1. The aforesaid appeals are directed against the following orders indicated against each:C/183/88 O/A No. 3998/87 BCH, dated 8-9-1987.CD/668/86 & O/O No. S/10-307/86 A, dated 18-6-1986C/972/87-BOM 2. From the above, it can be seen that the Appeal Nos. 668/86 and 972/87 are against the same order; one filed by M/s. Everest Gems against the order of confiscation and imposition of redemption fine and the other filed by the Collector of Customs under the direction of the Board seeking for determination of the liability on M/s. Everest Gems to penalty under Section 112 of the Customs Act.
3. In these cases M/s. Everest Gems have imported almonds in shell and claimed clearance against the additional licences issued to Diamond exporters in compliance with the Supreme Court directive on the Writ Petitions filed by the Diamond Exporters. These additional licences were sought to be utilised for the import of almonds by M/s. Everest Gems. The facts which are required for the disposal of the appeal can be stated as below : In the case of Appeal No. 183/88, 10 consignments of almonds in shell were imported against L/C opened on 2-12-1985. The goods were shipped on 19-7-1986 and the B/E for clearance were filed on 20-8-1986. In the case of Appeal No. 668/86, one B/E covering import of 880 bags valued at Rs. 5,24,574 was imported against the same L/C dated 2-12-1985. The goods were shipped on 8-2-1986 and the B/E was filed on 25-2-1986.
3. In both the cases, adjudication proceedings were initiated holding that almonds cannot be imported against additional licences issued to the Diamond Exporters and the adjudication proceedings were concluded after the Supreme Court judgment dated 15-5-1986 in the case of Indo Afghan Chamber of Commerce v. Importers of dry fruits including the present appellants, reported in AIR 1986 S.C. 1567. In the aforesaid judgment, the Supreme Court held that Everest Gems are not entitled to import almonds and they are restrained from importing dry fruits during the period 1985-88 under the additional licence granted to them during the Import Policy 1978-79. In view of the aforesaid judgment of the Supreme Court the adjudication proceedings were concluded and in the case of Appeal No. 183/88, the goods were ordered confiscation but allowed redemption on payment of fine of Rs. 5,50,000/- in respect of each of the consignments covered by each B/E. In the case of Appeal No.668/86, the goods covered by one B/E were allowed redemption on payment of fine of Rs. 10 lakhs.
4. M/s. Everest Gems have come up in appeal against the order of confiscation and imposition of redemption fines. The Collector of Customs, Bombay had come up in appeal against the Order No.S/10-307/86-A, dated 18-6-1986, requesting the Tribunal to determine the penal liability under Section 112 of the Customs on M/s. Everest Gems.
5. The main contentions raised by the ld. advocate Shri Madon in favour of the appellants M/s. Everest Gems are as below : He refers to the interim order dated 18-2-1986 passed by the Supreme Court, wherein, the Apex Court have ordered that except in the cases, where irrevocable letters of credit have been opened before 31st January, 1986 and the goods covered thereby, no future imports will be made. It was his contention that in their case the L/C has been opened on 2-12-1985 and was extended on 27-2-1986. Though the date of shipment is after the judgment of the Supreme Court, in one case, their efforts to stop the consignment could not succeed. They were under the bona fide impression that the Supreme Court may allow imports of almonds, where irrevocable L/C has been opened before 31-1-1986 as per the interim order dated 18-2-1986 of the Supreme Court. He, however, fairly agrees that in the final judgment passed by the Supreme Court reported in AIR 1986 S.C. 1567, the Supreme Court have not altered the cut off date earlier fixed by them viz.
18-10-1985. He, however, pleads that the redemption fine to the extent of nearly 200% in both the cases is excessive and they have incurred loss by clearing the goods on payment of the redemption fines. However, he could not produce any documents to show that they have incurred loss in the imports.
6. Shri Mondal, the ld. SDR, in reply to the aforesaid arguments referred to the relevant portion of the judgment of the Apex Court in the case of Indo Afghan Chamber of Commerce to point out that during the Policy period 1978-79 dry fruits were placed under OGL, which can be imported by all. Hence, the additional licence cannot be said to confer the restitution of right for the commodity, which was under OGL in 1978-79 Policy. He also referred to para 8 of the Supreme Court judgment particularly in this regard. Hence, they are only motivated by making a bonanza or profit. During the relevant period, the margin of profit is more than 200% in the case of almonds. He also referred to the judgment of the South Regional Bench in the case of M.M. Exports v.Collector of Customs, Madras - 1989 (39) E.L.T. 482 (Tri.), wherein the Bench have upheld the redemption fine to the extent of 220% going by the margin of profit on this item. He, therefore, pleaded that no modification in the quantum of redemption fine is called for. He also contended that the interim order was only an arrangement for bonding the goods pending final decision by the Apex Court. He also pointed out that the Supreme Court on 31-1-1986 has given certain directions and only in that context, they have mentioned the date 31-1-1986. The Supreme Court does not, in any way, fix the cut-off date as 31-1-1986.
However, the final order of the Supreme Court clearly indicates that the appellants cannot import dry fruits during 1985-88 Policy against the Additional Licences granted to them under the Import Policy 1978-79. He also refers to Para 12 of the Supreme Court judgment to point out that the diamond exporters are not entitled to the benefit extended by the judgment of the Supreme Court dated 15-5-1986, who had imported items under irrevocable L/C opened and established even before 18-10-1985. In the circumstances, no bona fides can be pleaded, since the imports have been made, not for actual use but for purpose of trading, to make a huge profit. Hence, their deliberate import attracts penal liability. In this case, the L/C was extended on 27-2-1986, after the interim order of the Supreme Court dated 18-2-1986. This also indicates their deliberate plan to import, calling for imposition of penalty.
7. Shri Madon, in reply stated that no penalty has been imposed in the other case and no appeal has been filed by the Department. Only in the case of one order they have come in appeal seeking for imposition of penalty. When they extended the L/C, they were only governed by the interim order of the Supreme Court, which allowed import, where irrevocable L/C have been opened before 31-1-1986. Hence, they were under the bona fide impression that in such cases imports can be effected. However, when the final order of the Supreme Court came, they made attempts to stop the consignment but they did not succeed.
However, in the case of the Department appeal, the date of shipment itself is 18-2-1986 prior to the final order of the Apex Court. Hence, no mala fides can be attributed.
8. After hearing both the sides, we are unable to persuade ourselves to accept the proposition of the ld. advocate that the Supreme Court in their interim order dated 18-2-1986 laid down the proposition that where L/C have been opened before 31-1-1986, imports could be allowed without any redemption fine. As rightly pointed out by Shri Mondal, which is not rebutted by the ld. advocate, the Supreme Court in their final judgment have clearly indicated that they are not inclined to modify the cut off date. In fact, the Supreme Court has held that they are not entitled to the benefit of even this cut off date (18-10-1985) and that judgment is also directly applicable to the appellants. In the circumstances, confiscation of almonds which were sought to be imported against the Additional Licences is required to be upheld in both the cases.
9. As regards the quantum of redemption fines, the appellants M/s.
Everest Gems have not produced any documents to show that they have not made any profit after paying the redemption fine and cleared the goods.
Their claim that they have incurred loss is without any supporting documents. On the contrary we find that the redemption, fine to the extent of 220% is found to have been upheld by the South Regional Bench. Since this is a consumer item carrying high margin of profit and in the absence of any evidences produced by the appellants to show that the redemption fines are excessive as compared to the margin of profit, we are not inclined to modify the quantum of redemption fines. Hence the Appeal Nos. 183/88 and 668/86 filed by M/s. Everest Gems are dismissed.
10. Now coming to the appeal filed by the Collector of Customs, Bombay, seeking for imposition of penalty on M/s. Everest Gems, we find that in this case, where the Collector has filed the appeal, L/C was opened on 2-12-1985 and the goods were shipped on 8-2-1986. The said L/C was to expire on 15-3-1986 but extended on 27-2-1986. Hence, in the circumstances, we are of the view that no deliberate plan could be alleged that even after the interim order of the Supreme Court dated 18-2-1986; they had persisted in import; because of the fact that the goods have already been shipped on 8-2-1986, and the Supreme Court's final order came to be passed only on 15-5-1986. In these circumstances, we are unable to persuade ourselves to accept that this is a flagrant and deliberate attempt even after knowing the outcome of the Supreme Court judgment. Hence, we are not accepting the proposal for imposing penalty on M/s. Everest Gems. In the result the appeal filed by the Collector of Customs, Bombay (A. No. C/972/87) is also dismissed.