Full Judgment
2. The facts necessary for the disposal of this appeal lie in a small compass; The appellants imported 45 cases of Olive Oil and sought clearance under OGL Appendix 10(4). The Customs, however, objected to the clearance on the ground that the import was for stock and sale and that the appellants are not the actual users. The Asstt. Collector of Customs, who held the adjudication ordered confiscation but allowed redemption on payment of fine of Rs. 10,000/-. On appeal, the Collector of Customs (Appeals) confirmed the order of the Asstt. Collector by holding that the import of olive oil cannot be allowed under the OGL not only because the importers are not engaged in the manufacture of Ayurvedic or unani medicines but because the item is canalised as per para 5 of App. 9 of AM. 83 Policy.
3. During the hearing of this appeal Shri Balani submitted that the interpretation of the Policy made by both the authorities below is erroneous. Under the Policy olive oil can be imported by all persons.
The Policy does not lay down any condition much less actual users condition. Shri Balani also submitted that the matter had been clarified by the Collector in his letter dated 24.8.83 (Ex.7 of the Paper Book). Shri Balani further submitted that the cif value of the goods was Rs. 9,600/-. The fine levied was Rs. 10,000/-. Shri Balani firstly referred to para 77 where there is declaration of the Policy and then referred to SI. No. 41 of App. 10 and later referred to item 58 of list 4 of App. 10. He submitted that the combined reading of all the above goes to show that olive oil can be imported by all persons and no restriction is placed for the import. He, therefore, prayed that the orders of the authorities below may be set aside.
4. Shri Mondal appearing for the Collector, opposed this appeal. He contended that during the adjudication proceedings the appellants were questioned as to the use of the olive oil and they had admitted that they were not the manufacturers of ayurvedtc and unani medicines, they are only stockist and they did not know if the chemists who purchase from them were selling the olive oil to the manufacturers of ayurvedic medicines or not. Shri Mondal submitted that having regard to the admission of the appellants, the Asstt. Collector was justified in ordering confiscation. Shri Mondal again read SI. No. 41 of App. 10. He also placed reliance on condition no. 17 of App. 10.
5. The further submission of Shri Mondal was that the olive oil at the relevant time was a canalised item and in that connection he referred to item no. 5 of Appx. 9. Shri Mondal further referred to para 217(e) of the Policy and contended that since all oils are canalised the appellants could not import the olive oil during the very Policy. He, therefore, prayed for the rejection of the appeal.
6. I have considered the submissions made on both the sides, perused the available records and carefully gone through the provisions of the Policy insofar as it is applicable to the present appeal.
7. App. 10 of the Policy AM 80 sets out the categories of importers, the items allowed to be imported by them under OGL and also the conditions governing their importation.
8. Item 41 of the App. 10 relates to import of Crude drugs required for making ayurvedic and unani medicines as per list 4 of the said Appendix. This item can be imported by all persons. Item 58 of list 4 Is 'olive oil'.
9. There is no dispute that olive oil is a crude drug. There is also no dispute that this crude drug is required for making ayurvedic and unani medicines. As the Policy then stood olive oil could be imported without any restrictions by all persons under OGL. Therefore, the objection taken by the department for clearance of the olive oil on the ground that the importers are not the actual users or that they have no intention to sell the imported goods to the actual users is totally outside the scope of the Policy. Therefore, the Asstt. Collector's order is wholly illegal.
10. Though the Department had not objected the clearance on the ground that the olive oil was a canalised item during the relevant period, the Appellate Collector rejected the appeal on the ground that olive oil at the relevant time was a canalised item and therefore, impermissible for import by an agency other than the canalising agency. Shri Mondal during the hearing of the appeal also contended that olive oil was canalised Kern under the Policy AM 83. In that connection he referred to Appx. 9 item 5 which has a generic heading oils/seeds. Under this heading as many as 9 oils/seeds are specifically enumerated and thereafter there is a general description which is to the effect on : "All other oils/seeds, whether edible or non-edible including vegetable fats, not specifically mentioned above or elsewhere in this policy (but excluding Tung oil/China Wood oil and natural essential oils), will also be imported only by STC under these provisions." If olive oil is a natural essential oil then it ceases to be a canalised item. If really the olive oil was the canalised item then at the initial stage itself the Customs would have objected to the clearance on that ground. No such objection was taken. As a matter of fact the Asstt. Collector who held the adjudication did not make the canalisation as one of the grounds for ordering confiscation. The Collector (Appeals) cannot make out a new case at the time of hearing of the appeal. Having regard to the scheme of the Customs Act the party is entitled to a show cause notice and he should have been informed of the ground on which the goods are proposed to be confiscated. He should have been further given an opportunity to make representation against such confiscation. Since no such opportunity had been given before the adjudication or during the adjudication, the Collector (Appeals) committed an error in relying on Appx. 9 for upholding the order of the Asstt. Collector.
11. The Collector (Appeals) had not considered whether the olive oil is an essential oil or not. Without recording such a finding, he cannot hold that the olive oil was a canalised item. There is no basis for such a finding.
"any item in Appendices 3 to 9, or 15 with a specific or a generic description, will preclude the eligibility to its import under Open General Licence, except where the policy allow this clearly".
So if the Policy allows import of olive oil then there is no scope to invoke para 217(e). In his order the Collector (Appeals) observed - Having recorded such a finding his further finding which is unintelligible and which reads: "but its entry is prohibited by the provisions of para 217(e) of the same Policy." This finding is self-contradictory. There is no scope to invoke para 217(e) if the import of olive oil is specifically by the Policy.
13. Crude drugs are specifically allowed for import under OGL According to the Policy this item can be imported by all persons. Olive oil specifically appears at item 58 of list 4. Therefore, para 217(e) is no bar for import of olive oil as crude drug by all persons.
14. On consideration of all the aspects, I hold that the view taken by the authorities below is totally erroneous, and against the provisions of the Policy. Accordingly, I set aside the orders and allow this appeal. The fine, if paid, shall be refunded to the appellants.