1. This is an appeal against the order passed by the Collector Customs, Bombay bearing No. S/26-223/89 Gr. I/ S/10-11/89 Gr. I, dated 24-4-1989.
2. Before going into the factual position of the case, certain facts connected with the hearing and disposal of the appeal by this Bench are required to be set out for purpose of record. The appellant filed a writ petition in the Hon'ble High Court of Bombay against the aforesaid order of the Collector. The Hon'ble High Court of Bombay in its order dated 12-5-1989 passed in W.P. No. 1398/1989 has observed that the questions involved are disputed questions of facts, which are difficult for the High Court to answer and the petitioner's remedy is by way of an appeal. The High Court further directed that the petitioner may be permitted to clear the goods on payment of redemption fine and full Bank guarantee for penalty amount. Subsequently, the High Court, on an appeal filed by the petitioner, before the Division Bench, dismissed the appeal observing that the petitioner would be at liberty to file a departmental appeal and the appeal may be disposed of not later than six weeks from the date of its presentation and in modification of the direction of the learned Single Judge, the Bench directed that the petitioner would be permitted to clear the goods on payment of redemption fine and furnishing bank guarantee for half of the penalty amount subject to further orders by the appellate Authority after disposal of the appeal. In pursuance of this order, the appellant herein presented an appeal with the stay petition, which was received by the registry of this Bench of the Tribunal 28-6-1989. The stay petition and the appeal were fixed for hearing on 10-7-89. On the stay petition of the appellant, this Bench observed that the High Court have already directed the appellant to furnish Bank Guarantee for 50% of the penalty amount, which has not been complied with. This Bench also did not accept the contention of the appellant that since the goods were not cleared they are not required to comply with the direction of the Hon'ble High Court for furnishing the Bank Guarantee towards half of the penalty amount. This Bench took the view that if the appellant did not choose to clear the goods, they were not required to pay only the redemption fine and a waiver of furnishing Bank Guarantee for the penalty amount as ordered by the Hon'ble High Court cannot be entertained unless it is specifically waived under the orders of the Hon'ble High Court. In the circumstances, this Bench directed the appellant to comply with the High Court's direction by furnishing the Bank guarantee towards 50% of the personal penalty. This order dated 10-7-1989 was complied with by the appellant only on 11-7-89.
Thereafter, the appeal was fixed for hearing on merits on 21-7-89. At the request of the departmental representative who sought for engagement of the Sr. Counsel for defending the department's case a short adjournment was given and the case was taken up for hearing.
Hearing continued for 3 days and finally concluded on 2-8-1989.
3. Now coming to the facts of the case relating to the appeal, they can be stated briefly as below : The appellant, who claimed to be a small scale industry engaged in processing of stone slabs, filed a B/E for import of 3120.50 sq.
mtrs. of slabs of calcareous stones (other than marble) and claimed clearance under OGL Appendix 6 Item No. (1) of Import Policy AM.1988-91. The value of the goods as declared in the B/E is Rs. 4,93,000/. The department objected to the clearance on the ground that the item under import declared as slabs of calcareous stones (other than marble) is marble covered by Sr. No. 62 of Appendix 2 Part-B of AM. 88-91 Import Policy. In this context, the department sought reliance on the Expert's opinion of the subject goods taken from the Indian Bureau of Mines, Government of India, Udaipur, Geological Survey of India (CR) Regional Petrological Laboratory Nagpur and Director. Mines and Geology Department, Government of Rajasthan, Udaipur. It was also alleged that the item under import is lime stone marble. According to the commercial circle, any limestone which is sufficiently hard and coherent to take a good polish and which can be cut into desired size can be called marble.
The department also sought to rely on the Explanatory Notes of the HSN with regard to the term 'marble'. A show cause notice was issued by the department to this effect and in the adjudication proceedings taken by the Collector, the Collector held that the import is unauthorised, since the goods imported are marble, whose import requires a specific licence. The Collector ordered enforcement of the bond to the extent of Rs. 4,93,199 in respect of the goods already taken delivery during the pendency of adjudication on a bond executed by them. As regards the goods valued at Rs. 2,44,763.50, which were still with the Customs department, the Collector ordered confiscation but allowed redemption on payment of fine of Rs. 5,00,000/-. The Collector also held that marble is a luxury item and used by persons in higher strata of society and since the import is in violation of the Import Control Policy, the appellant deserves to be penalised and accordingly imposed a penalty of Rs. 10,00,000/-.
The present appeal is against the aforesaid order of the Collector of Customs.
4. Shri M.H. Merchant, the learned authorised representative on behalf of the appellant, after narrating the facts of the case, put forth his arguments on the basis of five propositions set out below : (i) Expression 'Marble' in Customs Tariff Act Entry No. 25.15 is manifestly appearing in Technical nomenclature and hence only technical meaning i.e. geological or petrological meaning is required to be given to the said expression.
(ii) There is no specific definition of 'Marble' appearing either in the Chapter Notes or Section Notes in respect of Customs Tariff 25.15. Only Explanatory Notes gives definition of marble. Since these explanatory notes do not form part of the CTA, it is not permissible to engraft the HSN definition in the Customs Tariff. It is therefore, not legally permissible to place reliance on the HSN definition found in the Explanatory Notes. Even assuming that it is so permissible to place reliance on the explanatory notes, then even by the definition in Explanatory Notes, the goods imported are not marble.
(iii) Goods imported are not marble technically i.e. geologically or petrologically. The goods imported are not commercially marble, since they are not falling in the ISI definition of marble defined in IS:1130-1969. According to the judicial pronouncements, for understanding trade/commercial parlance definition in ISI is to be preferred to other affidavits and opinions.
(iv) The Collector's finding that the goods imported are metamorphosed and hence they are crystalline, is not correct. The Collector's finding is based on an untested report where the opinion has been given only on visual examination and not based on scientific investigation; and (v) The Collector has erred in ignoring ISI definition of marble and his finding that none of the Experts have opined that the goods imported are sedimentary type limestones, is also erroneous.
5. Shri Merchant, elaborating on the aforesaid five propositions argued a below : In the Customs Tariff Heading 25.15 five terms have been spelt out namely (i) 'Marble' (ii) 'Travertine" (iii) 'Ecaussine' (iv) 'other calcareous monumental and building stones; and (v) ' Alabaster'. On a plain reading of the said Heading 25.15 it is clear that the same covers four different technical varieties of calcareous monumental and building stones viz. technical term 'Marble', technical term 'Travertine', technical term 'Ecaussine' and technical term 'other calcareous monumental and building stones'. Even the term 'Alabaster' is a technical term comprehending only those rocks which are technically 'Alabaster' and they are namely 'calcareous alabaster and 'gypseous alabaster'. In view of the aforesaid position, he vehemently argued that each term referred to in the Tariff heading is to be technically understood and applied. He also contended that other calcareous monumental and building stones referred to in the aforesaid Tariff heading is statutorily comprehending within its scope only those limestones which are similar to marble, travertine, ecaussine but not those stones which are technically neither marble, nor travertine nor ecaussine.
According to Shri Merchant, while the entry is comprehending marbles or limestones, the term other than calcareous stone can only be construed to cover such stones other than marble technically known as such. For construing the imported item as marble, only if polishable limestones satisfy the technical definition of marble, it can be said to be construed as marble. It is also urged that sedimentary limestones which are not technically marble, have been statutorily segregated and separated from the expression marble-viz.
'Travertine', 'Ecaussine' 'Other calcareous monumental and building stones'. According to the technical definition, only recrystallised limestones can be technically called marble. Geological meaning of marble refers to metamorphic carbonate rocks and could cover only recrystallised limestones. He also contended that technically marble is a product of thermal metamorphism of limestone, in which recrystallisation takes place and silicate minerals are also produced. In this context he referred to the various technical and geological definitions to urge his point that technically a stone can be construed as marble, only if it is a recrystalline lime stone.
6. Commercial definition of marble proposed in the show cause notice on the basis of which adjudication has been done contemplates that any polishable hard limestone can be called marble and such construction has to be discarded, since the meaning of marble as envisaged in the commercial definition adopted by the department is repugnant to the statutory scope and context of expression marble specified in 25.15 of CTA. If this definition is adopted, all other expressions such as, travertine, ecaussine etc. would be rendered nugatory and meaningless and significances of their being spelt out separately; would become meaningless. It is a well settled principle of interpretation of statute that the same should not be interpreted in a manner which renders any portion of the statute nugatory. There is also no warrant to bring in the commercial definition especially when the expressions in the statute clearly attribute technical meaning to the same. It is a well settled principle of law that expressions can be construed in trade parlance or commercial parlance, only where the context of the said expressions do not require to be interpreted in technical meaning.
In this context, he relied on the judgment of the Supreme Court reported in AIR 1977 S.C.113 and also Bombay High Court judgment reported in 1983 ECR 648 D. Going through the technical information rendered on the samples, he contended that the Director, Geological Survey of India, Nagpur has clearly indicated that the sample forwarded by the appellant cannot be termed as marble and it is only an allochemic (Pelmicritio) limestone. He pointed out that the same sample was sent by the department as well as by the appellant. The department has not disclosed the report received by them from Geological Survey of India but in the writ petition proceedings, the learned Counsel for the department conceded that the content of the report sent to the Department also was identical. He also referred to the report of the Director, Mines and Geology Department, Udaipur (Rajasthan) to point out that in the sample forwarded by the department recrystallisation has not taken place and the sample has been identified as fine grained cherty limestone. On the opinion given by the Regional Petrological Laboratory Nagpur, he contended that it is only based on visual observation and his conclusion that it is marble, as per the commercial definition, cannot be accepted. He also pointed out that the author of the report in this case has stated that if opinion is to be obtained regarding technical and scientific basis the department should approach the Director,Ore Dressing Laboratory, Indian Bureau of Mines, Civil Lines, Nagpur. This direction has been complied with.
7. As per proposition No. (ii) the learned representative Shri Merchant stated that HSN definition of marble is appearing only in the Explanatory Notes and no such definition is appearing either in the Act or Customs Tariff. Hence the definition given in the Explanatory Notes has no statutory force. Only the technical definition of marble which gives petrological and geological meaning of marble should be adopted.
Even assuming that it is lawful to place reliance on HSN definition of marble, he argued that even that HSN definition states that marble is 'often crystalline' limestone. Expression 'often crystalline' limestone can only mean that marble is a repeatedly, frequently time and again crystalline limestone. The meaning given by the department to the term 'often' referring to 'may or may not be' is not correct because crystalline limestone is a recrystalline limestone and is a product of thermal metamorphism. In this context 'often crystalline' only take the meaning 'repeatedly', 'frequently', 'time and again' crystalline limestone. He also contended that if a person is described as often disobedient it can only be taken to be meaning that he is disobedient and reflects his character. In the same sense, here 'often crystalline' can only mean that the product is crystalline. He also contended that none of the two test reports relied upon by the department have confirmed the fact that the imported goods are 'homogeneous' or 'Opaque'. They are also not identified as crystalline limestone. The report given by the Regional Controller of Mines, Indian Bureau of Mines is only based on visual examination of the specimen, wherein the author has described the rock as crypto crystalline, fine grained, mildly metamorphosed. First of all this report has been based on visual examination without subjecting the specimen on scientific definition and hence is not admissible evidence. Moreover, the word 'crypto crystalline' according to New Webster's Dictionary means indistinctly crystalline; noting or pertaining to rocks whose crystals are so small as to be indistinguishable even with the microscope. Hence, the finding of the Collector based on the term 'crypto crystalline' to the effect that the imported goods are crystalline, is erroneous, and is also contradictory to the other technical reports.
8. On the proposition No.(iii), Shri Merchant contended that the goods have not undergone the process of recrystallisation and are not marble technically. Even assuming that the technical definition is not applied and commercial parlance is to be adopted, reliance is to be placed on the ISI specification. In this context IS: 1130-1969 defines that marbles are metamorphic rocks capable of taking polish formed from the recrystallisation of limestone or dolomitic limestone and are distinguished from limestone by even visibly the crystalline nature and non-flaggy stratification. In this context, he referred to the judgment of the Supreme Court reported in 1977 (1) ELT at page J 199, wherein the Supreme Court have held that the views of the Indian Standard Institute with regard to how a particular product is known to Indian trade should be preferred to views of foreign authors and experts. This ratio of the Supreme Court judgment has been followed by the Delhi High Court in judgment reported in 1980 Vol. 6 ELT page 679. The Tribunal have also adopted the ratio of the Supreme Court judgment in the judgment reported in 1987 (29) ELT page 627. If there is no definition given in the Act or in the Tariff or in the Notification itself, definitions and specifications as laid down by the ISI are to be relied upon as representing the general understanding of the trade and industry. In this context, he cited the judgment reported in ELT 1987 (30) page 942. Hence, adopting definition given in the ISI specification to the imported goods even commercially, they cannot be called as marble because it is not a crystalline product.
9. On the proposition No. (iv) above, Shri Merchant contended that the Collector's finding that the goods imported are metamorphosed and hence are crystalline limestone, is based on the untested report of the Indian Bureau of Mines referred to earlier. Since the identification is not based on scientific investigation this evidence is not admissible.
The test report given by the Director of Mines and Geology Department, Government of Rajasthan Udaipur clearly holds that recrystallisation has not taken place and the sample has been identified as fine grained cherty limestone. The Collector seeking to rely on the untested report is erroneous. In this behalf, he cited the judgement of the Madras High Court reported in 1987 Vol. 28 ELT page 346.
10. On the proposition No. (v) above, Shri Merchant urged that the Collector himself has admitted that the ISI specification indicates how the goods are understood in the trade parlance. Notwithstanding this, the Collector has committed a serious error in ignoring ISI definition of 'marble', where it has been specifically mentioned that marble is a recrystalline product. He also contended that for determining the classification in the Customs Tariff, there is no need to go into the trade parlance, since Customs Tariff is a self contained one backed by interpretative Rules, Section and Chapter Notes. He also contended that the Collector has ignored the documentary evidences produced by the appellant viz. certificate issued by the Foreign Experts and certificate issued by Dr. Sethna and also the test report obtained by the appellant from the Geological Survey of India, Nagpur.
11. After arguing on the above five propositions, Shri Merchant also contended that the appellants have taken precautions to ensure that the goods imported are covered by OGL entry by getting samples tested and obtaining the opinion of Dr. Sethna before hand and also by getting the certificate from the surveyors of Italy and also the certificate from the suppliers. On the basis of these documents, they declared the product as 'other than marble'. Hence no mala fide can be attributed, since the appellants were under bona fide belief that the goods imported are 'other than marble' and could be imported under OGL. The penalty imposed in this circumstances is totally unwarranted apart from the fact that it will cause undue hardship. He, therefore, requested that the order of the Collector may be set aside and the goods may be allowed clearance without any fine and penalty.
12. Shri Sethna, the learned Sr. Counsel, on behalf of the department contended as below : The question involved in the appeal is one relating to interpretation of the term 'Marble' figuring against Sr.No. 62 of Appx. 2 Part-B of AM 1988-91. Items listed in Appx. 2 are restricted items, which cannot be imported without a valid licence, particularly marble is an item of luxury consumption used by the affluent people and hence in that context any interpretation of the term 'marble' figuring in the aforesaid appendix should be construed. He urged that the interpretation of the term figuring in the restricted and banned list is to be made in the context of the Policy background viz. utilisation of foreign exchange for the essential purpose. In this context, he also referred to Maxwell on Interpretation of Statutes and contended that it has been clearly stated that any interpretation that aids to carrying out the objective of the legislature rather than the one which may result in enabling evasion of the law should be preferred. It was his submission that the objective of the legislature in including marble under restricted list is to discourage import of such expensive items of ultimate luxury consumption for which the country does not have adequate foreign exchange. He, therefore, sought to rebutt the argument of Shri Merchant that the term 'Marble' should be given the restricted and technical meaning. The item 'marble' is a restricted item and any interpretation of the term 'marble' in technical sense, which facilitates free import of other similarly placed items of luxury consumption like travertine, ecaussine and are excluded from Appx. 2 Part B merely on the ground that they are not technically true marble, would only defeat the very purpose of the Import Policy.
Such a construction is wholly repugnant to the objective of the Import Policy and has to be discarded. It will be absurd to construe that the legislature has restricted the scope only to technical meaning of the term 'marble' and allowed import under OGL like other similarly placed ornamental and monumental stones free of any licence. Such a construction would lead only to absurd results and evasion of law.
According to Maxwell interpretation such a construction is to be avoided. According to Shri Sethna, the word 'Marble' used in the entry necessarily covers all calcareous stones, which have a specific gravity of 2.5 or above. Such stones are hard rock capable of taking polish. He also referred to the Customs Tariff entry 25.15 and stated that the entry unambiguously lays down marble, travertine and ecaussine and other calcareous stones. The only determining factor for inclusion of calcareous stones under this entry is whether it has got a specific gravity of 2.5 or more. He also referred to Maxwell Interpretation of Statutes and argued that the general words take their 'colour' from the specific words. When the entry is properly construed it could only refer to include all calcareous stones of 2.5 or more gravity, which are commercially known as either marble, travertine, ecaussine etc. In other words, these three different words are used to remove doubts as to the coverage of the entry so that a calcareous stone of this type is not sought to be excluded, because it happens to be known as travertine or ecaussine. The term 'ecaussine' refers to only such calcareous stones found at the place of Belgium known by that name.
He, therefore, contended that the words used in the Customs Tariff are from the same family of calcareous stone and there is no justification to suggest that Marble in technical sense goes out of the family of calcareous stones of specific gravity of 2.5 or above. He, therefore, contended that the Tariff Entry does not warrant an interpretation as made out by the learned representative from the other side. Thereafter, Shri Sethna took us through the publication Marmi Italia NI to point out that in narrow sense petrographers and geologists defined the marble as true marbles or pure marbles as a metamorphic, recrystallized calcareous rock. However, commercial definition of marble is wider and has become a part of common usage. He also pointed out that this publication also recognises that the marble is a term with many meanings. Commercial definition of marble as given in the publication covers polishable, decorative rocks, a category which largely comprises those minerals with a hardness. Apart from the true marble, there are numerous other rock types, the calcareous rocks, the dolomites, the polishable, calcareous breccias and the calcareous alabasters, the serpentines and ophicalcites.
The Tariff Entry however, only seeks to cover calcareous stones of a specific gravity of 2.5 and above and if a stone comes within the technical competence of this specific gravity and is known commercially as marble, it would be covered by the restriction in the Import Policy.
Referring to the book of materials and technology, he pointed out that Italy is the most important source of white marbles which are homogeneous or show a pattern of blue, grey or yellow veins and marble is marketted under various names depending on the situation of the deposit, the colour and the structure. He contended that even if recrystallisation has not taken place, the stones at the most may not be termed as 'pure' or 'true marble'. All the same, such a calcareous stone of specific gravity 2.5 and above, cannot be dismissed as not marble because it is not a pure and true marble. He also contended that the Explanatory Note to HSN, which is internationally recognised and can be relied upon also, refers to marble as 'often crystalline' thereby emphasising that the requirement of re-crystallisation is not the decisive factor to understand and delimit the scope of 'marble' in the Tariff entry.
12A The learned Sr. Counsel also referred to another entry in Sr.No.53 of Appendix 2 of AM 1988-91 Policy covering 'Gold in any form'. It is a matter of common knowledge that import of gold is not permissible. For interpretting such an entry, it is not possible to go into any specification as to whether it is pure gold or lower purity gold in various forms. So long as it is recognised and understood in the trade parlance as gold, it should be construed as covered by the entry.
Adopting the same analogy in this case, when the entry reads marble it is not necessary to adopt technical definition of marble, which is applicable to true and pure marble. The entry should be construed as covering impure marble, which has not reached the stage of recrystallisation to the desired extent. If the policy was to restrict to only technically pure marble, the expression used in the entry would have been 'Metamorphic crystalline calcareous rock' and not the expression 'Marble'. It is an admitted fact that the imported goods are intended for making tiles to be used in buildings and they are used as marble. It is also not disputed that they are calcareous rock of specific gravity of 2.5 and above. Hence, such a stone is squarely covered by entry against Sr.No. 62 of Appx. 2 Part-B. He also referred to the judicial pronouncements to support his plea that the entries in the absence of any specific definition are to be understood as they are known in the Trade or Commercial Parlance. He also referred to the decision of the Supreme Court reported in AIR 1967 (SC) page 1454 (Commissioner of Sales Tax v. Shaswanth Singh) .He pointed out that the Supreme Court in this case have specifically laid down the criteria for applying the trade parlance. In this case, the question involved is whether coal or charcoal is one and the same. Though coal is technically understood as a mineral product, while charcoal is manufactured by human agency from products like wood and other things, the Supreme Court adopted the popular meaning and held that coal would be covered by the term coal. The conclusion reached by the Supreme Court is that if a statute contains language which is capable of being construed in a popular sense, such statute is not to be construed according to the strict or technical meaning of the language contained in it, but is to be construed in its popular sense i.e. in the sense in which people conversant with the subject matter understand it. He also sought to rely on the judgment reported in 1988 (35) ELT 3 (S.C.) in the case of Asian Paints Bombay High Court division Bench and argued that in both these cases, it has been held that even if there had been differences in specification between the product in question and the product specifically enumerated in the Tariff entry, if the same is commercially understood and held to be falling within the scope of Tariff Entry, it should be construed accordingly. He also referred to the decision of the CEGAT reported in WRB wherein the Tribunal have held that for interpretting the scope of the entry in the Tariff, it is not only the material contained which is relevant but also its function and how it is understood in Trade Parlance. He countered the arguments of Shri Merchant that only technical definition is to be applied by saying that the citations made by the other side relates to the interpretation of Central Excise Tariff item 15A(1), which talks of various chemical terms like poly-condensation, polyaddition, polymerisation etc. and only in that case, the Court have held that scientific definition is to be applied and not commercial parlance. He also refuted the contention of Shri Merchant that reliance should be placed only on ISI. ISI also talks about quality products, and in that context the definition of 'marble' has been given for a quality marble.
In that context, the ISI definition should be referred to as a guideline, for getting ISI markings. Merely, because it fails to get ISI markings, it cannot be dismissed as falling outside the purview of the term marble especially when it is commercially identified and understood as marble. In this context, he sought to rely on the judgment reported in (Madras High Court) and 1988 (21) ELT 532. He, therefore, argued that merely because, the marble does not come upto ISI standard, it cannot cease to be marble when it is commercially understood and identified as marble. He also cited the decision reported in 1982 ECR 271 D Bombay and argued that the department should not indulge in the niceties and technical distinctions in the matter of classification.
13. On the question of redemption fine and liability to the penalty, Shri Mondal, the learned Sr. Departmental Representative contended that this is a deliberate attempt for importing the luxurious articles spending precious foreign exchange. The licences issued for the import of such items carry the premium of 200% and the margin of profit is about 300%. Viewed in this context, the quantum of fines and penalty imposed are not excessive and does not call for any interference. He also cited the decision of the Delhi High Court reported in 1987 (29) ELT 753 (Del.) in the case of Jain Exports Pvt. Ltd. to point out that when there is an illegal transaction of import, the fine in lieu of confiscation cannot be so exercised as to give a bonanza of profit.
14. In reply, Shri Merchant referred to the decision of the Tribunal reported in 1987 (29) ELT page 975. He contended that if the expression 'Marble' is construed in the way the other side seeks to envisage then all other expressions viz. travertine, ecaussine, alabaster and all other calcareous stones become nugatory... All the expressions have been spelt out clearly in the explanatory notes giving separate meaning to each of them. If the Heading 25.15 is to be read as a whole, then it would be evident that marble is distinguishable from other calcareous stones inasmuch as all sedimentary limestones and rock are segregated and separated from marble. Hence, he pleaded that the trade meaning given in the commercial parlance as relied upon by the other side cannot be accepted. Marble including travertine, ecaussine etc. cannot be inducted into the term marble, especially when it is distinctly and specifically mentioned. He also pleaded that none of the test reports indicates that the item imported is homogenous or opaque. The test reports are silent in this respect and the report of the Geological Survey of India is also in their favour. There had been no mala fides on their part. They had taken all precautions to ensure that the item is falling within the purview of OGL, before import and hence imposition of high fine and penalty is not called for.
15. After hearing both the sides and perusing the available records, we find that the arguments advanced by both the sides cover the following main issues, which we propose to identify and deal with in the light of the arguments advanced by either side : (i) Whether the term 'Marble' appearing against Sr.No. 62 in Appx. 2 Part-B of the Import and Export Policy AM. 88-91 is to be interpreted in its true and technical sense and for its purpose geological and petrological definition only should be adopted; (ii) If it is held otherwise, for understanding the commercial parlance, is it permitted to adopt a view comprehending all limestones and hard calcareous stones, which can take polish or whether the definition given in the IS specification is only required to be adopted; (iii) Having regard to the distinct and specific mention of various terms viz., marble, travertine, ecaussine and other calcareous stones in the Tariff Entry 25.15 is it permissible to take a view that any calcareous stone having specific gravity of 2.5 and above be called marble, notwithstanding the fact that it is not a metamorphosed crystalline product.
16. Before considering these issues in details in the context of the arguments advanced, it would be necessary for us to set out certain facts, which are not disputed by either sides : "Slabs of Calcareous stone - Rough slabs of Calcareous stone (other than Marble)." They produced the invoice dated 2-12-1988 which quoted proforma invoice telex of the appellants and described the item as 'slabs of calcareous stone of 2 CMS Thick'. In the certificate given in the invoice, it is mentioned that merchandise is of Italian origin, and contents are true and authentic. When questioned by this Bench, with regard to the proforma invoice and the L/C, referred to in the final invoice, the appellants, during the hearing produced the copies of the same. On going through the proforma invoice, the description given therein is found to be slabs of calcareous stone of 2 CMS Thick. On going through the L/C opened through the Union Bank of India for this consignment, it is observed that the same has been opened for the import of slabs of calcareous stone as per the proforma invoice. Thus from the aforesaid documents, goods sought to be imported are found to be of general description of calcareous stone of 2 CMS thick. The goods under import are found to be having the specific gravity of 2.71 as per the chemical examiner's report, which is not disputed. They also agree that the goods are covered by Customs Tariff Entry 25.15 being calcareous stones of specific gravity of 2.5 and above. It is reported that the appellant's firm is a small scale industry engaged in the processing of stone slabs and the stones imported are for manufacture of tiles which are marketted. It is also not disputed that these tiles are similar to marbles and are used as marble tiles for building construction. [It is to be pointed out that no documents from either side have been produced as to how these tiles are actually marketted by the appellants. However, the appellants do not dispute that they are similar to marble tiles and can be used as marble.] 17. The appellants, in their appeal memorandum, claim that they obtained from the foreign exporters a sample tile of 'Botticino', the calcareous rock proposed to be imported and had the same tested by a reputed geologist Dr. Sethna, who confirmed that the same was not marble by his report dated 13-10-1988. In view of this fact, it is claimed by the appellants that they had taken reasonable precautions to ensure that the offending goods are permitted under OGL. It is also urged by the appellants that the Italian book 'Marmi Italta' indicated that the Botticino varieties are covered under Polishable calcareous rocks and not under true marbles (Re-crystallised calcareous rocks). It is also contended that the appellant specifically placed an order for calcareous stones (other than marble) and also asked the exporter to certify that the goods are not marble, which the Exporter has also done. Over and above, the appellants have also obtained a certificate dated 6-12-1988 from Gianni Baigini a surveyor registered with the Chamber of Commerce, Carrara and a specialist for stones, who, after checking the consignment loaded in the containers, certified that they are calcareous stones other than marble. Accordingly, they have declared the imported item in the B/E as calcareous stone slabs other than marble.
18. In the context of the documents relating to imports made available to us, it is necessary for us to go through the claim made by the appellants referred to in the preceding para. The documents viz.
proforma invoice, L/C, final invoice referred to only import of calcareous stone of 2 CMS thickness. There is no mention in these documents about the term 'Botticino' calcareous rocks, the sample of which was obtained before hand and tested by Dr. Sethna. Hence, from the documents relating to import we are only to take that the goods imported are calcareous rock of 2 CMS thick which on arrival and on test were found to be of specific gravity of more than 2.5. This fact is not disputed. In the context of the aforesaid clear factual position, the issues are now required to be considered in greater detail.
(i) Whether geological and petrological definition only should be adopted : As seen from the entry in ITC Policy Sr.No. 62 Appx. 2 Part-B reads as below : It is observed that onyx is also a variety of marble as seen from the Explanatory Notes given against Heading 25.15, whereas granite and other monumental or building stone is covered by T.I. 25.16 of CTA. It is also observed that the entry in the ITC Policy covers the products occurring in T.I. viz. 25.15, 25.16.
19. It is not disputed that marble is a hard clacareous stone of a specific gravity of 2.5 or above. The point of dispute is that Tariff Entry 25.15 specifies marble, travertine, ecaussine and other calcareous monumental or building stone and alabaster, whereas the ITC individually specifies only marble. Hence, what is technically known as marble is geologically and petrologically sought to be restricted. In other words, for interpretting the term 'marble' it is urged that only the technical definition of marble is required to be adopted. According to the technical definition, it has to be metamorphosed crystalline product, which is not the case in regard to the imported goods. We have carefully considered this argument. We observe that Tariff Heading 25.15 covers a family of calcareous monumental or building stone of an apparent gravity of 2.5 or more. This is the genous. There are different forms from the genous viz. marble, travertine, ecaussine etc.
The appellants have contended that the meaning given in the Explanatory Notes should not be inducted in the Tariff Entry because it does not have legal backing unlike Section Notes or Explanatory Notes, which are adopted in the Tariff Entry. Going by the appellants' own arguments, if we choose to ignore the Explanatory notes given to marble, then we are left with a situation where the term 'marble' is to be construed without any definition or explanation. When such a situation is posed, it is well settled law that only commercial parlance is required to be adopted. The judgment cited by the learned authorised representative Shri Merchant that the technical definition is to be preferred, has been in the context of peculiar wording of Central Excise Tariff entry 15A(1), where the different chemical process have been specifically mentioned in that item itself. In this case, the entry in the ITC Policy refers to only marble without any definition or explanation.
Even in the Customs Tariff read with Chapter Note and Explanatory Note, no explanation or definition for marble is forthcoming. Only in the Explanatory Note, it has been mentioned as below :- "Marble is a hard calcareous stone, homogenous and fine-grained, often crystalline and either opaque or translucent. Marble is usually variously tinted by the presence of mineral oxides (coloured veined marble, onyx marble etc.) but there are pure white varieties." Hence, if we are to adopt the argument of the appellants that the explanatory notes do not have a legal binding and cannot be adopted, the answer is quite simple viz., that we should go only by commercial and trade parlance without going into the technicality of the term.
However, in fairness to the appellants, they have made this only as an alternative plea. They have contended that even in the Explanatory Notes, it is specifically mentioned that the product should be often crystalline. The word 'often crystalline' according to them means repeatedly, or time and again or frequently crystalline and hence any stone which is not crystalline cannot be called as marble even as per the Explanatory Notes to the Tariff Entry. We have carefully considered this argument which boils down to the interpretation of the words 'often crystalline'. The department have held that the words 'often crystalline' means 'may or may not' or 'need not always be'. The appellants, however, contended that it is reflecting the character of the stone and has to be necessarily crystalline. We observe that the words 'often crystalline' refer to the normal feature of the stone.
However, there could be calcareous stones other than crystalline for being termed as marble. If we are to accept the argument of Shri Merchant that it should always crystalline then there is no need for using the word 'often' in the Explanatory Notes before the word 'crystalline'. Hence, we are unable to pussuade ourselves to the argument of Shri Merchant that 'often crystalline' should be construed as 'always crystalline' or 'repeatedly crystalline'. It we go by the Explanatory Notes, it is observed that any hard calcareous stone, homogenous and fine-grained either opaque or translucent can be construed as marble and it is normally crystalline but exception can also be there. This is how the Explanatory Note can be construed and not in the way urged by the appellants. Hence, the argument that only metamorphosed crystalline nature of the stone is the deciding feature of marble to distinguish from other calcareous rock does not carry weight.
20. Though the items figuring in Import Policy are not defined in the Policy itself, they are required to be read in the context of the Customs Tariff Entry. This fact is not disputed by either side. But when no definition or explanation is given in the Tariff Entry itself and the Explanatory Notes do not have any legal backing, then according to well settled law on this subject, only commercial parlance is required to be adopted to understand the meaning as to how these are understood by the people conversant with the items in question.
Technical niceties are not the relevant factors, when the Tariff Entry is not defined in such technical or scientific terms as in the case of Central Excise Tariff Entry 15A(1).
21. Apart from the aforesaid consideration, we are now interpreting the item figuring in the restricted list of ITC Policy. It is an accepted fact that the ITC Policy is intended to ensure canalising the precious foreign exchange for the essential purposes in regard to the import of goods. In that context of the objective, the entry is required to be interpreted. If we are to accept the proposition made by Shri Merchant that what is technically known as marble only is restricted, then all other calcareous stones of the same family which are similarly placed and which have identical use would be deemed to be placed under OGL, while only technically pure marble is sought to be restricted. Such a view is repugnant to the Policy itself and cannot be adopted. Hence, when the Policy makers have chosen to place marble in the restricted list, it is obvious that all similarly placed monumental or building stone belonging to that family is also restricted. It is also observed that stones belonging to this family are also known by the different names depending on the place of their occurence. For example, ecausine is extracted at a place known by name Ecausine in Belgium. Calcareous rock obtained in Egypt is known as alabaster. Hence, merely because of their place of occurence, if they are known by different names and has certain characteristics, they cannot be construed as different from marble. It is well settled rule of interpretation that any interpretation sought to be made, which would defeat the purpose of the legislation, should be rejected.
22. In the adjudication proceedings, the Collector has taken into consideration the opinions given on the samples by the Indian Bureau of Mines, Udaipur, Geological Survey of India, Nagpur and Director, Mines and Geology Department, Government of Rajasthan, Udaipur. According to the appellants, the report from the Geological Survey of India, Nagpur categorically says that the sample cannot be termed as marble. It is observed from the discussion in the report that the analysis has been done only on the basis of scientific and petrological consideration.
This is evident from the report, which reads as follows: "The Section of the rock shows typically bimodal, particularate texture. The packing is mud supported. The allochem components include mainly polistal material and spares, well preserved shell (gastropod?), fragments, polletal matter shows elliptical to subsphercidal shapes and lack of internal organisation with submicroscopic calcitic (2)" granules. An outer rim of dark micrite is characteristic. Thus they appear to be Allochem micrites. The initial mud part occurs as spar consisting of mosaics of calcite grains which also fill up void and vacant shell spaces as well as a few fracture planes.
The rock is an allochemic (Pelmicritic) limestone, it cannot be termed as a marble".
23. As we have observed that since the term 'marble' cannot be construed on geological and petrological consideration, but has to be construed in commercial parlance, we are unable to place much reliance on this report. The other opinion given by the Indian Bureau of Mines states the technical definition of marble to the effect that geologically (petrologically) marble is recrystallised (metamorphosed) limestone. Ordinary limestone is a sedimentary rock but once it is metamorphosed i.e. once it has undergone recrystallisation, it is turned to marble. It also says that the usage of the term 'marble' has a much wider application. In the commercial circle, any limestone which is sufficiently hard and coherent to take a good polish and which can be cut into desired size free of cracks can be called as marble. He also referred to American Society for Testing Material and also Indian Standard Institution in regard to term 'marble'. On the specimen sample, he observed that the rock is cryptocrystalline, fine grained, mildly metamorphosed with few bigger grains of calcite. The specimen is hard and compact and is capable of being cut into slabs/blocks of desired size and can take a good polish. He has also given his opinion on the specimen under reference as marble as per commercial definition.
On this report the appellants have contended that since it is an untested report much reliance cannot be placed. Even according to the author of the report, if confirmation is required on scientific basis, the department was advised to approach the Director, Ore Dressing Laboratory Indian Bureau of Mines, Nagpur. As we have already observed that the question of going into the technical and scientific basis for construing the term 'marble' is not warranted in the context of the entry in the Import Policy, it is not required of us to dismiss this report as of no significance. However, while taking cognizance of the report, we note that the specimen could be termed as 'marble' as per the commercial definition but not technically.
24. Now coming to the report by the Director, Mines & Geology Department, the appellants contended that recrystallisation has not taken place and the opinion given by the aforesaid authority is that the rock sample has been identified as 'fine grained cherty limestone'.
On going through the report, it is also observed that it takes good polish and can be used as marble. He also states that technically marble is a product of thermal metamorphism of limestone in which recrystallisation takes place and silicate minerals are also produced.
He also gives the petrological definition of marble as given in IBM publication 'Marble in India' 1983. He, however, contends that in commercial parlance the term 'marble' has a wider application.
Commercial marble is any crystalline rock composed predominantly of calcite. He also refers to ISI-1130-1969.
25. From this report, we observe that the author is positive that in the sample recrystallisation has not taken place. All the same he observes that it takes good polish and can be used as marble. He also observes that commercially the term 'marble' has been applied to any stone, other than those known in trade as granite, that has a pleasing appearance and will take a polish. Hence, even from this report, it is observed that though technically this cannot be called pure marble, it passes the commercial test for being called 'marble'.
(ii) If it is commercial parlance whether the ISI alone is to be adopted: The question now required to be considered is whether the information given regarding commercial parlance by the aforesaid authorities is to be preferred to the definition given in the ISI standard. Shri Merchant contended that if commercial parlance is to be adopted, it should be only ISI and nothing else. In this context he cited the judicial pronouncement. We have carefully looked into the judgment. On the other hand, Shri Sethana, the learned Counsel contended that if the classification on the basis of facts and trade parlance is clear, ISI specification need not be examined for this purpose and in that context he cited the judicial pronouncement to support his views. On going through the ISI specification it is observed that it is a specification for marble (blocks, slabs and tiles). As per the ISI, marble has been defined as below : "Marble are metamorphic rocks capable of taking polish, formed from the re-crystallization of limestones or dolomitic limestones and are distinguished from limestone by even visibly crystallined nature and non-flaggy stratification." 26. From the aforesaid definition it is observed that the standard recognises marble as metamorphic rocks capable of taking polish, formed from the re-crystallization of limestones or dolomitic limestones and are distinguished from limestone by even visibly crystallined nature and non-flaggy stratification. All the same in the note given under definition, it is mentioned that rocks, such as serpentine are also polished and used in trade as marble. This gives an indication that in the commercial parlance the term 'marble' is known in its wider perspective rather than restricted meaning given in the definition.
Hence, we are not able to agree with Shri Merchant that only the definition part of the marble is to be taken into account for understanding the trade parlance and not the note thereof. It is also observed that the ISI itself recognizes that the physical properties of the marble vary considerably from place to place. Even in the same place, there is large variation in the quality and shading or overall design which necessitates proper selection in the procurement of marble. The object of the ISI is also laid down in para 0.5 as below : "This standard has, therefore, been formulated to provide guidance with respect to quality and dimensions of marble (slabs,blocks and tiles) From the aforesaid object of ISI, it is evident that the definition formulated is with regard to the quality marble where the marble can be marketed as a product conforming to the ISI specification. In this view of the matter, we are of the view that merely going by the definition given in the ISI specification would not lead to correct commercial understanding of the term 'marble', especially when Experts in their view have identified this product commercially known as marble.
Normally, we would have gone by the definition given by the ISI, but for the fact that a note under this definition has been given to the effect that serpentine are also polished and used in trade as marble and also the standard is formulated with respect to quality marble. In this context, we seek to rely on the decision of the Tribunal reported in 1985 (21) ELT p. 532 (Tri), wherein it has been held that even if the product is not manufactured to the standard quality and does not conform to the ISI specification, that does not, however, make it a different product. Following the ratio of this decision, we are of the view that though the item imported may not be quality marble, which could be marketed as a product conforming to ISI specification, it cannot be dismissed that it is not a marble on this ground. From the Italian Publication produced before us, it is observed as below: "Petrographers and geologists agree on the definition of marble as a metamorphic, recrystallised, calcareous rock, this is a scientific definition which includes only a narrow category of ornamental rocks, often referred to as 'true marbles' or 'marbles in the proper sense'. The commercial definition of marble is .wider and has become apart of common usage (emphasis supplied).
In the Publication of Materials and technology, it is mentioned that marble is marketed under various names, depending on the situation of the deposit, the colour and the structure. In the geological sense, the name 'marble' is limited to metamorphic carbonate rocks. However, in practice, the name is also used for sedimentary carbonate rocks (limestone and dolomite), which can be gloss-polished.
27. From the aforesaid publications, it is evident that while technically and geologically definition of marble is narrow and restricted, in the commercial parlance, it has got wider meaning and it covers sedimentary carbonate rocks which can be glosspolished. Shri Merchant has argued that what is imported is only a sedimentary rock, which is capable of taking polish. He urged that only marble of crystalline nature is sought to be restricted. This view is not acceptable to us because of the fact that restricted geological or petrological definition is not warranted in this case for reasons already discussed earlier.
(iii) In view of the specific and distinct mention of various terms in the Customs Tariff, is it correct to take a view that any calcareous stone having specific gravity of 2.5 and above be called 'marble'.
Tariff Heading 25.15 mainly seeks to cover all varieties of calcareous stone having specific gravity of 2.5 and above. In that group, marble, travertine, ecausine have been referred to. Once it is admitted that it is calcareous rock of specific gravity of 2.5 and more, it comes in this family. The question to be adopted, as we already indicated, is the commercial parlance. In the absence of specific definition given in the Customs Tariff Or in the ITC Policy, if we go by the commercial parlance, as expressed by the Experts, the item passes the test of marble as per the commercial parlance. We are also unable to appreciate how the goods can be imported with a generic description of calcareous rocks. The specific variety of rock normally would also have been mentioned. The appellants' claim is that Botticino variety of sedimentary rock is imported. But this is not supported by the import documents, as we have already observed earlier. The burden is on the appellants to establish that the Botticino variety is imported and it is not commercially known as marble. This burden has not been discharged. Moreover, no literature or documentary evidences giving the detailed specification of Botticino variety have been produced by the appellants. In the circumstances, we have no other alternative but to conclude that the goods imported have been given general description of calcareous stones slabs, which are 'marble' known in the commercial parlance. In this case admittedly, the calcareous nature of stones are used in the place of marble. Hence, we are of the view that the entry in Appx. 2 Part-B would cover the stone of this kind especially when they are commercially identified as marble.
28. Thus, while we positively hold that the item imported passes the test of commercial 'marble', we also cannot dismiss the view held by the Collector as perverse or malafide. In this context, we would like to draw support from the decision of the Supreme Court reported in 1984 ECR 127 S.C. in the case of the Collector of Customs, Madras v. K.Ganga Setty. Though the Supreme Court decision is not cited before us, we consider this as relevant especially, in a case where the findings of the authorities are sought to be interfered with. This case relates to import of Feed oats and the question was whether they can be construed as 'fodder' or 'grain'. The Supreme Court held as below: "If there are two constructions, which an entry could reasonably bear, and one of them which was in favour of Revenue was adopted, the Court has no jurisdiction to interfere merely because the other interpretation favourable to the subject appeals to the Court as the better one to adopt.
In the present case it could not be contended that uncrushed oats did not answer the description of "grain" and therefore the decision of the Customs authorities holding that the oats imported fell within item 32 could not be said to be a view which on no reasonable interpretation could be entertained. In other words, the conclusion or decision of the Customs authorities was rationally supportable....The mere fact therefore that a grain is capable of being used as horse or other cattle feed does not make it "fodder" excluding it from the category of grain to which it admittedly belongs. The decision of the Assistant Collector and of the Collector on appeal holding the oats imported by the respondent to be grain cannot therefore be characterised as perverse or malafide and in the circumstances we consider that the learned judges of the High Court erred in interfering with the order of the appellant".
29. In this case, while going by the ratio of the aforesaid judgment, even if the type of stone imported by the appellants is technically known as marble and even if it fails to satisfy the definition of quality marble as per ISI specification, so long as it is used as marble and is also known in wider context of commercial parlance as marble, that finding cannot be construed as perverse or malafide calling for interference by us, so long as we are clear about the object and purport of the Import Policy in specifying the item 'marble' in the restricted list.
30. In this view of the matter, we reject the contention of the appellants that the impugned item could be imported under OGL and could be allowed clearance.
31. Now coming to the question of the quantum of redemption fine and the penalty imposed, it was argued by Shri Merchant that the appellants have taken reasonable precautions to ensure that the imported item is permissible under OGL and is not figuring in the restricted list. We have carefully considered this argument. It is observed that when the appellants have chosen to get the sample tested beforehand by Dr.
Sethna and also claimed to have taken precautions to get the confirmation and certificate from the foreign supplier that the item imported is not 'marble' they have not chosen to go to the Chief Controller of Imports & Exports., New Delhi for obtaining the authentic clarification, which even as per the provisions of the Import Policy, is binding on the departmental authorities. In a situation like this, when the appellants have gone in for a large scale import of these stones, which admittedly, are imported under generic description of 'calcareous stones slabs' occurring in the family of marble covered by Tariff Entry 25.15, any person importing such a stone would normally take precaution to get the authentic clarification from the CCI & E as to whether only technically known marble is prohibited and other similarly placed calcareous polishable stone having identical and same use, are allowed under OGL. It is rather strange that when the appellants were in a vulnerable position of importing such stones had not chosen to approach the appropriate authorities beforehand for clarification. When this question was posed to the appellants, they had no answer excepting pleading that the department had also not sought for clarification. We, no doubt, agree that the department also could have sought for clarification but the burden is here on the appellants to establish their claim under OGL, especially when they claimed to have taken prior precautions, this fundamental precaution seems to have not been taken. However, taking note of the fact that the item imported does not pass technical/petrological test of true marble on account of which the appellants claimed to have had a bonafide belief that these goods are allowed under OGL, we are inclined to extend some leniency to the extent warranted.
32. While dismissing the appeal and confirming the order of the Collector, we would like to reduce the penalty amount from Rs. 10,00,000/- to Rs. 5,00,000/- (Rupees five lakhs). But for this modification in the quantum of penalty, the appeal is otherwise rejected.