Customs, Excise and Gold Tribunal - Delhi
Subhash Woollen Mills (P) Ltd. vs Collector Of Customs on 6 February, 1992
Equivalent citations: 1992(40)ECR557(TRI.-DELHI)
ORDER S.L. Peeran, Member (J)
1. The appellants are importers of woollen rags. They had imported 50 bales containing 18,988 Kgs. of woollen rags per s.s.v/Bhakti valued at Rs. 1,25,168 CIF for bill of entry No. 500/80. The.importers claimed clearance of the imported goods under OGL. The Customs House did not consider the goods to be falling under OGL for the following reasons-
i) The goods had been declared as woollen rags. On examination of the goods, it was found that 60% of this consignment is synthetic rags and balance 40% as woollen rags. The department contended that the effective rate of duty on synthetic rags is 80% as against 20% on woollen rags. Hence, the importers were charged for misdeclaration of description of goods and held the same to be confiscable under Section 111(m) of the Customs Act, 1962;
ii) The rags were not in completely pre-mutilated condition as required under para 37 in Appendix 6 AM/85-88 Policy. It was alleged by the department that the goods were cut into two pieces which could be economically restitched and hence, the goods could not be treated as pre-mutilated goods. Therefore, these goods were held to be liable for confiscation under Section 111(d) of Customs Act, 1962 for ITC violation;
iii) The department also alleged that the goods had been imported in contravention of the provisions of Sub-section (1) of Section 3 of the Imports & Exports (Control) Act, 1947 read with Clause 3 of the Imports (Control) Order, 1955. They were also charged for contravention of Section 11 of the Customs Act, 1962.
2. The importers had contended before the customs authorities that only a portion of the consignment is synthetic rags and not 100% synthetic rags. They had further contended that the goods had not been properly mutilated as their supplier was not aware of the mutilation requirement. They requested the Customs authorities for clearing the goods after mutilation of goods.
3. The Deputy Collector of Customs, after adjudication, held that 60% of the goods were synthetic rags as against the declared description. She has further held that mis-declaration had not been detected, then it would have caused considerable loss to the Revenue and therefore, she had held that the goods had been imported in violation of ITC Policy as they had not been properly pre-mutilated. On these two grounds, she passed an order of confiscation under Section 111(d) and (m) of Customs Act, 1962. However, the importers were given an option on payment of redemption fine of Rs. 22,000/- under Section 125 of the Customs Act. The importers went in appeal before the Collector (Appeals) who did not consider their appeal.
4. I have heard Shri Hari Om Arora, learned Advocate for the appellants and Shri Rakesh Bhatia, learned SDR for the Revenue. Shri Arora submitted that the importer had filed a revised bill of entry declaring the correct percentage of synthetic woollen being 60% and balance 40% as woollen rags. This revised bill of entry was accepted by the Customs house and, therefore, the question of misdeclaration does not arise once the bill of entry is accepted under Section 46 of the Customs Act. He relied on Sub-section (5) of Section 46 of the Customs Act and submitted that once the proper officer is satisfied that the interest of Revenue are not affected and that there was no fraudulent intention, the proper officer may permit substitution of bill of entry for home consumption for a bill of entry for warehousing or vice-versa. Shri Arora pointing to this Sub-section (5) of Section 46 of the Customs Act, submitted that the proper officer had accepted the revised bill of entry and it implies that there was no fraudulent intention on the part of the importers in submitting the earlier bill of entry showing synthetic woollen containing 100%. He submitted that the importer was not aware regarding the percentage of the content of the woollen rags as the invoice had not disclosed about the same. As the proper officer after scrutiny, had accepted the revised bill of entry, no fraudulent move can be made by the importer in this regard. As regards the question of import of rags in two pieces, he relied on the ruling rendered by the Tribunal in the case of Kakkar & Co. ] and also contended that this ruling has been confirmed by the Supreme Court. He also placed before me the ruling of this Tribunal in the importer's own case as rendered in order No. A-303-328/89 dated 9.8.1989. The Bench has taken the view that 'Synthetic rags/woollen rags' cut into two/three pieces or in two pieces wholly available are to be taken as completely mutilated even if it is felt that the mutilation is not sufficient, the Customs authorities would have ordered further mutilation on the analogy of Section 24 of the Customs Act. Therefore, the import in that case was held valid under OGL. Against this judgment of the Tribunal, the department filed their SLP No. 12523-26 and the same was dismissed by the Hon'ble Supreme Court observing as follows:
In view of the facts found by the Tribunal, it is clear that the goods were rags as contained bills of entry, there is no dispute. The only question in dispute that was raised was that the rags were not completely mutilated and these are retrievable and are restitchable. The Tribunal went into the question and had exhaustive discussion, took into consideration all the relevant facts and also that the goods were not available and as such no further mutilation was possible, came to the conclusion that the order of the Collector was not sustainable. The appeal was allowed. We find no, ground to entertain this petition. The petitions are, therefore, dismissed.
Shri Arora also relied on the ruling in the case of Re-Hind Hosiery Mills 1982 (10) ELT 424 : 1981 ECR 117D (CBE and C).
5. Shri Rakesh Bhatia, SDR submitted that admittedly, the bill of entry filed in the first instance, had disclosed that the importer had declared synthetic woollen content to be 100% while on examination, it was found that the content was only 60%. Therefore, the charge of mis-declaralion was fully established and hence, redemption fine imposed was justified.
6. I have carefully considered the submissions made by both the sides and perused the rulings submitted by the learned advocate. As regards the allegation that the importer had violated the Import Policy in importing rags without mutilation, is now covered in favour of the importer by the ruling rendered by the Tribunal in the case of Kakkar & Co. which has been confirmed by the Supreme Court. This bench in the importer's own case in order No. 303-328/89-NRB dated 9.8.1989 (supra), has also granted relief to the importer. The only question which remains for my determination is whether there is a mis-declaration in the bill of entry with regard to the percentage content of synthetic yarn. The appellants have submitted that the Customs house had accepted the revised bill of entry which discloses the correct percentage of synthetic yarn. As Sub-section (5) of Section 46 clearly lays down that the proper officer may accept the revised bill of entry if he is satisfied that the interest of Revenue was not prejudically affected and that there was no fraudulent intention on the part of the importer. I have examined the revised bill of entry filed in the case, a copy of which has been produced before me. The proper officer having accepted the revised bill of entry and lower authorities also having not given any finding on the fraudulent intention of the importer in the first instance in filing the bill of entry; the lower authorities again now say that the importer had is-declared the goods in the bill of entry, I am satisfied that the importer has made out a case as regard this charge and in the facts and circumstances of the case, the imposition of redemption fine is not justified and the same is set aside.
6A. The appeal is allowed with consequential relief.