Calcutta High Court
Collector Of Customs, Calcutta And Ors. vs Uday Engineering Enterprises And Ors. on 19 December, 1985
Equivalent citations: AIR1986CAL309, 90CWN800, 1986(9)ECC374, 1987(27)ELT234(CAL), AIR 1986 CALCUTTA 309, (1986) 9 ECR 134, (1986) 3 ECC 374, (1986) 90 CAL WN 800
JUDGMENT Anil K. Sen, J.
1. This is an appeal under Clause 15 of the Letters Patent. The Union of India and the Customs authorities are the appellants before us. The order challenged in this appeal is one dated August 30, 1985, passed by a learned single Judge of this Court in a writ proceeding which was registered as C. R. No. 10290(W)/84. By the order impugned the learned Judge allowed the writ petition of the respondents (hereinafter referred to as the writ petitioners) and directed release of the goods imported by the respondents under a contract dated September 27, 1982, on the basis of certain import licenses. The goods directed to be so released are said to be aligning tools (dial indicators).
2. The facts material for our present purpose are not in dispute. The writ petitioners purchased seven REP group of import licenses. REP license is a kind of license granted to an export house for importation of special types of goods for special use in the industry manufacturing the exportable goods. In the present case now before us the concerned licenses purchased by the writ petitioners authorised importation of goods described in A35 Appendix 17 of the Import Policy for 1984 and the description of the goods as set out therein is as follows :
"Special production aids for electronic industry, namely, wrapping and unwrapping tools, aligning tools, disoldering tools, I. C. extractors."
3. On the authority of the licenses so purchased, on September 27, 1982, the writ petitioners entered into an agreement to purchase and import Mitutoyo Brand Aligning Tools (Dial Indicators) with M/s. Mitutoyo Manufacturing Co. Ltd., Japan. In terms of the said contract Mitutoyo Manufacturing Co. despatched several consignments of such aligning tools. The writ petitioners presented Bills of Entry to the Customs authorities for assessment of duty and release of the goods. The Customs authorities thought that the goods so imported were not covered by the licenses and hence, refused to release the goods without holding an adjudication proceeding. But before any adjudication proceeding could be taken up, the writ petitioners moved this Court on July 24, 1984, with a writ petition out of which the present appeal arises on a prayer for issue of an appropriate writ for release of the goods by the Customs authorities. In the writ petition the writ petitioners pleaded on the basis of certain certificates issued by certain experts that the goods imported were aligning tools. It was further pleaded that the Customs authorities themselves had earlier allowed importation of self-same instruments on the authority of the same type of REP licenses.
4. In contesting the writ petition the Customs authorities filed an opposition. In that opposition they pleaded that the goods imported were precision measuring instruments and not aligning tools used as special production aids for electronic industry. It was further pleaded that such instruments were used for linear measurements. They were graduated in millimeter and used for measurement for the purpose of comparison of linear measurements like thickness, diameter etc. of an article though in some cases such instruments might be adopted for alignment of work piece or work piece fixtures with the aid of special accessories. In this affidavit the Customs authorities admitted that some clearance of similar goods under similar licence was allowed in the past but alleged, without furnishing any particulars, that such clearance was allowed because of wrong informations furnished by the importers to the assessing officers. It was, however, said that it had been decided to review all such cases.
5. The Customs authorities filed a supplementary affidavit in support of their original opposition. In this affidavit they disclosed the various proceedings undertaken by them since the filing of the disputed Bills of Entry for release of the imported goods in question. It was pointed out that the matter was placed before an Assistant Collector by the appraiser on March 19, 1984, and the Assistant Collector directed to check up whether the goods imported were covered by the licenses. In paragraph 5 of this supplementary affidavit it was, however, clearly admitted that previously several Bills of Entry were received for clearance of such and other precision measuring instruments under similar REP licenses and in some cases clearance had been allowed although, according to them now, those were not covered by the licenses. In the minutes thus disclosed there was no suggestion that such earlier release was made on any wrong information. But because of such divergence of views, the matter was brought to the notice of the Deputy Collector. The Deputy Collector took the view that the goods imported were not covered by the licenses but he advised an enquiry as to whether similar goods had been allowed to be imported on similar licenses by the Customs authorities at Bombay. Since the Bombay Customs authorities did not own up release of any such goods, it was decided to initiate an adjudication proceeding.
6. The writ petitioners filed rejoinders to such opposition and they categorically denied the suggestion that similar goods were earlier cleared on similar licenses on any wrong informations supplied. They took the plea that the Customs authorities never held the goods imported to be not covered by such REP licenses. They reasserted that the goods imported were really covered by the licenses. In any event, they relied on a decision of the Member, Board of Central Excise & Customs to the effect that once the authorities allowed release of certain goods on the basis of a particular type of license, they could not penalise the importers for importing such goods later on the view that such goods were not covered by the licenses unless the authorities issued a public notice rectifying their previous erroneous decision.
7. On these averments and affidavit evidence, the learned Judge proceeded to dispose of the writ petition. He took the view that, since the Customs authorities had earlier released such goods when imported on similar licenses, their present decision not to do so would be arbitrary though, according to the learned Judge, the writ petitioners were not entitled to lake the plea of res judicata or estoppel by the records. The learned Judge thought that there existed no justifiable grounds for differing from the earlier decision of the appraisers that such goods were covered by similar licenses and the present appraising authority could not resile therefrom "simply on the ground that he does not agree with the previous order or decision". In that view, the learned Judge allowed the writ petition and directed release of the goods. Feeling aggrieved, the appellants have now preferred the present appeal.
8. We have heard the learned counsel for both the parties and we have carefully considered the respective contentions put forward before us. In our view, the principal issue involved is as to whether aligning tools (dial indicators) are covered by the REP licenses on the basis of which they are being imported. It would be so covered if they fulfil two conditions, namely, (a) that they are aligning tools in the strict sense of the term and (b) that even so they can be said to be special production aid to an electronic industry. Unless the goods fulfil the aforesaid two conditions, they cannot come within the cover of the licenses in view of the description set out in A35 Appendix 17 of the Import Policy referred to hereinbefore. Though the writ petitioners are claiming that the goods imported are aligning tools, they are not specific enough to say that such goods are special aids to the production in electronic industry. They have relied on certain expert opinions in support of their case, but no final decision can be arrived at merely on those opinions. The Customs authorities in their affidavit have taken the stand that such goods are precision measurement instruments though they can be used for aligning purpose with the aid of accessories. The view of the Customs authorities has been sought to be supported by the evidence of an expert Dr. Mrs. Chowdhury who while specifying that aligning tools are used in electronic industry, has not categorically overruled the claim that such dial indicators as are being imported are of no special aid to such an industry. Therefore, in our view, the materials on records are not sufficient to enable us to come to a definite conclusion as to whether the aligning tools (dial indicators) really answer the description of the goods specified in entry A35 Appendix 17 and hence are covered by the licenses. Moreover, the issue is such that no final decision can or should be arrived at except upon a thorough adjudication based on expert's evidence. The Customs authorities have relied upon a subsequent decision of their own in an adjudication initiated after the initiation of the present writ proceedings. We are, however, not satisfied that it would be safe on our part to act on the said decision when such a decision had been taken more or less on an ex parte adjudication where no expert evidence other than the report of Dr. Mrs. Chowdhury was taken into consideration.
9. Although such is the position with regard to the goods now under consideration we are, however, unable to agree with the learned trial Judge that there existed no justifiable ground for differing from the earlier decision of the Customs authorities directing release of similar goods. It is well established before us that the Customs authorities at the level of appraisers did allow importation of similar goods on the basis of similar licenses previously. Although in the original opposition it had been claimed that such importation was allowed and the goods were released on the basis of wrong information supplied by the importers, the Customs authorities have failed to satisfy us that there was any wrong information or any misrepresentation in the matter of previous release of such goods on similar licenses. The fact remains that such goods were released earlier and if they are not really covered by the licenses they were so released due to the error on the part of the appraisers. The Customs authorities, however, had sufficient materials before them to doubt the correctness of the earlier actions taken by the appraisers. The proceedings disclosed in the supplementary affidavit filed by the Customs authorities clearly go to show that there exist bona fide grounds for them to doubt the correctness of their previous decision to release similar goods under similar licenses. That being the position the short question which is to be decided by us is as to whether the Customs authorities should be allowed to hold an adjudication for deciding whether the goods are really covered by the licenses. The learned trial Judge has himself held that previous decision would not operate as res judicata and he has also held that there would be no estoppel as against the Customs authorities on record. We are of the view that the learned Judge was right in taking such a view. An importer, in our opinion, is expected to know on the terms of the license what actually are the goods which could lawfully be imported on the basis thereof. If the goods are not within the sanction of importation under a particular type of licenses, an error on the part of the appraising authorities on any previous occasion will not confer any right upon the importers to import such goods again on the basis of similar licenses. It is also an accepted principle that if the Customs authorities had been in error in not appreciating on any previous occasion that some goods not really covered by the license were being imported on the basis of such license they cannot be made to be embedded in the error for all transactions in the future. They have every right to correct their own error and if such correction requires an adjudication it would not be just and proper for this Court to refuse them an opportunity to do so. The learned trial Judge has relied on the observation of a learned single Judge of this Court in the case of Mercantile Express Co. Ltd. v. Assistant Collector of Customs, . That was a case which involved the interpretation of the tariff schedule. The question raised was as to whether certain goods should be assessed as coming under Item 63(28) of Schedule 1 of the Tariff Act or under Item 63(9). The learned Judge, upon construction of the tariff schedule came to the conclusion that it comes within Item 63(9) of the schedule and not under 63(28) as claimed by the authorities in the case before the learned Judge. Having come to his own conclusion the learned Judge then proceeded to observe that even earlier the authorities themselves had assessed the same goods under item 63(9) and not under item 63(28) of the said schedule and it was further observed that they having decided as such earlier they cannot go on changing their mind from time to time and thus assess different assessees at different rates on the same article. It was in that context it was observed that "The Customs are bound by their own precedents in administering taxing statutes involving the very basis of taxation in respect of particular article and not leave it to them to modify their own previous decisions but to leave it to them to apply to the Courts or Parliament or legislatures as the case may be to put the law beyond doubt." That was a case where the Court was dealing with interpretation of a taxing statute. This decision again, in our opinion, is clearly distinguishable for the simple reason that in that case unlike the present one there was no dispute about the nature of the goods. There, it was not an issue on fact, the goods being what they were, the issue raised was one in regard to interpretation of the two entries of the Schedule for deciding which of the entries really covered the goods. But in the case now before us the dispute is with regard to the nature of the goods sought to be imported. There is no dispute regarding the entry in the present case which as we have indicated hereinbefore speaks of aligning tools which could be used as special aid for the electronic industry. The dispute is with regard to the nature and character of the article sought to be imported. The mere fact that the appraising authorities had on an earlier occasion failed to appreciate that the goods actually imported had not answered the description as above and, as such, were not covered by the licenses cannot be compared with a decision rendered on the interpretation of a particular entry in the schedule to the Tariff Act. A factual error, in our opinion, can always be corrected and the authorities cannot be enforced to stick to such error if once committed. It is true that although as an importer the writ petitioner was required to know for themselves what exactly are the goods which answer the description referred to hereinbefore and incorporated in the license, but the fact of earlier release of similar goods might have misled them in not ascertaining as to whether such goods really come within the cover of the license or not. This, contention in our opinion, is to be taken into consideration for the purpose of deciding whether any penalty should be imposed and if such a penalty is to be imposed whether the same should be nominal or not But that by itself cannot be a ground for disentitling the Customs authorities from holding an adjudication particularly when on such adjudication alone it can finally be decided as to whether the goods sought to be imported really answer the description of the goods permitted to be imported under the disputed license.
10. The learned-Judge has rightly commented on the failure of the Customs authorities from holding such an adjudication proceedings all these months either prior to the writ proceeding or even thereafter when there was no injunction restraining them from holding as such. That indeed was a lapse on the part of the customs authorities though they have explained their position by saying that once the matter was brought before the High Court in the writ proceedings they refrained from taking any steps at their end which may be construed as a parallel adjudication. That being the position, we are unable to agree with the learned trial Judge that the goods should be released without allowing any adjudication proceeding to be taken up by the customs authorities. In our opinion, it is a fit case where there should be an adjudication and adjudication based on expert evidence to determine whether the goods sought to be imported, namely, aligning tools (dial indicators) are really aligning tools or not and if so whether they can be said to be special aids to the electronic industry in its productive process. The customs authorities, however, must guide themselves by the direction in parallel case issued by the Member, Board of Excise and Customs, namely, that if they have erroneously allowed release of such goods at an earlier stage they cannot penalise such importation at later stage until the error is found and notified. For the purpose of finding out whether the earlier release was erroneous or not we allow the adjudication by modifying the order of the learned trial Judge. But we further direct at the same time that all the goods be released keeping three samples thereof for the purpose of adjudication -- one of the sample being left with the writ petitioner. Such release should be made as and when the writ petitioners furnish bank guarantee to the extent of Rs. 30,000/- to be held by the customs authorities until the conclusion of the adjudication proceedings so that in the event any nominal penalty is to be imposed that can be realised from the bank guarantee. We make it clear that primary object of adjudication would be to determine whether the goods imported answer the description of the goods specified in the licence and in the event it is adjudged that it is not so covered, the appellants will not be entitled to impose any penalty other than a token one following their own precedent referred to hereinbefore. The parties will be given liberty to mention the matter once more if due to the subsequent proceedings any case for further direction becomes necessary.
11. The appeal and the application are disposed of accordingly.
12. Let operative part of this order be forthwith communicated to the appellant, Collector of Customs as also to the Union Bank of India, 15, India Exchange Place, Calcutta.
S.K. Mookerjee, J.
I agree.