Customs, Excise and Gold Tribunal - Delhi
Decor India And Ors. vs Collector Of Customs on 18 June, 1987
Equivalent citations: 1987(12)ECR1150(TRI.-DELHI), 1987(31)ELT400(TRI-DEL)
ORDER G.P. Agarwal, Member (J)
1. Being dis-satisfied with the order-in-original No. 29-C/86, dated 4-12-1986, passed by the Collector of Customs, New Delhi, all the appellant who are partners and running their business under the name and style of M/s. Decor- India, New Delhi, have preferred their separate appeals, which were heard together and are disposed of by this common order.
2. Factual backdrops: The appellant, M/s. Decor India is a partnership firm and M/s. K.K. Exports is a sister concern of the said firm. The other appellants herein are the partners of the appellant firm M/s. Decor India, New Delhi. On 18-2-1986, the authorities concerned searched the business premises of the appellant M/s. Decor India and its sister concern, M/s. K.K. Exports, and recovered 4672 rolls of Vinyl Wall Coverings imported from United Kingdom and West Germany and 304 pcs of Acrylic Pile Rugs. The same were seized on 19-2-19S6 under Section 110 of the Customs Act, 1962. Statements of the partners were also recorded. After the usual investigation, Dy. Director (Inv), Directorate of Revenue Intelligence issued separate Show Cause Notices to the appellants 'proposing to confiscate the seized goods and also for levying personal penalties upon them for contravening the provisions of Clause (3) of Import (Control) Order, 1955 (as amended) issued under Section 3 of Import & Export Control Act, 1947 as amended) read with Section 11 of the Customs Act, 1962, alleging that the said firms have imported Vinyl Wall Coverings and Acrylic Pile Rugs as PVC sheets and Artificial Fur Cloth by misdeclaring and have abused import licences. In reply the appellants, inter alia, contended that there was no misdeclaration of the goods as alleged; that Vinyl Wall Coverings are also PVC sheets; that PVC stood for Polyvinyl Chloride and therefore there was no misdeclaration in referring to Vinyl Wall Coverings as PVC sheets and that similarly Acrylic Fur Cloth also had the characteristics of fur cloth and were made of acrylic which is artificial or synthetic fibre. It was further contended that Vinyl Wall Coverings contains over 59% of PVC; that since these are predominantly made of plastic these had to be considered as PVC sheets; that the designs were all in the PVC portion and the paper was only a backing material; that as per Rule 3(b) of the Rules of Interpretation of the Customs Tariff, the goods were to be classified as if they consisted of material which gave the goods their essential character and that the goods being in the form of sheets have to be considered as only PVC sheets. It was also emphasised that earlier the appellants had imported one consignment of decorative paper under B/E No. 001367, dated 5-4-1983 against licence No. 2902201, dated 11-12-1981, which was valid for inter alia decorative paper; that the goods were tested by the Customs House, Bombay, and was found that PVC content was 59.6%; that since the goods were predominantly of PVC, the Bombay Customs had held that the licence produced for decorative paper was not valid to cover the goods; that accordingly they imposed a certain amount of fine in lieu of confiscation of goods; that the goods were also assessed to duty under Chapter 39 of CTA and c.v.d. was charged under 15A GET; and that it was only after the Bombay Customs decided to classify the goods as PVC sheets on the basis of predominance of the PVC content that they started importing the goods against licence for PVC sheets and also asked the supplier to declare the goods as PVC sheets; that as they had acted on the basis of the information conveyed to them by the Bombay Customs the Department could not then, turn round and say that they had misdeclared the goods and had claimed clearance against invalid licence. The appellant also contended that the entire proceedings were without jurisdiction; that even if, according to the Department, the goods have been released by the Customs after the appellant had paid duty and the import licences were accepted; that Section 47 of the Customs Act stipulates that where the proper- officer is satisfied that the goods imported for home consumption are not prohibited goods and the importer had paid the import duty, if any, assessed thereon and any charges payable under the Customs Act in respect of the same, the proper officer might make an order permitting, clearance of the goods for home consumption; that the release of the goods by the proper officer was therefore an order under Section 47 of the Customs Act; and that if the Department then disagreed with the said order, it was open to it to file an appeal with the Collector of Customs (Appeals) under Section 128 of the Customs Act; that no appeal having been filed before the Collector of Customs (Appeals) within the statutory time limit, the Department had no right to re-open the case. However, it appears from the impugned order that the Collector of Customs, after the usual adjudication proceedings concentrated itself only on the following two questions :
(i) assessment made in similar case by Bombay Customs House; and
(ii) competency of the Adjudicating Authority to revise the order clearing the goods from Customs.
Regarding the first contention, the Adjudicating Authority showed its inability to say anything as according to him the product that was assessed at Bombay Customs by the relevant officer was neither available nor shown to him. The Adjudicating Authority further brushed aside the defence of the appellant on the ground that the same facts were not disclosed immediately after the seizure was made. Regarding the second contention the Adjudicating Authority held that the argument was not supported by the provisions of the Customs Act. After holding so, the Adjudicating Authority ordered for the confiscation of the seized goods under Section HHd) of the Customs Act, 1962 with an option to redeem the same on payment of a redemption fine of Rs. 5 lakhs. The Adjudicating Authority also imposed a personal penalty of Rs. 1 lakh each on all the three partners, appellants herein. However, no penalty was imposed on the appellants M/s. Decor India or M/s. K.K. Exports. It deserves to be mentioned here that the other partner, Shri Ram Chandra Goyal was also issued a Show Cause Notice, but no penalty was imposed on him as he expired during the proceedings. Hence these appeals.
3. We have heard Shri R.R. Gupta, learned Counsel for the appellants duly assisted by Shri M.C. Sogani, Consultant.
4. Shri R.R. Gupta, learned Counsel for the appellants at the outset submitted that the adjudication proceedings started by the Collector is illegal being without jurisdiction. While elaborating his submissions, he submitted that the goods in question were released by the Customs after the appellants had paid duty and the import licences were accepted. In other words, he submitted that the goods in question after import were cleared by the proper officer under Section 47 of the Customs Act and that amounts to an adjudication order. Therefore, it was not open to the Collector of Customs to recall or revise the previous order permitting clearance of imported goods and hence the seizure and confiscation of the goods or the imposition of the personal penalty is without any authority, To substantiate his contention, he cited the following authorities :
(i) Jain Shudh Vanaspati Ltd. v. Union of India, 1982 ELT 43 (Del.) (ii) Industrial Cables v. Union of India, 1986 (25) ELT 33 (P & H) (iii) Ajay Exports v. Collector, 1986 (26) ELT 873 (Tribunal) (iv) Parkar Leather Export Co. v. Collector, 1987 (29) ELT 53
(v) Union of India v. Popular Dyechem, 1987 (28) ELT 63 (Bom) In reply, Smt. Nisha Chaturvedi, learned SDR submitted that in the case of Jain Shudh Vanaspati Ltd. v. Union of India, supra, it was also held that the finality attached to an order passed under Section 47 of the Customs Act, can be disturbed where the Department successfully shows that there was fraud or deliberate suppression.
5. Before we proceed to deal with the respective contentions of the parties, we shall briefly consider the cases cited at the Bar.
6. In the case of Jain Shudh Vanaspati Ltd. v. Union of India, supra, a Division Bench of the Delhi High Court was directly concerned with the interpretation of Section 47 of the Customs Act. In that case, Jain Shudh Vanaspati Ltd., imported palm oil contained in stainless steel drums from foreign suppliers. The proper officer cleared the goods after physical checking and satisfying himself that the imported goods are not prohibited under Section 47 of the Customs Act. It appears that subsequently acting on the belief that under Appendix 3 of the Import Policy A.M. 79, importation of stainless steel drums was banned, the Customs authorities effected searches and seized the drums from various places and after usual investigation the Assistant Collector issued short levy notices under Section 28 of the Customs Act to the company, calling upon the company to show cause as to why the duty be not recovered from them since the stainless steel drums were subject to levy of customs duty which was not levied as provided under Section 28 of the Customs Act. The Show Cause- Notices were replied and thereafter the Collector issued Show Cause Notice under Section 124 of the Customs Act, calling upon them to explain why the stainless steel drums be not confiscated. Before the Hon'ble Delhi High Court, it was inter alia contended that once the goods are cleared by the Customs authorities after physical verification and check up under Section 47 of the Customs Act, issuing of such Notices amounts to reviewing the order under Section 47 of the Act. It was further contended that the order of clearance passed under Section 47 of the Act can be revised by the Collector of Customs or Board of Excise under erstwhile Section 130 of the Customs Act. Agreeing with the contention, the Division Bench held that "Considering Section 47 of the Customs Act in the light of the legislative history... the Section attaches finality to the satisfaction of the officer that the goods are not prohibited. The finality cannot be disturbed unless the Department successfully shows that there was fraud or deliberate suppression."
7. In the case of Industrial Cables v. Union of India, supra, a Single Judge of the Punjab & Haryana High Court held that the clearance of the goods by the proper officer under Section 47 of the Customs Act must be presumed to be after due adjudication, firstly with regard to the fact whether or not the import of the goods is prohibited by the Act or any other law for the time being in force within the meaning of subsection 1B3) of Section 2 of the Customs Act and the proper officer was "Adjudicating Authority" within the meaning of Sub-section (1) thereof, and therefore, the order passed under Section 47 of the Customs Act is binding on the authorities under the Import (Control) Order.
8. Following the view expressed by the Division Bench of Delhi High Court in the case of Jain Shudh Vanaspati Ltd. v. Union of India, supra, a Division Bench of this Tribunal, in the case of Ajay Exports v. Collector of Customs, supra, held that the order of clearance of goods for home consumption under Section 47 of the Customs Act amounts to an adjudication order, and therefore, is liable to revision or correction by Collector only under re visional powers under Section 129D of the Customs Act, 1962, and not by issue of Show Cause Notice under Section 124 ibid.
9. One of the Learned Judicial Member who was a party to the decision given in the case of Ajay Exports, supra, reiterated the same view in the case of Parkar Leather Export Co. v. Collector of Customs, 1987 (29) ELT 53 (Tribunal).
10. We also find that a Division Bench of the Bombay High Court very recently in the case of Union of India v. Popular Dyechem, 1987 (28) ELT 63 (Bom.), supra, following the view expressed by a Division Bench of the Delhi High Court in Jain Shudh. Vanaspati Ltd., supra, held that once the goods have been cleared by the Customs authorities after physical verification of the goods under Section 47 of the Customs Act, such goods cannot be subsequently confiscated except in contemplation of an order or in pursuance of an order passed in revision under Section 129D of the Customs Act, 1962. In that case, the goods were cleared by the proper officer under Section 47 of the Customs Act as plastic scraps. Subsequently, the goods were attempted to be confiscated by the Department on the ground that the goods were not plastic scraps but serviceable plastic articles when imported. Under these circumstances, their Lordships observed as follows :
"The only goods which remain now to be cleared are goods in respect of which it was contended by the appellants that the same were not plastic scrap but serviceable plastic articles when imported whereas the respondents contended that the said Roods were plastic scrap. The order of clearance under Section 47 was passed by the Assistant Collector concerned after physical verification of the goods. In view of this and in view of the decision of a Division Bench of the Delhi High Court reported in Jain Shudh Vanaspati Ltd. v. Union of India and Ors., (1982) ELT 43, it is clear that such goods cannot be confiscated, except in contemplation of an order or in pursuance of an order passed in revision under Section 129D of the Customs Act, 1962...."
[Emphasis supplied] Thus it stands settled that goods cleared under Section 47 of the Customs Act cannot be confiscated, except in contemplation of an order or in pursuance of an order passed in revision under Section 129D of the Customs Act, 1962.
11. The contention of Smt. Nisha Chaturvedi, learned SDR for the respondent that the finality attached to an adjudication order passed under Section 47 of the Customs Act can be disturbed where the Department successfully shows that there was a fraud or deliberate suppression also does not improve the case of the Department in the facts and circumstances of the case. Moreover, it goes against the Department itself. In the Show Cause Notice issued to the appellants in the case in hand, no allegation regarding any fraud or suppression of fact, much less deliberate suppression of fact, was averred or alleged. The relevant portion of the said Show Cause Notice reads thus :
"10. From the discussion in the foregoing paragraphs, it is clear that the said firms have imported Vinyl Wall Coverings and Acrylic Pile Rugs 'in the garb of PVC Sheets and Artificial Fur Cloth by mis-declaring and have abused import licence. It, therefore, appears that M/s. Decor India, E-I, East of Kailash, New Delhi have contravened the provisions of Clause (3) of Import (Control) Order, 1955 (as amended) issued under Section 3 of Import & Export Control Act, 1947 (as amended) read with Section II of the Customs Act, 1962 made applicable by virtue of Section 3(2) of the Imports & Exports (Control) Act, 1947 and thereby have made the goods Vinyl Wall Coverings and Acrylic Pile Rugs worth Rs. 27,68,000/- seized by the officers of Directorate of Revenue Intelligence, New Delhi on 19-2-1986, liable for confiscation under Clause (d) of Section 111 of the Customs Act, 1962 and have also made themselves liable for penalty under Section 112 of the Customs Act, 1962."
It also deserves to be mentioned here that the fact that the seized goods when imported were having the labels attached to the rolls of the seized goods describing the goods as Vinyl Wall Coverings and Acrylic Rugs is an admitted position. Moreover, this fact itself finds place in the Show Cause Notice issued to the appellants, and reads as follows :
"9. The fact that the said goods were sold off in the market, as they were, is also substantiated by bills/selling vouchers which were also seized. The Bills/Vouchers of the said firm clearly show that Vinyl Wall Coverings was sold off to the different buyers in the market. Moreover, the labels attached to the rolls of the seized goods described the goods as Vinyl Wall Coverings and Acrylic rugs, which go to prove that the goods were not PVC Sheets and Artificial Fur Cloth. (Copies of sale Bill No. 605, dated 31-1-1986 and label attached to one of the sample rolls, attached as Annexure-E)."
Thus, in the absence ox any allegation, much less proof, by the Department regarding the fraud or deliberate suppression, the exception carved out by a Division Bench of the Delhi High Court in the case of Jain Shudh Vanaspati Ltd., supra, is not available to the Department. The apprehension of the Adjudicating Authority in the instant case expressed in the impugned order that acceptance of the contention of the appellants would make that no smuggling by misdeclaration, fraud or collusion can be taken action under the Customs Act, is unfounded, because in such a situation order passed under Section 47 of the Customs Act, can be revised under Section 129D of the Customs Act, and therefore, the Department is not without any remedy.
11. Thus, it appears that unfortunately instead of exercising the revisional or review powers in terms of Section 129D (1) and (2) of the Customs Act, the Collector of Customs decided to issue a Show Cause Notice to the appellants and decided the issue as if he were an original adjudicating authority. If the Collector of Customs had exercised jurisdiction under Section 129D of the Act and directed his subordinate authority to file an appeal before the Collector (Appeals), that would have been a proper course. But as the same has not been done in the case in hand, the impugned order is liable to be set aside being without jurisdiction. On this short ground itself the appeals deserve to be allowed.
12. On merits, the learned Counsel for the appellants reiterated the same grounds which were taken up before the Collector of Customs and submitted at the outset that no question having a relation to the rate of duty or to the value of goods for the purpose of assessment is involved. He submitted that the appellants were importing Vinyl Wall Coverings even before the import in question. He submitted that the appellants had earlier imported Vinyl Wall Coverings against licence for "decorative paper" assessable to duty under Customs Tariff Heading 48.01/21(1) read with GET Item 17(1) under B/E No. 001367, dated 5-4-1983, against licence No. 2902201, dated 11-12-1981 which was valid for inter alia decorative paper, but the goods were tested by the Customs House, Bombay and that it was found that the PVC content was 59.6% and since the goods were predominantly of PVC, the Bombay Customs had held that the licence produced for decorative paper was not valid to cover the goods. Accordingly, the Bombay Customs House treated the goods as plastic goods liable to duty under Customs Tariff Heading 39.07 read with GET Item 15A. Consequently, the goods were allowed to be cleared on redemption fine and on payment of duty leviable on plastic goods under Customs Tariff Heading 39.07 read with GET Item 15A. He further submitted that it was only after the Bombay Customs decided to classify the goods as PVC sheets on the basis of predominance of the PVC contents that the appellants started importing the goods against licence for PVC sheets and also asked the supplier to declare the goods as PVC sheets. Thus, the appellants, relying upon the said classification of the Bombay Customs House, imported the goods accordingly, and therefore, the Revenue cannot now turn round and say that the appellants have misdeclared the goods and had claimed clearance against invalid licence. In support of his contention, he submitted that the copy of the earlier B/E No. 001367, dated 5-4-1983 and the letter from the clearing agents were produced before the Collector of Customs. The appellants have also filed the copy of the said B/E and the letter and the same are on record before us. A perusal of the said letter and the B/E supports the contention of the appellants. From the reply to the Show Cause Notice, we find that in paragraph 7, the appellants also took the same plea giving out the details of the import and the relevant file number in which the case was adjudicated. The said para runs as follows :
"7. We further submit that earlier 'we had imported one consignment of decorative paper under B/E No. 001367/5-4-1983 per s.s. EYIA LUCK, Rotation No. 3381, Line No. 10, at Bombay Port and had claimed clearance against Licence No. 2902201, dated 11-12-1981 which was valid for inter alia decorative paper. The goods were tested by the Customs House, Bombay and it was found that the PVC content was 59.696. Since the goods were predominantly of PVC, the Bombay Customs held that the licence produced for decorative paper was not valid to cover the goods. They accordingly imposed a fine of Rs. 23,000/- in lieu of confiscation of the goods (Customs House File Reference No. S/10-116/838). The goods were also assessed to duty under Chapter 39 of CTA and C.V.D. was charged under 15A GET. In this connection We were enclosing copy of the B/E and also copy of the letter dated 2-6-1983 received from our clearing agents, M/s. Hansraj Pragji & Sons. In spite of our repeated reminders to the Customs we have not been able to get any order from the Adjudicating Officer and as such we are unable to submit the same for your perusal."
Against this, from the impugned order, we find that instead of verifying the contention of the appellants with reference to the earlier import and the earlier records, or summoning the said file the Collector of Customs showed his inability by saying that the product that was assessed at the Bombay Customs is neither available for shown to him and mainly relying upon the statement of the appellant Shri Subhash Goyal recorded under Section 108 of the Customs Act, conduced that this fact was not mentioned by Subhash Goyal in the said statement and therefore it cannot be believed. To quote him, the Collector of Customs has recorded the following findings in the impugned order :
"The stand taken in defence that in the case of clearances made through Delhi, goods were described as PVC Sheetings and Artificial Fur Cloth on account of the assessment previously made at Bombay appears to be difficult to accept in view of the statements made by Shri Subhash Goyal in particular under Section 108 of the Customs Act, 1962 immediately after the seizure made by the DRI officers. There has been nothing shown or even stated in reply to the show cause notice or during personal hearing that the statement of Shri Subhash Goyal was not made by him or was in any way influenced by the DR officers. Had that been the fact nothing prevented Shri Subhaah Goyal or his partners in coming clean right of the beginning to say as to why Vinyl Wail Coverings and Acrylic Pile Rugs had been described toy them while making the declaration on the bills of entry as PVC Sheeting and Artificial Fur Cloths."
From the above it is clear that the Collector of Customs never bothered to verify the contention of the appellants with reference to the earlier adjudication of which details and even the file number were given by the appellants in paragraph 7 of their reply to the Show Cause Notice as stated above, but concluded that omission on the part of Shri Subhash Goyal or the other partners to mention about this earlier import in their statement under Section 108 is fatal to them. We are afraid this approach of the Collector of Customs is illegal and is in direct conflict with the settled principle of appreciation of evidence. The omission to mention a fact which is based on the Government record itself cannot be branded as an afterthought or false. If the Collector of Customs was doubting about this defence of the appellants, it was his duty to verify the contention with reference to the details set out in the reply to the Show Cause Notice either by summoning- the said file or otherwise. Besides it is on record that the said B/E and letter of the clearing agent were produced before him, but it is curious that the Collector of Customs has not taken into consideration the said documents while appreciating the defence of the appellants. A perusal of the said B/E and letter of the clearing agent support the contention of the learned Counsel for the appellants. It deserves to be mentioned here that even during the course of the arguments before us nothing was pointed out by the Department contrary to the defence of the appellants. Shri Gupta, learned Counsel for the appellants further drew our attention to order No. S/10-209/83-D, dated 2-2-198* passed by the Collector of Customs, Bombay in the case of R.K. Aggarwal & Co., to show that it had been a long standing practice of the Bombay Customs House to treat such import of goods as valid. A copy of the said Order-in-Original was placed on record during the course of the hearing before us. In the said case 500 rolls of PVC laminated sheets with design on one side were imported against the licence valid for import of PVC sheets. On laboratory test, it was found that the goods were composed of two pigmented PVC sheets laminated (Bonded) together with one of the sheets having coloured design on one side. It was contended by the Department that the goods imported being fully finished and ready for use are not raw materials or components used in the manufacture of PVC fabricated goods. Therefore, the importation was thought to be not in line. Accordingly, Show Cause Notice was issued and the Collector of Customs, Bombay posed the following question for determination :
"The question to be decided is whether the description 'PVC sheets' appearing under column 4 against Sr. No. C-11-4 of Appendix 17 of 1983-84 policy would cover laminated decorative PVC sheets of the type imported."
After posing the said question, the Collector of Customs, Bombay held that PVC sheets is specifically mentioned in column 4 against Sr. No. C-11-4 of Appendix 17 of Import & Export Policy. For ready reference, the relevant portion may be extracted as below :
"Turning to the CCCN, it is seen that the Chapter Note No. 3(d) of Chapter 39 includes within Heading 39.01 to 39.06, 'plates, sheets, film, foil and strip (other than that classified in Heading 51.8 by the application of Note 4 to Chapter 51), whether or not printed or otherwise surface worked, uncut or cut into rectangles but not further worked (even if, when so cut, they become articles ready for use)'. The EN on page 570 includes plates, sheets, strip, film and oil whether or not containing fillers or colouring matters, which may be printed or otherwise surface-worked (polished, embossed, coloured etc.) or merely cured and/or corrugated but not otherwise worked, under Heading 39.01 to 39.06. In fact it further goes on to say that they may also be cut into rectangles even if, as the result of being cut they may become finished articles (e.g. tiles, wall coverings, table cloths). It is thus seen that the description 'PVC Sheets' would include plain sheets printed sheets, coloured sheets and even laminated sheets. In this sense of the term, I wonder whether we could treat the goods as not covered by the description. The imported goods are to be treated as PVC sheets.
The next question is whether the entry 93 in Appendix 4 of P.B. for AM-84 would hit the import of these goods. Para 5 of Appendix 17 states that no import of item appearing in Appendix 4 shall be allowed against Rep. licence except if such item is specifically described for import either under column 4 or under column 5 or against an advance/imprest licence issued under this policy. PVC sheet is specifically mentioned in column 4. Hence even if the goods are held to be consumer goods under entry 93 of Appendix 4, it cannot be said that PVC sheets cannot be imported against the licence."
On these premises, the learned Counsel for the appellants submitted that exercise of the powers of confiscation under Section 111(d) of the Customs Act was entirely uncalled for in the present case as it is a longstanding practice of the Bombay Customs House to treat such import valid as stated above. We find force in the arguments of the learned Counsel for the appellants. In the case of Gujrat State Export Corporation v. Union of India, 1984 (17) ELT 50, the Hon'ble Bombay High Court under somewhat similar circumstances observed that if the Customs House has been treating identical imported goods as valid and was releasing the imports on previous occasions, it cannot be said that the import was in contravention of provision of Section 111(d) of Customs Act. The relevant observations of His Lordship runs thus :
"Section 111(d) of the Customs Act enables confiscation provided the import is contrary to any prohibition imposed by or under this Act or any other law for the time being in force. As two views were possible about the validity of the 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 and the imposition of fine in lieu of confiscation was wholly unnecessary. In my judgment, this ground itself is sufficient to dispose of the petition."
In the instant case, the defence of the appellants that earlier the same imported goods were treated as plastic goods/PVC sheets by the Bombay Customs House on previous occasions is not rebutted by the Department by any acceptable evidence available on record when it is settled law that if a charge of misdeclaration is made against an importer, it would be for the Department to establish the said charge by acceptable evidence, as held by this Tribunal in the case of Automotive Enterprises v. Collector of Customs, 1985 (22) ELT 283. Further* the case does not rest here. It was argued by the learned Counsel for the appellants that by the said assessment of the earlier identical goods by the Bombay Customs, the appellants had to pay in fact higher duty applicable to PVC sheets. In other words, he submitted that at the earlier occasion duty on decorative paper was to the tune of Rs. 19.809.06, whereas the appellants had to pay Rs. 29,777.72 as duty since the Bombay Customs House treated the imported goods as plastic goods liable to duty under Customs Tariff Heading 39.07 read with GET Item 15A. In other words, he submitted that in the instant case also the appellants had paid the higher duty leviable on PVC sheets. Thus, applying the ratio of the decision rendered in the case of Gujrat State Export Corporation v. Union of India, supra, and keeping in view of the fact that the appellants paid the higher rate of duty and earlier the identical goods imported by the appellants were treated as P"C sheets, we hold that the confiscation of the seized goods and the penalty imposed was not justified.
13. The learned Counsel for the appellants also contended that the charge of misdeclaration is not proved by the Revenue by any acceptable evidence. He further submitted that Vinyl Wall Coverings are PVC sheets. Since PVC stands for polyvinyl chloride, there is no misdeclaration in referring to Vinyl Wall Coverings as PVC sheets. Similarly, in the case of Acrylic Fur Cloth, there is no misdeclaration since the goods have characteristics of fur cloth and are made of acrylic with artificial or synthetic fibre. He further submitted that the Vinyl Wall Coverings contain 59% of PVC and since they are predominantly made of plastic, they had to be considered as PVC sheets. Further, the designs are all in the PVC portion and the paper was only a backing material. Since, according to him, as per Rule 3(b) of the Rules of Interpretation of the Customs Tariff, the goods are to be classified as if they consisted of the material which gave the goods their essential character, the imported goods in question have to be considered as only PVC sheets. He further submitted that since the licences were specifically for PVC Sheets and Artificial Fur Cloth, the importation in question against the licences under reference was valid. In the process, he also submitted that the PVC sheets imported can be used as decorative coverings of the plastic fabricated goods and artificial fur cloth is capable of being used in the manufacture of ladies hand bag, wallets, purses etc., hence, the importation was also valid on this count too. To substantiate his contention further he adopted the same reasonings which were recorded by the Collector of Customs, Bombay in the case of R.K. Aggarwal & Co., supra (already extracted above). From the impugned order, we find that the same pleas were advanced before the Collector of Customs. But curiously enough, the learned Collector of Customs did not advert himself to this question. The learned SDR for the respondent also could not point out anything in rebuttal. On the other hand, learned SDR frankly submitted that in the absence of any finding in the impugned order by the Collector of Customs on this point, she had no comments to offer. Under these circumstances, at the first blush, we thought it proper to remand the case for recording the findings on this issue by the Collector of Customs, but keeping in view the fact that we are allowing the appeal on other grounds also, the absence of any findings on this issue by the Collector of Customs need not detain us any further. On a careful reading of the items mentioned in column 4 of Sr. No. C-11-4 of Appendix 17 of Import & Export Policy applicable during the licensing year 1984-85, we find force in the arguments of the learned Counsel for the appellants. In the instant case, looking to the fact that PVC stands for polyvinyl chloride and contain over 50% of PVC - a fact not rebutted by the Department and the designs are all in the PVC portion and the paper was only a backing material - as shown to us during the arguments, -Vinyl Wall Coverings, the imported goods, are to be treated as PVC sheets as contended by the learned Counsel for the appellants cannot be brushed aside. In other words, it is not possible to brush aside the contention of the appellants when one looks to the material which gives the goods their essential character as laid down in Rule 3(b) of the Rules of Interpretation of the Customs Tariff. For similar reasons, the contention that the imported Acrylic Fur Cloth is to be treated as Artificial Fur Cloth as mentioned in column k of Appendix 17 of the said Import & Export Policy also cannot be brushed aside since the Acrylic Fur Cloth had the essential characteristics of the fur cloth and are made of acrylic which is artificial or synthetic fibre and may be used for making ladies hand bags, wallets, purses etc.
14. In the light of the foregoing discussions all the appeals deserve to be allowed, and are allowed. The impugned order is set aside with consequential relief.