J.K. Synthetics Limited And Anr. vs Union Of India (Uoi) And Ors.
2002 Latest Caselaw 2081 Del

JUDGMENT

D.K. Jain, J.

1. Challenge in this writ petition is to the two orders, namely, (i) dated 16 March 1982 passed by the Asstt. Collector, Central Excise & Customs, Division Kota holding that the Polyester Chips (Textile Grade) are classifiable under the Customs Tariff Heading No. 39.01/6 and further the Landing charges are to be included in the C.I.F. value for the purpose of Section 14 of the Customs Act, 1962; and (ii) dated 13 April 1982 passed by the Appellate Collector of Customs, New Delhi, upholding the order passed by the Assistant Collector.

2. The petitioner company carries on the business of manufacture and sale of Staple Fibre and Polyester Filament Yarn. For the purpose of manufacture of staple fibre and polyester filament yarn, the petitioner imports polyester polymer chips (textile grade). The main dispute in the present petition is under which customs tariff heading polymer chips imported by the petitioner would be assessable.

According to the petitioner, on a proper interpretation of Chapter 39 of the Customs Tariff, Note-2, the Textile Grade Polymer Chips are neither artificial plastics nor artificial resins and, therefore, cannot be classified under Chapter 39, as is sought to be done by department. Its stand is that these would only fall under the general heading of Chapter 38, relating to miscellaneous Chemical products or in the alternative under Chapter 29 relating to organic Chemicals. The other side issue pertains to the loading of the assessable value of the imported material for the levy of customs duty with the landing charges.

3. Since in our view both the issues are no longer res integra, we deem it unnecessary to dwell on the issues in greater detail.

4. In Chemical and Fibres of India Ltd. v. Union of India, 1997 (80) E.L.T. 633 (SC), while dealing with the question of classification of polymer chips of textile grade under Tariff Item 15A of the erstwhile Central Excise Tariff, as amended after 28 February 1964, their lordships of the Supreme Court held that the polyamides in the form of polymer chips of textile grade are not known as synthetic resins. They are also not plastics and hence Entry 15A does not cover them.

5. Following the ratio of the said decision, in Baroda Rayon Corporation Ltd. v. Collector of Customs, 1997 (91) E.L.T. 537 (S.C.), the apex court has held that Polyester Chips (Textile Grade) are classifiable under Heading 38.01/19(1) of the erstwhile Customs Tariff and not under Heading 39.01/06.

6. Mr. Pravin Bahadur, learned counsel for the petitioner would submit that insofar as the question of classification is concerned, the ratio of the said decision apply with full force to the case in hand and in this view of the matter the impugned orders on the issue are unsustainable in law. Mr. Jayant Bhusan, learned Central Government Standing Counsel, on the other hand, has contended that since in Chemical and Fibres case (supra), the Supreme Court was concerned with a tariff entry under the Central Excise Tariff and not with the Customs Tariff Heading 38.01, the decision of the apex court does not conclude the issue arising in this case. As regards the decision of the apex court in Baroda Rayon Corporation Ltd. (supra), learned counsel would submit that since the court did not notice the difference between the two items under two different statutes and had merely followed the decision in Chemical and Fibres case, it is not a binding precedent. In support of the proposition that the decision in Baroda Rayon Corporation Ltd. (supra) was arrived at sub silentio, reliance is placed on the decision of the Supreme Court in A-one Granites v. State of U.P. and Ors. , (2001) 3 SCC 537.

7. We are unable to persuade ourselves to agree with learned counsel for the respondent. There is no gain saying that pronouncements of law, which are not part of the ratio decidendi are classed as obiter dicta and are not authoritative. Similarly, precedents sub silentio are said to be of no moment. Explaining the concept of sub silentio, in Salmond on Jurisprudence, (12th Edition), it was said:

"A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind. The court may consciously decide in favor of one party because of point A, which it considers and pronounces upon. It may be shown, however, that logically the court should not have decided in favor of the particular party unless it also decided point B in his favor; but point B was not argued or considered by the court. In such circumstances, although point B was logically involved in the facts and although the case had a specific outcome, the decision is not an authority on point B. Point B is said to pass sub silentio."

8. In A-one Granites (supra), the following observations in Arnit Das v. State of Bihar, , were highlighted:

"20. A decision not expressed, not accompanied by reasons and not proceeding on a conscious consideration of an issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141. That which has escaped in the judgment is not the ratio decidendi. This is the rule of sub silentio, in the technical sense when a particular point of law was not consciously determined."

9. In Fuerst Day Lawson Ltd. v. Jindal Exports Ltd. , , the apex court has observed that a prior decision of the Supreme Court on identical facts and law binds the court on the same points of law in a latter case and unless it is glaring case of obtrusive omission, it is not desirable to depend on the principle of judgment "per incuriam".

10. Very recently, in Director of Settlements, A.P. and Ors. v. M.R. Apparao and Anr. , (2002) 4 SCC 638, while examining the binding nature of the Supreme Court's decision, their lordships of the Supreme Court observed as under:

"The statements of the Court on matters other than law like facts may have no binding force as the facts of two cases may not be similar. But what is binding is the ratio of the decision and not any finding of facts. It is the principle found out upon a reading of a judgment as a whole, in the light of the questions before the Court that forms the ratio and not any particular word or sentence. To determine whether a decision has "declared law" it cannot be said to be a law when a point is disposed of on concession and what is binding is the principle underlying a decision. A judgment of the Court has to be read in the context of questions which arose for consideration in the case in which the judgment was delivered. An "obiter dictum" as distinguished from a ratio decidendi is an observation by the Court on a legal question suggested in a case before it but not arising in such manner as to require a decision. Such an obiter may not have a binding precedent as the observation was unnecessary for the decision pronounced, but even though an obiter may not have a binding effect as a precedent, but it cannot be denied that it is of considerable weight. The law which will be binding under Article 141 would, therefore, extend to all observations of points raised and decided by the Court in a given case. So far as constitutional matters are concerned, it is a practice of the Court not to make any pronouncement on points not directly raised for its decision. The decision in a judgment of the Supreme Court cannot be assailed on the ground that certain aspects were not considered or the relevant provisions were not brought to the notice of the Court."

11. In the present case, the issue before the Supreme court in Chemical and Fibres case (supra) was whether polymer chips of textile grade could be held to be "plastic" within the meaning of Entry 15A, as existing prior to 28 February 1964. On an elaborate analysis of the technical literature and dictionaries, their lordships of the Supreme Court have held that polyamides in the form of polymer chips of textile grade are neither known as "synthetic resins" nor are they "plastics" and hence could not be covered under Entry 15A. In Baroda Rayon (supra) the Apex Court was again considering the question whether polymer chips of Textile Grade could be held to the "Plastics and articles thereof" falling within the ambit of Chapter 39 of the Customs tariff. Therefore, in both the cases, the apex court was concerned with the same article which was under consideration in Chemical and Fibres of India Ltd. (supra). The Apex Court having held that the polymer chips could not be held as synthetic resins or plastic, under the Excise Tariff, the nature of the same article cannot be different for the purpose of Customs Tariff. In this view of the matter, we have no hesitation in holding that the decision in Baroda Rayon Corporation Ltd. on the question of classification of Polymer Chips is not per incuriam or was arrived at sub silentio.

12. Following the ratio of the said authoritative pronouncements, we hold that Polyester Chips (Textile Grade), imported by the petitioner are to be classified under Heading 38.01 of the Customs Tariff.

13. Insofar as the second issue with regard to the loading of the assessable value by the Landing Charges is concerned, in view of the decision of the apex court in Garden Silk Mills Ltd. v. Union of India, , learned counsel for the petitioner does not press the same.

14. For the foregoing reasons, the impugned orders are set aside to the extent they pertain to the classification of the polymer chips (textile grade) under Customs Tariff Heading 39.01 and the rule is made absolute accordingly.

15. During the pendency of the petition, by virtue of the interim order dated 25 May 1982, the petitioner was permitted to clear the imported Textile Grade Polyester Polymer Chips upon payment of customs duty under Chapter Heading 38.01/19, without loading the assessable value with landing charges, on their furnishing a Bond for the disputed amount of customs duty, supported by a bank guarantee for 50% of the disputed amount and upon payment of auxiliary duty @ 20% in respect of importation before 28 February 1982 and @ 25% in respect of importation subsequent to the said date. Since the petition succeeds partly, the matter shall stand remitted to the concerned Asstt. Commissioner of Customs for determination of the customs duty liability of the petitioner in terms of the decisions of apex court in the case of Chemical and Fibres of India Ltd. and Garden Silk Mills Ltd. (supra) and for realisation or refund of the duty, as the case may be.

The petition stands disposed of in above terms, with no order as to costs.