1. This appeal is against the impugned order of the Collector by which he allowed the Respondents clearance of an imported consignment of 59 rolls of what was described the Respondents as "Cinematographic Colour Films (unexposed) positive". The Respondents filed a Bill of Entry containing the said description of the goods and claimed clearance of the same under OGL, Appendix 6, List 8, Part 1, Item 186(I) of AM 85-88 Policy. The Respondents also claimed concessional rate of customs duty under Notification No. 52/86 read with Notification No. 157/88-Cus.
They also claimed the benefit of Exemption Notification No. 50/88-C.E.in respect of Additional Duty of Customs (CVD).
2. When the goods were examined, they were found to be colour films - Jumbo Rolls. It was, therefore, considered by the Customs that the goods were deliberately misdeclared as "Cinematographic colour film" as, if assessed as such and not as Jumbo Rolls, the Respondents would have paid duty of Rs. 16,19,842 instead of Rs. 68,09,504. The Customs also felt that there was an attempt to camouflage the nature of the goods and to hoodwink the Customs as the labels pasted on the rolls also declared the goods to be "Colour Cine Positive Film". Suspicion arose that the declarations etc. were done in a pre-planned manner and documents were prepared to fit in the description given in Notification No. 52/86-Cus. under which the amount of duty payable would have been much less.
3. Customs started proceedings and according to the impugned order, the Respondents waived show cause notice and requested for personal hearing. The Collector, in his order (para 2.1) records as follows : "Right at the beginning the Advocate and his clients were informed that at their request Show Cause Notice has been waived but the prima facie charge against them was (1) mis-declaration of description in the Bills of Entry for the purpose of classification/availing of exemption; (2) eligibility of the product imported by them for the exemptions and rates of duty claimed in the Bills of Entry; and (3) the eligibility of the import of the consignment in question under O.G.L." 4. The appellants' claim for OGL based on SSI Registration Certificate was also before the Collector. The pleas of the appellants in this regard recorded by the Collector in para 2.2 of his order are as follows: "Regarding the eligibility for import under OGL the Advocate produced a copy of SSI Registration Certificate issued by the District Industries Centre, Ghaziabad wherein reference is made to registration for 'Cinematographic Colour Films (Unexposed) Positive' as ready for production for conversion/cutting of Jumbo Rolls and '...the date of production for additional items dated 22-5-1986 at Sr. No. 2 is 23-12-1986 i.e. Cinematographic Colour Films (Unexposed) Positive'. It was, therefore, pleaded that it is clear that as envisaged in the Import Policy under definition of actual users (Industrial), they have necessary evidence to prove that they are actual users (Industrial) for the said product. It involves manufacturing process also. They also filed a copy of Bill of Entry of Delhi Custom House under which Cinematographic Colour Films (Unexposed) Positive (as per invoice attached) had been permitted to be cleared as back as 1987 under OGL. It was pleaded that this Bill of Entry covered an identical import at Delhi. Accordingly, it was pleaded that the Importer was eligible for clearance under OGL." 5. In the personal hearing, the Respondents argued before the Collector that Exemption Notification Nos. 52/86-Cus. and 50/88-C.E. were available to them on the basis of the practice of the Delhi Custom House with reference to identical goods. It appears from the Collector's order that the Respondents filed a copy of the L.4 Licence (Licence to manufacture goods liable to Central Excise duty) which referred, inter alia, to Cinematographic Colour Films (Unexposed) Positive under sub-heading 3702.20. The Respondents claimed that the goods should be classified under 3702.41 and argued before the Collector that this having been the earlier practice there could not be a departure from the same.
6. The Respondents denied mis-declaration and submitted before the Collector that they having given the specific description of the product including its length and width and also having pointed out the particular item of OGL, there could not have been any deliberate mis-declaration.
7. From the Collector's order it is further seen that the Respondents were specifically asked whether the goods as imported were capable of being used as Cinematographic Colour Films as it is, by putting it on a projector or camera etc. and this was answered by the respondents in the negative. In this background of facts (which are practically those recorded by the Collector) the Collector came to the finding that there was no case of mis-declaration for the purpose of classification under Customs Tariff and for import under OGL and that the importer appears to be eligible to import the said Item as actual user (Industrial) in terms of Entry No. 297 of Part I of List 8 of Appendix 6 of the Import Policy for 1988-91. The Collector, after discussing the provisions of Notification No. 52/86-Cus. and Notification No. 266/86-Cus. as also Notification No. 50/88-C.E. and Notification No. 40/88-C.E., held that the Importers were not eligible to concessional assessment either of Customs duty or CV duty. He ordered to drop proceedings with reference to charge of mis-declaration and contravention of the provisions of Import Policy.
8. The present appeal filed by Revenue is against the Collector's order. The Central Board of Excise and Customs felt that this order was not legal and proper for the reasons mentioned in their Order No.29-R/89 dated 11-7-1989. By this order the Board directed, under the powers vested on it under Section 129D(1) of the Customs Act, the Collector to apply to this Tribunal for correct determination of the points set out in the Board's order. Hence the present appeal.
9. Against the same order of the Collector there were other appeals filed by M/s. Hindustan Photo Film Mfg. Co. Ltd. ('HPF' for short) (Appeal No. C/1491/89-C) and also by Ministry of Industries (Appeal No.2072/89-A). By separate orders, we dismissed both the appeals as not maintainable. HPF made an application for intervention which was considered by us and was granted. During the hearing we heard HPF also as 'intervener'.
10. When the matter came up for hearing, Dr. Kantawala, the learned Advocate for the Respondents raised certain preliminary objections, submitting that as the Collector's appeal goes beyond the contents of the impugned order and seeks to invoke Section 111(d) of the Act, the appeal is not maintainable. He further submitted that the question of the Respondents having been given an Industrial Licence under the Industries (Development & Regulations) Act, 1951 ('IDR Act' for short), was never a point before the Collector, and the Board, by their order, and the Collector, through his appeal, could not now raise this point before the Tribunal. He submitted that these matters which were not before the Collector, would not be within the purview of Section 129D(1) of the Act and these, being contained in the Board's Order and in the Collector's appeal alone, the appeal should be dismissed in limine on these preliminary objections. After considering the objections, we rejected the plea for dismissal of the appeal on the preliminary grounds and gave liberty to the Respondents to urge the same points as their arguments during the course of hearing.
11. Shri Sunder Rajan, the learned DR supporting the appeal, submitted that the appeal filed by the Collector can go beyond what is directly recorded in the impugned order. He submitted that Section 129D(1) is wide enough to cover both omissions and commissions pertaining to an order passed by the Collector. He explained that as the Respondents waived the show cause notice in this case and only personal hearing was given, the Department was handicapped to the extent that all that was in the mind of the Customs could not be recorded. The learned JDR further submitted that prior to the establishment of this Tribunal, the Central Board of Excise and Customs had powers to review the Collectors' orders under Section 130 as it was then and Section 129D(1), as it is now, is a successor to the same. The learned DR pointed out that if a Collector passes an order which in the view of the Board is totally incorrect, there is no forum which the Board can approach by way of an appeal except this Tribunal. Therefore, an order passed by the Collector which is in the view of the Board, defective can be challenged only before the Tribunal and to fetter the Board and the Collector in this regard and to hold a very restrictive view that an appeal can only be against what is actually contained in the Collector's order would amount to injustice and also would defeat the very purpose of enacting Section 129D(1). He submitted that it is not only the legality but also the propriety of the order which can be questioned before the Tribunal under an order passed by the Board and pleaded that Section 129D(1) should, in view of its legislative history, and its importance in the scheme of Customs administration, be interpreted liberally by the Tribunal.
12. Shri Sunder Rajan prefaced his further arguments with the submission that the Collector jumped to the "findings" without any discussion of the points before him. He referred to the impugned order and showed that there is no discussion at all of any of the factual or legal questions that were involved. After having recorded that there was obvious mis-declaration and that there had been a deliberate attempt to camouflage the nature of the goods, and after noting that the Respondents tried to evade payment of duty amounting to over 50 lakhs of rupees, the Collector straightaway came to the conclusion that there was no mis-declaration and that no charge involving the same could be established and, again without any discussion, concluded that the Respondents did not contravene the provisions of the Import Policy.
He further prefaced his arguments . submitting that the judgment passed by the Division Bench of the Delhi High Court on 8-5-1989 in L.P.A. No.28/89 recorded the facts fully.
13. Shri Sunder Rajan's arguments essentially consisted of four propositions. These were: (i) What the Respondents imported were "Jumbo Rolls" and not Cinematographic Colour Films; (ii) M/s. Northern Plastics, the Respondents, do not have a licence under IDR Act, which is a mandatory requirement for entitling them to the import of Jumbo Rolls; (iii) The Respondents mis-declared the goods as "Cinematographic Colour Films" to escape the requirement of producing such a licence; and (iv) as a consequence, the Respondents imported the goods in contravention of Section 111(d) of the Act and are liable to a penalty under Section 112 thereof.
14. Shri Sunder Rajan advanced elaborate arguments in support of his submission that the imported goods were "Jumbo Rolls". He argued that these were known as "Jumbo Rolls" in the trade and were recognised to be so even by the Respondents. He submitted that the description "Jumbo Rolls" is not a loosely used term but was a popular term used by commercial circles and was also a term used in Notification Nos.
252/88-Cus. and 266/88-Cus. He submitted that according to the Policy of the Government for importing Jumbo Rolls, the importer had to be an "actual user (industrial)" as defined in para 6.3 of the Import and Export Policy for April, 1988 - March, 1991.
15. He submitted that for importing Jumbo Rolls, an industrial licence under the IDR Act is required and unless such an industrial licence is held by an importer he cannot be considered as an actual user (industrial) and the goods cannot be released under OGL. Shri Sunder Rajan averred that the respondents did not have an industrial licence under the IDR Act nor did they produce the import licence to cover the goods. Therefore, the goods were clearly not covered under OGL for the respondents. The learned Representative referred extensively to the IDR Act and to the Notification issued thereunder on 18-7-1986 and submitted that the Small Scale Industries had to register with the Central Government within six months from the date of Notification if such Units intended doing slitting/confectioning of Jumbo Rolls. The DR stated that in a subsequent order the Collector changed his mind and stated that a copy of this order which was an enclosure to the paper Book filed by the appellants as also to the Miscellaneous Intervention Application by M/s. HPF was placed before the Bench and was also given to the respondents including the Revenue. The learned Representative submitted that as can be seen from the correspondence between the respondents and the Ministry of Industry the appellants were to deal only with photographic colour paper and not with Jumbo Rolls or cinematographic films.
16. Shri Sunder Rajan proceeded to submit that if the goods imported by the respondents were cinematographic films as they are known, the import of the same should be channelised through NFDC. If they were Jumbo Rolls, the slitting operations necessary to convert them into cinematographic films required an industrial licence under the various provisions of the IDR Act. Therefore, either way the importation was illegal. The learned DR submitted that it is for all purposes an admitted fact that what were imported are Jumbo Rolls and not cinematographic films. The learned DR invited our attention to the Tariff and to the Exemption Notification claimed by the respondents in the Bill of Entry and submitted that if the imported goods were not Jumbo Rolls there was no question of claiming the particular exemption.
17. Shri Sunder Rajan, the learned DR pointed out that the Division Bench of the Delhi High Court in their order took note of the factual position and argued that the respondents misled the Department in that, having asked the Ministry of Industry for a carry on business licence (CCB), they produced a letter of 1985 from the District Industries Authorities. The learned DR submitted that after the Notification was issued by the Ministry of Industry on 18-7-1986, any activities of slitting and confectioning if undertaken by the respondents would be illegal and under the IDR Act they would be liable to prosecution. Shri Sunder Rajan argued that the Customs cannot be a party to release the goods and abet a person to commit an offence against the provisions of an enactment.
18. Shri Sunder Rajan referred to a letter of the Ministry of Industry, signed by the Desk Officer dated 8-4-1987 addressed to the Respondents and submitted that this letter should be read together with the letter dated 9-8-1988 from the same authority to the respondents, and submitted that the Ministry expressed "no objection to Customs exempting consignments of photographic colour papers" and not photographic colour films in Jumbo Rolls. He argued that the letter dated 8-4-1987 referred to cutting of Jumbo Rolls of photographic colour papers, graphic art films, cinematographic colour films unexposed and X-ray films but not to Jumbo Rolls of Cinematographic Colour films. In this context the learned Representative referred to the judgment of the Delhi High Court dated 8-5-1989 and submitted that the High Court came to the finding that in spite of these letters the respondents went on representing that they have not only the permission for importing all the four varieties of photo sensitized papers but also to do so at concessional rates of duty. He pointed out that it appeared to the Court that the Single Judge who heard the matter earlier "was misled by the said submission of the respondents." Shri Sunder Rajan submitted that the ban covered all sensitized material but licence was given only for photo sensitized paper (photographic colour paper).
19. The learned DR argued that the goods imported must be considered by Customs for purposes of classification as well as licence in the form in which they are imported and not with reference to what would happen to them later. In support of his argument, he relied on a judgment of the Supreme Court in the case of Dunlop India v. Union of India [1983 (13) E.L.T. 1566]. He submitted that the letter dated 8-4-1987, in any event, cannot create estoppel against the Government and referred to a judgment of the Supreme Court in Star Diamond Company v. Union of India [1986 (9) E.C.R. 7 S.C.].
20. The learned DR submitted that Government had powers to create a monopoly but the Bench did not want him to expand on the same as the powers of the Government in this regard were not in question before the Bench and in any event such a question would be beyond the jurisdiction of the Bench to decide.
21. Shri Sunder Rajan then argued that a prohibition contained in IDR Act and Import Policy is directly relatable to the provisions of the Import Policy and, therefore, Section 111(d) of the Customs Act. To support his argument Shri Sunder Rajan relied on a judgment of the Supreme Court in the case of Sheikh Mohd. Omer v. Collector of Customs, Calcutta and Ors.
22. The learned Representative also argued that the Tribunal had powers to enhance the liability and to impose penalty and cited a judgment of the Supreme Court in State of Kerala v. Vijaya Stores [1979 (116) I.T.R. 16 S.C.].
23. Shri Sunder Rajan further submitted that as recorded in the Collector's order impugned before us the respondents cleared similar goods at Delhi and other Ports earlier. He argued that the decisions to release the goods were erroneous and could not create an estoppel. In support of his arguments he cited two judgments : (i) Collector of Customs v. Hindustan Motors [1979 (4) E.L.T. J 313] and Devsons Pvt.
Ltd. v. Collector of Central Excise [1984 (17) E.L.T. 135 (T)] and submitted that the present appeal the Revenue are trying to correct an error which was committed in the past. The learned Representative then argued that the classification under the Customs Tariff need not necessarily be the same for ITC as these are different Statutes and cited the judgment of the Tribunal in Arun Agencies v. Collector of Customs 24. Shri Sunder Rajan submitted that the goods in question were imported contrary to the legal provisions and were automatically liable to confiscation and penalty as the prohibition was attracted. He cited Kantilal Manilal & Co. v. Union of India [1985 (22) E.L.T. 32 (Bombay)] and Bloomfeld Trading Company v. Union of India [1985 (22) E.L.T. 398 (Bombay)] in support of his arguments.
25. Concluding his arguments Shri Sunder Rajan submitted that the impugned order was passed without application of mind, without taking the legal requirements into consideration and without proper discussions and findings and, therefore, had to be set aside. He submitted that the Collector should be directed to readjudicate the matter with reference to relevant materials. While reiterating that the Tribunal had powers to order confiscation and to impose penalty, Shri Sunder Rajan submitted that as the necessary information like the margin of profit was not available to the Bench, they may consider whether the Collector may be directed to consider such matters and to impose penalty and to order confiscation.
26. Shri Sanghi, the learned Advocate appearing on behalf of the Interveners (M/s. HPF) took us through the relevant provisions of the IDR Act, 1951 with special reference to Section 24 which deals with penalty. He submitted that the objective of the Act was to implement the Industrial Policy which came into existence as early as 1948 (i.e.
even prior to coming into force of the Constitution of India). He next referred to Section 3 (bb) which defines "existing industrial undertakings" as follows :- "(a) in the case of an industrial undertaking pertaining to any of the industries specified in the First Schedule as originally enacted, and industrial undertaking which was in existence on the commencement of this Act or for the establishment of which effective steps had been taken before such commencement, and "(b) in the case of an industrial undertaking pertaining to any of the industries added to the First Schedule by an amendment thereof, an industrial undertaking which is in existence on the coming into force of such amendment or for the establishment of which effective steps had been taken before the coming into force of such amendment".
He contended that the concept of 'effective steps' is relevant to industries which existed prior to 1951 or in relation to which effective steps had been taken prior to 1951. Our attention was next drawn to Section 10 of the IDR Act which deals with the Registration of existing industrial undertakings. The contention of the learned Counsel was that if an industry is an existing industrial undertaking it required compulsory Registration under Section 10. Our attention was drawn to Section 11 which deals with the licence requirements of new industrial undertakings, Section 11A dealing with the requirement of licence for producing or manufacturing new articles (Shri Sanghi here stressed that prohibition is emphasised), Section 11B dealing with the ancillary and small scale industries, Sections 13, 14 and 29B which deal with exemption power of the Central Government. Shri Sanghi contended that under Section 29B(1) of the Act, a notification was issued on 16-2-1973 granting exemption to certain classes of industrial undertakings like small scale units etc. from the operation of the provisions of Sections 10, 11, 11A and 13 of the Act. This Notification of 16-2-1973 was amended on 18-7-1986 by another Notification No.10/115/84/IP and it added entry 11 "slitting/confectioning of photo sensitized material from Jumbo Rolls" to Schedule 4 of 1973 Notification, thereby adding the same to the list of industries which were not exempt from the provisions of the IDR Act to which we referred to earlier. Shri Sanghi explained that as a result all the provisions of IDR Act would apply to this activity (slitting/confectioning) from 18-7-1986 after a period of six months therefrom. Shri Sanghi summed up saying that Northern Plastics' licence was only for photographic colour papers and not for colour films which was a mandatory requirement under the IDR Act. He submitted that by not having obtained an Industrial Licence they cannot manufacture films from Jumbo Rolls and, therefore, they are not actual users (industiral). As a result they cannot be permitted to import Jumbo Rolls and cannot claim OGL.
27. Dr. Kantawala, the learned Advocate for the Respondents, in his reply, sub-mitted that the appeal filed by the Revenue is not maintainable. He aruged that only the contentions made before the Collector and his findings thereon are relevant and the appeal filed by the Revenue cannot go beyond what was contained in the Collector's order. He referred to Section 129D and sub-section (1) thereof and submitted that the scope of an appeal filed by the Revenue under this Section was limited to the examination of the legality and propriety of the same. He stated that 'legality' meant whether the provisions invoked in the impugned order were properly dealt with and nothing more. He referred to the order and submitted that the Collector recorded certain charges and came to certain findings. The Board cannot now pass an order that a new charge, namely, the charge under Section 111(d) of the Customs Act should be brought in against the Respondents.
28. Dr. Kantawala vehemently argued that the question of IDR Act was nowhere even mentioned in the impugned order passed by the Collector who, having passed the order became functus officio and cannot reagitate the matter afresh. He sub-mitted that the direction given by the Central Board of Excise & Customs was wrong and illegal.
29. The learned Advocate argued that what was in question before the Customs and in appeal before us, is the right to import the goods and not the right to manufacture certain goods. The learned Advocate submitted that Customs are concerned only with import and they have nothing to do with the manufacture of goods carried on by the Respondents. If the Respondents, by manufacturing certain goods, committed an offence in terms of the IDR Act, action can be taken against them under the law but so far as the Customs are concerned, they are not concerned with the legality or otherwise of manufacture.
He submitted that so far no legal action has been taken against the Respondents even though they have been indulging in the manufacture of cinematographic films from Jumbo Rolls.
30. Dr. Kantawala further argued that OGL Policy does not say that industrial licence is needed. He opposed the prayer for remand on the ground that it was a sub-stantial prayer and cannot be made orally, not having been a ground in the appeal. The learned Advocate emphasised that neither in the order passed by the Board under Section 129D of the Customs Act nor in the appeal filed by the Collector, there is even mention of Section 111(m) and expressed surprise at this situation as the Collector's order dealt with nothing but Section 111(m). The learned Advocate submitted that the provisions of the IDR Act did not apply to the Respondents and stated that the Bench was being misguided on this point. He referred to Section 3(bb) of the IDR Act and sub-mitted that the crux of the matter was that "industrial undertakings" were subject to the provisions thereunder. "Industiral Undertakings" and "factory" were defined in Section 3. With reference to these definitions, the learned Advocate argued that the factual position is that the Respondents have only 10 workers and, therefore, they were not a 'factory' and, not being a factory, they cannot be an industrial undertaking. Therefore, Dr. Kantawala argued that the Act did not apply to them as they were only a small scale industry. In this context the learned Advocate cited State of M.P. and Ors. v. Nandlal Jaiswal and Ors. (AIR 1987 S.C. 251). He submitted that paragraph 30 of this Judgment clinches the issue in favour of the Respondents. The learned Advocate then went on to argue that even if IDR Act applies (which he does not accept), the Respondents are still entitled to OGL.
Explaining this, he submitted that the Collector had no jurisdiction or power to look at the IDR Act and apply its provisions as the said Act was not an analogous enactment to Customs Act and Import & Export Trade Control Act. The Collector had to confine himself to these two Acts only.
31. Referring to the term 'actual user (industrial)', the learned Advocate drew our attention to Appendix 5B of the Hand Book, where the provisions of SSI Units were mentioned and submitted that it is the District Industries Officer who is the authority for such units. He, therefore, argued that the Respondents having got an endorsement of the said Officer on their SSI Certificate, they are entitled to OGL.
32. Dr. Kantawala further argued that even if the provisions of Section 111(d) are applied, the goods imported cannot be held liable to confiscation as the goods in question were not 'prohibited'. He referred to Section 2(33) of the Customs Act and Section 11 thereof and also Section 3(2) of the Import & Export Control Act and submitted that IDR Act did not concern itself with imports and the goods cannot be held as 'prohibited' unless there is a notification under Section 11 of the Customs Act, imposing such a prohibition. Questioned by the Bench, the learned Advocate argued that the words "any other law for the time being in force" occurring in Section 11 of the Customs Act did not mean the IDR Act as only analogous legislation can be considered and not remote legislations like IDR Act. In this context the learned Advocate cited a judgment of the Karnataka High Court in Standard Electronic Engg. Corporation v. C.C.E. & C., Bangalore (1981 E.C.R. 314 KNT). The learned Advocate submitted that the Karnataka High Court was dealing with an OGL order similar to the one in question here namely, Order No.1/88-91 and the Karnataka High Court's Judgment not having been set aside, has become final and binding on the Tribunal.
33. Dr. Kantawala further submitted that the Respondents are actual users and the imported goods are admittedly raw material. They have made several such imports earlier and the long standing practice of allowing such clearance should not be changed as there is no change in the policy.
34. Referring to the charges of mis-declaration against the Respondents and the findings in the Collector's order, Shri Kantawala argued that at worst, there was mis-description and that was only with reference to the rate of duty and not ITC. He sub-mitted that as the benefit of exemption was not granted to the Respondents any allegation under Section 111(m) can no more be there. He argued that it was the birth-right of the importer to ask for exemption and the Customs could grant it or reject it. There is no question of penalising the importer for asking for exemption. He submitted that in so far as the description of the goods is concerned, the Respondents gave complete and full description including the measurements in the Bill of Entry and in the invoice and there could not be a question of mis-declaration in this regard. There was not even mis-description in the Bill of Entry. Referring to the dictionary meaning of "Jumbo Rolls", the learned Advocate submitted that the omission to describe the goods as Jumbo Rolls in the Bill of Entry did not lead to an implication that these were goods of small size. He explained that the Bill of Entry description conformed to the description given in the invoice and reiterated that the Respondents imported cinematographic film only; whether it is in jumbo rolls or not was not material. He submitted that in the Tariff there is no reference to 'Jumbo Rolls' and the words 'Jumbo Rolls' were only colloquial words. The description given by the Respondents was in accordance with the Tariff and the length and breadth of the film having been mentioned quite clearly, the full description was there for the Customs to see.
35. The learned Advocate referred to two judgments and submitted that these judgments dealt with OGL and how to treat it. These were (i) U.O.I. v. Suksha International & Nutan Gems and Anr. [1989 (39) E.L.T.503] and (ii) Decor India and Ors. v. C.C., New Delhi [1987 (31) E.L.T.400].
36. Referring to the Division Bench Order of the Delhi High Court (dt.
8-5-1989) the learned Advocate submitted that it was only a direction to the Single Judge and not a 'Judgment'. If it were not so, the Single Judge would not have been directed to dispose of the Writ Petition as recorded in the order Itself. Referring to the case law cited by the learned JDR, Dr. Kantawala submitted that they were not applicable to the facts of the case in hand. He submitted that there was no question of estoppel and it was never pleaded by them and there was no question of industrial licence before the Collector. Shri Kantawala also argued that when the suppliers of the goods were a Government factory from Rumania, it would be unimaginable even to allege that there could be mis-declaration arranged in collusion between the importers and the suppliers. He sub-mitted that the suppliers being a Government body it should be held that there was no mis-declaration and relied on the Order of the Tribunal (No. 302/84-A) dated 14-5-1984.
37. Summing up, the learned Advocate submitted that the Respondents were 'actual users (industrial)' with a right to import the goods; they held SSI Registration which was the only condition for OGL; that IDR Act did not apply; that there was no prohibtion imposed by Section 11 of the Customs Act; that even if IDR Act applies the purpose of the Act concerns only production and not import; that the Tribunal cannot modify the Collector's order and bring in Section 111(d) and that the Board's order is defective as it shows total lack of application of mind and as a result of all these, the appeal should be dismissed.
38. Shri Sunder Rajan, in his rejoinder, submitted that the Tribunal had full powers to pass orders modifying the Collector's order if it deemed it fit to do so, as this power was specifically mentioned in Section 129 itself. He further explained the significance of the terms 'legality', 'propriety' and 'proceedings', occurring in Section 129D and sub-section (1) thereof of the Customs Act. He submitted that Section 129B(1) gives very wide powers to the Tribunal by which it can confirm, annul or modify the Collector's orders and examine the legality and propriety of the order. He reiterated that points may arise out of an order both by commissions and omissions and when the adjudicating authority does not take into consideration the relevant provisions of law and passes an order, it is within the powers of the Tribunal to direct the Officer to take such matters into consideration.
He submitted that the IDR Act is directly applicable to the Respondents and to the Import Policy and is, therefore, relevant to the Customs Department who decide whether the goods imported are covered by a valid licence or whether OGL is extendable to them. He submitted that OGL also refers to Jumbo Rolls and the Notifications issued both under the Customs and Central Excise Acts referred to Jumbo Rolls and, therefore, there is no question of giving a dictionary meaning or a popular meaning to these words. He pointed out that the words 'Jumbo Rolls' also appear in the SSI licence of the Respondents themselves. He submitted that the scope of Section 111(d) has been examined by the Supreme Court in the case of Sheikh Mohd. Omer (supra) and no contrary Judgment having been cited, the Tribunal should follow the same.
39. Shri Sunder Rajan, the learned JDR reiterated that what was imported was not cinematographic film but Jumbo Rolls and that the Respondents had to have an industrial licence; that the Tribunal had jurisdiction to go into the whole question; the goods are not covered by OGL as far as the Respondents are concerned and that the Collector having passed the order without considering the relevant and necessary statutory provisions and not having applied his mind, the order deserved to be set aside with directions to the Collector so that interests of justice are served and the legal provisions enacted by the Government for the good of the Country are not ignored either by the Collector or by other parties.
40. We have carefully considered the arguments of all the parties concerned.
41. To take up first things first, we examined the objections raised by Northern Plastics though their learned Advocate and the suggestion made that the appeal filed by the Collector is ab initio void. Dr. Kantawala forcibly argued that the Tribunal cannot go beyond what is contained in the Collector's Order and can examine only the issues raised by the Collector and the conclusions arrived at. He argued that what is not contained in the Collector's Orders cannot be said to be a point arising out of it and, therefore, cannot be considered by this Tribunal.
42. We examined this submission with reference to the words of Section 129D of the Customs Act and with reference to the submissions made by Shri Sunder Rajan. Whether Section 129D and the old Section 130 are similar or not, is immaterial. Section 129D of the Customs Act empowers the Central Board of Excise & Customs to require the Collector to file an application before the Tribunal for the determination of 'such points' arising out of the decisions or orders as may be specified by the Board in its Order.
43. The Board is empowered under Section 129D of the Act, to examine not only the Orders passed by the Collector but the entire proceedings connected therein. Besides, it is not only the legality which it can apply its mind to, but also the propriety. In this case, the Board passed an order under these provisions directing the Collector as a result of which the present appeal is before us. This Order was passed by the Board under Section 129D which empowers it to pass such an order. Dr. Kantawala's contention that the Board did not apply its mind while passing the said Order, does not appear to be based on solid grounds. We say so because the Order itself does not show any failure on the part of the Board to appreciate the omissions and commissions of the Collector as reflected in the Order. When a Collector passes an Order in total disregard of certain provisions of Law, the Board cannot be expected to be a silent and mute spectator especially when it is empowered and is required by Section 129D to take appropriate action.
The only action that the Board can take against the Orders of a Collector is to direct the Collector to file an appeal before the Tribunal and to approach it for Orders on the specified points. We cannot interpret Section 129D in a restrictive way as desired by Dr.
Kantawala as such a restrictive interpretation will defeat and render nugatory the very purpose of the Section which is to safeguard against any Orders passed by the Collector in disregard of legal requirements, and to the detriment of the country. If a Collector passes an Order without taking into consideration or wrongly deciding about the requirements of a licence, it cannot be said that to raise the point before the Tribunal against the Order would be illegal and beyond the purview of Section 129D. We entirely agree with the submissions made by Shri Sunder Rajan that the phrase 'points arising out of the decision' refer not only to commissions but also to omissions, as long as they are relevant and relate to the facts and aspects of the matter before the Collector. Therefore, we reject this ground raised by the Respondents.
44. Shri Kantawala repeatedly pointed out that while the Collector's Order dealt with Section 111(m) of the Customs Act and gave certain findings on the same, and Section 111(d) never found place in the Collector's Order, the Board's Orders and the Appeal before us contain no reference at all to Section 111(m) and refer exclusively to Section 111(d). This may be a correct observation but we have carefully examined the Collector's Order and find that while he did not refer to 'Section 111(d)' the order, in more than one place, refers to the aspect of licensing, which, after all, is what is relevant for the purpose of Section 111(d). Such reference is found in paragraphs 1.3, 2.1, 2.2, 3.0 and in the "order" contained in Para of the impugned order. Simply because the Collector, for whatever reasons, did not mention Section 111(d) in his order, we cannot overlook the specific references to the aspect of licensing in all these paragraphs. In substance, the Impugned Order examined the question of licensing and come to the conclusion that the Respondents could import the goods under OGL. It is our opinion that the Tribunal which is the only source of appeal in such a case is entitled to go into a point even if it is not directly or indirectly dealt with, in the Collector's Order provided that such a point has legal and factual relevance to the issue before the Collector. As it happens in view of the contents of this impugned order as pointed out, we need not exercise such a power and we make this observation in passing only. In any event, the Collector's order is certainly not proper in ignoring the consideration of the facts and law relating to OGL.
45. In the light of this discussion, we do not find anything objectionable in the prayer contained in the appeal. We hold that the objections raised on the question of maintainability of the appeal are not sustainable.
(i) whether the goods imported by the Respondents are Jumbo Rolls/Cinematographic colour films; (ii) whether the importation by the Respondents required a licence; or was it covered by OGL in 1988-91 policy; (iii) whether the Collector was right in not invoking Section 111(d) in his order; (iv) whether the Collector's order can be sustained; and (v) if not, what would be the legal and just order to be passed.
47. In so far as the identity of the imported goods is concerned it is quite clear that what has been imported are Jumbo Rolls and not cinematographic colour films. It was never the case of the Respondents that the imported goods were not Jumbo Rolls. Besides, the perusal of the invoice and the Bill of Entry which clearly give the measurements of the film shows that the imported goods are Jumbo Rolls as defined in the Exemption Notifications. Dictionary meaning and case law are not necessary. Besides, we also keep in mind that if the imported goods are to be considered as cinematographic colour films the Respondents would not, in any event, be allowed to import them as such films are canalised and only NFDC can import them. After considering the evidence, there is no doubt in our mind that what the Respondents imported were Jumbo Rolls and are not cinematographic films.
48. That brings us to the second question as to whether the importation of these goods required an import licence, or whether it was covered by OGL. It is the case of the Revenue that in terms of the IDR Act and the Notifications issued thereunder, the Respondents required an industrial licence for slitting/confectioning of Jumbo Rolls, that they do not have such licence and, therefore, in terms of the ITC Policy, the Respondents are not "actual user (industrial)" and are not entitled to import the goods under OGL. It is the argument of the Respondents that they are not a factory according to the definition contained in the IDR Act, that they do not require an industrial licence under the same Act and that the IDR Act is concerned only with production and not with imports and the Customs are concerned only with import and not with manufacturing activity of the respondents. In short, the Respondents say that they are not covered by the IDR Act, but as they manufacture cinematographic films out of Jumbo Rolls they are actual users (industrial) and are entitled to OGL.
49. We have considered these arguments very carefully. We have gone through the provisions of the IDR Act, the submissions made by the learned JDR and those by the learned Advocates for M/s. HPF and the arguments of Dr. Kantawala.
50. Dr. Kantawala's argument contained two interesting propositions.
One was that his is not a "factory" and, therefore, not an industrial undertaking and, that, therefore, it is not covered by the provisions of IDR Act, as a consequence of which the Respondents do not need an industrial licence to entitle them to import the goods under OGL, as, in fact, he is an actual user (industrial). However, apart from his assertions that his is not a factory in terms of Section 3(c) of the IDR Act and consequently it is not an industrial undertaking under 3(d) of the same Act, we do not have any data before us to verify the statement. However, that need not stop us.
51. In terms of paragraph 6.3 of the Import and Export Policy 1988-92 the term "actual users (Industrial)" has been given the following meaning: "Actual users (industrial) shall mean an industrial undertaking, be it in the large scale, small scale or cottage industries Sector, engaged in the manufacture of any goods for which it holds a licence or registration certificate from the appropriate Government authority wherever applicable." This definition makes it quite clear that for the purpose of OGL the importer should be an actual user (industrial) and according to the definition of the term actual user (industrial) he must be an industrial undertaking of any size engaged in the manufacture of goods for which it holds a licence etc. If the respondents' argument that they are not an industrial undertaking as a consequence of not being a factory (in terms of IDR Act definitions) is upheld, they are ab-initio shut out from claiming OGL, not being actual users industrial as defined in the Policy.
52. However, not having the facts before us we examined the only possible alternate situation assuming that the respondents are an industrial undertaking. Because the IDR Act is there and it concerns industries, the respondents cannot be taken to be exempt or to be outside the purview of that Act unless they are covered by the provisions within the Act which helps them to get out of its purview.
We note that the Act has a Schedule (First Schedule) which lists any industry engaged in the manufacture or production of any of the articles mentioned thereunder. Sl. No. 20 thereof deals with "photographic raw film and paper (i) cinematographic films (ii) photographic amateur film (iii) photographic printing paper". In 1973 the Government exempted certain industries from the operation of certain provisions of the IDR Act as a result of which such industries need not have taken a licence and would not have been penalised for want of such a licence. However, in 1986 the Government amended Schedule IV to the Act (which Schedule contained a list of industries to which the exemption did not apply) and added slitting/confectioning of photo sensitized material from Jumbo Rolls, as a result of which this industry did not, after six months from 18-7-1986, enjoy the exemption from the provisions of the Act relating to registration, licensing of industrial undertakings etc. (Registration and Licensing).
The respondents averred that they are engaged in the manufacturing activity in respect of cinematographic colour films (unexposed) positive. This activity can be only slitting of Jumbo Rolls and is specifically covered by Notification dated 18-7-1986. Therefore, the respondents required a licence under the IDR Act and this is where the definition of actual user (industiral) occurring in para 6.3 of the Policy 1988-91 becomes directly relevant. If and only if they obtained industrial licence as prescribed in the IDR Act, would they become actual user (industrial) for the purposes of import policy. This is the position of law and the respondents cannot get away with the argument that IDR Act is concerned with the production and the Customs are concerned with the import only. The Import Trade Control Policy which is administered by the Customs Department attracts the provisions of IDR Act. We also note that in para 6 of the Handbook of Procedures 1988-91 it is laid down that an import licence is issued without prejudice to the operation of other laws to which the goods of the applicant licence holder may be subject and that this applies also to goods eligible for import under OGL. This paragraph further adds that every person concerned is under obligation to comply and to continue to comply with all other laws, etc. applicable to his case at all times.
This observation and this part of the Handbook also disposes of Dr.
Kantawala's argument that "other laws for the time being in force", occurring in Section 11 of the Customs Act relate only to Customs law and Import Trade Control law. Even in general terms we cannot accept that the words "and other law" can be interpreted to restrict their meaning without specific sanction of the law to do so.
53. In the light of these discussions we do not find it necessary to go into the detailed arguments, and the case law cited by both sides and the interveners on these questions. The facts of this matter are such that there is no earlier judgment which covers them. The questions before us arose, in this forum, for the first time. Therefore, the exercise of going through the many judgments would not be useful especially as we have to examine only Customs Act and IDR Act all of which are before us.
54. As a result of the legal position applicable to these facts, we conclude that in any event, whether they are a factory or not, the Respondents should hold a valid import licence or have a valid industrial licence for claiming the benefit of OGL for import of Jumbo Rolls.
55. The next point that arises is whether the Collector was right in not having invoked Section 111(d) of the Customs Act. Earlier in this order we observed that the Collector in several parts of his order took note of the issue relating to the licence without mentioning Section 111(d). It is quite clear that at least to begin with the Collector had a question before him relating to licence and that he took it up. But he made only a vague reference to it and in para 3.0 of the order he recorded that "the importer appears to be eligible to the import of the said item as an actual user industrial...". We cannot approve the approach of this Collector on the question of licensing. Shri Sunder Rajan, during the course of his arguments, several times submitted that the purpose of the revenue authorities is to collect Revenue. We do not think so. Revenue has to be collected. But it is the duty of the staff to see that neither a penny more nor a penny less is collected, and to ensure that any restrictions and prohibitions under the Customs Act are enforced. That is why powers of adjudication are conferred on Customs Officers. These powers have to be exercised impartially and without fear or favour. There cannot be a vague reference to the issue followed undiscussed findings and conclusions. In our opinion the Collector was wrong, in that having made the observations in his order he did not invoke Section 111(d) in his order. He should have invoked the Section and after hearing the importers, given finding either for or against.
He should not have dealt with in the way he did in the impugned order.
56. Can the Collector's order be sustained? In our opinion, "no". The most obvious and striking reason for this is the contents and non-contents of the order itself. The order sadly lacks any insight into the problems involved, any discussions of the issues and any logical conclusions based on facts, submissions, evidence and law. In fact between para 2.6 and 3.0 (the next para) of the impugned order there is such a big gap that it clearly shows that the Collector did not apply his mind at all. This large space should have been, in the normal course, occupied by the discussions of issues and reasoned findings. We do not, therefore, hesitate in holding that this order was passed totally without application of mind and that it should not be sustained and deserves to be set aside. The self contradictory nature of many paragraphs contained in the order reinforces our view and findings in this regard.
57. The next question that arises is as to what will be the legal and just order to be passed. The Collector's order has to be set aside and it is hereby ordered to be set aside. We have given our views about the aspect of licensing, about the necessity for invoking Section 11 l(d), and, even though indirectly, the necessity to go into all the facts, circumstances, documents, law, evidence & arguments pertaining to this matter which involves substantial financial stakes. In these circumstances we feel that it will be fair and just to direct that the Collector should readjudicate the matter after keeping in mind what we have said in earlier paragraphs. We further direct that before readjudication he should issue a show cause notice in writing as the earlier show cause notice was oral and the respondents are entitled to be informed of the detailed charges against them.
58. In view of our findings above we feel it is not necessary to go into the other arguments, case law etc. cited before us during the course of the hearing. As observed by us earlier, this would not help further the course of justice in view of the exclusive nature of the issue before us, and elaborate discussions, merely leading to the dismissal of other arguments as irrelevant would merely add to the length of this order.