Customs, Excise and Gold Tribunal - Mumbai
Collector Of Customs vs Oswal Agro Mills Ltd. on 5 November, 1988
Equivalent citations: 1989(22)ECR444(TRI.-MUMBAI), 1989(41)ELT104(TRI-MUMBAI)
ORDER R. Jayaraman, Member (T)
1. This is an appeal filed by the department against the order of the Collector of Customs, Ahmedabad bearing No. VIII/48-85/ Cus (T)/83 dated 20.6.83. The said appeal had been filed by the department in pursuance of the Order No. 111R dated 01.11.1983 of the Central Board of Excise & Customs, passed in exercise of the powers conferred on the Board under Section 129-D(1) of the Customs Act, 1962.
2. The relief claimed in the appeal is for setting aside the aforesaid order of the Collector and to determine the correct legal position of issue raised and to declare that the import of lard is not correct under OGL Appendix 10(1) and the same is covered under entry 41 of Appendix 8 of Import and Export Policy, 1982-83.
3. The facts of the case necessary for the disposal of the present appeal can be briefly stated as below.
4. The respondents imported a consignment of 3474.416 M.T. of lard and filed two Bills of Entry for clearance of the aforesaid consignment. The respondents claimed clearance of the consignment in question under OGL Appendix 10(1) of Import Policy AM-1982-83 against Export house additional licence dated 30.1.82. The respondents also claimed the clearance in terms of para 187(C) read with Appendix 10(1) of the Import Policy AM 1981-82. A show cause notice was issued to the importers alleging that under entry No. 41 of Appendix 8 of Import & Export Policy AM 1982-83 tallow of any animal origin including mutton tallow is canalised and lard which is a fat extracted from the tissues of pigs, hogs etc. and hence import of this item against this additional licence as OGL item cannot be permitted.
5. In the adjudication proceedings before the Collector of Customs, the respondents referred to various technical books pointing out that the word 'tallow' refers to only fat of bovine animals and the item imported, namely lard is the fat rendered from fresh clean, sound fatty tissues from hogs and any tissue from pigs, hogs, swaine, boar or sow. They are also known in the international market as distinct from tallow and separate prices are quoted in the case of animal tallow, which is obtained from the body fat of catties, sheep and goats. It was, therefore, pleaded before the Collector that both technically as well as in commercial parlance lard and animal tallow are treated as separate product and the entry against item 41 of Appendix 8 refers to only tallow of any animal origin including mutton tallow and hence lard, which is distinct from tallow cannot come its purview. Based on this contention, the Collector, in the adjudication proceedings discharged the show cause notice issued to the respondents and allowed the consignment accepting the licence produced. The department have come in appeal against the said order of the Collector of Customs.
6. The learned S.D.R., Shri K.M. Mondal, argued on behalf of the department stated as below:
7. A show cause notice was issued to the respondents by the Collector on 22.5.83 and the adjudication was done on 20-6-83. However, before adjudication he had made a reference to the office of the Chief Controller of Import & Export seeking clarification as to whether lard, which is soft white fat from hogs will come within the meaning of tallow of any animal origin. He has also indicated in his reference to the CCIE that lard is usually a fat obtained from fatty tissues of pigs, hogs, swaine, boar and sow. In the circumstances he has asked for clarification whether tallow referred to in entry No. 41 of Appendix 8 would cover lard as well. In response to his reference, office of the CCIE replied that the import of the impugned item is canalised through State Trading Corpn. of India under the description of tallow of any animal including mutton tallow. It is also indicated in the said reply from the office of the CCIE that they have consulted DGTD on this point. Another letter was also received from the office of the CCIE dated 12-9-83, which specifically refers to the import by the respondents and advised that import of 'lard' is canalised and it is covered under the description 'Tallow of any animal origin including mutton tallow' and hence the import is unauthorised. It was the contention of Shri Mondal that the Collector himself sought for a clarification from CCIE and also having received a reply on 17-5-83 did not take into account the opinion given by the office of the CCIE but passed the impugned order contrary to the clarification given by the CCIE. In this connection he took us through the provision of Para 222 of the Import Policy, which specifically provides for the binding nature of the clarification given by the CCIE. He also argued that the date of adjudication being 20-6-83, the clarification dated 17-5-83 from the CCIE was before the Collector and it has not been considered by the Collector despite the fact that as per the Policy, it is binding. In this connection he also cited the Delhi High Court judgment reported in ELT 1987 (29) page 753, wherein the High Court had held that in the matter of interpretation of ITC Policy with regard to the provisions of the licence as well as the additional licence, the clarification given by the CCIE is legally binding. In the circumstances, it was pleaded by Shri Mondal that the order passed by the Collector without taking into account the clarification received from the CCIE is bad in law and is required to be set aside. On being asked that in the context of the fact that the goods have already been cleared, what specific relief is sought for by the department, Shri Mondal stated that the prayer as per the appeal is to set aside the order and to determine the correct legal position of the issue raised and to declare that the import of lard is not correct under OGL Appendix 10(1) and the same is covered under entry 41 of Appendix 8 of Import and Export Policy, 1982-83. If the Tribunal comes to the conclusion that the said order is required to be set aside on the basis of the submissions, it is inferred that the matter may have to go back to the original authority for considering the issue afresh.
8. Shri Rajiv Datta, the learned advocate, appearing on behalf of the respondents, argued as below:
9. As regards the binding nature of the clarification of the CCIE, he referred to the Calcutta High Court judgment reported in ELT 1988 (37) page 44 Beno Gupta v. Collector of Customs. According to this judgment the High Court had held that the interdepartmental communications, which are not issued in the form of Public Notice do not have the force of law and are not binding. Moreover even if the Collector seeks for clarification, any opinion given cannot be binding on him, since he is the final adjudicating authority. It was also his submission that the Collector has gone through the various technical books including the BTN and has come to the conclusion that both technically as well as commercially tallow and lard has distinct products and has accordingly discharged the show cause notice. In this connection, he referred to the citation of the Supreme Court judgment 1988 (4) SC page 1988 (Judgment To-day). It was also his submission that even the Supreme Court have recognised the importance to be accorded to the importance of commercial parlance in case of dispute and where the Tariff entry does not clearly give the technical distinctions. He also argued that in this case, even for the purpose of customs assessment, lard was treated as distinct from tallow and the impugned item was charged to 100% duty and the concessional rate of duty of 15% available to the tallow has not been extended to the item. It was also contended by him that later by a Public Notice issued under 42 (ITC) PN dated 01-10-83, the entry was amended to include fat, oil etc. thereby making the position clear that at the time of import only tallow was sought to be canalised and not lard, which comes under the category of fat of pigs, hogs etc. When the learned advocate's attention was drawn to the arguments that the clarification, which the Collector sought for from CCIE was received well before the adjudication, which the Collector has not taken cognizance of the pleaded that the Collector must have taken this into account and because of the fact that it is marked secret, he has not specifically referred to this in his adjudication order. All the same he has considered the other view also and after satisfying himself that lard is distinct from tallow both commercially as well as technically, he has passed the impugned order. Since he is the final authority to decide even as per 325 of the Hand Book, his order cannot be stated to be illegal or improper.
10. We have considered the arguments from both sides. We propose to dispose of this appeal on the short point, namely whether the Collector is justified in ignoring the clarification given by the CCIE in his letter dated 17-5-83 and whether the department's grievance on the ground is justified. On perusal of the records, it is observed that the letter dated 17-5-83 written by Shri Takhat Ram, Jt. Chief Controller of Imports & Exports New Delhi, in reply to the reference made by the Collector is as extracted below:
"The import of this item is canalised through State Trading Corporation of India under the description of tallow of any animal origin including Mutton tallow. We have consulted DGTD also on this point. In this regard this office letter No. IPC/54/7/83/13716 dated the 28th March, 1983 (copy enclosed) addressed to all Collector of Customs may also be referred to for necessary action."
This letter dated 17-5-83 is not marked "secret". Only the other letter dated 12-9-83 referring to the import by the respondents is marked secret. In any case, this letter was not before the adjudicating authority before adjudication but was received only after adjudication. When an open clarification has been received from the office of CCIE under letter dated 17-5-83, particularly when it invites attention to a letter issued to all the Collectors of Customs, whether the Collector is justified in not taking cognizance of that clarification is a point to be considered. This clarification received from the CCIE dated 17-5-83 is not marked secret and it is an open letter inviting attention to a circular letter issued to all the Collectors of Customs in this regard. The Collector could have conveyed the gist of the interpretation made by the CCIE to the Respondents and after taking into account his comments could have come to his conclusion. In any case, the binding nature of the clarification cannot be brushed aside. In this connection, we also take note of the judgment of the Bombay High Court in the case of Richardson Hindustan Limited v. Union of India-1988 (37) ELT 496 (Bom.), therein the learned judge has held as below :-
"This interpretation cannot be challenged by the Customs authority. In fact in the Hand Book of Import Export Procedures 1985-88, in paragraph 124, it has been stated 'As in the matters relating to import-export policy and procedure, the interpretation given by the Chief Controller of Imports & Exports is final in case of doubt regarding these matters, the Customs authorities should consult the Import Trade Control authorities before clearance of the goods.
In the case of Lokash Chemical Works v. M.S. Mehta, Collector of Customs (Preventive) reported in 1981 ELT 235 (Bom.) a learned Single Judge of this Court observed that interpretation of licensing policy was the function of the licensing authority. It was not for the Customs authorities to interpret the licensing policy. If the licensing authority interprets the policy one way and the Customs authorities take a contrary view, there will be a conflict between the two authorities, with the result that the importer would be put to considerable incon venience."
11. In the context of the aforesaid decision of the Bombay High Court and also the view held by the Delhi High Court referred to by the Departmental representative, we are inclined to agree with him that the Collector cannot brush aside the clarification received from the licensing authority especially when it has been received well before the adjudication and also the Collector himself has sought for the clarification. The learned advocate's arguments by citing the Calcutta High Court's judgment has also been considered. In that case, there was an established practice of importation of rapeseeds under REP license for seeds, bulbs etc. The Customs authorities have contended that a telex message was received on a particular date from the Joint Chief Controller of Imports & Exports clarifying that rapeseed is not covered by shopping list in Appendix 17. In that context, the Calcutta High Court have held that such a telex message without an issue of a Public Notice cannot be taken advantage of, especially when some previous consignment have been released under REP licence issued under Appendix 17.
We, however, observe that the Collector while seeking for clarification could have done it with the knowledge of the importers and also could have made available a copy of the clarification received from the licensing authority and after taking into consideration the objection from the importers, could pass the order. In any case, he cannot ignore the clarification received from the licensing authority and take a view of his own. In other words, the clarification given by the licensing authority cannot be brushed aside by him. On this short point, we hold that the order passed by the Collector is bad in law and is required to be set aside. We, however, note that as per the order of the Collector, discharging the show cause notice, the goods have been released and no useful purpose would be served in remanding the case to the Collector inasmuch as in a case of this type where the authorities themselves were in doubt and sought for a clarification, there is no justification for consideration of imposition of penalty. Inasmuch as the goods have already been released and also because we are of the view that no penalty is justifiable in this case, we confine ourselves to the prayer made in the appeal viz. that the order of the Collector is required to be set asidse. We, however, hold that the case does not call for sending back to the Collector in view of the circumstances, stated above. The appeal is disposed of accordingly.