Customs, Excise and Gold Tribunal - Delhi
Rajeev Woollen Mills vs Collector Of Customs on 14 July, 1988
Equivalent citations: 1990(46)ELT351(TRI-DEL)
ORDER I.J. Rao, Member (T)
1. In all these 25 appeals the issue involved is common. They were therefore heard together and are being disposed of by this common order.
2. The question involved in all these appeals relates to the interpretation of ITC policy for 1985-88. All the appellants concerned herein imported Synthetic Rags which were described in the Bill of Entry filed by each of them as "premutilated synthetic rags" or "completely premutilated synthetic rags" according to the relative invoices. The appellants herein, the importers, claimed clearance under OGL as listed against Sl. No. 418, List 8, Part-I, Appendix-6 of the Import Policy.
3. This serial number at page-197 of the policy was as follows -
"418. Woollen rags/synthetic rags/shoddy wool in complete premutilated form only".
Condition No. 37 (at page 168 of he said policy) further governing the import of such rags under OGL was as below:-
"(37). (i) Import of woollen rags/shoddy wool/synthetic rags will be allowed only when these are imported in completely premutilated condition.
(ii) Definition of woollen rags/is as follows:-
(a) "New waste woollen cloth whether woven or knitted which is left after a garment had been cut out including genuine tailor cutting piece ends, discarded pattern bunches and sample bits.
(b) 'Old' rags of woollen textile fabrics (including knitted and crocheted fabrics), which are required for manufacture of shoddy yarn and may consist of articles of furnishing or clothing or other clothing so worn out, soiled or torn as to be beyond cleaning or repair."
(iii) The above definition shall also apply mutatis mutandis to synthetic rags."
4. Examination report of the goods imported showed that in each case the imported synthetic rags consisted of garments cut into 2,3 or 4 pieces. In the opinion of the Customs the garments were restichable and retrievable as fabrics. Therefore Customs held that the goods did not satisfy condition No. 37 of OGL for April, 1985 - March, 1988 policy inasmuch as the rags were not completely premutilated. It is the case of the appellants that no standard of mutilation has been laid down in ITC policy 1985-88 and it did not define what is "completely premutilated". The learned Counsel for the appellants submitted that identical matters came up before the Tribunal and were decided in favour of the appellants. The learned Counsel cited; i) judgment of the Tribunal in Kakar & Co. in Order No. A/92 to 95/88-NRB in Appeal No. C/2433/87-NRB, C/2434, C/3394 and C/3657 all of 1987 filed by M/s. Kakkar & Co., M/s. B.K. Spinning Mills (P) Ltd., M/s. Singla Textiles and M/s. Anand Woollen Mills (P) Ltd. (these appellants are among the present appellants also). (ii) Order No. 997-998/86-WRB, dated 22-8-1986 in Appeals Nos. C/366-367/86-WRB.M/s. Subhash Woollen Mills (P) Ltd. and M/s. 5.5. Woollen Mills v. Collector of Customs, Bombay.
5. Smt. Nisha Chaturvedi, the learned SDR submitted that the facts of the appeals now before us are similar to the facts of the earlier appeals which were decided by the Tribunal and orders in which were now cited by the Counsel for the appellants. She, however, submitted that while she does not dispute the identical nature of the facts in these appeals and consequent binding nature of the earlier judgments, she should like to emphasise that the goods were not completely premutilated inasmuch as they were retrievable and restichable. She submitted that the importation of the so called rags was not covered by OGL and reiterated the findings recorded in impugned order.
6. We have considered the arguments of both sides. In similar facts similar arguments were put forward before the Bench in both the appeals cited by the Counsel for the appellants.
7. In Order No. A/92-95/88, dated 9-3-1988 the Bench made the following observations which are relevant to the present proceedings also:-
"In the absence of any identifiable test of complete mutilation laid down in the Policy for the guidance of the importers and the enforcement agencies, the benefit has to be given to the importers. S.C: has held so in the case of U.O.I. v. TISCO (ECR C 450 SC) on the controversy whether the goods produced by the respondent therein are skelp or strip. The Court has ruled in that case: "Since the duties on strip and skelp are not the same it is absolutely necessary to define the word 'skelp' so that there can be no doubt or confusion in the mind either of taxing authority or of the tax payer with regard to the tax liability qua skelp as opposed to strip." This principle squarely applies in the instant case.
Factual examination reports, shorn of the expression of opinion of the examining officers, indicate that goods in the first two appellants cases are synthetic garments cut into 2, 3, 4 pieces or in two pieces wholly available. The fact that these are 'rags' as declared in the Bills of Entry has not been disputed because there is neither an allegation nor a finding that the goods are not rags. The goods have been assessed as rags. The dispute is that these are not 'completely mutilated' and that these are retrievable and restitchable as fabric or garments. We are unable to agree with this finding of the Collector of Customs on the basis of the examination report and other material on record. There is no indication that the 'cut' made is along the seams of the old clothing so that these are restitchable and retrievable as garments.
Similarly, the finding of the Addl. Collector of Customs on the basis of the factual examination report "synthetic rags cut into 2-3 pieces" that these are not "completely pre-mutilated" is also not sustainable on the face of it, in view of the above observation due to lack of any identifiable test of complete mutilation.
Addtional Collector's further finding that the imported goods are capable of being retrieved for manufacture of children's garments or of other articles is without any evidence. It is unwarranted assumption.
Even if it is felt that the mutilation is not sufficient, Customs authorities at Delhi could have ordered further mutilation on the analogy of Section-24 of the Customs Act and on the basis of similar practice prevalent in the Bombay Customs referred to in the W.R.B's Appeal Order No. 997-998/86-WRB, dated 22-8-1987 mentioned supra. Facts of the case before the W.R.B. of this Tribunal are almost identical to the facts in these cases. We respectfully agree with the decision of the W.R.B. in the case of Subhash Woollen Mills.
In the instant cases, however, since the goods are not available, no further mutilation is possible. For that reason, however, the impugned orders cannot be sustained because confiscation cannot be justified on the basis of our finding of lack of identifiable test of complete mutilation."
8. In Subhash Woollen Mills (P) Ltd. and M/s. S.S. Woollen Mills v. Collector of Customs, Bombay the W.R.B. was considering a similar matter concerning woollen rags. The Bench in their order inter alia observed as follows :
"We have carefully considered the submissions made on both the sides. The Import Policy which permitted import of woollen rags under OGL reads "Import of woollen rags/shoddy wool/synthetic rags will be allowed only when these are imported in completely premutilated condition". There is no dispute that what had been imported were woollen rags. The controversey is according to the Department that woollen rags imported were not completely mutilated, whereas the Appellants contend that no standard had been fixed regarding the mutilation. The mutilation had been done by the suppliers and if the mutilation done by the suppliers does not satisfy the Customs, the Cutoms could as well mutilate them and release the goods to the Appellants. It appears in respect of both the consignments, 20 of the goods were examined under AC (Docks) supervision. The endorsement made on the Bills of Entry read "that these are woollen rags which are not properly mutilated (2-3 pieces) and do not contain synthetic rags of hosiery". It is thus seen that the observation made during the exam. of the goods was that the imported goods are woollen rags but were not properly mutilated.
Coming to the orders passed by the Additional Collector, the Additional Collector observed "I have carefully considered the objections and allegations and rebuttals of the importers tendered as written/written and oral/oral submissions. The import of goods without proper mutilation is not permitted". The Additional Collector had only declared that import of goods without proper mutilation is not permitted. He did not record a finding that the goods imported were not completely mutilated. Apparently he had based his finding on the examination report contained in the Bills of Entry. It is significant to note that the finding of the Additional Collector is not that the imported goods were not completely pre- mutilated. As a matter of fact, while permitting redemption on payment of fine, the Addl. Collector had directed that the goods should be cleared after proper mutilation. The expression used by the Examining Officer as well as the Collr. namely, "proper mutilation" is a vague term. Neither the examiner nor the Collr. had stated the extent of mutilation required. The expression "completely mutilated" in the I.T.C. Policy is not defined anywhere. No evidence is also adduced as to the standard of mutilation required to allow the import."
9. We see no reason to depart from the findings of the Tribunal, contained in the earlier orders (supra) especially in the orders passed by the NRB. Respectfully following the same we set aside the impugned orders and allow the appeals. We further order that if the goods are in Customs control in any of the appeals the Customs are at liberty to order further mutilation.
The appeals are disposed of accordingly.