1. This is a case of two consignments of synthetic and woollen rags.
The appellants herein have not been extended the benefit of OGL as per Appendix 6(1) of the Import Export Policy of 1985-88 on the ground that these are not completely premutilated although they are otherwise admitted to be mutilated. Exact examination reports in respect of the two consignments are as follows :- 'Mutilated (Synthetic) rags only in each. These are garments cut/torn to two or three pcs. only"; and 'On examination it is ascertained that the imported goods are synthetic garments (used) which are cut/torn to two or three pcs.
only".
'(Mutilated) Woollen rags only in each. These are all garments cut/torn to two or three pcs. only and 'On examination it is ascertained that the imported goods are woollen garments (used) which are cut/torn to two or three pcs.
only." Since they have not been considered rags the appellants have also been denied the benef it of lower rate of duty applicable to the woollen and synthetic rags by relevant exemption notifications. The goods have been confiscated under Section 111(d) of the Customs Act, 1962 read with Section 3(2) of the Imports and Exports (Control) Act. A fine of Rs. 2.5 lakhs for each of the two consignments has also been imposed. No penalty has, however, been imposed on the appellants.
2. Learned Consultant Shri K.V. Kunhikrishnan appearing for the appellants has urged that the question regarding Import Policy stands already resolved by a number of decisions of the Tribunal between NRB and WRB. He relies for his support on Tribunal's judgment in the case of Mis. Kakkar & Co. and Ors. v. Collector of Customs, New Delhi [Order No. 92-95/88-NRB dated 9-3-1988; 1988 (35) ELT 718 (Tribunal)] and in the case of Subhash Woollen Mills Pvt. Ltd. v. Collector of Customs, Bombay (Order No. 997-998/86-WRB dated 22-8-1986). He submits that so far as the question of classification is concerned, even in these cases, the benefit of lower rate of duty was not denied to the appellants therein inasmuch as the definition of rags for the purpose of lower rate of duty in the Customs Tariff did not speak of any mutilation. In view of the aforesaid judgments and the clear position regarding the lower rate of duty, he has submitted that the appeals should be allowed following the judgments of the Tribunal and the practice of assessment in these cases.
3. Learned JDR, Shri L.C. Chakraborthy, on the other hand, urges that the question of interpretation of the Import Policy came up for consideration before Gujarat High Court in the case of Mis. Rupani Spinning Mills Pvt. Ltd. v. Union of India and Others (Spl. Civil Application No. 399/88). That High Court directed the Customs officials at Kandla while setting aside the confiscation, to follow the practice of Bombay Customs House of further mutilation of the garments into 4 pcs., if they are not already so mutilated, so that they are rendered unserviceable for any purpose other than the one for which garments have been imported.
4. Learned Consultant for the appellants did not have any objection to the goods being subjected to mutilation into 4 pcs. wherever necessary as directed by the Guj. High Court in the aforesaid case. We order accordingly while setting aside the confiscation.
5. The question of assessment at lower rate of duty cannot be denied to the appellants because the goods are admittedly mutilated rags as is clear from the examination reports, set out above. In fact, as rightly pointed out by the learned Consultant for the appellants, the benefit of lower rate of duty to such rags had not been denied even at other parts, namely by the Collector of Central Excise, Delhi and Collector of Customs, Bombay in such cases. The objection taken was only with regard to the fact that they were not completely premutilated. We, therefore, order that the benefit of lower rate of duty should be extended to the appellants for the purpose of assessment.