Customs, Excise and Gold Tribunal - Mumbai
Chirag International vs Collector Of Customs on 13 December, 1988
Equivalent citations: 1989(41)ELT517(TRI-MUMBAI)
ORDER K. Gopal Hegde, Member (J)
1. Both these appeals arise out of , and are directed against the Order-in-Appeal No. .S/49-179/88L (BMY) and S/49-180/88L(BMY) (Nos2745/88BCH) dated 18.7.1988 passed by the Collector of Customs (Appeals) Bombay.
2. As these appeals involve common question of facts and law, they are clubbed together, heard together and hence this common order.
3. The facts necessary for the disposal of these appeals are not in dispute. M/s Chirag International who are one and the same in both the appeals, imported two consignments, one containing 900 kgs. and another containing 300 kgs. of Potassium Cyanide and sought clearance against REP licence No.313652/C/LL/03/B/86 dated 29.1.1987, which was valid for import of Electroplating Salts and Brighteners. The customs, however, objected to the clearance on the ground that Potassium Cyanide is specifically and independently shown in Appendix 3 Part A at Serial No. 355(1) whereas Electroplating Salts and Brighteners are separately given at Serial 131 of the Policy AM 85-88. The Assistant Collector of Customs, Bombay, who held the adjudication after duly complying with the procedural aspects, held that the licence was not valid for the goods imported. He, therefore, ordered confiscation of both the consignments but allowed redemption on payment of fine of Rs.80,000/- for each consignment.
4. Feeling aggrieved by the order M/s Chirag International preferred two appeals before the Collector (Appeals). The Collector (Appeals) clubbed both the appeals and passed a common order.
5. It appears that during the hearing of these appeals, the appellants specifically brought to the notice of the Collector (Appeals) the order passed by the Tribunal bearing No: 71/88 WRB, dated 14.1.88, which has since been reported in 1988 (38) ELT 339. The appellants appears to have urged before the Collector (Appeals) that the issues involved in the appeals before him were covered by the judgement of the Tribunal in the order referred to above.
6. In his order, the Collector (Appeals) had set out the submissions made by the advocate, who appeared for the appellants before him. One of the submissions as set out by the Collector (Appeals) reads :-
"7. that a similar issue has been decided by the Appellate Tribunal in Order No.71/88 WRB, dated 14.1.88 which may be considered in deciding the present appeal as well."
7. Thereafter, the Collector (Appeals) passed the order, which reads :-
"I have examined the facts of the case and the written submissions put forth by the appellants. I have also carefully perused copy of the order of CEGAT produced by the appellants. It is an accepted principle particularly laid down in Para 21(c) of the Import Policy Book that a specific entry would always take precedence over a generic eatry. This would also give a clue to the other issue as to whether an item having more than one entry should be allowed if covered under a generic entry when it specifically appears in Appendix 3A. Headings under Appendix 3A did not provide for any specific use of the item and, therefore, it is a reasonable construction that all those items appearing therein irrespective of their use and being entered elsewhere by a generic entry would not be permitted for import. In the order of CEGAT it is admitted that the chemical in question namely Potassium Cyanide found only scant use in electroplating salts and, therefore, the heavy quantity of import could not be justified by that scant use. This fact also exists in the present case. The lower authority has also relied upon this fact and held that Potassium Cyanide had very scant usage as an electroplating salt and brightener. This technical fact has not been disputed by the appellants at any stage. Therefore, I am constrained to observe that the order of CEGAT suffers from infirmities. The whole issue has, therefore, to be decided in the light of the evidence regarding usage of the item as an electroplating salts and brighteners as well as in the light of the provisions of Para 21 (c) taken as a whole and the principles enunciated therein. Accordingly, I reject the appeals.
(S.K. Malhi), Collector of Customs (Appeals), Bombay."
8. During the hearing of these appeals Shri Nankani not only reiterated the contentions which he had urged before the Collector (Appeals), but also submitted that the Collector (Appeals) is guilty of grave impropriety and he had shown scant respect for the order of the superior Tribunal, which is binding on him.
9. After going through the order of the Collector (Appeals), we get an impression, that despite the Collector (Appeals') observation that "I have also carefully perused the copy of the order of the CEGAT produced by the appellants" he has either not read the CEGAT's order or totally misread it.
10. The Collector (Appeals) factually found that Potassium Cyanide has very scant usage as a electroplating salt and brightener. Despite such a finding, he proceeded to observe "Therefore, I am constrained to emphasisobserve that the order of CEGA T suffers from infirmities" (e supplied). the Collector (Appeals) did not spell out the infirmity, the order of CEGAT suffers from.
11. From the tenet of the Collector (Appeals) order he appears to have considered Para 21(c) of the Import Policy as well as Appendix 3A of the Policy AM 85-88.
11A. The short question for our consideration is whether Shri Narjkani, who appeared for the appellants, was correct in contending that the issues involved in the appeals before the Collector (Appeals) were wholly covered by our above decision (reported in 1988 (38) ELT 339). Prom the facts narrated in that order, it is seen that the appellants imported 12.600 MT of Potassium Cyanide and sought its clearance against the REP licence issued under the Registered Export Policy against export product goods A-82(l). Their licences included electroplating salts and brighteners as one of the specific items of import. They sought clearance of Potassium Cyanide against the licenced item electroplating salts and brighteners. In respect of that import also the Collector had held that the entry did not cover the goods and that therefore the licences were not valid. The Collector gave two reasons. Firstly, the generic description electroplating salts and brighteners could cover such items as fourfd widespread and general use in electroplating. Potassium Cyanide has a rare or scant application in electroplating. It could not, therefore, come under the generic entry in the import licences. This had been clarified in the Public Notice under No.26/86 of the Bombay Custom House. Secondly, even if covered by the generic entry, import of Potassium Cyanide was not permissible since paragraph 21(c) of the Import Policy read with the specific entry in Serial No.355(l) of Appendix 3 thereof prevailed and an item specifically named in the restricted list of Appendix 3 could not be imported against a generic description.
12. This Bench after referring to the literatures produced by the appellants and after referring to the Bombay Customs House Public Notice No.86/86 dated 10-2-1986 observed :
"The extent of use of Potassium Cyanide in electroplating is not discussed in the Technical Literature placed before us by the appellants. But since the Bom- * bay Customs House Public Notice is based on the technical advice of an expert chemist, we take it that the use of Potassium Cyanide in electroplating would be rare or scant. Yet, we have not been shown anything in the Import Policy for the period (AM 85-88) which says that a salt finding a minor application in electroplating is not to be considered an electroplating salt. On the contrary, the Bombay Custom House mentioned by name five different chemicals, including Potassium Cyanide and Sodium Cyanide which found, according to the said . Public Notice, scant use in electroplating. Some eight months later, the licencing authority issued a Public Notice to amend the Import Policy showing that import of Sodium Cyanide will not be allowed against entry "electroplating salts and brighteners". We take it that the position stated and the view taken in the Bombay Custom House Public Notice dated 10-2-1986 was within the knowledge of the licencing authority. The said authority too had technical experts to guide it. Yet, the said authority chose to disallow import of only Sodium Cyanide and not that of Potassium Cyanide or any other chemical as electroplating salts. Implied-ly, therefore, the said authority took the view that Potassium Cyanide could come in against the entry electroplating salts. Once the use, whether scanty or general, is accepted, the extent of use is hardly relevant. The licencing authority had the chance to disallow the import of Potassium Cyanide also if it wanted to. But it did not choose to do so. We, therefore, agree with the appellant that the generic entry "electroplating salts and birghteners covered Potassium Cyanide."
13. The Bench also considered the scope of Paragraph 21(c) of the Policy. After extracting the said paragraph, the Bench observed "It would be seen that this paragraph specifically mentions two Appendices-2 and 3. The latter words in the paragraph "in any of these Appendices", therefore, can refer to only these two Appendices named in the para viz. Appendices 2 and 3, and not to all the Appendices in the Policy. If the intention was to give an overriding force to paragraph 21(c) oxer all other Appendices in the Policy the concluding words would have been "in any of the Appendices" and not "in any of these Appendices". The items permissible to the Registered Exporters are contained in Appendix 17 of the Policy. This Appendix is more or less a self-contained one and it contains its own conditions and limitations."
14. The Bench, after extracting condition No. 5 in Appendix 17 observed:
"We find that only Appendix 2 has been given over-riding force over Appendix 17. Appendix 3 has not been given any such over-riding force. Appendix 3, in which entry Serial No. "355(10) - Potassium Cyanide" occurs is the list of limited permissible items. The entry 355(1) is a very specific one, no doubt. But it having hot been given an ovcr-nding force over Appendix 17, it could not exclude Potassium Cyanide from the generic entry "electroplating salts and brighteners". We are fortified in our conclusion by the Division Bench Judgement of the Hon'ble Andhra Pradesh High Court at Hyderabad in Hyderabad Engineering Industries v. Chief Controller of Imports & Exports, New Delhi-1987. (32)ELT 620(AP) in which it has been held that Appendix 17 was not subject to Appendix 3."
15. Finally, the Bench which heard the appeals concluded:
"We, therefore, hold that the restrictions of Paragraph 21(c) read with the specific Entry 355(10) of Appendix 3 could not come in the way of Potassium Cyanide being imported against the REP licences issued under Appendix 17."
16. We are more than satisfied that the order of this Bench reported in 1988 (38) ELT 339 wholly covers the issues involved in the appeals before us. It is unfortunate that the Collector (Appeals) not only ignored the binding precedent but has also proceeded to make uncalled for remarks to the effect that the order of CEGAT suffers from infirmities. We were not angered by the above observation. The observation only evokes pity for the Collector (Appeals). We would like to remind the Collector (Appeals) of the observation of the Supreme Court in East India Commercial Co. Ltd., Calcutta v. Collector of Customs, Calcutta, reported in 1983 ELT 1342 (S.C.) while considering the question whetheuany Administrative Tribunal can ignore the law declared by the High Court and start proceedings in direct violation of the law so declared, the Supreme Court observed:
"Under Art. 215, every High Court shall be a court of record and shall have all the powers of such a court including the power to punish for contempt of itself. Under Art. 226, it has a plenary power to issue orders or writs for the enforcement of the fundamental rights and for any other purpose to any person or authority, including in appropriate cases any Government, within its territorial jurisdiction. Under Art. 227 it has jurisdiction over all courts and tribunals throughout the territories in relation to which it exercises jurisdiction. It would be anomalous to suggest that a Tribunal over which the High Court has superintendence can ignore the law declared by that court and start proceedings in direct violation of it. If a tribunal can do so, all the subordinate courts can equally do so, for there is no specific provision, just like in case of Supreme Court, making the law declared by the High Court binding on subordinate courts. It is implicit in the power of supervision conferred on a superior tribunal that all the tribunals subject to its supervision should conform to the law laid down by it. Such obedience would also be conducive to their smooth working; otherwise, there would be confusion in the administration of law and respect for law would irretrievably suffer."
17. In the case of Hico Products Ltd. v. Collector of Customs, reported inl988 (36) ELT 308 (Tribunal). The Tribunal observed that the Quasi-judicial authorities in the Department cannot ignore or brush aside the Tribunal's decisions is a self evident proposition and it is not as if the Assistant Collector and the Collector (Appeals), in the present cases, have even attempted to distinguish the facts of the present cases from those of the cases decided by the Tribunal and come to a finding that these decisions are not applicable to the facts of the present cases.
18. The Special Bench'C' referred to the following observation of the Madras High Court iaSree Rajendra Mills Ltd. v. Joint Commercial Tax Officer, Salem, (1971 Vol. 28 STC 483):
"We consider that in the hierarchy of authorities set up under the Act, the Tribunal is superior to the Appellate Assistant Commissioner, who is bound by the orders of the Tribunal. The orders of the Tribunal will be as effective as the orders of this court so far as their binding character on the Appellate Assistant Commissioner is concerned. Merely because a tax case has been filed by the department it does not mean it acts as a kind of stay of operation of the order of the Tribunal. So long as that order of the Tribunal is not set aside, the Appellate Assistant Commissioner is bound to give effect to it, and if he fails to do it and by-passes it on the ground that the department has filed an appeal, it will be really a contempt of the Tribunal's order. In the circumstances, therefore, we should . think that the Appellate Assistant Commissioner will, as he is bound to, follow the Tribunal's view. It is, of course, open to the Appellate Assistant Commissioner to take his own view on the facts, but, so far as the law propounded by the Tribunal is concerned, it is binding and it should be applied by the Appellate Assistant Commissioner to the facts before him."
19. The above observation made in the context of the binding effect of the decision of the Sales Tax Appellate Tribunal, in our view, is equally applicable with respect to the decisions of this Tribunal.
20. It is unfortunate that the Collector (Appeals) without any justifying reason failed to follow the binding decision of this Tribunal which necessitated in filing of the present appeals.
21. Since the issues involved in these appeals are fully covered by our order reported in 1988 (38) ELT 339, we allow both the appeals, set aside the orders passed by the authorities below and direct that the appellants be granted consequential relief.