Customs, Excise and Gold Tribunal - Tamil Nadu
Diplomatic Foundations vs Collector Of Customs on 27 May, 1994
Equivalent citations: 1994(73)ELT616(TRI-CHENNAI)
ORDER V.P. Gulati, Member (T)
1. COD Petition. Initially the appellants filed only one appeal against the impugned order. On being pointed out that separate appeal had to be filed in respect of each BE, the appellants filed one more appeal and delay was occasioned in this process. Therefore, the delay in filing the second appeal is condoned.
These appeals are against the order of the Collector of Customs, Madras. Under the impugned order, the learned Collector has confiscated the goods which have been described as secondary used clothings for charitable purposes and which were sought to be cleared under para 98(v) of the hand- book of ITC Policy 1992-97 and Notification 85/92 CN. Before the Customs authorities, the appellants declared the value for two lots as US $ 3919.22 equivalent to Rs. 1,23,155 and US $ 3213.90 equivalent to Rs. 1,24,030/-. The appellants had earlier also imported consignments of secondary used clothings under the aforesaid provisions of the import policy and clearance was allowed by the Customs in terms of the aforesaid Notification i.e. 85/92. In respect of some of the earlier consignments the appellants had also produced distribution certificate as required under the said Notification and the bond executed by the appellants were cancelled by the authorities. Initially in respect of these consignments as seen from the order of the lower authority and the evidence placed on record, the appellants were asked to furnish bank guarantee in addition to the bond executed based on the value fixed by the authorities after drawing representative samples, at Rs. 15/- per kg. Bank guarantee for Rs. 2,14,000/- was submitted. Thereafter, it is seen that the Assistant Collector desired re-examination of the imported consignment for the purpose of fixing valuation and as a result of this, as seen from the Order-in-Original the value was refixed at Rs. 30 per kg. The examination report as endorsed in the Order-in-Original is reproduced below:
"opened the containers and examined S/2 bales from each container in the presence of AC Gr. 7 AO Gr. & (Shri S. Ramanathan and Shri Anandkumar respectively) along with AC (Docks) Shri M. Rama Rao as per DC's order and as revised by Group-7.
Contents :- The examined pieces are of gents/ladies full pants/trousers fixed with button/zippers of open type as well as with elastic waist types. The goods appear to be in good condition though looks used. The lables found attached with some pants/trousers are detached and forwarded herewith duly signed by CHA and AO Docks.
Random pieces collected from the examined bales and weighed Weight: 51 Pieces -17 Kgs.
Taking into consideration of the quality of the goods/materials the valuation has been re-fixed at Rs. 30.00 per kilo"
Since the consignment was held up, the appellants approached officers at various levels and finally the Principal Collector of Customs. At this stage a doubt appears to have been entertained by the authorities and a fresh certificate in terms of the Notification 85/92 was asked to be produced and the appellants thereafter produced a certificate purported to have been signed by the Assistant Commissioner (Collector) Srinagar, bearing No. AC/S/137-31V dated 24-8-1993 indicating that appellants were registered in the office of the Sub-Registrar for charitable purposes that "it is certified that it is a bona fide organisation engaged in relief work in the distribution of relief supplies to the poor and the needy without any distinction of caste, creed or race". Thereafter, show cause notice was issued to the appellants refixing the value at Rs. 90 per kg and in the show cause notice it was alleged that the appellants had earlier imported four consignments covered by four BEs which raised a doubt in view of the large quantity of clothings imported about the bona fide of the importers and also stated that certificate produced by the appellants as required in terms of clause (i) of the Notification 85/92 dated 15-3-1992 was not acceptable and therefore the goods were covered by the negative list of the import policy 1992-1997. In view of the valuation fixed by the authorities, the charge of under-valuation was made out against the appellants and the goods were therefore sought to be confiscable under Sections 111(d), 111(m) and 111(o) of the Customs Act, 1962. The appellants originally had produced certificate of registration from the Executive Magistrate, Delhi as a charitable trust constituted wholly for charitable purposes showing that one of the objects of the trust will be to engage in relief works, supplies viz medicines, medical supplies, food stuff, clothing, blankets etc. for free distribution to the poor and needy without any distinction of caste, creed, race or religion. In the show cause notice, however, it has been stated that the certificate of entitlement produced does not meet the requirement of clause (i) of Notification 85/92 dated 15-3-1992 and as such they do not qualify as a charitable organisation and further that the appellants have imported large quantity of such clothings in quick succession and all such clothings on examination were found to be of saleable capacity and also had price tags and other tags in many cases and thereby do not appear to be bona fide gifts. The learned Collector after going through the examination report by the customs authorities in regard to the bona fide nature of the goods has entered the following findings :
"The show cause notice appears to conclude the goods are also not bona fide gifts on the grounds that the importer has been importing large quantities of such huge clothings in quick succession, that such clothings on examination are found to be of saleable capacity and they are also seem to be imported with price tags and other tags in many cases. It may be true that individually each of these facts may not be determinative of the goods being not bona fide gifts. It may also be true that, as pleaded, the importer has no control over the goods sent by the donors as gifts, and therefore, may consist of only one set of items. They may also look new though used because of the generosity of the donor. Also, just because, they have ready market in India, it may not mean that such goods are not gifted from the donors abroad, because in the third world countries such goods may find acceptability even on sale. Presence of price tags on many of the articles may also be accounted for by the fact of donations of unsold stocks by the Departmental stores"
He, however, has not allowed the import of the appellants as claimed holding as under :-
"However, when all these facts are taken together, particularly considering that such large quantities have been received in quick succession over a short period of interval and the certificate produced about the bona fides of the organisation is not acceptable, the bona fide nature of the goods being gifts also becomes unacceptable"
The learned lower authority therefore confiscated the goods under Sections 111(d) & 111(m) of the Customs Act, 1962 while dropping proceedings under Section 111(o) of the Customs Act, 1962 as he has held that under Section 111(o) satisfaction of the post-import conditions were not the issue before him.
2. Shri R. Raghavan, the learned counsel for the appellants pleaded that the issue that arises for consideration in the appeal lies in a narrow compass i.e. eligibility of appellants to the benefit of Notification 85/92 CN and the acceptability of the certificate produced by the appellants in terms of Notification 85/92 i.e. whether the appellants can be considered as a charitable trust engaged in the distribution of relief supplies like clothings, medicines etc. free of cost to the poor and needy without any distinction of cast, creed or religion and whether in view of the post importations the appellants can be allowed to clear the goods as per para 98(v) of the Hand Book of Procedures Vol. 11992-97. He pleaded that the further issue would be in regard to the fixing of value for the purpose of confiscation of the goods. The value he pleaded, so far as the appellants are concerned, they had declared before the customs authorities that there was no invoice value in respect of the goods being used clothes and only a notional value could be declared. He further pleaded that the valuation issue is not relevant so far as the permissibility of the goods for importation and clearance of the same are concerned. He further pleaded that he is not going to urge the question of valuation as the appellants will not be interested to clear the goods in case they are not allowed clearance of the goods under the import policy and the Customs Notification as above. He therefore, prayed for taking up the appeal and with the consent of the parties and the appeal itself was taken up for disposal dispensing with the pre-deposit of penalty in the facts and circumstances of this case and taking into consideration the prima facie aspect of the case.
3. The learned Counsel for the appellants pleaded that the appellants are a registered charitable trust as is evidenced by the certificate of the Executive Magistrate, Delhi and the learned lower authority has taken note of the fact that one of the objects of the trust is free distribution of blankets, medicines, clothings etc. without distinction of cast, creed or religion. He pleaded that as it is in terms of para 98(v) of the Handbook of Procedures Vol. I,1992-97 food-stuffs, medicines, clothing and blankets received by any charitable organisation or any individual as a gift from any philanthropic organisation or individual abroad for free distribution either by themselves or other charitable organisation or individuals to the poor and the needy without any distinction of caste, creed or colour could be imported without a licence provided the import does not involve foreign exchange remittance. He pleaded that there is nothing in the records to show nor is there any allegation that there was any foreign exchange remittance involved in respect of the goods imported. He pleaded that the goods were imported from HUMAN RIGHTS INTERNATIONAL, HOUSTON and in their letter addressed to the President of the appellants' foundation it is clearly stated that these goods are collected from American communities for charitable purposes and are sent to the foundation free of cost for distribution irrespective of race or religion. He pleaded that the appellants' foundation is registered in the sub-Registrar's office at Delhi as a Charitable foundation vide Registration No. 5826 Book No. 4 Volume No. 1950 pages 35 to 45 dated 17-12-1992. He further pleaded that the Income Tax authorities had also granted recognition of the appellants under Section 80G of the Income Tax Act as a charitable trust and donations made to the trust have been certified to be eligible for exemption under Income Tax Act, 1961 and the recognition is valid from 1-4-1993 to 31-3-1995 and the certificate bearing No. DIT (Exemption) 93-94/D-571/93/569 is signed by the Director of Income Tax (Exemptions) New Delhi. He pleaded that so far as the requirements under par 98(v) of the Handbook of Procedures 1992-97 is concerned, the appellants fulfilled all the requirements. He pleaded that the learned lower authority has not adverted to the discussion in terms of this para in his order and has been primarily influenced by the fact that the appellants had made the importation of few consignments in the immediate past. He pleaded that in view of the evidence available on record that the goods have been received as gifts even if some of them are not found to be used on customs examination so far as para 98(v) of the Handbook for the policy 92-97 is concerned, the importation is covered by this para and there is no requirement that the goods should be used and the appellants fulfil the basic requirements of para 98(v), that the goods received are as gifts for free distribution to the poor and the needy without any distinction of cast, creed or religion. He pleaded that the appellants had imported similar goods in the past and furnished necessary distribution certificate to the Customs authorities and which has been accepted and the authorities have also cancelled the bonds executed by the appellants for the purpose of carrying out their obligations for free distribution of clothings to the poor and needy without any distinction of caste, creed or religion. In this connection he referred us to the certificate filed in the paper book and which has been accepted by the authorities and also referred us to the bond cancelled by the authorities in this regard. He pleaded that in regard to the past clearance no proceedings have been drawn against the appellants. He pleaded that proceedings have been drawn against the appellants only on suspicion that since they had imported consignments of clothings in the recent past and the authorities had doubts in regard to the compliance with the requirements under Section 90(v) or Notification 85/92. He pleaded that as it is, the Hon'ble Supreme Court while upholding the Bombay High Court order reported in 1991 (56) E.L.T. 739 in the case reported in 1992 (58) E.L.T. 163, have held that past conduct cannot be a bar for relief in respect of future consignments. He pleaded that so far as the Customs Notification 85/92 is concerned what the authorities are required to ensure is while giving the benefit under this notification, necessary bond for distribution of the clothings as required under the Notification for distribution free of cost to the poor and needy without any distinction of cast or creed or religion is executed and that so far as the appellants are concerned they have furnished a certificate from the State Government certifying that the foundation is engaged in relief works supplies to the poor people in India and the goods as bona fide gifts imported and should be allowed clearance. He pleaded that in the present case, the appellants are a registered trust with one of the objects of the trust being distribution of relief supplies among the poor and the needy without any restriction of caste, creed or religion or colour and this certificate has been issued by the Executive Magistrate Delhi and as per the trust deed, the appellants are a charitable organisation engaged in relief supplies of medicines, blankets, clothings etc. for distribution to the poor and the needy without any distinction of cast, religion or colour. He pleaded that the Income Tax authorities have also given a certificate for the purpose of relief under Section 80G of the Income Tax Act, 1961. He pleaded that certificate produced earlier had been accepted and found adequate and the appellants have complied with the requirement of furnishing certificate for distribution of the goods amongst the poor and therefore, the learned lower authority should have allowed clearance of the present consignments also with safeguards if felt necessary to ensure that no diversion of the goods takes place. He pleaded, there is no ground for the lower authority to have entertained any suspicion. He pleaded that as it is, the lower authority so far as the nature of the goods is concerned has rejected the Department's plea made out in the show cause notice that the importers have been importing large quantity of clothings in quick succession and that the clothings are of saleable capacity and the clothings had price tags and other tags in many cases by stating that it may be true that individually each of these acts may not be determinative of the goods being not bona fide gifts and that it may also be true that as pleaded the importer has no control over the goods sent by the donors as gifts and therefore, may consist of only one set of items and they may also look hew though used because of generosity of the donor. He pleaded that the Collector in his findings has ruled in favour of the appellants in regard to the allegation regarding the nature of the goods and that imports had been made in quick succession and he referred us to his findings reproduced above. He pleaded that though the learned Collector has entered a finding in favour of the appellants, without any reason has gone on to hold as under :-
"however, when all the facts are taken together particularly considering that such large quantities have been received in quick succession over a short period of interval and the certificate produced about the bona fides of the organisation is not acceptable, the bona fide nature of the goods being gifts also becomes unacceptable."
He pleaded that once it has been held that the goods have been received as gifts and are for charitable purposes, the goods are larger in quantity cannot be a ground for confiscation. He pleaded that the appellants have in fact established the distribution of clothings imported earlier by them by production of a distribution certificate. He pleaded that the lower authority's finding that the certificate produced about the bona fides of the organisation is not acceptable is without any basis as the appellants have established bona fide of the charitable trust in terms of Notification 85/92 and produced certificate from the State Government itself certifying that it is a bona fide organisation engaged in relief supplies such as medicines, blankets, etc. to the poor and the needy without any distinction of caste or creed or religion, for the satisfaction of the Assistant Collector of Customs, in this regard. He pleaded that the appellants also produced certificate from the Executive Magistrate about the status of the charitable trust. The appellants have also produced a certificate from the Income Tax authorities and also a certificate from the Assistant Commissioner Revenue (Collector), Srinagar, which according to the authorities has been verified to be not correct. However, he pleaded that in Kashmir on account of the uncertainties prevailing there could have been some confusion. He pleaded that the appellants have produced a letter from the Divisional Commissioner, Kashmir bearing No. Ck/Misc/a/93 dated 29-12-1992 addressed to the Supdt. Srinagar. He particularly drew our attention to the last para of the letter which is reproduced below for convenience of reference :-
"Since nothing adverse has so far been reported to us, there is no reason to suspect the bona fides of the charitable organisation, who have been participating in the distribution of relief goods such as used clothings, through their centres at Srinagar, they need to be helped in carrying on the charitable work"
He pleaded that the Central Excise authorities made wide ranging enquiries both with the State Govt. authorities and also in Delhi and the veracity of the appellants' claim of being a charitable organisation has not been found to be in any way false and the Divisional Commissioner has also vouchsafed the relief work done by them and no adverse report has been made against them. He pleaded that the appellants have satisfied all the conditions set out in the said Notification. He pleaded that in view of this, the goods should be allowed to be cleared, may be with some conditions against any diversion of the goods into the market. He pleaded that the appellants did not misdeclare any aspect in regard to the goods and its nature. In any case the authorities have refixed the value at Rs. 90 per kg after making some enquiries in Delhi which could not be accepted. He pleaded that before the lower authority also the appellants made pleas in this regard that the value has not been fixed properly. He pleaded that since the issue involved is only regarding the acceptance of the certificate and also the bona fide nature of the appellants foundation, for the purpose of -clearance of the goods, the valuation could not be an issue and for determination of the same he is not pleading in view of the nature of the issue involved.
4. Shri J.P. Gregory, the learned SDR pleaded that he is not agreeable to any condition being attached for allowing release of the goods and that the certificates produced by the appellants are not acceptable.
5. After hearing both the sides and considering the pleas advanced before us the operative portion of the order was announced viz. appeal allowed subject to the goods being distributed in terms of the Notification with proper safeguards with detailed order to follow. We observe that the issues that arise for consideration are :-
(1) Whether the import can be allowed in terms of para 98(v) of Handbook of Procedures, Vol. 1,1992-97, (2) Whether the goods should be allowed clearance free of duty in terms of Notification 85/92 CN.
As pleaded before us, the conditions envisaged as per para 98(v) are that the goods imported should not involve any foreign exchange remittance and that the goods received as gifts are for free distribution to the poor and needy without any distinction of caste, creed or colour. The import, as seen from the provisions of the TIC policy could be made as per this para even by individuals apart from charitable organisation. The appellants are a registered trust and evidence has been produced by way of certificate from the Executive Magistrate that one of the objects of the trust is for free distribution of supplies like medicines, blankets, clothings to the poor and the needy without any distinction of caste, creed or religion. There is no finding by the learned lower authority nor is there any averment before us from the Revenue that the appellants are not a trust engaged in distribution of relief supplies as mentioned above. In fact the appellants have supported their claim of being a charitable trust by producing certificate from Director of Exemptions, Income Tax to the effect that donations made to the trust are eligible for exemption under Section 80-G of the Income Tax Act, 1961. Provisions of Section 80-G in regard to donation made are applicable only when donations are made in terms of Section 80-G(5) to an organisation which is constituted as a public charitable trust and if the Institution or fund is not expressed to be for the benefit of any particular religious community or caste. The certificate produced is valid from 1-4-1993 to 31-3-1995. Another certificate has also been filed in the paper book which is signed by the Assistant Director (Exemptions), Income Tax, dated 10-9-1993 showing that the appellants have been registered as a trust under Section 12A(a) of the Income Tax Act. This Section deals with voluntary contribution received by trusts created wholly for charitable or relief purposes. The recognition granted by the Income Tax authorities clearly goes to show that the appellants are a charitable trust and as seen from the evidence produced one of the objects of the foundations is free distribution of blankets, clothings, medicines etc to the poor and the needy without any distinction of caste, creed or religion or race. No foreign exchange remittance is also alleged. From the above it is clear and we hold that the appellants are eligible to import the goods which have been sent as gifts and which fact has been accepted by the learned lower authority in terms of the import policy 1992-97 under para 98(v) of the handbook.
6. The next question that arises for consideration is whether the appellants are eligible for the benefit of Notification CN 85/92. For proper appreciation of the said notification, the same is reproduced below:
"In exercise of the powers conferred by Sub-section (i) of Section 25 of the Customs Act, 1962 and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 190-Customs, dated 7th September 1979, the Central Government being satisfied that it is necessary in the public interest to do so hereby exempts foodstuff, medicines, medical items of perishable nature, clothing and blankets when Imported into India by a charitable organisation in India as free gift to it from abroad or purchased out of donations received abroad in foreign exchange by it, for free distribution to the poor and the needy without any distinction of caste, creed or race from:
(a) the whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975); and
(b) the whole of the additional duty leviable thereon under Section 3 of the said Customs Tariff Act.
Subject to the following conditions, namely :-
(i) the organisation importing the goods furnishes a certificate from the State Government concerned certifying that it is a bona fide organisation engaged in relief work and in the distribution of relief supplies to the poor and the needy without any distinction of caste, creed or race or otherwise satisfies the Assistant Collector of Customs in this regard.
(ii) the Assistant Collector of Customs is satisfied having regard to the activities and bona fides of the importing organisation, the area of its operations, its financial resources, the status of the donor; the nature, value and quantity of the goods imported; the food and sartorial habits of the people amongst whom the imported goods are to be distributed, that the goods are bona fide gifts for free distribution to the poor and the needy without any distinction of caste, creed and race;
(iii) the organisation importing the goods gives an undertaking to the effect that it would furnish a certificate from the State Government concerned to the Assistant Collector of Customs within six months from the date of importation of the goods or such extended period as the Assistant Collector may allow certifying that the goods have been distributed to the poor and the needy free of cost without any distinction of caste, creed or race.
(iv) where the goods have been purchased out of donations received abroad in foreign exchange, the organisation has been permitted to maintain an account abroad by the Reserve Bank of India for the purpose of receiving funds donated overseas".
In the show cause notice it has been alleged that the appellants have not satisfied the condition No. (i) of the Notification and also that the quantum of goods imported in quick succession had been large. We observe that Notification envisages the production of a certificate by the importer from the State Government certifying that it is a bona fide organisation engaged in relief work for distribution of relief supplies to the poor and the needy without any distinction of caste, creed or race or otherwise provides for production of evidence in the absence of that which would satisfy the Assistant Collector of Customs, that the organisation which is importing goods is a charitable organisation and is engaged in the relief work in the distribution of relief supplies asset out above and if this evidence is found adequate and acceptable this would be enough for the purpose of satisfying condition No. (i) (emphasis supplied). In the present case, as we have held above, that the appellants have established by the evidence produced that they are a charitable trust, one of the objects of which is free distribution of relief supplies like clothings, blankets without distinction of caste or religion. The certificate of exemption granted to the organisation under Section 80-G of the Income Tax Act and the registration granted under Section 12A(a) of the Income Tax Act, 1961 confirm this fact. We, find as it is, in the past, the appellants have been allowed to clear the goods based on similar evidence and they have produced certificate of the supplies done and the said certificate has been accepted by the authorities and the bond executed under Notification 85/92 CN has been cancelled. It is seen from the records that the authorities prior to the issue of the show cause notice were contemplating clearance of the goods on execution of Bank guarantee by the appellants and it was however, later that they asked for a certificate from the J &K Govt. which was signed by the Assistant Commissioner (Collector) Srinagar. This certificate was asked to be verified and necessary confirmation about the same has not been received, but a letter from Assistant Commissioner (Revenue) states that no such letter has been issued. However, we find there is a communication which is addressed to the Supdt. of Central Excise, dated 29-12-1992 from the Additional Commissioner (Kashmir) wherein it has been stated that there is no reason to suspect the bona fides of the charitable organisation who have been participating in the distribution of relief goods such as used clothing through their centres at Srinagar. We observe that what is required to be satisfied in terms of the Notification is that the appellants are a charitable organisation and they are engaged in the distribution of relief supplies like clothing to the poor and the needy without any distinction of caste or creed or race. The communication from the Assistant Commissioner, Srinagar even if it is ignored does not make any difference to the situation so far as the appellants are concerned inasmuch as the Additional Commissioner Kashmir has certified that the foundation has been participating in the relief work through their centres in Srinagar. That the appellants are a charitable trust engaged in the work for distribution of clothings etc., satisfying condition (i) of Noti. 85/92CN, we have already held, has been established by evidence placed before us. We observe the authorities have cancelled bond earlier executed in respect of the earlier consignments on production of certificate from Halqa President. Kawandara, Srinagar (J&K) and this distribution certificate has not been found fault with nor any adverse inference drawn by the lower authority in regard to the earlier distribution of the goods by the appellants. In view of above, we hold that the appellants satisfy the condition No. , (i) of the Notification.
7. The next condition in the notification at S. No. (ii) is in regard to the satisfaction of the Assistant Collector in regard to the activities and bona fides of the organisation importing the goods, the area of the organisation's operation, its financial resources, status of the donor, the nature, value and quantity of the goods imported, the food and sartorial habits of the people amongst whom the goods are to be distributed. We observe that the lower authority has merely given a finding in this context that the appellants had imported in quick succession consignments of used clothings. We observe that apart from taking into consideration the quantum of goods the learned lower authority has not entered any finding in regard to the activities and the bona fides of the organisation or in regard to their financial status, the nature and value of the goods, the sartorial habits of the people. In fact he has entered a finding in favour of the appellants by stating "that while the show cause notice appears to conclude that the goods are also not bona fide gifts on the ground that the importer has been importing large quantities of such huge clothings in quick succession, that such clothings on examination are found to be of saleable capacity and they are also seem to be imported with price tags and other tags in many cases, it may be true that individually each of these facts may not be determinative of the goods being not bona fide gifts and that the appellants have no control over the goods sent by the donors as gifts, and therefore, may consist of only one set of items and the goods may also look new though used because of the generosity of the donor and also just because, they have ready market in India, it may not mean that such goods are not gifted from the donors abroad and further presence of price tags on many of the articles may also be accounted for by the fact of donations of unsold stocks by the Deptl stores." Having said this, the lower authority has not laid any basis for holding that the goods are not bona fide gifts and that the bona fide nature of the organisation is not acceptable. We hold that just because larger quantity in quick succession had been received over a short period, merely for this reason the authorities cannot hold that the goods cannot be considered a bona fide gifts and allowable for import. For the purpose of benefit of the Notification, the lower authority has also in para 5.1 of his order in regard to the nature of the goods observed as under:
"I find that in the present show cause notice, under adjudication, it is observed that the goods are of immensely good quality and not conforming "to the declaration as secondary used clothing". This runs contra to the observation in the re-examination report dated 18-8-1993 referred to above".
We observe that while the learned lower authority has been fair in the appreciation of facts so far as the nature of the goods and the bona fides of the gifts sent are concerned, he has failed to lay any basis taking into consideration the parameters in condition No. (ii) of Notification 85/92 CN for holding that requirement of the Notification and the ITC policy in question have not been satisfied. We observe that the goods have been examined a number of times and the value fixed at Rs. 15 per kg. initially and then it was raised to Rs. 30 per kg and again it came to be fixed at Rs. 90/-. The mere fact that the prices have been fixed based on weight itself goes to show that goods are in the nature of secondary used clothings and not of primary quality. Inasmuch as the issue before us relates to whether the goods can be allowed clearance in terms of Notification 85/92 and also para 98(v) of the Handbook of Procedures 1992-97 we are not going into the question of valuation of the goods. However, we observe that there is an element of arbitrariness in the matter of fixation of value. We find that after detailed examination and drawal of samples the price was initially fixed at Rs. 15/- per kg and then revised to Rs. 30/- per kg and later on again revised to Rs. 90/- per kg. We find from the impugned order that the price of the clothings at Rs. 90/- per kg was fixed as a result of some enquiries made in the Delhi market. The learned lower authority in this regard has observed as under in para 5.3 of his order:
As for the plea that the re-examination conducted on 18-8-1993 had resulted in fixing of price at Rs. 30 per kg. though this may be a fact, it is an appraisement without the facility of subsequent investigation made in this regard at Delhi and in any case no formal order of assessment appears to have been issued/made. As for the pleas that the proposed action lacks evidence, it is admitted that no invoice had been produced in support of the claim that the goods are sold at Delhi at a price of Rs. 150 per pant but the nature of items being such viz, used second hand clothes generally sold in retail, production of invoice is not possible."
However, there is nothing on record to show that the appellants were given any evidence in regard to any enquiry done or they were associated in the enquiry or they were given an opportunity to contest the same. The goods have been declared as secondary used clothings as per the invoices filed and the goods have been sent by HUMAN RIGHTS INTERNATIONAL, HOUSTON, free of cost for charitable purposes. The bill of Lading also shows same description and the certificate filed in the paper book also bears the same description. The issue regarding valuation will be relevant only if the post importation condition in terms of Notification 85/92 are not satisfied. We direct the authorities to refix the value after clearance of the goods based on the 100 kgs of representative samples to be drawn in the presence of the appellants' representative for the purpose of taking action later if need be after giving the appellants an opportunity in this regard based on the market enquiries and examination report of the Customs authorities. In regard to the satisfaction of the post importation conditions, we may mention that so far as the Notification is concerned, the same is not a rigid one and does not provide for the authorities to exercise supervision over distribution or for any spot verification nor is there any prescribed procedure set out therein to keep the authorities informed about the distribution being done in regard to the place, quantity and the date etc. All that is provided in the Notification 85/92 CN is that the importing organisation will give an undertaking to the effect that it would furnish certificate from the State Government concerned to the Assistant Collector within six months from the date of importation or such extended period as the Assistant Collector may allow certifying that the goods have been distributed to the poor and the needy free of cost without any distinction of caste, creed or race. We observe that as large quantities of goods have been imported there is no bar under the law against the authorities exercising a modicum of control that the authorities may choose to exercise to ensure that the purpose of the Notification 85/92 and the ITC policy in terms of para 98(5) of Handbook of Procedures 1992-97 are carried out. The learned SDR pleaded that he is not agreeable to any post importation condition being made regarding verification etc. We observe that we are not able to appreciate the stand of the Department. It is desirable that a watchful eye is kept for fulfilment of the post importation conditions as set out in the Notification or in the policy and a spot verification is arranged to be done by the authorities through the State Government agencies or otherwise in regard to the distribution of the clothes undertaken to ensure that it is done in conformity with the provisions of the Notification. However, this need not be done in each and every case but whenever the authorities entertain any doubt, in addition to the normal procedure of taking the undertaking from the importers as provided in the Notification, the authorities can prescribe other procedural conditions to ensure compliance with the Notification. We, therefore, direct the appellants that apart from the normal undertaking for the distribution as has been executed by the appellants for their earlier consignments, and by similar other importers, the appellants shall execute a Bank guarantee for Rs. 3,00,000/- (RUPEES THREE LAKHS) for due compliance with the provisions of the Notification and the ITC policy and subject to compliance with this, and other directions herein below we allow clearance of the goods as prayed for. As it is we find that the appellants had executed a Bank guarantee for Rs. 2,14,000/- seen from the order of the lower authority and record of proceedings at the behest of the Assistant Collector which ultimately was not accepted as proceedings were drawn against the appellants later. The appellants shall also inform the Customs Collector in whose jurisdiction they are located of the receipt of the goods in their godown or any other place of storage within 24 hours of the receipt of the same and thereafter as and when the appellants want to take out a particular lot for distribution they shall intimate the Collector of Customs in whose jurisdiction they are located in this regard 48 hours prior to the removal of the goods to enable the authorities to arrange for any check regarding distribution and transport of the goods to the place of distribution as they may choose to do. In the intimation to be sent, the appellants shall inform the authorities the mode of transport and the place of distribution. The appeals are thus allowed in the above terms setting aside the impugned order.
8. The learned Counsel for the appellants at the end pleaded that the goods are under detention and the authorities may be directed to issue a detention certificate. It was pointed out to the learned Counsel that he could make this request to the competent Customs authority who will consider the same under the rules and the procedure in this regard. The appeal is disposed of in the above terms.