and not according to the type of sub- system used for various aspects of the machines/device. All other sub- system are auxiliary to this primary function and do not have independent existence in this context.
...The machines are all mechanical metal cutting and allied inspection/assembly machines. Electronic machines or computer in itself do not perform any metal cutting operation. This is the function of a mechanical machine only which could be supported or assisted by electronic controls.
51. Similar affidavit was given by Mr. S.D. Mathur, a qualified Mechanical Engineer and a Fellow of Institution of Engineers (India) and a Chartered Engineer. Likewise, the Malaviya Regional Engineering College had appointed a committee to inspect the machines in question and to give their opinion. Even this report was submitted by the petitioner before the learned Commissioner. Thus, the learned Commissioner had ample evidence before him to adjudge the nature of the machines. However, he has overlooked the evidence available on the record.
52. Furthermore, learned Commissioner has erred in placing the burden of proof on the assesse instead of the JMC. In the case of Union of India v. Garware Nylons Ltd. & Ors. (1996) 10 SCC 413), the Hon'ble Supreme Court had opined that "The burden of proof is on the taxing authorities to show that the particular case or item in question is taxable in the manner claimed by them. Mere assertion in that regard is of no avail. Especially in a case as the instant one, where the claim of the assesse is borne out by the trade enquires received by them and also the affidavits filed by persons dealing with the subject-matter. A heavy burden lay upon the Revenue to disprove the said materials by adducing proper evidence." However, in the present case, the Learned Commissioner had placed the entire burden upon the petitioner, when it was the duty of the JMC to prove that the machines in question fell within a particular Item in the Octroi Schedule. Hence, the entire approach of the learned Commissioner is legally untenable.
53. The moot question before this Court is in which Item of the Octroi Schedule would the machines fall under? Whether the machines in question fall within Item Nos. 69 (e), or 74, or 109? For this purpose it is essential that the Items be analyzed. The Item Nos. are as under:
Item No. 69(e): VCR, VCP and its cassettes, remote control and its parts, X-ray machines, electronic machine and its parts, chemotherapy machine Gama, Camera Sonography, CT-Scanning ECG apparatus-and other machines of this type or their parts.
It prescribes a duty of 1 % of the value of the machine. Item No. 74: Wall clocks, table clocks, simple or electronically run clocks, glass, chain, and other parts of clocks and other items with computer or computer run machine."
It prescribes a duty of I% of the value of the goods.
Item No. 109: Every type of machinery, their parts, other tube, counter scale and weighting machine.
It prescribed an excisable duty @ Rs. 50 per quintal.
54. While interpreting these Item Nos. one would have to keep in mind certain principles of interpretation of fiscal legislation. Firstly, entries in a fiscal statute create merely broad categories of goods. Secondary, a good can fall only within one particular category. It cannot be classified under two different categories. Thirdly, entries in a schedule of a fiscal statute list some articles separately, and some articles are grouped together. When they are grouped together, each word in the entry draws color from the other words therein. This is the principle of noscitur a sciis. This principle was elaborately explained in the case of State of Bombay v. Hospital Mazdoor Sabha (AIR 1960 SC 610). The Apex Court held in under:
Noscitur a Sociis means that when two or more words which are susceptible of analogous meaning are coupled together they are understood to be used in their cognate sense. They take as it were their color from each other, that is, more general is restricted to a sense analogous to, a less general. Such doctrine is broader than the maxim ejusdem generis. In fact the latter maxim is only an illustration or specific application of the broader maxim noscitur a sociis.
[Also ref. to Rohit Pulp & Paper Mills Ltd. v. Collector of Central Excise, Baroda [(1990) 3 SCC 447]
55. Keeping in mind these principles, the Item Numbers mentioned above can be analyzed. Item No. 69(e) can easily be split into two distinct parts: firstly, "VCR, VCP and its cassettes, remote control and its parts," and secondly, X-ray machine, electronic machine and its parts, chemotherapy machine Gama, Camera Sonography, CT-Scanning ECG apparatus and other machines of this type or their parts." Clearly while the first part deals with those good which are for audio-Visual entertainment, the second part deals with those machines and articles which are used for medical purposes. Even the words "other machines of this type or their parts" would have to take its color from the words it keeps company with. Thus even
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these general words would have to be restricted to a less general meaning. Hence, these words would mean "other machines which are used for medical purposes and their parts." But, the machines in question are neither goods meant for entertainment, nor are they apparatus meant for medical purpose. They are machines meant for grinding and polishing ball bearings etc. being manufactured by the petitioner. Thus, obviously, the machines in question cannot fall within Item No. 69(e) of the Octroi Schedule. 56. Similarly, Item No. 74 can be divided into two parts: firstly, "wall clocks, table clocks, simple or electronically run clocks, glass, chain, and other parts of clocks" and secondly, "other items with computer or computer run machine." Under the rule of noscitur a sociis the general words "other items with computer or computer run machine" would have to take their color from the less general words "wall clocks, table clocks, etc." Therefore, these general words would refer to only time pieces and their parts. These words cannot be enlarged to include machines used for manufacturing of polishing or grinding ball bearings etc. in production line. 57. Item No. 109 is a residuary entry. Whatever does not fall within specific entries per force falls under the residuary entry. It too can be divided into two parts: first part deals with "every type of machinery and their parts", second part deals with "other tube", counter scale and weighting machine." The words "every type of machinery and their parts" clearly show that it is a residuary entry. This phrase would, indeed, cover machinary of all sorts, of all nature, that is whether electronic or mechanical or computerized. The words "every type of machinery" would not take its color from the words, "other tube, counter scale and weighting machine." For, while the first part lays down a residuary entry, the second part again lays down a series of specific articles. Hence, the machines which are being used for grinding, polishing ball bearings would fall within the ambit of the words, "every type of machinery". Therefore, the machineries in question would fall within Item No. 109 and not within Item Nos. 69(e) and 74 of the Octroi Schedule. Thus, the learned Commissioner is unjustified in concluding that the machines in question would fall under Item Nos. 69(e) and 74 of the Octroi Schedule. 58. Is the petitioner entitled for the refund of the octroi duty by it to the JMC under Item Nos. 69(e) and 74 of the Octroi Schedule? This is the next moot question before this court. The case of Mafatalal Industries Ltd. v. Union of India, ([(1997) 5 SCC 536] has dealt extensively with the doctrine of unjust enrichment. In the said case the Hon'ble Supreme Court has held as under: A claim for refund... .can succeed only if the petitioner/plaintiff alleges and establishes that he has not passed on the burden of duty to another person/other persons. His refund claim shall be allowed/decreed only when he establishes that he has not passed on the burden of the duty or to the extent he has not so passed on, as the case may be. Whether the claim for restitution is treated as a constitutional imperative or as a statutory requirement, it is.neither an absolute right nor an unconditional obligation but is subject to the above requirement, as explained in the body of the judgment. Where the burden of the duty has been passed on, the claimant cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden and it is only that person who can legitimately claim its refund. But where such person does not come forward or where it is not possible to refund the amount to him for one or the other reason, it is just and appropriate that amount is retained by the State, i.e., by the people. There is no immorality or impropriety involved in such a proposition. The doctrine of unjust enrichment is a just and salutary doctrine. No person can seek to collect the duty from both ends. In other words, he cannot collect the duty from his purchaser at one end and also collect the same duty from the State on the ground that it has been collected from him contrary to law. The power of the Court is not meant to be exercised for unjustly enriching a person. The doctrine of unjust enrichment is, however, inapplicable to the State. State represents the people of the country. No one can speak of the people being unjustly enriched. 59. In the present case the petitioner has neither pleaded, nor proved that it did not pass of the octroi duty paid by it to the JMC to the customer. In absence of its proof, the petitioner company is certainly not entitled to refund of the octroi duty paid by it to the JMC. As opined above by the Hon'ble Supreme Court, the doctrine of unjust enrichment is inapplicable to the State. The same principle would be applicable in the present case. For, the JMC is nothing but an instrumentality of the State. Hence, the contention of the learned counsel for the petitioner company is unacceptable. 60. For the purpose of seeking refund from the JMC, the petitioner cannot rely on the directions issued by the learned Division Bench vide its judgment dated 8.11.1993. For the said directions were issued prior to the decision of the Apex Court in the case of Mafatal Industries Ltd. (supra). The directions are, however, contrary to the opinion of the Hon'ble Supreme Court. Hence, the directions cannot be implemented. 61. For the reasons stated above, this petition is partly allowed. The impugned order dated 6.3.1997 is hereby quashed and set aside. However, the petitioner is not entitled to claim any refund of the octroi duty from the JMC. No order as cost. Petition partly allowed.