Full Judgment
The Additional Collector allowed the goods to be kept in warehouse subject to the fulfilment of the conditions prescribed in notification 10/90. Subsequently notice was issued as to why the goods should not be confiscated, as no licence for their import was produced and importer penalised. Importer waived written notice and stated before the Additional Collector that it was unable to produce a licence. The Additional Collector held the goods liable to confiscation for want of licence, but permitted their re-export on payment of Rs. 3,00,000/-.
2. The importer appealed this order. The Collector (Appeals) was of the view,' that the goods were in transit to China and therefore fell within the scope of saving Clause 11(c)(l) of the Import (Control) Order 1955 and hence no import licence was required. He found that the notification 10/93 permitted deposit of goods in a bonded warehouse without payment of 50% advance duty. He therefore set it aside the order of confiscation and penalty. Hence this appeal.
3. The contention in the appeal is that the warehousing of goods was permitted on condition that an import licence was produced, which was not complied with; and that the Collector (Appeals) has gone beyond the rules under which permission is granted to warehouse the goods. The goods were not in transit; they were not so manifested and hence not covered by saving Clause 11(l)(e) of the Import (Control) Order, 1955.
The departmental representative elaborates these grounds.
4. It is not correct to say that the Additional Collector allowed warehousing of the goods subject to an import licence being produced.
The order of the Additional Collector is not forthcoming. However, the Additional Collector himself records that warehousing was allowed subject to fulfilment of conditions prescribed in notification 10/93.
This notification specifies the purposes of Sub-clause (v) of Clause (a) of Sub-section (1) of Section 61 of the Act, various categories of the goods. One of these is goods meant for re-export. The specification of the goods in the notification itself was required in Section 61(1) which provides that goods so notified which could be kept in a bonded warehouse without payment of duty. This basis for the appeal fails.
5. Even if we accept that the Additional Collector either erroneously permitted deposit of goods or permitted it to the fulfilment of a condition which was not fulfilled, the net result would be that duty would be payable on the goods. The payment of duty, however, does not arise in this case since the Additional Collector has permitted the re-export. The other issues regarding the period of warehousing and interest on advance duty of 50%, etc. are of no relevance in this situation. If payment of duty is not involved in the proceedings on the consideration that the goods were permitted to be re-exported, effect is that duty need not be paid, there would be no question of payment of interest.
6. The only issue that therefore remains is the liability to confiscation of the goods. I agree that, strictly speaking, it is difficult to consider these goods as those in transit. The general understanding of goods in transit is the goods which are taken from one port or airport to another port or airport in course of their travel from their place of consignment to their destination. It is not the case with regard to these goods, that they incidentally or unavoidably happened to pass through Indian port, because of the route that was taken by the ship carrying them. The goods were deliberately brought to the country along with the main consignment, so that they could be exported with the remaining of the goods. It is not proper to call them goods in transit. Strictly speaking, therefore, licence was required for their import.
7. However, we have to keep in mind other aspects. They formed part of a much larger consignment which was imported into India for the purpose of assembly into complete machinery to be exported. The value of the imported component is in excess of Rs. 3 crores and the value addition effected by the Indian manufacturer was nearly half, i.e. 48%. This is clear from the correspondence between M/s. Plasser & Theurer of Austria and the respondent. Therefore, there has been substantial earning of foreign exchange to the extent of Rs. 1.75 crores. In these circumstances, it would be justifiable to permit re-export of the goods on a warning or action without imposing any fine, even if strictly speaking, they would be held liable for confiscation for having imported without a licence. The effect of Collector (Appeals) order is precisely this. I therefore, see no reason to interfere.