Customs, Excise and Gold Tribunal - Delhi
Maxo Laboratories (P) Ltd. vs Collector Of Customs on 30 November, 1989
Equivalent citations: 1995(80)ELT720(TRI-DEL)
ORDER G.P. Agarwal, Member (J)
1. Being dissatisfied with the confiscation of the imported goods, namely "Sufeed Sarah (Poppy seeds)" with an option to redeem the same on payment of a redemption fine of Rs. 3 lakhs under Section 111 (d) of the Customs Act and also imposition of penalty of Rs. 10,0007- under Section 112 of the said Act, the appellants have preferred their present appeal.
2. Factual backdrop : The appellants said to be the manufacturers of Ayurvedic and Unani medicines imported from Karachi poppy seeds valued at Rs. 1,54,000/- under supplier's invoice dated 28-8-1986 and claimed clearance of the goods under OGL Appendix 6 List 8 Serial No. 1 of the Import Policy for AM 1985-88. Since the import of the subject goods was covered under entry No. 121 of Appendix 2 Part B of AM 1985-88 policy and for the clearance of which a specific Import Licence/CCP was required the appellants were asked to produce the valid Import Licence/CCP to cover the import of the subject goods. However, the appellants did not produce the valid Import Licence/CCP and inter alia vide their letter dated 20-9-1986 submitted that they had imported the subject goods under OGL for actual consumption in the manufacturing of Ayurvedic and Unani medicines for which they hold valid drugs manufacturing licence. But the Collector did not agree with the submissions made by the appellants and ultimately ordered for the confiscation of the subject goods with an option to redeem the same on payment of the redemption fine and also imposed personal penalty as aforesaid. Hence, the present appeal.
3. Shri N.C. Sogani, learned Consultant on behalf of the appellants submitted that in terms of Serial No. 1 of Appendix 6 of the Import Policy for the year 1985-88 import of raw material was permissible by Actual Users (Industrial under OGL), and since the appellants are Actual Users (Industrial) as they are manufacturers of Ayurvedic and Unani medicines, the import of the subject goods being the raw material for manufacture of Ayurvedic and Unani medicines was permissible under OGL. He further submitted that the Collector of Customs was wrong in holding that the goods were covered under Item No. 121 of Appendix 2 Part B of AM 1985-88. Alternatively, learned Consultant submitted that assuming but not admitting that the subject goods are consumer goods falling under Serial No. 121 of Appendix 2 Part B the Collector of Customs should have allowed the clearance of the subject goods in view of the long standing practice of the Customs all over the country and in view of the fact that no Public Notice had been issued stating that import of poppy seeds would no longer be allowed under OGL. At the fag end of the arguments he also submitted that in the facts and circumstances of the instant case there was no justification for either confiscating the goods or for imposing the penalty and at the most the appellants would have been cautioned to be careful in future. He also made an issue that in the somewhat similar circumstances redemption fine of Rs. 20,000/- was imposed on one M/s. Uni Pharma India, Delhi for illegal importation of Khas Khas valued at Rs. 77852.50 and no penalty was imposed by the Dy. Collector of Customs vide his Order-in-Original No. 41/86 dated 24-10-1986. To bolster his submissions he cited the following cases:
1. Gujarat State Export Corporation Ltd. v. Union of India, -1984 (17) E.L.T. 50 (Bombay) (stress was laid on paragraph 7 - wherein the goods were released in view of the long standing practice of the Custom House)
2. Menon Associates v. Collector of Customs, 1988 (34) E.L.T. 367 wherein the case of Gujarat State Export Corporation, supra was relied upon by the Tribunal.
3. Kothari and Co. v. Collector of Customs, 1989 (40) E.L.T. 155 - wherein in view of the past practice of the Custom House, importation was allowed.
3. In reply Smt. Dolly Saxena, learned SDR reiterated the reasonings and findings recorded by the Collector of Customs in his impugned order and emphasised that in the instant case the Bill of Entry dated 8-9-1986 was filed for clearance and invoice was dated 28-8-1986 whereas as back as on 25-6-1986 the C.C.I. & E New Delhi had already clarified that the Khas Khas poppy seeds is a consumer item of agricultural origin and as such, the import was not allowed in terms of Serial No. 121 of Appendix 2 Part B of Import and Export Policy for the year 1985-88. She Vehemently submitted that the said clarification issued by the C.C.I. & E, New Delhi was binding on the Customs Authorities acting under the Act.
4. We have considered the submissions. The contention of the learned Consultant that since the appellants were holding valid drugs manufacturing licence and the subject goods namely poppy seeds was used as a raw material in the manufacture of Ayurvedic and Unani medicines, the import of the subject goods was permissible under OGL vide Appendix 6, List 8, Serial No. 1 of AM 1985-88, cannot be accepted. It was not disputed before us that the import of consumer item of agricultural origin was not permissible in terms of Serial No. 121 of Appendix 2 Part B of Import and Export Policy, AM 1985-88. It was also not disputed before us that the subject goods namely poppy seeds were of agricultural origin. What was contended before us was that since the appellants imported the poppy seeds to be used as raw-material in the manufacture of Ayurvedic and Unani drugs the same was permissible under OGL, Appendix 6, List 8, Serial No. 1 of AM 1985-88. After giving our due consideration to the arguments advanced by the learned Consultant we are of the considered view that the question of validity of the importation of the subject goods is not required to be decided by the manner in which the appellants were going to use the imported poppy seeds, but is required to be decided by the nature of the imported goods. Poppy seeds imported by the appellants are the consumer item used in every household in India and if it has incidentally, as most of our massalas have, a medicinal value and are used in the manufacture of Ayurvedic and Unani medicines, it cannot by virtue of use come in Appendix 6(i). Besides there is a clarification given by the C.C.I. & E, New Delhi on the record that the poppy seeds is a consumer Item of agricultural origin and as such, the import is not allowed in terms of Sl. No. 121 of Appendix 2 Part B of Import and Export Policy, AM 1985-88. This clarification is binding on the Customs Authorities as held by the Delhi High Court in the case of Jain Exports Pvt. Ltd., v. Union of India, -1987 (29) E.L.T. 753 and relied upon by the Tribunal in the case of Collector of Customs v. Oswal Agro Mills Ltd., 1989 (41) E.L.T. 104. The other far-fetched argument of the learned Consultant that no Public Notice was issued stating that import of poppy seeds would no longer be allowed under OGL is only to be stated to be rejected. The instant case is not a case of amending the relevant Import Policy or Notification but is a case where the question of interpretation of the Import and Export Policy, AM 1985-88 is involved. No authority or case law was cited by the learned Consultant in support of his contention that Public Notice is required in such case. Moreover it was not argued before us that the said letter No. 50/1/1984-85/IPC dated 25-6-1986 whereby the C.C.I. & E, New Delhi clarified that the Khas Khas poppy seeds is a consumer Item of agricultural origin and as such, the import is not allowed in terms of Sl. No. 121 of Appendix 2 Part B of Import and Export Policy, AM 1985-88 was marked "secret". In other words it was an open letter clarifying the position issued by the C.C.I. & E., New Delhi. It is also significant to note that the appellants were made aware of the said clarification contained in the said letter dated 25-6-1986 of C.C.I. & E., New Delhi and they understood the same as could be seen from the following facts narrated in para 5 of the impugned order "5. Shri N.C. Aggarwal, Chairman M/s. Maxo Laboratories Pvt. Ltd. Delhi vide his letter of date further submitted that they had been made to understand regarding the contravention committed by them in regard to the provisions of ITC and Section 46 of the Customs Act, 1962. He further submitted that they do not have any valid Import Licence/CCP to cover the import of the aforesaid goods valued at Rs. 1, 54, 000. As they need the goods under import urgently, the case might be adjudicated at an early date without issue of a formal show cause notice and without hearing them in person."
Thus, we hold that the findings of the learned Collector that the imporation of the subject poppy seeds was not valid is correct.
5. The other argument of the learned Consultant that in view of the past practice to release the imported poppy seeds without any penal action also cannot be accepted in the peculiar facts and circumstances of the case. In the instant case the C.C.I. & E, New Delhi vide their letter No. 50/1784-85/IPC, dated 25-6-1986 had already clarified that the khaskhas poppy seeds was a consumer Item of agricultural origin and as such, the import is not allowed in terms of Sl. No. 121 of Appendix 2 Part B of Import and Export Policy, AM 1985-88. It is an admitted fact after the issuance of the said clarification the appellants opened their letter of credit No. NICW-2799, dated 2-8-1986 and it is only after the opening of the said letter of credit that the goods were shipped under Invoice dated 28-8-1986, though it was contended by the appellants that the sale contract was made on 7-6-1986. Under these circumstances the contention of the learned Consultant that the appellants acted bonafidely cannot be accepted. The only other argument of the learned Consultant that since earlier the imported poppy seeds were released without any penal action and therefore, in view of this practice confiscation or redemption fine or penalty was not called for, cannot be accepted. The case law cited by the learned Consultant is not applicable to the facts of the instant case. In the leading judgment delivered by the Bombay High Court in the case of Gujarat State Export Corporation v. Union of India Supra, which was followed by the Tribunal in the case of Menon Associates v. Collector of Customs, supra, and Kothari and Co. v. Collector of Customs, supra, it was held as follows -
"As two views were possible about the validity of import and the Customs House was consistently taking the view over several years that the import was valid, in my judgment this was not a fit case to take proceedings for confiscation was wholly unnecessary".
In the instant case as aforesaid at the time of the importation as well as at the time when the L.C. was opened and the goods were shipped the position was very clear that the importation of poppy seeds being a consumer item of agricultural origin is not permissible in terms of Serial No. 121 of Appendix 2, Part B of Import of Export Policy, AM 1985-88. As- regards the only other surviving contention of the learned Consultant that in the case of importation similar goods by M/s Uni Pharma India, Delhi, initially only a redemption fine of Rs. 20,000/- for the imported goods valued at Rs. 77, 852. 50 was levied and no penalty was imposed by the Deputy Collector of Customs, New Delhi vide his order-in-original No. 41/86 dated 24-10-1986 and on appeal the Collector of Customs (Appeals) remitted the fine and penalty in full and instead cautioned the appellants of that case that the import of poppy seeds in terms of the OGL would not be available further and therefore, imposition of redemption fine of Rs. 3 lakhs and a penalty of Rs. 10,000/- either was not called for or excessive, however does not assist the appellants at all. In the instant case the said Order No. 41/86 passed by the Deputy Collector of Customs on 24-10-1986 whereas in the instant case the adjudication order was passed by the Collector himself on 15-10-1986. It appears from the copy of the said order passed by the Deputy Collector that the impugned order dated 15-10-1986 passed by the Collector was not in the knowledge of the Deputy Collector. Needless to say that what we are now concerned with is not disciplining the Customs Authorities in their quasi-judicial conduct, but to consider whether the redemption fine and the penalty imposed in the instance case was called for or is excessive. On a careful consideration of the facts and circumstances of the case we do not think that redemption fine or penalty was not called for or excessive.
6. In the result we reject the appeal.