Judgment:
1. COD petitions. Since one appeal against the impugned order of the Additional Collector of Customs, dated 11.5.1990 has been filed in time, the technical delay in filing the other appeals against the same impugned order, is condoned.
2. Appeals. Appellants Sanwah Micro Systems have filed the appeals against the order of the Additional Collector of Customs, Madras dated 11.5.1990 levying a total redemption fine of Rs. 11,75,000/- and a penalty of Rs. 65,000/-.
3. Appellants Sevak Ayat Niryat Co. (P) Ltd. have filed the appeals against the respective impugned orders of the Collector of Customs, Kochi levying a redemption fine of Rs. 10,00,000/- besides a penalty of Rs. 2,00,000/-(A.No.C/602/90) and penalty of Rs. 2,00,000/- (A.No.25/91).
4. Shri Thiagarajan, the learned Senior Counsel for the appellants Sanwah Micro Systems (P) Ltd. contended that the goods imported i.e.
Fax machines are permissible for clearance under Additional licences issued to Export Houses/Trading Houses in terms of Chapter XVIII of ITC Policy 1988-91. The licences produced clearly permit items as per para 215(2), (4) & (5) of the Policy providing for importation of "Fax machines" which are non-OGL capital goods not covered by Appendix 1 Part A and Appendix 8 of the policy. The show cause notice issued by the Department clearly alleges that para 215(4)(ii) provides for importation of non-OGL capital goods other than the goods covered by Appendix 1, Part A and Appendix 8 and the Department erroneously declined clearance of the goods on the ground that the goods imported are Office machines falling under para 118 of the Policy 88-91 and cannot be permitted as non-OGL capital goods. The Department's contention that the goods imported are non-OGL capital goods coming within the mischief of para 118 is not correct and runs counter to the decided cases. The show cause notice does not specifically allege that the goods are not non-OGL capital goods nor is there any averment that the same is covered by Appendix I Part A and Appendix 8. Under the relevant Policy 1988-91 Chapter III deals with capital goods and para 29(1) clarifies that there are three categories of machinery and equipment viz. restricted items covered by Appendix 1 Part A, OGL items covered by Appendix 1 Part B and non-OGL items not covered by the said Appendix I, Part A and Part B and there is no separate category of capital goods as 'Office machines'. In the impugned order the adjudicating authority has read the provisions of Chapter VIII as restrictions on the goods and the learned Counsel assailed the correctness of the same. The learned Counsel submitted that non-OGL capital goods are permitted for import by Export Houses/Trading Houses even under 1985-88 policy and also the goods were permitted for import under para 51(iii) subject to certain conditions and Fax machines were covered by the term 'Office Machines' in terms of para 145 of the 1985-88 policy and import was permitted as non-OGL capital goods.
Therefore, consistent with the earlier policy, the present policy 1988-91 should be construed in the same way particularly in the light of para 215(4)(iii) of Policy. The learned Counsel contended that it would be wrong to read Chapter VIII and para 118 in respect of the import concerned in this case and paras 118 and 215 are independent and mutually exclusive and the only para applicable is para 215 which does not exclude Office machines from importing. It was further urged that by virtue of the specific endorsement of para 215 (4) against the description of items the licences have become specifically endorsed for the import of Office machines of any category of non-OGL capital goods and therefore it is beyond the power and the jurisdiction of the Customs authorities to question the same. Reference was made in this connection to the ratio of the ruling of the Supreme Court in the case of Union of India v. Tarachand Gupta & Sons reported in ECR C 539 SC : C. Cus 779 SC. Reference was also made to the ratio of the ruling of East Regional Bench in the case of R.D. Electronics v. Collector of Customs permissible for clearance as non-OGL capital goods. It was urged that in respect of the ratio of the said ruling, restrictions contained in one Chapter of the Policy cannot be read into the other Chapter of the Policy. In regard to penalty, it was urged that the appellants were actuated by sheer bona fides and therefore no penalty could be levied.
5. Shri Patel learned Counsel appearing for appellants in customs appeal Nos. C/602/90 and C/25/91 almost adopted the reasoning of Shri Thiagarajan, the learned Senior Counsel. As a matter of fact Shri Patel had argued the case earlier and put forth all pleas which Shri Thiagarajan Advocate later reiterated adopted and adumbrated later in the day. Shri Patel reiterated the contentions set out above and emphasised that para 215 has been specifically endorsed in the licence and that alone will apply. The learned Counsel also referred to the judgment of the Bombay High Court reported in 1981 ELT 235 and urged that under Section 47 read with Section 233 of the Customs Act, 1962, once the licence is granted the proper officer has only to ascertain whether the goods sought to be imported correspond to the description in the licence, whether the conditions imposed in the licence and required to be complied with by the importer have been complied with and if his findings on the aforesaid issues are in the affirmative, the Customs officer is bound to allow clearance of the goods on payment of duty. It is not for the Customs to interpret the licensing policy and enforce the same, once the authorities have issued the licence.
6. Shri J.P. Gregory, the learned SDR adopted the reasoning of the adjudicating authorities in the respective impugned orders.
7. We have carefully considered the submissions made before us and gone through the entire records. As a matter of fact while dealing with the appeals filed by M/s. Agro Impex and M/s M.B. Impex we had occasion to deal with various contentions set out above and raised by the respective Counsels and in dealing with the same we have held as under: We observe that the short point that falls for consideration in the above appeals is whether the flexibility for import of non-OGL items permissible under para 215 of the import policy would also cover within its ambit import of fax machines which are in the nature of office machines and also what would be the implication of the deletion of certain conditions viz. conditions (i) to (iii) on the reverse of the licences as mentioned above with reference to para 215 of the import policy. We observe that the appellants are holders of additional licence and they are permitted to import non-OGL capital goods in terms of para 215(4)(iii). The plea of the appellants is that import of non-OGL capital goods other than those covered under Appendices 1 Part A, and 8 is permissible without any indigenous clearance and since there is no dispute that office machines do not figure under Appendices 1 Part A and 8 these machines being in the nature of capital goods though useful in the office is covered by the licences produced. We observe that various facilities which are made available to the Export and Trading Houses are set out under para 214 of the Policy and under para 215 of the policy under heading Additional Licences' the policy for the same has been set out and the relevant para is 215(4)(iii) reproduced above. In this context it would be relevant to go into para 215(5) which is reproduced below for convenience of reference: The Export/Trading Houses may also be permitted the clubbing of the flexibility allowed on Additional Licences as per sub-para (4) above, for the import of Non-OGL capital goods (other than those in Appendices 1 Part A and 8) for import of a single integrated plant/machinery including accessories thereof, upto a c.i.f. value not exceeding Rs. 1 crore.
It is seen that in this para (5) the facilities made under para 214(4) are referred to as flexibility allowed to additional licence holders. Under para 118(1), the policy prescribes for import of Office machines and this para figures under Chapter VIII which carries the heading 'Special Licensing Provisions'. This Chapter deals with the Policy for import of various specified items which are not covered under the general provisions and among these are permitted items such as Animals, Birds and Reptiles, plants, seeds, books etc. etc. and policy for office machines is amongst the many.
Under para 118(1) specific provision has been made in the case of Registered Exporters upto the value of export exceeding Rs. 1 crore or more in the preceding years and Fax machines at Serial 3 under the description Fascimile machine have been allowed for import once in two financial years. Further, under sub-para (2) of para 118 there is also policy regarding import of photocopying paper, calculating machine, paper rolls etc. etc. of Value not exceeding Rs 10,0007- in a licensing year by the Export Houses or Trading Houses and there is specific condition that import of machines and materials will be subject to actual user condition i.e. for use in the licence holder's office/factory. There is also provision for import of PBX/PABX by the Export and Trading Houses against additional licences on the recommendation of the Department of Tele Communication as mentioned in the Registered Export Policy, vide para 118(5). Further, there is provision under para 118(6) for import by Government Departments, Research and Development Institutions and request for which from these organisations are to be considered on merits for issue of specific licences. Para 118(7) sets out the following: Applications for import of office machines will not be entertained under the procedure for import of capital goods. Import of Office machines cannot also be made under flexibility provisions.
It is seen that this prohibition under sub-para (7) reproduced above is a general prohibition applicable to all cases where flexibility provisions are there for import against licences. It is seen that against Sl. No. 215(4) the facilities given have been termed as flexibility provisions. Under para 215(5) we see no reason as to why bar set out in para 118(7) of the policy cannot be read into the facility under para 215(4)(iii) reproduced above. The only contingency under which this condition will not apply would be when there is specific mention that the other condition in the import policy will not apply to the licences in question.
8. Therefore, in our view the licences produced and relied upon by the appellants would not be valid for clearance of the goods in question.
At this stage we take note of the ruling of the East Regional Bench in the case of R.D. Electronics v. Collector of Customs . We take note of the fact that fax machines were allowed clearance during 1985-88 and the definition of capital goods in the 1985-88 and 1990-93 policies is same. The East Regional Bench has taken note of the fact that under Policy 1990-93 under para 124(1) office machines have been specifically included whereas in the policy for 1985-88 under para 145(1) office machines were not included.
However, East Regional Bench has not dealt with the issue by referring to Chapter VIII which carries heading "Special licensing provisions" dealing with various items specified therein not covering under the general provisions. The East Regional Bench also has not considered the relevance and applicability of prohibition under para 118 (4) and (7) referred to above and given a finding. Since we feel that the issues are contentious and debatable we, are of the view that in the light of the ruling of the East Regional Bench and the view expressed by us and also keeping in mind the aspects which East Regional Bench have not had occasion to consider, we are inclined to think that the issue should be resolved by a larger Bench. As a matter of fact when the appeals were argued extensively by the respective Counsels we also prima facie expressed the view as, to whether the matter could be referred to the larger Bench and the learned Counsel while not disputing the fact that the issue would require consideration by larger Bench stated that the ratio of the ruling of the East Regional Bench can be applied and relief granted. In our view, in the interests of justice, the issue will have to be settled by larger Bench and in this view of the matter we direct the Registry to place the papers before the Hon'ble President for constituting a larger Bench as per law for deciding the issue in the facts and circumstances of the case set out above. Ordered accordingly.