Customs, Excise and Gold Tribunal - Delhi
Raymond Woollen Mills Ltd. And Voltas ... vs Collector Of Customs on 30 June, 1986
Equivalent citations: 1986(26)ELT962(TRI-DEL)
ORDER I.J. Rao, Member (T)
1. First mentioned two appeals, filed by M/s. Raymond Woollen Mills Ltd., Bombay emanate from a common Order-in-Appeal passed by Central Board of Customs & Excise. Third appeal, which is by M/s. Voltas Ltd., Bombay arose out of same imports but the proceedings, which have been received by the Tribunal for being disposed of and treated as an appeal, was a revision application filed' before the Central Government, against an Order-in-Revision passed by the Collector of Customs, Bombay, being Order No. SG/Misc-33/2/78A _________________ Z/10-46/78-LSIIB dated 19-8-1978. Since the issue involved in these three appeals are interconnected, all the three were heard together, and are being disposed of accordingly by one consolidated order.
2. Brief facts of the matter are that M/s. Raymond Woolen Mills Ltd. (hereinafter referred to as 'Raymond') imported on 16-K1978 60 drums, "oxytetracycline hydrpchloride" and these goods were sought to be cleared under two Import Licences Nos. 2797359 & 2797752 issued on 10-8-1977 & 17-8-1977 which in the opinion of the Customs did not cover the goods. The Customs alleged that the Indent for the goods imported having been placed sometime during the beginning of Nov., 1977 and the L/C for the item having been opened only on 1-11-1977, the date of amendment of description of goods in the L/C licences produced for clearance were not valid for the subject importation in terms of para 106(i) of I.T.C. Policy Book (Vol. II) for AM '78, read with ITC Public Notice No. 78-ITC(PN)/77, dated 27-9-77. This Public Notice placed restrictions on import of Oxytetracycline which till then could be imported without such restrictions. It is also alleged that the Indent No. 41018 dt. 2-9-1977 for the single item "Oxytetracycline" produced was a fabricated indent prepared sometime during Nov. 1977. (t. is', also alleged that the goods were under-valued and the importers sought to evade payment of Customs Duty amounting to over Rs. 32,000/-.
3. After issue of a Show-cause Notice and hearing, the Collector of Customs, Bombay held that there was no firm commitment by the appellants (Raymonds) for the import of 'Oxytetracycline' so as to take advantage of ITC Public Notice No. 78/77 dt. 27-9-1977. He, therefore, held that the licences did not cover the consignment and were liable to confiscation. The Collector further held that the commission locally payable was clearly a part of the cost of the goods imported and waif to be included in the value Under Section 14 of the Customs Act,/1962. He also held that M/s, Raymond as well as the indentors, M/s Voltas Ltd. (hereinafter referred to as 'Voltas') were liable to penalties and the goods were liable to confiscation. He confiscated the goods but gave an option for redemption of the same on payment of a fine of Rs. 3,80,000/- and imposed penalties of Rs. 2,00,000/- on Raymond and Rs. 1,00,000/- on Voltas. The Central Board of Excise & Customs, the appellate authority upheld these orders and hence the Revision Application filed before the Government of India which on transfer to the Tribunal are being dealt with appeals.
4. We heard Shri K.M. Desai & Shri A.S. Bosewalla, Advocates for the appellants and Shri P.K. Ajwani, SDR for the respondent. The following questions come up for decision in these two appeals :-
(1) Whether the licences cover imported goods consisting of "Oxytetracycline". This question would be resolved oh the basis Of answer to other questions, viz.-
(a) Was there a firm commitment by way of an indent and opening of Letter of Credit prior to 27-9-1977 when ITC Public Notice Nos. 78/77 were issued.
(b) Could the Public Notice restrict or prohibit importation under the licences already issued? (According to the import licence, Oxytetracycline Hydrochloride" could have been imported but for the issue of the public notice).
(2) If the confiscation was correctly ordered whether Raymonds were liable to a penalty.
(3) Was the indenting commission paid locally includible in the value for assessment Under Section 14 of the Customs Act?
(4) Is the penalty imposed on Voltas justified?
5. The first question is of utmost importance. The learned counsel for Raymonds argued that the Department did not prove the substitution of indent and proceeded merely on presumption. Further he submitted that Public Notices could not take away right conferred by import licence which was issued well before the issue of the Public Notice. He referred to Clause 3 of the conditions of licence which was as follows :-
"This licence shall also be subject to the conditions applicable to the class of importer concerned under the import policy for Registered importers and as contained in Chapter V of the relevant Import Trade Control Hand Book of Rules & Procedure in force on the date of the issue of the licence, of any amendments thereof made upto, and including the date of issue of the licence unless otherwise specified."
(emphasis supplied)
6. The Id. counsel submitted that in the light of this clause only conditions applicable and in force on the date of the issue of the licence or any amendment thereof made up to and including the date of issue of the licence can be enforced and not conditions and amendments which were brought in after the issue of the licence. He argued that only those conditions which appear in the Policy Book AM '78 were enforceable and not the contents of the Public Notice which came into force later. The Id. counsel submitted that vested rights could not be taken away and that Import Policy was not "regulation" but only issue of licence. According to him, the import policy was not law. Only Import & Export Control Act was law and Section 3 thereof empowered the C.G.I.E. to issue import licences. He cited the order passed by C.B.E.C. in M/s. Arvind Exports Pvt. Ltd, and filed a copy thereof (Order Nos. 174-176/82-CBEC). In support of his argument that Public Notice is not statutory, the Id. counsel cited A.I.R. 1962 SG 1893 (M/s. East India Commercial 'Co. Ltd., Calcutta and Anr. v. Collector of Customs, Calcutta). In this context, he cited another judgement of the Supreme Court in Bharat Barrel and Drum Mfg. Co. (P) Ltd. v. Collector of Customs, Bombay - A.I.R. 1971 SC 704 and also A.I.R. 1968 SC 718 (Union of India and Ors. v. Anglo Afghan Agencies). He emphasised that Public Notices were issued by C.C.I.E. and not the Govt. of India.
7. With regard to valuation, learned counsel reiterated the grounds mentioned in the appeals and submitted that M/s. Voltas were not indenting agents but merely a seller through Volkart Bros., Swi and. He denied that the payment of 10% of value to Voltas was indenting service charges and referred to the statement of Mr. Ramu of Voltas dt. 20-3-1973. He submitted that the alleged excess value, was not debited to the licence, and the alleged substituted indent was never produced to prove any such substitution. In view of this, learned counsel submitted that the confiscation was not justified and that the penalty was not warranted. '
8. Shri R.J. Joshi appearing for Voltas referred to the arguments advanced on behalf of Raymonds and added that Volkarts were not persons concerned in the importation of the goods and were not liable to a penalty under Section 112 of the Customs Act.
9. Shri Ajwani, Id. SDR opposing the arguments, submitted that Public Notices are legally binding as those issued by ;the same authority who issued policy itself. He also claimed that the Public Notices are published in the Gazette of India and that the General Clauses Act contains provisions to show that the Public Notice is statutory. He further referred to Order No. 17/55 quoted in the licence and stated that this order of 1955 as amended subsequently was binding on the parties. According to the conditions printed on the fact of the licence, amendment till arrival of the goods govern the imported goods. The word "subsequent" appearing in the condition, according to the Lt. SDR, referred to the date of issue of licence and orders issued subsequent to such dates. He placed reliance on the words 'unless otherwise specified appearing in the condition of the licence and submitted that a Public Notice is, as such, binding. Referring to the Case Law cited by the appellants, Shri Ajwani argued that the Case Law related to the years 1962 &"" 1963, but the condition might have changed later. Referring to the order passed by Sh. J. Dutta in his capacity as Member of C.B.E.C. in M/s. Arvind Exports Pvt. Ltd., Shri Ajwani, SDR submitted that the same authority in other orders changed his views, (however, Shri Ajwani did not cite any particular order in which the changed views were expressed by the said authority). Because of the change, Shri Ajwani submitted that the persuasive value of the order is diminished.
10. Referring to A.I.R. 1968 SC 718 cited, by the appellants, Shri Ajwani countered that the Public Notice in question was issued by the Textile Commissioner and not by the C.C.I.E. He further submitted that Supreme Court's powers were considerably wider than those of CEGAT. Similarly, the judgment in (supra) concerned itself with a Public Notice issued by the Iron & Steel Controller and is, therefore, not relevant to the present, proceedings. He further submitted that indenting commission called by any name like service charges (as is the case in the present proceedings) is nothing but indenting commission and should be added to value. He drew our attention to the considerable amount involved here which was as much as 10% of the value of the imported goods. He justified the penalty on both parties as also the confiscation of the goods in the circumstances.
11. We have considered all these arguments carefully. The first question that falls for consideration is; the validity of the Licence. While deciding this, the main question that comes up in this context is whether a Public Notice issued by C.C.I. & E. subsequent to the issue of licence would affect the licence or not. The appellants argued that according to the conditions of the licence, especially the 3rd clause printed on the reverse of the licence, only those conditions in force on the date of the issue of the licence are effective. The Revenue's argument that the licence is governed by Public Notices issued up to the arrival of the goods has been examined by us. The Revenue placed reliance on the following condition which is printed on the face of the licence :-
"This licence is granted under the Government of India, Ministry of Commerce and Industry order No. 17/55 dated the 7th December, 1955, as subsequently, amended, issued under the Imports and Exports (Control) Act, 1947 (XVIII of 1947) and is without prejudice to the application of any other prohibition or regulation affecting the importation of the goods which may be in force at the time of their arrival."
This condition has necessarily to be read with clause 3 of the other conditions of the licence which we have referred to earlier but reproduce here once again :-
"This licence shall also be Subject to the conditions applicable to the class of importer concerned under the import policy for Registered importers and as contained in Chapter V of the relevant Import Trade Control Hand Book of Rules & Procedure in force on the date of the issue /of the licence, or any amendments thereof made upto, and including the date of issue of the licence, unless otherwise specified."
Reading these two conditions together, it would appear that the intention of the conditions printed in the licence is to ensure that goods importation of which is prohibited under any other law are not imported on the strength of the licence. The wording of the conditions itself refers to "other prohibition or regulation". Examined in this light, both the conditions can be constructed and construed harmoniously and the position appears to be that while all conditions in force on the' date of the issue govern the licence, later conditions did not govern it. We have in this context examined the claim of the appellants that a Public Notice is not binding. We reject this argument straightway as the Public Notice is issued by the same authority who issued the Policy Book and the appellants having accepted to follow the Policy Book cannot very well say that a clarification amendment or other change in the policy issued in the form of a Public Notice is not binding; While there can be a question whether a Public Notice would have retrospective effect, we do not have any doubt till that a Public Notice is binding.
12. In this context we have carefully referred to the Case Law cited by the appellants. The Board's order passed by Shri J. Datta on 23-12-1981, contains the following observations :-
"The Board has considered the different contentions of the appellants. The Board finds that the ITC Public Notice No, 29/81 of 5-6-1981 canalising the importation of tallow of animal original as imported in this case has been issued for the Policy period April, 1981 to March 1982. The Licences in question have, however, been issued during the period' 1980-81. The Board also observes' that the earlier orders of the Board cited by the appellants contain clear findings which are binding on the subordinate authorities that the licence issued during a Policy period is governed by the policy as amended up to the date of issue of the licence and amendments made after the date of issue do not have any application to the licences. The Board is also in agreement with the contention; of the appellants that the Additional Collector was wrong in referring to the general, condition subject to which import licences are issued applying prohibitions or regulations imposed under other enactments to the imports under the licence. In the facts of the case, as the restriction sought to be Imposed is not under other enactments, but under the very Imports (Control) Order which the licences were issued, the Additional Collector's interpretation was wrong."
The view of the Board which does not bind our judgement but has persuasive value, the order having been passed by an officer who has not only knowledge of Import (Control) Act & Procedures but also immense experienced in the field. The order itself sounds logical and the argument of the Id. SDR that the authority who passed this order later changed his view (a claim which was not substantiated) does not diminish the persuasive' value of this order. Incidentally the original orders in all these three appeals were passed by the same officer as Collector, who passed the later appellate order, cited before us, and referred to above. We should also observe that no Subsequent order where a very different view has been taken by the Board has been cited before us.
13. In (supra), the Hon'ble Supreme Court was examining a matter in which the appellants before the Court imported electrical instruments from U.S.A. and pleaded that the proceedings against them for confiscation of the goods under the Sea Customs Act were not legal as the Collector can confiscate only when there is an import in contravention of an order prohibiting or restricting it whereas in the instant case before the Supreme Court, the Collector was proceeding to confiscate on the ground that a condition of the licence under which the goods have been imported had been disobeyed. This judgment: is not of direct relevance to the present proceedings. In (supra), the Supreme Court held that the Public Notice issued by the Steel Controller was not retrospective. In that case, the appellants before the Court obtained two licences for importing steel sheets in June, 1962 and imported the same. The Supreme Court (para-5) observed that "the condition that the sheets imported must be of "prime quality" was imposed for the first time by the Iron and Steel Controller's Public Notice dated December 6, 1962 and could hot obviously apply to the sheets imported under the two licences which were issued earlier." In para-6 of the same order, the Supreme Court observed as follows :-
"The Officer who heard the revision applications on behalf of the Central Government was of the view, and rightly, that the Public Notice No. I/I-S/62, dated December 6, 1962 of the Iron and Steel Controller had no retrospective operation and the condition of "prime quality" could not be applied to the sheets imported under the licence issued before that date. But in his view, one of the two licences e.g., licence dated June 13, 1962, covering the consignments was issued specifically for 18 guage sheets, while sheets of different sizes, including 18 (guage were imported against that licence and on that account consignments covered by the licence "had to be treated as unauthorised"."
14. In Union of India and Ors. v. Anglo Afghan Agencies etc., (supra), the facts are not similar to those in the appeals before us. We are not, therefore, going into that decision at length.
15. In addition to the Case Laws cited, we have also perused the decision of the Central Board of Excise and Customs (three Members sitting on the Bench) dated May 28, 1982, reported in 1982 ECR 530(CBEC). They were examining the validity of the licences in respect of import of Palm Stearin. In paras 40 & 40.1, the Id. Members observed as follows "40. The Board has also considered "The I.T.C. Public Notice No. 48/80 dated 9-12-1980 issued for amending serial No. 5(4). of Appendix 9. This amendment makes it clear that the particular serial number will not cover Palm Stearin, Palm Kernel Oil etc. which have been simultaneously included in Appendix 3 as banned items of imports.
40.1 The Board has no hesitation in axiomatically stating., that such amendments can have only prospective effect. This position has been clearly accepted in different judicial and quasi-judicial pronouncements."
16. In another judgement reported in 1984 ECR 301 (CEGAT Bombay) ( Patel Impex Pvt. Ltd. v. Collector of Customs), the West Regional Bench of the CEGAT was examining the effect 'of amendment of Import Policy by Public Notice. In their order, they observed as follows:-
"8. We have given careful consideration to the submissions of both sides. We shall first deal with the effect of the amending notice No. 48 of 9-12-1980. The notice, on the face of it, does riot indicate that it has any retrospective effect. It does not say : "the following amendment shall always be deemed to have been made" or words to that effect which are customarily employed in retrospective legislation. (This is quite apart from the question whether any retrospective amendment could be made). On the other hand, the operative portion says : "In the existing entry No. 368, the following shall be added at the end..." (emphasis supplied by us). The words added ("Palm stearing/palm kernel oil") were simply, not there in entry No. 368 before the entry was amended by Notice 48 of 9-12-1980 and were added by the notice.
8a. Apart from what is stated above, the Id. counsel for Patel Impex has cited certain judicial pronouncements which support his contention. In the case of Bharat Barrel and Drum Co., the Supreme Court (AIR 1971 SC 704) held with reference to a Public Notice dt. 6-12-1962 issued by the Iron and Steel Controller (which, for the first time, imposed a, condition that steel sheets imported must be of "prime quality") that the notice could not obviously apply to, the sheets imported under the Licences which were issued earlier. It had no retrospective operation. Similarly the Supreme Court in the Cannanore Spinning & Weaving Mill case - 1978 ELT (J375) interpreting the effect of Central Government Notification of 16-2-1963 (which defines "hanks"), held that it had not retrospective effect and that the said definition could not be made use of for the purpose of Notification dated 15-9-1962, which it amended. This was despite the fact that the notification of 16-2-1963, in terms, said that it shall be deemed to have taken effect from 17-8-1962, the Court further held that the Central Excise law did not confer any retrospective rule making power on Government.
In the Stretch Fibre case (Misc. Petition No. 1419 of 1979) decided on 9-10-1981 January, 1980 by the Bombay High Court,, the matter was about certain import replenishment and other benefits under the Import Policy for registered exporters as were permissible on the date registered contracts for export the overseas buyers coupled with certain duty benefits. These were sought to be subsequently restricted. Following the ratio of the Supreme Court judgement in the Bharat Barrel case, the Court held that the policy in the Public Notice of 28-2-1979 was clearly prospective. There was nothing to indicate that it would apply to the case of an import already made and endorsement already validly made on the licence by the licensing authorities."
17. In the light of this Case Law, we are of the opinion that the submissions made by the Id. counsel for Raymonds are valid. The Public Notice must be held to govern only licences issued after its issue and not those licences which were previously issued. Therefore, we hold that the present importation is covered by the licences produced by the, appellants, as these licences were issued prior to the Public Notice which imposed restrictions on the import of Oxvtetracvcline.
18. This finding would render examination of other issues unnecessary. Whether there was substitution of the indent is also not a point which would remain material for a decision of these arguments. We, therefore, do not go into the same.
19. In so far as the valuation is concerned, we agree with the finding of the Board that the amount paid to Voltas should form part of the value of the imported goods. We agree with the observations of the Collector and that of the Board that indenting commission by whatever name it is called - here it was called service charges - is nothing but indenting commission.
20. In the light of this finding, we allow the appeal in so far as the validity of the licence is concerned. As the value sought to be excluded from assessment amounted to only 10% of the total value, we take a lenient view and reduce the fine imposed from Rs. 3,80,000/- to Rs. 10,000/- only. The penalty on M/s. Raymonds Woollen Mills is, reduced from Rs. 2,00,000/- to Rs. 5,000/- only. The penalty on M/s. Voltas is Set aside.
21. The appeals are disposed of as indicated above.