1. This Appeal is directed against Order-in-Original No S/10-44/85 LSIIB dated 14.6.85 passed by the Additional Collector of Customs, Bombay.
2. The facts of the case, briefly stated, are that M/s Paharpur Cooling Towers Pvt. Ltd. Calcutta (hereinafter referred to as the appellants), imported at the Port of Bombay 480 bundles of timber valued at Rs.41,33,504 c.i.f. by the vessel M.V. HOEGH DRAKE. The said timber was stated to be required for manufacture of cooling towers for supply to Hazira Project of Krishak Bharat Co-operative Ltd., Surat, an I.D.A.aided Project. The appellants' Custom House Agent presented a home consumption Bill of Entry No.l 141/12 and 1141/13 for clearance of the goods. Three imprest licences and three duty exemption entitlement certificates (DEEC) books were also produced to cover the goods. The Customs authorities undertook certain investigations and, as a result, alleged that the goods were liable to confiscation under Section lll(m) of the Customs Act, 1962 (hereinafter referred to as the Act) as there was mis-declaration by the appellants in relation to the particulars shown in the import documents such as Bill of Entry, Invoices, Bills of Lading, Certificates of Country of Origin, etc. It was also alleged that goods valued at Rs. 4.79 lakhs sought to be cleared under Licence No. P/L/2967598 dated 10.8.83 (Invoice No. 236/84) were liable to confiscation under Section lll(d) of the Act read with Section 3 of the Imports and Exports Control Act, 1947. It was alleged that the appellants were liable to penal action under Section 112 as also under Section 117 of the Act. Apparently, in view of the high demurrage charges liable to be incurred, the appellants waived, in writing, the issue of a written show cause notice and filed written submissions denying the charges. On adjudication, the Additional Collector of Customs, by his impugned order - (a) confiscated timber valued at Rs. 4.79 lakhs under Section 111 (m) of the Act but gave the appellants an option to redeem the same on a fine of Rs. 5 lakhs; (b) imposed a penalty of Rs. 50,000/- on the appellants under Section 112 of the Act and Rs.1000 under Section 117; and (c) ordered that the appropriate duty leviable on the goods valued at Rs. 4.79 lakhs be recovered and that, for the rest of the goods, the licences be debited and the DEEC procedure followed.
3. The findings recorded by the Additional Collector leading to his order are:- (a) the vessel was not at the Port of Tacoma on 28.2.85. It was actually at Tacoma from 9-3-1985 to 11-3-85; (c) though 426 bundles of timber were covered by valid licences; there was misdeclaration as regards the date of shipment of the goods. The Bill of Lading showed the date of loading as 20.3.85 which was not correct; (d) licence No. P/L 2967598/C dated 10.8.83 expired on 28.2.85 including the grace period. Shipment of goods valued at Rs. 4.79 lakhs was effected after the expiry of this licence. The licence was not, therefore, valid for clearance of the goods. Also duty exemption was not applicable and duty was leviable.
4. We have heard Shri K. Narasimhan, Advocate, for the appellants and Shri L.C. Chakraborty, DR, for the respondent Collector.
5. At the outset, Shri Narasimhan referred to the Miscellaneous application C/Misc/232/88-D dated 20.6.88 filed by the appellants seeking to incorporate an amplification and an addition to the grounds of appeal. Shri Chakraborty, DR, did not object to the prayer. We considered the matter and allowed the application.
6. The crucial issue for consideration in the present dispute is whether timber valued at Rs. 4.79 lakhs were shipping before or after expiry of the validity of Licence No. P/L 2967598 dated 10.8.83 The licence, as is apparent from it, is an imprest licence and the applicable policy period is April 83 - March 84. In the column "Period of shipment" is the remark "valid for 12 months from the date of issue". The appellants have placed on record a copy of a letter dated 5.2.85 from the Joint Chief Controller of Imports and Exports revalidating the licence as desired by the appellants. The revalidation endorsement which is the root cause of the dispute is in the following terms:- "Revalidated for 6 months from the date of expiry of the licence including the grace period".
It is the Department's contention that the above endorsement signifies that the usual grace period of 60 days is not available in respect of this revalidated licence, whereas the appellants' contention is that the grace period is admissible.
7. In the normal course, the validity of the aforesaid licence, that is to say, the period within which goods should have been shipped expired on 10.8.84 i.e., 12 months from the date of issue of the licence.
However, in accordance with the provisions contained in paragraph 207(2) of the Hand Book of Import-Export Procedures 1983-1984, where the date of expiry of an import licence falls before the last day of a month, the licence will automatically be valid up to the end of that month. The period of validity of the present licence thus automatically gets extended to 31.8.84. The next circumstance to be noticed is the revalidation endorsement according to which the licence was revalidated for 6 months from the date of expiry of the licence including grace period.
"In order to facilitate shipment/despatch of goods against licences, a grace period not exceeding 60 days is allowed after the date on which the licence expires".
"The importers can also avail of the grace period of 60 days in the case of revalidated licences".
Applying these provisions to the facts of the present case, the importers had a grace period of 60 days after 31.8.84 i.e., upto 30.10.84 for shipment of the goods. It is only on 30.10.84 that the licence would have become totally dead. No shipment could have been effected against that licence after 30.10.84 unless the licence was revalidated by the licence "for six months from the date of expiry of the licence including the grace period". Six months added to 30.10.84 would take the period forward to 30.4.85. Looking at the matter from a different angle, if the licence is deemed to have expired on 31.8.84, in terms of para 207(2) of the Hand Book, the revalidation of the licence by six months would take forward the period to 28.2.85. Para 209(3) by virtue of which the importer can avail of the grace period of 60 days in the case of revalidated licences also would take the period further forward to 29.4.85.
9. Shri Chakraborty's submission, however, is that revalidation endorsement (extracted earlier) signifies that the grace period was not permissible in the case of the present revalidated licence. According to Shri Chakraborty, the licence, as it originally stood, was valid upto 10.8.84 It was revalidated for six months from this date i.e. upto 10.2.85. The significance of the revalidation endorsement was that from the date of expiry of the licence it was good and valid only for six months including the grace period. In other words, Shri Chakraborty contends that the grace period is not applicable at all to the present revalidated licence.. This contention flies in the face of two provisions in the Hand Book. Firstly, it flies in the face of Para 207(2), according to which the period of validity of a licence should be automatically deemed to be extended upto the last date of the month in which the date of expiry falls. Secondly, the contention is against the provision in Para 209(3), according to which the grace period of 60 days is admissible in the case of revalidated licences also. The endorsement of revalidation, in our opinion, could have been more clearly worded leaving no room for ambiguity. Even assuming for the nonce that the Department's contention is plausible, it would only mean that two views are possible and if that be so, the benefit of the favourable view should go to the appellants.
10. The adjudicating authority has held that the goods were loaded on board the ship on 10-3-1985 and the ship left the Port of Tacoma on 11-3-1985. The licence, according to the foregoing discussions was valid either upto 30-4-1985 or upto 29-4-1985 depending upon the angle from which the matter is looked at. In either event, the shipment had taken place before the date of expiry of the revalidated licence taking into account also the grace period of 60 days. In this connection, it is significant to note that the Additional Collector had not proceeded against the goods under Section lll(d) of the Customs Act which he should have invoked though he had held the goods as not having been covered by a valid licence. All that he holds against the goods and the appellants is that the date of shipment was erroneously declared in the Bill of Entry. No evidence has been placed before us that the appellants had foreknowledge that the dates as shown in the two Bills of Lading were erroneous or that they had arranged with the suppliers of the goods to show the dates as they actually came to be shown on the Bills of Entry.
11. There was no dispute before the Additional Collector that but for the finding that the goods were shipped after the expiry of the period of validity of the revalidated licence, the goods were eligible for the benefit of duty free entry under the DEEC scheme on account of notification 210/82-Cus., dated 10-9-1982. However, Shri Chakraborty sought to argue that this notification was not applicable to the present goods in view of the fact that the notification referred to in terms in the conditions attached to the licence was notification 117/F.No. 602/14/78-DVK dated 9-6-1978 as amended from time to time. We note that the adjudicating authority had not proceeded on this basis.
Apart from that, it is clear that the licence in question is a special imprest licence. Annexure VII to Appendix 19 of the Import & Export Policy for the period April 1983-March 1984 pertains to supplies made in India inter alia for IDA aided projects and exemption of imported inputs from customs duty. The reference therein is to the customs notification dated 10-9-1982 which exempts from payment of customs duty import of raw materials and components required for the manufacture of goods to be supplied inter alia to IDA aided projects. There is no dispute that the present goods have been imported for one such project.
There is no merit in Shri Chakraborty's contention.
12. Section lll(m) of the Customs Act has been invoked by the Additional Collector. This Section provides for confiscation of any goods which do not correspond in respect of value or in any other particular with the entry made under this Act. Looking at the language employed, it prima facie appears that the particulars envisaged are in respect of the goods, that is to say particulars such as value, description, quantity etc., and not particulars of the Bill of Lading or the date of shipment but in view of our finding that the goods have been shipped within the period of validity of the revalidated licence, the discrepancy between the dates of the two Bills of Lading and the actual date of loading which has been held by the Additional Collector to be 10-3-1985 loses all its significance in so far as the present case is concerned. We do not, therefore, wish to express any definite opinion on this point.
13. Section 117 of the Act is in the nature of a residuary provision.
It provides for imposition of penalty on a person where no express penalty is provided elsewhere in the Act for contravention of any provision of the Act or abetment of such contravention or failure to comply with any provision of the Act which it was his duty to comply with. We do not think that, on the facts and in circumstances of the present case, Section 117 was attracted.
14. In the result the impugned order is set aside and the appeal is allowed with consequential relief to the appellants.
15. I have had the advantage of reading the erudite judgment proposed by the learned Senior Vice-President. Since the revalidation endorsement which is the root cause of the dispute in hand, is capable of being construed both ways as observed by the learned Senior Vice-President (para 9), I agree with the conclusion recorded by him and allow the appeal only on the short ground that since the two views are possible, the benefit of the favourable view should go to the appellants.