Judgment:
1. This appeal is directed against the order-in-original No.S/10-72/89-Gr.I MC114/89 passed by the Collector of Customs on 8-6-1989 confiscating the consignment of 49896 kgs imported as "seeds of Almonds non-peeled quality" under Section 111(d) of the Customs Act, giving option to pay fine of Rs. 18.00 lacs in lieu of confiscation and also imposing personal penalty of Rs. 2.00 lacs under Section 112 of the Act on the appellants.
2. The appellants imported 2200 bags containing 49896 kgs of Soft Shell Almonds non peeled quality, and claimed clearance against REP import licence dt. 24.7.87, issued under Export Product Gr-G2(i)(a) for fresh fruits, vegetables and flowers. The import was claimed against entry (d) in Column 4 of G2(i)(a) as "Seeds". The authority however found the goods as not importable under the said licence, as the goods imported were "soft shell Almonds" which were direct consumer agricultural product ready for consumption as "dry fruits". Further, the almonds were covered by entry 121 of Appendix 2 Part B of AM 1985-88 Policy, and in terms of para 5 of Appendix 17 of the same Policy, they could not be imported as seeds. Moreover, the imported goods were not related to Export Product Gr of G2(i)(a) entry and required specific licence under para 181(3) of the Policy. A show cause notice dated 16.3.89 was accordingly issued to the appellants, to the effect that the import was in contravention of the provisions of Section 3(1) of the Imports and Exports (Control) Act read with C1.3 of the Import Control Order, 1955, and hence liable to confiscation. The appellants submitted their written reply on 17.3.89 and pleaded that goods imported were "seeds" capable for germination, and cannot be considered as consumer item since they cannot be consumed without removing the shell. They also pleaded that Almonds were generally used as raw material for other product. They also raised a plea that Almonds are not specifically mentioned in Appendix 2 Part B or Appendix 3 Part A, and hence, it cannot prevail over generic description "seeds" in Appendix 17. Further pleading that relation of import product to export product is not relevant for admissibility of the import, it was pleaded that "Almonds" were classifiable as "Nuts". It was also contended by them that REP licence produced by them was for the Import Policy period 1985-88, and it was only in the Import Policy 1988-91 that the entry "Seeds excluding dry fruits and oil seeds" has been made, meaning thereby that the import was permissible during the earlier period. The Collector of Customs however negatived the contentions of the appellants principally relying upon the decision of CEGAT South Regional Bench in MM Exports v. Col-lector of Customs, reported in 1989(39) ELT 482 (Tribunal) which, according to the Collector, had similar set of facts, and which applied on all fours to the present case, and where it was held that import of almonds in shell was not permissible as "seeds". He also relied upon the clarification given by CCI&E to the effect that "Almonds" are consumer item falling under Appendix 2B. He also relied upon the ratio of the Delhi High Court Judgement in Jain Exports v.Union of India 1987(29) ELT 753. Relying upon the Supreme Court judgement in A/A Indo International Industry v. Commissioner of Sales Tax (1981 ELT 325) he also held that the meaning as understood in common or commercial parlance ought to prevail. He further held that under the Customs Tariff, which is based on HSN Code, "Almonds" were classified as "Edible fruits and nuts" under Chapter 8, and hence the same could not fall within "Seeds" for which the licence under question was issued. He also held Almonds as consumer item and passed the impugned order.
3. Mr. S.D, Nankani, the learned advocate for the appellants, submitted that though the question here is very identical to the one before the CEGAT - SRB in MM Exports v. Collector of Customs, 1989(39) ELT 482 (Tribunal), there are some distinguishing features, which would make the ratio of the said decision not applicable here. In his submission, the main point of distinction is the fact that in the licence issued in the instant case, there is a specific endorsement that the conditions Nos. 1,2,3 printed over-leaf, the licence, w rich dealt with applicability of Trade Policy existing, have been deleted, and hence, the provisions of the Policy, which have been taken as the basis in the order Re. MM Import cannot be made applicable. He submitted that here the only point that has to be considered is whether the licence permits import and not whether Policy allows it. In support of his said submission, Mr. Nankani cited the decision of the Bombay High Court in Bipinchandra Vrajlal Ghelani v. Union of India, 1987(31) ELT 694(Bom).
He also submitted that if the licence permits import, the customs authorities are bound to clear the goods and for this purpose, he placed reliance on the decision of the Bombay High Court in Lokash Chemical Works v. M.S. Mehta 1981 ELT 235 (Bom). Mr. Nankani then submitted that as per the licence, the appellants were entitled to import "seeds" and then submitted that all the nuts are seeds and relying upon the decision of the Calcutta High Court in M.D. Agarwalla and Ors v. Director of Entry Tax, 1978(41) Sales Tax Cases 258, submitted that Almonds in shell are nuts. According to him, though the decision of the Calcutta High Court is in different set of facts and legislative enactment, the ratio of the said decision would stand attracted here. He also cited before us, Para 768 of the Condensed Chemical Dictionary 9th Edition, p.42, of the plastic Index and p.226 of the Green Kingdom to show that the Almonds are nuts and seeds. He submitted that, when Almonds in shell which are recognised as seeds, and which have been even otherwise established to have capacity to germinate, have to be accepted as seeds for the purpose of import under the licence in question, and recourse cannot be had to any residuary clause 4. Mr. K.M. Mondal, the learned SDR, however, supported the findings of the adjudicating authority and submitted that the point at issue has been squarely covered under the decision of CEGAT, South Regional Bench, in Re: MM Export (supra). He, without conceding, further submitted that even assuming that because of deletion of some conditions from the licence, which prevents applying the Policy and requires only terms in the licence to be considered, then also Almonds in shell are not importable under the licence which permits import of "seeds". He submitted that the licence is issued under the previsions of Import and Export (Control) Act, and Import (Control) Order 1955.
Inviting our attention to Clause 3 of the Order, he submitted that as per the said clause, for the purpose of import of an item, the description of the goods given in the licence should conform to the description given in Schedule I to the said Order. He then referred to the note on the top of the said Schedule I, to the said Order, and submitted that as per the said note, the scope of interpretation of an item given in the said schedule would be the same as the one given in the Schedule to the Customs Tariff Act 1975 as amended. He then referred to Ch.8 sub-heading 08.02 of the Schedule I of the Import Control Order and submitted that item specified therein is "other nuts, fresh or dry. Whether or not shelled or peeled". Referring to the Schedule to the Customs Tariff Act, he submitted that the same description is given under sub-heading 08.02 of Ch. 8 and then pointed out that Almonds in Shell, are shown under heading 0802.11. He submitted that under Customs Tariff Act, Edible Fruits and Nuts fall within Chapter 8 of the Schedule, whereas seeds fall within Chapter 12.
As pleaded by him, the Customs Tariff is based on the format provided by the Customs Co-operation Council and submitted that the Explanatory Notes of CCCN should be given due consideration, and for that, he cited in 1986(7) ECR 379, and then took us to page 45 of the Explanatory Notes of Vol. 1 where Almonds are included as nuts. He then took us to page 65 of the said Notes, and referred to item 12.01, where "Almonds" are specifically excluded from "seeds". He further submitted that the appellants have, for the purpose of import, classified the Almonds in shell as seeds falling within Chapter 12 whereas, for the purpose of payment of duty, they claim applicability of Ch.8. He relied upon the decision of the Bombay High Court in Greaves Cotton & Co v. Union of India, 1989 (43) ELT 263, and submitted that classification of goods cannot be made differently for the purpose of ITC and Customs duty. He also urged that, what is to be considered is the predominant use, and for that he cited the decision of Ashish & Co v. Collector, 1986 (25) ELT 115 (Tri).
5. From what has .been urged before us, the first point that has to be examined is whether the Almonds in shell are seeds, importable under the licence as seeds.
6. Undisputedly the import licence in question is issued under the provisions of Imports & Exports Control Act, and the provisions of Import (Control) Order, 1955 as existed on the day of licence, governs the licence. Sub-clause (1) of Clause 3 of the Import Control Order reads: "Save as otherwise provided in this order no person shall import any goods of the description specified in Schedule I, except under and in accordance with a licence or a customs clearance permit granted by the Central Government or by any Officer specified in Schedule II." "Note: Each heading number in Column (1) corresponds, to the respective Chapter and heading number of the first Schedule to the Customs Tariff Amendment Act, 1985 as amended on 24.1.1986 and each entry in Column (2) has the same scope and meaning as the corresponding Chapter and heading of the said first Schedule." 8. In the Schedule, heading 08.02 of Ch.8, pertains to "other nuts fresh or dried, whether or not shelled or peeled." Referring to the relevant entry in Schedule to Customs Tariff Act, in Chapter 8, Almonds are specifically mentioned under heading 08.02 with sub-heading 0802.11 being for Almonds in shell, and sub-heading 0802.12 for shelled Almonds. This clearly establishes that under the Customs Tariff Act "Almonds in shell" fall within Chapter 8 of the Schedule. As mentioned above, the same interpretation has to be given for the purpose of interpretation of the provisions of the Import (Control) Order and as such Almonds in shell are not "seeds". With this position being clear, it may not be necessary to seek any further confirmation from any other source. Mr. Mondal has however referred to the Explanatory Notes of CCCN (Vol I) Almonds, where also Almonds are shown as falling within heading 08.01.
9. "Oil seeds and oleaginous fruits" are listed under Chapter 12 of the Schedule to Customs Tariff Act and there Almonds are specifically excluded from the category of "seeds". The submission made by Mr.
Nankani, the learned advocate for the appellant, that the Almonds are also seeds, thus goes contrary to the categories recognised, under the Import Control Order, where, by virtue of what has been discussed above, they fall within Chapter 8 and not in Chapter 12. It may also be observed that mere capacity to germinate, would not automatically make the item as "seeds" for the purpose of Import, and here, they have been specifically excluded from category of seeds for the purpose of their import into India.
10. In view of the above, even going by what is permissible under the licence, and not considering the provisions of the then existing Import Policy, the only conclusion that can be drawn is that Almonds in shell are not importable as seeds, on account of they being not permissible under the Import Control Order.
11. Mr. Nankani, the learned advocate, has referred to several Reference Books as also, a decision of the Calcutta High Court Re: M.D.Agarwalla (supra) to show that Almonds are nuts. What is material for us here is how Almonds in shell are classified for the purpose of import and not how they are botanically known. The reference books cited therefor provide no assistance. The judgement of the Calcutta High Court too, cannot render any assistance, as the same was given, in relation to the provisions of the Sales Tax Act.
12. Though no conclusion is based on that, it is significant to note that in the Bill-of Entry, for warehousing filed, though they have not filled up Column 7, relating to Customs Tariff, in Column 12, relating to CET, they have assessed duty payable under heading 0801.90. In the Central Excise Tariff, the said heading falls under Chapter 8 where the Chapter heading is "edible fruits and nuts". This indicates that even the appellants brand them as suits. It was open to the appellants not to fill in that column, but when they have chosen to classify the item under CET, it leads to show, that even according to them, the item imported is edible fruits.
13. In view of our finding that the licence as it stands, does not permit import of Almonds in shell s seeds, the question whether, the provisions of Policy could apply, and whether the decision of CEGAT South Regional Bench in MM Exports v. Collector 1989 (39) ELT 482 (Tri) and Sun Exports v. Collector 1989(22) ECR 67 would stand attracted, does not survive.
14. However, considering from that angle also, there is no dispute on the point, that if the provisions of Policy are attracted, then the ratio of those two decisions would apply here on all fours and import of Almonds in shell would not be permissible.
16. Sub-clause (5) of Clause 5 of the Import Control Order, 1955 reads thus: "The licencee shall comply with all conditions imposed or deemed to be imposed under this clause." "Every import licence issued under this Policy shall be deemed to have been issued subject to the conditions (applicable thereto) as laid down in the Import (Control) Order, 1955, as amended. These conditions apply to licences in addition to any other conditions imposed on the licence itself." 18. From this it can be inferred that the conditions and prohibitions imposed under the Policy are deemed to have been imposed under Import Control Order, which governs the present licence and when according to the Policy AM 1985-88, Almonds in shell are not importable as seeds, the appellants cannot import Almonds as seeds.
19. Further, for the purpose of import, what is considered is the commercial parlance. CEGAT in its decision in Asltish & Co v. Collector of Customs, 1986 (25) ELT 114 (Tri), has held : "In determining the meaning or connotation of words, and expression describing an article or commodity to be used, if there is one principle fairly well settled, it is that the words or expression must be construed in the sense in which they are understood in trade by dealer and consumer." There is not much dispute over the point that "Almonds" have been universally and commercially ac acknowledged as falling within the category of "dry fruits". Mr. Mondal, cited before us a copy of the News Paper "Economic Times", where prevailing prices of different commodities in the internal major markets are quoted. There also Almonds have been categorised under dry fruit and not as seeds. This reputed economic daily recognises Almonds in shell as commodity known as "dry fruits".American Dry Fruits Stores v. Collector 1986 (25) ELT 975 (Tri), held that Almonds are "consumer goods" as they can directly satisfy human needs without further processing.
21. The Supreme Court has, in M/s Indo Afgan Chamber of Commerce v.Union of India, AIR 1986 SC 1567, while dealing with the import of dry fruits has, amongst others, held Almonds as consumer goods of agricultural origin and not the raw material. The Supreme Court has also held that the same would fall within item 121 of Appendix 2 Part B of Policy AM 1985-88. Though the point at issue before the Supreme Court was little different from the one here, the finding given has considerable application to the facts of the case as well.
22. If the Almonds in shell are thus recognised as dry fruits, the classification has to be based on how they are commercially known and merely because they are capable of germination, they cannot fall within the category of seeds.
23. From the reasons given and also considering the reasonings adopted by the learned Collector in his order, there appears no grounds to interfere with the order of the Collector, holding that the import of Almonds in shell under the REP licence produced, is not permissible.
24. Though it may not be permissible for the customs authorities to examine the legality and validity of the licence, it is certainly within the powers of the said authority to examine whether the item imported is permissible under the licence. The authorities here have precisely done the same, and it cannot be said that they have traversed beyond their jurisdiction.
25. We, therefore, confirm the order of the Collector confiscating the consignment as imported without any valid licence.
26. The Collector has in exercise of his discretionary powers under Section 125 of the Customs Act, given option to the appellants to pay fine in lieu of confiscation. The question is what ought to be the redemption fine. The fine imposed by the Collector is Rs. 18.00 lacs for the goods valued at Rs. 18,30,560.00 of, i.e. nearly 100%.
Considering the prevailing rate, which is Rs. 4800/- to Rs. 5000/- per 40 kgs as indicated in the Economic Times dt. 11.10.1989, the margin of profit for the imported consignment would positively be more than 100%.
However, as the department has not preferred any appeal against the quantum of redemption fine, we cannot consider the aspect of increase in the same. However, we find no justifiable ground to hold the same as unduly harsh or disproportionate.
27. Mr. Nankani, the learned advocate submitted that in similar cases, the redemption fine imposed is much lower than the one here. We have no material available before us to assess as to why the Collector has taken such view in other matters. May be, he may have some cogent reason for the same, Section 125 of the Customs Act, however, invests entire discretion in the adjudicating authority to assess the quantum of redemption fine, and in absence of anything to indicate that he has acted with bias in use of discretion, no interference is called for. No bias or irrationality is shown. We, therefore, find no ground to interfere with that order of the Collector.
28. As regards the personal penalty of Rs. 200000/- it cannot be held that the appellants imported Almonds, bona fide. Total quantity imported leads us to believe that such a huge quantity was not meant to be used as seeds. It can also not be presumed that they were unaware of the view taken by other Collectorates and Tribunals regarding this. We are satisfied that action of the appellants was not a bona fide one and in that case imposition of personal penalty was justified. About the quantum of penalty also, we find no justifiable reason to interfere with the same.
29. In the result, the appeal is dismissed and the order of the Collector is confirmed.