Customs, Excise and Gold Tribunal - Mumbai
Pacific Exports And Ors. vs Collector Of Customs on 14 July, 1994
Equivalent citations: 1994(48)ECC43
ORDER
R. Jayaraman, Member
1. All the aforesaid appeals involve consideration of the identical facts and issues and hence they were heard together and are being disposed of by this common order.
2. The details of the appeal numbers, the orders challenged and the gist of the orders of the authorities below are given in the Annexure to this order.
3. In the case of appeal C/127/94 Bom, appeal has been filed against the order of the Collector of Customs, Nhava Sheva, Bombay. In the case of Appeal C/34/94 Bom appeal has been filed against the order of the Collector (Appeals). In the case of other appeals, the orders impugned have arisen from the Collector of Customs, Bombay.
4. The undisputed facts, in all these appeals, can be identified as below. The appellants acquired Exim Scrips/REP Licences issued during the Policy Period AM 1990-93. These licences/Exim Scrips were either endorsed for import of items figuring in Appx.5-A of the said Policy or bearing an endorsement for allowing import of items in terms of para 192 of AM 1990-93 Policy. As per the said para 192, goods listed in Appx.5-A could also be imported subject to the conditions laid down in the aforesaid para. It is not the allegation of the department that the licences issued do not cover the imported item raw silk (which is an item imported in all the cases) at the time of issue of the licences, which have been acquired by the appellants. In all these cases, imports are after 17.12.1992 when a. Circular No. 19/92 dated 17.12.1992 was issued by DGFT clarifying that such licences issued during the Policy period AM 1990-93 can be valid only where the items are specifically mentioned in the licence and they are not valid if the items are referred to in terms of Appendices of the earlier Policy, if such items are figuring in the Negative List of the new Policy AM 1992-97. New Policy AM 1992-97 was announced on 1.4.1992. According to the new Policy AM 1992-97, as per the provisions of para 4 of the said Policy, licences issued during the earlier policy period shall continue to remain valid. Hence the contention of the appellants before the adjudicating authority was that these licences which had been specifically endorsed for Appx.5-A items of AM 1990-93, should continue to be valid, since raw silk was an item figuring in Appx.5-A of AM 1990-93. However, the adjudicating authorities have rejected this contention and in the adjudication proceedings held by the authorities goods were ordered confiscation, but allowed redemption on payment of fines as detailed in the annexure attached to this order. They were also imposed with penalties as indicated in the said annexure. The present appeals are against the aforesaid orders.
5. Heard elaborate arguments of S/Shri V.S. Nankani, and Anil Balani, the Id. advocates for the appellants and Shri K.P. Mishra, the Id. SDR, on behalf of the department.
6.1. Shri V.S. Nankani, the Id. Advocate made the following propositions to plead the case of fhe appellants which are briefly indicated below. The licences are valid for import of items as are permissible on the date of issue thereof. Hence only when validity of the licence is made inoperative in accordance with law it shall cease to be valid. ...[Illegible] The licence shall continue to be valid for the import of items specified in Appx.5-A. He also contends that the doctrine of incorporation is to be read in the licences issued with endorsement making the licence valid for import of Appx.5-A items instead of elaborating all the items covered by Appx.5-A in the licence. The licence has been endorsed valid for import of all items figuring in Appx.5-A. Hence the doctrine of incorporation has to be read in the licence.
6.2. Even if the licence is to be read in the context of the new Policy, by virtue of para 4 of the new Policy, licences issued during the previous policy shall continue to be valid. He has also referred to the definition of licence given in para 7 (21) of the new Policy to point out that the licence means the licence granted by the licensing authority.
6.3. He also contends that even after the Public Notice No. 278/90-93 dated 29.2.1992 and the amendment made thereafter by Public Notice No. 279/90-93 dated 11.3.1992 they could have only affected for amending 1990-93 Policy. They did not survive after that Policy came to an end. There can be no change in the position even after the new Policy in view of the clear provision to the effect that the licences issued earlier continued to be valid even after the new Policy. It is also his contention that para 4 is only a transitional arrangement and can be decided in two parts. The substance of the para is to be taken as a whole and the later part of para 4 seeks to exclude licences which are already issued.
6.4. He also pleads that the Negative List in the new Policy consists of absolutely prohibited goods forming under one category and the list of restricted goods under another category. In the case of restricted goods, they can be allowed import against the licence or in accordance with the Public Notice. Here, in this case, though a Public Notice has not been issued under the new Policy, in regard to raw silk, they can be allowed against licence. Since the licence is already procured and is valid even after announcement of the new Policy, import cannot be construed to be unauthorised.
6.5. He also refers to para 196 to plead that para 1% is not applicable because imports have taken place after 1.4.1992, in the new Policy period and hence para 196 has no effect during the period of 1992-97 Policy. Even assuming that para 196 is applicable, it is subject, to para 4 of the new Policy which has an over-riding effect because it is a transitional arrangement. He also pleads that even if para 196 is to be applied, the only requirement is that they have to produce the licence which they have done.
6.6. He also contends that there is a direct judgment of the Calcutta High Court in the case of Enterprise International Ltd. v. Collector of Customs reported in 1994 (69) ELT 453 (Cal), holding that circular issued by Director General of Foreign Trade (referred to supra) is not in accordance with law and import of raw silk against Exim Scrips/REP licences issued during the Policy Period AM 1990-93 is valid. The Calcutta High Court have allowed the import of raw silk against Exim Scrips/REP licences and according to his understanding, no appeal has been filed against this judgment.' On a query by the Bench, the Id. SDR also confirms that according to his information, no appeal has been filed against the judgment of the Calcutta High Court referred supra. In view of this, the Id. Advocate pleads that the judgment of the Calcutta High Court, directly on this issue, is binding on the authorities adjudicating on issue, especially when there is no contrary judgment of any other High Court. Hence he would plead that apart from the arguments on merits, this accepted factual position itself is sufficient to allow the appeals.
6.7. He also refers to a number of previous Bills of Entry, where in the Collector's order quoting the File No. have been cited and the same item raw silk has been allowed against REP/Exim Scrips. In these cases, such clearances have been allowed even after the issue of Circular by the Director General Foreign Trade in December, 1992 made public on 3.1.1993. He contends that as can be seen from the Bills of Entry, the practice continued till in August/September, 1993. In the circumstances, imposition of penalties and subjecting the goods to confiscation and imposing redemption fines are not justified. He refers to the case laws in support of his contention.
7. Shri Anil Balani, the Id. Advocate for appellant in Appeal C/47/94 Bom, adopts the arguments of Shri V.S. Nankani, and also pleads that para 4 of the Policy 1992-97 has not been changed even on 31.3.1993, when the new Policy AM 1992-97 was announced, even though the Circular is dated 31.1.1993 and having regard to the effect of Circular dated 31.1.1993. In other words, he would plead that the Circular has not been made into a law by suitable amendment to para 4. Amendment in the Policy can be made only by the Central Government by tissue of a Notification and not by way of issue of Circular by the DGFT.
8.1. Shri K.P. Mishra, the Id. SDR, in reply contends as below. Para 4 of the new Policy contains two parts. According to the first part of para 4, any notification or Public Notice or anything done in the old Policy has to be consistent with the provisions of the new policy. Issue of licences under old Policy is an act done under the old Policy. Hence such an act has to be consistent with the provisions of new Policy. This position has to be read into, while considering the latter part of para 4 indicating that licences issued during the earlier policy shall continue to remain valid.
8.2. The object of the new Policy is no doubt to further liberalise. However, even in the liberalised context if raw silk is put in the Negative List, it is to be considered as a sensitive item which can be allowed only against licences issued after the new policy or in accordance with the Public Notice issued by the Government. Hence a licence issued during the earlier policy period valid for Appx.5-A items cannot be considered to be a specific licence issued for the item raw silk, which is figuring in the Negative List and which can be imported only against a specific licence. Since the licences issued in the earlier Policy valid for Appx.5-A item is not consistent with the new Policy, because of the specific mention in the negative list, such licence being inconsistent with the new Policy cannot be valid.
8.3. He also contends that the licences were issued during AM 1990-93 Policy and hence they should satisfy para 196 of the Policy.
8.4. On Calcutta High Court judgment referred to and relied upon by the Id. Advocate, he pleads that para 196 has not been taken into consideration. Hence to that extent it is not a judgment, which could be accepted, since all the legal aspects have not been considered. Moreover, the Collector has not mainly gone by the Circular issued by the DGFT and that Circular was only struck down by the Calcutta High Court. Hence that judgment would not come in the way of the decisions by the adjudicating authorities which have been taken independent of the Circular issued by the DGFT.
8.5. As regards past practices, at the most, that can be an argument with regard to their claim of bona fide seeking for remitting the penalty but that would not come in the way of confiscation of the .' goods and imposition of redemption fine, if the Tribunal holds that the import is unauthorised and the past practices are not in accordance with law.
9. After hearing both the sides, the main objection taken by the Department in these appeals is that the Exim Scrips/REP licences are endorsed in terms of generic descriptions valid for import of Appx.3 and Appx.5-A items of AM 1990-93 Policy and raw silk is now in the Negative List as per the Policy AM 1992-97 vide Entry at J-8 Chapter XV Part IL Therefore, the goods cannot be allowed import against such licences. In this context, the ITC Circular dated 17.12.1992 read with Para 196 of Import Policy 1990-93 is also relied upon. Hence before going into the merits in all these cases, it may be observed that the Circular issued by the Director General of Foreign Trade was one of the basis cited in the show cause notice and it is undisputed that the Calcutta High Court in the case of Enterprise International Ltd. v. Collector of Customs 1994 (69) ELT 453 (Cal) has held the said Circular to be not in accordance with law and also held that import of raw silk against these Exim Scrips/REP licences is valid. Since the judgment is not challenged by the Department by way of appeal as reported by the Id. SDR, this judgment has become final. In the absence of any other judgment from any other High Court or from the Supreme Court on this issue this decision would be binding on the Tribunal, irrespective of whatever be our views on merits.
Judicial discipline warrants that when there is a judgment directly on the issue and in the absence of any other judgment to the contrary, that judgment, has to be respectfully followed and given effect to. This is the view taken by the (Larger Bench) in the case of Ashwin Vanaspati Industries (Pvt.) Ltd v. Collector of Central Excise & Customs, Vadoara--Order No. 2507/93 dated 21.12.1993. It is also not open for the Tribunal to contend that the aforesaid decision of the Calcutta High Court has not taken into consideration para 196 and in that regard it is defective. It that be so, the Department could have challenged the decision of the Calcutta High Court by way of an appeal and got stay of the same. We find that the judgment of the Calcutta High Court is a Division Bench judgment. In the circumstances, on this ground itself the appeals are required to be allowed. Apart from this the Department, even after issue of this Circular by the Director General of Foreign Trade, have been allowing clearances of raw silk against the licences and the Collector has also observed that there is a practice of allowing clearances of this item against Exim Scrips/REP licences. In the circumstances, there is an admitted established practice of allowing clearances against the Exim Scrips/REP licences issued during the Policy Period AM 1990-93 and they cannot be construed to be stray clearances. In the circumstances, benefit of past practice also would be available to the appellants, even if they are held to be liable to confiscation technically, heavy redemption fins or imposition of penalties, on them cannot be justified. Moreover, in these cases, there is absolutely no case for imposition of penalties, when the admitted position is that the appellants going by the past practice have resorted to these imports and hence no mala fide could be attributed to them. Since the imports have been construed to be authorised as per the decision of Calcutta High Court judgment (supra), the past practice of allowing clearances against Exim Scrips/REP licences has also acquired legal sanctity in terms of the judgment of the Calcutta High Court. Hence imposition of redemption fines are also not justified.
10. We also, are to observe that even on merits of the arguments, we are not persuaded to appreciate the objection raised by the Department for the following reasons. We accept the proposition of the Id. SDR Shri K.P. Mishra to the effect that licences issued under the previous Export Policy are also to be construed as an act done under the old Policy. The question is whether the licences issued before the announcement of the new Policy are inconsistent with the provisions of the new Policy is to be considered by us. Only if it is inconsistent, they can be held to be not applicable. In this context, we looked into the Negative List of the new Policy vis-a-vis the provisions of the earlier Policy. Under the Policy 1990-93 raw silk is an item figuring in list of canalised items of Appx.5-A. A canalised item is also a restricted item, which is not freely allowable for import by any one. When this canalised item is permitted import by specifically endorsing in Exim Scrips/REP licence, it is an item which is allowed to be imported against such licence issued under the Policy AM 1990-93. It is not in dispute that the validity period of this licence/Exim Scrip covers the date of shipment of the goods. They shall therefore continue to be valid for import of items permitted therein, so long as it is not inconsistent with the provisions of the new Policy. This is what is contemplated in the transitional arrangement laid down in para 4 of Chapter I of the new Policy. In the new Policy, raw silk is not figuring in List of Prohibited Items which cannot be imported at all and not permitted to be imported even under licence. Raw silk is figuring in Part II--Restricted Items under Sub-section J--Miscellaneous Items and the nature of restriction is indicated as "Permitted to be imported only against a licence or in accordance with a Public Notice issued in this behalf. Hence even under the new Policy, it can be imported against the licences and cannot be imported without a licence. Hence when a licence has already been issued and is valid covering the period of shipment, which is falling in the new Policy period is available, such a licence cannot be construed to be inconsistent with the provisions of the new Policy, where also the requirement is that raw silk can be imported only against a licence. Going by this view, we find that even the first part of para 4 does not come in the way of holding that the licence issued under the earlier Policy AM 1990-93 is inconsistent (sic not inconsistent?) with the provisions of the new Policy AM 1992-97. It is not disputed that all items other than those figuring in the Negative List can be freely imported even under the new Policy. A person holding a licence issued under the Policy Period AM 1990-93 need not have to use it for an item, which is freely importable not figuring in the negative list. A licence will be required to be used, only when an item is figuring in negative list and if such a licence has already been issued by the competent authority, no fresh licence is called for.
11. We also find that Para 196 of the Policy AM 1990-93 does not seem to come in the way of these licences/Exim Scripts. The requirement in that para is that notwithstanding anything contained in that Policy (AM 1990-93), items covered by REP Licences should continue to remain in the permissible Appendices on the date of their actual import. This para in 1990-93 Policy cannot be read in isolation de hors para 4 of the new Policy, setting out the transitional arrangements. Moreover, the item raw silk, even under AM 1990-93 was a restricted item. It continued to be a restricted item in the Negative List of the new Policy. No appendices are retained in the new Policy. All items are made importable excepting those figuring in negative list. Raw silk is a restricted item in the new Policy allowed against a licence. Hence when a licence for the restricted item is already available, and its validity period has not expired, it cannot be held to be hit by para 196 of the Policy. This is what would emerge on reading para 196 of the earlier Policy and para 4 of the new Policy together.
12. In view of the aforesaid considerations, we allow the appeals with consequential relief's, wherever called for, either by way of discharge of bank guarantees or by way of grant of refund.