1. This is the party's appeal, against the impugned Order-in-Appeal No.23/94-BCH, dated 13-1-1994 in File No. S/49-76/93 Lic of the Respondent praying for setting aside the same and for such other orders deemed fit.
1. The facts of the case are that the Appellant manufactures Audio Magnetic Tapes, under Central Excise license, and non-woven fabric materials is one of the materials used for it, and for want of particular specification in India, it had to be imported from Japan.
Before doing so the Appellant wrote to D.G.F.T. on 4-5-1988 as whether it could be imported under OGL, and to CCI & E on 1-6-1988, and they have in their letters dated 19-8-1988 and 31-10-1988 have replied that non-woven fabric rolls is covered under Appendix VI, List 8 Part I against Serial No. 375 of I.E. Policy for 1988-91 subject to actual user condition and other conditions laid down thereunder. Accordingly Appellant received supply of non-woven fabric in roll form from suppliers in Japan/and on importation the Appellant submitted Bill of Entry No. 0006025, dated 13-3-1992, accompanied by supplier's Invoice No. 92065, dated 12-2-199e (sic), Bill o: Lading, dated 11-2-1992, and packing list, dated 12-2-1992, Certificate o: Origin, dated 4-2-1992 and Purchase Order No. AMT-SPL: RM: 189/91, dated 16-12-1991. The Appellant claimed the imported non-woven fabric rolls are filter media and an OGL item mentioned at Sl. No. 354, Appendix 6, List 8, Part I of Import Policy 1990-93. Since the Import of non-woven fabric was for use of Filter Media in the course of manufacture of the Audio Magnetic tapes it did not require an import license even it was rightly classified under CH 59.11 instead of CH 56.03 of the Customs Tariff Act. The additional Collector allowed clearance of the imported goods on the condition that the Appellant should pay fine of Rs. 85,000/- and penalty of Rs. 20,000/- in addition to the Customs duty on the goods imported and issued the order-in-original on 21-6-1993, which was dated 30-10-1992. On appeal by the Appellant, Collector of Customs (Appeals) upheld the above order and rejected the appeal on 13-1-1994. Hence this appeal.
2. The learned Counsel for the Appellant has argued in support of the appeal, contending that the issue involved in this case is whether non-woven fabric, filter media, used to remove cutting waste slit into tapes on hubs, cones under OGL for import or not The opinion of DGFT and CCI & E cannot be disputed. 16-12-1991 letter to supplier is based on their opinion. Import has taken place on 17-3-1992. Non-woven fabric was covered under item at Sl. No. 354 before amendment. There is no change. Chapter 56.03 Customs Tariff Act is the classification of the goods imported. In the alternative, classification under Chapter 59.11 is claimed. Goods are inspected as per the endorsement on the reverse of Bill of Entry. As per the new import policy for 1990-93 goods comes under OGL. Non-woven fabric is covered under Technical grade. It is clarified by the Appellant that it works only as filter, not a wiper.
It only sucks dust on the rolling. It is a dust catcher. Adjudication and appellate authority have not taken any expert opinion, before coming to conclusion, on the role of imported goods with regard to tape. Analogy to the air conditioner is correct regarding the sucking of dust by non-woven fabric. The Appellant has given complete picture to both DGFT and CCI & E for confirmation, before importing the goods.
If there was any doubt they would have asked and not blindly swear such opinion. Even the customs authority could have asked the Appellant to clarify any doubt about the role of non-woven fabric with tapes. Wiping does not arise in this case, in the absence of any liquid. 1992 (62) E.L.T. 566 - Para 6 is relied upon. Penalty and fine has to be set aside. Appellant's action has bona fides. OGL is correct. Appellant has declared everything about the usage of non-woven fabric.
3. The learned Departmental representative has argued that even though Appellant's stand is that of filter media, of non-woven fabric, it acts as wiper, by removing the dust on the tapes. Dictionary meaning of filter is different than the function of the above. The goods are not covered by OGL classification not relevant to ITC. Order-in-original and appeal are proper. The learned Counsel for the Appellant has replied that the orders of lower authorities are not supported by any expert opinion. Their personal views cannot prevail over the clarification by DGFT and CCI & E.4. Point for consideration is whether the appeal has to be allowed My finding thereon is in the affirmative.
5. Perused the Appeal memorandum, orders of the lower authorities and documents produced and 1992 (62) E.L.T. 566 (Tribunal) in the case of Trijama Filterall Pvt. Ltd. v. Collector of Customs - "Fabrics - Customs - Filter Aid and non-woven filter panels (SYNFASAN) being fabrics having industrial use classifiable under sub-heading 5911.10 of Customs Tariff Act, 1975. Note 7(b) of Chapter 59 of refers also to Textile fabrics of a kind used for technical purposes when they are endless also falling under Chapter 59. The Note 7(b) of Chapter 59 need not necessarily include textile products in the piece, cut to lengths are simply cut to rectangular (including square) shape and it need not be an article in view of the example textile fabrics endless given in the bracket in Note 7(b) of Chapter 59. The goods imported are therefore classifiable under Heading 5911.10 (Tribunal Order Nos. E/150-161/92-D, dated 28-2-1992 relied on) (para 6)".
6. The case of the Appellant is non-woven fabric is used for catching the dust settled on the surface of magnetic tapes in the manufacture of tapes, which was a technical purpose. The said fabric comes into contact with the coated polyester film, it picked up the debris from the surface of the film, and performs the filter action. It is not the wiping of the tapes. If it is so the manufacture of the coated film will be a non-productive venture. After the coating of magnetic paint on the polyester film, the magnetic tape thus formed is run against these rolls to catch the dust and any other foreign particle from the surface of the tape. It basically performs the function of dust catching. Soft non-woven fabric is used for this purpose to avoid any scratch to the coated film because the same will render recording of scratched ineffective. It is used to the cleaning for surface of audio and video magnetic tapes and floppy disk, as per the suppliers, Silver Shoji Co. Ltd., Japan. It is described as Grade D22 non-woven cleaning fabric 330 mm (w) and 80 m (1) per roll, 1" paper core. To decide whether the non-woven fabric is a filter, it has to be seen whether it fits in the meaning of filtration. For that, the meaning of the said word has to be examined. The Appellant has used the word filter media.
It also requires examination. As per the Condensed Chemical Dictionary 10th edition revised by Gessner G. Hawley at page 462 both are considered as follows : (a) Filter Media: Almost any water insoluble porous material having a reasonable degree of rigidity can serve as a filter. Sand is used in simple large scale water filtration, the voids between the grains providing the porosity. In industrial operations cotton duck, woven wire cloth, nylon cloth and glass cloth are used. For laboratory work Whatman filter paper, diatomaceous earth, and closely packed glass fibres are standard materials. Plastic membranes containing over 'a million pores per square inch are used in bacteriological filtration.
(b) Filtration : The operation of separating suspended solids from a liquid (or gas) by forcing the mixture through a porous barrier.
(See filter media). The construction and operation of the many kinds of industrial filtration equipment are too detailed to permit description. The most widely used types may be classified as follows : (1) gravity filters, used largely for water purification and consisting of thick beds of sand and gravel, which retain the flocculated impurities as the water passes through; (2) pressure filters of plate-and-frame or shell-and-leaf construction, which utilise filter cloths of coarse fabric as a separating medium; (3) vacuum or suction filters of the rotating drum or disk type, used on thick sludges and slurries; (4) edge filters; (5) clarification filters; (6) bag filters (dust collectors). (See baghouse). Gel filtration (q.v.) is a chromatographic technique involving separation at the molecular level. For bacteriological filtration membranes having over a million pores per square inch are used, e.g.
collodion or synthetic film. Some types of virus will pass through such membranes and are thus known as filterable viruses.
In the light of the above, the discussion in para 2 of the order-in-original regarding the filtration is not proper and correct.
Additional Collector of Customs has not at all considered the industrial filter equipments, both for filter media and filtration, which also deals with different varieties of filtering process than the one considered "as the process of separating suspended solids from a liquid by forcing the mixture through a porous barrier". His conclusion that "action envisaged is not filtration and non-woven fabric cannot be called as filter media" goes against the meaning of the said words as narrated above. It cannot be upheld. The Additional Collector has held that action envisaged is a wiping process, and the non-woven fabric is a wiper. Collector of Customs (Appeals) has also confirmed in para 6 of the order. How far it is correct is to be seen. Oxford (Concise) Dictionary of Current English by H.W. Fowler & F.G. Fowler (1st Edn.) and by R.E. Allen (18th Edn.) at page 1406 has explained : Wiper: Wind screen wiper, electr. a moving contact, a cam or tappet.
Wipe : 1. Clean or dry the surface of by rubbing with the hands or a cloth etc.; 2. rub (a cloth) over a surface; 3. spread (a liquid etc.) over a surface by rubbing; 4. (often foil, by away, off, etc.) a. clear or remove by wiping (wiped the mess off the tabler, wipe away your tears) b. remove or eliminate completely (the village was wiped off the map); 5. a. erase (data, a recording, etc.) from a magnetic medium; 6(2) a piece of disposable absorbent cloth. Cloth usu. treated with a cleansing agent, for wiping something clean (antiseptic wipes).
So from the above wipe means 'to clean' process of catching the dust and foreign particles settled on the surface of the magnetic tapes by non-woven fabric and picking up of the debris from the surface of the film, when magnetic tape is run against the roll of non-woven fabric does not come within the meaning of erase from magnetic medium, which creates scratch, rendering the recording on a coated film ineffective.
Sucking of the dust cannot be termed as wiping, which is a process of dust catching. The reasoning in the order-in-original in this regard is not sound for above reason. In this regard the contention of the appellant is upheld.7. The Appellant has taken all precautions before getting the non-woven fabric rolls from Japan, along with other 17 materials, by getting clear clarification both from DGFT and CCI & E, regarding the requirement of license and classification by giving the details such as chemical name/specification, use, remarks of all the 18 materials in the letter dated 4-5-1988. For non-woven fabric rolls at serial No. 17, usage is mentioned as for cleaning of slitted magnetic tapes at the time of slitting operation, with remarks not separately classifiable, so taken under OGL. Copy is also marked TO CCI & E. In the letter to CCI & E, dated 1-6-1988 at Sl. No. 16, in the column No. 7 end use raw material consumables is mentioned without giving specific use as observed in the order-in-original and order-in-appeal. DGFT has replied on 19-9-1988 that non-woven fabric roll is covered under Appendix 6, List 8, Part I, against Sl. No. 375 of I.E. Policy for 1988-91 subject to actual user condition, for which both Additional Collector and Collector (Appeals) cannot have any objection, CCI & E has replied on 31-10-1988 under Item No. 10 regarding non-woven fabric rolls that it is covered by Appendix 6, List 8, ran 1, Sl. No. 375. In the same letter, a clarification is sought from the Appellant as to the detailed chemical composition of poly carboxylate type surfactant and 100% carbon acid surfactant to examine the matter further and classify the item. So from the above one thing is crystal clear that CCI & E has not blindly accepted the details furnished by the Appellant to give opinion as requested, as held by the lower authority. It is amply clear that CCI & E had no doubt about the non-woven fabric rolls, and has specifically answered the requirement of Appellant, which exactly tallies with the clarification issued by DGFT, to whom the Appellant has furnished mode of usage of the non-woven fabric roll. Collector {Appeals) has clearly conceded that the said opinion has to be accepted. Additional Collector has not denied this aspect, but has observed that CCI & E was bound to give the opinion only on the particulars furnished by Appellant, which is not correct. So the discussion and conclusion in the order of lower authorities that to import non-woven rolls license was required goes against the detailed opinion of competent authority DGFT, and CCI & E. They are bound by these opinions as per 1994 (31) E.L.T. 512 (Tribunal) in the case of Kalpa Ghosh v. Collector and 1995 (77) E.L.T. 600 (Tribunal) (sic) in the case of R.N. Rajan & Co. v. Collector of Customs, Madras (para 4).
According to these decisions clarification issued by DGFT alone treatable as final or binding, and interpretation of Import Policy by DGFT is final and binding even on customs authorities. There is a definite clarification by CCI & E that items covered by entry at Sl.
No. 1 of Appendix 6, shown above/in which non-woven fabric rolls is covered, can be imported under OGL by actual users (industrial) in the letter dated 31-10-1988. Import documents show License No. OGL No. APP.6, List 8, Part I, Sl. No. 354 of ITC 1990-93 (Bill of Lading, Invoice, Packing List, Bill of Entry for home consumption), purchase order giving the details. Import Policy 1988-91, Appendix 6, List 8, Part I, Serial No. 354 shows non-woven filter media, dust catcher bags, non-woven filter panels which was before amendment. After which it is shown at Sl. No. 375 in Appendix No. 6, List 8, Part I in April 1988 to March 1991 (volumes). Clause 17(2) requires Customs Authorities to consult Import Trade Control authorities before clearance of goods in case of any doubt and interpretation given by CCI & E is final in the matters relating to Import Export Policy and procedures. In this case, customs authorities have not tried to comply the above provision.
Adjudication order shows that without any expert assistance, the Additional Collector has decided on his own. Collector (Appeals) has agreed to it, which is against the ITC Policy. The findings cannot be upheld. The goods imported is covered by OGL with actual user condition. No license is required. The contention of the Appellant is proper and correct, and it is accepted.
8. In view of the above, conclusion, classification issue does not survive, which was taken by the Appellant as an alternative stand. The Appellant is entitled to succeed. The point raised is considered in the affirmative. Hence I pass the following order.
For the reasons discussed above, the appeal is allowed with consequential relief according to law. The impugned order is set aside.