Harish Chander, Member
1. M/s. Jain Sudh Vanaspati Ltd. had filed the above captioned appeals at serial number 1 and 3, and the Collector of Customs, Bombay, had filed the above captioned appeal at serial number 4 and a cross objection at serial number 2. The Bench vide miscellaneous order No.l35/88-C dated 9th December, 1988, in response to the importer M/s. Jain Sudh Vanaspati Ltd. 's request for the change of the name to M/s. Elephanta Oil & Vanaspati Industries Ltd. had ordered for the change of the name from M/s. Jain Sudh Vanaspati Ltd. to M/s. Elephanta Oil & Vanaspati Industries Ltd. The learned Departmental Representative had no objection to the request of the importer.
2. Against Order No. S/10-175/83-A dated 20.12.83 passed by the Collector of Customs, Bombay, M/s. Jain Sudh Vanaspati Ltd. & Another (now Elephanta Oil & Vanaspati Industries Ltd.) had filed a writ petition in the Hon'ble Calcutta High Court and the same was registered as Matter No.1838 of 1983. After the filing of the writ petition a stay was granted by the Hon'ble Calcutta High Court vide order dated 30th December, 1983. Thereafter a writ petition was filed before the Hon'ble Supreme Court of India registered as Writ Petition No. 585 of 1988 and the Hon'ble Supreme Court's order dated 9.6.88 is reproduced below:
'The petitioners are permitted to implead the Customs, Excise and Gold (Control) Appellate Tribunal Delhi as a respondent.
The petitioners' appeal has been pending before the aforesaid Tribunal for the last five years. The Tribunal is directed to decide the appeal within three months. With these observations, the writ petition is disposed of accordingly.
The said writ petition of M/s. Jain Sudh Vanaspati Ltd, (now Elephanta Oil & Vanaspati Industries Ltd.) was in respect of Order No. S/lQ-175/83-A dated 20.12.83 passed by the Collector of Customs, Bombay, and the Learned Single Judge vide order dated 19th April, 1989, had decided the writ petition in favour of the importer and on internal page 28 of the order the Hon'ble High Court had granted stay as under:-
There will be a stay of operation of the order for a period of four weeks from date in respect of the interim orders passed in this proceedings.
The respondent, viz., Collector of Customs had also filed an application before the Calcutta High Court in view of the observations of the Hon'ble Calcutta High Court.
"At this stage Mr. Roy Chowdhury, Advocate, on behalf of the respondent submits that he only argued on the point of jurisdiction and maintainability of the application and he was under the impression that the matter was heard only on preliminary point and not on merit. Mr. Roy Chowdhury prays for recalling of the order as he submits that there is substantial point of law and he wants to argue. At no stage there was any prayer for hearing the matter on preliminary point nor any order was passed. Mr. Roy Chowdhury may file an application if so advised. Mr. Roy Chowdhury prays for stay of operation of the order.
Thereafter, the Hon'ble Calcutta High Court dismissed the application filed by the Collector vide order dated 3rd August, 1989. Being aggrieved from the order passed by the Single Judge of the Hon'ble Calcutta High Court, an appeal was filed before the Division Bench of the Calcutta High Court by the Department. The Learned JDR vide letter dated 26.9.89 had intimated that Division Bench of the Calcutta High Court had stayed the order passed by the Single Judge, though copy of the order was not available. However, a telex copy was enclosed. In that letter it was also mentioned that "due notice may kindly be taken of the fact that the judgment is stayed qua the parties". Thereafter the JDR vide his letter dated 6.10.89 enclosed a copy of the order passed by the Division Bench of the Hon'ble Calcutta High Court. High Court's order is dated 14.9.89 and is reproduced below:
The Court:- Ad interim relief directing stay of the operation of that part of the judgment under appeal which directs the issue of a writ quashing the order of the Collector of Customs dated December 20,1983 imposing personal penalty in the sum of Rs. 5 crores under Section 112 of the Customs Act, 1962. This order is subject to the condition that no proceeding for recovery of the penalty shall be instituted and that the respondent-company will not dispose of its fixed assets except in the usual course of business. A list of the fixed assets and their valuation as per the last balance sheet shall be annexed to the affidavit-in-opposition to be filed by the respondent company on or before November 14, 1989. Affidavit-in-reply, if any, to be filed on or before December 5, 1989. To be listed on December 14, 1989.
All parties to act on a signed copy of the minutes of this order on the usual undertaking.
M/s. Elephanta Oil & Vanaspati Industries Ltd. vide application dated 4th October, 1989 had intimated that the Tribunal may decide the matter on merits after considering relevant facts and law submitted in writing as well orally by both the parties before the Bench and that the stay of the operation of the order passed by the Learned Single Judge of the Calcutta High Court by the Division Bench does not debar the Tribunal. During the course of arguments, we had enquired from the Learned J.D.R. Shri A.S. Sunder Rajan whether we should proceed with the appeals during the pendency of the application filed by the Revenue before the Single Judge for decision on the merits. To this, Shri Sunder Rajan, JDR had stated that the Revenue would like that the Tribunal should come on its own independent conclusion and the Tribunal should not place any reliance on the order passed by the Single Judge. Now, an appeal has been admitted against the decision of the Single Judge before the Division Bench of the Hon'ble Calcutta High Court and stay has been granted. We have perused the order passed by the Hon'ble Calcutta High Court. There is no stay for the decision of the appeals by the Tribunal and both sides desired that the Tribunal should give its own decision on merits. In the letters dated 26th September, 1989 and 6th October, 1989 are subsequent to the conclusion of the hearing (the hearing was concluded on 12.7.89), there is no prayer from any side as to the reopening of the hearing. There is also a direction of the Hon'ble Supreme Court for the disposal of the appeal by the Tribunal and both sides had undertaken to apply for extension of time for decision by the Tribunal from time to time. We very respectfully follow the directions of the Hon'ble Supreme Court. Accordingly we proceed to decide the same.
3. Appeal Nos. 2542/83-C,2543/83-C and C/Cross/169/83-C.
The facts of these two appeals and the cross objection are as follows:
M/s.Elephanta Oil & Vanaspati Industries Ltd., (formerly M/s Jain Sudh Vanaspatt Ltd.) New Delhi, had imported 4696.5015 MT of what is described as top white beef tallow extra fancy (inedible) valued at Rs. 2,32,15,852 per Osco Sierra. The importer had presented 8 Bills of Entry - 69/27 PE: 69/24,25,26 PE; 69/31 PE; 69/21,22,23 PE; 69/28,29,30 PE; 69/11,12,13 PE; 69/9,10 PE; and 69/14,15,16 PE. They had also presented 4 Bills of Entry per SS Botani Troubadour - Nos. 366/11,12; 366/7,8; 366/9,10; and 366/13,14 valued at Rs. 9812848.00. The Bills of Entries were filed in the Customs House by M/s. Damani Brothers, Customs House Agents. The bills of entries originally showed the details of 5 import licences against which the importers had claimed clearance but only Licence No. 0452196 of a face value of Rs. 6,53,23,200 issued to M/s. B.Arun Kumar & Co. was produced. The licence is imprest Licence issued on 29.6.81 to a Merchant & Manufacturer Exporter. M/s. B. Arun Kumar & Co. had given a letter of authority to M/s. Jain Sudh Vanaspati Ltd. in terms of para 382 of the Hand Book of Imports & Exports Procedure, 1981-82. In terms of this letter of authority and the provisions of Clause 26 of Section 2 of the Customs Act, 1962, M/s. Jain Sudh Vanaspati Ltd. had held themselves out to be the importers of the goods. Since the licence was issued on 29.6.81 as per the adjudicating authority, the Import Policy applicable was April 1981-March 1982 Policy. The licence was initially valid for a period of 12 months but was subsequently revalidated for a period of 6 months from 10.9.82 to 10.3.83. The goods were shipped on 16.3.83, i.e., within the grace period. On 20.9.82, that is, during the revalidated period the licence was made non-transferable and endorsed for the import of OGL items under para 185 of the Import Policy 1982-83 subject to the conditions laid down. This para 185 permits Export Houses to import OGL items against REP licences issued in their own name or transferred to them by others and the facility Will be available to them for the import of, inter alia, raw materials which have been placed on OGL for Actual Users, as per conditions laid down. The importers opened a letter of credit with New Bank of India, New Delhi, on 30.3.83 in favour of M/s. Algul Pte. Ltd., Singapore for a total value of US $ 12,246.250 for a total quantity of 25,000 MT inedible Beef Tallow of Newzealand/Australian/Canadian origin. Pursuant to this, the goods were shipped per s.s. Osco Sierra. Prior to the opening of the L/C, the importers filed Civil Writ Petition No.313 of 1983 in the Delhi High Court. On 25.2.83, the High Court issued a show cause notice to various respondents, viz., Union of India, the Chief Controller of Imports & Exports, Collector of Customs, Bombay and the State Trading Corporation of India. The learned Judges in their order gave liberty to the petitioners to move an application to a banker for the issue of a letter of credit which was to be processed but no final order on that application was to be passed till the next date of hearing, i.e., 4th March, 1983. The petitioners' case, in short, was that they were entitled to import raw materials, components and consumables (non-iron and steel items) other than those included in Appendices 3,5,8,9 and 15 in terms of serial No. 1 of Appendix 10 of the Import Policy for the year 1981-82 on the strength of the Additional and REF licences of other Export Houses as they were letter of authority holders. The importers further contended that till 5.6.81, Entry No. 44 of Appendix 8 covered only mutton tallow and not beef tallow and that they were entitled to import beef tallow as raw material. It was also contended that the importers had entered into contract on 2nd June, 1981 to import 25,000 MT of inedible beef tallow with the suppliers. The agreed rate was fixed at US $ 485 per metric ton. The shipment was to be effected in lots of not more than 5000 MT. This contract was placed on 2nd June, 1981 orally. Subsequently, the suppliers sent them Sales Contract No. AG/JSV/10 dated 2.6.81 which was received by the importers on 6.6.81 on which date they got the same duly notarised from the Notary Public in Delhi. In the meanwhile when they approached the bankers on 3rd June, 1981 for opening an irrevocable letter of credit, the bankers required the production of copy of the contract Subsequent to the receipt of the contract, the importers approached the New Bank of India, New Delhi on 8.6.81 for the opening of a letter of credit. However, the bankers refused to open the letter of credit since the Entry No.44 of Appendix 8 of the Import Policy, 1981-82, had been amended by Public Notice No.29-ITC(PN)/81 dated 5.6.81 to read as follows:-
Tallow of any animal origin including mutton tallow.
Thereafter the suppliers insisted that the importers should fulfil the contract and legal notice was served on the importers. Since they were not able to fulfil the contract the importers filed writ petition in Delhi High Court. In the writ petition prayer was to issue appropriate writ, order or direction directing the respondents to allow the petitioners to import the contracted goods in pursuance of the contract dated 2.6.81 against Additional/REP licences to have as Letter of Authority holders in possession of the petitioners and issue an appropriate order or direction, directing respondents Nos. 5 and 6 to open letter of credit against the contract in question with further direction to the respondent No. 3 to clear the goods on importation. On 16th March, 1983, the Learned Judges of the Delhi High Court in their order permitted the petitioners to press their application dated 3rd June, 1981, move to respondent No.5 which may open the letter of credit asked for on the basis of that application. The Learned Judges also were pleased to order that with regard to import it was not possible at that stage to grant the prayer made in the application that on import clearance of the goods should be permitted. They were pleased to observe that the clearance of the goods on import could only be made after Customs clearance and fulfilling other necessary formalities. Liberty was given to the petitioners to move the Court for direction as to the clearance as and when the goods either reach a port in India or are about to reach, which would be decided on merits. The Court was also pleased to give liberty to respondents Nos.1 to 3 to make such verification as they thought fit regarding the averments made in the affidavit filed before the Court as to the validity and genuineness of the contract under which the petitioners claim to import the goods. On import of the goods, the petitioners vide letter dated 23.3.83 requested to permit them to discharge and store the goods under Section 49 of the Customs Act, 1962, to avoid heavy demurrage of the vessal. On the same day, the permission was granted and the goods were stored in the tanks hired by the petitioners from a company at Sewree, Bombay. On scrutiny of the import licences and other documents presented for clearance, the Appraising Group 'A' of the Bombay Customs House came to the tentative conclusion that the licence No. 0452196 dated 29.6.81 was not valid for the import of beef tallow as the licence had been endorsed under para 185 of the Import Policy 1982-83 and the beef tallow was a canalised item in the said Import Policy. A show cause notice dated 3.5.83 was issued which was received by the importers on 4.5.83. In the meantime, the writ petition in the Delhi High Court came up for hearing and on 13.5.83 the High Court was pleased to order that as a show cause notice had been issued, the Collector of Customs, Bombay should determine the issue involved in the departmental adjudication proceedings with a liberty to the petitioners to return to the High Court in case they were aggrieved of the order. The petitioners filed their reply to the show cause notice on 11.5.83. In their reply the petitioners have repeated the sequence of events commencing from their entering into a contract with the suppliers on 2.6.81 to their opening the letter of credit pursuant to the orders of the Hon'ble Delhi High Court dated 16.3.83. Regarding the merits of the case their contentions were as follows:-
(i) A Public Notice can have only retrospective effect and accordingly, the one dated 5.6.81 cannot affect the import of the goods under contract entered into on 2.6.81.
(ii) On the date of entering into the contract, beef tallow was not a canalised item and there was a promise that it would be allowed as an OGL item.
(iii) When they approached the Bankers on 3.6.81 for opening a Letter of Credit, they had in their hand, 13 licences, the details of which were given in the reply to the show cause notice. These licences, according to them, were valid for the import of Beef Tallow. Subsequently, they had to utilise these licences for the import of other goods as there was a time lag between the initial approach to the bank and the date on which they finally opened the Letter of Credit pursuant to the Court's order dated 16.3.83. They had to utilise the licence as otherwise they would have expired. In view of this, they had to open the Letter of Credit against 5 licences mentioned on page 5 of their reply to the show cause notice which includes the present licence in question bearing No. 0452196 dated 29.6.81.
(iv) This licence has been produced by them "as a matter of convenience to avoid extra foreign exchange burden on the Govt. as we are entitled to import the contracted quantity of 25,000 M/T of Beef Tallow under the firm contract made by us with our foreign supplier op 3.6.81". Since the permission had been given to them to open the Letter of Credit based on their old commitments, the Letter of Credit opened under the aforementioned licence was valid as goods were being imported under 1982-83 Policy in OGL based on Court permission. They, therefore, requested for the release of the goods.
4. The Collector of Customs have discussed at length in his order that the importation was unauthorised and after canalisation of beef tallow, the licence could not be used and the endorsement was clearly for the facilities under Para 185 of the 1982-83 Policy when Beef Tallow was canalised. The letter of credit was opened on 9th March, 1982. The Collector of Customs has held that 12 consignments of beef tallow imported per s.s. Osco Sierra and s.s. Botany Troubadour were liable to be confiscated under Section 111(d) of the Customs Act, 1962 inasmuch as the licence No. 0452196 dated 29th June, 1981 was not a valid licence against which they could import the said goods. He had held that the goods were imported in contravention of Clause (3) of the Imports (Control) Order, 1955 read with Section 3(1) of the Imports & Exports (Control) Act, 1947. By virtue of Sub-section (2) of Section 3 of the Imports and Exports (Control) Act, 1947, the prohibition on their import was deemed to be a prohibition under Section 11 of the Customs Act, 1962. He had confiscated the goods under Section 111(d) of the Customs Act, 1962. However, he had given an option, under Section 125(1) of the Customs Act, 1962, to the importers to pay fine in lieu of confiscation amounting to Rs. 1,09,60,000.00 and clear the goods for home consumption.
5. Shri G.L. Rawal, Advocate with Miss Neerja Mehra, Advocate appered on behalf of the importers and reiterated the facts. However, for proper appreciation, he has laid emphasis on the following dates: 2nd June, 1981 - Date of contract
3rd June, 1981 - Letter to bankers for opening of L/C 5.6.81 - Public Notice No. 29-ITC (PN)/81 6.6.81 - Notarised contract
8.6.81 - Written Contract submitted to New Bank of India. 11.6.81 - Refusal by the Bank for opening of Letter of Credit 3.2.83 - Received notice from the suppliers for cancellation of t he Contract
24.2.83 - Writ Petition No.313/1983 filed before the Delhi High Co urt.
16.3.83 - Order of the Delhi High Court directing the bank to open L/C.
3.5.83 - Show Cause notice issued.
11.5.83 - Reply to Show Cause Notice. 28.5.83 - Adjudication order passed.
Shri Rawal further stated that Public Notice No. 29-ITC(PN)/81 came to the knowledge of the importers on 11.6.81 when the importers received information from the bank for the refusal for opening of Letter of Credit. Shri Rawal stated that the goods imported by the importers were under OGL and the public notice issued by the import authorities cannot have retrospective effect. In support of his argument, he referred to the judgment in the case of M/s. East India Commercial Co. Ltd., Calcutta and Anr. v. Collector of Customs, Calcutta (para 33) where the Hon'ble Supreme Court had held that the orders issued under Section 3 of the Imports and Exports (Control) Act, 1947 had statutory force, whereas public notices are policy statements administratively made by the Government for public information. The Hon'ble Supreme Court had held that "we have no hesitation in holding that public notices are not orders issued under Section 8 of the Act". He has also relied on the judgment of the Delhi High Court in the case of Kaptan's Enterprises & Another v. Union of India AIR 1986 Delhi 21. The Supreme Court had held that public notice was only administrative circular or instruction and had no statutory force and relied on the earlier judgment of the Supreme Court in the case of East India Commercial Co. Ltd., Calcutta and Anr. v. Collector of Customs, Calcutta (supra). He had laid special emphasis on paras 10 and 14 of the said judgment. Shri Rawal, Learned Advocate, has argued that once a right has accrued to a citizen, the same cannot be taken away. Though the goods were imported under OGL, the importer was also in possession of the imprest licence dated 29th June, 1981 for Rs. 6,53,23,200 which was issued in terms of the Import Policy. He further argued that in case the importers' plea that the importers were entitled to import under OGL is not accepted, the importers alternatively should be given the benefit of the import licence. He had further argued that the import licences were issued in the name of B.Arun Kumar & Co. It was valid for 6 months and was revalidated for 6 months. He has referred to para 183 and 185 of AM 1981-82 and AM 1982-83 Policy. He has pleaded that the Bill of Lading is dated 16th March, 1983 and the Bills of Entry were filed as per record. He has further argued that the licence issued will be governed by the Import Policy of that period. In support of his argument, he has referred to the following judgments:-
- Bharat Barrel and Drum Mfg. Co. (P) Ltd. v.
Collector of Customs, Bombay and Anr. (para 5 and 6)
6. In Raymond Woollen Mills Ltd. case (supra), the Tribunal had held that while all conditions in force on the date of issue govern the licence, later conditions do not govern the licence, and in the instant case these licences were issued prior to the public notice which imposed restrictions on the import of oxytetracycline, therefore, the present importation was covered by the licences produced by the appellants. (Reliance placed on -paras 11 to 18 of the judgment).
7. The Hon'ble Supreme Court in the case of M/s. Bharat Barrel and Drum Mfg. Co. (P) Ltd. (supra) has held that where a public notice is issued under Section 3 of the Imports & Exports (Control) Act, 1947, the same cannot have retrospective effect It was observed that the condition that the sheets imported must be of "prime quality" was imposed for the first time by the Iron and Steel Controller's Public Notice No. I/I-S/62 dated December 6, 1962 could not obviously apply to the sheets imported under the two licences which were issued earlier. The revenue authorities had decided the cases simply on the ground that the goods were not of "prime quality". The Supreme Court had held that the condition that the sheets must be of "prime quality" cannot apply to sheets imported under licences issued before 6th December, 1962.
In this case, attention was invited to the two cases of Arvind Exports (P) Ltd. and Jayant Oil Mills (P) Ltd., passed by the Central Board of Excise and Customs and the Government of India had taken the view 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.
9. Shri Rawal, the Learned Advocate, has argued about Public Notice No.29-ITC (PN)/81 dated 5.6.81. He has referred to page 3 of the Order-in-Original and also para 9 appearing on internal page 5 of the Order-in-Original where the reply to show cause notice has been reproduced. He has further referred to para 17 of the Order-in-Original which appears at internal page 8 where it has been mentioned that a further quantity of 2000 M/T of beef tallow had been imported by the importers and the details of the Bills of Entry are furnished in Annexure-II, which is part of the order and the issue involved was the same. He has also referred to para 11 which relates to the chronological sequence of events till the issue of the show cause notice. Para 22 of the Order-in-Original, which deals with the imprest licence, produced, and referred para 25 where the Collector has mentioned that in terms of Para 185 of the Import. Policy 1982-83 the importer gets the facility of importing OGL items otherwise the licence was valid only for the import of diamonds unset and uncut. Shri Rawal further stated that the date of issue of the licence is 29th June, 1981. On 10th September it was revalidated for six months viz., up to 10th March, 1983 and as per policy the licence was valid till last day of the month. He has pleaded that these facts are not in dispute and, in view of the judgments and the legal position explained by him, there is no unauthorised importation and the fine in lieu of confiscation imposed by the Collector needs be quashed and the departmental appeal filed in terms of provisions of Section 129D (1), which is being treated as an appeal, needs be dismissed.
10. Shri A.S. Sunder Rajan, the Learned JDR, who has appeared on behalf of the Revenue, at the outset of his arguments brought it to the notice of the Bench that the Collector of Customs had disposed of two orders by a common order. He has referred to para. 17 of the order which appears on internal page 8 of the Order-in-Original where it has been mentioned that a further quantity of 2000 M/T of beef tallow had been imported per s.s. Botany Troubadour from Australia and details of the Bills of Entry are as per annexure-II and in those cases the importers had waived the issue of a show cause notice and also mentioned that the submissions made would equally apply to these imports also. There was also a request that these may be adjudicated together with earlier cases. Shri Sunder Rajan further stated that serial No. 2 of the Memo of Appeal shows the number and date of the order as Order No. S/10-107 to 114/83 dated 28.5.83. This means the importer has accepted Order No. S/10-107 to 114/83-A and no appeal has been filed and there is no prayer in this appeal. Shri Sunder Rajan stated that the goods imported are "Top White Beef Tallow Extra Fancy (Inedible) in Order No. S/10-107 to 114/83 and goods imported are of Canadian origin, whereas the goods imported in Order No. S/10-107 to 114/83-A appeared to be of Australian origin. The show cause notice was issued only in respect of Order No. S/10-107 to 114/83 but in respect of Order No. S/10-114/83A show cause notice had been waived. In respect of S/10-107 to 114/83A the Bill of Entry was filed on 21.4.83 and the importer had sought clearance against licence No. 0452196 dated 29th June, 1981 and in terms of the import licence the goods to be imported were diamonds unset and uncut. The licence was valid for one year viz. 28th June, 1982. The importer had obtained a letter of authority on 9th March, 1982 from the licence holder and the licence was revalidated for six months with effect from 10th September 1982. Shri Sunder Rajan stated that this means that from 1st July, 1982 to 9th September, 1982, the licence was dead. The revalidated licence expired on 28th September, 1983. He further argued that on 28th September, 1982 they were endorsed under Para 185 of AM 1982-83 (April 1982-March 1983 Policy). The importer had entered into a contract on 2nd June, 1981 with the supplier in Singapore. As per version of the importer the contract expired on 6th June, 1981 and notirised on the same day. The bill of lading was filed on 16th March, 1983. The letter of credit was open on 30.3.83 in terms of the direction of the Hon'ble Delhi High Court. Shri Sunder Rajan had stated that Public Notice No. 29-ITC(PN)/81 dated 5th June, 1981 was issued by the authority. He further argued that writ petition was filed on or about 5th February, 1983 and on 17.8.84 writ petition No. 313/83 was withdrawn. He has further argued that Public Notice No. 29-ITC(PN)/81 dated 5th June, 1981 had canalised the tallow at serial No. 8. He has also referred to Import Trade Control Order No. 1/81 dated 3rd April, 1981 and condition nos. 18,19 and 20 thereof. He has also argued that the importer had opened a letter of credit with the bank on 30th March, 1983, whereas the shipment had taken place even before the opening of the letter of credit on 16th March, 1983. He has referred to Sub-section (3) of Section 4 of the Sale of Goods Act He further argued that the origin of the goods at seller's option were breach of contract Letter of Credit was opened on 30th March, 1983 in terms of High Court's order and there was no LC till 30th March 1983. There is no document which can establish the amendment of the contract. He has referred to para.25 of the Order-in-Original, where the Collector has observed that it was only on account of the provisions of Para, 185 of the Import Policy 1982-83 that the importer gets the facility of importing OGL items. Otherwise the licence is valid only for the import of diamonds unset and uncut. Shri Sunder Rajan argued that the Collector's view was that the importer was not correct in stating that the import policy had no force of law. Without referring to the import policy, the importer cannot exercise his right to import OGL items. It was only the existence of the provisions of Para 185 that enabled the licence holder to get an endorsement on the licence that the licence will also be valid for import of OGL items under para 185 of Import Policy 1982-83, subject to the conditions laid down and that the licence shall be non-transferable. The entitlement to import the goods would not arise but for the provisions of the Import Policy which gives him the entitlement to import goods. Shri Sunder Rajan had read the Order-in-Original at length and laid emphasis on para Nos. 1, 6, 7, 9, 12, 13, 15, 17, 18, 19, 20, 21 to 25, 29, 31 to 33, 36, 37, 39 to 42, and the licence.
11. Shri Sunder Rajan, JDR, referred to a judgment in the case of Bansal Exports (P) Ltd. and Anr. v. Union of India and Ors. , where the Hon'ble Delhi High Court had held that promissory estoppel - not applicable against Government's policies which can be changed in the public interest - Silver - restrictions on export of silver to be decided "on merits'' - Paragraph 316 of Hand Book on Import and Export Procedure does not constitute statutory promises against which the doctrine of promissory estoppel can be pressed nor confers any right to grant export licence - Public Notice dated 30,3.1979, Exports (Control) 22nd Amendment Order. He argued that it was further held by the Hon'ble High Court that there should be a firm commitment by an exporter and in that matter the contract dated 25th March, 1977 was altered and amended at the sweet will and pleasure of the parties. The same could not be regarded as a firm contract. Shri Sunder Rajan has laid special emphasis on para Nos. 3, 4, 7, 9 to 11, 17, 24, 29, 41 to 45, 47, 48, 50 to 56, 60 and 76 to 85.
12. Shri Sunder Rajan referred to a judgment of the Supreme Court in Liberty Oil Mills and Ors. v. Union of India and Ors. , where it is observed that the import policy of any country, particularly a developing country, has necessarily to be tuned to its general economic policy founded upon its constitutional goals, the requirements of its internal and international trade, its agricultural and industrial development plans, its monetary and financial strategies and last but not the least the international political and diplomatic overtones depending on friendship, neutrality or hostility with other countries.
13. Shri Sunder Rajan referred to the judgment of the Hon'ble Delhi High Court in Jain Exports Pvt. Ltd. New Delhi and Anr. v. Union of India and Ors. where the High Court had held that import licence issued for the licensing period AM-1981 subject to regulations in force at the time of arrival of goods - import of industrial coconut oil invalid when goods arrived in July-September 1982 and import was prohibited in 1981-82 and 1982-83 Policies. He has laid emphasis on paras 37 to 43 and asserted that para 39 and 40 of the said judgment are very important.
Shri Sunder Rajan further stated that the judgment of the Delhi Court was upheld by the Hon'ble Supreme Court in the case of Jain Exports (P) Ltd. and Anr. v. Union of India where the
Hon'ble Supreme Court had dismissed the appeals.
14. Shri Sunder Rajan referred to a decision of the West Regional Bench in Jain Exports (P) Ltd. v. Collector of Customs and central Excise, Ahmedabad 1988 (33) ELT 199 (Tribunal) and also a judgment of the Bombay High Court in P. Ripalkumar & Co. Bombay v. Union of India and Ors. (32) ELT 668 (Bom), where Hon'ble Bombay High Court had held that goods specifically banned under current policy cannot be imported even if permissible under earlier policy - import of OGL items by virtute of an endorsement on imprest licence under Policy AM 82-83-Such import must satisfy requirements of earlier policy of 82-83 as well as of current policy - Para 185(4) of Import Policy AM 82-83. The Bombay High Court had held that whether it is an additional licence or whether it is a REP or imprest licence, essentially all these relate to certain facilities whereby the importer can import certain items. When importers have to import those items, naturally, current policy becomes relevant. If, under the Current Policy, it is not possible for the importers to import items which they want to import though the same may be permissible under the earlier policy, the importer have no choice. Therefore, the importers cannot find fault with the show cause notice issued by the Department. Emphasis was laid on para 6 to 12 and 15. Shri Sunder Rajan referred to the judgment of the Hon'ble Supreme Court in Andhra Industrial Works v. Chief Controller of Imports and Ors. special emphasis on para 12, 15 and 18.
15. Shri Sunder Rajan has also referred to Delhi High Court judgment in the case of Kaplan's Enterprises and Anr. v. Union of India AIR 1986 Delhi 221 and has referred to para 15, 17 and 21. He has argued that the present imports were under foreign contract and as such the importers cannot have the benefit of the decision of the Delhi High Court. Reference was invited to AM policy 1981-82.
16. Shri Sunder Rajan has referred to a judgment of the Calcutta High Court in the case of Collector of Customs v. Priyanka Overseas (P) Ltd. and relied on para 63 to 70 of the said judgment The Hon'ble Calcutta High Court has held that Import - OGL - Goods subject to contract not shipped - in the absence of shipping of any such articles before it was made a canalised item, the facility of OGL would not extend to the goods contracted for but not shipped within that date - Palm Kernel - Import Policy 1985-88. Shri Sunder Rajan, the learned JDR, has pleaded for the disposal of the appeals filed by the importer on Revenue's Appeal No.2543 and cross objection. Shri Sunder Rajan has argued that the Collector had imposed a lesser fine in lieu of confiscation and no personal penalty was levied and the Collector had not discussed the applicability of Section 112 of the Customs act in the order. He has referred to the judgments of the Hon'ble Supreme Court in F.N. Roy v. Collector of Customs, Calcutta and Ors. 1983 ELT 1296 (SC) and Indo-China Steam Navigation Co. Ltd. v. Additional Collector of Customs, Calcutta and Ors. 1983 ELT 1392.
17. In 102 ITR 548 at pages 550-551 (Commissioner of Income-tax v. B.M. Modi) it was held that when authorities concerned are satisfied that there was no reasonable cause, levy of penalty was justified. Shri Sunder Rajan further argued that when there is no reasonable cause it is mandatory for the authorities to impose penalty. In support of his argument he has referred to the judgment of the Gauhati High Court in Hanutram Ramprasad v. Commissioner of Income-tax (1978) 112 ITR 187. Shri Sunder Rajan has further argued that once a show cause notice under Section 112 of the Customs Act had been issued to the importers, the Collector has to give a finding but in the present matter no finding has been given. In support of his argument, he has referred to the judgment of the Madras High Court in reported in 102 ITR 787 and Commissioner of Income-tax, Kerala v. Smt. P.K. Noorjehan 1980 Taxation Law Reports 726. Shri Sunder Rajan has pleaded that the Tribunal should give a direction to the Collector to readjudicate the matter for the quantum of redemption fine and also to impose penalty. He has pleaded for the acceptance of the Revenue's appeal and cross objection and dismissal of the appeal filed by the importer.
18. Shri G.L. Rawal, Learned Advocate, in reply states that this objection raised by the Department as to the non-filing of the appeal is not tenable. He fairly stated that it is a technical error. He has drawn attention of the Bench to para 8 of the Appeal Memo in Appeal No.2542/83-C where the amount of fine involved has been shown at Rs. 1,09,60,000. He has stated that this figure represented fine in lieu of confiscation in respect of 12 Bills of Entries and there is a bonafide mistake and no adverse inference could be drawn for such a petty mistake. Shri Rawal further mentioned that the first question to be decided is whether the goods fell under OGL or not. He reiterated that 2nd June, 1981 was the date of contract; on 3rd June, 1981 a letter was addressed to the banker for opening of letter of credit and on 5th June public notice was issued by the Government and the date of licence is 29th June, 1981. He further stated that the public notice has to take effect from the date of the knowledge and not prior to that. In support of his argument, he has referred to a judgment of the Tribunal in the case of Gulab Impex Enterprises Ltd. New Delhi and Ors. v. Collector of Customs, New Delhi  15 ECC - T 318 (NRB): 1988 (16) ECR 67, where the Tribunal had held that public notices deleting certain concessions already allowed held effective from the date it was made known to the public and not from the date of issue of the notice as the rights/concessions once allowed could only be withdrawn when made public. Shri Rawal submitted that the facts in the case Andhra Industrial Works v. Chief Controller of Imports and Ors. (supra), cited by the learned JDR, were different. He has argued that the importers' case is fully covered by the judgment of the Hon'ble Supreme Court in the case of East India Commercial Co. Ltd., Calcutta and Anr. v. Collector of Customs, Calcutta . Shri Rawal has argued that OGL order is a statutory order under Section 3 of the Imports & Exports (Control) Act, 1947, whereas the issue of the later public notice dated 5th June, 1981 is an administrative order and it cannot change the Import Policy. In support of his argument, he has referred to a judgment of the Hon'ble Supreme Court in the case of Jang Singh v. Brij Lal and Ors. where the Hon'ble Supreme Court had observed that a litigant must be vigilent and take care but where a litigant goes to Court and asks for the assistance of the Court so that his obligations under a decree might be fulfilled by him strictly, it is incumbent on the Court, if it does not leave the litigant to his own devices, to ensure that the correct information is furnished. If the Court in supplying the information makes a mistake the responsibility of the litigant, though it does not altogether cease, is at least shared by the Court. If the litigant acts on the faith of that information the Courts cannot hold him responsible for a mistake which it itself caused. There is no higher principle for the guidance of the Court than the one that no act of Courts should harm a litigant and it is the bounden duty of Courts to see that if a person is harmed by a mistake of the Court he should be resorted to the position he would have occupied but for that mistake. This is aptly summed up in the maxim: "Actus curiae neminem gravabit".
19. He has referred to the judgment in the case of Union of India v. Godrej Soaps pvt. Ltd. and Anr. , where the Hon'ble Supreme Court has held that Imports and Exports - Canalised goods - Export House Certificates and Additional Licenses -entitled to import all items "whether canalised or otherwise" provided the items were permissible for import under such licenses and not absolutely banned under the Import Policy 1978-79 prevailing at the time of filing applications for Export House certificates and continued to be so importable under the Import Licence 1985-88 prevailing at the time of import - meaning in the context of the expression "whether canalised or otherwise" used by Supreme Court in its order dated April 18, 1985 (Union of India v. Rajanikant Bros.) explained - Palm kernel Fatty Acid imported under the Additional Licence pursuant to order dated April 18, 1985 and sold to the respondent not being a canalised item under Import Policy 1978-79 but a canalised item under current Import Policy 1985-88 (Appendix V Part B Item 9(v).
20. Shri Rawal has again referred to the Supreme Court judgment in the case of East India Commercial Co. Ltd. Calcutta and laid special emphasis on para 33. Shri Rawal has argued that Public Notice dated 5th June, 1981 cannot override the OGL order which is an order under Section 3 of the Imports and Exports (Control) Act, 1947. He has referred to para 2 of the Import Policy 1981-82. Shri Rawal has argued that the genuineness of the contract has not been doubted by the authorities. He has referred to para 20 of the Order-in-Original and also para 42 on internal page 24. Reference was invited to the judgment of the Hon'ble Supreme Court in Mohinder Singh Gill and Anr. v. Chief Election Commissioner, New Delhi and Ors. where the Hon'ble Supreme Court had held mat when statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to Court on account of a challenge, get validated by additional grounds later brought out. The Hon'ble Supreme Court had placed reliance on an earlier order of the Supreme court ; and the Supreme Court had further
observed that "Orders are not like old wine becoming better as they grow older".
21A. Shri Rawal has referred to the Hon'ble Delhi High Court's order dated 16.3.83 directing the Bankers to open L/c. He has also referred to the following cases:
Union of India v. Rajnikant Bros. (Appeal No.1423/84)
Raj Parkash Chemicals Ltd. and Anr. v. Union of India and Ors.
In Raj Prakash Chemicals Ltd. case, (sic) the Hon'ble Supreme Court had observed
The Export House Certificates shall be granted within 3 months from this date. Save and except items which are specifically banned under the prevalent import policy at the time of import, the respondents shall be entitled to import, all other items whether canalised or otherwise in accordance with the relevant rules. The appeals are disposed of accordingly.
Union of India v. Godrej Soaps Pvt. Ltd. and Anr.
B.Vijayakumar. Collector of Central Excise & Customs - Civil Appeal Nos.445-446/88.
The appellants bonafidely imported the canalised items of goods under the additional import licence granted to them and in pursuance thereof they imported goods which were not permissible items. Since the appellants acted bonafide under orders of the Supreme Court and the communication issued by the Customs Authorities, they had not committed any breach of law and they were not liable to pay any penalty or fine. The Hon'ble Supreme Court had set aside the order of the Collector with regard to the confiscation of goods and imposition of redemption fine. Shri Rawal argued that the importer satisfied all the conditions of the licence. Shri Rawal referred to serial No.8 of the Appeal Memo in respect of Appeal No.2542/83-C to say that the amount of fine involved was shown as Rs. 1,09,60,000.00 and the importer had duly mentioned the order dated 28th May, 1983. It was pleaded that documentation of the appeals should not be doubted, He referred to a judgment of Shama Engine Valves Ltd., Bombay v. Collector of Customs, Bombay , where the Tribunal had held that where there were bonafide imports, penal action not justified in unintentional offence under ITC Policy. Paras No. 11 and 12 from the said judgment are reproduced below:
11. There is no doubt that since the goods fell within the scope of stainless steel which were canalised through SAIL in terms of Appendix 8 in the ITC policy for 1982-83, they were, on a correct interpretation of the ITC policy, permitted to be imported only through SAIL and not directly by the importers. Thus, technically there was a contravention of the Import Control Regulation by the appellants. Nevertheless, for the reasons given by Shri Mehta and set out earlier in this order, there was a very strong case in equity against taking penal action against the importers. It is not necessary to repeat the various arguments advanced by Shri Mehta. However, certain relevant facts may be noted. The steel was being imported for the manufacture of an essential industrial component which in this case was to be supplied to the Indian Railways, and it was stated by Shri Mehta that the material had in fact been used for that purpose and an end-use certificate had been furnished. There was no question or allegation that the material was diverted for highly profitable or non-essential purpose which could be the case with stainless steel sheets etc. The licenses with the description 2 Iron and Steel and Ferro Alloys" were issued to the importers specifically for the manufacture of their end-product and that end-product was also specified as "Engine Valves". Clearly, therefore, it was the intention of the licensing authorities that the Actual Users be allowed to import this material for the manufacture of their end-product. It is equally clear that the Customs authorities had been allowing importation of such material earlier even though under the licensing policy for the earlier periods, stainless steel was a canalised item. Even during the period under considerations the Customs Authorities treated the goods as "alloy steel" for the purpose of the exemption notification. In the light of all these facts, and the judicial decisions referred to by Shri Mehta, we find that here is considerable weight in his contention that penal action should not have been taken in this case and that at most a warning could have been given. As already observed, even the Additional Collector recorded that a lenient view was being taken, but went on to impose a fine of Rs. 1,00,000 which in the circumstances cannot be considered at all lenient.
12. In the result, we hold that the Addl. Collector was right in treating the goods as a canalised item in terms of Appendix 8 of the ITC Policy for 1982-83. He was however, not justified in confiscating the goods subject to a fine of Rs. 100,000. We accordingly set aside the confiscation of the goods. The fine of Rs. l,00,000 which we were informed had been paid by the appellant should be refunded to them. The Additional Collector's order is modified to this extent only.
21. We have heard both the sides and have gone through the facts and circumstances of the case. First we deal with the preliminary objection of the learned JDR, Shri A.S. Sunder Rajan. The Collector of Customs, Bombay had passed adjudication order No. S/10-107 to 114/83A + S/10-140/83A dated 28th May, 1983. Shri A.S. Sunder rajan, learned J.D. R. had argued that the importer had filed appeal only in respect of order No. S/l0-107 to 114/83A dated 28th May 1983 and no appeal has been field in respect of order No. S/10-140.83A. We have perused the form in column No. 2 the number and date of the order filed against has been mentioned as S/10-107 to 114/83 dated 28th May, 1983 and in column No. 8 the amount of fine involved has been mentioned as Rs. 1,09,60,000 and in column No. 10(a) of the memo of appeal, i.e. , reliefs claimed in appeal it has been mentioned that "Order dated 28-5-1983 which was issued on 30th May, 1983 should be squashed and set side", 10(b) the goods in question be permitted to be cleared on the payment of the appropriate amount of duty and in 10(c) for further and other reliefs as the nature and circumstances of the case may require". It is a settled law that the order has to be seen as a whole and cannot be bifurcated in a piece-meal manner. The Collector in his order has only mentioned in para 17 of his order as to further quantity of 2000 MT of beef tallow and Bill of Entries on internal page 25 and 26 have been mentioned from sl.No.1 to 12. The total fine in lieu of confiscation is at Rs. 1,09,60,000. If the requirement of the filing of the appeals in terms of provisions of Section 129-A of the Customs Act, 1962 had to be seen keeping in view the numbers of Bill of Entries there are 12 Bills of Entries are involved and as such 12 appeals should have been filed. But in the instant case the appellant has only field one appeal and the revenue has also not challenged the filing of one appeal for the 8 Bills of Entries relating to Order No. S/10-107 to 114/83. Appeal was filed much earlier and if at all any defect in any way the registry should have pointed it out to the appellants. Rule 33 of Order 41 of Code of Civil Procedure, 1908 relates to appeals from original decrees and Rule 33 deals with the power of Court of appeal. Hon'ble Supreme Court in the case of Union of India v. Allied Products had held that an appellate Court may in appropriate case pass any decree and make any order appropriate to the ends of justice, even if, a party has not appealed against any advance [adverse] decision. The power may be exercised by the Court notwithstanding that the appeal is as to part only of the decree and may be exercised in favour of all or any of the parties even though they may not have filed any appeal or cross-objection. Sub-section (6) of Section 129-C of the Customs Act, 1962 provided that subject to the provisions of this Act the Appellate Tribunal shall have power to regulate its own procedures and the procedure of the Bench thereof all matters arising out [of] exercise of its powers or of the discharge of its functioning including the place at which the place (sic) shall hold their sittings and Sub-section (8) of Section 129-C further provides that the Appellate Tribunal shall be deemed to be a Civil Court. Rule 41 of the CEGAT Procedure Rule, 1982 further empowers the Tribunal. The Tribunal may make such orders or give such directions as may be necessary or expedient to give effect or in relation to its order or to prevent abuse of its processes or to secure the ends of justice. In view of the legal position discussed above to secure the ends of justice we overrule the objection raised by the learned JDR and hold that the appeal before the Tribunal is in respect of order No. S/10-107 to 114/83A + S/10-140/83A dated 28th May, 1983. Now coming to the merits of the appeal we would like to observe that the facts are not disputed. The importer had imported top white beef tallow extra fancy (Inedible) per Osco Sierra valued at Rs. 2,32,15,852 assessable value from Canada and 8 Bills of Entries were presented and had also imported 2000 MT of beef tallow per ss Botany Troubadour from Australia when four Bills of Entries were filed as discussed by the Collector in his order in para No. 17. The facts are not disputed. For the proper appreciation of the facts cronological data chart is given below: ________________________________________________________________________________ _____
3 Apr. 1981 OGL Order No. 1 of 1981 was issued 2nd June 1981 Petitioners entered into contract for import of item in questi on
3rd June 1981 Request to the Bankers to open L/C. 5th June 1981 Public Notice No.29-ITC (PN)/81 was issued 6th June 1981 Contr act
8th June 1981 Firm contract was placed before the Bank 11th June, 1981 Bank refused to open L/C on account of issuance of Public Noti ce
d. 5th June,
1981 Meanwhile number of letters were written to the foreign supplier not to
insist upon for carrying out the contract, but of no effect. T his
was done so during
the period 20th July 1981 to 16th Nov. 1982.
3rd Feb. 1983 Legal Notice of the solicitors of the Foreign Supplier to carr y
out the contract.
25th Feb. 1983 Order passed by the Hon'ble High Court of Delhi in C.W. P 313/ 83
to the petitioner to press application for issuance of L/C whi ch
may be processed
but no order be passed.
16th Mar. 1983 Hon'ble High Court of Delhi passed order permitting the petitioner to press their
application dt. 3rd June, 1981 for opening L/C and for opening of
3rd May 1983 Show Cause Notice was issued by the Customs Authorities with regard to the
consignment in question.
11th May 1983 Reply to show cause notice was filed. 24th May 19834 Adjudication order is made for goods to be confiscated, but permitted to be
released on payment of redemption fine of Rs. 1.09 crores. ________________________________________________________________________________ _____
Chief Controller of Imports & Exports had issued Import Trade Control Order No. 1/81 on 3rd April, 1981 in exercise of the powers conferred by Section 3 of the Imports and Exports Control Act 1947. Relevant extract from the open General Licence No.1/81 dated 3rd April, 1981 is reproduced below:-
In exercise of the powers conferred by Section 3 of the imports & Exports (Control) Act, 1947 (18 of 1947), Central Government hereby gives general permission to import into India from any country except the Union of South Africa/South West Africa, raw materials, components and consumables by Actual Users (Industrial), subject to the following conditions:-
The items to be imported are not covered by appendices 3,6,7,8,9, ad 15 of the import policy of the Import Act, 1952....
Such goods are shipped on through consignment to India on or before 31st March, 1983 or, in the case of Actual User (Industrial), on or before 30th June, 1983 against firm orders for which irrevocable letters of credit are opened on or before 28.2.1983, without any grace period whatsoever,.
Chief Controller of Imports & Exports.
Section 3 of the Imports and Exports (Control) Act 1947 (Act No.18 of 1947) is reproduced below:-
Power to prohibit or restrict imports and exports.-
The Central Government may, by order, published in the Official Gazette, make provisions for prohibiting, restricting or otherwise controlling in all cases or in specified class of cases and subject to such exceptions, if any, as may be made by or under the order:-
(a) the import, export carriage coastwise or shipment as ships stores of goods of any specified description;
(b) the bringing into any port or place in India of goods of any specified description intended to be taken out of India without being removed from the ship or conveyance in which they are being carried.
2. All goods to which any order under Sub-section (1) applies shall be deemed to be goods of which the import or export has been prohibited under Section 11 of the Customs Act, 1962, (52 of 1962), all the provisions of that Act shall have effect accordingly.
3. Notwithstanding anything contained in the aforesaid Act, the Central Government may, by order published in the Official Gazette, prohibit, restrict or import conditions on the clearance, whether for home consumption or for shipment abroad of any goods or class or goods imported into India.
A simple reading of the Import Trade Control Order No.1/81 dated 3rd April, 1981 and Section 3 of the Imports and Exports Control Act, 1947 will clearly show that the open general essence (sec Licence) No. 1 dated 3rd April, 1981 is an order under Sub-section (3) of Section 3 of the Imports & exports Control Act, 1947. It is also not disputed that the importer had entered into a contract with the foreign supplier for the import of disputed item. On 2nd June, 1981 and on 3rd June, 1981 the appellants had made a request to the Bankers for the opening of the letter of credit The Bankers wanted a copy of the written contract. On 6th June, 1981 New Bank of India vide their letter dated 3rd June, 1981 informed the appellants that letter of credit could not be opened till original contract entered into by the importer with the foreign supplier was not submitted to them. A copy of this letter appears on page 36 of the paper book filed in the open court and the imported had filed attested copies of the contract by the Notary Public on 6th June, 1981. The importer had sought the clearances of the goods under OGL and had also produced import licence No.045296 for Rs. 6,53,23,200 issued to M/s. Arun Kumar & Company. The licence was issued on 29th June, 1981. It is an imprest licence. A letter of authority was given in the name of M/s. Jain Shudh Vanaspati Ltd. in terms of para, 382 of the Imports & Exports Procedure 1982 and an endorsement on the licence was also made on 20th September 1982 as under:-
This replenishment licence will also be valid for import of OGL items under para 185 of Import Policy 1982-83 subject to the conditions laid down and shall be non transferable.
The licence was issued on 29th June, 1981 the import policy applicable would have been April, 1981 to March, 1982 policy. The licence was initially valid for a period of 12 months but was subsequently re-validated for a period of 6 months from 10th September, 1982. The licence, therefore, expired on 10th March, 1983. The goods were shipped on 16th March, 1983 that it is within the grace period. On 20th September, 1982 during the re-validated period the licence was made non-transferable. Para 185 of the Import Policy 1982-83 permits Export Houses to import OGL items against REP licence issued in their own name or transferred to them by others and the facility will be available to them for the import of inter alia raw materials which have been places on OGL for actual users as per conditions laid down. The Bank vide their letter dated 11th June, 1981 reviewed to open letter of credit on account of issuance of Public Notice dated 5th June, 1981. for the proper appreciation of the correct legal position the reproduction of the relevant part of the notification is very essential. The relevant portion is reproduced below:-
Sl.No. Page No. of Import Policy Reference Errata/Amendmen t
1. 2. 3. 4. ________________________________________________________________________________ _______
1. ... ... ...
2. ... ... ...
3. ... ... ...
4. ... ... ...
5. ... ... ...
6. ... ... ...
7. ... ... ...
8. 107 Appendix 8, list of items Im- The existing description port of which is canalised shall read:-
through pubic sector agen- "Tallow of any anima
cies - State Trading Corpn. in including Mutton
of India - Entry No.44.
9. ... ... ...
10. ... ... ...
11. ... ... ...
12. ... ... ...
13. ... ... ...
3. In respect of Iron and Steel items covered by S.No.11 above, the provision for registration of contract laid down in the Ministry of Commerce Public Notice No.22-ITC(PN)/81 dated the 29th April, 1981 shall continue to apply.
4. In the case of raw cashewnuts, the provisions contained in the Ministry of Commerce Public Notice No.29-ITC(PN)/81, dated the 27th April, 1981 and Public Notice N0.26-ITC(PN)/81 dated the 22nd May, 1981 pertaining to imports by Actual Users (Industrial) and Export Houses/Trading Houses shall continue to apply. Stocks imported by Cashew Corporation of India will be disposed of to Actual Users in such manner as may be laid down by Government from time to time.
(Miss Sona Mazumdar)
Chief Controller of Imports and Exports.
A simple look and the reading of the above public notice shows that public notice No. 29-ITC(PN)/81 is a Public Notice. In the Public Notice nowhere it is mentioned that it is a notification under Section 3 of the Imports and Exports Control Act, 1947. Para No.183 of AM 1981-82 of the Import Policy enumerates the import facilities available to Export Houses. Para 183(v) and (vii) of the Import Policy 1981 deals with the validity of the licence for the import of raw materials as were placed under OGL during the said policy period which is AM 1981-82. Shri A.S. Sunder Rajan, the learned JDR had contended that the licence was to be governed by the policy of 1982-83. The Collector in his order has discussed the Import Policy in para No. 22, 23, 24, 25 and 26 of the impugned order. Shri Sunder Rajan, the learned JDR has placed strong reliance on the judgment of the Delhi High Court in the case of Jain Exports v. Union of India
where it was held that the licence will be governed by the time of Import Policy when the licence was issued. He has laid down special emphasis of para nos. 37 to 43 and has laid great emphasis on para 39 and 40 of the said judgment and the Hon'ble Supreme Court had upheld the order of the High Court in the case of Jain Exports v. Union of India reported in 1988 (17) ECC 49. The importer had all along trying to open letter of credit with the Bank but the same was not opened by the Bank and the importer had to file a writ petition on or about 5th February, 1982. On 16th March, 1983 Delhi High Court directed the Bank to open letter of credit and in view of the directions of the High Court letter of credit was opened on 30th March 1983. The Bill of lading is dated 16th March, 1983 and shipment had taken place on 16th March, 1983. The learned JDR had also argued that the origin of the goods was at seller option. There was breach of contact No letter of credit was established till 30th March, 1983. The contract was not firm contact. The learned JDR, Shri A.S. Sunder Rajan had also cited the judgment of the Tribunal in the case of Gulab Impex Enterprises Ltd. and Anr. v. collector of Customs, New Delhi reported in 1988 (15) ECC
318. He had laid special emphasis on para No. 6. In the case of Gulab Impex Enterprises the Tribunal had held that the Public Notice issued has the force of law. Shri Rawal, the learned Advocate who had appeared on behalf of the respondents had brought it to the notice of the Bench that the judgment of the Supreme Court in the case of East India Commercial Co. Ltd. v. Collector of Customs, Calcutta was not brought to the notice of the Bench and as such that judgment will not become a prudent for the Tribunal. In the earlier paras we have reproduced the endorsement dated 20th September, 1982 made on the licence. Shri Rawal the learned Advocate had placed great emphasis on the word "also". He meant it that 'also' meant importation valid for OGL under 1981-82 policy and also 1982-83 policy whereas Shri Sunder Rajan, the learned JDR has interpreted otherwise that is the licence in question was at no time for import of OGL items under Import Policy AM 1981-82. It is a settled law that documentary evidence is always superior to any other evidence. In the matter before us the revenue has not doubted anywhere the genuineness of the contract and the Collector while appreciating the evidence in respect of the contact has discussed probabilities. Probabilities cannot prevail over the fact. The revenue has not placed any evidence that the contract was ingenuine. The importer could not comply with the terms of the contract due to non-issuance of the letter of credit by the Bank as soon as there was an order for the opening of the letter of credit goods were shipped to India. Accordingly, it cannot be said that the contract was a firm contract and in terms of provisions of para 183 of AM 1981-82 policy we have to say that the import was in terms of 1981-82 policy. We have already reproduced Public Notice No. 29-ITC(PN)/81 dated 5th June, 1981. A simple look of the same shows that the same is a Public Notice and is: cannot be deemed to be a statutory order under Section 3 of the Imports and Exports Control Act, 1947. The legal position and the facts as discussed above fully confirms to the views of the Hon'ble Supreme Court in the case of East India Commercial Co, Ltd. v. Collector of Customs, Calcutta reported in AIR 1962 (5C) 1893. Para Nos. 33,34 and 35 from the said judgment are reproduced below:-
33. Firstly, the said notice does not purport to have been issued under Section 3(1) of the Act, whereas the orders referred to earlier, that is, notifications Nos. 23-ITC/43 and 2-ITC/48 and similar others, were issued by the Central Government in exercise of the power conferred on it by Sub-rule (3) of Rule 84 of the Defence of India Rules or Section 3(3) of the Act, as the case may be. The Central Government itself makes a clear distinction in the form adopted in issuing the notice. Secondly, while the notifications issued under Section 3 of the Act are described as orders, the notices are described as "public notices", while the notifications under Section 3 of the Act regulate the rights or parlies, the public notices give information to the public regarding the principles governing the issue of import licence for specified periods. It is also clear that the orders issued under Section 3 of the Act, having statutory force, have to be repealed, if the new order in any manner modifies or supersedes the provisions of an earlier order; public notices are issued periodically without repealing or modifying the earlier notices or notifications. For instance, on December 7, 1955, the Central Government in exercise of the power conferred by Sections 3 and 4-A of the Act made an order and under Clause 12 thereof the orders contained in Schedule IV only mentioned five notifications issued under Section 3 of the Act, but no public notice was included in that list. To put it differently, orders made under Section 3 of the Act have statutory force, whereas public notices are policy statements administratively made by the Government for public information. The foreword to the Import Trade Control Hand-book of Rules and Procedure, 1952, under the signature of the Secretary to the Government of India, in the Ministry of Commerce and Industry brings out this distinction thus:
In the past the half-yearly publication on Import Control, popularly known as the "Red Book", has included not only a statement of policy for the ensuing six months but also a reproduction of various notifications relating to Import Control and detailed information on points of procedure.
It is the true the Chief Controller, made an affidavit in the High Court that the policy statements are issued under Section 3 of the act. But as we have said, that is only on information which has no support either in the form adopted or the practice followed or the matter incorporated in the notifications. We have no hesitation in holding that public notices are not orders issued under Section 3 of the Act.
34. It follows from the above that the infringment of a condition in the licence not to sell the goods imported to third parties is not an infringement of the order, and, therefore, the said infringement does not attract Section 167(8) of the Sea Customs Act.
35. Nor is there any legal basis for the contention that licence obtained by misrepresentation makes the licence nonest, with the result that the goods should be deemed to have been imported without licence in contravention of the order issued under Section 3 of the Act so as to bring the case within Clause (8) of Section 167 of the Sea Customs Act. Assuming that the principles of law of contract apply to the issue of a licence under the Act, a licence obtained by fraud is only viodable; it is good till voided in the manner prescribed by law.
The East Regional Bench of the Tribunal in the case of Collector of Customs v. Mansingka Brothers had taken
the view that right to import under OGL by virtue of ITC Order No.1/83 dated 15th April, 1983 being a statutory right not to be taken of a bye non-statutory public notice. Para No.51 and 52 from the said judgment are reproduced below:-
51. In support of his argument that the words 'in terms of the import policy in force mean the import policy in force on 15.4.83, Shri Nankani has relied on the judgment of Calcutta High Court in the case of Mangla Brothers v. Collector of Customs and others, , 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.
52. In paragraph 48(i) to (vi), 49.50,50.1 and 51 (Supra) we have dealt with the various decisions relied upon by the learned advocate for the appellant 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 ITC 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 ITC 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 11.11.83 provided the conditions of ITC Order 1/83 were fulfilled.
Hon'ble Delhi High Court in the case of Kaplan's Enterprises and Anr. v. Union of India had held that 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 cannot be given effect to. Therefore, if the petitioner had entered into a firm contract on 7th October, 1983 as alleged, it should be permitted to import the Stearin Fatty Acid contracted for, under OGL but subject to the other terms and conditions of the said notifications. We have also considered written arguments the other judgments cited by both the sides. In view of the discussion above in the earlier paras we are of the view that public Notice No. 29-ITC/PN/ 81 dated the 3rd April, 1981 has got no statutory force under Section 3 of the Imports & Exports Control Act, 1947. Accordingly, we hold that the importation of "top white beef tallow extra fancy (inedible)" was in order. Accordingly, we set aside the impugned order and further order that Collector of Customs, Bombay was not justified in levying fine in lieu of confiscation at Rs. 1,09,60,000. Since we have held that the importation of top white beef tallow extra fancy (Inedible) was in order the Cross Appeal as well as Cross Objection filed by the Revenue are dismissed.
22. In the result the appeal filed by the importer is allowed and the appeal as well as Cross Objection filed by the revenue are dismissed. Revenue authorities are directed to give consequential effect to this order.
D.C. Mandal, Member
23. The operation of the judgment dated 19.4.89 passed by the Hon'ble Calcutta High Court in Matter No. 1838 of 1983 (Jain Sudh Vanaspati Ltd. and Anr. v. The Collector of Customs and Anr.) was stayed by the Hon'ble Division Bench of the High Court by order dated 14.12.89. The said matter relates to A.No. C/247/84-C. In the meantime, in Writ Petition No. 585 of 1988 (Elephanta Oil and Vanaspati Industries Ltd. and Anr. v. Union of India and Anr.), which relates to A.No. C/2542/83-C, the Hon'ble Supreme Court issued an order dated 1.2.90 directing this Tribunal to render its decision positively within two weeks. In the circumstances, the learned Member (Judicial) sent the order written by him and agreed to by Shri I.J. Rao, Member (Technical) to me. I, therefore, record the following order.
24. I agree with the findings of Brother Shri Harish Chander, Member (Judicial) in paragraph-21 of his order so far as it relates to the preliminary objection of the learned D.R. regarding filing of appeal against the Collectors' impugned orders-in-original No. S/10-107 to 114/83A and S/10-140/83A dated 28.5.83 (issued on 30.5.83) is concerned. I could not, however, persuade myself to agree with the views of my learned Brothers on merits of the cases, i.e. Appeals No. CD/SB/2542/83-C and CD/SB/2543/83-C. Detailed reasons for my taking different views in the matters are given by me in the following paragraphs.
25. The main argument of Shri Rawal, learned advocate for M/s. Elephanta Oil and Vanaspati Industries Ltd. (formerly M/s. Jain Sudh Vanaspati Ltd.) (herein after referred to by me as the "importers") is that Import Trade Control Order No. 1/81 dated 3.4.81 (Open General Licence No. 1/81 dated 3.4.81) is a statutory order issued under Section 3 of the Imports & Exports (Control) Act, 1947 whereas the Import Trade Control Public Notice No. 29-ITC (PN)/81 dated 5.6.81 is administrative in character. The public notice has no statutory force and hence it could not take away the right of the importers conferred by the I.T.C. Order No. 1/81 dated 3.4.81. In support of his argument he has relied on the judgments of Hon'ble Supreme Court in the case of East India Commercial Co. Ltd. v. Collector of Customs and of the Hon'ble Delhi High Court in the case of Kaptan's Enterprises and Anr. v. Union of India. He has argued that in view of the above legal position, the I.T.C. order dated 3.4.81 continued to be in force even after issue of the Public Notice dated 5.6.81. He has argued that the importers could import beef tallow under OGL. He has also argued that the licence is governed by the Policy during which it is issued. In this case, the licence dated 29.6.81 against which the goods were sought to be cleared was issued during the Policy period 1981-82. In support of his argument he has cited a few decisions which have been discussed in the order written by Brother Shri Harish Chander, Member (Judl.) and concurred by Shri I.J. Rao, Member (Technical).
Shri Sunder Rajan has argued that by Public Notice dated 5.6.81, import of beef tallow was canalised by amending entry No. 44 of the Appendix-8 of the Import Policy 1981-82. Therefore, beef tallow ceased to be an OGL item w.e.f. 5.6.81 and it could not be imported without a valid import licence. He has argued that the import licence dated 29.6.81 produced by the importers was not valid for import of this beef tallow. He has argued that the import of an article is governed by the Import Policy of the period when the licence was issued and also by the Policy prevalent at the time of actual import of the goods. He has relied on a few judgments for his arguments. The ratio of these judgments also have been stated in the order written by Shri Harish Chander. In the case of Jain Exports Pvt. Ltd., New Delhi and Anr. v. Union of India and Ors., reported in 1987(29) ELT 753 (Delhi), the Hon'ble Delhi High Court has held per majority decision that the importer has no vested right to import when the import is prohibited under subsequent Import Policy in force at the time of arrival of the goods. It has also been held that the revalidation does not keep an old licence in tact and that the import under a re-validated licence is subject to policy and prohibition in force at the time of arrival of the goods. This judgment has been upheld by the Hon'ble Supreme Court in their judgment dated 5.5.88, reported in 1988(17) ECC-49 (SC), in the case of Jain Exports (P) Ltd. and Another v. Union of India and others. In the case of Collector of Customs v. Priyanka Overseas (P) Ltd. (decided in May, 1988 and reported in 1989(41) ELT 195 (Cal), about 35000 tonnes palm kernel was sought to be imported under the contract. There was no shipment of the goods before it was made a canalised item. 1985-88 Import Policy expired on 31.3.88. The Hon'ble Calcutta High Court has held that "if any shipping of palm kernel is made on any date thereafter, that can not be governed by OGL of 1985-88. It cannot be said that OGL would extend to the goods contracted for but not shipped within that date. Accordingly, in respect of the same, it would be governed by the position as it would be at the time of shipping. At present it is a canalised item". In the case of P. Ripal Kumar and Company, Bombay v. Union of India and Others, , it has been held by Hon'ble Bombay High Court that the goods specifically banned under the current policy cannot be imported even if permissible under an earlier policy. Shri Sunder Rajan has argued that the present cases are fully covered against the importers by the judgment of Calcutta High Court in the case of Priyanka Overseas Ltd. (Supra). Further, in in the case of Union of India v. Godrej Soaps Pvt. Ltd. and Another  10 ECC 396 (SC), the Hon'ble Supreme Court has held that an import item shall satisfy two tests. First, it should be importable under the earlier Import Policy and secondly, it should also be importable under the current Import Policy. The last paragraph of the said judgment dated 12.9.86 reads as follows:-
It was further submitted that in any event under Item 1 of Appendix-6 (import of items under Open General Licence) of the Import Policy, 1985-88, raw materials, components and consumable (non-iron and steel items) other than those included in the Appendixes 2,3, part A, 5 & 8 will be permissible by the actual user (Industrial). It was submitted that the respondents herein were actual users (Industrial) because these were used by them for their production. This contention cannot be accepted firstly because it comes within specific prohibition of item 9 in part-B of Appendix 5 being fatty acid and acid oil which were importable only by the State Trading Corporation of India on the basis of foreign exchange released by the Government in its favour. Secondly, the actual importation was not by the petitioners but by somebody else as mentioned hereinbefore, being M/s. Dimexon Co. In the premises, the view of the Bombay High Court cannot be sustained.
Shri Rawal has cited the judgment dated 16.12.88 in the Civil Appeals No. 4445 and 4446 of 1988 (B. Vijoy Kumar & Co. etc. v. Collector of Central Excise and Customs) in which the Hon'ble Supreme Court allowed the import of canalised items under OGL. This judgment is not applicable to the present case, as, in the last para of the judgment, the Hon'ble Supreme Court has held as follows:-
We would like to emphasize that since we have decided the matter in view of the special facts and circumstances available in these cases this order will not be treated as a precedent.
26. No doubt, the I.T.C. orders issued by the Govt. under Section 3 of the Imports and Exports (Control) Act, 1947 are statutory orders having the force of law. But it has to be considered whether the importers herein could be permitted to import beef tallow under OGL. The I.T.C. orders issued by Govt. from time to time under Section 3 of the Imports and Exports (Control) Act, 1947 have laid down various conditions which should be fulfilled in order to import under OGL. These are pre-conditions for import under OGL.
27. The OGL order No. 1/81 dated 3.4.81 laid down many conditions, of which conditions (1) and (18) are of much relevance in the present cases. These two conditions were as under:
(1) The items to be imported are not covered by Appendices 3, 5, 6, 7, 8, 9 and 15 of the Import Policy, 1981-82.
(18) Such goods are shipped on through consignment to India on or before 31st March, 1982 or on or before 30th June, 1982 against firm orders for which irrevocable letters of credit are opened on or before 28.2.1982 without any grace period what-so-ever.
Open General Licence No. 1/82 dated 5.4.82 was issued by Govt. under Section 3 of the Imports and Exports (Control) Act, 1947 during the Policy period 1982-83. In all, 23 conditions were laid down in OGL No. 1/82. Out of the same, conditions No. (1) and (21) are relevant here. These are:
(1) The items to be imported are not covered by Appendices 3, 4, 5, 6, 7, 8, 9 and 15 of the Import & Export Policy, 1982-83 (Vol I).
(21) Such goods are shipped on through consignment to India on or before 31st March, 1983 or, in the case of Actual User (Industries), on or before 30th June, 1983 against firm orders for which irrevocable letters of credit are opened on or before 28.2.83, without any grace period what-so-ever.
28. In view of these conditions, an article to be eligible for import under OGL must satisfy the following tests:
(i) It should not be covered under any of the Appendices of the relevant Import Policy as specified in condition No. (1);
(ii) There must be a firm order;
(iii) There must be irrevocable letter of credit opened against the firm order on or before 28.2.82/28.2.83 in the case of OGL No. 1/81 and No. 1/82 respectively; and
(iv) The goods should be shipped to India on or before 31.3.82/30.6.82, or 31.3.83/30.6.83 against the firm order, in the case of OGL No. 1/81 and OGL No. 1/82 respectively.
29. Beef tallow was not covered under any of the Appendices 3, 5, 6, 7, 8, 9 and 15 of the Import Policy, 1981-82 upto 4.6.81. From 5.6.81, it was included in Appendix-8 (vide amended item No. 44) of the Import Policy, 1981-82. Item No. 44 was amended by Public Notice No. 29 - ITC (PN)/81 dated 5.6.81. In the Import Policy for 1982-83, beef tallow was covered by serial No. 41 of Appendix 8.
30. The importers produced a contract dated 2.6.81. They could not submit it to the bank on 3.4.81 along with their application for opening letter of credit as they have stated that it was received by them from the foreign supplier on 6.6.81. The aforesaid contract contained, inter alia, the following items:
Quantity : "25,000 M/T + / - 10% 'selling option'. Origin : "USA/Australia/New Zealand at 'selling option'. Shipment : "Within six months after the establishment of E Lcee maximum quantit y
of shipment in one lot not to exceed 5000 M/T.
Price : "USD 485 M/T of 1000 kilos each net.
Payment : "By confirmed irrevocable transferable and without recourse Letter of
Credit, payable at sight in favour of seller for 100% value of good s. The
Letter of Credit to be established latest by 31st July, 1981. In ca se the
buyer requires any credit the same will be extended for maximum of 150 days on the prevailing rate of interest.
Against this contract, the importers imported the following lots of goods:
(i) Per Osco Sierra from Canada = 4696.5015 M/T (ii) Per Botany Troubadour from Australia = 2000 M/T (iii) Per Bum Dong = 5767.4569 M/T (iv) Per Bona Tello = 4727.0952 M/T
Out of these, the first two lots are the subject matters of the two appeals No. C/2542/83-C and C/2543/83-C.
30.1 The first lot of the goods was imported from Canada which was not a stipulated country of origin as per the contract. Information regarding the country/countries of origin in respect of the third and fourth lots is not available before us. The third lot was 5767.456 M/T which exceeded the stipulated maximum quantity of 5000 M/T in a lot. The last date for opening Letter of Credit as per term of the contract was 31.7.81. Letter of Credit was actually opened on 30.3.83. The first shipment was made on 16.3.83. According to the term of the contract, the first shipment was to be effected within six months after establishment of Letter of Credit. The contracted quantity was 25,000 M/T, as against which about 17,000 M/T were actually shipped. At his option, seller could vary the quantity to the extent of 10% only. Thus, the terms of the contract were varied in respect of country of origin, quantity of shipment, date of shipment and the opening of Letter of Credit. The first lot was shipped on 16.3.83, which was before the Letter of Credit was opened. The contract was not, therefore, a firm contract. In the case of Bansal Exports (P) Ltd. and Anr. v. Union of India and Ors., , the Hon'ble Delhi High
Court has held that a contract which has been altered and amended cannot be regarded as a firm contract Shri Rawal has cited Bombay High Court's judgment in the case of Dowsyl
Polymers (Pvt) Ltd. and Anr. v. M.G. Abrol, Special Secretary, Ministry of Finance and Ors., in support of his contention that condition is not law for the time being in force, but is an administrative action. It is seen from paragraph-9 of the said judgment that in the said case the conditions of restricting 10% import was not a restriction under notified order under Section 3 of the Imports and Export (Control) Act, 1947. In the present case, the conditions in the OGL No. 1/81 and OGL No. 1/82 were laid down under Section 3 of the aforesaid Act. Thus, the facts being different, the above judgment cited by Shri Rawal is not applicable to the present cases. In the light of the above discussions, I hold that beef tallow did not quality for import under OGL during the Policy periods 1981-82 and 1982-83 as the conditions of the OGL were not satisfied. There was no firm order. The goods were not imported within the Policy period 1981-82. Letter of Credit was not opened by 28.2.82. Therefore, the OGL No. 1/81 could not be used by the importers in support of the imports made by them. The first and second lots could not be imported in March, 1983 under OGL No. 2/82 as the conditions (1) and (21) of the OGL were not fulfilled inasmuch as the beef tallow was covered by Item No. 41 of Appendix 8 of the Import Policy 1982-83 and the contract dated 2.6.81 was not a firm order.
31. Appendix 10 of the Import Policy for 1981-82 and 1982-83 gave a list of the items allowed for import under OGL, Item No. 1 of the said Appendix 10 allowed the Actual Users (Industrial) to import raw materials other than those included in Appendix 8, under OGL. The import under OGL was, however, governed by the OGL No. 1/81 and OGL No. 1/82 respectively in those two Policy periods. Conditions laid down in the OGL orders were required to be fulfilled. Without fulfilling those conditions the goods could not be imported under Open General Licence even though the goods were covered by Appendix 10. Importers could not ignore the OGL orders issued under Section 3 of the Imports & Exports (Control) Act, 1947. This is the correct legal position about import under Open General Licence.
32. The importers produced imprest import licence No. 0452196 dated 29.6.81. The licence was valid for 12 months. It was issued during the Import Policy 1981-82. The licence was revalidated for six months on 10.9.82. On 20.9.82 the following endorsement was made to the licence under paragraph 185(5) of the Import Policy for 1982-83:--
This licence will also be valid for import of OGL items under para 185 of Import-Export Policy, 1982-83, subject to the conditions laid down, and shall be nontransferable.
I have already discussed above that beef tallow did not satisfy the conditions laid down in the OGL in either of the policy periods 1981-82 and 1982-83 and hence it did not qualify for import under OGL. Therefore, this endorsement did not help the importers to import beef tallow under this import licence during the policy period 1982-83. The import licence was issued for import of diamonds, uncut and unset. This did not cover beef tallow and it was not valid for import of beef tallow. Although it is a raw material, Item No. 1 of the Appendix 10 of the Import Policy was of no help to the importers in view of what has been stated in the preceding paragraph.
33. In the absence of a valid licence, import was unauthorised and the goods were liable to confiscation under Section 111(d) of the Customs Act, 1962 read with Section 11 of the Act ibid and Section 3 of the Imports (Control) Order, 1955.I, therefore, uphold the confiscation ordered by the Collector in his order-in-original dated 28.5.83.
34. Shri Rawal has argued that in Civil Appeal No. 4978 of 1985 in the case of Raj Prakash Chemicals Ltd. and Anr. v. Union of India and Ors.  10 ECC 112 (SC), the Hon'ble Supreme Court allowed the import of canalised items under OGL in respect of the goods for which letter of credit had been opened prior to 18.10.85. He has contended that the importers in the present cases opened the LC on 30.3.83 pursuant to the direction given by the Hon'ble Delhi High Court in Civil Writ No. 313/83 on 16.3.83. Therefore, on the analogy of Supreme Court judgment in Raj Prakash Chemicals' case (supra), the importers in these cases should be allowed the facility of Import under OGL without confiscation, redemption fine and penalty. He has also stated that the contract dated 2.6.81 was accepted as valid by Delhi High Court in their judgment dated 4.2.85 in Criminal Misc. (Main) No. 1266 of 1984. The contention of the learned advocate is not acceptable. In their judgment dated 16.12.88 in Civil Appeals Nos. 4445 and 4446 of 1988 (B. Vijoy Kumar Co. etc. v. Collector of Central Excise & Customs), a copy of which was filed by the learned advocate, the Hon'ble Supreme Court in the last paragraph of the judgment has emphasised that the said order will not be treated as a precedent as the said decision was taken in view of special facts and circumstances available in those cases. In the penultimate paragraph of this judgment, the Hon'ble Supreme Court referred to Raj Prakash Chemicals' case , along with three other cases. In view of the special facts and circumstances available in Raj Prakash Chemicals' case, the judgment delivered by the Hon'ble Supreme Court in that case is not to be followed as a precedent. So far as Delhi High Court's judgment in Criminal Misc. (Main) No. 1266 of 1984 is concerned, the same has been set aside by the Hon'ble Supreme Court by judgment dated 8.4.86, in Criminal appeal No. 223 of 1986 (J.P. Sharma v. Vinod Kumar Jain and Ors.). Further, the Hon'ble Supreme Court did hot go into the merit of the case as to whether import of beef tallow of the importers herein was permissible against licence dated 29.6.81. In their order dated 16.3.83 in C.W. No. 313 of 1983 (Jain Sudh Vanaspati v. Union of India and Ors.), the Hon'ble Delhi High Court permitted the petitioners to press their application dated 3.6.81 moved to respondents No. 3, which may open the LC asked for on the basis of that application. In regard to import, the Hon'ble High Court observed that it was not possible at that stage to grant the prayer made in the application that on import, clearances of the goods imported be permitted. A copy of the said order dated 16.3.83 filed by the learned DR does not say that the contract dated 2.6.81 was a firm contract or that import under OGL against the said contract was permissible. Opening of LC does not imply that import will be permitted as a matter of course without confiscation and penal action. Even after letter of credit is opened and the goods are imported, action is permissible under Sections 111 & 112 of the Customs Act, 1962 if it is warranted for contravention of law.
35. The CIF value of the beef tallow as per 16 bills of entry covered by the impugned order-in-original dated 28.S.83 was Rs. 3.3 crores approximately. These goods were confiscated and redemption fine amounting to Rs. 1,09,60,000 was imposed by the Collector by this impugned order. The fine amounted to about 33% of the CIF value of the goods. Collector did not impose any penalty under Section 112 of the Customs Act, 1962 in respect of these goods. In exercise of the powers conferred under Section 129-D(1) of the Customs Act, the Central Board of Excise and Customs called for and examined the records of the order passed by the Collector for the purpose of satisfying itself as to the legality and propriety of the said order. The Board took the view that the estimated margin of profit on this beef tallow was more than 100% of the CIF value of the goods and Collector should have imposed fine to the extent of 100% of the CIF value and he should have also imposed deterrent penalty under Section 112 of the Customs Act The Board, therefore, directed the Collector of Customs, Bombay to file an application before this Tribunal under Section 129-D(4) of the Act for enhancing the redemption fine to 100% of CIF value of the goods and also for imposing penalty. Collector then filed an application before this Tribunal which was assigned Appeal No. C/2543/83-C.
36. A copy of this appeal was sent to M/s Jain Sudh Vanaspati Ltd. by the Registry of this Tribunal with letter No. C. No. CD(SB) A.No. 2543/83-C dated 13.1.84. The importers did not file any cross-objection challenging this margin of profit. Although during the hearing before the Bench the learned advocate for the importers argued against the confiscation and fine imposed in lieu of confiscation, he has not rebutted the claim of the Revenue that the profit margin was 100% of the CIF value. This has been argued by Shri Sunder Rajan for the Revenue. He has also argued that the purpose of imposing redemption fine is to take away the margin of profit so that the importer cannot make profit after clearing the goods on payment of fine and this acts as a disincentive to the unauthorised importation of the prohibited goods. In the present case, the Collector has not recorded any reason for fixing the quantum of redemption fine at Rs. 1,09,60,000. It was necessary for him to record the reasons for fixing the redemption fine at Rs. 1,09,60,000/-. In the circumstances, it is necessary to remand the matter to the Collector on the point of quantum of fine. I, therefore, remand the point regarding the quantum of redemption fine and the Collector should record a speaking order re-determining the quantum of redemption fine after giving the opportunity of personal hearing to the importers according to the provisions of law.
37. Collector has not given any reason for not imposing penalty. Shri Rawal has argued that no penal action is justified as the importers acted bona fide for the import of the goods. In support of his argument, he has relied on this Tribunal's decision in the case of Shatna Engine Value Ltd., Bombay v. Collector of Customs, Bombay, . He has also relied on the judgment of
Hon'ble Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa , wherein it has been held that
when the breach of the law is technical in nature and there is no deliberate violation, penalty need not be imposed even though there may be a provision for imposing the penalty. Shri Sunder Rajan has argued that in the present case, the importers are guilty of contumacious conduct and they deliberately contravened the law. Deterrent penalty should, therefore, be imposed on them. He has relied on the judgment of Gujarat High Court in the case of Hanutram Ramprasad, Dibrugarh v. CIT, Assam, Nagaland, Meghalaya, Manipur and Tripura, Shillong, reported in (1978) 112 ITR 187 (Guj). At page 203 of the ITR, the Hon'ble High Court observed that in the said case the failure of the assessee to submit the return within the time allowed was deliberate in defiance of law inasmuch as, in his objection petition, only legal grounds were taken and the cause of not furnishing return within the time was not disclosed. In the fact of the case, it was held that the assessee was guilty of conduct, contumacious or dishonest The Hon'ble High Court, therefore, distinguished the said case from the case of Hindustan Steel Ltd. He has also relied on the judgment of Hon'ble Supreme Court, reported in 1983 ELT 1392 (SC) in the case of Indo-China Steam Navigation Co. Ltd. v. Jasjit Singh, Additional Collector of Customs, Calcutta and Others. In paragraph-33 of the above judgment, the Hon'ble Supreme Court observed that it would be open to the Customs Authorities to take a view that the best way to check the spread of illegal operation of smuggling was to impose deterrent fines whenever the offence was discovered and proved. Shri Sunder Rajan has also relied on the judgment of Hon'ble Supreme Court in the case of F.N. Roy v. Collector of Customs, Calcutta and Others, in which, vide paragraph-27 of the judgment, it was held that the imposition of the fine under the Customs Act was really a quasi-judicial act and the test of the quantum of it was the gravity of the offence. The object of the Act is to prevent unauthorised importation of goods and the discretion has to be exercised with that object in view. The learned DR has further relied on the judgment of Madhya Pradesh High Court, at pages 550-551 in the case of CIT v. B.M. Modi and Sons in support of his argument that if the authority concerned is satisfied that there was no reasonable cause for contravention, imposition of penalty is mandatory.
38. As the Collector has not given any findings about penalty under Section 112 of the Customs Act, I am of the view that this point should also be remanded to him for issuing a speaking order regarding penalty after giving the importers an opportunity of personal hearing according to the provisions of law. I order accordingly.
39. Subject to the remand on the limited points of redemption find and imposition of penalty, the Collector's impugned order is upheld, importer's appeal No. C/2542/83-C is dismissed and the Revenue's Cross-objection and Appeal No. C/2543/83-C are allowed in the above terms.
In view of the majority decision, the appeal filed by the Importer is allowed and the appeal as well as cross-objections filed by the Revenue are dismissed. Revenue authorities are directed to give consequential effect to this order.