1. The above appeal arises out of the order of the Addl. Collector of Customs, Calcutta confiscating a consignment of 40,000 kgs. of completely pre-mutilated synthetic rags imported by the appellants against Additional Import Licence, with an option to redeem the same on payment of a fine of Rs. 3,15,000/- and imposing a penalty of Rs. 78,000/- on the appellants, on the ground of contravention of ITC Public Notice No. 122/89 and ITC Order No. 52/89, both dated 28-4-1989, according to which, import of the subject goods was permissible only through the ports of Bombay, and Delhi ICD.2. Shri M.K. Jain, learned Chartered Accountant, appearing on behalf of the appellants, submits that the issue in the appeal is covered in favour of the importer by the judgment dated 1-2-1994 of the Division Bench of the Hon'ble Calcutta High Court in the case of Kalindi Woollen Mills Pvt. Ltd. v. Union of India (Appeal No. 384/90 and Matter No.3145/89) holding that the Public Notice and ITC order are without jurisdiction, being ultra vires the provisions of the Import and Export (Control) Act, 1947 and that there could be no valid basis or jurisdiction to restrict import of goods under OGL into India only through Bombay and Delhi ICD ports. He therefore, prays for setting aside the impugned order and acceptance of the appeal.
3. The learned SDR Shri K.N. Gupta fairly concedes that the matter is covered by the Calcutta High Court judgment (supra).
4. We have considered the submissions of both the sides and carefully perused the judgment of the Calcutta High Court. In para 15 thereof, the Court has held that if the specified goods are allowed to be imported into the country under the OGL Scheme of the Government of India, there could be no valid basis or jurisdiction whatsoever to restrict their importation into the country only through the ports of Bombay and Delhi ICD. Para 15 is reproduced below - "Section 3(1)(a) of the said Act enables the Central Government, in the manner provided in the said Section, to prohibit or restrict import and export of goods of any specified description. The power under Section 3 of the said Act is general in nature and is restricted to the goods only and the scope of the said Act was never intended nor could be construed to empower the authorities under the said Act to pick and choose a port through or at which only the goods could be imported. Hence, any restriction or prohibition imposed under the said Section has to be applicable to, inter alia, all ports of the country, to be in the public interest. The power under the said Section 3 of the said Act although omnibus in nature, cannot by any stretch of imagination be construed to enable the Central Government to pick and choose at its whims and fancy particular ports through which only certain goods can be imported into the country and restricting and/or prohibiting importation of such goods from other ports in the country. Any prohibition or restriction or control of any kind whatsoever under the said Section 3 of the said Act in order to be valid, has to be applicable to the entire country. Hence, if the said goods are allowed to be imported into the country under the Open General Licence Scheme of the Government of India, there can be no valid basis or jurisdiction whatsoever to restrict their importation into the country only through the ports of Bombay and Delhi ICD".
5. In paragraph 22 of the judgment, the Hon'ble High Court has held that the impugned Public Notice and Control Order are without jurisdiction being ultra vires the provisions of the Import and Export (Control) Act, 1947.
6. In paragraphs 30-31, the Division Bench has held that there is no rational basis for allowing importation through Bombay and Delhi ICD and prohibiting importation through Calcutta port.
7. Further the Bench has held that the amendments made to OGL or in the conditions governing imports under OGL cannot apply to the importation of goods under Additional Licences on the ground inter alia that the conditions governing imports are provided in the various clauses of paragraph 215 of the Import Policy 1988-91; "and in none of those clauses is it provided that the conditions governing imports under OGL, as contained in Appendix 6 of the said Import Policy, would also be applicable to goods importable under the Additional Licences issued under para 215 of the said Import Policy".
8. We also note that the ITC Public Notice and ITC Order have been the subject matter of interpretation by other High Courts too. In the case of P.S. Tandon v. Union of India and Anr. -1991 (33) ECR 419, the Hon'ble Madras High Court has held that the order restricting import of woollen rags only through Bombay and Delhi ports is discriminatory and not sustainable. The petitioner before the Madras High Court was actual user of synthetic rags with an office in Madras and for his spinning unit, the raw material was synthetic and woollen rags which could be imported under OGL. The petitioner was importing synthetic rags in completely pre-mutilated condition (in terms of para 25(1) of the Import and Export Policy) through Tuticorin and Madras ports. Paragraph 25 of the Policy was amended on 28-4-1989 to restrict the import of woollen rags / synthetic rags/shoddy only through two ports namely Bombay and Delhi ICD. The petitioner contended that this condition was arbitrary and discriminatory and his contention was accepted by the High Court and the Writ petition was allowed.
9. In the case of Swastika Woollen Industries Pvt. Ltd. v. Union of India -1992 (62) E.L.T. 17, the Rajasthan High Court had occasion to consider the restriction permitting import only through Bombay and Delhi as incorporated in Item 29 of the Appendix 6 of the Import & Export Policy 1990-1993 and held that restriction was arbitrary and unreasonable and allowed the Writ Petition. The High Court noted the judgment of the Calcutta High Court in the case of Kalindi Woollen Mills v. Union of India -1991 (53) E.L.T. 524 (Cal.) wherein it was held that the restriction was reasonable, having regard to the administrative feasibility for effective control and in order to plug loopholes perpetuated by unscrupulous traders and differed from the Calcutta High Court judgment, holding that power to restrict entry is to be exercised in an arbitrary manner and that the restriction imposed is not justified.
10. Following the ratio of the above judgments, we set aside the confiscation of goods and the penalty and allow the appeal with consequential relief.