Full Judgment
2. Among the arguments raised before us by the advocate for the appellant was that principles of natural justice had not been complied with. The appellant had relied upon a certificate dated 25.9.1990 issued to it by the Mechanical Engineering Department, Government College of Engineering, Pune. This certificate states that the parts imported by the appellant could be used in making ventilating and recyling goods. The Collector has refused to accept this certificate on the ground that no authority has been cited in support of the conclusion in the letter and that those persons who issued the certificate are academicians "who could not understand the customs tariff or Explanatory Notes".
3. The Collector did not permit cross-examination of various persons whose statements were relied upon by the department. Amount these are R.R. Dhidholkar, Production Engineer; Pradeep Kumar Dhoot and V.N.Dhoot, of the appellant; Jairaman Gopalan, Dy. General Manager of the appellant; Ramakant S. Manikar; Custom House Agent; and V.R Shambus, Manager of the appellant. It is stated by the appellant that these persons were required to be cross-examined with regard to the process of manufacture of the goods. Others are R. A. Gala, General Manager of District Industries Centre, Amravati; he was required to be cross-examined with regard to filing of an application by the appellant before him. It is stated that R.P Mishra, Group Appraiser was required to be cross-examined to record that split invoices and bills of lading were issued by the importer. The Collector has justified the refusal to permit cross-examination of these persons on the ground that the question involved in this case are purely legal and because some of the persons concerned are controlling the firm. He further finds that these are only dilatory tactics to avoid a final decision.
4. It is not possible for us to agree that the questions involved are purely legal. What is, essentially, for consideration is whether the goods in question are classifiable as parts of air-conditioners or parts of ventilating goods. Answering these questions it involves facts and law. Substantially the questions involved are those of facts. The refusal for cross-examination on this ground was also not justified.
However, we must not be understood as saying that we permit cross-examination of all persons; to cite just one example, it is not clear to us why the apprising officer's cross-examination is required merely to prove that split invoices are issued by M/s. Yamato Industrial Company, the Japanese supplier. This fact can be established by producing the invoices in question.
5. We are also not able to accept the dismissal of the certificate of the Mechanical Engineering Department of Government College of Engineering, Pune, on the ground that those who issued it were "academicians" who could not understand the customs tariff or the Explanatory Notes. Classification of a commodity requires not only understanding of the customs tariff or Explanatory Notes, but understanding of the mechanical principles and procedures to relating to its use or application, to a large degree. It would not be correct to say that the opinion of College of Engineering relating to this aspect should be dismissed merely because those who issued it are academicians. If, by calling them academicians the Collector means to say that they have no practical knowledge of engineering that would in fact hold true of the Collector and members of the various appellate authorities who sit in judgment on his orders. The Collector may be an expert in classification, but he was, surely, not an engineering expert. Here again, we emphasise between considering the certificate of the College of Engineering and accepting it as correct. We do not express any opinion on the correctness or otherwise of the contents of that certificate. All that we say is that it should not have been brushed aside without considering it. If the certificate contained nothing to support the appellant's case, or presented an incorrect opinion, it was open to the Collector to say so.
6. The advocate for the appellant has produced before us considerable technical material, which he says support his contention. He has quoted from the book Basic Refrigeration and Air Conditioning, Second Edition, published by Tata McGraw-Hill Publishing Company Limited, New Delhi; Air Quality Control Handbook, by E. Roberts Alley & Associates Inc., published by McGraw-Hill; and Handbook of Air Conditioning, Heating and Ventilation by Stamper & Koral, published by Industrial Press Inc., New York. We are of the opinion that the Commissioner should consider this material.
7. In his order the Collector has imposed penalty on the appellant for rendering the goods liable to confiscation under Section 111(m) of the Act. He says that he has taken a lenient view in the quantum of penalty, having regard to the fact that the importer willingly paid the differential duty when it was brought to the notice that imported goods were not parts of ventilating or recycling goods but were merely parts of air-conditioners. He further finds that it was possible that V.N.Dhoot (of the appellant) was labouring under a mistaken belief that, by stretching the legal position, the goods could be classified under the category of parts of ventilating and recycling goods also and thereby he could save substantial amount of duty. If this is the position, and none of it had been challenged by the department, we are of the view penalty was not imposable at all. The Collector in effect says that the appellant could have believed that the goods were classifiable under a different heading than the one claimed by it for which he finds support from the fact that the appellant promptly paid the differential duty that was demanded. Further, his order does not cite any specific act or misconduct neither his findings. In these circumstances we are of the view that penalty was not imposable on the appellant and set it aside.
8. Accordingly we set aside the order of the Collector. He shall decide on the classification of the goods, and their liability to confiscation, after giving the appellant a reasonable opportunity of being heard, and after considering the request for cross-examination of witnesses and evidence that may be produced before him by the appellant. We make it clear that the department is at liberty to cite any evidence in support of its contention provided the appellant is given sufficient opportunity to deal with that evidence.