Customs, Excise and Gold Tribunal - Tamil Nadu
D.A.B. Exports vs Commissioner Of Customs on 6 August, 2003
Equivalent citations: 2003(158)ELT591(TRI-CHENNAI)
ORDER P.G. Chacko, Member (J)
1. The appellants in all these appeals had imported various quantities of what they described as 'Dried Garlic' and sought clearance thereof under ITC (HS) Heading 071290.04 and Customs Tariff Heading 0712.90 under Bills of Entry filed on different dates in the year 1999. They had no specific licence for the imports. The Department took the view [hat the imported goods were not 'dried garlic' falling under ITC (HS) Heading 071290.04 but fresh garlic falling under ITC (HS) Heading 070320.00, which was a restricted item, for which specific import licence was required. The importers waived show cause notice and obtained clearance of the goods on the basis of orders passed by the proper officer of customs. In a few of these cases, the Commissioner of Customs was the proper officer, while, in the rest of the cases, the Additional Commissioner of Customs was the proper officer. The Commissioner or the Additional Commissioner, as the case may be, confiscated the goods under Section 111(d) of the Customs Act with option for redemption thereof on payment of fine and also imposed penalty on the importer under Section 112(a) of the Act. Where orders were passed by Addl. Commissioner, appeals were preferred to Commissioner (Appeals) and the latter upheld the orders passed by the lower authority. Such orders of the Commissioner (Appeals) are impugned in some of these appeals. The remaining appeals before us are against the orders passed by the Commissioner as adjudicating authority. In any case, the question arising for our consideration is whether the goods imported by the appellants should be classified under ITC (HS) Heading 071290.04 as 'dried garlic' or under Heading 070320.00 as 'fresh garlic'. We may, at once, note a fact which is not disputed in these appeals - that the garlic imported by all the appellants had a water content which was far above 10% w/w.
2. Learned Counsel for the appellants submit that the common parlance test has to be applied to determine the classification inasmuch as the item is described merely as 'dried garlic' under ITC (HS) Heading 071290.04 without reference to the percentage of any moisture content. The subject goods should be held to be falling under ITC (HS) Heading 071290.94 and to be freely importable. With reference to the Policy Circular dated 17-9-99 issued by the Joint Director General of Foreign Trade with the approval of the Director General of Foreign Trade (DGFT), which is relied on by the department in these cases to deny the benefit of the above ITC (HS) heading to the appellants in respect of the goods in question, learned Counsel submit that the Tribunal (West Zonal Bench) has held that the circular is not valid and binding as it does not indicate that any doubt had arisen before the DGFT for clarification. The Tribunal has also held that, where any garlic under import is known as 'dry garlic' in commercial parlance, it should be so classified for ITC (HS) and Customs Tariff purposes. The decision cited by the Counsel is the one rendered by the West Zonal Bench in the case of J.B. Impex v. CC, Nhava Sheva [2001 (134) E.L.T. 210 (Tri. - Mumbai)]. It is, further, submitted that various co-ordinate benches of the Tribunal have followed the above decision to allow free import of garlic declared as 'dried garlic' but containing considerable water content. The cited decisions are the following :-
(a) Raisoni Exports v. CC, Nhava Sheva - 2001 (127) E.L.T. 176 (Tri. -Mum.); (b) Pallippadan Enterprises v. CC, Cochi - 2001 (132) E.L.T. 117 (Tri. -Bang.); (c) Jupiter Exports v. CC, Chennai - 2002 (145) E.L.T. 608 (Tri. - Chen-nai); (d) Selvam Dhali Mills (P) Ltd, v. CC, Chennai - 2002 (149) E.L.T. 317 (Tri. - Chennai);
3. Another argument raised by the learned Counsel is that the DGFT circular, if at all applicable, can have no retrospective effect and, therefore, the circular cannot be applied to garlic cleared at Customs prior to the date of the circular.
4. Learned DR has opposed the above arguments. It is his contention that the DGFT had authority vested in him under Para 4.13 of the EXIM Policy, 1997-2002 to clarify any question or doubt which arose in respect of interpretation of any provision contained in the policy or regarding ITC (HS) classification of any export/import goods. When a doubt arose as to the classification of garlic imported into India by various importers it was examined by the DGFT and the clarificatory circular dated 17-9-99 was issued. Such a clarification had also retrospective effect to cover all imports from the date of commencement of the policy period. In this connection, learned DR relies on the Supreme Court's decision in Aero Leather Pvt. Ltd. [2003 (154) E.L.T. A98 (S.C)] as well as in Collector v. Bhadrachalam Paper Boards Ltd. [1991 (55) E.L.T. A67 (S.C). While, in the former case cited by the DR, the Apex Court held that an amendment of the Income-tax Act by the Finance Bill 1999 was clarificatory and hence had retrospective effect, in the latter case, it was held that an amendment brought about by an amending notification (No. 214/84-C.E.) was clarificatory and retrospective. Adverting to the description of the goods, learned DR refers to Section Note 2 in Section I of "ITC-HS Classification on Import items". This Section Note says that "except where the context otherwise requires, throughout this Schedule, any reference to "dried" products also covers products which have been dehydrated evaporated or freeze-dried". In this connection, reference is also made to HSN notes under Heading 07.12. One note reads thus : "This heading covers vegetables of Headings 07.01 to 07.09 which have been dried (including dehydrated, evaporated or freeze-dried) i.e. with their natural water content removed by various processes". Relying on this HSN note, learned DR submits that the expression "dried" and "dehydrated" are synonymous and they mean a condition in which the natural water content has been completely removed by whatever process. In other words, "dried garlic" should not have any natural water content. This submission of the DR is without prejudice to what has been clarified by the DGFT, who allowed up to 10% water content for any garlic being classified as "dried garlic". According to the learned DR, the DGFT's clarification is in the nature of a concession given to importers of garlic.
5. We have examined the submissions. The crucial issue which immediately surfaces is whether the DGFT's circular dated 17-9-99 is applicable to the subject imports. All the shipments of garlic were prior to 17-9-99. The import considered by WZB in the case of J.B. Impex was also prior to 17-9-99, and so were the imports considered by the other co-ordinate benches in the cited cases. It has been held by WZB in the case of J.B. Impex that the DGFT circular can have no legal and binding effect inasmuch as :-
(a) there is no indication that any doubt in relation to dried garlic was referred to the DGFT;
(b) dried garlic cannot be equated to dehydrated garlic.
6. Having considered the judgment of the WZB in J.B. Impex, we think, it is necessary to have a fresh look at the text of the DGFT's circular extracted below :-
"It is hereby clarified that "Dried Garlic" classified under Exim Code No. 071290.04 ITC (HS) Classification, 1997-02 would be treated as "Dried Garlic" provided the moisture content thereof does not exceed 10%, irrespective of the method of drying.
This issues with the approval of DGFT".
7. The source of authority for the above clarification is Para 4.13 of the EXIM Policy, 1997-2002, which reads as under :-
"If any question or doubt are arises in respect of the interpretation of any provision contained in this policy or regarding the classification of any item in the book titled "ITC (HS) classification of Export and Import Items," the said question or doubt shall be referred to the Director General of Foreign Trade whose decision thereon shall be final and binding."
8. Going by the above provision of the Policy, we note that the Central Government had authorised the Director General of Foreign Trade to interpret and clarify the provisions of the policy as also to clarify doubts regarding ITC (HS) classification of any a item. The subject matter of the above clarificatory circular is "dried garlic" mentioned under ITC (HS) Heading 071290.04. The description of the goods is only "dried garlic". There is no mention of any extent or degree of dryness. During the Policy period, apparently, consignments of garlic with varying percentages of water content were imported by different parties. All those parties, apparently, claimed free importation under the above ITC (HS) heading. In some cases, the Customs department objected to free importation, by taking the view that garlic with considerable water content could not be classified under the above heading and would be considered as fresh garlic under ITC (HS) heading 070320.00, which required specific licence for import. It then became necessary for the competent authority to issue a clarification. We are given to believe that the circular dated 17-9-99 of the DGFT happened to be issued in such a situation. It is true that the circular does not say as to who referred the question for clarification to the DGFT. Nevertheless, in our considered view, this omission (if at all it is one) cannot detract from the legal validity and binding effect of the clarification rendered by the DGFT in exercise of his authority conferred by Central Government under Para 4.13 of the EXIM Policy. In this context, we may usefully refer to Section 114 of the Evidence Act, which enables Courts to presume that all official acts have been regularly performed. This rule of evidence is, in our view, equally applicable to tribunals/authorities discharging quasi judicial function. The above presumption, of course, is rebuttable. The burden to rebut the presumption is on that party who asserts that the official act in question has been wrongfully, unlawfully or irregularly performed. In the instant case, the DGFT's clarificatory circular has been called in question, but the appellants do not appear to have succeeded in rebutting the presumption that the DGFT issued the clarification in lawful and regular exercise of his jurisdiction. Therefore, we are of the considered view that the clarification issued by the DGFT regarding the ITC (HS) classification of dried garlic is valid and binding on the Customs authorities and the importers of garlic. The circular cannot be substituted with commercial parlance, the former being backed by statutory provisions. Where any law made through legislation or delegated legislation has specific provision for clarifying EXIM Policy relating to import of goods, such provision should govern the field to the exclusion of commercial parlance and other extraneous factors. The DGFT circular clarifies that garlic containing up to 10% moisture can be treated as dried garlic under ITC (HS) Heading 071290.04, irrespective of the method of drying. This is only a clarification issued by an authority which is empowered to do so, and, by any stretch of imagination, will not amount to change of policy. Therefore, we are unable to persuade ourselves to agree with the view taken in J.B. Impex as regards the DGFT circular.
9. Learned DR has relied on certain rulings of the Supreme Court regarding retrospective effect of statutory provisions/notification which are clarifi-catory. The DGFT circular dated 17-9-99 calls itself "EXIM Policy clarification circular". A clarification of any provision of EXIM Policy must be applicable to that provision from the date of its commencement. This proposition is apparently supported by the Apex Court's decisions cited by the DR.
10. We have, in these appeals, taken a considered view which is but contradictory to decisions taken by other co-ordinate benches in similar cases. Therefore, as judicial discipline requires us to do, we have to refer the conflict to a Larger Bench. Accordingly, we direct the Registry to place the papers before the Hon'ble President for constituting a Larger Bench to examine and decide on the following issue :-
"Whether, for the period 1-4-1997 - 31-3-2002, the Policy Circular No. 32 (RE-99)/1999-2000, dated 17-9-99 issued by the DGFT regarding ITC (HS) classification of "dried garlic" is a valid and binding clarification on such classification in terms of Para 4.13 of EXIM Policy, 1997-2002."