Customs, Excise and Gold Tribunal - Calcutta
Collector Of Customs vs Mansingka Brothers on 26 November, 1986
Equivalent citations: 1987(13)ECR717(TRI.-KOLKATA), 1988(38)ELT105(TRI-KOLKATA)
ORDER D.C. Mandal, Member (T)
1. These appeals relate to common issues. These were, therefore, taken up for hearing together and are being disposed of by this common order.
2. Appeal No.C-152/84-Cal., vide Sr.in was filed by the Collector of Customs, Calcutta as per order of the Central Board of Excise & Customs, New Delhi in Order in 1/R-Cus/Gr. dated 23.7.1984 under Section 129-D(1) of the Customs Act, 1962, against the order dated 17.11.1983 passed by the said Collector. The other appeals, vide Serial Nos.2 to 10, were filed by the importers concerned against the respective order-in- original passed by the Collector of Customs, Calcutta.
3. The facts of the cases, in brief, are as follows: -
(i) Appeal No.C-152/84-Cal.
(a) M/s Mansingka Brothers, respondent in , entered into a contract No. Oil/002/D/83 dated 15.3.1983 with M/s Kuok (Singapore) Pvt. Ltd., Singapore for importing 1500 M/Tons of Stearin Fatty Acid. The goods were to be shipped in part consignments. The first consignment of 200.17 M/Tons of the goods arrived at Calcutta Port on 13.9.1983 per "SS Johneverett". The respondent filed Bill of Entry on 13.9.1983 for clearance of the goods under OGL - Appendix 10 - Item No. 1, list 8, Part III of I.T.C. Policy 1983-84. On 24.9.1983 the Assistant Collector of Customs issued a show cause notice alleging that the importation of the goods was not authorised under Open General Licence vide Appendix 10 of the Import Policy. It was also stated in the show cause notice that Stearin Fatty Acid was covered by the term "Palm Fatty Acid " appearing at Sr.No. 50 of Appendix 4 of the Import Policy 1983-84 as "Palm Fatty Acid" is a generic term and stearin fatty acid is derived from the source of palm. Since "Palm Fatty Acid" was a banned item, the respondents were asked to show cause as to why the goods should not be confiscated under Section 111 (d) of the Customs Act. The respondents explained, in reply to the show cause notice, that Palm Fatty Acid and Stearin Fatty Acid were two different products, chemically and also as per understanding of the Trade. The Collector of Customs, Shri T.S. Swaminathan, after considering the reply to show cause notice and giving a personal hearing, passed order to release the goods under OGL In the adjudication order, while ordering release of the goods, the Collector observed as follows:-
"I have carefully considered the arguments. There is considerable force in what the importers have placed before me. in the trade, palm fatty acid and palm stearin fatty acid are differently known.The source from which these materials are derived is also different in that palm fatty acid, is derived from palm oil, while stearin fatty acid is derived from palm stearin, the latter being one of the constituents of the palm oil. In composition also these two materials differ. While palm oil contains palmitic acid to an extent of 41 to 47 per cent, the palmitic acid content in palm stearin is higher, starting from 46 to 74 per cent. Similarly, in terms of oleic acid (unsaturated acid) the palm oil content is nearly 37 to 40 per cent, while palm stearin acids have lower percentage, namely, 15 to 37 per cent. Due to the lower content of oleic acid, the iodine value for palm stearin is 21 to 49 while for palm oil, it is 51 to 55. Also the description in appendix 9 for palm oil is an artificial definition in that the term has been allowed to include even other oils, such as, palm Kernel Oil and also the constituents of palm oil, namely, palm olein and palm stearine. However, this artificial definition cannot be transferred to Appendix 4 where the term used is 'palm fatty acid' without any qualification or addition. This position appears to be a lacuna in the policy. It is a legal avoidance, but not illegal import. In these circumstances, the goods may be released. WREC if necessary may also be issued for the period for which the goods were detained."
(b) The second consignment of the goods weighing 167.244 M/Tons against the same contract arrived at Calcutta Port on 2.11.83 per vessel "Ramoneverett." The respondent sought clearance of the goods under OGL vide Sr. in of Appendix 10, list 8, Part III of Import Policy 1983- 84. Bill of Entry for clearing the goods was filed on 9.11.83. The Collector of Customs, Calcutta, vide his order dated 17.11.1983, allowed the clearance of the goods on caution. No show cause notice was issued to the respondents before passing this order and no opportunity was given to explain their case. Copy of the order of caution was also not endorsed to the respondents. Extract from the Collector's order dated 17.11.1983 in File No. S/33-78/83-A (Gr. I), as filed with the appeal memorandum, reads as follows :-
"In so far as the technical aspect is concerned I have discussed with the Deputy CWef Chemist as well as with the concerned Deputy Collector. My tentative view is as follows :-
From palm oil by fractionation, two products are obtained. The first one is palm olein and the other one is palm stearin. From palm stearin by further processing, two products are obtained, one is fatty acid and another is glycerin. Here we are concerned with the fatty acid which is obtained from palm stearin. Here we find that fatty acid can be obtained from palm stearin which in turn is obtained from palm oil. This product can, therefore, be called stearin fatty acid which the importers are claiming to have imported. The other process of obtaining fatty acid Is directly from palm oil by direct processing. This product can be called palm fatty acid which is banned. The question is whether the palm stearin fatty acid which is indirectly obtained through palm stearin is the same as palm fatty acid. The difference is only this much that while both of them are derived from palm oil, one (palm fatty acid) is derived by direct processing, whereas the other one (palm stearin fatty acid) is derived by indirect processing. It is derived from a fraction of the palm oil. Ultimately, it is the fatty acid which is produced. The question to be determined is whether the palm fatty acid which is banned will also refer to palm stearin fatty acid which is claimed by the importer.
Chemically speaking both palm fatty acid and palm stearin fatty acid are not well known chemical derivatives occurring in any technical literature of standard books. The Poram Technical Brochure of Malaysian Palm Oil Refinery Industry is available for consultation. The goods have also been imported from Malaysia and the country of origin is Malaysia. In this literature, there is a mention of crude fatty acid derived from palm oil. Obviously, this refers to the fatty acid derived directly from palm oil and not from palm stearin. Otherwise it would have been described as palm stearin fatty acid. There is no such expression as palm stearin fatty acid in this Technical literature. In this case, apart from the party's statement there is no other way of distinguishing whether it is derived from palm oil directly or from the fraction of palm oil, namely, palm stearin. The Deputy Chief Chemist told me that it is not possible to distinguish it in our laboratory. Ultimately, the products, that is, fatty acid derived from palm oil either directly or indirectly (i.e. from the fraction, namely, palm stearin) are the same excepting for the difference in the palmitic acid content. I have also seen the minutes of the meeting of the Heads of Laboratories of Customs & Excise held on 21 st and 22nd April, 1983 a copy of which is placed in the file. In this discussion also, the minutes say that the products would be taken as same although there is a suggestion that C.C.I. & E. may have to give a clarification. Dy. C.C.'s opinion has also been seen by me. He also said that both the items should be taken as the same.
In order to find out whether palm fatty acid and palm stearin acid are same or not, it would have been better to find out from the market whether they are known as different entities in the market parlance. But there is no Indian market of these goods and the importations are very rare and therefore there is no question of finding out whether in the market parlance they are known as same or not. In any case, if any commodity as palm stearin or palm fatty acid was known as a different entity in the market, then the technical literature would have described this as such. In fact, I find from the technical literature mentioned above that the crude fatty acid described therein does not distinguish between the fatty acid derived from palm oil directly or from a fraction of palm stearin. Obviously, there is no such other product known either in the trade or in the technical literature as palm fatty acid, otherwise it would have been distinguished even in the technical literature also. In fact, the palm stearin fatty acid is written by deriving the nomenclature from its method of derivation. It is not our contention that palm oil and palm stearin are the same. But it is only our contention that the end product, that is, the fatty acid derived from palm oil is the same whether you derive it directly or indirectly through another fraction, it has, therefore, to be concluded that the goods imported fall within the banned category. However, the licence aspect will have to be discussed separately.
D.C. (N) Sd/ S. Mukhopadhyay Collector dated 17.11.1983.
I have further discussed with the Deputy Collector. I have also taken note of the fact that previous Collector, Shri T.S. Swaminathan has already allowed the importation after considering it in length. His order is in File No. S/33-67/83-A (Gr.l). D.C. tells me that canalisation of all fatty acid has been done although no order has so far been received by us. It is expected any time. It has been reported in the news, he tells me. In view of this, it may not be possible for the importers to import this item in big quantities under OGL Since the previous Collector has already allowed it, it would not be proper to confiscate it even though I have recorded a note yesterday that purely on merit I have a different opinion. I also take note of the fact that the chemists also differed and consider It as a doubtful case. It is also found that Cochin is allowing such consignment In view of all these circumstances, I decide to release this consignment on caution, (no need of p.h.).
Sd/-S.Mukhopadhyay Collector 17.11.1983 D.C. (Nair)"
(c) In exercise of the powers conferred upon it under Section 129-D(1) of the Customs Act, 1962, the Central Board of Excise & Customs, New Delhi, called for the records of the above order dated 17.11.83 for the purpose of satisfying Itself as to the propriety and legality of the said order and examined the same. The Board, vide its order dated 23.7.84, directed the Collector of Customs, Calcutta to make an application against his order dated 17.11.1983 to this Tribunal under Section 129-D(4) of the Customs Act 'for imposing redemption fine in lieu of confiscation proportionate to the margin of profit and also for imposition of personal penalty on the importers under Section 112 of the Act commensurate to the gravity of offence and for suitably modifying the said order of the Collector." Accordingly, the Collector of Customs filed this appeal.
(ii) In the remaining 9 appeals, vide appeals at serial Nos. 2 to 10, the appellants Imported stearin fatty acid against contracts entered into with foreign suppliers before 11.11.1983. On arrival of the goods, the appellants sought clearance of the same under O.G.L. vide Appendix-10(1) of the Import Policy for 1983-84 on the ground that the goods did not figure in any of the Appendices 3 to 9 and 15 of the Import Policy. The Custom House, Calcutta took a different view that the goods were covered by expression palm fatty acid appearing at serial in 0 of Appendix 4 of the Import Policy for that year and hence the import of the same was banned prior to 11.11.83 and canalised through State Trading Corporation of India from 11.11.1983. The appellants filed Writ Petitions in Calcutta High Court and obtained interim orders, but the same were lateron vacated/withdrawn. The appellants then submitted before the adjudication proceedings under the Customs Act before the Collector of Customs, Calcutta.The Collector of Customs did not accept the contentions of the appellants and held the import of the goods as unauthorised, being covered by Serial in 0 of the Appendix-4 of the Import Policy. He adjudicated the cases and confiscated the goods under Section 111 (d) of the Customs Act, 1962 with fine in lieu of confiscation of varying amounts and also imposed penalty of various amounts under Section 112 of the Customs Act on the appellants. The present appeals are against the said orders of Collector of Customs, Calcutta.
4. During the hearing before us Shri Jatin Ghosh, learned Advocate argued for the appellant in and respondent in . Shri S.D. Nankani, learned advocate argued for the respondent in and Appellants No. 2,3,4,8 and 9. Shri Habibullah Badsha, learned Advocate argued for the appellants in ,6 and 7. Shri Bhaskar Gupta, learned Advocate argued for the Appellant No. 10.
5. Arguing for Appellant in , Shri Ghosh stated as follows:
5.1. The respondent described the goods as "Palm Stearin Fatty Acid". It is derived from palm oil by indirect method. It is included in the term "Palm Fatty Acid", the import of which was prohibited during the relevant period vide serial No. 50 of Appendix 4 of the Import Control Policy for the year 1983-84. At page 3 of the Collector's order dated 17.11.1983 he categorically stated that the goods imported fell within banned category. It was a categorical finding that the goods were banned. The Collector released the goods as his predecessor Collector released similar goods. The operative part of the order is not correct. Any statutory authority is to give his own decision. After holding that the goods were banned, the Collector should have confiscated the goods under Section 111 (d) of the Customs Act. The goods imported against the prohibition imposed under the Customs Act or under any other law for the time being in force, shall be liable to confiscation. This section cast a mandatory obligation for confiscation of the goods. The importer was liable to penalty under Section 112 of the Act. By releasing the goods, the Collector committed an error of law. Order for home consumption of the imported goods under Section 47 of the Customs Act can be made when the goods are not prohibited goods. So, the Collector having once held the subject goods as unauthorised import, could not release them for home consumption.
5.2. Section 129-D(1) of the Customs Act, 1962 empowers Central Board of Excise & Customs, New Delhi to call for and examine the records of any proceedings in which a Collector of Customs as an adjudicating authority has passed any decision or order under this Act for the purpose of satisfying itself as to the legality or propriety of such decision or order, and may by order direct such Collector to apply to the Appellate Tribunal for the determination of such points arising out of the decision or order as may be specified by the Board in its order. The Adjudicating Officer has been defined in Section 2(1) of the Customs Act. According to this definition, the "Adjudicating authority does not include Collector (Appeals)". In view of this definition, the Collector who passed the order dated 17.11.1983 was an Adjudicating authority. Accordingly, in terms of provision of Section 129-D(1) of the Customs Act, the Central Board of Excise & Customs could review the said order passed by the Collector. Section 129-D(4) of the Act provides that when an application is made by the Collector in pursuance of an order under Sub-section (1) of Section 129-D, it shall be heard by the Appellate Tribunal as if such application were an appeal made against the decision or order of the Adjudicating Authority and the provisions of the Customs Act regarding appeals, including the provisions of Sub-section (4) of Section 129-A shall apply to such application. Section 129-A(4) of the Customs Act provides that a party against whom the appeal has been preferred under Section 129-A before the Customs Tribunal may file a Memorandum of cross-objection within 45 days from the date of receipt of the notice of appeal. Rule 15 of the Customs, Excise & Gold (Control) Appellate Tribunal (Procedure) Rules, 1982 provides that memorandum of cross- objection should be assigned a number. Rule 6(2) of the Customs (Appeals) Rules, 1982 provides that memo of cross-objection should be filed in form No. C.A-4. Rule 6(3) lays down that cross-objection should be accompanied by a verification signed by a person specified in Rule 3(2). Therefore, the Customs Act and the Rules made thereunder prescribe the procedure to be followed by the respondent in filing cross-objection. In this case, the respondent did not file any cross-objection. What they filed is a "Reply affidavit to appeal filed by the appellant before the Hon'ble Tribunal." This is not a cross-objection. The person affirming it does not say that this is a corss-objection. This is also not an appeal memorandum. Even the forwarding letter dated 14.6.1986 does not purport that what has been filed by the respondent is a cross-objection. The Collector's decision on import has not been assailed by the respondent by filing a cross-objection. So, the respondent cannot now argue on the merits of the case at this stage. In other words, the findings of the Collector that the goods were prohibited goods cannot be assailed by the respondent at this belated stage. In view of the above decision, the appeal filed by the Collector should be allowed by the Tribunal as a matter of course.
6. While arguing for the respondent No. 1 Shri Nankani stated that the appeal filed by the Department was not maintainable. The order dated 17.11.1983 passed by the Collector of Customs was a noting in the file. The Collector had dual roles, executive and adjudicating. The aforesaid order was passed by the Collector in his executive capacity. No show cause notice was issued to the respondent by the Collector, nor were the respondents given any personal hearing as required under Section 124 of the Customs Act, 1962. The respondents did not waive the issue of show cause notice and right of personal hearing. The Collector did not also disclose any evidence to the respondents before passing the order. The respondents were not allowed to state their case. The Collector decided the case subjectively and not objectively. The order passed by the collector was, there fore, not an order under Section 122 of the Customs Act. As the order was not under Section 122 of the Act and the Collector did not pass the said order as an adjudicating authority, the Board could not review the order under Section 129-D(1) of the Act. According to this section, the Board can call for and examine the records of any proceedings which the Collector of Customs had passed as an adjudicating. The appeal filed by the Department should be dismissed on this ground alone. Shri Nankani has relied upon the judgment of the Hon'ble Supreme Court in the case of Shankerlal Aggarwal and Ors. v. Shanker Lai Poddar and Ors. reported in AIR-1965-SC-507at page511, Para 13. Shri Nankani has also stated that the order of caution was not an appealable order. It was an executive order. In support of his argument, he cited the decision of this Tribunal in the case of T. G. Merchant and Company v. Collector of Customs, Bombay reported in 1984- (16)-E.LT.-269.
6.(1). Shri Nankani further argued that legality and jurisdiction of the order of the Collector could not be challenged by the appellant. He had jurisdiction to pass order in the matter. His order was not malafkJe. Under Section 125 of the Customs Act, the Collector, as an adjudicating authority, could impose redemption fine. But in the present case the Collector recorded his reasons for taking a lenient view and not confiscating the goods. There was nothing wrong in the Collector's order. The quantum of fine required to be imposed was a discretion of the officer who ordered confiscation. The discretion exercised by the Collector in the facts and circumstances of the case could not be challenged by the appellant. In support of this argument Shri Nankani relied on the decision of this Tribunal in the case of Collector of Customs, Bombay v. Mis Llwe International, Bombay reported in 1985(20) ELT 107 (TrL).
6.(2). The next point of argument of Shri Nankani was that the appeal had been filed for (i) imposition of fine in lieu of confiscation and (ii) penalty under Section 112 of the Customs Act. He argued that the imposition of penalty and redemption fine was the function of the original authority and not of the Appellate Authority. The Tribunal could not assume original jurisdiction and pass an order of confiscation of goods and imposing fine in lieu of confiscation and penalty under Section 112 of the Act. Shri Nankani further stated that the appellant was not entitled to any relief other than that directed by the Board. In the circumstances, no relief was admissible to the appellant. He relied on the decision of this Tribunal reported in (Supra).
6.(3). On merits of the case, Shri Nankani argued that the goods were Imported prior to 11.11.1983, when palm stearin fatty acid could be imported under Open General Licence in terms of ITC Order No. 1/83 dated 15.4.1983, as that commodity was not specified under any of the Appendices 3 to 9 and 15 of the Import-Export Policy 1983-84. He stated that respondents' case was fully and squarely covered by the judgment of Delhi High Court in the case of Kaptan's Enterprises v. Union of India, reported in AIR- 1986-Delhi-221 in which the Hon'ble High Court held that palm stearin fatty acid was not covered by the term "Palm fatty acid" and hence import of palm stearin fatty acid was permissible under O.G.L prior to 11.11.1983. Shri Nankani stated that the judgment of Delhi High Court was binding on the Tribunal. In support of his contention, he cited the judgments reported in (i) 1986(24) ELT 635 (Tri.) (Mis. Maltex Malsters Limited, Patialav. Collector of Central Excise, Chandigarh), (ii) 1984 (17) E.L.T. 331 ffitma Steels Pvt. Ltd. and Ors. v. Collector of Central Excise, Chandigarh and Ors.), and (iii) 1978-ELT-J-552 (Mercantile Express Company Limited v. Assistant Collector of Customs and ors.). He also argued that the Additional Collector of Customs, Bombay in his adjudication order dated 17.10.1984 held in a similar case that palm stearin fatty acid was different from Palm Fatty Acid and was not covered by serial No. 50 of Appendix 4 of the Import Policy, 1983-84. The Central Board of Excise & Customs did not review the said order of the Additional Collector, Department accepted the decision.
7. In reply to the arguments of Shri Nankani, Shri Ghosh stated that the facts of the case in 1984-(16)-ELT-269 were distinguishable from those of the present case. Earlier case related to the appeal under Section 129-A(1) and not an appeal under Section 129-D(4). Further, the order of West Regional Bench was contrary to the judgment of other High Courts. Against the arguments of Shri Nankani that the order of caution was not appealable, Shri Ghosh cited the judgment of Calcutta High Court in the case of East Jamuria Company Private Ltd. v. Collector of Customs, Calcutta reported in 1978Taxation Law Reporter1693 in which the Hon'ble High Court held that an order permitting the goods was judicial or quasijudicial order. He also asserted that Section 129-D(1) referred to "Any decision or order under the Act." Therefore, according to the learned Advocate Shri Ghosh, the appeal of the department was sustainable. As regards Delhi High Court decision in the case of Kaptan's Enterprises, Shri Ghosh stated that Writ Petition was dismissed as premature, but still Hon'ble High Court discussed three questions posed in paragraph 10 of the judgment. The findings of the High Court were by way of obiter. Further, the Collector's reasonings were not brought to the notice of the Hon'ble High Court and hence, the High Court held that the imported goods were not prohibited. In the context of Delhi High Court's judgment in Kaptan's Enterprises case, Shri Ghosh drew our attention to paragraphs 11 and 12 of the judgment of Supreme Court reported in AIR-1985-SC-218 ( Amar Nath Om Prakash and Ors. v. State of Punjab and Ors.) in which their Lordships held that the "judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a Statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes. They do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as Statutes." Shri Ghosh also stated that in East India Commercial Company Ltd. v. Collector of Customs (AIR1962- SC-1893), Supreme Court held that under the Constitution, law laid down by the Supreme Court is binding. Decision of High Court having jurisdiction is also binding. Further, according to Shri Ghosh, the judgment of Delhi High Court in Kaptan's Enterprises' case is not binding on the Tribunal in view of the findings of this Tribunal in the case of Atma Steels Pvt. Ltd. and Ors. v. Collector of Central Excise, Chandigarh (1984-(17)-E.LT.- 331).
8. Shri S.D. Nankani, learned Advocate for the appellants No. 2, 3, 4, 8 and 9 stated that he would first argue for appellant No. 2 in Appeal No. C-24/85-Cal. and then adopt those arguments in the other four appeals as the salient facts and issues were common, except slight variations in dates etc. At the beginning of his arguments, he referred to the Collector's observations in para 12.1 of the adjudication order in appeal No. C- 24/85-Cal, to the effect that the importers should have sought clarifications from the concerned authorities before entering into any contract with the foreign suppliers and said that because of those observations he would like to submit the following documents as additional evidence: -
(i) Copy of letter in (P) I&EP/CLA 752 dated 3.7.85 from the Governemt of India, Directorate General, Technical Development (I&EP Cell), New Delhi to M/s. Ashok Industries, Bombay;
(ii) Copy of letter in (2)/l&EP/CLA/492/85/2145 dated 15.11.85 from the Government of India, Directorate General of Technical Development (I&EP Cell), New Delhi to M/s. B. Vijay Kumar & Co., Bombay;
(iii) Copy of All India Importers' Association's Circular No. 17/1985 dated 18.6.85; and
(iv) Copy of letter No. 48/4/83/84/I PC/10650 dated 21.11.1984 from the Jt. Chief Controller of Imports and Exports, Ministry of Commerce, Government of India to M/s. Mansingka Impex (P) Ltd., Calcutta.
9. I n reply to a query from the Bench, Shri L.C. Chakraborty, learned Departmental Representative said that he had no objection to the filing of those new evidence and the appellants relying on them. Those documents were, therefore, taken on record for being relied upon as additional evidence.
10. Shri Nankani then argued on merits of the appeal. His arguments were on the following seven propositions:-
(I) Whether the goods In question, viz. Industrial Stearin Fatty Acid, were permissible for import under I.T.C. order No. 1/1983 dated 15.4.1983 prior to 11.11.1983, or in other words, whether the description "Palm Fatty Acid" given at Sr.in 0 of Appendix-4 of Import-Export Policy 1983-84 covered Industrial Stearin Fatty Acid;
(II) Whether I.T.C. Public Notice 47/83 dated 11.11.83 would affect the import of Industrial Stearin Fatty Acid under I.T.C. order No. 1/83 dated 15.4.83 pursuant to firm contract entered into prior to 11.11.1983;
(III) If conditions of I.T.C. order No. 1 /83 dated 15.4.83 were complied by the appellants, whether the import of Industrial Stearin Fatty Acid was valid;
(IV) As contended by the Respondent in the case of Collector of Customs, Calcttte v. Mis. Mansingka Brothers (Appeal No. C-152/84-Cal.), whether the judgment of Hon'ble Delhi High Court in Kaptan's case (AIR-1986-DELHI-221) Is oblterdicta;
(V) Whetherthe judgment of Hon'ble Delhi High Court in Kaptan's case (AIR-1986-DELHI-221) is binding on this Tribunal;
(VI) Whether the redemption line imposed by the respondent is without and/or In excess of jurisdiction under Section 125 of Customs Act, 1962, and/or ar- bitrary; and (VII) Whether, in the facts and circumstances of the case, penalty on the appellants under Section 112 of the Customs Act was warranted.
11. The gists of the arguments of the learned advocate on the above propositions are given below:-
(i) It is an admitted fact that the appellants imported Industrial Palm Stearin Fatty Acid. In para 13 of the Adjudication order, the Collector has observed: "Since the goods in question namely Palm Stearin Fatty Acid is not an OGL item ...".
The appellants entered into a contract for import of "3500 M/Tons Industrial Stearin Fatty Acid". In the remarks column of the contract it was stated by the foreign suppliers "we guarantee that goods will be other than Palm Fatty Acid." Palm oil is obtained from palm fruit by extraction process. After palm oil is obtained, the oil never remains to be palm fruit. From palm oil, two products are obtained by fractionation, one is the liquid fraction called palm olein and the other is solid or semisolid fraction known as palm stearin. After this fractionation, palm stearin becomes a completely different product separate from palm oil. It ceases to be palm oil. Palm Stearin Fatty Acid Is obtained from Palm Stearin by hydrolysis process. Therefore, the source of palm stearin fatty acid is palm stearin and not palm oil or palm fruit. Paim Fatty Acid is derived from palm oil directly. This fatty acid is mentioned at Serial No. 50 of the Appendix-4 of Import-Export Policy 1983-84. In Godrej Soaps Ltd. and Ors., the Governmemt of India (Full Bench) in their order-in-review in 08- B of 1980 dated 26.9.1980 reported in 1981 -ELT-72 (GOI), have held that palm olein and palm oil are not identical. Palm oil and palm olein have distinct name and character. ISI specifications for the two are different. Full Bench of the Central Board of Excise & Customs in their Order Nos. 179-A, 189-Aand 190- B of 1982 in the case of OswalAgro Mills Ltd. and os., reported In 1982-ECR-530-D, has held that "palm oil" and "palm stearin" are different items (vide paragraphs 42.1, 42.2 and 42.3. of the order). In the case of Purbachal International and Anr., reported in 1985-(21)-ELT-673 (Cal), Hon'ble Calcutta High Court held that ordinary Portland cement and white cement were two different and distinct commercial commodities. In Oswal Oil Refinery, Madras v. Collector of Customs, Madras (1984-(i8)-ELT-662), Customs, Excise & Gold (Control) Appellate Tribunal also held that palm olein was not palm oil. So, the logical conclusion will be that palm stearin fatty acid is different from palm fatty acid. In the case of Kaplan's Enterprises v. Union of India (AIR 1986-Delhi-221) the Hon'ble Delhi High Court has categorically held that palm fatty acid and palm stearin fatty acid are different commodities.
(ii) ISI specification for palm oil is IS 8323 E-1977. Paragraph 0.3 of the Foreward of the specification says that "Palm Oil is obtained from the fruits of Oil Palm (EALCIS GUINEENSIS) trees. Para 1.1 of the scope of this specification says that this standard prescribes the requirements and methods of sampling and test for palm oil derived from fleshy mesocrap of the fruit of palm oil tree. ISI specification for palm olein is IS-8361-1977. Para 0.2 of Foreward of the specification book says that on fractionation palm oil is separated into liquid and semisolid fractions and the former is called palm olein. The ISI specifications for palm oil and palm olein do not cover palm stearin.
(iii) In the telex addressed to all registered suppliers of palm oil, S.T.C., Singapore stated that S.T.C. was in the market for palm stearin fatty acid and they invited price quotations. (Copy of telex is at page 219 of the Paper Book filed by the appellants).
(Iv) At page 221 of the paper book submitted by the appellants, is a copy of letter dated 26.1.1984 from the S.T.C, Singapore to suppliers of edible oils/manufacturers of split palm stearin fatty acid in which the State Trading Corporation of India, Singapore invited offers on 27.1.1984 for the following products :-
(1) Palm Fatty Acid Distillate (PFAD).
(2) Split Palm Stearin Fatty Acid (SPSFA) (3) Edible Palm Oils (4) Coconut oil for edible purposes.
Subpara (iii) anch(iv) above show that the State Trading Corporation has treated Palm Stearin Fatty Acid as a separate commodity.
(v) In a telegram addressed to "ASCOSOAP CALCUTTA' with post copy to Shri P.R. Bharech, Chief Executive, Asiatic Soap Company, Calcutta (Copy of the telegram submitted at page 223 of the Paper Book filed by the appellants). The State Trading Corporation of India, New Delhi quoted the sale price of split Palm Stearin Fatty Acid (Bulk) at Rs. 9,584/ per M/Ton Ex. Jetty and Rs. 9,809/ per M/Ton Ex. Tank.
(vi) Indian Soap & Toiletries Makers' Association, Bombay in their Circular No.lSTMA/106/12/84 dated 9.3.1984 to All Members of the Association circulated the release prices of S.T.C. in respect of :-
(a) Split Palm Strealn Fatty Acid
- Ex. Jetty Rs. 9,584/- per M/Ton
- Ex. Tank Rs. 9,809/- per M/Ton.
(b) Palm Fatty Acid Distillate
- Ex. Jetty Rs. 9,078/- per M/Ton
- Ex. Tank Rs. 9,291/- per M/Ton.
Alongwith the above circular the Association circulated a copy of minutes of the meeting of State Trading Corporation of India Limited, New Delhi, held on 31.1.1984. In para 2 of the minutes it was stated that "STC had contracted to import Palm Fatty Acid Distillate (PFAD) and Split Palm Stearin Fatty Acid (SPSFA). In paragraph 3, it was stated that a copy of the specification for PFAD and SPSFA was distributed to the members. In paragraph 5, It was indicated that the small units could use both PFAD and SPSFA. Price was the main consideration in the choice. In paragraphs 6 and 7, it was stated that the organised sector could also use both the items, but they needed SPSFA for manufacturing stearic acid; bulk of the requirements of stearin acid was by rubber industry and the rubber grade material could be obtained from SPSFA and PFAD. In paragraph 16 of the minutes, it was pointed out that PFAD/SPSFA were not suitable for the manufacture of greese. Copies of the minutes and the Association's circular dated 9.3.84 are at pages 225 to 229 of the paper book filed by the appellants. S.T.C. has treated these two products as separate commodities.
(vii) Ministry of finance (Department of Revenue) Government of India, Notification No. 16/84 dated 13.2.1984 granted partial exemption of basic customs duty on Palm Fatty Acid and Palm Stearin Fatty Acid falling within chapter 15 of the First Schedule to the Customs Tariff Act, 1975. In this Notification "Palm Fatty Acid" and "Palm Stearin fatty Acid" have been shown as two distinct commodities.
(viii) The above notification was amended by the Government of India, Ministry of Finance (Department of Revenue) Notification No. 80/84 dated 9.3.1984 to include "Palm Fatty Acid Distillate" with "Palm Fatty Acid" and to include "Split Palm Stearin Fatty Acid" with "Palm Stearin Fatty Acid." In this Notification also, the two products have been shown as separate items.
(ix) In letter No. 1 (P)/I&EP/CLA 752 dated 3.7.85 to M/s. Ashok Industries, Bombay, the Government of India, Directorate General of Technical Development clarified that "Stearin Fatty Acid is not the same as Palm Fatty Acid both in manufacturing process and end use and it is seen that Stearin Fatty Acid was under O.G.L. as per Import Policy for 1983-84 Appendix 10(1)". It was also stated that "Similarly Palm Kernel Fatty Acid is not covered under entry Laurie Acid and Palm Fatty Acid. Therefore, it was under OGL during 1983-84 policy under 10(1)".
(x) Again, In letter No. 1 (2)/l&EP/CLA/492/85/2145 dated 15.11.1985 to M/s. B.Vijay Kumar & Co., the Government of India, Directorate General of Technical Development (I &EP CELL) stated that "Palm Stearin fatty Acid is not the same as Palm Fatty Acid, therefore, it was under O.G.L vide Appendix 10(1) of the I.T.C. 1978-79".
(xi) Paragraph 242(3) at page 73 of the Import-Export Policy 1983-84 (Volume I) provides that an actual user may seek clarification from the Directorate General of Technical Development on the scope of any item in Appendices 1,2, 3, 4, 5, 8, 9,10,15 and 30. Procedure to be followed in case of conflicting clarifications has also been laid down therein. The importers M/s. B. Vijay Kumar and M/s. Ashok Industries sought for clarification in respect of Palm Stearin Fatty Acid and there was no conflicting clarifications. As per provisions of the Import Policy Book for the year 1983-84, the Directorate General of Technical Development are competent authority, to give such clarification. In this case, D.G.T.D. has given necessary clarification which shows that "Palm Stearin Fatty Acid" is not the same as "Palm Fatty Acid" and the former was under O.G.L., Appendix 10 of the Import Policy for 1983-84.
(xii) On the subject of import of Palm Stearin Fatty Acid and Palm Kernel Fatty Acid under O.G.L. Joint Chief Controller of Imports and Exports, office of the Chief Controller of Imports and Exports, Ministry of commerce, New Delhi, in his letter No. 48/4/83-84/IPC/10650 dated 21.11.1984 gave the following clarification to M/s. Mansingka Impex (P) Ltd., Calcutta :
"... Import of Palm Stearin Fatty Acid and Palm Kernel Fatty Acid has been canalised vide Public Notice No. 47-ITC(PN)/83 dated, 11.11.83, and its direct import is not permissible under any circumstances except in those cases where shipment from the country of origin has already been effected before the date of the said Public Notice. It is, therefore, very much regretted that your request for extension of time for shipment under OGL cannot be acceded to."
This letter implies that Palm Stearin Fatty Acid was under O.G.L. prior to 11.11.1983.
(xiii) In circular No. 6/1985 - 88 (in 9/48/85-88/IPC(1978) dated 12.6.1985, it was clarified by the Joint Chief Controller, I & E, New Delhi that the items which were not appearing in any of the Appendices (including various lists under Appendix 6) would be covered by the first entry of Appendix 6 of the Import and Export Policy (Vol.1), 1985-88 and will be available to Actual users (Industrial), subject to the conditions laid down therein. The Appendix 6 referred to in this circular is corresponding to Appendix 10 of the Import-Export Policy for 1983-84.
(xiv) in his order-in-original dated 19.10.84, the Additional Collector of Customs, Bombay has decided that "Palm Fatty Acid" and "Palm Stearin Fatty Acid" are altogether separate commodities and "Palm Stearin Fatty Acid" is not covered by the description "Palm Fatty Acid" under entry in 0 of Appendix 4. (Copy of this order-in-original has been filed at Pages 275-281 of the Paper Book). No appeal was filed by the department against this order.
(xv) The question involved in this appeal was also examined in great detail by the Collector of Customs, Calcutta earlier in a case of import of "Stearin Fatty Acid" and it was decided by him in his order-in-original No. S-33-67/83-A (Gr.l) dated 29.9.83 that "Palm Stearin Fatty Acid" and "Palm Fatty Acid" are different from each other. The former is not covered by the term "Palm Fatty Acid" appearing at Sr. in 0 of appendix 4 and he allowed the goods to be cleared under OGL No appeal has been filed by the Department against this order-in-original.
(xvi) In the case of Kaptan's Enterprises and Anr. v. Union of India [AIR-1986- Delhi-221) the Hon'ble Delhi High Court has held that the import of "Stearin Fatty Acid" under O.G.L was permissible prior to 11.11.83. The first and last sentences of paragraph 13 of the judgment have very categorically said so. The appellants' case is squarely covered by this judgment.
(xvii) In paragraph 12.5 of the order-in-original the Collector has held that there is no product chemically known as Palm Fatty Acid and that none of the literature available on the subject draw any distinction between Palm Stearin Fatty Acid and Palm Fatty Acid. This finding of the Collector is not correct. If there was no product known as Palm Fatty Acid, then the term "Palm Fatty Acid" could not find place at Serial No. 50 of Appendix 4 of the Import & Export Policy for 1983-84. Collector has also not mentioned which particular literature was consulted by him. He has observed that "Palm Fatty Acid" is a generic term. His observation is not correct. The terms "Palm Fatty Acid" and "Palm Stearin Fatty Acid" are specific terms. "Fatty Acid" is a generic term.
(xviii) Palm Oil, Palm Olein and Palm Stearin are admittedly different products. Therefore, the acids derived from them are also different products, different. from one another. Source of Palm Stearin Fatty Acid is not Palm, but Palm Stearin. On the basis of the various evidence produced and in view of Delhi High Court's Judgment in the case of Kaptan's Enterprises, Palm Stearin Fatty Acid was permissible under O.G.L. prior to 11.11.1983.
12. On proposition No. (II), the learned advocate argued that the appellants entered into a firm contract on 2.11.83 and acquired a right to import palm stearin fatty acid under O.G.L by virtue of the I.T.C. order No. 1/83 (also referred to as O.G.L. 1/83) dated 15.4.83 which was issued by the Central Government under Section 3 of the Imports & Exports (Control) Act, 1947. This right could not be taken away by a nonstatutory Public Notice No. 47/83 dated 11.11.1983. Further, the public Notice was issued by the Chief Controller of Imports & Exports and not by the Central Government. The effect of this Public Notice was considered by Delhi High Court in Kaptan's case (AIR-1986-DELHI- 221) and it was held that the Public Notice could not deprive an importer of the valuable right of importing the goods under O.G.L, acquired by virtue of a statutory order, in exercise of which he has, before the change of policy, entered into contracts or other commitments which he can avoid only at great peril, risk or loss (Para 14 of the Judgment). In paragraph 15 of the judegment the Hon'ble Court held that the petitioners' right to import the goods in question under OGL did not cease on 11.11.1983. The learned Advocate also relied on the following judgments :-
(i) 1986 (25) ELT 385 (Tribunal) H.E.S. Limited v. Collector of Customs, Bombay.
(ii) AIR-1962-SC-1893 Eastlndia Commercial Co. Ltd. and anr v. Collector of Customs, Calcutta; and
(iii) AIR-1968-SC-718 Union of Indiaand Ors. v. Anglo Afghan Agencies.
13. Regarding the proposition No.(lll), Shri Nankani stated that the appellants complied with all the conditions of I.T.C. order No. 1/83 dated 15.4.83. The imported goods, viz. Industrial Stearin Fatty Acid, did not fall under any of the Appendices 3 to 9 and 15 of Import-Export Policy 1983-84. Condition (1) of the I.T.C. order was thus fulfilled. The Imported goods did not fail under any of the items in Parts I and II of the Schedule to I.T.C. order 1/83. The goods were covered by serial 16 of Part III of the said schedule. Condition No. (26) of the I.T.C. order 1/83 was also satisfied as the goods were shipped on or before 31.3.84. The goods were imported for stock and sale. The appellants' case is, therefore, fully and squarely covered by Delhi High Courts' Judgment reported in AIR-1966- Delhi-221. Import of Industrial stearin fatty acid under O.G.L. was valid.
14. Regarding the 4th proposition, the learned advocate argued that according to Black's Law Dictionary 5th Edition, page 967, the definition of Obiter is by the way; in passing; incidentally; collaterally. The decision in Kaptan's Enterprises' case is not by way of obiter. Three questions, as in paragraph 10 of the judgment were formulated on the basis of the petitioners' contentions in the Writ Petition and the stand taken by the Department. In paragraph 10 and subsequent paragraphs the High Court examined the points raised in the Writ Petition. In paragraph 11 of the judgment the High Court said that they proceeded to examine the contentions of the petitioner and pronounce upon. Therefore, the findings of Delhi High Court were not incidental or by way of obiter. In the result, the doctrine of Obiter Dictum was not applicable in the present appeal case. In support of his contention, the learned advocate relied upon (i) AIR-1938-Patna-22 (Full Bench) in Ram KhelawanSahuv. BirSurendraSahi and Ors. and (ii) AIR-1939-Madras~433 (Annamalai Chittiarv. Lakshmanan Chettiar).
15. Proposition No. (V): In support of his argument that Delhi High Court Judgment is binding on this Tribunal, the learned advocate has cited the following judgments/decisions:-
(i) 1984-(17)-ELT 331 (Tribunal Larger Bench) Atma Steels Private Ltd. v. Collector of Central Excise, Chandigarh.
(ii) 1986(24)ELT 635 (Tri). Maltex Malsters Limited v. Collector of Central Excise, Chandigarh.
(iii) 1984 (18) ELT 358 (CEGAT) Hindustan Petroleum Corporation Ltd. v. Collector of Customs, Bombay.
(iv) 1985 (22) ELT 144 (CEGAT) Indian Plywood Manufacturing Co. Ltd. v. Collector of Central Excise, Chandigarh.
(v) 1985 (21) ELT 410 (Delhi) JK Synthetics Limited v. Collector of Central Excise, Delhi.
(vi) 1984 (18) ELT 172 (Bombay) Godrej & Boyce Manufacturing Co. Pvt. Ltd. and anr. v. Union of India and Ors.
16. Proposition No. (VI) : Arguing on this proposition, the learned advocate stated that there was practice in Calcutta, Bombay and Cochin Custom Houses to allow clearances of palm stearin fatty acid under O.G.L. Those ports held that this commodity was different from "Palm Fatty Acid" and hence, not covered by Sr. in 0 of Appendix 4. Delhi High Court, In paragraph 12 of their judgment in Kaptan's case, mentioned about the practice. Orders passed by Sh. T.S. Swaminathan, Collector of Customs, Calcutta and Sh. S. Biswas, Additional Collector of Customs, Bombay were not challenged by the Department by filing appeal. Cochin Custom House confirmed that there was a practice of clearing Stearin Fatty Acid under O.G.L The appellants were guided by the practice. No public notice was issued for the guidance of the trade in this case informing that the practice would not be followed. The learned advocate argued that because of the practice imposition of redemption fine was not justified. He cited the following decisions in support of his contention :
(i) 1984-ECR-886 (Bombay) (Gujarat State Export Corporation Ltd. and Anr. v. Union of India and Anr.)
(ii) 1984-(18) ELT 533-(CEGAT) (Shama Engine Valves Ltd. v. Collector of Customs, Bombay).
(iii) Order No. 596-A of 1981 dated 21.9.81 passed by the Central Board of Excise & Customs in appeal NO. APP/72/81 of M/s. Kamani Oil Industries.
17. Arguing on the proposition (VII), Shri Nankani stated that there was no deliberate or contumacious violation of law on the part of the appellants. There was a practice. They were guided by the order-in-original passed by Shri T.S. Swaminathan, the then Collector of Customs, Calcutta. So, no penalty should have been imposed on the appellants. In support of this contention, he cited the judgments of the Hon'ble Supreme Court in the cases of (i) Hindusthan Steel Limited v. State of Orissa (AIR-1970-SC-2S3) and (ii) Cement Marketing Co. of India Ltd. v. Asstt. Commissioner of Sales Tax (AIR-1980-SC- 346). Further, relying on the Andhra Pradesh High Court's judgment in Gyanoba Jaswant Jadav v. Collector of Central Excise, Hyderabad (AIR-1974-AP-76), he stated that the penalty, whenever imposed, should be commensurate with the gravity of offence. The learned advocate pleaded that even though the Collector decided to impose penalty inspite of the Supreme Court's judgment (AIR-1970-SC-253),only token penalty should have been imposed following the ratio of Calcutta High Court's judgment in the case of Collector of Customs, Calcutta and Ors. v. Uday Engineering Enterprises and Ors., reported in 1986-(9)-ECC-374-(Cal.)According to the lamed advocate, the redemption fine and penalty in this case have been exhorbitant and imposed arbitrarily. In law and equity, the Collector's order should be set aside.
18. Arguing for the appellants in appeals No. C-36/85-Cal. and C-37/85-Cal., Shri Nankani stated that the facts in those two cases were identical except variation in some dates and the issues involved therein were the same as in appeal No. C-24/85-Cal. He adopted the arguments and submissions made in appeal No. C-24/85-Cal. The relevant dates in those two cases were as follows :-
In appeal No. In appeal No.
C-36/85-Cal. C-37/85-Cal.
Date of firm contract = 24.10.83 24.10.83
Date of opening L/C = 2.5.84 21.4.84
Dates of shipment = 3.5.84 3.5.84
19.5.84 & 19.5.84 &
30.5.84 30.5.84
19. The learned advocate further stated that in both the cases the appellants who were actual users, approached the Bank to open letter of credit, but the Bank refused to open it as split stearin fatty acid became a canalised item from 11.11.1983. Appellants then moved Calcutta High Court and obtained order on the basis of which Letter of Credit was opened on 6.4.1984, as amended on 2.5.1984 in the case of Appeal No. C-36/85-Cal. and on 21.4.1984 in the case covered by Appeal No. C-37/85-Cal. In the circumstances, the condition of opening letter of credit by 29.2.84 is deemed to have been complied with. Letter of credit is a collateral security for payment and it has no other purpose. Thje appellants tried to comply with condition (26) of ITC order 1 /83 by opening letter of credit by 29.2.84, but the bank failed to do its duty. For this fault of the bank, the appellants should not be penalised or punished. Regarding redemption fine and penalty, the learned advocate adopted the same arguments as in appeal No. C-24/85-C.
20. While arguing for the appellants in appeal No.C-90/85-Cal and C-91/85-Cal, Shri Nankani has stated that the issues involved in these two appeals are the same as in Appeal No.C-24/85-Cal and the salient facts are also similar, except that the appellants did not open any letter of credit in these two cases. Contracts in both the cases were entered into before 11.11.1983 and the shipments were made in June, 1984. Barring letter of credit, other requirements as per condition (26) of the I.T.C. Order 1/83 were satisfied. In appeal No.C-91/85-Cal., the original stipulated period of shipment was November, 1983 to February, 1984. Shipment upto 31.3.1984 was permissible without letter of credit as per condition (26) of I.T.C. Order 1/83. The period of shipment was extended upto 30.6.84. in pursuance with the requests of foreign suppliers as there was Dock Workers' strike at Calcutta Port. No. LVC could, therefore, be opened by 29.2.84 as per condition of I.T.C. Order. Appellants, however, did not make any prayer to the High Court for direction to the Bank for opening letter of credit. In appeal No.C-90/85-C also the appellants filed Writ Petition in Calcutta High Court and obtained interim order, but they also did not make any prayer to issue direction to bank for opening letter of credit.
21. Arguing for the appellants in Appeals Nq.C-83/85-Cal, C-84/85-Cal. and C- 85/85-Cal, Shri Habibulla Badsha, learned Advocate stated that in all the three appeals, facts were same. Only dates differed. The gists of his arguments are as follows :-
(i) In view of the order of Central Board of Excise & Customs, reported in 1982- ECR-530-D in Oswal Agro Mills Ltd. and Ors, it is an admitted fact that palm oil and palm stearin are two different commodities. Their specifications are also different. In common trade parlance they are different commodities. According to Supreme Court judgment in Dunlop India Ltd. v. Union of India and Ors. (AIR-1977-SC-597), the meaning given to articles in a fiscal statute must be as people in the trade and commerce conversant with the subject generally treat and understand them in the usual course. "Fatty Acid" is a generic term and not "Palm Fatty Acid". BTN' Heading 15.10 says "Fatty Acids" and not "Palm Fatty Acid".Heading 15.10 of the First Schedule to the Customs Tariff Act, 1975 also says "Fatty Acids" and not Palm Fatty Acid. Customs Duty exemption Notification No. 16/84 dated 13.2.84 mentioned Palm Stearin Fatty Acid separately. Customs authorities are to follow the Notification. In paragraph 9 of the Order-in-original in Appeal No. C-83/85-Cal. The Collector has admitted that the goods are palm stearin fatty acid. Even bereft of Delhi High Court judgment in Kaptan's case, Palm Stearin Fatty Acid is not included in the term "Palm Fatty Acid".
(ii) OGL order 1 /83 dated 15.4.83 was issued under Section 3 of Imports & Exports (Control) Act, 1947. Public Notice 47/83 dated 11.11.1983 was an administrative order. It cannot override the statutory I.T.C. order 1/83 issued under Section 3 of the aforesaid Act. This principle of law has been laid down by the Supreme Court in East India Commercial Co. Ltd. v. Collector of Customs, Calcutta (AIR-1962-SC-1893), followed by Delhi High Court in Kaptan's Enterprises v. Union of India (AIR 1986-Delhi-221). Public Notice can not also have retrospective effect. This proposition has been clearly laid down by the Supreme Court in 1978-ELT-(J-375) {Cannanore Spinning and Weaving Mills Ltd. v. Collector of Central Excise, Cochin) and AIR-1971-SC-704 (Ms. Bharat Barrel and Drum Mfg. Co. Ltd. v. Collector of Customs, Bombay and Anr.) and by this Tribunal in 1984 (16) ELT 497 (Tri.) (Patel ImpexPvt. Ltd. v. Collector of Customs, Ahmedabad). Normally an ITC Order is amended by another ITC order and then Public Notice is issued on the basis of amending ITC Order. ITC Order in 3/83 and PN No. 48/83 both dated 14.11.1983 and I.T.C. Order in 9/83 and P.N.No. 40/83 both dated 21.9.83 are instances in this regard. In the present case, no amending I.T.C.order was issued In respect of Palm Stearin Fatty Acid. Further, the Public Notice 47/83 canalised the items. Those were not banned. In a similar situation (AIR 1966-SC-478), Supreme Court held that "NIL" policy was not a ban. Public Notice 47/83 dated 11.11.83 did not make any difference so far as the imports under OGL1/83 (I.T.C. Order No. 1/83) were concerned.
(iii) The appellants fulfilled all the requirements of condition (26) of the I.T.C. order 1/83, except the opening of letter of credit by 29.2.84. Contract was prior to 11.11.83 and shipment was made by 30.6.84. There has been substantial compliance of condition (26) in spirit. Letter of credit is for fixing the contract. Nonfulfilment of the condition of letter of credit will not make the goods liable for confiscation. The goods were imported for bona fide use in the manufacture of soap in the appellants' factory. No margin of profit was, therefore, involved. Collector has not discussed how the amounts of redemption fine were fixed. No uniformity in the quantum of redemption fine was followed by Collector. The fine in the three cases was 33% in Appeal No. C-83/85-Cal, 19% in Appeal No. C-84/85-Cal and 22% in C-85/85-Cal. Appellants could buy from S.T.C. at cheaper price.
(iv) No uniformity has been maintained by the Collector in quantum of penalty also. Penalty in these three appeal cases was 5%, 2.5% and 3.2% respectively of the value of the goods. Collector has not given any reasons for such variation. He has also not given any reason for imposing penalty. No mens rea has been alleged on the part of the appellants. Even if there was technical violation, fine and penalty should be struck down following the decision of the Tribunal reported in 1984-(18)-E.L.T.-533 and the Supreme Court's decision reported in AIR-1970-SC-253.
(v) Delhi High Court, in AIR-1986-Delhi-221, has given clear findings and conclusions that (a) palm fatty acid and palm stearin fatty acid are two different commodities and (b) statutory order cannot be amended by a Public Notice. These conclusions were not by way of obiter. This judgment is binding on this Tribunal. This Tribunal held earlier that High Court's judgment is binding on the Tribunal.
(vi) The judgment of Punjab and Haryana High Court in Oswal Woollen Mills' case [1984 (18) ELT 694] is not applicable to the present cases as the facts are distinguishabale. In that case, right to import arose from paragraphs 174 and 176 of the Import Policy, and not from the I.T.C. Order issued under Section 3 of the Imports & Exports (Control) Act. The right under paragraphs 174 and 176 was taken away in that case under paragraph 231 of the Import Policy. Supreme Court's judgment in Liberty Oil Mills' case (AIR-1984-SC-1271) did not decide any merit. Reference to that judgment is not relevant to the present case.
22. Shri Bhaskar Gupta, learned Advocate, who argued forKusum Products Limited in appeal No.C-129/85-Cal submitted written arguments in the Court, with a copy to the learned advocate for the respondent in . In the written submissions, the main contentions, besides mentioning certain errors and inconsistencies in the adjudication order of the Collector, are that prior to 11.11.1983 the impugned goods, viz. Stearin Fatty Acid were permissible under O.G.L vide I.T.C. Order in /1983 dated 15.4.1983, and that ITC Public Notice No. 47/83 dated 11.11.1983 had no effect as it did not have statutory backing. In support of these contentions, reliance has been placed on the following judgments:-
(I) AIR-1962-SC-1893 (East India Commercial Company Ltd. v. Collector of Customs, Calcutta) (II) 1981 -ELT-235. (Lokash Chemical Works v. Collector of Customs, Bombay) (III) AIR-1966-SC-478. (Jr. Chief Controller of Imports and Exports v. Amin Chand Mutha).
Further, amendment of Import Policy cannot have retrospective effect so as to affect the appellants who had, on the faith of the Import Policy, entered into firm commitment with foreign seller by irrevocable letter of credit as it is clearly against the law laid down by the Hon'ble Supreme Court in the case of Union of India v. Anglo Afgan Agencies (AIR-1968-SC-718) and in the case of Motilal Padampat Sugar Mills v. State of Uttar Pradesh (AIR-1979-SC-621).
22.1. The written submissions also mention that the Government of India already treated Palm Fatty Acid and Palm Stearin Fatty Acid as different commodities. In this connection, reliance has been placed on the following evidence:
(a) Notification in 6/84-Cus., dated 13th February, 1984 issued by the Government of India in which Palm Fatty Acid and Palm Stearin Fatty Acid have been treated as two separate products.
(b)Notification in 7/84-Cus., dated 13th February 1984 Issued bythe Government of India in which also Palm Fatty Acid and Palm Stearin Fatty Acid 'were dealt with as separate products by the Central Government.
(c) Notification in 0/84-Cus. dated 9th March, 1984 and Notification in 6/84-Cus. dated 31st March, 1984, both issued by the Central Government, in which Palm Fatty Acid and Palm Stearin Fatty Acid were mentioned as two distinct and different items.
(d)Letter No.F.in 55/248/84-Cus. I dated 22nd June, 1984 issued bythe Ministry of Finance, Department of Revenue, Government of India, to the Collector of Customs, Bombay which deals with Palm Stearin Fatty Acid.
(e) The State Trading Corporation of India Ltd., floated a tender in Singapore in January 1984 asking for quotations for purchase of Palm Stearin Fatty Acid. The said State Trading Corporation of India Ltd. also offered for sale of Palm Stearin Fatty Acid to one M/s Asiatic Soap of Calcutta.
(f) The Collector of Customs, Calcutta (Shri T.S. Swaminathan) has opined in his adjudication order that Palm Stearin Fatty Acid and Palm Fatty Acid are distinct and separate commodities.
(g) The Additional Collector of Customs, Bombay, has also decided in October, 1984 in seven casej of Imports of such goods in Bombay Port that Palm Stearin Fatty Acid is an item distinct and separate from Palm Fatty Acid, (h) The policy cell of the Office of the Chief Controller of Imports and Exports, by a letter dated 21.11.1984 categorically stated that the import of Palm Stearin Fatty Acid has been canalised by Public Notice in 7 I.T.C. (PN)/83 dated 11.11.1983.
(i) Palm Oil is classified under Central Excise Tariff as vegetable nonessential oil attracting duty under Tariff Item 12 whereas Palm Stearin is classified under Central Excise Tariff Item 68.
22.2. It has also been stated that entries in the Schedules and Appendices in the Import-Export Policy are to be strictly construed and there cannot be any intendent nor can anything be added to the entry and only the language of the entry should be considered. It has further been stated that the entries appearing in Import Trade Control Policy are to be construed In their popular and commercial sense. This principle has been une- quivocally accepted by the Supreme Court and various High Courts and the same are binding on the Customs as well as Import Control Authorities. The written submissions also say that technically Palm Fatty Acid and Palm Stearin Fatty Acid are different from each other. Palm Fatty Acid is obtained from the Palm Oil by direct processing whereas Palm Stearin Fatty Acid is obtained from Palm Stearin. It has been urged that Palm Fatty Acid and Palm Stearin Fatty Acid, being two distinct and separate commodities, Palm Stearin Fatty Acid is not covered by Sr.in 0 of Appendix 4 of the Import Policy for 1983- 84. Since Palm Stearin Fatty Acid was not specified in any of the Appendices 3 to 9 and 15 of the Import Policy for 1983-84 and it was covered by Item (1) of Appendix 10 of the said Import Policy, the goods imported by the appellants were duly covered by the I.T.C. Order No. 1/83 dated 15.4.1983. This view has been held by Delhi High Court In Kaptan's Enterprises and Anr. v. Union of India reported in AIR-1986-Delhi-221. It has been categorically held by the Hon'ble High Court that import of Stearin Fatty Acid under O.G.L was permissible prior to 11.11.1983 and from 11.11.1983 also this commodity could be imported under O.G.L subject to fulfilment of conditions as the P ublic Notice in 7/83 dated 11.11.1983 had no legal force. The judgment of the High Court is binding on this Tribunal and in this respect reliance has been placed on the following judgments:-
(i) 1986(24) ELT 635 (Tri.) Maltex Malsters Ltd. Patiala v. Collector of Customs and Central Excise, Chandigarh.
(ii) 1985-(22)-ELT-144. Indian Plywood Manufacturing Co.Ltd.v. Collector of Central Excise, Bangalore.
(iii) 1978-ELT-624 Commissioner of Income Tax v. Smt. Godavari Devi Saraf.
(iv) AIR-1972-SC-2466 Shri Baradakanta Misra v. Shri Bhlm Sen Dixit.
There is no decision of any High Court or Supreme Court contrary to the decision of Delhi High Court reported in AIR-1986-Delhi-221 and as such, the said decision should be followed by this Tribunal in favour of the appellants.
22.3. The learned advocate pointed out that after the Writ Petition was withdrawn by the appellants from the Calcutta High Court, they were granted personal hearing by the Collector on 29.9.1984, but the order was passed by the Collector on 15.9.1984 as would be seen from the date shown on the top of the order-in-original. This Indicated that the Collector passed the order before giving personal hearing to the appellants and the subsequent hearing granted on 29.9.1984 was nothing but an eye wash. Passing adjudication order before the personal hearing is contrary to the provisions of Section 124 of the Customs Act, 1962 and violation of the principle of natural justice. On this ground atone the Collector's order should be set aside.
22.4. The learned advocate, in his oral arguments, stated that paragraph 3 of the Collector's order was not correct. Paragraph 13.1 of the Collector's order was also not correct as a letter of credit was opened by the appellants in respect of the impugned goods on 5.5.1983 which was subsequently amended on 23.9.1983 to substitute Stearin Patty Acid. In the Collector's order, it is mentioned that the contract was dated 2.11.1983 whereas the correct date of entering into contract by the appellants was 15.9.1983.
22.5. He also argued that the appellants satisfied all the conditions prescribed in the O.G.L 1 /83. The appellants were actual users, contract was entered into on 15.9.1983, letter of credit was opened on 5.5.1983 as amended on 23.9.1983 and the goods were shipped on 24.6.1984, thus fulfilling all the conditions laid down in the I.T.C. order 1/83. As a result, the goods were eligible for importation under the said ITC Order, prior to 11.11.1983 as well as from 11.11.1983.
22.6. As regards imposition of fine and penalty, the learned advocate stated that the bona fide of the appellants was beyond any doubt. No mala fide was also alleged by the Collector. Confiscation of the goods and imposition of redemption fine and penalty were not in the judicious exercise of power of the Collector. The Collector, in his adjudication order, had not discussed as to why penalty had been imposed. Concluding his arguments the learned advocate prayed that the order of the Collector should be set aside and the appeal be allowed as the appellants' case was squarely covered by the judgment of Delhi High Court in the case of Mis Kaptan's Enterprises and Ors..
23. Shri Jatin Ghosh, learned advocate addressed common arguments for Respondent in in appeals at Serials in to 10 as the salient facts and the issues involved are common. His arguments were as follows:-
23.1. The imported goods come under the nomenclature "Palm Fatty Acid", whose import was banned vide serial in 0 of Appendix 4 of the Import-Export Policy for 1983-84. It is a generic term. All items falling under this generic term are banned in view of the provision of paragraph 240 (e) of the Import-Export Policy Book 1983-84. Fatty Acid extracted either directly or indirectly from Palm Oil is a Palm Fatty Acid. It is a combination of Fatty Acids. In Chambers Dictionary of Science and Technology, Reprinted in 1984, Page 444,"Fatty Acid" has been defined as "A term for the whole group of saturated and unsaturated monobasic aliphatic carboxylic acid." The goods imported by the appellants No. 2 to 10 fall within this definition. Import Trade Control Order, Customs Act and the Customs Tariff Act are interlinked. B.T.N.Heading 15.10 covers "Fatty Acids; Acid Oils from refining; Fatty Alcohols." Heading No. 15.08/13 of the First Schedule to the Customs z Tariff Act, 1975 covers inter alia" Fatty Acids, acid oils from refining; fatty alcohols; "Schedule I to import (Control) Order, 1955, Section III, Item 15.10 reads as "Fatty Acid, acid oils from refining fatty alcohols." What has been stated in B.T.N. Heading 15.10 is "Fatty Acids" and this terminology has been accepted in Import Trade Control Schedule and Customs Tariff. Imports of the goods in question was not permissible prior to 11.11.1983 because the same fell under Serial in 0 of Appendix 4 of Import Policy.
23.2. Nomenclature is for the purpose of assessment or Import Trade Control Classification. Test report is important to determine nomenclature. In the present case, samples were drawn and tested. Test reports were not challenged by application for retesting. The appellants waived formal show cause notice. Test report was not asked for, nor did they ask for cross examination of the Chemist who tested the samples. The effect of not challenging the test reports is that the authorities were justified in proceeding to act on the basis of the said test reports. Madras High Court's decision in the case of Ramlinga Choodambikai Mills Ltd. v. Government of India and Ors. (AIR-.1975-Madras- 217) 1984(15) ELT 407 is relied upon in this connection. Similarly, Poram Brochure relied upon by Collector was also not challenged to show that the inference drawn from the Brochure is not correct.
23.3. Since 1957, the Supreme Court laid down certain canons in regard to the law or approach in construing Import and Export Policy of Government. According to these, the Import and Export Policy cannot be static. It is bound to be flexible. The needs of the country, the position of foreign exchange resources, the need to protect national industries, preservation of Natural resources and all other relevant considerations have to be examined by the Central Government from time to time and the rules in regard to import and export suitably adjusted. It is, therefore, idle to suggest that there should be unfettered and unrestricted freedom of import and export or that the Government should not change the policy according to the requirement of the country. It is the duty of the court to uphold the policy of Government in the matter of import in the interest of the nation and it should not be frustrated by allowing the importers to bypass it by mere technicalities here and there. The judgment of the Supreme Court and High Court in (i) Bhatnagar & Company Pvt. Ltd. v. Union of India and Ors. (AIR-1957-SC-478), (ii) Glass Chatons Importers and Users Association and ors. v. Union of India and Ors. (AIR-1961 -SC- 1514), (iii) Union of India and Ors. v. C. Damani & Co. and Ors. (AIR-1980-SC- 1149) and (iv) Indo Foreign Commercial Agency (Produce) Pvt. Ltd. v. Union of India and Ors. (AIR-1976-Delhi-4) are relevant in the matter.
23.4. In paragraph 1 (1) in Chapter-I of the Import & Export Policy for 1983-84, it is stated that the policy in this book has been brought into effect under the Gazette of India Extraordinary dated 15.4.1983. Any amendment to this policy which may become necessary in the course of the year, will be notified by means of Public Notices issued by the Chief Controller of Imports and Exports from time to time. In accordance with this provision, the Chief Controller of Imports and Exports issued Public Notice in 7/83 dated 11.11.1983. This Public Notice made necessary amendment to the import policy for 1983- 84. Paragraph 2 in the said Chapter-I says that 'The Imports and Exports (Control) Act, 1947 empowers the Central Government to prohibit, restrict or otherwise control imports and exports. In exercise of the powers conferred by this Act, the Imports (Control) Order, 1955 has been issued. Schedule I to the said Order contains the list of articles import of which is controlled. The import of such items is prohibited except (i) under and in accordance with a licence or a customs clearance permit issued under the said Order, or (ii) if they are covered by an Open General Licence (subject to such conditions as may be stipulated), or (iii) if they are covered by the Savings Clause 11 of the Imports (Control) Order ..." Central Government issued I.T.C. Order in /83 dated 15.4.1983 under Section 3 of the Imports & Exports (Control) Act, 1947 allowing certain articles as specified in the Schedule attached thereto to be imported under Open General Licence, subject to certain conditions as stated therein. Condition (1) of this I.T.C. Order is that the items to be imported are not covered by Appendices 3,4,5,6,7,8,9 and 15 of the Import and Export Policy 1983-84 (Volume-I). Condition (27) says that nothing contained in this licence shall affect the application to any goods, of any other prohibition or regulation, affecting the import thereof, in force at the time when such goods are permitted. Part Ml of the Schedule to I.T.C. Order 1/83 relates to items allowed for import by Actual Users, and others for stock and sale. Item 16 of this Part III is a residuary item. It reads "All other items permitted under Open General Licence in terms of the import policy in force, other than those covered by parts I and II of the Schedule." This is also a condition of this I.T.C. Order. I.T.C. Policy has been bodily engrafted in the said O.G.L. Order. Note (I) below Part III of the Schedule of the I.T.C. Order says that the entries in Parts I, II and III of the said schedule allow only those items and their specifications, sizes, types, varieties, compositions, categories etc.; as are covered under Open General Licence for Actual Users (Industrial) vide items 1 and 2 of Appendix -10, i.e. the items or their specifications etc. which do not appear in Appendices 3 to 9 and 15, read with the clarification contained in Chapter - 22 of Import & Export Policy April, 1983 - March, 1984. Two more conditions of this I.T.C. order, which are relevant to these appeals are conditions (22) and (26) which read as follows:-
"(22) Items covered under Part 111 of the Schedule to this Licence can be imported Under Open General Licence by Actual Users (Industrial) and others, for stock and sale";
"(26) Such goods are shipped on through consignmert to India on or before 31 st March, 1984 or, in the case of Actual User (Industrial), on or before 30th June,. 1984 against firm Orders for which irrevocable letters of credit are opened and established on or before 29.2.1984, without any grace period whatsoever;"
Import of the goods in question by the appellants was subject to fulfilment of Conditions. In AIR-1962-SC-1152 (K.R.C.S.Balakrishna Chetty and Sons Versus The State of Madras) it was held by Madras High Court that "subject to" means "conditional upon" and the use of the words "subject to" has reference to effectuating the intention of law.
23.5. Note (I) below Part III of the Schedule to OGL1/83 refers to Chapter-22 of the Import and Export Policy for 1983-84. This Chapter contains clarifications and interpretation of the Policy. Paragraph 240(e) in this Chapter says that any item in Appendices 3 to 9, or 15 with a specific or a generic description, will preclude the eligibility to its import under Open General Licence, except where the policy allows this clearly. Appendix-10 of the Import-Export Policy, Volt-contains a list of the items allowed to be imported under O.G.L. and the conditions governing such import. Paragraph 42 at page 153 of the Policy book says that "Nothing in the Open General Licence shall affect the application to any goods, of any other prohibition or regulation affecting the import thereof in force, at the time when they are .actually imported." Similar provision has been incorporated in Condition (27) of the I.T.C. Order 1/83. The word "permitted" in the said condition (27) should, therefore, mean permitted for clearance. Item 16 of Part III of the Schedule to O.G.L 1/83 being a residuary item, goods could be imported if they were permitted by the I .T.C. Policy.
23.6. By Public Notice in 7/83 dated 11.11.1983, Palm Acid Oil, Palm Fatty Acid, Palm Kernel Oil, Palm Stearin, Palmitic Acid and soap stock were deleted from Appendix- 4. A new paragraph 10 was added to Appendix 9 of the Import Policy 1983-84, with heading "Fatty Acids and Acid Oils". It was stated in that paragraph that import of the following items would be made by the State Trading Corporation of India Limited only under Open General Licence:-
(i) Laurie Acid, (ii) Oleic Acid, (iii) Stearic Acid.
(iv) Palmitic Acid.
(v) Palm Fatty Acid.
(vi) Palm Acid Oil.
(vii) Palm Kernel Oil.
(viii) Palm Stearin.
(ix) Other Fatty Acids, pure or mixed, including acid oil, all types.
(x) Soap Stocks.
"Palm Fatty Acid" appearing at Item (V) of para 10 of amended Appendix-9 includes palm oil fatty acid and palm stearin fatty acid. All palm based products were in Appendix-4 earlier according to the scheme of the Import Policy. "Other Fatty Acids" appearing at Item (IX) of paragraph 10 of Appendix 9 would mean all other Fatty Acids not covered by the group (i) to (viii). After issue of this Public Notice, only those goods could be imported under OGL against item 16 of part III of Schedule to OGL 1/83, which were still O.G.L.items after 11.11.1983. From that date, the items mentioned in paragraph 10 of Appendix-9 could not be imported by any private importer as those were canalised through State Trading Corporation of India. So, the effect of the Public Notice 47/83 was that the appellants were not eligible to import the goods in question under O.G.L 1/83. In Oswal Woollen Mills Ltd. and Anr. v. Union of India and Ors. (1985- (4)-ECC-81), the Punjab and Haryana High Court held that there was no right to import beef tallow under O.G.L. after canalisation of the item.
23.7. The decision in the case of East India Commercial Co.Ltd. (AIR-1962-SC- 1893) is not applicable to the present cases as the facts are different. The Notifications No. 23/ITC/43 issued under Rule 84 of Defence of India Rules and in /ITC/48 issued under Section 3 of Imports & Exports (Control) Act, 1947 in that case did not contain any reference to I.T.C. Policy northe policy was embodied therein. In the present cases before this Tribunal, the policy itself is inbuilt in the O.G.L.1/83. This Tribunal's decision in the case of HES Ltd. v. Collector of Customs, Bombay is not applicable, since in that case the licence was not conditional and the I.T.C. Policy was not made inbuilt in the licence in that case. In the present cases, Item 16 of Part III of Schedule to the O.G.L. 1/83 embodied the I.T.C. Policy in itself. The judgment of Calcutta High Court in Purbachal International and Anr., reported in 1985 (21) ELT 673 (Cal) should not be followed as there is a contrary judgment of Allahabad High Court in the case of Commissioner of Sales Tax, U.P., Lucknow v. Mango Mai Manak Ram (33-Sales Tax Cases Page 556) in which it was held that in the common parlance and in commercial sense the word "cement" would include all varieties of cement. In Atma Steels Pvt. Ltd. [1984 (17) ELT 331 ] this Tribunal did not lay down any proposition and hence this judgment is not applicable to the present cases and the decision is not binding. The learned advocates for the appellants have cited a plethora of past decisions of Supreme Court, High Courts and this Tribunal,, but those cannot be applied here as the facts are different. The order of the higher authority is not binding unless it is relevant infacts and law. In the case of Liberty Oil Mills and Ors. v. Union of India and Ors. (AIR-1984-SC-1271), past decisions of the Supreme Court,. Government of India and the Central Board of Excise and Customs were cited, but the Supreme Court did not consider them to be applicable as the facts were distinguishable.
23.8. A judgment is authority on what it decides, but not what is discussed. In the case of Kaplan's Enterprises (AIR-1986-Delhi-221), Delhi High Court discussed points No.(i) and (ii) of paragraph 10, but the High Court did not decide the points. There is not concrete and conclusive findings on the points in the judgment. Further, in paragraph 11, the Court came to a finding that the Writ Petition was premature. The High Court also proceeded on the basis of assumption as indicated in paragraph 11 of that judgment. That judgment is not binding for the following reasons:-
(a) There was no test report before the High Court;
(b) Court has not considered the Dictionary meaning;
(c) Court has not considered Customs Tariff Entry and B.T.N. entry;;
(d) Court did not consider the nature of O.G.L.1/83, particularly with reference to different conditions and residuary Item 16 of Part III of the Schedule to O.G.L.1/83 and Note (I) to Part III; and
(e) Punjab & Haryana High Court's judgment in Oswal Woollen Mills Ltd. was not considered.
23.9. There is no question of promissory estoppel in the present cases. Goods were shipped in June, 1984. No detriment was, therefore, caused to the appellants by the Public Notice in 7/83 dated 11.11.1983. Delhi High Court's judgment reported in AIR- 1976-Delhi-4 (Indo-Foreign Commercial Agency (Produce) Pvt. Ltd. v. Union of India and Ors) is relied upon.
23.10. According to proviso to Sub-section (1) of Section 125 of the Customs aci, 1962, the amount of redemption fine shall not exceed the market price of the goods less duty chargeable. Collector has followed this broad principle in imposing fine in lieu of confiscation. Formula adopted by him is, Market price minus duty minus CIF value. But he has taken a lenient view by keeping the fine at lower side. Maximum penalty under Section 112 of the Customs Act is five times the value of the goods. In none of these cases, penalty of five times has been imposed.
23.11. M/s Jayant Oil Mills, appellants in imported the goods for stock and sale. The goods were shipped by 31.3.1984. Opening of letter of credit by 29.2.1984 was not necessary in this case. They satisfied the condition (26) of the I.T.C. Order 1/83. M/s Kusum Products Ltd. are actual users. They opened letter of credit by 29. 2.1984 against firm contract dated 15.9.1983 and the goods were shipped by 30.6.1984. They also fulfilled the condition (26). Except these two appeals are liable to be dismissed on facts and law. Whether the appeals of M/s Jayant Oil Mills and M/s Kusum Products are sustainable may be considered by this Tribunal on the basis of facts and law, but the other appeals should be dismissed straight away as the condition of opening letter of credit by 29.2.1984 was not fulfilled.
23.12. After Shri Ghosh concluded his arguments, Shri Badsha, stated that Shri Ghosh's argument that all palm products fell in Appendix-4 was not correct in view of the fact that "palm oil (All Types, including palmolein and other fractions)/palm seeds" figured at Serial No.(4) of paragraph 5 in Appendix 9 of the Import Policy. He also stated that the words "In terms of the Import Policy in force" mean import policy on the date 15.4.1983 and not the date of import or clearance as contended by Shri Ghosh. The crucial date was 15.4.1983; what happened after 15.4.1983 was immaterial. Prohibition etc. referred to in paragraph 42 of Appendix-10 means other prohibitions, such as under Section 11 of the Customs Act, 1962, Section 13 of the Foreign Exchange Regulation Act, 1973 and Section 10 of the Drugs and Cosmetic Act, etc.
24. Shri Nankani submitted a written note in reply to the arguements of Sh. Ghosh, with a copy to the opposite side. The written note contained the following points argued by Sh. Ghosh and Sh.Nankani's reply thereto:-
24.1. Point No. 1:- That the description given at Sr.in 0 of Appendix-4, viz. Palm Fatty Acid is generic and covers Palm Stearin Fatty Acid and therefore, the import of Palm Stearin Fatty Acid is not permissible under Open General Licence by virtue of para 240(e) of Import-Export Policy for 1983-84, prior to 11.11.1983.
REPLY :-
(a) Palm Oil, Palm Stearin and Palmolein are three different things. The respondent has admitted that each of these three different things give rise to respective fatty acid.
(b) The fact that palm oil fatty acid, palm stearin fatty acid and palm olein fatty acid are three different things having a distinct and separate identity, meaning and nomenclature is not disputed by the respondent.
(c) The respondent admitted that the immediate source of the goods imported by the Appellants, i.e. Stearin Fatty Acid is palm stearin and not palm oil.
(d) The only Test applied by the respondent to give the finding that the goods imported by the appellants are covered by the description palm fatty acid is that the source of the same is palm. This Test fails because if the interpretation of the Respondent is correct then there would be no need to mention Palmitic Acid separately at Sr.in 3 of the same Appendix-4 since the source of Palmitic Acid is also Palm and therefore, on the basis of the reasoning of the Respondent Palmitic Acid would also be included and covered by the description Palm Fatty Acid given at Serial in 0 of Appendix-4.
(e) It is well settled legal position that any interpretation which would render a provision or entry redundant or into nullity is to be discarded. In as much as the reasoning of the Respondent would render, inter alia, Serial in 3 of Appendix-4 redundant and meaningless, the same cannot be applied at all.
(f) No reliance can also be placed on the Chambers Dictionary of Science and Technology referred to by the respondent since in determining the meaning which is to be given to items/goods resort is to be had to their popular meaning, i.e. the meaning attached to them by the people in trade as well as consumers and not to the scientific or the technical meaning thereof. On this point reliance is placed on the following judgments:-
(i) AIR-1967-SC-1454 (para 4) The Commissioner of Sales Tax, Madhya Pradesh v. Jaswant Singh Charan Singh.
(ii) AIR-1972-SC-2551 Minerals and Metal Trading Corporation of India Ltd.v. Union of India.
(iii) AIR-1976-SC-2721 Healthways Dairy v. Union of India.
(iv) AIR-1977-SC-597-(Para 31) Dunlop India Ltd. v. Union of India (v) AIR-1981 -SC-1079-(Para 4) Indo International Industries v. Commissioner of Sales Tax, U. P.
(vi) AIR-1985-SC-679 (Para-32) Rathi Khandsari Udyog v. State of U.P. (vii) 1985 (21) E.L.T. 668 (Bom.) Union of India and Ors v. The Century Spg. and Mfg. Co.Ltd.,
(g) In the case of Indo International it was held that clinical syringes, though made out of (source) glass,, were not considered as glassware but as hospital equipment.
(h) In any event, the meaning of the term fatty acid as given in the aforesaid Dic- tionary does not even suggest that the palm (oil) fatty acid is the same as palm stearin fatty acid. Even the respondent Is not saying that palm fatty acid is the same as palm stearin fatty acid. The only reasoning the respondent is that the source of palm stearin fatty acid is palm. This reasoning is fallacious and untenable for the reasons stated earlier.
(i) The respondent has, in para 12.5 on page 13 of his impugned order, admitted that "None of the literatures available on the subject draw any distinction between palm stearin fatty acid as different from palmfatty acid". In the premises, trade parlance ought to be considered in the instant case.
(j) Neither the schedule to the Customs Tariff Act nor much less the B.T. N. (which otherwise has only persuasive effect in interpreting CTA itself) can be used to interpret the entries in the Appendices of the Import Policy. In this connection, judgment reported in 1983 ELT 1154 (Allied Enterprises v. Collector of Customs) may be referred to. For the same reasons, Head Note to the Schedule to the Imports (Control) Order, 1955 cannot be used to interpret the entries in the Appendices of the Import Policy.
(k) In the circumstances, palm fatty acid is different, distinct and distinguishable from palm stearine fatty acid both technically and commercially, and therefore, this is not covered by Serial in 0 of Appendix-4. The import of Palm Stearin Fatty Acid was, therefore, permissible under Open General Licence prior to 11.11.1983.
24.2. Point in :- That the appellants had not challenged the Test Report and therefore the Respondent had rightly relied upon the same to hold that the goods imported by the Appellants, namely, Palm Stearin Fatty Acid were covered by Serial in 0 of Ap- pendix 4.
REPLY:-
(a) The respondent himself has not disputed that the goods in question are stearin fatty acid. On the contrary, in the impugned order he has admitted that the goods in question are stearin fatty acid (page 14, last para of the impugned order)
(b) In his findings which start from para 12.1 of the impugned order, the respondent has not even referred to the Test Report. As such the Test Report is of no consequences.
(c) In any view of the matter the Test Report is vague in as much as the same does not give all the relevant particulars, parameters/constituents of the goods in question.
(d) The credibility and importance of the Test Report is completely in doubt in view of the observation made by the Respondent in his Order dated 17.11.1983 in the case of M/s Mansingka Brothers (Appeals No. CD/Cal/152/84) that the Deputy Chief Chemist had told him that it was not possible to distinguish in their (Calcutta Custom House) Laboratory whether the Fatty Acid is derived directly from Palm Oil or from the fraction of palm oil, i.e.stearin.
(e) Opinion of the Chemical Examiner which is attached to the Test Report suffers from the following anomalities:
(i) Only physical characteristics like odour and colour have been mentioned without specifying the exact colour.
(ii) Admittedly, the standard literature available in the Calcutta Custom House does not mention physico chemical constants of mixed acid derived from palm oil and palm stearin.
(iii) The exact iodine value and titre value of the goods in question are not given.
(iv) As the description and identity of imported goods are not disputed by the respondents, Poram Brochure is not relevant in determining whether goods in question are covered by the description Palm Fatty Acid.
(v) Opinion of the Chemical Examiner is irrelevant for the purposes of construing the description in the import policy particularly when Palm Stearin Fatty Acid Ind Palm Fatty Acid are commercially different and known as two different items by the people in trade and consumers. This fact is recognised by the STC as well as Government of India in exemption Notification.
(f) The reliance by the respondent on the judgment of the Hon'ble Madras High Court reported in AIR-1975-Mad-217 is totally irrelevant.
24.3. Point No. 3:- That there are three intrinsic instances in the ITC Order No. 1 /83 dated 15.4.1983 to show that the same is not static and is subject to the import policy and therefore, the amendment brought about by way of ITC Public Notice No. 47/83 dated 11.11.1983 would not entitle the appellants to import palm stearing fatty acid under Open General Licence even after 11.11.1983.
Reply :-
(a) The contention of the respondent is unsustainable and unjustifiable in law for the following reasons :-
(i) It has been held by the Hon'ble Delhi High Court in Kaptan's case (AIR- 1986-Delhi-221) that if there was a firm contract prior to 11.11.1983 import of stearin fatty acid is permissible under OGL in terms of ITC Order 1/83 provided the other terms and conditions thereof were satisfied, (Para 15 on page 228 of the AIR). The appellants have complied with the various conditions of ITC Order 1/83.
(ii) In view of this position, the judgments reported at 91 Law Ed. US(SC) and AIR-1961 -SC-1152, cited by the respondent are of no relevance at all, because right to import under ITC Order 1/83 is subject to conditions which they have satisfied.
(b) The three instances referred to by the respondent to show that Import Policy is engrafted in the ITC Order 1/83 have been misinterpreted, as it would be evident from the following :-
(i) On the respondent's own admission various Appendices have been bodily lifted into the ITC Order No. 1/83. Thus, by doctrine of Incorporation, once, inter alia, the Appendix-9 is said to be incorporated into ITC Order 1/83, any subsequent amendment to the said Appendix would not affect ITC order 1/83. In this connection, AIR-1979-SC-798 (Mahindra & Mahindra Ltd. v. Union of India) and 1984-ECR-953-(CEGAT) 1984(15) ELT (Tri.) (Motilal & Co. v. Collector of Central Excise) is relied upon.
(ii) Condition No. (27) of ITC Order 1/83 relates to any other prohibition or regulation affecting the import of goods under ITC Order No. 1 /83 which are in force at the time when such goods are permitted, i.e. in the instant case on 15.4.1983 itself. In other words, the importer is bound by only such prohibition or regulation which were in force at the time when he acquired the permission to import goods under ITC Order 1/83.
(iii) In the instant case, since the Appellants acquired the permission to import the goods in question under ITC Order 1/83 from the very beginning, i.e. from 15.4.1983, they are not affected by any subsequent change or amendment resulting into any prohibition or regulation or otherwise.
(iv) The expression "... in force at the time when such goods are permitted ..." means at the time when such goods are permitted for Import and not when permitted tor clearance since any condition on the clearance of the goods has to be separately imposed by an order under Section 3(3) of the imports & Exports (Control) Act, 1947.
(v) The words"... in terms of the import policy in force ..." mean the Import policy in force as on 15.4.1983 since the ITC Order 1/83 being an Open General Licence is governed by the Policy as on the date of its issue, i.e. 15.4.1983. On this point the judgment of Calcutta High Court in the case of Mangla Brothers v. Collector of Customs reported in AIR- 1985-Cai. (paras 14 & 15 of the judgment) is relied upon.
(vi) If the intention of the policy makers would be to subject the ITC Order 1/83 to every amendment of the import policy then the language used against the Serial No. 16 of Part III would perhaps read as" ... in terms of import policy in force as amended from time to time ..." or any other like expression. In the absence of such an expression, only the well settled legal proposition that a licence is governed by the policy as on the date of its issue and not affected by subsequent amendment, is sub- stalnable.
(c) Para 42 of Appendix-10 of AM 83-84 Policy Book (Page 153-thereof) does not apply in the instant case as the same is not contained in ITC Order 1/83 under which the appellants are claiming the right to import stearin fatty acid. Since the import policy has no statutory force as held by the Supreme Court in the case of East India Commercial Co. (AIR-1962-SC-1893) and Anglo Afgan Agencies (AIR-1968-SC-718), it cannot be read into the ITC Order 1/83 which is statutory order issued by the Central Government in exercise of the powers conferred under Section 3 of the Imports and Exports (Control) Act, 1947.
(d) Since the description palm fatty acid is not generic, paragraph 240(e) of Import and Export Policy 1983-84 has no relevance at all to the instant case.
(e) It is not the case of the appellants that the Import Policy, which itself comes into force by way of Public Notice and not by a Notification cannot be amended from time to time. But the case of the appellants is that the right derived under ITC Order 1/83, which is a statutory instrument, cannot be affected or taken away by a public notice which is purely administrative in nature and without any legal force.
(f) A Public Notice per se does not nullify or modify the statutory order. This is a cardinal principle of law and squarely applicable to the appellant's case in toto. Therefore, the right acquired by the appellants to import stearin fatty acid upto 31st March, 1984 could not be taken away by issuance of a mere public notice.
(g) The judgment of the Hon'ble Punjab & Haryana High Court in the case of Oswal Woollen Mills [1984 (18) ELT 694] relied upon by the respondent is out of context and can be distinguished on the following grounds :-
(i) The main issue in that case was whether order passed by the Customs Authorities could be reviewed by the Import-Control Authorities and not whether a Public Notice would have the effect of amending an ITC order.
(ii) The facts of that case were totally different in as much as the imports made therein were against interalia REP licences issued under the provisions relating to registered contracts and the same were also revalidated and endorsed either in terms of para 138 of AM 81 -82 Policy or the provisions of para 231 of AM 1982-83 Policy Book.
(iii) In that case since the licences themselves were subjected to the particular provisions of the Import Policy by a specific endorsement on the face of the licences and as such the question of imports against the licence being affected by the public notice did not arise at all.
(iv) The said judgment has now been stayed by the Hon'ble Supreme Court.
(h) The judgment of the Hon'ble Supreme Court in the case ofLiberty Oil Mills v. Union of India, reported inAIR-1984-SC-1271 is totally out of context. The issue in that case was whether abeyance notice issued by the Import Control Authorities was sustainable in law. The Hon'ble Supreme Court did not express any views on the merits of the case. This is evident from reading of para 27 of the judgment at page 1290 of AIR.
(i) There is no dispute as to how an Import Policy is to be interpreted. The appellants' contention is that by virtue of permission under ITC Order 1/83 a right is given to them for importing items under Open General Licence upto 31st March, 1984 or as actual users upto 30th June, 1984 and the same cannot be taken away by a Public Notice. Hence the judgment reported in AIR- 1957-SC-478, AIR-1961-SC-1514 and AIR-1980-SC-1149 cited by the respondent are not relevant to the issue in question.
24.4. Point No. 4 :- That since several submissions which were now canvassed on behalf of the respondent before this Tribunal were not argued before the Hon'ble Delhi High Court in the case of Kaptan's Enterprises (AIR-1986-DELHI-221), the same does not have any binding effect:
Reply:
(a) The new arguments or submissions cannot affect a binding decision, particularly of a Higher Court on identical facts and law. Hon'ble Delhi High Court considered all aspects before giving its decision. In this context, the Supreme Court judgment in the case of Ambika Prasad Mishra v. State of U.P. (AIR- 1980-SC-1762-Para 5) and Kamleshwar Prasad v. Kanahaiya Lal (AIR-1975-SC-907, Para 7 & 8) are cited.
(b) In view of the reasons stated above and in view of the other judgments and decisions cited by the appellants, the judgment of Hon'ble Delhi High Court in the case of Kaptan's Enterprises is binding on this Tribunal. It is also mentioned that the judgment is binding not because of its conclusion but with regard to the ratio and principles laid down therein. In this connection, the judgment of Supreme Court in B. Shama Rao v. Union Territory of Pandlchery (AIR-1967-SC-1480-Para 5) is relied upon.
25. We have considered the evidence placed before us and the arguments of both sides.
26. In appeal No. C-152/84-Cal., the learned advocate for the respondents - M/s. Mansingka Brothers has raised the question of maintainability of the appeal. His objection is based on the grounds that:-
(i) The order dated 17.11.1983 passed by the Collector was an executive order and not a quasi-judicial adjudication order and as such, the same could not be reviewed by the Central Board of Excise and Customs under Section 129-D (1) of the Customs Act, 1962; and
(ii) The order of warning was not an appealable order. In support of his arguments, the learned advocate Shri Nankani has relied upon the Supreme Court's judgment, reported in AIR-1965-SC-507, in the case of Shankarlal Agarwal and Ors. v. ShankarLal PoddarandothersandthsTribuna\'sdec\sion, reported in 1984 (16) ELT269, in the case of T. G. Merchant & Co. v. Collector of Customs, Bombay.in reply to the arguments of Sh. Nankani, the learned advocate for the appellant has cited the judgment of Calcutta High Court in the case of East Jamuria Co. Pvt. Ltd. v. Collector of Customs, Calcutta (1978- Taxation Law Reporter-1963). He has also stated that the Tribunal's decision is not applicable to the present case as the facts are distinguishable in as much as the appeal in the case of T.G. Merchant & Co. Pvt. Ltd. was under Section 129-A (1) whereas the present appeal is under Section 129-D(4) of the Customs Act.
27. Under Section 129-D(1) of the Customs Act, the Central Board of Excise & Customs may call for and examine the records of any proceedings in which a Collector of Customs, as an adjudicating authority, has passed any decision or order under the Customs Act, for the purpose of satisfying itself as to the legality or propriety of any such decision or order. According to the definition in Section 2(1) of the Customs Act, "Adjudicating authority" means any authority competent to pass any order or decision under this Act, but does not include the Board, Collector (Appeals) or Appellate Tribunal. In this case, the order dated 17.11.1983 was passed by the Collector of Customs and not by the Collector (Appeals). Now, the question is whether the Collector of Customs passed the order in his capacity as an executive authority or as an adjudicating authority. The Collector of Customs exercises the power of quasi-judicial authority and in that capacity he has to act judicially, in the present case, the Collector of Customs made investigations to determine whether the imported Stearin Fatty Acid fell within the term "Palm Fatty Acid' appearing against Sr. in 0 of Appendix-4 of the Import Policy for 1983-84, examined the evidence placed before him and then passed order to release the goods on caution. The essential criteria of a quasi-judicial decision were thus followed by the Collector and considering the nature of the order passed, we should call it an adjudication order, which could be reviewed by the Central Board of Excise & Customs under Section 129-D(1) of the Customs Act. It is contended on behalf of the respondents that before deciding the case the Collector did not Issue any show cause notice to the respondents and no personal hearing was granted to them. It is mentioned at the end of the order dated 17.11.1983 that no personal hearing was granted. The respondents, thus, did not get the opportunity to represent their case before the Collector. There has, therefore, been violation of the principle of Natural justice on the part of the Collector, but this does not change the nature of the order to an executive order. It is also urged by the respondents that a copy of the Collector's order was not endorsed to them. The fact of warning was, however, indicated on the Bill of Entry. On the basis of that endorsement the respondents could call for a copy of the order and file an appeal against it, if they desired. Once the order becomes a quasijudicial order, the Central Board of Excise & Customs are within their competence to review the order under Section 129-D(1) of the Customs Act. The judgment of the Supreme Court reported in AIR-1965-SC-507, relied upon by Shri Nankani does not help the case of the respondents. In para 13 of the judgment, the Hon'ble Supreme Court held, Inter alia "one of the tests would be whether the matter which involves the exercise of discretion is left for the decision of the authority, particularly if that authority were a Court and if the discretion is to be exercised on objective, as distinguished from a purely subjective consideration, it would be a judicial decision. It has some times been said that the essence of judicial proceeding or of a judicial order is that there should be two parties and a lis between them, which is the subject of adjudication, as a result of that order or a decision on an issue between a proposal and an opposition (SIC). No doubt, it would not be possible to describe an order passed deciding a lis before the authority, that it is not a judicial order but it does not follow that the absence of a lis necessarily negatives the order being judicial." On the other hand, in Mis East Jamuria Company Pvt. Limited, Calcuttav. Collector of Customs, Calcutta (1978-T.LR.-1693) it was held by Calcutta High Court that the orders permitting clearance of goods were judicial or quasi-judicial orders.
28. As regards the second ground of Shri Nankani that an order of caution is not an appealable order, our considered view is that all orders of caution are not non-appeal- able. Whether an order of caution is appealable or not will depend upon whether the order is an adjudication order; in other words, whether the order has been passed as an adjudicating authority. It depends on the facts and circumstances of each case. In the case of T.G. Merchant, the Additional Collector of Customs himself stated that his order was an executive order and hence it was not appealable. We, on the other hand, considering the facts and circumstances of the present case, have held that the order dated 17.11.1983 of the Collector of Customs was an adjudication order. As a result, the decision reported in 1984 (16) ELT 269 is not applicable in the facts and circumstances of the present case.
29. In the light of the above discussions, we hold that the order dated 17.11.1983 was passed by the Collector of Customs in his capacity as an adjudicating authority and not as an executive authority and as such, the objection regarding maintainability raised by Shri Nankani is not acceptable.
30. On merits of the cases before us, the following issues arise for our consideration and decision:
(i) Whether, prior to 11.11.1983, the import of the goods in question, viz. stearin fatty acid was permissible under I.T.C. Order No. 1/83 (also referred to as O.G.L 1/83) dated 15.4.83;
(ii) Whether, from 11.11.1983, the said goods could be imported under OGL1/83 after issue of I.T.C. Public Notice in 7/83;
(iii) If answers to (i) and (ii) above are in the affirmative, whether the relevant conditions of OGL 1/83 were fulfilled in each case;
(iv) If answers to (i), (ii), and/or (iii) are in the negative, whether confiscation of the goods and imposition of fine and penalty were justified in the facts and circumstances of each case.
31. We shall examine point (i) first. It is an admitted fact that palm oil is obtained from palm fruit by expression process. From palm oil two products are obtained by fractionation. The liquid product is called olein and the solid or semisolid product is known as palm stearin. From palm stearin, palm stearin fatty acid is obtained by hydrolysis process. Palm fatty acid is obtained directly from palm oil. For facility of better appreciation of the arguments of both sides, we would like to summarise their contentions here. The appellants have claimed that the palm fatty acid and palm stearin fatty acid are two separate and distinct commodities. As the "palm stearin fatty acid" does not figure in any of the appendices 3 to 9 and 15 of the Import and Export Policy for 1983-84, Volume-I, the import of the same was permissible under OGL 1/83. The Collector of Customs has held that palm stearin fatty acid is covered by the term "Palm fatty acid" against Sr. No. 50 of appendix-4 of the Import Policy for 1983-84, as palm fatty acid is a generic term and the palm stearin fatty acid is obtained from the source of palm. He has held that prior to 11.11.1983, palm stearin fatty acid was a banned item, being covered by Sr. in 0 of Appendix-4, and w.e.f. 11.11.1983 this commodity became canalised through the State Trading Corporation of India by virtue of Public Notice in 7/83 dated 11.11.1983. Shri Gosh, appearing for the Deptt. has argued on the same line and has said that the fatty acid extracted either directly or indirectly from palm oil is palm fatty acid. He has referred to the definition in the Chambers Dictionary of Science and Technology and has pleaded that the goods imported by the appellants in to 10 fell within the said definition. He has also referred to B.T.N. Heading 15.10 and Customs Tariff Heading No. 15.08/13 both of which covered, inter alia, "fatty acid". He has further argued that the test reports of the samples drawn from the consignments of the Imported goods are important to determine the nomenclature for the Import Trade Control classification. He has contended that the test reports were not challenged by the appellants by filing an application for retesting and as a result, the authorities were justified in proceeding to act on the basis of the said test reports as held by Madras High Court in the case of Ramalinga Choodambikai Mills Ltd. v. Government of India and Ors. (AIR 1975 Madras-217). He has also pleaded that the appellants did not challenge the inference drawn by the Collector from Poram Brochure.
32. As regards the Customs Tariff Heading referred to by Shri Ghosh, it does not help us in resolving the issue in dispute. The Customs Tariff Heading has grouped together various types of fatty acids for the purpose of Tariff classification, but it does not mean that palm fatty acid includes palm stearin fatty acid or that both are one and the same thing. On the other hand, customs duty exemption notifications, including the Ministry of Finance (Deptt. of Revenue)'s notification No. 16/84-Cus. dated 13.4.1984, have mentioned these two acids as separate commodities. Unless these two products are distinct and separate commodities, the Govt. of India could mention only palm fatty acid and there was no necessity to mention both. We do not agree with the Collector's findings that the two products were mentioned separately to avoid ambiguity.
33. Regarding test reports of the samples, we find from Paragraph 6 of the Orders-in-original relating to Appeals at^serials No. 2, 3,4,5, 7, 8,9 and 10 of this order and paragraph 5 of the Order-in-original covered by the appeal at serial in that the Collector has mentioned about test of samples in the Custom House Laboratory. Copies of the test reports were not available in the records placed before us. At the end of the hearing on 12.9.86, we, therefore, asked the learned Departmental Representative to submit copies of the test reports and copy of Poram Brochure. In compliance with our direction, the learned Departmental Representative submitted photo copies of three test reports along with photo copy of the chemical examiner's note dated 28.6 84 in respect of 3 samples drawn from the consignments covered by appeal No.C-24/85-Cal. Copies of other test reports and copy of Poram Brochure were not submitted to us. From a perusal of the chemical examiner's Note dated 28.6.84 bearing NoT.M.No. S 43-668/I/84-A, we observe that the contents of the said Note have been incorporated in the relevant paragraphs of the Orders-in-original, as indicated above. During the hearing before us, Shri Nankani has stated that copies of the test reports were not made available to the appellants till the date of hearing and no show cause notice was issued to them as the issue of formal show cause notice was waived. He has stated that he received the copies of test reports during the hearing before us. He has stated that it is not a fact that the appellants did not challenge the test reports. We find from paragraph 10(v) (h) of the Order-in-original passed by the Collector in the case covered by Appeal No.C-24/85-Cal. that the appellants challenged the correctness of the test reports. In this connection, we would like to reproduce the said paragraph, which is as follows:
"(h) It is stated that there is no literature with the Customs Authorities to distinguish between fetty acids derived from palm oil and fatty acids derived from stearin. Despite this it is stated in the report of the chemical examiner that the samples under reference is palm fatty acid derived from paim oil. The above conclusion is neither logical nor reasonable nor it is based on the very report of the chemical examiner."
34. The Collector's findings are in paragraphs 12.1 to 12.6 and 13 of Order-in- original in the case covered by Appeal No.C-24/85-Cal and in paragraphs 13.1 to 13.6 and 14 of Orders-in-original in the cases covered by Appeals at serials No.(3) to (10). in his findings, the Collector has not discussed the test reports and he has not commented on the appellants' objection on the test reports. He has not even referred to the test reports in his findings. This shows that he has not based his findings on the said test reports and the Chemical Examiners' opinion. This point has been strongly urged on behalf of the appelants, but learned Shri Ghosh has not addressed any arguments in rebuttal. The Collector seems to have drawn his conclusions on the basis of his own opinion that palm fatty acid is a generic term and that in view of the paragraph 240(e) of Import Policy for 1983- 84 stearin fatty acid was covered by Sr. No. 50 of Appendix 4 of the said Import Policy prior to 11.11.1983. In fact, the ColleBtor has not disputed that the goods in question are stearin fatty acid. In the following paragraphs of the Orders-in-original, the Collector has himself admitted that the goods in question are stearin fatty acid :-
Appeal No. Order-in-original No. and date Paragraph No.
1. C-24/85-Cal. S 202-Gr.l(P)159/84A dated 15.9.1984 13
2. C-36/85-Cal. S 33-71/84A(Gr.l), 9&14
S 33-72/84A(Gr.1) and
S 33-73/84A(Gr.l)
dated 18.9 .1984
3. C-37/85-Cal. S 33-74/84A (Gr.l), 9&14
S 33-75/84A (Gr.l) and
S 33-76/84A (Gr.l)
dated 15.9.1984
4. C-83/85-Cal. S 202-GR I(P) 264/84A 9&13
5. C-84/85-Cal. S 33-80/84A dated 24.9.84 8&14
6. C-85/85-Cal. S 202-Gr l(P)-240/84A dated. 26.9.84 9 and 14
7. C-90/85-Cal. S 33-99/84 (Gr.l) dated 1.10.84 10 and 14
8. C-91/85-Cal. Gr.S 33-95-98/84 (Gr.l) dated 29.9.84 10 and 14
9. C-129/85-Cal. S 33-93-94/84A (Gr.l) dated 15.9.84 9 and 14
In this order dated 17.11.1983 also, which is the subject matter of Appeal No. C- 152/84-Cal., Collector has not disputed the fact that the imported goods are stearin fatty acid. As the Collector has not based his findings and conclusion on the test reports and the Chemical Examiner's opinion, the same are of no consequence and the judgment of Madras High Court reported in AIR 1975 Mad-217 is totally irrelevant in the present cases.
35. The text of the Chemical Examiner's Note dated 28.6.1984 is as follows:-
"The sample under reference has a pronounced odour of palm oil and responds to colour test for palm oil indicating it to be a product of palm oil origin. In the standard literature available here the physico chemical constants for the mixed acids derived from palm oil/palm stearin have not been mentioned for their categorical characterisation. However, the observed Iodine value of the sample under reference falls within the range for palm oil as mentioned in the Poram Brochure, and in other literature. The titre value of the sample under reference also falls within the range mentioned for palm oil.
From the analytical findings on the sample under reference, I am therefore of the opinion that the sample under reference is "palm fatty acids" derived from palm oil."
36. The note of the Chemical Examiner is vague. It does not give the details of analytical results found on test of the samples. It does not mention the exact colour of the samples and the extent of iodine value and titre value found in the samples. The note says that in the standard literature available in Calcutta Custom House the physico chemical constants of mixed acids derived from palm oil and palm stearin have not been mentioned for their categorical characterisation. In the face of this fact, we are at a lossio understand as to how the Chemical Examiner expressed his opinion that the samples were "palm fatty acid" derived from palm oil. His opinion is self-contradictory. He has not disclosed any analytical data on which he has based his opinion. Further, we find from the Collector's order dated 17.11.83 in the case of Mansingka Brothers covered by Appeal No.C- 152/84-Cal. that the Depurty Chief Chemist had told him (Collector) that it was not possible to distinguish in their (Calcutta Custom House) Laboratory whether the fatty acid is derived directly from palm oil or from fraction of palm oil, i.e. palm stearin. In the contract entered into by the appellants in Appeal No. C-24/85-Cal., there was a guarantee Clause that the goods would be other than palm fatty acid. In view of the above facts, we are not satisfied about the reliability of the Chemical Examiner's opinion that 'the sample is palm fatty acid derived from palm oil". Collector has not gone by the opinion of the Chemical Examiner. Collector has also not held that the goods are palm fatty acid. As already stated by us earlier, the Collector admitted in all the Orders-in-original that the goods in question were stearin fatty acid. This is also supported by the fact that the importers were not charged for misdeclaration of description of the goods. In view of the above, we are not inclined to be guided by the test reports and the Chemical Examiner's opinion.
37. One of the arguments of Shri Ghosh is that the appellants have not challenged the inference drawn by Collector from Poram Brochure. From the Chemical Examiner's Note dated 28.6.1984, we find that he has mentioned Poram Brochure in the context of the range of iodine value of palm oil. Except this, we do not find that the Collector has placed reliance on Poram Brochure in the adjudication orders of appeals at Serials No. 2 to 10. We do not think that mention of the Poram Brochure helps us in any way in deciding the issue before us.
38. Learned Advocate Shri Ghosh has pleaded that goods imported by the appellants No. 2 to 10 fall within the definition of "Fatty acid" in the Chambers Dictionary of Science and Technology. This definition does not help us in resolving the issue in dispute as it does not say whether palm stearin fatty acid is included in the term "Palm fatty acid" or whether both are one and the same thing. It is not disputed that the imported item is fatty acid, but the appellants have contended that palm stearin fatty acid imported by them is different from the "Palm fatty acid" appearing at serial No. 50 of Appendix 4. There are several judgments of Supreme Court in which it has been laid down that for determining the meaning of an article resort is to be had to its common meaning, i.e. meaning attached to it by the people in the trade and commerce and not to the scientific or technical meaning thereof. In AIR-1967-SC-1454 (The Commissioner of Sales-Tax, Madhya Pradesh, Indore v. Jaswant Singh Charan Singh it was held by the Hon'ble Supreme Court that "It is now well settled that while interpreting items in statutes like the Sales Tax Acts, resort should be had not to the scientific or the technical meaning of such terms but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense". In AIR-1981-SC-1079 (. Indo International Industries v. Commissioner of Sales Tax, U.P.), it was again held by the Hon'ble Supreme Court that "It is well settled that in interpreting items in statutes like Excise Tax Acts or Sales Tax Acts, whose primary object is to raise revenue and for which purpose they classify diverse products, articles and substances resort should be had not to the scientific and technical meaning of the terms or expressions used but to their popular meaning, that is to say, the meaning attached to them by those dealing in them. If any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted." In AIR-1976-SC-2221 (. Healthways Dairy Products Co. Regd. Gauhati v. The Union of India) the Hon'ble Supreme Court observed that "It is well established by several authorities of this Court that for the purpose of levy of excise duty or any other similar tax the description of goods as popularly and commonly understood has to be taken as the description of the same goods in the relevant provisions of the Statute or the Rules. In this case there are materials to show that condensed milk and condensed skimed milk are two different items of milk preparations." In the judgment reported in AIR-1972-SC-2551 (Menerals & Metals Trading Corporation of India Ltd. v. Union of India and Ors.) it was held by the Hon'We Supreme Court that "whether the ore imported is in powder or granule form is wholly immaterial. What has to be seen is what is meant in international trade and in the market by wolfram ore containing 60% or more WO3." Further, in the case of . Rathi Khandsari Udyog etc. v. State of U.P. and Ors (AIR-1985-SC-679) it was held by the Hon'ble Supreme Court that "Since the term 'Khandsari' has not been defined by the Act it must be construed in its popular sense, that is to say, in the sense in which people conversant with the subject matter with which the statute Is dealing would attribute to It." In the case of . Dunlop India Ltd. v. Union of India and Ors (AIR-1977-SC-597). Hon'ble Supreme Court held that "meaning given to articles in the fiscal statute must be as people in trade and commerce, conversant with the subject, generally treat and understand them in the usual course ... Technical and Scientific tests offer guidance only within the limits. Once the articles are in circulation and come to be described and known in common parlance, we then see no difficulty for statutory classification under a particular entry". Following the judgments of Hon'ble Supreme Court in Mis. Indo International Industries v. Commissioner of Sales Tax, Uttar Pradesh, . Rathi Khandsari Udyog Etc. v. State of U.P. and Dunlop India Ltd. v. Union of India and Ors., Bombay High Court in the case of Union of India and Ors. v. The Century Spg. and Manufacturing Co. Ltd. reported in 1985 (21) E.LT. 668 (Bombay) has also expressed the similar view.
39. In the adjudication orders, the Collector has stated that "None of the literatures available on the subject draws any distinction between palm Stearin fatty acid as different from palm fatty acid". In the first sentence of the penultimate paragraph of his order dated 17.11.1983, which is the subject matter of appeal No.C-152/84-Cal., the Collector observed: "In order to find out whether palm fatty acid and palm stearin fatty acid are same or not, it would have been better to find out from the market whether they are known as different entities in the market parlance." Following the Supreme Cours' judgments quoted in the preceding paragraph we should consider the trade parlance to ascertain whether stearin fatty acid is a separate commodity or it falls within the description "Palm Fatty Acid".
40. The learned Advocates for the appellants No. 2 to 10 have relied upon a large number of evidence to prove that palm stearin fatty acid and palm fatty acid are two separate and distinct commodities. These have been mentioned in paragraphs 11 and 22.1 of this order. In the Appeal No.C-90/85-Cal., M/s. Naraindas BrOrs., at pages 14- 15 of the Appeal Memorandum, have stated that from the origin as well as on specifications, palm fatty acid and palm stearin fatty acid are different commodities. They have stated that litre of stearin fatty acid is between 46 C and 52 C while that of palm fatty acid is between 40C and 45C. The iodine value of stearin fatty acid is between 30 and 40 while that of palm fatty acid is between 45 and 55". These averments have not been controverted by the respondent Collector. We find that the Government of India, Ministry of Finance (Deptt. of Revenue) in their Notifications No. 16/84-Cus., dated 13.2.84,17/84-Cus., dated 13.2.84, 80/84-Cus., dated 9.3.84 and 96/84-Cus., dated 31.3.84 mentioned "Palm fatty acid" and "palm stearin fatty acid" as two distinct commodities. Letter dated 22.6.1984 issued by the Ministry of Finance, Department of Revenue, Government of India to the Collector of Customs, Bombay dealt with palm stearin fatty acid. The Directorate General, Technical Development (I & EP CELL), Government of India, in their letters addressed to M/s. Ashok Industries, Bombay and to M/s. B. Vijay Kumar & Co., as mentioned In subparagraphs (ix) and (x) respectively of para 11 of this order stated that stearin fatty acid was not the same as palm fatty acid in manufacturing process and end-clues and that palm stearin fatty acid was under O.G.L as per Import Policy for 1983-84 and 1978-79. According to the provisions of paragraph 242(3) at page 73 of the Import and Export Policy, 1983-84, Volume I, an actual user could seek clarificatioin from the Directorate General of Technical Development of the Government of India on the scope of any item in Appendices 1, 2,3, 4,5,8,9,10,15 and 30 of the Import Policy. The above clarifications were given by the Directorate General of Technical Development on reference made by the aforesaid two firms. These are clarifications given by the competent authority as prescribed by the Government and the Department has not produced any evidence before us to disprove the authenticity of the same. The Directorate General of Technical Development has very categorically stated that stearin fatty acid was under O.G.L as per Import Policy for 1983- 84. Appendix 10(1). Jt. Chief Controller of Imports and Exports, Office of the Chief Controller of Imports and Exports, Ministry of Commerce, New Delhi in his letter dated 21.11.84, as mentioned in subpara (xii) of para 11 of this order, has mentioned that import of palm stearin fatty acid was canalised vide Public Notice No. 47/ITC(PN)/83 dated 11.11.1983 and that the request for extension of time for shipment of the same under OGL couid not be acceded to. The words "extension of time for shipment under OGL" are very significant. Had not the palm stearin fatty acid been under OGL prior to 11.11.1983, the question of "extension of time" could not arise. We find from sub-paras (ill) and (iv) of paragraph 11 of this order that the Singapore Branch of State Trading Corporation of India invited price quotations for "Palm Stearin Fatty Acid" from foreign suppliers and manufacturers of this commodity. From subparagraphs (v) and (vi) of that paragraph, we find that the State Trading Corporation of India Ltd. quoted their sale prices for "Palm stearin fatty acid". We also find from para 22.1 (i) of this order that palm oil was classified under Item 12 of the Central Excise Tariff, whereas palm stearin was being classified under Item 68 of CET. The learned advocates for the appellants have cited the Govt. of India (Full Bench)'s Order-in-review No. 208-B of 1980 dated 26.9.1980 [1981 (8) E.LT. 72] in the case of Godrej Soaps Ltd. and Ors. in which the Government of India held that palmolein and palm oil were not identical, having distinct name, character and ISI specifications. ISI specification for palm oil is IS 8323 E-1977 whereas the ISI specification for palmolein is IS 8361 -1977. The Full Bench of Central Board of Excise and Customs in their order No. 179A-189A and 190B of 1982 in the case of OswalAgro Mills Ltd. and Ors. (1982 ECR 530D) held that palm oil and palm stearin were different items. The learned Advocates have relied upon the Order-in-original No. S33-67/83A (Grl.) dated 29.9.1983 passed by Shri T.S. Swaminathan, Collector of Customs, Calcutta in which he held that palm stearin fatty acid and palm fatty acid were different from each other and the former was not covered by the term "Palm fatty acid" appearing at serial No. 50 of Appendix-4 of Import Policy 1983-84 and accordingly, he allowed the goods to be cleared under OGL The learned advocates have also relied upon the Order-in-original dated 19.10.1984 in the case of imports of palm stearin fatty acid by a number of importers through Bombay Port in which the Additional Collector of Customs, Bombay held a similar view. The Deptt. did not file any appeal against those two adjudication orders and accepted the decisions.
41. From the evidence produced, we find that
(i) The Govt. of India, Ministry of Finance (Department of Revenue),
(ii) The Directorate General of Technical Development,
(iii) Chief Controller of Imports and Exports,
(iv) State Trading Corporation of India Ltd.,
(v) The Collector of Customs, Calcutta and
(vi) The Additional Collector of Customs, Bombay have treated "palm stearin fatty acid" and "Palm fatty acid" as two separate and distinct commodities. We also find from the adjudication order of the Collector of Customs, Calcutta, cited earlier, that Cochin Custom House was allowing import of palm stearin fatty acid under OGL It is stated in paragraph 12(b) of Delhi High Court's judgment (AIR 1986 Del. 221) that "A communication dated 23.7.1983 from the Collector of Customs, Cochin to the Collector of Customs, Calcutta, explaining that regular import of Industrial Stearin Fatty Acid was being allowed to be imported through Cochin Port ... The letter explains that this was done only after a detailed examination and laboratory tests conducted in consultation with the chemical examiner." All these clearly show that these two commodities are treated as distinct and separate items, not only by the concerned Govt. authorities, but also by those who are in the trade and commerce dealing in these commodities. State Trading Corporation is the largest trading organisation of Government. As against so many evidence and authorities produced/cited by the appellants in support of their contentions, the Department has not produced any evidence before us in support of the Collector's findings in the impugned orders, that stearin fatty acid is covered by the term" Palm Fatty Acid" falling under serial No. 50 of Appendix-4. The only reason given by the Collector in the adjudication orders is that palm stearin fatty acid is derived from the source of palm and palm fatty acid is a generic term. In our view, palm fatty acid is not a generic term, but it is a specific term. Fatty acid is a generic term. The Collector's reasoning is not correct. If the interpretation of the Collector is accepted as correct then there could be no need to mention "Palmitic acid" separately at Serial No. 53 of the same Appendix-4 of the Import Policy since the source of palmitic acid is also palm and therefore, on the basis of the reasoning given by the Collector palmitic acid could also be covered by the description palm fatty acid given at serial No. 50 of Appendix 4. The Collector's interpretation, if accepted, will make the entry at serial No. 53 of Appendix-4, redundant and meaningless. We are unable to agree with such an interpretation. In their order No. 596- A dated 21.9.1981 in Appeal No. 383/31/81/AU (A) filed by M/s. Kamani Oil Industries, the Central Board of Excise & Customs held that palm kernel oil was not covered by the term palm oil (all types). The Board observed that palm oil (all types) would cover only those which were derived from palm fruit, but not from the kernel of the palm fruit. This decision of the Board also goes to show that the reasoning adopted by the Collector for his finding is not correct. It is an admitted fact that stearin fatty acid is derived from palm stearin by hydrolysis process. It is also an admitted fact that palm fatty acid is derived directly from palm oil. After stearin is obtained from the palm oil, it becomes a new commodity different from palm oil. The logical conclusion which one can draw is that palm fatty acid and palm stearin fatty acid are two separate commodities arising out of two different parents. In the Trade parlance, these two acids are known as two separate and distinct commodities. Accordingly, we hold the view that the palm stearin fatty acid is a separate commoditity, not covered by the description palm fatty acid as at Serial No. 50 of Appendix 4 of the Import Policy.
42. The appellants No. 2 to 10 have heavily relied upon the decision of the Hon'ble High Court of Delhi in the case of Kaptan's Enterprises and Anr. v. Union of India, reported in AIR 1986 Delhi 221. The issue involved in Kaptan's case is exactly similar to that in the cases before us. There also the same commoditity, the same OGL1 /83 and the same Public Notice 47/83 were involved. Exactly similar questions as before us, were decided by the Hon'ble High Court in the said case. After examining the matter in details the Hon'ble High Court, in para 13 of the Judgment, held inter alia as follows :-
"We are of the opinion that petitioner's contention that the import of "stearin fatty acid" under OGL was permissible prior to 11-11-1983 has to be accepted"
....
"For the above reasons, we are of the opinion that 'stearin fatty acid' could have been imported by the petitioner under OGL 1 /83 as it stood before the public notice dated 11-11-1983."
The learned advocates for the appellants have argued that their cases are within the four walls of this judgment and it is binding on this Tribunal. In support of their contention that this Tribunal is bound by the said judgment of Delhi High Court, they have relied upon a number of decisions, which we should discuss here.
43. In Atma Steels Pvt. Ltd. and Ors v. Collector of Central Excise, Chandigarh and Ors [1984 (17) ELT 331] the FiveMember Bench of this Tribunal has held that the Appellate Tribunal having all-India jurisdiction and peculiar features cannot be held bound to the view of any particular High Court irrespective of the fact that the appellant was within the jurisdiction of that particular High Court or the regional authority was located there.The Appellate Tribunal has the judicial freedom to consider the conflicting views reflected by the different High Courts and adopt the one considered more appropriate to the facts of a given case before the Tribunal. In paragraph 70 of the said Order, the Tribunal observed that 'We are constrained to repel the argument, that we are circumscribed by the view of a particular High Court where the assessee or a particular Collectorate is because that would inevitably land the Tribunal in a mess, propounding conflicting and contradictory views, vitiating its very existence, and cutting down the wholesome principles, desirability whereof has been highlighted in para 60 above". In the said paragraph 60, the Tribunal observed that 'The need to have a uniform approach in fiscal matters, particularly administering on all-India basis, was emphasised by Gujarat High Court in the case : J.D. Patel and Anr. v. Union of India and Ors. [1978 (2) ELT (J 540)] where it was pointed out that "It is not desirable that taxing authorities in different States should take different views. In any case, they must try to settle the matter of conflicting interpretations between different Collectorates at the highest level at the earliest opportunity". In para 5 of the Order No. 107/1986-D, dated 17-2-1986 in the case of Maltex Malsters Ltd., Patialav. Collector of Central Excise, Chandigarh [1986(24) ELT 635 (Tribunal)], this Tribunal held that "We have given the matter our earnest consideration. We observe that the Delhi High Court Judgment is directly on the product-barley maltwhich is in dispute before us. We are also told that there is no contrary judgment of any other High Court on this product. In the circumstances, in keeping with the practice of this Tribunal, we are bound to follow the Delhi High Court judgment". In the case of Hindustan Petroleum Corporation Ltd. v. Collector of Customs, Bombay [1984 (18) ELT 358] this Tribunal held that in the matter of interpretation of all India Statute, the Tribunal is bound by the decision of the High Court under those jurisdiction the office of the Tribunal is situated. In the absence of a decision of such a High Court, the Tribunal is required to follow the decision of any other High Court. If, however, there are conflicting decisions, the Tribunal is at liberty to follow any one of the decisions". On the issue before us, there is no judgment of any other High Court contrary to that of Delhi High Court which is reported In AIR 1986 Del. 221. According to the ratio of the above decision of the Tribunal, we are required to follow the judgment of Delhi High Court. In their judgment reported in 1985 (21) ELT410 (Delhi) in the case of J.K. Synthetics Ltd. v. Collector of Central Excise, Delhi, the Hon'ble High Court of Delhi held that it would not be appropriate for any authorities under the Excise Act, to take a different view from that of a High Court even if such decision has been appealed against. The judicial propriety would require the authority under the Excise Act to follow the judgment of High Court until it is reversed in an appeal and not to take a different view. If a different view is permitted, this would lead to uncertainty of law. The decision of Delhi High Court in Kaptan's case has not been reversed in an appeal and as such, the same is binding on this Tribunal. In the case of Indian Plywood Manufacturing Co. Ltd. v. Collector of Central Excise, Chandigarh [1985 (22) ELT 144] this Tribunal also held that the High Court's decision is binding on the revenue authorities/Tribunals throughout the country though it may be of another High Court. Shri Nankani cited another judgment of Bombay High Court in the case of Godrej and Boyce Manufacturing Co. Pvt. Ltd., Bombay and Anr. v. Union of India and Ors., reported in 1984 (18) ELT 172 (Bom.), in which it was held that the decision of a superior authority is binding on the sub- ordinate authority in the subsequent proceedings. We also find that in their judgment reported in 1978 ELT 624 in the case of Commissioner of Income Tax v. Smt. Godavari Devi Saraf, the Hon'ble Bombay High Court held that "until a contrary decision is given by any other competent High Court, which is binding on a Tribunal in the State of Bombay, it has to proceed in the footing that law declared by the High Court, though of another State, is a final law of the land". In the case of Shri Barada Kanta Misra v. Shri Bhimsen Dixit [AIR 1972 (S.C.) 2466] the Hon'ble Supreme Court observed that:
"The action of subordinate court or Tribunal in refusing to follow the High Court decision when there was no contrary decision of any other High Court amounted to deliberate disobedience and wilful disregard of the High Court and amounted to contempt of Court."
In view of this judgment of the Hon'ble Supreme Court and other judgments/decisions indicated above, we have to follow the judgment of Delhi High Court in Kaptan's Enterprises' case as that is a direct judgment on the issue before us and there is no other contrary judgment.
44. Shri Ghosh for the respondent-Collector has argued that the judgment of Delhi High Court in the case of Kaptan's Enterprises has discussed point Nos. (i) and (II) of paragraph 10 of the judgment, but the High Court did not decide the points. According to him, the observations of the High Court on the two points are by way of obiter and hence this judgment cannot be followed in the present cases. Further, the High Court proceeded on the basis of assumption as indicated in para 11 of the judgment. He has also contended that the judgment is not binding for other reasons, which we have indicated at (a) to (e) in para 23.8 of this order. We have gone through the judgment of Delhi High Court carefully. We find that in para 10 of the judgment the Hon'ble High Court has stated that 'Three questions arise for consideration in the Writ Petition in the light of the stand taken by the respondent in their replies and at the time of the arguments". This shows that the three questions as in para 10 of the judgment were formulated on the basis of the petitioner's contentions in the writ petition as well as the stand taken by the respondent. We also find from para 6 of the judgment that the contention of the petitioners in that case was that the goods imported by them, viz. stearin fatty acid, were permissible to be imported under OGL1/83. From para 14 of the judgment we find that the petitioners made two points, namely, (i) Public Notice dated 11-11-1983 being an administrative circular or instruction, has no statutory force and cannot override or obliterate the right of import available to traders under OGL 1/83, and (ii) even if it is held that the same has the effect of law or statutory notification, it will be applicable only in respect of imports made into India after 11-11-1983 otherwise than in persuance of a firm commitment or contract entered into by the importer before that date. It cannot deprive an importer of the valuable right of importing certain goods under OGL that was available to him till then and in exercise of which he has, before the date of the change of policy, entered into contracts or other commitments which he can avoid only at great peril, risk or loss. The Hon'ble High Court discussed point No. (i) in paragraphs 12 and 13 of the judgment and gave their clear findings to the effect that import of stearin fatty acid under OGL was permissible prior to 11-11-1983. The second question was discussed by the Hon'ble High Court in paragraphs 14 and 15 of the judgment and they held that the petitioner's right to import the goods in question did not cease on 11-11-1983. The judgment has clearly brought out the questions arising out of the petitioner's contentions and the High Court's decision thereon. In the circumstances, we are unable to"accept the contention of Shri Ghosh that Delhi High Court did not decide anything, but only discussed point Nos. (i) and (ii) of para 10 of the judgment, nor can we agree with his contention that the judgment was by way of obiter. Shri Nankani arguing for the appellants No. 2,3,4,8 and 9 has stated that this judgment is not hit by the Doctrine of Obiter Dictum and has relied upon the judgment of Patna High Court reported in AIR 1938 Patna 22 [Ram Khelawan Sahu v. Shri Bir Surendra Sahi and Ors] and Madras High Court's decision reported in AIR 1939 Madras 433 [Annamalai Chattier v. Lakshmanan Chettiar]. The fact that the Delhi High Court proceeded on the basis of certain presumption about contract, does not affect the above findings. In para 11 of the judgment, High Court has observed that whether the contract had been entered into genuinely and before 11-11-1983 or not is a pure question of fact and this question has to be determined by the appropriate authorities and not by the High Court. The learned advocate for the respondent cannot, therefore, question the propriety of the High Court's proceeding on the basis of assumption regarding the contract. The High Court is also not precluded from discussing the issues and recording its findings although the Writ Petition may be premature.
45. Amongst the other reasons which Shri Ghosh has advocated in support of his claim that Delhi High Court's judgment is not binding, some are that there was no test report before the High Court and that the dictionary meaning of fatty acid and the Customs Tariff Entry and B.T.N. Entry have not been considered by the High Court. In view of our discussions in paragraphs 32 to 39, the reasons adduced by Shri Ghosh do not impress us at all. The next reason given by Shri Ghosh is that the Court did not consider the nature of OGL1/83, particularly with reference to different conditions and residuary Item 16 of Part III of the Schedule to OGL 1/83 and Note (l)below Part III. The contention of Shri Ghosh is not correct. We find from the judgment that the High Court thoroughly discusssd these matters in paragraphs 2, 3, 4, 5 and 8 of the judgment. In this connection, the last subpara of para 4 in which the entry 16 of Part III of the Schedule has been discussed, is quoted below:
"'The Schedule consists of three Parts I, II and III and all that we need note here is that under (Entry 16 of Part lll),'"all other items permitted under OGL in terms of the import policy in force, other than those covered by Parts I and II above" are allowed for import by actual users and Ors. for stock and sale. It will, thus, be seen that OGL No. 1/83 virtually repeats the language of the import policy in all material particulars. Its significance is that it constitutes the clothing of statutory authority to the said policy statement."
Another reason given by Shri Ghosh is that Punjab and Haryana High Court's judgment in Oswal Woollen Mills' case was not considered by Delhi High Court. The point made by him is that the Punjab and Haryana High Court held that there was no right to import beef tallow under OGL after issue of the Public Notice canalising the item. We observe that there are certain basic differences between the two cases. The cases are clearly distinguishable. It is stated in paragraph 5 of the Punjab and Haryana High Court's judgment that a combined reading of paragraphs 174 and 176 of the Import Policy would show that the Export Houses were entitled to Import OGL items provided the licence was got endorsed as non-transferable. In the Import-Export Policy for the period April, 1982 to March, 1983, it was provided in paragraph 231 (3) that REP licence and additional licence held by Export Houses/Trading Houses will cease to be valid for import of any item which could be imported under OGL during 1981-82, but is no longer so in the Import-Export Policy for 1982-83. The tallow of animal origin was canalised with effect from 5-6-1981 and the State Trading Corporation alone was allowed to import it.The effect of this canalisation was given in the Import Policy for the period April, 1982 to March, 1983 by including the tallow of animal origin in Appendix-8 which contained a list of items the import of which was canalised through the Public Sector Agencies. Thus, the right given under paragraphs 174 and 176 of the Import Policy was taken away by paragraph 231 (3) of the Import Policy for 1982-83. The importers did not derive that right to import from a statutory ITC order issued under Section 3 of the Imports and Exports (Control) Act, 1947. In the present cases before us, the importers got the right to import under OGL by virtue of the ITC Order No. 1/83 dated 15.4.1983 issued by the Central Government under Section 3 of the Imports and Exports (Control) Act, 1947. This statutory right could not be taken away by a non-statutory Public Notice as held in other cases by the Supreme Court, High Courts and the Customs, Excise and Gold (Control) Appellate Tribunal in their judgments/decisions reported inAIR-1966-SC-478, AIR-1986-Del-221,1981 ELT235 (Bombay) and 1986 (25) ELT 385 (Tribunal). It was further held by the Hon'ble Supreme Court in Ambika Prasad Misra v. State of U.P. and Ors (AIR-1980-SC-1762) that a decision does not lose its authority merely because it was badly argued, inadequately considered and fallaciously reasoned. Further, the main issue in Oswal Woollen Mills' case was whether an order passed by Customs authorities could be reviewed by Import Control authorities, which is not the issue in the present cases nor in the case of Kaptan's Enterprises. Moreover, the judgment of Punjab & Haryana High Court in Oswal's case has been stayed by the Supreme Court. In the circumstances, the said judgment does not affect the Delhi High Court's judgment in Kaptan's Enterprises' case. Shri Ghosh's contention that Delhi High Court's judgment is not binding in view of Tribunal's findings in Atma Steels Case, 1984 (17) ELT 331, is also not acceptable to us in view of what has been stated in paragraph 43 of this order.
46. In view of foregoing discussions, we are of the firm view that prior to 11.11.1983, the import of stearin fatty acid was permissible under OGL vide ITC order in /83 dated 15.4.1983.
47. Regarding question No.(ii), i.e., the effect of I.T.C.Public Notice in 7/83 dated 11.11.1983, the contention of the Appellants in to 10 is that I.T.C. Order in /83 dated 15.4.1983 was issued by the Central Government under Section 3 of the Imports and Exports (Control) Act, 1947. Public Notice in 7/83 dated 11.11.1983 was an administrative order issued by the Chief Controller of imports and Exports. The non-statutory Public Notice in 7/83 cannot over-ride the statutory I.T.C. Order in /83 (O.G.L.1/83). In support of their contention, they have relied upon the Supreme Court's judgment reported in AIR 1962 S.C.1893 and AIR 1966 S.C.478, Bombay High Court's judgment reported in 1981 ELT 235, Delhi High Court's judgment reported in AIR 1986-Delhi-221 and this Tribunal's decision reported in 1986(26) E.LT. 385. They have also contended that Public Notice cannot have retrospective effect. This proposition has been laid down in Supreme Court's judgments reported in AIR 1968 S.C. 718, AIR 1979 SC-621, AIR 1971 S.C. 704,1978 ELT 375 (S.C.) and this Tribunal's decision reported in 1984-ECR-301. They have further argued that the words "in terms of import policy in force" appearing at Item 16 of Part III of Schedule to O.G.L1/83 mean lmport Policy on the date 15.4.1983 and not the date of import or clearance of the goods. Shri Badsha has added that normally statutory I.T.C. Order is amended by another statutory I.T.C. Order and then Public Notice is issued on the basis of the amending I.T.C.Order. In support of his argument he has cited ITC Order in 3/83 and Public Notice in 8/83, dated 14.11.1983 and I.T.C. Order in 9/83 and P.N.in 0/83 dated 21.9.1983, photo copies of which were submitted in the Court. He has stated that in the present cases, no amending I.T.C. Order under Section 3 of the Imports and Exports (Control) Act, 1947 was issued in respect of palm stearin fatty acid and as such, the Public Notice will have no effect on the import of palm stearin fatty acid from 11.11.1983. The argument of Shri Ghosh for the Department is that by Public Notice in 7/83 import of palm fatty acid and other fatty acids was canalized through the State Trading Corporation of India Limited and as such, the Appellants in to 10 were not entitled to import palm stearin fatty acid under O.G.L. from 11.11.1983. In support of his argument Shri Ghosh has relied upon the judgment of Punjab and Haryana High Court in the case of Oswal Woollen Mills Limited and Anr.v. Union of India and Ors. [1984 (18) ELT 694]. He has stated that palm stearin fatty acid being covered by the term "Palm fatty acid", the same was covered by Item No.(v) of paragraph-10 of amended Appendix-9 of the Import Policy, 1983-84. According to the interpretation of Shri Ghosh the words "all other items permitted under Open General Licence in terms of the Import Policy in force" appearing against Item 16 of Part III of the Schedule to I.T.C. Order 1/83 mean Import Policy in force from time to time at the time of importation and clearance of the goods. His contention is that the entire Import Policy was engrafted in I.T. C. Order in /83 dated 15.4.1983 and the Import Policy as amended by the Public Notice is deemed to have been incorporated in the I.T.C. Order in /83 from 11.11.1983. Stearin fatty acid became canalised after the amendment of Import Policy by Public Notice in 7/83. Shri Ghosh has contended that there is no unrestricted freedom to import and the Government can change the policy according to the requirement of the Country. He has cited several judgments of Supreme Court in support of his contention. He has also stated that there is no question of promissory estoppel in these cases as the goods were shipped in June, 1984 and no detriment was caused to the appellants by the Public Notice 47/83. He relied on AIR-1976-Delhi 4.
48. From the judgments relied upon by both sides, as mentioned in the preceding paragraph, we finding that:
(i) As early as in 1962, in the case of East India Commercial Company Limited, Calcutta and Anr.v. Collector of Customs, Calcutta (AIR 1963-S.C.1893), the Hon'We Supreme Court examined the legal position of Public Notice. After detailed examination it was held by the Supreme Court that orders made under Section 3 of the Imports and Exports (Control) Act, 1947 had statutory force, whereas Public Notices were policy statements administratively made for public information and as such, Public Notices were not orders issued under Section 3 of the Act.
(ii) In paragraph 13 of the judgment reported in 1966 S.C.478 (Joint Chief Controller of Imports and Exports, Madrasv. Amin Chand Mutha etc.), the Constitution Bench of the Hon'ble Supreme Court held as follows:"Now there is no doubt that it is open to the Central Government under Section 3 to prohibit the import of any article, but that can only be done by an order published in the official Gazette by the Central Government under Section 3."
(iii) In paragraph-22 of the judgment in the case of Lokash Chemicals Works V. M.S. Mehta, The Collector of Customs (Preventive) Bombay and Ors., decided on 29.4.1980 and reported in 1981 ELT 235 (Bom.), Bombay High Court observed as follows;
"The right to carry on business of import is restricted by law contained in the Imports and Exports (Control) Act, 1947 and Imports (Control) Order, 1955, and any executive action or direction or instruction which seeks to control such right must necessarily have its foundation in one or other provision of the said Act and Order. I do not find any support for the aforesaid action in the said Act or the Order. Mr. Dalai did contend that such a Public Notice has its foundation in Section 3 of the Act and in Clauses 6,7,8, 8A.10B and 10C of Order and in the "conditions of the licence itself. The particular condition which Mr. Dalai relied on is the condition mentioned on the face of the licence to the effect that the licence is without prejudice to the application of any other prohibition or regulation affecting the importation of goods may be in force at the time of their arrival. The prohibition or regulation referred to in this condition must necessarily mean prohibition or regulation imposed by law or having force of law. It cannot mean something done by mere change in policy or by public notice, which may or may not be published or brought to the notice of a person affected adversely. An Officer may issue such a Public Notice and keep it in his own pocket and it will still be effective as a public notice or an amendment or change in the policy but it cannot have the force of law. However, a right was acquired, and it is beyond dispute that once the licence is granted the person acquires a right, which cannot be taken away by mere executive action but such action must necessarily have its foundation either in the said Act or Order."
(iv) In the case of Kaptan's Enterprises and Anr. V. Union of India and Ors. (AIR-1986-Delhi-221) which is similar to the present cases before us, the Hon'ble Delhi High Court examined this question in great details and in para- 15 of the judgment held as follows:
"We are of opinion that the petitioner's right to import the goods in question under OGL did not cease on 11.11.1983. If, as we have held, the original import policy announced for 1983-84 coupled with OGL 1/83 entitled the petitioner to import "Stearin fatty acid" under OGL and, again, as we assume, if the petitioner firm had placed firm contracts with the third respondent for the import of these goods on 7.10.1983 itself, that right of import is no doubt liable to statutory changes but cannot be taken away to the petitioner's detriment except by another statutory instrument. In this case that has not been done, for on 11.11.1983 only a public notice has been issued. We do not see how a public notice such as one issued on 11.11.1983 which has no statutory force by itself and which is inconsistent with OGL 1 /83 which has been issued under Section 3 of the Act can be given effect to. If it is suggested that the change is sought to be effected only as a modification of the earlier policy and nothing more, such change, unwarranted by a statutory instrument, unless justified on grounds of public interest, will be hit by the doctrine of promissory estoppel."
(v) In its order dated 7.2.1986 in the case of HES Limited V. Collector of Customs, Bombay reported in 1986 (25) ELT 385, this Tribunal held that:
"There cannot be any quarrel as to the proposition that it is the prerogative of the Government to change the Policy and it could even take away the rights conferred under the licences issued prior to the date of change of the policy, but in order to take away the rights conferred under the licences, the Government shall have to issue notification or orders in exercise of the powers conferred under the Import/Export Control Act or Import Control Order. Public Notice or even the Policy having no statutory force, the right vested in the licence under the validly issued licence cannot be taken away. What the licensee is exercising is not the rights conferred under the policy but the right conferred under the licence, therefore, by merely changing the policy by non- statutory orders the rights conferred under the licence cannot be divested."
(vi) In the case of Union of India and Ors. v. Anglo Afghan Agencies (AIR 1968- SC-718), the Supreme Court held as follows:-
"We are unable to accede to the contention that executive necessity releases the Government from honouring its solemn promises relying on which citizens have acted to their detriment. Under the Constitutional set up no person may be deprived of his right or liberty except in due course of and by authority of law.lf a member of the Executive seeks to deprive the citizen of his right or liberty otherwise than in exercise of power derived from the law common or statute, the Court will be competent to and indeed would be bound to protect the rights of the aggrieved citizen."
(vii). In the case of . Moti Lal Padampat Sugar Mills Co.Ltd. v. State of U.P. and Ors. (AIR-1979-SC-621) Supreme Court discussed about the doctrine of promissory estoppel and held, inter alia, as follows:
"The true principle of promissory estoppel, therefore, seems to be that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective whether there is any preexisting relationship between the parties or not."
xxx xxx xxx "It was laid down by this Court that the Government cannot claim to be immune from the applicability of the rule of promissory estoppel and repudiate a promise made by it on the ground that such promise may fetter its future executive action. If the Government does not want its freedom of executive action to be hampered or restricted, the Government need not make a promise knowing or intending that it would be acted on by the promisee and the promisee would alter his position relying upon it. But if the Government makes such a promise and the promisee acts in reliance upon it and alters his position, there is no reason why the Government should not be compelled to make good such promise like any other private individual."
xxx xxx xxx "But it is necessary to point out that since the doctrine of promissory estoppel is an equitable doctrine, it must yield when the equity so requires. If it can be shown by the Government that having regard to the facts as they have subsequently transpired, it would be inequitable to hold the Government to the promisee made by it, the Court would not raise any equity in favour of the promisee and enforce the promise against the Government. The Doctrine of promissory estoppel would be displaced in such a case because, on the facts, equity would not require that the Government should be held bound by the promise made by it. When the Government is able to show that in view of the facts which have transpired since the making of the promise, public interest would be prejudiced if the Government were required to carry out the promise, the Court would have to balance the public interest in the Government carrying out a promise made to a citizen which has induced the citizen to act upon it and alter his position and the public interest likely to suffer if the promise were required to be carried out by the Government and determine which way equity lies. It would not be enough for the Government just to say that public interest requires that the Government should not be compelled to carry out the promise or that the public interest would suffer if the Government were required to honour it.
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If the Government wants to resist the liability, it will have to disclose to the Court what are the subsequent events on account of which the Government claims to be exempt from the liability and it would be for the Court to decide whether those events are such as to render it inequitable to enforce the liability against the Government. Mere claim of change of policy would not be sufficient to exonerate the Government from the liability, the Government would have to show what precisely is the changed policy and also its reason and justification so that the Court can judge for itself which way the public interest lies and what the equity of the case demands."
(viii) In the judgment reported in 1978 ELT (J 375) (Connanore Spinning and Weaving Mills Ltd. V. The Collector of Customs and Central Excise, Cochin and Ors.) it was held by the Supreme Court that the rule-making authority has not been vested with the power under the Central Excises and Salt Act to make rules with retrospective effect. The retrospective effect if proposed to be given in any notification will be beyond the powers of rule-making authority.
(ix) In AIR-1971 -SC-704 (Bharat Barrel & Drum Mfg.(P) Ltd.v. Collector of Customs, Bombay and Anr.), it was observed by the Supreme Court in paragraph-5 of the judgment that:
"The condition that sheets imported must be of "Prime quality" was imposed for the first time by the Iran and Steel Controller's Public Notice No. 1 /1 - S/62 dated 6th December, 1962 and could not obviously apply to the sheets imported under the two licences which were issued earlier."
(x) In Patel Impex (P) Ltd. v. Collector of Central Excise, Ahmedabad, reported in 1984-ECR-301, this Tribunal held that judicial pronouncements supported the appellants' contention that a Public Notice amending import policy had no retrospective operation.
49. The learned Advocate for the Department has relied upon a few judgments in support of his argument that the import policy of the Government is not static and the Government can change the policy according to the needs of the Country. In the case of Bhatnagar & Co.Ltd. and Anr. v. The Union of India and Ors. (AIR 1957 SC- 478), the Hon'ble Supreme Court, in paragraph 6 of the judgment, observed that"- in modern times, the export and import policy of any democratic State is bound to be flexible. The needs of the country, the position of foreign exchange, the need to protect national industries and all other relevant considerations have to be examined by the Central Government from time to time and rules in regard to export and import suitably adjusted. It would, therefore, be idle to suggest that there should be unfettered and unrestricted freedom of export and import or that the policy of the Government in regard to export and import should be fixed and not changed according to the requirement of the country." It was also observed by the Hon'ble Supreme Court in paragraph-6 of the judgment reported in AIR-1961 -S.C.1514 in the case of Glass Chatons Importers and Users Association and Os. v. Union of India that "a policy as regards imports forms an integral part of the general economic policy of a country which is to have due regard not only to its impact on the internal or international trade of the country but also on monetary policy, the development of agriculture and industries and even on the political policies of the country involving questions of friendship, neutrality or hostility with the other countries." In Union of India and Ors. v. Mis C. Damani & Co. and Ors. (AIR 1980 S.C. 1149 the Supreme Court, in paragraph 20 of the judgment observed:
"... We are not inclined to stand in the way of the full operation of a policy decision by the Central Government in regard to export of silver."
In the said case, M/s C. Damani & Co. had entered into an agreement with State Trading Corporation for the purpose of exporting silver to foreign buyer and had made all arrangements to perform the contract. In the meanwhile the Export (Control) Fifteenth Amendment Order, 1979 came into force which imposed a complete ban on export of silver including plebian contracts. The agreement between the dealer and the State Trading Corporation contained an indemnity clause according to which in case the contract with foreign buyer could not be performed the dealer undertook to indemnify the State Trading Corporation. It was held that even though the contract to export silver related to pre-ban period, the Court would not interfere with the Government order prohibiting export of silver. In Paragraph 27 of the judgment, the Hon'ble Supreme Court observed, inter alia, as follows:
"... The S.T.C., notwithstanding its independent personality, is an instrumentality of the State and must be satisfied that the policy of the State is being upheld by this Court, although confined only to this case."
From this observation of their Lordships, it appears to us that the decision to uphold the applicability of prohibition to the pre-ban contracts was confined to that case only, and in view of this, the decision in the case of C. Damani & Co. cannot be applied to the cases before us. In the case of Liberty Oil Mills V. Union of India (AIR 1984 S.C.1271), applications for import licences were kept in abeyance for 6 months and the Hon'ble Supreme Court declared the abeyance order valid. We find from paragraph 2 of the judgment that in the counter affidavit filed on behalf of the Government of India and the Chief and Deputy Chief Controller of Imports and Exports, it was claimed that the abeyance order was issued in exercise of the powers conferred by Clause 8-B of the Imports (Control) Order, 1955. The Additional Solicitor General also asserted so. The said case is clearly distinguishable from the present-cases as the abeyance order in that case was a statutory order, whereas in the present cases before us the right to import under OGL conferred by a statutory Order (I.T.C. Order No. 1 /83 dated 15.4.1983) was sought to be taken away by Public Notice in 7/83 dated 11.11.1983 which had no statutory backing. The judgment in Liberty Oil Mills's case is not, therefore, applicable to the present cases.
50. It is not the contention of the Appellants in to 10 that the Government cannot change the import policy according to the needs of the country or that the people have unrestricted power to import. What they have contended is that the right conferred by a statutory order to import can not be taken away by a Public Notice which has no legal force. This view has been held by the Hon'ble Supreme Court and Bombay High Court in very clear terms in the judgments mentioned in paragraphs 48(ii) and (iii)(Supra). Same view has been held by Delhi High Court in the case of Kaptan's Enterprises, which we have quoted in sub-para (iv) of paragraph 48 (supra). We are bound by the decisions of Supreme Court and High Courts. We cannot held a different view. This Tribunal already held a similar view in HES Limited as mentioned in para 48(v) (supra). In the case of Anglo Afghan Agencies mentioned in paragraph 49(vi), the Supreme Court has also held that a member of the executive cannot deprive the citizen of his right otherwise than in exercise of powers derived from common or statutory law. The learned Shri Ghosh has not disputed the general proposition that a Public Notice per se does not nullify the statutory law. He has stated that the position depends on the nature of licence or statutory order. According to him, the whole import policy for 1983-84 was embodies in the I.T.C. Order in /83, dated 15.4.1983 and the said I.T.C. Order stands amended by subsequent amendment of Import Policy by Public Notice. In support of his contention Shri Ghosh has relied upon the Punjab and Haryana High Court's decision in Oswal Woollen Mills 'case reported in (supra) we have already distinguished the said case from the present case before us. At the cost of repetition we would again like to say that in the case of Oswal Woollen Mills the right to import under OGL given by paragraphs 174 and 176 of the import policy was taken away by paragraph 231 (3) of the import Policy for 1982-83, whereas in the present cases the right to import under OGL was granted by I.T.C. Order 1/83 issued under Section 3 of the Imports and Exports (Control) Act, 1947 which was sought to be taken away by a non-statutory Public Notice in 7/83 dated 11.11.1983. The contention of Sh. Ghosh that the said I.T.C. order is subject to any amendment of the import policy made after 15.4.1983 is not acceptable in view of the judgment of the Hon'ble Supreme Court in the case of Mahindra and Mahindra Limited v. The Union of India and Anr. (AIR-1979-SC-798). In that case the effect of incorporation by reference was considered by Supreme Court in details. It was held by the Hon'ble Supreme Court that" ... where a provision of one statute is incorporated in another, the repeal or amendment of the former does not affect the latter. The effect of incorporation is as if the provision incorporated were written out in the incorporating statute and were a part of it. Legislation by incorporation is a common legislative device employed by the legislature, where the legislature for convenience of drafting incorporates provisions from an existing statute by reference to that statute instead of setting out for itself at length the provisions which it desires to adopt. Once the incorporation is made, the provision incorporated becomes an integral part of the statute in which it is transposed and thereafter there is no need to refer to the statute from which the incorporation is made and any sub- sequent amendment made in it has no effect on the incorporating statute. Lord Esher, M. R.while dealing with legislation by incorporation in In re. Wood's Estate (1886) 31 Ch.D. 607 pointed out at page 615:
"If a subsequent Act brings into itself by reference some of the clauses of a former Act, the legal effect of that, as has often been held, is to write those sections into the new Act just as if they had been actually written in it, and, the moment you have those clauses in the later Act, you have no occasion to refer to the former Act at all."
Lord Justice Brett also observed to the same effect in Charke v. Bradlaugh, (1881) 8 QBD 63 at 69:
" ... There is a rule of construction that, where a statute is incorporated by reference into a second statute the repeal of the first statute by a third statute does not affect the second."
This was the rule applied by the judicial committee of the Privy Council in Secretary of State for India V. Hindustan Cooperative Insurance Society Limited, 58 Ind.App 259: (AIR 1931 P.C. 149). The Judicial Committee pointed out in that case that the provisions of Land Acquisition Act, 1894 having been incorporated in the Calcutta Improvement Trust Act, 1911 and become an integral part of it, the subsequent amendment of the Land Acquisition Act, 1894, by the additional of Sub-section (2) in S.26 had no effect on the Calcutta Improvement Trust Act, 1911 and could not be read into it." There are similar other decisions of the Supreme Court on this point. We would like to mention two of them here. In the case of Ram Sarup v. Munshi (AIR-1963-SC-553 at page 558) Supreme Court held that when an earlier Act or certain of its provisions are incorporated by reference into a later Act, the provisions so incorporated become part and parcel of the latter Act as if they had been "bodily transposed into it." In Bolani Ores Ltd. V. State of Orissa(AIR-1975-SC- 17) Section 2(c) as substituted in 1943 in Bihar and Orissa Motor Vehicles Taxation Act, 1930 defined "Motor Vehicle" to have the same meaning as in the Motor Vehicles Act, 1939. Construing Section 2(c) of the Taxation Act, it was held by the Supreme Court that definition of "Motor Vehicle" In the "Motor Vehicles Act" as existing in 1943 got incorporated in the Motor Vehicles Taxation Act, 1930 and the amendment of the definition of "Motor Vehicle" in the Motor Vehicles Act in 1956 was not applicable for the purpose of Motor Vehicles Taxation Act. The principle laid down by the Supreme Court in AIR-1979-SC-798 and other judgments as stated above should be applicable to the present cases.
50.1. An amendment made to the Import Policy by Public Notice after 15.4.1983 can, therefore, have no effect on the I.T.C.Order 1 /83 dated 15.4.1983 as the Import Policy was incorporated by reference in the I.T.C. Order on 15.4.1983. Therefore, the I.T.C. Order continued to be as it was on 15.4.1983. We have held earlier after examining point No.(i) that stearin fatty acid could be imported under Open General Licence under I.T.C.Order 1/83 dated 15.4.1983. For the purpose of bringing this item in appendix-9 as a canalised item it was necessary to amend the I.T.C. Order 1/83 dated 15.4.1983 by an order issued under Section 3 of the Imports and Exports (Control) Act, 1947. As this was not done, the Public Notice, which had no legal force, could not amend that I.T.C. Order and as a result, stearin fatty acid continued to be under Open General Licence covered by the I T.C. Order even after issue of the Public Notice on 11.11.1983. This view is supported by the ratio laid down in the decisions of the Supreme Court, High Courts and this Tribunal, cited in paragraphs 48(i),(ii),(iii),(iv),(v) and (vi) and the Supreme Court's judgments quoted above. Shri Badsha has brought to our notice I.T.C. Order in 3/83 and Public Notice in 8/83 both dated 14.11.1983 and I.T.C. Order in 9/83 and Public Notice in 0/83 both dated 21.9.1983. We find that by I.T.C. Order in 3/83 dated 14.11.1983 issued under Section 3 of the Imports & Exports (Control) Act, 1947 Open General Licence No. 1/83 dated 15.4.1983 was amended by deleting, inserting and amending certain entries of the Schedule to the OGL 1/83, and those amendments were reflected in the Public Notice in 8-ITC(PN)/83 dated 14.11.1983. Similarly, by I.T.C. Order in 9/83 dated 21.9.1983 issued under the said Section of the Act, Entry in 4 of Part III of the Schedule to O.G.L. Order in /83 dated 15.4.1983 was amended and the said amendment was published in the Public Notice in 0/83 dated 21.9.1983, vide Serial in thereof. No such amending I.T.C. Order was issued in respect of stearin fatty acid.
51. In support of his argument that the words "in terms of the import policy in force" mean the import policy in force on 15.4.1983, Shri Nankani has relied on the judgment of Calcutta High Court in the case of Mangla Brothers v. Collector of Customs and Ors., reported in AIR-1985-Cal-122, which was decided on 4.7.1984. In that judgment it was held that the licence issued during a policy period is governed by that policy as amended upto the date of issue of the licence and amendments made after the date of issue do not have any application to the licence. In this connection, paragraphs 14 and 15 of the judgments are reproduced below:-
"14. The next contention which requires consideration is whether the import of the item in question is permissible having regard to the fact that under the Current Policy (1984-85) this'ftem has been canalised and can only be imported by State Trading Corporation. A licence issued during a policy period is governed by that policy as amended upto the date of the licence and any amendment made after the date of issue cannot have any effect on the licence. There may be a time lag between the date of placing of an order and actual importation. Even after an importer has complied with all the necessary formalities for import of the goods under a licence, he may not complete the importation for no fault of his and when goods arrive, the import policy is found to have been amended to prohibit the import of the goods covered by the said licence. In such a case the importer will suffer loss and prejudice if he is not allowed to clear the goods on the basis of the licence. The time limit can always be prescribed by Import Policy as has been done in para 185(7) of 1982-83 Policy. If within the time prescribed the goods are imported under a licence covered by import policy of a particular year, the Customs authorities cannot withhold the release of the goods on the ground that when the goods have arrived at the port, the import policy has been amended making the item in question a canalised item. The Customs authorities have to ascertain whether the items were allowed to be imported under the Import Policy governing the licence and whether such goods have been imported within the time prescribed by the import policy.
15. In this connection an order of the Central Board of Excise and Customs in Customs Appeal being Order NO.721A of 1981 may be referred to. It has, inter alia,been held in the said order by the Board as follows:
"The Board has considered the different contentions of the appellants. The Board finds that I.T.C. Public Notice in 9/81 of 5.6.1981 canalising the importation of tallow of animal origin as imported in this case has been issued for the policy period April, 1981 to March, 1982. The licences in question have, however, been issued during the period 1980-81. The Board also observes that the earlier orders of the Board cited by the appellants contain clear findings which are binding on the subordinate authorities that the licence issued during a policy period is governed by that policy as amended up to the date of issue of the licence and amendments made after the date of issue do not have any application to the licences. The Board is also in agreement with the contention of the appellants that the Additional Collector was wrong in referring to the general condition subject to which import licences are issued applying prohibitions or regulations imposed under other enactments to the imports under the licence. In the facts of the case, as the restriction sought to be imposed is not under other enactments, but under the very lmports(Control) Order under which the licences were issued, the Additional Collector's interpretation was wrong. The Board also finds that in the Government's Order in 8.2.1980 cited by the appellants relating to an importation to which provisions of para 210 of the Import Policy for 1978-79 applied, a view has been taken by the Government that the restriction was not applicable to the licences issued earlier and the provisions of that paragraph generally correspond to the provisions in para 222(3) of the Policy for 1980-81 relied upon by the Additional Collector."
52. In paragraphs 48(i) to (vi), 49, 50,50.1 and 51 (supra) we have dealt with the various decisions relied upon by the learned advocates for the appellants and the respondent in support of their arguments on the effect of Public Notice 47/83. In a number of judgments it has been clearly held that a non-statutory Public Notice cannot take away the right conferred by a statutory order. Respectfully following these judgments, particularly the judgment of Delhi High Court reported in AIR-1986 Delhi-221 in which the facts are exactly similar to those of the present cases, we are of the view that the said Public Notice could not take away the right of the appellants to import Stearin Fatty Acid under IT. C. Order No. 1/83 dated 15.4.1983 even after issue of the Public Notice on 11.11.1983 and that the amendment of the Import Policy by Public Notice 47/83 had no effect on the I.T.C. Order 1/83 as the latter was not amended by issue of a statutory order under Section 3 of the Imports and Exports (Control) Act, 1947. Stearin Fatty Acid could, therefore, be imported under Open General Licence from 11.11.1983 provided the conditions of I.T.C.Order 1/83 were fulfilled.
53. Regarding promissory estoppel and retrospective effect of the amendment of Import Policy, we have quoted in paragraphs 48(vii) to (x) of this Order, extracts from the judgments relied upon by Shri Badsha and Shri Gupta. We have also quoted extract from Delhi High Court's judgment earlier in paragraph 48(iv). Delhi High Court has held that if the petitioner firm had entered Into a contract on 7.10.1983, then the right to import, though liable to statutory changes, cannot be taken away to the petitioner's detriment except by another statutory instrument. In Moti Lal Padampat Sugar Mills'case (AIR-1979- SC-621), the Hon'ble Supreme Court, while holding that the government is not immune from the applicability of promissory estoppel, has observed that the doctrine of promissory estoppel is an equitable doctrine. If it can be shown by the government that having regard to the fact as they have subsequently transpired, it would be inequitable to hold the Government to the promise made by it, the Court would not enforce the promise against the Government. Shri Ghosh for the respondent Collector has also relied upon Delhi High Court's judgment in the case of Indo Foreign Commercial Agency (Produce) Pvt. Ltd. v. Union of India and Ors. (AIR-1976-Delhi-4). According to that judgment, the principle of promissory estoppel would not apply to the policy action by the Government. Relying on the judgment of the Supreme Court reported in AIR-1980-SC-1149 (Mis C. Damani & Co. v. Union of India and Ors.) Shri Ghosh has made a plea that if the contract is frustrated due to change of law, then each party is discharged of its liability under the Contract and there is no questionof damage. Therefore, in our opinion, the plea of the promissory estoppel as made by Shri Badsha and Shri Ghosh is not on a strong footing. We, however, have already upheld the appellants' right to import on a different ground.
54. ShriGhosh hastried to distinguish the case of Eastlndia Commercial Co.Ltd. on the ground that the Notifications in the said case did not contain any reference to I.T.C. Policy nor the policy was embodied therein. On the same ground, he has also tried to distinguish the case of HES Ltd. V. Collector of Customs, Bombay in the case of East India Commercial Co.the Supreme Court held that a Public Notice was not a statutory order. This case was cited by the learned advocates for the appellants as an authority in support of their argument that the Public Notice 47/83 had no statutory force. The fact that the Notifications in 3/ITC/43 and in /ITC/48 in that case did not contain any reference to I.T.C. Policy does not make any difference. Similar is the case with HES Ltd. We have already discussed the effect of reference to I.T.C. Policy in the OGL1/83 vide paragrphs 50 and 50.1 (supra) and have observed that inspite of reference of the Import Policy in force in the I.T.C. Order 1/83, the amendment of Import Policy by Public Notice 47/83 will have no effect on the I.T.C. Order. In view of the contrary judgment of Allahabad High Court in the case of Commissioner of Sales Tax, Lucknow V. Mango Mal Manak Ram we have not followed Calcutta High Court's judgment reported in 1985 (21) ELT 673 (Cal.) although it was cited. Shri Ghosh has pleaded that this Tribunal's decision in Atma Steels' case is not binding as the Tribunal did not lay down any proposition. We have already quoted from this decision in paragraph 43(Supra). The Tribunal did lay down proposition which we have brought out in the said paragraph. It was held that in view of the all-India jurisdiction and peculiar features, this Tribunal was not bound to the view of a particular High Court. The ratio of this decision was relied upon by the appellants to support their contention that the judgment of Delhi High Court in Kaptan's case was binding on the Tribunal. The ratio is applicable to the present case. The contention of Shri Ghosh is not tenable. Shri Ghosh has also broadly stated that the plethora of past decisions cited by the appellants cannot be applied to the present cases as the facts are different, but he has not specifically argued to bring out the distinguishing features of these cases, except the very few mentioned above in this paragraph, and has not also stated why the ratio laid down therein should not be followed in the present cases, although it was open to him to do so. We cannot brush aside the ratio laid flown in the various decisions of the Supreme Court and High Courts simply on the basis of a vague statement that the facts are different. In the case of B. Shama Rao V. Union Territory of Pondichery(AIR 1967 S.C.1480), the Hon'ble Supreme Court laid down an important proposition, which cannot be overlooked by usThe proposition was laid down in paragraph 5 of the judgment, an extract of which is given below for ready reference:
"It is trite to say that a decision is binding not because of its conclusion but in regard to Its ratio and the principle laid down therein."
In the judgments reported in AIR 1967 S.C.1454, AIR 1972 S.C.2551, AIR 1976 S.C. 221, AIR 1977 S.C. 597, AIR-1981 -SC-1079, AIR-1985-SC-679 and 1985 (21) ELT 668 (Bombay), the Supreme Court and Bombay High Court laid down the ratio that in interpreting the items in the fiscal statutes resort should be had not to the scientific or technical meaning of such terms, but to the trade parlance. These judgments have been cited by the appellants for this ratio in support of their contention that the question whether palm stearin satty acid is a separate commodity distinct from palm fatty acid should be decided on the basis of trade parlance. In AIR-1966-SC-478, AIR-1968-SC-718, Al R-1986-Delhi-221, 1986 (25) ELT 385 (Tribunal), 1981 ELT 235 (Bombay), a ratio has been laid down that a non-statutory Public Notice cannot override a statutory order. The appellants relied upon this ratio to sustain their contention that the Public Notice 47/83, being non-statutory, could not override I.T.C. Order No. 1/83. In AIR-1979-SC-621.1978 ELT (J 375) (SC), AIR-1971- SC-704, and 1984-ECR-301 (Tribunal), the ratio laid down was that a Public Notice could not have retrospective effect. This ratio was relied upon by the appellants in support of their argument that the Public Notice 47/83 could not have a retrospective effect, in other words, the said Public Notice could not take away retrospectively the right conferred by the I.T.C. Order 1/83 dated 15.4.1983. Similarly, the ratio laid down in AIR-1972-SC-2466, AIR-1975-S.C.-907, AIR-1980 SC-1762, 1978 ELT 624,1984 (18) ELT 172(Bombay), 1985 (21) ELT 410 (Delhi), 1984 (17) ELT 331 (Tribunal), 1984 (18) ELT 358 (Tribunal), 1985 (22) ELT 144 (Tribunal), 1986-(7)-E.C.R.233(Tribunal) were relied upon by the appellants to support their contention that the judgment of Delhi High Court (AIR-1986-Delhi-221) was binding on the Tribunal. The principle of incorporation by reference, enunciated in AIR- 1979-SC-798 and the ratio that a licence is governed by the Policy on the date of issue as laid down in AIR-1985-Cal.-122, were also relied upon by the appellants. In 1981 ELT 72 (GOI), 1982-ECR-530-D(CBEC) and 1984 (18) ELT 662 (Tribunal), distinction was made between palm olein and palm oil, palm oil and palm stearin, and palm oil and palm olein respectively. These decisions were cited by the appellants to explain this factual position. In the circumstances, the objection of Shri Ghosh is ruled out.
55. We have decided questions No.(i) and (ii) of paragraph 30(supra) in the affirmative. We shall now examine question No.(iii). Out of the various conditions enumerated in I.T.C. Order in /83 dated 15.4.1983, conditions in ,22,26 and Note-1 below Part-Ill of Schedule to this I.T.C.Order are important and relevant in these cases. Although arguments have been addressed by the learned Advocates of both sides on condition in 7, we do not consider this condition relevant to the present cases as prohibition or regulation imposed under any other law in force is not involved in these cases. Hence, we are not going to discuss this condition and arguments addressed by the learned Advocates thereon. So far as the Note-1 below Part III of Schedule to the I.T.C. Order is concerned, the only significant aspect of this Note is reference to Appendices 3 to 9 and 15, and the clarification contained in Chapter-22 of the Import and Export Policy, 1983- 84. It has been clarified in the said Note that the items which do not appear in Appendices 3 to 9 and 15 of the Import Policy, 1983-84, could be imported under Open General Licence in terms of I.T.C. Order in /83. Condition in of the I.T.C.Order also lays down that "Items to be imported are not covered by Appendices in ,4,5,6,7,8,9 and 15 of the Import and Export Policy 1983-84 (Volume-1)". The department has heavily relied upon paragraph 240(e) in Chapter-22 of the Import Policy 1983-84 in support of the contention that palm fatty acid was generic description and as such, in view of the provisions of this paragraph stearin fatty acid could be covered by the description palm fatty acid. We have already dealt with this point in this order earlier and as such, further discussion is not considered necessary here.
56. Condition in 6 of the I.T.C. Order is very important so far as the present cases are concerned. According to this condition, the goods could be shipped to India on or before 31.3.1984. In case of actual user (Industrial) the goods could be shipped on or before 30.6.1984 against firm order for which irrevocable letter of credit was opened and established on or before 29.2.1984 without any grace period. During the hearing before us, the learned advocates for the appellants and the respondents have confirmed with reference to a query from the Bench that in case of shipment of the goods to India on or before 31.3.1984 it was not necessary to open letter of credit on or before 29.2.1984. Opening of irrevocable letter of credit by 29.2.1984 against firm order was necessary in the case of actual user (industrial) in case the goods were not shipped on or before 31.3.1984, but were shipped on or before 30.6.1984.
57. We have already held that stearin fatty acid was not covered by any of the Appendices 3 to 9 and 15 of the Import and Export Policy 1983-84 (Volume-1). Condition in of the I.T.C. Order was, therefore, fulfilled by the goods in all these appeals. These goods were covered by Item 16 in Part III of the Schedule to I.T.C. Order 1/83 dated 15.4.1983. The importers of the goods were either actual users, or others for stock and sale. Condition (22) of the I.T.C.Order is, therefore, fulfilled. We shall now examine whether condition in 6 was fulfilled in each case.
58. So far as the merits of Appeal No.C-152/84-Cal.(Collector of Customs, Calcutta v. Man Singhka Brothers) are concerned, the learned Advocate Sh.Ghosh for the appellant in this case has made a plea that the respondents did not file any crossobjection against the appeal filed by the Collector within the stipulated period of time and as such, they are precluded from arguing on merits at this stage. It is a fact that the respondents did not file any crossobjection. They filed a "reply affidavit to appeal filed by the appellant". We, therefore, agree with the learned Shri Ghosh that the respondent cannot now argue on merits of this particular case. However, we have to examine the merits of the case as the Department has filed an application under Section 129-D(4) of the Customs Act. 1962 against the order dated 17.11.1983 passed by the Collector of Customs, Calcutta. While deciding this appeal, we are to see whether the importation was authorised and permissible under I.T.C. Order 1/83. The Collector has held that importation of the goods, viz. stearin fatty acid, was unauthorised for the reasons stated in his order. In this case, the goods were imported before 11.11.1983. We have also held earlier in this order vide paragraph 46 (supra) that stearin fatty acid could be imported under O.G.L. prior to 11.11.1983. As such, the importation of the goods was not unauthorised. Accordingly, the question of imposition of penalty and fine in lieu of confiscation does not arise. In this appeal, the prayer of the Department is to impose penalty and fine in lieu of confiscation. In the result, the appeal filed by the Collector in this case is dismissed.
59. In Appeal No.C-24/85-Cal.( Jayant Oil Mills V. Collector of Customs, Calcutta),the appellants imported palm stearin fatty acid for stock and sale. Contract was entered into with M/s Effingham Enterprises Ltd., Hongkong on 2.11.1983. The goods were shipped in three consignments on 25.3.1984, 27.3.1984 and 31.3.1984. The learned Advocates Shri Nankani and Shri Ghosh have confirmed during the hearing before us that according to condition (26) of the I.T.C.Order in /83 dated 15.4.1983 it was not necessary to open letter of credit in this case as the goods were shipped on or before 31st March, 1984. Paragraph 185(5) at Page 54 of the Import and Export Policy for 1983-84 (Volume-1) also provided that import of O.G.L. items by Export Houses should be subject to the condition, inter alia, that the shipment of the goods should take place within the validity of the O.G.L, i.e. 31st March, 1984. In Appeal No.C-129/85-Cal ( Kusum Products Ltd. V. Collector of Customs, Calcutta), the appellants are actual users. Initially on 20.4.1983, they entered into a contract with Sime Darby Oleo Chemicals Ltd., Singapore for purchase of 2400 M/Tons of Tallow fatty acid". On 15.9.1983, the contract was amended substituting stearin fatty acid for tallow fatty acid. Originally, letter of credit was opened on 5.5.1983 and the same was amended on 23.9.1983 substituting stearin fatty acid. The goods were shipped on 24.6.1984. In the case of these two appeals, the condition (26) of the I.T.C.Order 1/83 was fulfilled and the importation of stearin fatty acid was valid. Shri Ghosh while arguing for the respondent-Collector has conceded that these two appellants satisfied the condition (26) of the I.T.C. Order. He has also stated that except these two appeals, other appeals are liable to be dismissed. In view of the above, these two appeals are required to be allowed with consequential relief to the appellants and the impugned orders of the Collector set aside. We order accordingly.
Appeal No.C-129/85-Cal can also be allowed for violation of Section 124 of the Customs Act as the Collector passed the impugned order before the date of personal hearing. The argument of Shri Gupta, learned advocate on this point has not been met by the learned counsel for the respondent-Collector. However, we have allowed this appeal on merits.
60. In Appeal No.C-36/85-Cal, the appellants M/s H.Kumar & Brothers, who are actual users, entered into a contract with Hardial Enterprises Pvt. Ltd., Singapore for import of "Split Stearin Fatty Acid" on 24.10.1983. On 18.2.1984 they approached Andhra Bank for opening letter of credit, but the bank refused to open the same on the ground that the item had been canalised in the mean time. On 22.3.1984, the appellants moved Calcutta High Court and obtained interim order in pursuance of which letter of credit was opened on 2.5.1984. The goods were shipped on 3.5.1984, 19.5.1984 and 30.5.1984. In Appeal No.C-37/85-Cal (Chawla Soap Factory v. Collector of Customs, Calcutta), the facts were similar to those in Appeal No.C-36/85-Cal except that the appellants requested their bank for opening the letter of credit on 10.2.1984 and the same was opened on 21.4.1984. In the cases of these two appeals, condition (26) of the I.T.C.Order 1/83 was not fulfilled. The argument of Shri Nankani that the condition of opening letter of credit by 29.2.1984 is deemed to have been complied with, does not impress us as the condition 26 of the I.T.C. Order was mandatory and the same cannot be waived. Importation of the goods under OGL in these two cases, was, therefore, unauthorised.
61. In Appeals No.C-83/85-Cal (M/s Overseas Processors Pvt. Ltd.), No.C-84/85- Cal (M/s Oswal Soaps & Allied Industries (P) Ltd) and No.C-85/85-Cal. (M/s Shahji International Pvt. Ltd.) the appellants are actual users. They entered into contracts with Indo European Food Ltd., U.K. on 25.10.1983, 25.10.1983 and 15.10.1983 respectively for import of palm stearin fatty acid for manufacturing soap. The goods of M/s Overseas Processors were shipped during the period from 26.6.1984 to 30.6.1984. The goods of M/s Oswal Soaps & Allied Industries were shipped on 26.6.1984, while the goods imported by M/s Shahji International were shipped on 9.6.1984 and 28.6.1984. In these three appeals, the contracts were entered before 11.11.1983 and the shipments were also effected before 30.6.1984, but the appellants could not open letter of credit by 29.2.1984 as their bank refused to open the same orrthe ground that palm stearin fatty acid had been canalised from 11.11.1983. Thus, the condition (26) of the I.T.C. Order 1/83 was not fulfilled and the importation of the goods under OGL was unauthorised. The arguments of the learned advocate that letter of credit is for fixing the contract and that there has been substantial compliance of condition (26) in spirit do not convince us. As already observed by us, the condition of the I.T.C. order is mandatory and cannot be waived.
62. In the cases covered by Appeals No.C-90/85-Cal (M/s Naraindas Brothers) and No.C-91/85-Cal (M/s Jai Hind Oil Mills) the appellants were actual users. They entered into contracts on 3.11.1983 and 2.11.1983 respectively for import of palm stearin fatty acid. The goods were shipped on 20.6.1984 and 30.6.1984 respectively. No letter of credit was opened in these two cases. Condition (26) of the I.T.C. Order was not fulfilled. Importation of the goods under OGL was, therefore, unauthorised in both the cases.
63. In Appeals No.C-36/85-Cal, C-37/85-Cal, C-83/85-Cal, C-84/85-Cal, C-85/85- Cal, C-90/85-Cal and C-91/85-Cal, the goods were shipped after 31.3.1984, but no letter of credit was opened by 29.2.1984 as required under condition (26) of the I.T.C. Order 1/83. Importation in these cases under OGL was, therefore, unauthorised. Goods were liable to confiscation under Section 111 (d) of the Customs Act and the importers were liable to penalty under Section 112 of the Act. In the result, these seven appeals are to be dismissed on merits. We order accordingly.
64. Regarding fine and penalty, the learned Advocates for the appellants have argued that there was no malafide on the part of the appellants, nor has any mens rea been alleged in the matter of importation of the goods in question and that there was practice of clearing stearin fatty acid under O.G.L. in Calcutta, Bombay and Cochin Custom Houses. The adjudication orders passed by Shri T.S. Swaminathan, Collector of Customs, Calcutta and Shri S. Biswas, Additional Collector of Customs, Bombay releasing the goods under O.G.L. were instances in the matter. It has been contended that no confiscation should have'been ordered and no fine and penalty should have been imposed in these cases and that if any penalty was at all required to be imposed, only nominal penalty should have been imposed on the appellants. The Collector has not followed any uniformity in the quantum of redemption fine and penalty. He has not given any reason for such variation.
In support of their arguments, learned Advocates have cited the following judgments regarding penalty and redemption fine, viz. AIR-1970 S.C.253, AIR-1980-S.C.346, 1986 (9) E.C.C.374 (Cal.), 1984 E.C.R.886 (Bombay), 1984 (18) E.LT 533 (CEGAT), and Order No. 596-A/1981 dated 21.9.1981 passed by Central Board of Excise and Customs in the case of M/s Kamani Oil Industries.
65. The learned Advocate for the respondent has stated that in imposing redemption fine the Collector has adopted formula of market price minus duty minus C.I.F. value. He has also stated that the Collector has taken a lenient view by keeping fine and penalty on the lower side and not imposing maximum fine and penalty permissible under the Customs Act.
66. The appellants have relied upon a few judgments in support of their contention against imposition of fine and penalty. It is necessary to examine their applicability in the facts and circumstances of the present cases. In the case of Shama Engine Valves Ltd., Bombayv. Collector of Customs,. Bombay,reported in 1984 (18) ELT 533, this Tribunal held that penal action was not justified in unintentional offence under I.T.C. Policy. In Hindustan Steel Ltd. v. The State of Orissa (AIR-1970-SC-253), Supreme Court held inter alia that penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. In the judgment reported in AIR-1980- SC-346 (The Cement Marketing Co.of India Ltd.v. The Assistant Commissioner of Sales Tax, Indore and Ors.), the Hon'ble Supreme Court observed that penalty was not to be imposed when the filing of incorrect sales tax return was not deliberate. In Gujarat State Export Corporation Limited and Anr. v. The Union of India and Anr. (1984-ECR- 886) Bombay High Court observed that 'The petitioners relied upon the long standing practice of the Bombay Customs House and effected the import and as the Custom House itself was in doubt as to whether the import was valid or not and was releasing the import on previous occasions, including the import of identical items of the petitioners, it cannot be said that the import was in contravention of the provisions of the Customs Act. Section 111 (d) of the Customs Act enables confiscation provided the import is contrary to any prohibition imposed by or under this Act or any law for the time being in force." The judgment of Calcutta High Court, reported in 1986-(9)-ECC-374(Cal) in Collector of Customs, Calcutta and Ors. v. Udey Engineering Enterprises and Ors., was cited by Shri Nankani in support of token penalty. The judgment of Andhra Pradesh High Court in Gyanoba YaswantJadav v. The Collector of Central Excise, Hyderabad and Ors. (AIR- 1974-Andhra Pradesh-76) was relied upon by the appellants in support of the argument that the Collector should not have imposed penalty and fine arbitrarily without giving any reason and there was no uniformity in their quantum.
67. The judgments relied upon by the appellants do not help them. The decision of this Tribunal and the judgments of Supreme Court referred to in the preceding paragraph say that no penalty is to be imposed when the infringement of law is not deliberate. In the seven cases mentioned in paragraph 63(Supra) unauthorised importation was deliberate. The appellants in these seven appeals were aware that in case of shipment of the goods after 31.3.1984 opening of letter of credit on or before 29.2.1984 against a firm contract was a mandatory requirement under condition (26) of the I.T.C. Order 1 /83 and non-fulfilment of this condition would render the importation unauthorised and the goods liable for confiscation under Section 111 (d) of the Customs Act and would also make them liable to penalty under Section 112 of that Act. Knowing this position, the appellants should have tried to procure their requirements of Stearin Fatty Acid from the State Trading Corporation, but instead, they chose to import the goods directly in contravention of the provisions of the Imports & Exports (Control) Act. The unauthorised importation by these seven appellants was, therefore deliberate. The plea of past practice is also misconceived. No materials have been placed before us to show that clearance of stearin fatty acid under OGL was allowed in the past even though the conditions of OGL were not fulfilled. If there was any instance of past clearance where the condition of OGL was not fulfilled, but still clearance was allowed, then only the appellants herein could take the plea of past practice. No such instance has been cited by them before us. So, the judgment of Bombay High Court (1983-ECR-886) is of no help to the appellants. On the other hand, this judgment supports the confiscation of the goods. As the unauthorised importation in these seven appeals is deliberate the confiscation of the goods and imposition of redemption fine and penalty were not only according to the provisions of Customs Act, but also in conformity with the principle laid down in the decisions cited by them. It is true that the Collector has not assigned any reason regarding the amounts of redemption fine and penalty. We are, however, of the opinion that the adjudicating officer need not record reason for determining the quantum of fine and penalty as this is discretionary. This view is supported by the judgment of Calcutta High Court reported in AIR-1966- Cal-237 (Seikh Md. Omer V. Collector of Customs), the relevant extract from which is quoted below:-
"Imposition of a fine In lieu of confiscation is discretionary with the authorities. But no specific reason has to be given in every case as to why a particular penalty may be the more onerous of the two was imposed. If however there be indications that the authority felt that its discretion was fettered, although there was by law no limitation imposed, or that it had none, and in that view chose the more onerous of the two penalties provided, then only a superior court may remit the case and ask the authority to exercise the discretion according to law. When there are no such indications the discretion exercised by the authority should not be interfered with."
68. In Appeals No.C-36/85-Cal (M/s H.Kumar & Brothers) and C-37/85-Cal (M/s. Chawla Soap Factory), the appellants imported three consignments of stearin fatty acid. As copies of the relevant bills of entry were not submitted before us, we have complied the total weight and declared C.I.F. value of the goods from the relevant impugned orders of the Collector and the same are 499.240 M/Tons and Rs. 24,28,735.14 respectively in both the cases. The goods arrived on 25.5.1984,28.5.1984 and 30.5.1984. Shri Badsha, learned Advocate stated during the hearing that the effective rate of Customs duty on stearin fatty acid upto 19.6.1984 was 15% ad valorem and from 20.6.1984 the rate became 100%. In the absence of the bills of entry, we could not ascertain the actual assessable value and the duty actually paid. We have, therefore, applied 15% ad valorem to the C.I.F. value to ascertain the approximate amount of duty and the amount comes to Rs. 3,64,210.27. Total C.I.F. value and customs duty taken together, therefore, come to Rs.,27,92,945.00 approximately. From the copies of the State Trading Corporation's telegram to Asiatic Soap Co., Calcutta submitted in the paper book filed before us, we find that the S.T.C. quoted the ex-jetty sale price of palm stearin fatty acid at Rs. 9584/- per Metric Ton. Calculating at this price, we find that the market price of 499.240 M/Ton comes to Rs. 47,84,716.00 (approximately). If the C.I.F. value and duty are deducted from this amount, the margin of profit comes to Rs. 19,91,770.00 (approximately). Therefore, even after paying the redemption fine of Rs. 4,45,000/- and penalty of Rs. 3,73,000/ the appellants are left with a net gain of Rs. 11,73,770.00 (approximately). This is a broad calculation based on the declared C.I.F. value as, in the absence of bill of entry, we could not get the actual assessable value and duty paid. Actual amounts of duty paid will differ.
69. In Appeals No.C-83/85-Cal, C-84/85-Cal and C-85/85-Cal, the appellants have not filed copies of the relevant bills of entry, except photo copy of a bill of entry No.l-608 filed in the paper book of Appeal No.C-85/85-Cal. As a result, we are not in a position to ascertain the actual assessable value of the goods imported by the appellants and the Customs duty actually paid by them. Shri Badsha has stated during hearing that the goods were assessed at 100% ad valorem. Copy of the above bill of entry, however, shows that duty was assessed and paid on that bill of entry @ 15% ad valorem. In Appeal No.C- 83/85-Cal, (M/s Overseas Processors Pvt.Ltd), the appellants imported six consignments of total weight 3960.816 M/T and the total declared CIF Value was Rs. 1,35,84,376.97 (approximately). The goods were shipped in the last week of June, 1984. Adopting the S.T.C. 's sale price of Rs. 9584/- per Metric Tonne, we get an approximate market price of Rs. 3,79,60,460.00. As against this, the aggregate of C.I. F. value plus customs duty @ 100% ad valorem comes to Rs. 2,71,68,753.00 (approximately), thus leaving a big margin of profit of Rs. 1,07,71,706.00 (Approximately). After paying the redemption fine of Rs. 45,30,000/- and penalty of Rs. 6,99,000/-, the appellants still had an approximate net profit of Rs. 55,62,706.00 (Approximately).
70. In Appeal No.C-84/85-Cal, the declared quantity and C.I.F. value of the goods were 2005.727 M/Tons and Rs. 79,03,996.68 respectively. Goods were shipped on 26.6.1984. Following the above formula the market price comes to Rs. 1,92,22,887.00 (Approximately). Deducting of the C.I.F. value and customs duty at 100%, we get an approximate margin of profit of Rs. 34,14,894.00. Therefore, even after paying redemption fine of Rs. 16,00,000/- and penalty of Rs. 2,00,000/-, the appellants will have a net gain of Rs. 16,14,894.00 (Approximately).
71. In Appeal No.C-85/85-Cal, appellants imported two consignments of stearin fatty acid having total net weight of 2473.836 M/Tons. Declared C.I. F. value of two consignments was Rs. 95,20,446.87. The goods were shipped to India on 9.6.1984 and 28.6.1984. Adopting the market price quoted by the State Trading Corporation as indicated above, the market value of the goods comes to Rs. 2,37,09,244.00 (approximately). Shri Badsha stated that duty was assessed at 100% ad valorem . The total of C.I F. value and duty, therefore, come to Rs. 1,90,40,893.00 (approximately). This leaves a margin of profit of Rs. 46,68,350.00 (Approximately). If redemption fine of Rs. 20 lakhs and penalty of Rs. 3,20,000/- are deducted from this amount, the net gain would come to Rs. 23,48,350/- (approximately).
72. In Appeal No.C-90/85-Cal, the weight of the goods imported was 199.985 Metric Tonnes. The market price at the rate of Rs. 9,584/- per M/Ton on this quantity comes to Rs. 19,16,656.00 (approximately). The declared C.I.F. value of the goods is Rs. 14,22,015.00. From the photo copy of the bill of entry submitted before us, we find that Rs. 2,15,435.29 was actually paid as customs duty. Therefore, total of C.I.F. value and duty comes to Rs. 16,37,450.29. The margin of profit, therefore, comes to Rs. 2,79,206.00 (approximately). In this case, the Collector has imposed redemption fine of Rs. 1,40,000/- and penalty of Rs. 14,000/- and if the amount of redemption fine and penalty are deducted from the margin of profit, appellants are still left with a profit of Rs. 1,24,206.00 (approximately).
73. In Appeal No.C-91/85-Cal, the total quantity of goods imported in four consignments was 1,999.523 Metric Tonnes. The goods were shipped on 24.6.1984. The market price calculated at the rate of Rs. 9,584/- per M/Ton comes to Rs. 1,91,63,428.00 (approximately). The declared C.I.F. value was Rs. 85,75,832.11 in respect of four consignments. Photo copy of the bills of entry submitted alongwith the paper book show that customs duty amounting to Rs. 12,99,238.57 Paise was paid for four consignments. The margin of profit in this case, therefore, comes to Rs. 92,88,357/- (approximately). After deducting the redemption fine of Rs. 12,30,000/- and penalty of Rs. 2,46,000/-, the appellants are left with a net margin of profit of Rs. 78,12,357.00 (approximately).
74. During the hearing, Shri Badsha submitted certain statements showing calculation of margin of profit. We have not relied on those statements because:
(i) C.I.F. value shown therein does not tally with the Order-in-original in all the three cases and it has not been argued that the C.I.F.value shown in the relevant impugned orders is wrong,
(ii) no evidence has been submitted to show that the ST. C. 's sale price taken there in is authentic; and
(iii) the expenses shown therein are partly attributable to time taken in litigation.
75. We have made the above calculations in paragraphs 68 to 73 to get an estimate of approximate margin of profit available to the appellants in the import of the goods covered by these cases and to see whether the fine and penalty imposed were exhorbitant. On the basis of this rough calculation, we find that the appellants were still left with net margin of profit, even after the payment of redemption fine and penalty imposed by the Collector. This may, perhaps, be one of the reasons for which they preferred to redeem the goods on payment of fine and penalty. According to the proviso to Section 125 of Customs Act, 1962, the amount of fine in lieu of confiscation shall not exceed the market price of the goods confiscated, less in the case of imported goods, the duty chargeable there on. According to Section 112 of the Customs Act the maximum amount of penalty in the case of prohibited goods is five times the value of the goods or Rs. 1,000/ whichever is greater. It cannot, therefore, be said that the redemption fine and penalty imposed are exorbitant. In the circumstances, we do not find any justification for reducing the amount of redemption fine and penalty imposed by the Collector in 7 appeals discussed in paragraphs 68 to 73. The amounts of fine and penalty in these 7 appeals are, therefore, confirmed.
76. Appeals No.C-152/84-Cal, C-36/85-Cal, C-37/85-Cal, C-83/85-Cal, C-84/85- Cal, C-85/85-Cal, C-90/85-Cal and O91/85-Cal are dismissed. The redemption fine and penalty imposed by the Collector therein are confirmed. Appeals No.C-24/85-Cal and C- 129/85-Cal. are allowed with consequential relief to the appellants.