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1. The petitioners are letter of authority holders of two REP Import Licences of Export Houses, for import of raw materials, components and consumables covered by Appendix 10, Entry No. 1 of Import Policy, April 1981-March 1982. The petitioners placed an order for supply of 300 M.T. of Acid Oil (Raw material for soap) with M/s. Hardial Enterprises Private Limited, Singapore, which was confirmed by their letter dated 2.1.1981. The goods arrived by ship on 2.5.1981. The petitioners filed the bills of lading Nos. 6, 7, 8 and 10 dated 30.3.1981. The customs authorities did not release the goods but issued a show cause notice stating that though the ship's manifest shows that the goods loaded are coconut acid oil, in view of the fact that the goods are imported from Singapore where "Palm" is grown in abundance, the imported oil should be palm acid oil which is a canalised item. It was also stated that though the bills of lading are dated 30.3.1981, the goods were not actually put on board the ship till 14.4.1981 and therefore the bills of lading were pre-dated to cover the import of the goods within 1981-82 Import Policy. The petitioners submitted their explanation but it was not accepted and by order dated 12.6.1981 it was held that the import is unauthorised and redemption fine of 30% on the CIF value and also a personal penalty of 10% on CIF value of the goods was levied. The petitioners preferred an appeal to the 4th respondent in which they inter alia contended that they had imported only acid oil and not palm acid oil. In any event they are protected by para 222(3) of Appendix 10 of 1981-82 Policy and they are not in any way responsible and they had no knowledge of pre-dated bills of lading. The appeals preferred by the petitioners were rejected on 3.10.1981 on the ground that taking advantage of the transitional arrangements provided under [Para] No. 222(3) of the 1981-82 Policy the importers should have opened an irrevocable letter of credit, and in the instant case it was not done. Consequently both the imposition of redemption fine and the personal penalty were confirmed by the 4th respondent. Against this order, the present writ petition is filed praying for issue of writ of certiorarified mandamus to quash the order dated 3.10.1981 passed by the 4th respondent and directing refund of the amount paid by them.

4. The question of imposition of penalty can be first disposed of. According to the petitioners, there was a valid REP licence to import raw materials covered by Appendix 10 Entry 1 of April-March 1981-82 Import Policy. Import of these raw materials was allowed as OGL items under Appendix 18 Entry I of the said Import Policy. Acid oil was not a canalised item included in Appendix 9 and import of acid oil was permissive under OGL. The only relevant entry in Appendix-9 dealing with canalised items is palm oil, but acid oil is a different and distinct commodity from palm oil. The import of acid oil would not come under canalised items. Therefore, honestly and with bona fide intentions the petitioners placed an order for the import of acid oil, through a merchant in Singapore even as early as in January 1981 and this order placed by the petitioners was confirmed in January 1981 itself. In pursuance thereof, the bills of lading duly signed by the shipping agent were delivered to the petitioners, so as to enable them to clear the goods on their arrival in Madras Port. These bills bear the date 30.3.1981 which will be within the licence period. Therefore merely because the ship had arrived in Madras harbour in May 1981, there is no illegality committed by the petitioners, nor had they committed any fraud. Hence no question of imposition of penalty would arise. In AIR 1970, Supreme Court page 253 which arose under the Sales Tax Act, the Supreme court dealt with the question of imposition of penalty and held as follows:

5. The next question to be considered is whether the goods are liable to be confiscated. The petitioners' main contention is that on the strength of REP import licence they had placed order for import of Acid Oil which is not a canalised item even in January 1981, and that they were given bill of lading dated 30.3.1981. They acted on that and cleared the goods when the ship arrived in May 1981. The reasons given by the respondents for rejecting the [case] of the petitioners are two fold. Firstly, it is [shown] that Acid Oil imported by them can only be Palm Acid Oil since in Singapore Palm Acid Oil is available in plenty and Palm Acid Oil was a canalised item even during the Import Policy April-March, 1981. The import in the instant case was prohibited and confiscation was permissible. The second contention of the respondent is that though the bills of lading bear the date 30.3.1981, the goods were not actually put on board till the middle of April 1981 and therefore the import on the strength of licence valid for the period till 31.3.1981 cannot cover the goods in question. Palm Acid Oil had beea included as a canalised item the 1981-82. The third submission of the respondent is that insofar as the petitioner had not opened irrevocable letter of credit during the currency of the licence the petitioner is not entitled to the transitional provisions contained in para 222(3) of the 1981-82 Policy.

6. On a careful consideration of these objections raised by the respondent it could be seen that none of these contentions can help the respondents. The petitioner had placed an order for the import of acid oil. The description of the goods in the bills of lading, invoice, etc., is Acid Oil. Acid Oil was one which could be imported under OGL during 1980-81. Merely because the respondents felt that palm acid oil is available in plenty in Singapore, they cannot come to the conclusion that what had been imported by the petitioners should be Palm Acid Oil. Therefore, this conclusion of the respondents that what was imported should have been Palm Acid Oil is a conclusion based on no evidence. Hence the first contention of the respondents is rejected.