Customs, Excise and Gold Tribunal - Delhi
Gulab Impex Enterprises Ltd. vs Collector Of Customs on 20 January, 1988
Equivalent citations: 1988(15)ECC318, 1990(46)ELT109(TRI-DEL)
ORDER G.P. Agarwal, Member (J)
1. Being dissatisfied with the confiscation of the imported goods viz., 700 packages of 35000 kgs. of Cinnamonum Zoylanicum with option to redeem the same on payment of redemption fine of Rs. 5,00,000/- under Section 125 of the Customs Act and also imposition of a personal penalty of Rs. 1,00,000/- on the appellant Shri Satish Bansal, both the appellants have filed the present appeals.
2. Factual backdrops: The appellant M/s. Gulab Impex Enterprises Ltd., New Delhi filed an Into-bond bill of entry through their employee Shri Vishnu Kumar Sharma on 23-2-87 for clearance of 700 packages of 35000 kgs. of Cinnamonum Zoylanicum claiming clearance under O.G.L. Appendix -6, Item No. 37 List-4, Serial No. 47 of the Imports and Exports Policy 1985-88 as the import of Darchini (Bark) was admissible under O.G.L. vide Item 47 of List 4. Since according to the Department the said Item 47 of List 4 was deleted vide I.T.C./Notice No. 121-I.T.C.(PN)/85-88 dated 6-10-86 and further import of Darchini (Bark) was canalised through Public Sector Agncies, the import was prima facie not admissible under O.G.L., the Department started investigation and record the statement of the appellant Shri Satish Bansal, Director of M/s. Gulab Impex Enterprises Ltd. The statement of Shri Vishnu Kumar Sharma, employee of the appellants was also recorded. As a sequence thereof show cause notices calling upon both the appellants and also Vishnu Kumar Sharma were issued to show cause as to why the goods under import be not confiscated under Section lll(d) of the Customs Act, 1962 and a personal penalty be not imposed upon them under Section 112 of the Act. In reply, the appellants inter alia contended that the said ITC Public Notice No. 121- ITC (PN)/85-88 dated 6-10-86 said to have been published on 6-10-86 was not, in fact, made available to the Public on the same day and had been reported in the Press two days thereafter, and therefore, the said Public Notice takes effect only from the date when the Offical Gazette notifying the said Public Notice was circulated and put on sale to the public. And since the appellants had entered into firm commitment with the foreign suppliers for the import of the goods in question even before the goods were omitted from the O.G.L. List on 6-10-86, the goods were eligible for import under O.G.L. and deletion of this item did not have any relevance. It was further contended that the appellants applied to the Bank of Rajasthan Limited for issue of Letter of Credit to cover subject import on 4-10-86 and that the Bank had issued Letter of Credit on 6-10-86 and also debited the commission on the same date and consequently, the said Letter of Credit will still hold valid in terms of the said Public Notice dated 6-10-86. However, the said defence did not find favour with the learned Collector of Customs, New Delhi who adjudicated the case and ultimately held that the goods were imported in violation of Section 111(d) of the Customs Act and therefore, liable to confiscation and the appellants M/s. Gulab Impex Enterprises Ltd., through their Director Shri Satish Bansal are liable to personal penalty under Section 112 of the Customs Act. Accordingly, he ordered for the confiscation of the imported goods and gave option to the appellants M/s. Gulab Impex Enterprises to redeem the same on payment of redemption fine of Rs. 5,00,000/- under Section 125 of the Act. He also imposed a personal penalty of Rs. 1,00,000/- on the appellant Shri Satish Bansal, Director of the Appellants Company and refraind from imposing any separate penalty on the Appellants Company. He further refrained from imposing any penalty on Shri Vishnu Kumar Sharma who was a Import Clerk of the Appellants Company holding that he has neither abetted the importation of the goods in question nor made any false statement and was acting under the directions of the Appellants Company and its Director. Hence, these appeals.
3. It may be stated at the outset that during the pendency of the appeal filed by the Appellants Company, and application was filed by the Appellants Company praying that direction to the respondent to answer the interrogatories be given. That application was registered as miscellaneous application. It appears from the record that when the said application was posted last for hearing on 24-8-87, Shri M.G.S. Murthy, learned Advocate for the appellants made a oral request to the effect that the appellants are not pressing/withdrawing the said application. Accordingly, he was directed to move a written application to that effect. In compliance an application was moved by the appellants on 25-8-87 requesting for leave to withdraw the said application which was allowed on 27-8-87.
We have heard Shri M.G.S. Murthy, learned Counsel for the appellants and Shri A.S. Sunder Rajan, learned J.D.R. for the respondent.
4. At the outset Shri Murthy, learned Counsel for the appellants contended that in exercise of the powers conferred by Section 3 of the Imports and Exports (Control) Act, 1947, the Import Trade Control Order No. 49/85-88 dated 1-4-86 (also designated as Open General Licence No. 15/86) was issued, whereby general permission was accorded for the import into India goods of the description specified in the Schedule annexed to the said order. Item No. 8 of the said Schedule mentions "crude drugs" required for making Ayurvedic and Unani medicines as appearing in List No. 4 in Appendix 6 of Import and Export Policy for 1985-88. This permission contended the Counsel, could not be rescinded or abbrogated or modified merely by means of public notice in question that is to say, ITC Notice No.l21-ITC PN/85-88 dated 6-10-86 which, at best was not more than executive or administrative instruction, not having any statutory force. While elaborating his contention he contended that condition No.1 of the aforesaid ITC order dated 1-4-86 lays down that all items other than Item No.l mentioned in the Schedule to the said order may be imported by any person for stock and sale purposes. Thus the effect of this provision is that the said order adopted as its part and parcel and incorporated in itself all crude drugs which on the day the said order was issued that is to say 1-4-86 appeared in the List No. 4 of Appendix 6 of the Import Policy for 1985-88. He further submitted that imported goods in question that is to say, Darchini (bark) appears at Item No. 47 of List 4 of Appendix 6 pursuant to Item No. 37 thereof that is to say crude drugs required for making Ayurvedic and Unani medicines as per List 4 of the Appendix and by virtue of incorporation in the aforesaid order that is to say OGL No. 15/86 as Item 8 could be freely imported in terms thereof and therefore no addition to or deletion from the said List No. 4 thereafter can alter the scope and ambit of the general permission, unless such addition to or deletion from the said List No. 4 incorporated by specific reference in the Schedule to Order 15/86 is made by an order issued in exercise of the powers under Section 3 of the Imports and Exports (Control) Act, 1947 and in a like manner as was the OGL No. 15/86 itself was, in law. Shortly put the contention is that the Government could only have made an amendment in the Import Control Order No. 49/85-88 dated 1-1-86 (OGL NO. 15/86) by issuing an order under Section 3 and that since there is no such order the deletion of the Darchini (bark) by issuing public notice that is to say, ITC Notice No.121 - ITC (PN) 85-88 dated 6-10-86 is not valid. To support his contention he cited the following case law :-
(1) Joint Chief Controller of Imports and Exports v. M/s. Amin Chand Mutha,(1966) 1 SCR 262, (2) M/s. Jagannath Agarwal v. B.N. Dutta, Civil Appeal No. 801 of 1964 decided on 10-1-67 by the Supreme Court.
(3) Kaptan's Enterprises v. Union of India, AIR 1986 Delhi 221 (4) Mahindra & Mahindra Limited v. Union of India - (1979) 2 SCR 1038.
In reply Shri Sunder Rajan, learned JDR submitted that the said public notice dated 6-10-86 deleting the entries relating to Darchini (bark) from List 4 Sr. No. 47 of Appendix 6 of the Import and Export Policy for April, 1985 - March, 1988 is valid. In the process he submitted that such a Policy can be changed, rescinded or altered by mere administrative orders or executive instructions issued at any time as held by Supreme Court in the case of Andhra Industiral Works v. Chief Controller, Imports, AIR 1974 SC 1539. He further submitted that this very issue fell for consideration before the Delhi High Court in the case of S.S. International v. Union of India, 1987 (14) ECC 77, wherein it was held that the Government could make amendments in the Import Policy for 1985-88 by issuing public notices/amendment orders etc.
5. In order to appreciate the controversy in hand it would be useful to state few facts more. On 1-4-86 an order No. 49/85-88 was issued in the exercise of the powers conferred by Section 3 of the Imports and Exports (Control) Act, 1947 by the Central Government whereby general permission (OGL 15/86) was given to import into India from any country except the Union of South Africa/South West Africa goods of the description specifried in the Schedule annexed to the order subject to the conditions mentioned therein. The Schedule contains the item Darchini (Bark). On 26-9-86 a public notice No. 119/ITC(PN)/85-88 was issued informing the general public that the amendments/corrections shall be made in the Policy at the appropriate places indicated in para 2 of the said notice. One of the amendment was deletion of cloves and cinnamons from Appendix 6 of the Policy (which pertains to OGL to general public) and addition of the said items in Part A of Appendix 5 (which pertains to canalised items). On 26-9-86 an Order No. 63/85-88 under Section 3 of the Imports and Exports (Control) Act, 1947 was made deleting the entries relating to cloves and cinnamons from the Schedule appended to OGL 15/86. Another public notice No.l21-ITC (1985-88) which is in dispute before us, was issued deleting the Darchini (bark) from List 4 Sr. No. 47 of Appendix 6 of the Policy. After stating these facts it would be useful to reproduce the relevant portion of Section 3 of the Imports (Control) Order, 1955 to appreciate the controversy in hand for, to fortify his argument Shri Murthy also contended that as stated above an order under section 3 of the Imports and Exports (Control) Act, 1947 was issued for deleting the entries relating to cloves and cinnamons from OGL 15/86 which proves that the amendments and additions in Appendix 5 and 6 could only be made by an order under Section 3 and not by issuing public notice. The said Section 3 reads as under:-
"3. Restriction of import of certain goods. - (1) Save as otherwise provided in this order no person shall import any goods of the description specified in Schedule 1, except under and in accordance, with a licence or a customs clearance permit granted by the Central Government or by any officer specified in Schedule II."
6. After considering the arguments and the case law on the point we find that there is a fallacy in the arguments of the learned Counsel. The Imports and Exports Promotion Policy for the years 1985-88 is contained in Volume I known as red book. Appendix 5 and Appendix 6 are contained in Volume I. Part. 2 of Chapter I of the Imports and Exports Policy for April, 1985 to March, 1988 Volume I reads as under:
"(2) The Import and Export Policy is being announced this time for the three years' period from the date of announcement till 31st March, 1988 in consonance with the Government's objective of bringing in continuity and stability of Import and Export Promotion policies. However, the Government reserves the right to make amendments/changes in this policy which may become necessary in public interest from time to time during the above period. Amendments, etc., if any, will be notified, as usual, by means of public notices/amendment orders, etc., issued by the Chief Controller of Imports and Exports from time to time. Provision of this Policy Book are subject to such amendments or changes as and when notified."
In Andhra Industrial Works v. Chief Controller Imports, supra the Hon'ble Supreme Court had held that Import Control Policy, as distinguished from Import or Export Control Order issued under Section 3 of the Imports and Exports (Control) Act, 1947, is not a statutory document and such a policy can be changed, rescinded or altered by mere administrative order or executive instructions issued at any time.
Thus on a conjoint reading of the Imports and Exports Promotion Policy as extracted above and the law laid down by the Hon'ble Supreme Court in the case of Andhra Industrial Works v. Chief Controller, Imports, supra it is clear that the Government can make amendments in the Import Policy for the years 1985-88 by issuing public notices/amendment orders etc. Consequently we find no legal infirmity in the public notice dated 6-10-86 under reference. In this view of the matter we are further supported by the law laid down by the Delhi High Court in the case of S.S. International v. Union of India, supra which is directly on the point in issue and applies on all fours to the present case. In that case also legality and vires of the public notice No. 119-ITC (PN)/85-88 dated 26-9-86 were challenged which did not find favour with the High Court and it was held theat there was no legal infirmity in the said public notice, while dealing with the contentions raised therein the public notice No. 121-ITC(PN)/85-88 dated 6-10-86 (which is in dispute before us) was also referred to. The cases relied upon by the learned Counsel for the appellants as stated above are distinguishable on facts and therefore do not improve the case of the appellants. In the result we reject the contention of the learned Counsel for the appellants and hold that the public notice No. 121-ITC(PN)/85- 88 dated 6-10-86 under dispute is in order and does not suffer from any infirmity.
7. Alternatively Shri Murthy, the learned Counsel for the appellants vehemently contended that the import in question was duly covered by Para-3 of the Public Notice No. 121-ITC(PN)/85-88 dated 06-10-86 which provides for importing the deleted item i.e. Darchini (bark) by eligible importers to the extent of irrevocable Letters of Credit already opened and established before the date of this Notification for which shipments are made whithin a period of 90 days from the date of this Public Notice. Elaborating his arguments, Shri Murthy submitted that the Import & Export Policy 1985-88 was initially issued as a Public Notice and was given a statutory effect by the Import Trade (Control) Order No. 49/85-88 (OGL No. 15/86) dated 01-04-86. By the said order, the Government gave general permission to import into India, in terms of Item-8 of the Schedule to it, "Crude Drugs" required for making Ayurvedic and Unani medicines as per List 4 of this Appendix - which inter alia includes amongst them 'Darchini' (bark) (Item 47 of List 4) i.e. the goods under import. In other words, he submitted that the import of Darchini (bark) was admissible vide Item 47 of List 4 under OGL - a fact which is admitted to the adjudicating authority in Para 5 of his impugned order and not disputed before us. But the adjudicating authority contended the Counsel, held the import of Darchini (bark) inadmissible on the ground that the import of Darchini (bark) was deleted vide ITC Public Notice dated 06-10-86 and the appellants are not entitled to the benefit of the exception carved out in Para 3 of the said Public Notice dated 06-10-86. In reply, Shri Sunder Rajan supported the impugned order.
8. In order to appreciate the controversy in hand, it would be useful to reproduce Para 3 of the said Public Notice which runs thus -
"In respect of item(s) taken out of Open General Licence in terms of this Public Notice, import under Open General Licence by eligible importers shall not be permitted except to the extent of irrevocable letters of credit already opened and established before the date of this Public Notice, for which shipments are made within a period of 90 (ninety) days from the date of this Public Notice."
9. It is the case of the appellants that they had concluded contracts with M/s. Varindera Company Ltd., Hong Kong and M/s. New York Traders, Hong Kong for the supply and shipment to India Darchini (bark) - CINNAMONUM ZOYLANICUM (Crude Drug) and applied separately to the Bank of Rajasthan, Bombay, (with whom the first appellant has a current account) for opening and establishing and issuance of Letter of Credit, favouring the aforesaid suppliers on 04-10-86 and made arrangements for provision of adequate funds on 04-10-86 itself. It is their further case that the said applications were accepted by the Bank on 04-10-86 and letters of credit No. 2229 and 2231 were opened, established and duly prepared for issue on that day itself and since 04-10-86 was a half holiday, the establishment of the said Letters of Credit could be communicated to the Sellers i.e. the aforesaid suppliers through the Bank of Credit & Commerce International (Bombay branch) who are the seller's agents on 06-10-86 only. It is their further case that in all the correspondence date 04-10-86 which was originally typed was erroneously altered by the Bank to read 06-10-86. Shri Murthy, the learned Counsel for the appellant further submitted that the Letter of Credit so opened and established on 04-10-86 was later on got amended with the consent of all concerned including the original beneficiary M/s. New York Traders, Hong Kong to favour M/s. 'Gold Dragon Enterprises', Hong Kong (who has actually supplied the imported goods in question) and the rights of the orginal beneficiary thereunder were duly assigned to the latter. In the alternative, Shri Murthy submitted that in case it is held that the Letter of Credit was opened and established on 06-10-86 and not on 04-10-86, even in that case the irrevocable Letter of Credit opened and established on 06-10-86 is valid because though the said Public Notice is dated 06-10-86 and publised in the Gazette of the same date, it was not made available to the public and subsequent amendments in the Letter of Credit was of no consequence. In reply the learned JDR supported the impugned order and also submitted that on 04-10-86 the appellants were having not sufficient fund in their bank account. Thus for deciding the question as to whether the import in question was admissible in terms of Para 3 of the said Public Notice dated 06-10-86, the following questions fell for our consideration :-
(i) Whether the Letters of Credit were opened and established on 04-10-86 as urged by the appellants and not on 06-10-86 as contended by the Department?
(ii) Whether the Public Notice dated 06-10-86 appearing in the Gazette of the same date can be said to have been published on 06-10-86 itself in the eye of Law; and
(iii) What is the effect of amendment effected in the irrevocable Letter of Credit so opened and established.
10. As Regards Question No. (i): As stated above, it is the case of the appellant that the first appellant applied to the Bank of Rajasthan for opening and issuing of Letters of Credit on 04-10-86, but being the Saturday, the Letters of Credit were issueed on 06-10-86 i.e. on the next working day. It is the contention of the learned Counsel for the appellants that the application and Letter of Credit originally bears the date 04- 10-86 but erroneously altered by the Bank to be read as 06-10-86. Shri Murthy, relying upon the decisions rendered in the case of the Venkayyamma v. Appa Rao, AIR 1916 Privy Council 9; State of Bihar v. Bengal C&P Works, AIR 1954 Patna 14 and Bank of India v. RF Cowasjee, AIR 1955 Bombay 419 contended that the general rule relating to offer and acceptance has always been understood to be that there can be an acceptance of an offer by the communication of the assent of the person to whom the offer is made or by his doing some act which he is requested by the terms of the offer to do or by his accepting performance itself of the act constituting the offer. So far as this legal position is concerned, there cannot be any dispute that there can be the acceptance of a proposal by performance. But in the instant case apart from the fact that the Letter of Credit bears the altered date 06-10-86 the fact remains that the Bank of Rajasthan during the investigation vide their letter dated 17-02-87 (a photostat copy of which is on record) had stated that the applications for Letters of Credit were received on 04-10-86 and Letters of Credit were opened on 06-10-86 which was the next working day. Besides that, it is admitted to the appellants that all the accounts of the appellants were debited on 06-10- 86 and Letters of Credit were issued on 06-10-86. Thus in the teeth of the admission by the Bank that the Letters of Credit were opened on 06-10-86 coupled with the admission by the appellants that the Letters of Credit were issued on 06-10-86, it cannot be said that the Letters of Credit were opened and established on 04-10-86 when the appellants approached with their applications for opening the Letters of Credits and what transpired between the appellants and their Bankers before the opening and issuing of the Letters of Credit on 06-10-86 is of no consquence. For the same reasons the fact that the appellants were having no sufficient balance in their Bank Account on 04-10-86 also pales into insignificance.
11. Regarding Question No. (ii): On this question, the contention of the appellants is that the Public Notice No. 121-ITC (PN/85-88) dt. 6-10-86 would take effect from the date of its knowledge. The publication cannot be equated with the mere printing. It is the availability of the printed material to the general public that constitutes the publication required by statute and the rules of natural justice. He further contended that so far as the appellants were concerned, they came to know about the said Public Notice for the first time when it was reported briefly on 09-10-86 in the Newspaper, namely, 'Financial Express' date October 9, 1986, and for this proposition, the Learned Counsel relied upon the following cases:
1. Asia Tobacco Company Ltd. v. Union of India, 1984 (18) ELT 152 (Madras) - pending before the Supreme Court in Appeal.
2. Gokal Das Harbhagwan Das v. Collector, 1987 (29) ELT 379 Tribunal.
3. GTC Industries Ltd. v. Union of India, Writ Petition No. 2413 of 1985 decided on 04-11-87, since reported in 1988 (33) ELT 83 (Bom.).
In reply, Shri Sunder Rajan, the Learned JDR submitted that date appearing in the Gazette should be taken as conclusive proof of its publication. Relying upon the decision rendered by the Hon'ble Supreme Court in the case of Deepak Pahwa v. Lt. Governor of Delhi, AIR 1984 SC 1721 he further submitted that publication of Notification and Public Notice of substance need not be simultaneous.
From the Impugned Order, we find that this contention was also raised before the adjudicating authority but he brushed aside the said contention of the appellants by observing as follows:-
"As regards the second submission as to whether without coming to know on 06-10-86 that Public Notice has been issued deleting the subject imports from OGL,it should have divined on the importers, especially in view of the fact that they had advised their bank on 04-10-86 to issue the Letter of Credit, we may have to go little back and recount the circumstances of this case to arrive at the bona fides of the importers. ITC Public Notice No. 119/85-88 dated 26-09-86 and Import Trade Control Order thereunder No. 63/85-88 26-09-86 was already known to the importers. Therefore, even on 26-09-86 Public was notified what was the policy in regard to the item under import and what remained to be done since this item remained to be deleted from OGL. It is thus what could be called omission which was covered by Public Notice No. 121 of 6th October, 1986."
12. After giving our due consideration to the arguments so advanced by the parties, we are of the considered view that the contention raised by the Learned Counsel for the appellants has much force. In the case of Asia Tobacco Company Ltd. v. Union of India, supra, it was held by the Madras High Court that Notification takes effect from the date when the Official Gazette is circulated and put on sale to the public and the date of its issue, date of printing of the Gazette or the date of the Gazette are irrevalent. Same view is expressed by this Tribunal in the case of Gokal Das Harbhagwan Das v. Collector, supra. Moreover, we have the recent judgment of the Hon'ble Supreme Court on this concept. In B.K. Srinivasan & Others v. State of Karnataka, (1987)1 SCC 658 Chinnappa Reddy J, speaking for the Bench has this to say on the subject :-
"There can be no doubt about the proposition that where a law, whether Parliamentary or subordinate, demands compliance those that are governed must be notified directly and reliably of the law and all changes and additions made to it by various processes. Whether law is viewed from the standpoint of the 'conscientious good man' seeking to abide by the law or from the standpoint of Justice Holme's 'Unconscientious bad man' seeking to avoid the law, law must be known, that is to say, it must be so made that it can be known. We know that delegated or subordinate legislation is all pervasive and that there is hardly any field of activity where governance by delegated or subordinate legislative powers is not as important if not more important, than governance by Parliamentary legislation. But unlike Parliamentary legislation which is publicly made, delegated or subordinate legislation is often made unobtrusively in the chambers of a Minister, a Secretary to the Government or other official dignitary. It is, therefore, necessary that subordinate legislation, in order to take effect, must be published or promulgated in some suitable manner, whether such publication or promulgation is prescribed by the parent statue or not. It will then effect from the date of such publication or promulgation. Where the parent statute prescribes the mode of publication or promulgation that mode must be followed. Where the parent statute is silent, but the subordinate legislation itself prescribes the manner of publication, such a mode of publication may be sufficient, if reasonable. If the subordinate legislation does not prescribe the mode of publication or if the subordinate legislation prescribes a plainly unreasonable mode of publication, it will take effect only when it is published through the customarily recognised official channel, namely, the Official Gazette or some other reasonable mode of publication. There may be a subordinate legislation which is concerned with a few individuals or is confined to small local areas. In such cases publication or promulgation by other means may be sufficient." [Emphasis supplied] Relying upon the said decision of the Supreme Court rendered in B.K. Srinivasan & Others supra and other judgments and more particularly after taking into consideration the fact that the appeal is pending in the Supreme Court against the judgment rendered by the Madras High Court in the case of Asia Tobacco Co. Ltd., supra the Bombay High Court has also taken the same view in the case of G. T.C. Industries Ltd., supra. In the instant case, it is the case of the appellants that though the Public Notice dated 06-10-86 appears in the Gazette of the same date, it was not made known to the public, in general, till it was briefly reported on 09-10-86 in the newspaper, namely, 'Financial Express. This was never controverted by the adjudicating authority although the plea was taken up before him right from the beginning. Even during the course of arguments before us, this fact was not controverted. On the other hand, we have also perused the record to satisfy ourselves about the said contention of the Learned Counsel for the appellants, but finds nothing contrary. There is no evidence on record from the side of the department to show as to when the Public Notice dated 06-10-1986 was prepared, signed and delivered to the Government Press for publication in the Gazette. Likewise, there is no evidence on record to show as to at what point of time of 06-10-1986 the said Public Notice was received for publication. Similarly, there is no evidence on record to show as to at what point of time or date the same was printed and was put on sale to public. Thus, we have no hesitation in holding that the said Public Notice took effect from 09-10-1986 when it was first briefly reported in the 'Financial Express'. The reasonings of the Learned adjudicating authority that there was an omission in the ITC Public Notice No. 119/85-88 dated 26-09-1986 to delete the imported item from OGL and, therefore, this omission was covered by the Public Notice No. 121 of 06-10-1986 cannot be accepted. If for the sake of arguments it is accepted that there was any omission to delete the imported item in ITC Public Notice No. 119/85-88 dated 26-09-86, the importer or the public cannot be penalised for the omission on the part of the authorities concerned. Thus when the Public Notice in question though dated 06-10-86 and appears in the Gazette of the same date was not made known to the Public before 09-10-86 as stated above, the appellants cannot be deprived of the benefit of the exception carved out in Para 3 of the Public Notice dated 06-10-86, if he satisfies all the conditions laid down therein. Consequently, we hold that the appellants importer had entered into commitment with foreign supplier for the import of the goods by means of irrevocable Letters of Credit already opened and established before the date of the Public Notice in question. Before we part on this question, it will be useful to mention here that the Custom Authorities at Bombay cleared another consignment (3.5 MTs) of the identical goods in March, 87, which was imported by the appellants on the strength of Letter of Credit No. BY-2229 dated 06-10-86 without any objection.
13. Regarding Question No. (iii): From the impugned order, we find that the Collector (Customs) had denied the benefit of Para 3 of the Public Notice dated 06-10- 86 also on the ground that the Letter of Credit was opened on M/s. Varindera Company Ltd., Hong Kong (wrongly described for M/s. New York Traders, Hong Knong) - a concern owned by the brother of the importer - appellant herein - since this order was, however, changed to M/s. Gold Dragon Enterprises, the supplier of the imported goods, there was no firm commitment with the supplier on 06-10-86 but only with a sister concern. For ready reference his findings/reasonings may be extracted as under :-
"There is another very important factor which is the opening of the Letter of Credit. The Letter of Credit has been opened on M/s. Varindera Company Ltd., 23-A, Ground Floor, Kennedy Road, Hong Kong - a concern owned by the brother of the importer. The order has been, however, then changed to Gold Dragon Enterprises, the supplier of the imported goods with the address of 25/F Unit C, Phase-I, Kingsford Industrieal Buldgs., Kawai Hai Street, Kwai Chung NT. Therefore, there was no firm commitment with the supplier as on 06-10-86, but only with a sister concern. It requires no devine powers to see that Letter of Credit was established for speculative purposes to beat what had already been notified on 26th September, 1986 and create a cloak to camouflage illegal imports for speculative purposes."
14. Attacking the aforesaid reasonings of the Collector, Shri Murthy, the Learned Counsel for the appellants, vehemently contended that the Learned Collector erred in imporing the concept of a "firm commitment" and erroneously imagining such commitment to the contract between the buyer and seller, when for a fact - Para 3 of the Notice does not speak of any firm commitment whatsoever but speaks only of "irrevocable Letters of Credit already opened and established". He further submitted that an irrevocable Letter of Credit is nothing but a contract between the buyer and the banker and the contractual relationship between the issuing Bank and the buyer is defined by the terms of agreement made by them. On communication of the Letter of Credit to the beneficiary i.e. seller, a contract between the seller and the Bank comes into existence. This latter contract is ancillary to the original contract between the buyer and the seller. With the consent of the seller who is the beneficiary in terms of the Letter of Credit, it could always be amended. Any such amendment relates back to the date of establishment of the Letter of Credit. On this premises, contended the Learned Counsel for the appellants that it would be erroneous to conclude in the first, place that there has to be a commitment and that commitment is necessarily a contract between the buyer and the seller and just because such a contract or other contracts ancillary to it were amended, there was no commitment earlier to such amendment. To support his contention he cited a few passages appearing at PP 531-537 from the Paget's Law of Banking and also the case of Gokal Das Harbhagwan Das v. Collector, 1987 (29) ELT 379 decided by this Tribunal. In reply, while defending the impugned order, the Learned JDR cited the case of Bansal Exports (P) Ltd. v. Union of India, 1987 (30) ELT 361 (Delhi) - 1984 (l) ECC 234 - a decision rendered by the Delhi High Court.
15. We have considered the arguments. In order to appreciate the controversy in hand, it would be useful to recapitulate the facts of the instant case once again. The appellant firm had the concluded contracts with M/s. Varindera & Company Ltd., Hong Kong and M/s. New York Traders, Hong Kong for the supply and shipment to India of a consignment of 9 MTs and 35 MTs of Darchini (Crude bark). In pursuance of these two contracts, the appellant firm applied to the Bank of Rajasthan for opening and establishing of two irrevocable Letters of Credit which were admittedly issued on 06- 10-86. the number of the Letter of Credit issued in favour of M/s. Varindera & Comapny Ltd., was 2229 dated 06-10-86 whereas the number of Letter of Credit issued favouring M/s. New York Traders is BY-2231 dated 06-10-86. As stated above, the goods (3.5 MTs) covered under Letter of Credit No. 2229 dated 06-10-86 and supplied by M/s. Varindera & Company Ltd., were cleared by the Bombay authorities on its arrival in March, 87 without any objection. Thus we are concerned in this appeal only with the irrevocable Letter of Credit opened and established favouring M/s. New York Traders. Under the Letter of Credit No. BY-2231 dated 06-10-86 favouring M/s. New York Traders (a copy of which is on record), the Bank of Rajasthan was required to pay to the supplier (beneficiary) on production of the doucuments particularised in the Letter of Credit. The agreement entered into between the Bank of Rajasthan and the beneficiary (i.e. M/s. New York Traders) under the Letter of Credit was "subject to the Uniform Customs & Practice for Documentary Credits". It appears from the said photostat copy of the Letter of Credit that it was made "Not Negotiable". It further appears from the record that the said Letter of Credit was amended as under :-
"TRANSFER OF LC TO THIRD PARTY PERMITTED."
It deserves to be mentioned here that while making the amendment, it was specifically mentioned that "All other terms and conditions remain same." Consequent to the said amendment, the Letter of Credit was amended in favour of M/s. Gold Dragon Enterprises, Hong Kong and thereupon M/s. Gold Dragon Enterprises, Hong Kong supplied the imported goods under the said Letter of Credit and obtained the payment. It is the validity of this amendment in the Letter of Credit which is in dispute.
16. As stated above the agreement entered into between the Bank of Rajasthan and the beneficiary, namely, M/s. New York Traders under the Letter of Credit was subject to "Uniform Customs & Practice for Documentary Credits" (1983 Revision, International Chamber of Commerce, Paris, France - Publication No. 400). From the Uniform Customs and Practice for Documentary Credit, which are reproduced in Paget's Law of Banking (pages 533-534), we find that credits may be either revocable or irrevocable. An revocable credit may be amended or cancelled at any moment without prior notice to the beneficiary, whereas an irrevocable credit can neither be amended nor cancelled without the agreement of all parties thereto. Thus in the case of an irrevocable credit only condition for its amendment is that it cannot be amended without the agreement of all parties thereto. At page 538, it is stated that a credit can be transferred only if it is expressely designated as "Transferable" by the issuing Bank. At page 539, it is further stated that "it may be that after the credit is issued which does not provide for transfer, the beneficiary may seek authority; if given, this takes the form of an amendment to the credit. At page 540, it is further stated that the benefit of a credit can be assigned. In Pavia & Company SPA v. Thunnann - Nilelsen, (1952) 2 QB 84 at 88, Denning LJ observed as follows:-
"The sale of goods across the world is now usually arranged by means of confirmed credits. The buyer requests his banker to open a credit in favour of the seller and in pursuance of that request the banker, or his foreign agent, issues a confirmed credit in favour of the seller. This credit is a promise by the banker to pay money to the seller in return for the shipping documents. Then the seller, when he presents the documents, gets paid the contract price. The conditions of the credit must be strictly fulfilled, otherwise the seller would not be entitled to draw on it."
Recently, the Hon'ble Supreme Court also had an occasion to deal with the nature and scope of an irrevocable Letter of Credit in the case of Tarapore & Co. v. Tractors Export, Moscow, AIR 1970 SC 891 and quoted with approval the following passage appearing in Halsbury's Laws of England (Vol. 34 Paragraph 319 at page 185) :-
"It is often made a condition of a mercantile contract that the buyer shall pay for the goods by means of a confirmed credit, and it is then the duty of the buyer to procure his bank, known as the issuing or originating bank, to issue an irrevocable credit in favour of the seller by which the bank undertakes to the seller, either directly or through another bank in the seller's country known as the correspondent or negotiating bank, to accept drafts drawn upon it for the price of the goods, against tender by the seller of the shipping documents. The contractual relationship between the issuing bank and the buyer is defined by the terms of the agreement between them under which the letter opening the credit is issued; and as between the seller and the bank, the issue of the credit duly notified to the seller creates a new contractual nexus and renders the bank directly liable to the seller to pay the purchase price or to accept the bill of exchange upon tender of the documents. The contract thus created between the seller and the bank is separate from, although ancillary to, the original contract between the buyer and seller, by reason of the bank's undertaking to the seller, which is absolute. Thus the bank is not entitled to rely upon terms of the contract between the buyer and the seller which might permit the buyer to reject the goods and to refuse payment therefore; and, conversely, the buyer is not entitled to an injunction restraining the seller from dealing with the letter of credit if the goods are defective."
The Supreme Court also quoted with approval the following passage appearing in Chamlers on "Bills of Exchange" in the aforesaid case :-
"The modern commercial credit serves to interpose between a buyer and seller a third person of unquestioned solvency, almost invariably a banker of international repute ; the banker on the instructions of the buyer issues the letter of credit and thereby undertakes to act as paymaster upon the seller performing the conditions set out in it. A letter of credit may be in any one of a number of specialised forms and contains the undertaking of the banker to honour all bills of exchange drawn thereunder. It can hardly be over-emphasised that the banker is not bound or entitled to honour such bills of exchange unless they, and such accompanying documents as may be required thereunder, are in exact compliance with the terms of the credit. Such documents must be scrutinised with meticulous care, the maxim de minimis non curat lex cannot be invoked where payment is made by letter of credit. If the seller has complied with the terms of the letter of credit, however, there is an absolute obligation upon the banker to pay irrespective of any disputes there may be between the buyer and the seller as to whether the goods are upto contract or not."
17. Thus from the above it is clear that a Letter of Credit is only a means by which the payment of price for the sale of goods is secured and if the seller has complied with the terms of the Letter of Credit, there is an aboslute obligation upon the banker to pay irrespective of any disputes there may be between the buyer and the seller as to whether goods are up to contract or not. Emphasising the importance of the Letter of Credit in the International Trade, the Hon'ble Supreme Court also observed in the case of Tarapore & Co., supra that "an irrevocable Letter of Credit has a definite implication. It is a mechanism of great importance in international trade. Any interference with that mechanism is bound to have serious repercussions on the international trade of this country. Except under very exceptional circumstances, the Courts should not interfere with that mechanism." Thus the question that arises in the instant case is as to why Para 3 of the Public Notice dated 06-10-86 permitted import of deleted item i.e. Darchini (Bark) to the extent of irrevocable Letters of Credit already opened and established before the date of the Public Notice. Obviously because to save the mechanism of an irrevocable Letter of Credit and to avoid the serious repercussions on the international trade of our country and for this purpose providing saving in the Public Notice expressly laying down that no commitment other than that of a Bank, irrevocably securing the payment of the price by means of an irrevocable Letters of Credit already opened and established i.e. an absolute obligation upon the Banker to pay irrespective of any disputes between the buyer and the seller is recognised and comprehended. Consequently, the commitment or the obligation or a Bank for the issue of Letters of Credit prior to the publication of Public Notice in question was as much of an aboslute requirement - a condition precedent - as the conclusion of contracts for the consequential imports, to come within the exception made in Para 3 of the Public Notice in question. And once such contract by means of an irrevocable Letter of Credit is created, the issuing Bank is under absolute obligation to pay irrespective of any disputes there might be between the buyer and the seller. Likewise, if there is an amendment, in the Letter of Credit, subsequently with the consent of all the parties thereto which includes the issuing Bank also, the obligation of the issuing Bank to pay money to the seller in return for the shipping documents remains the same and that is exactly what has happened in the instant case. As stated above, an irrevocable Letter of Credit was already opened and established in favour of M/s. New York Traders, Hong Kong on 6-10-86 i.e. before the date of publication of the Public Notice in question and subsequently it was amended with the consent of all the parties thereto including the seller i.e. M/s. New York Traders and in pursuance of this amendment, M/s. Gold Dragon Enterprises who became the sellers on account of the amendment, supplied the imported goods under the said Letter of Credit No. BY-2231 dated 6-10-86 to the appellants and obtained the payment from the issuing Bank. Thus we hold that the amendment made in the irrevocable Letter of Credit already opened and established before the date of publication of the Public Notice in question is of no consequence for the purpose of Para 3 of the Public Notice in question and the reasonings of the Collector that there was no firm commitment with the supplier i.e. M/s. Gold Dragon Enterprises as on 6-10-86 is wrong in the light of the legal position discussed above. The case of Bansal Exports (P) Ltd. v. Union of India supra relied upon by the learned JDR, is not applicable to the facts and circumstances of the instant case. In that case, the petitioners entered into a contract dated 25-3-77 with the foreign buyers for the supply of 25 Tons of Indian Real Zari Badla. A part of the supply was made but before the remaining supply could be made, the Central Government changed the policy and issued a Public Notice dated 30-3-79 stating that the provision of paragraph 316 of the Hand Book of Import-Export Procedures will not be applicable to any "Pre-ban items". Consequent to this Public Notice, it was also said that all such cases of "Pre-ban commitments" will be decided "on merits only". On 12-9-79, another Public Notice setting out the new guidelines for deciding the "Pre-ban" or "Pre-control Cases" effected by the Public Notice dated 30-3-79 was issued. The Petitioners of that case challenged the validity of the said Public Notice dated 12-9-79 on the ground of promissory estoppel and also contended that the earlier contract dated 25-3-77 was a pre-control commitment in terms of paragraph 316 of the Hand Book of Import-Export Procedures. The Hon'ble Delhi High Court while upholding the validity of the said Public Notice also concluded that contract dated 25-3-77 is not a "pre-control commitment" in the sense in which the expression is used in paragraph 316 when tested on merits.
In the result, we hold that the import in question was saved by para 3 of the Public Notice dated 6-10-86.
18. At the fag end of his arguments Shri Murthy, learned Counsel for the appellant also prayed that in case the appeal is allowed a detention certificate may be issued to the appellants to save them from day-to-day demurrage and cited the following case law:-
(1) National Industries v. Asstt. Collector of Customs, 1980 (6) ELT 128 (Madras), and (2) Rajiv Woollen Mills v. Union of India, 1987 (31) ELT 639 (Delhi).
19. In the case of National Industries v. Asstt. Collector of Customs, Supra it was held that if the goods are detained by Customs Authorities, Rule 13 of Scales of Rates specifically contemplates the issuance of a certificate by the Collector of Customs for the purpose of enabling the importer to get the concession in the payment of demurrage. Such a right of the importer cannot be taken away by the Customs Authorities by refusing to issue a detention certificate because when a power is given by statue that power should be taken to impose a corresponding duty to exercise in a reasonable manner. However, it appears from that case that earlier the writ pertition filed by the petitioner of that case was dismissed by the learned Single Judge but on wirt appeal the Full Bench of the same High Court allowed the appeal and directed the learned Single Judge to dispose of the same on merits after setting aside the order of dismissal of the writ petition. Thus it would appear that no direction to issue the detention certificate was given in that case to the Customs Authorities. Similarly in the case of Rajiv Woollen Mills, Supra it was observed that if the imported goods are lying at the railway godown and the importers are incurring heavy demurrage, it shall be for them to make an application under Section 49 of the Customs Act, 1962 and thereafter it will be for the Asstt. Collector to order the storage of the goods in question in a public or private warehouse pending determination as to whether the goods have been legally imported or whether they are excisable to customs duty and after so observing directed that in case such an application is made under Section 49, ibid the Asstt. Collector shall decide the application without any delay. On the other hand we have the latest decision of the Hon'ble Supreme Court rendered in the case of Board of Trustees of the Port of Bombay v. Jai Hind Oil Mills Co., 1987 (30) ELT 633. In that case the Bombay High Court directed the Customs Authorities to issue detention certificate without the Port Trust being made a party to the writ petition and in any event without passing an order duly providing for the payment of the wharfage and demurrage charges due to the Port Trust on the event of dismissal of the writ petition. Being dissatisfied with the order so passed the Board of Trustees of the Port of Bombay filed their appeals by special leave in the Hon'ble Supreme Court. The Hon'ble Supreme Court while disposing of the bunch of writ petitions involving the identical issue observed that before compelling the Customs Authorities to issue a detention certificate, High Court should have issued notice to the Port Trust which was vitally interested in securing its own interests as regards the demurrage charges recoverable by it under law. It was further held that the Port Trust being a body corporate constituted under the Major Port Trusts Act is entitled to be heard by the Court before any order which affects its interests prejudicially is passed. Since in the instant case admittedly the Custodial authority is not before us and was neither the party at the adjudication stage we are of the considered view that no detention certificate can be issued by this Tribunal. We may however observe that if such an application is made for the issuance of the detention certificate before the authorities below they would dispose of the application according to law, keeping in view the fact that we have held that the import of the goods in question was proper.
20. In the end we may observe that while replying to the arguments advanced by the appellant's counsel the learned JDR at the end of his reply also submitted (which should have been raised as a preliminary objection at the beginning of the hearing, but not raised so) that since the appellant failed in his writ petition before the Hon'ble High Court of Delhi, the appellants cannot be allowed to approbate and reprobate. To appreciate this contention of the learned JDR, it would be useful to mention few facts more. Admittedly, in the instant case, goods were imported on 23-2-87. It appears that the same was not cleared by the Customs authorities, and therefore, the appellants had to file a writ (CWP No. 669 of 1987) in the Hon'ble Delhi High Court. In that writ petition certain directions were issue to the authorities concerned on 1-4-87. After the issuance of the said directions, a Show Cause Notice dated 10-4-87 was issued to the appellants to show cause as to why the imported goods in question be not confiscated and penalty be imposed. It appears that after the issuance of the said Show Cause Notice to the appellants, the appellants moved an application for the withdrawal of their writ petition on the ground that the Respondent has already adjudicated the case against the appellants vide the impugned order, and therefore, they want to challenge the adjudication order in appeal before this Tribunal. In these circumstances, the Hon'ble High Court disposed of the said writ petition in the following terms vide its order dated 10-6-1987 - "Learned Counsel wishes to withdraw the present petition as he wishes to challenge the order in appeal. Dismissed as withdrawn. We hope the appeal, if filed, shall be disposed of within a period of 3 months."
21. From the said Order dated 10-6-87 as extracted above, it would be clear that the writ petition filed by the appellants was not disposed of on merits. On the other hand, the Hon'ble High Court allowed the withdrawal of the said writ petition with the hope that if the appeal is filed before this Tribunal, it shall be disposed of within a period of 3 months. Thus in our considered view, the principles of approbation and reprobation is not attracted in the isntant case. For the same reasons, the reliance placed by the learned JDR on the case of Inidan Organic Chemicals Ltd. v. Union of India - 1980 (6) ELT 521 (Delhi), in which it was held that 'it is a maxim of judicial self-restrain that the Court will not pass upon the constitutionality of a statute at the instance of one who had availed himself of its benefits, but then decides to challenge its legality, anyway, is misplaced.' Thus we reject the contention reaised by the learned JDR that appellants are estopped from challenging the impugned order.
22. In the result in view of our findings that the import in question was covered by paragarph 3 of public Notice No. 121-ITC(PN)/85-88 dated 6-10-86 we hold that import in question was perfectly valid and there was no contravention that could be penalised either by fine or penalty. Consequently we set aside the impugned order and allow the appeal with consequential relief.