Full Judgment
Ajit K. Sengupta, J.
1. In this reference under Section 130(1) of the Customs Act, the following question of law has been referred tothis Court:-
'Whether on the facts and in the circumstances of the case, the finding of theTribunal upholding the charges levelled against the appellant and the imposition of the redemption fine or penalty is perverse and/or was arrived at byexcluding relevant material and/or by taking into consideration the irrelevantmaterial and/or was arrived at on the basis of irrelevant or extraneous consideration.'
2. Shortly stated, the facts are as under :-
3. The applicant is a manufacturer of plastic materials for packagingpurposes. For its said business, the applicant entered into a contract with aWest German firm for importing plastic extruder having screw diameter of 6'equivalent to 152.4 mm. The payment for the said machine was to be made ondeferred terms and required the approval of the Reserve Bank of India. As perthe Import & Export Policy of 1980-81, extruder machine having screwdiameter of above 150 mm was a permissible item for import under the OpenGeneral Licence (OGL). On 18th January, 1981, the confirmed order for theabove machine was placed to the supplier. The contract was registered prior to28th February, 1981 and in accordance with the import policy the shipmentcould be effected within 3ist March, 1982. After registration, approval of theReserve Bank of India was duly obtained for payment of the price on deferredterms. Two letters of credit were duly opened with United Commercial Bank one for payment of the initial sum of 15% and the other for payment of theremaining value of the machine on deferred terms. Two letters of credit wereopened on 19th May, 1981.
4. The said machine was duly shipped by the foreign supplier on 30thMarch, 1982 on the Vessel 'Kastro-K' that is, within the period permitted underthe Import Policy for the year 1980-81. All the relevant shipping documentsrelating to the said machine namely Bill of Lading, supplier's invoice, packinglist etc., were duly received by the applicant and negotiated by its bank underthe said Letter of Credit for 15% of the price of the machine. The said vessel'Kastro-K', however, could not arrive at Calcutta as it was detained at PiraeusPort in Greece. The detention of the said vessel was an arbitrary, high-handedand illegal act which resulted in unloading and detention of the cargo carriedby the said vessel including the said machine. Several legal proceedings had tobe initiated in the Greek Courts for obtaining release of the said machine by theapplicant and/or its representatives and by other cargo-owners. Only on 23rdSeptember, 1983 by reason of the said legal proceedings, it was possible for theapplicant to obtain the release of its machine in Greece. As stated earlier, thedocuments had been duly negotiated in the year 1982 and the applicant's bankhad paid the initial 15% value of the said machine. Subsequently, two instalments towards the balance price were also paid under the second Letter ofCredit. The other instalments were not paid by the applicant's bankers byreason of an injunction obtained by the applicant from this Court restraining itsbankers from making further payment in view of the said wrongful and illegaldetention of the machine at the Greek Port. After delivery of the said machineon 23rd September, 1983 a survey was duly conducted at the Greek Port forascertaining the condition of the said machine and it was discovered that onaccount of long-uncared storage and improper handling, the machine neededto be attended by the manufacturers for removing the damage/defects. Accordingly, from the Greek Port, the machine was sent to the machinerymanufacturer who after rectifying the damage/defects re-shipped the saidmachine on the vessel 'CASTOR' on 11th February, 1984. The said machine,thereafter, arrived at the Calcutta Port.
5. The applicant had declared in the Bill of Entry for warehousing orderthat the said machine had a screw diameter of 6' (152.4 mm) under the impression that the goods which had been supplied were in accordance with the termsand conditions of the applicant's order placed as per the catalogue of thesupplier and the proforma invoice.
6. In the said Bill of Entry, the applicant duly stated the fact of shipmentof the said machine originally on the vessel 'Kastro-K' on 30th March, 1982 andits impounding at the Greek Port.
7. However, on examination, the diameter of the screw was found to beof 150 mm only by the Customs authorities. The customs authorities alsoalleged that the Import Policy for 1983-84 did not specify extruder as an itemunder O.G.L.
8. The Import Policy for the year 1980-81 which permitted the import ofthe machine with a screw diameter above 150 mm was discontinued in thesubsequent policy, namely, Import Policy for the year 1983-84 which was invogue when the said machine was re-shipped on 11th February, 1984 after itswrongful and illegal detention in the Greek Port. Accordingly, the Customsauthorities were not allowing the clearance of the said machine and furtherwanted confirmation as to the diameter of its screw from the foreign supplier.Such confirmation was obtained from the foreign supplier and submitted to theCustoms authorities. The Customs authorities later measured the diameter ofthe screw of the said machine and found that it was 150 mm instead of 152.4mm as claimed by the applicant and as certified by the foreign supplier.
9. A notice to show-cause was issued by the Customs authorities alleging that the said machine was liable to confiscation on the ground that itsimportation was not permitted at the relevant time and that there had beenmis-declaration of the goods inasmuch as the screw diameter was described as152.4 mm instead of 150 mm. The applicant duly submitted its reply to theshow-cause notice and appeared at the personal hearing. In the course of thesaid hearing, the representative of the foreign supplier also appeared before theCollector of Customs and explained that at the time, when the machine hadbeen sent back to their works for removing the defects, the barrel which hadbeen damaged was replaced with barrel and screw of 150 mm diameter overlooking the fact that the said machine was originally supplied with screw of152.4 mm diameter and the replacement should have been with a screw of thatdiameter. The said representative admitted the mistake on the part of theforeign supplier and offered to replace the barrel and screw. By his order dated9th November, 1984, the Collector of Customs ordered for confiscation of thesaid machine and allowed the applicant to redeem the same on payment ofredemption fine of Rs. 8 lacs. A personal penalty of Rs. 2 lacs was also imposedunder Section 112 of the Act on the applicant.
10. Against the said order of the Collector of Customs, an appeal waspreferred by the applicant before the Customs, Excise and Gold (Control)Appellate Tribunal (in short 'the Tribunal'). During the pendency of the appeal,the foreign supplier approached the applicant for settlement of the litigationpending in this Court by reason whereof further payments to it had been heldup and for resolving the dispute relating to supply of the undersized machine.Arbitration was also tried for settlement of the dispute. These subsequent factswere also brought to the notice of the Tribunal at the hearing of the appeal. TheTribunal by its order dated 17th February, 1986 upheld the order of the Collector confiscating the said machine and levying the said redemption fine andpersonal penalty.
11. At the hearing before us, it has been contended that the finding ofthe Tribunal is perverse and vitiated by reason of its excluding relevantmaterials and/or evidence and basing its conclusion on surmises and extraneous considerations. Mr. Bajoria, learned Advocate, has drawn our attention to the certain materials stated to have been ignored by the Tribunal and nottaken into consideration. It is the contention of Mr. Bajoria that the facts andcircumstances relevant to the bonafide conduct of the importer in importingthe goods and the extenuating circumstances leading to the import have to betaken into consideration for determining as to whether the goods should beconfiscated and if so whether an option for redemption of goods should beallowed. He has submitted that the Tribunal fell in error in holding that thequestion of intention is not relevant in deciding the question of confiscationand quantum of redemption fine.
12. On the other hand, the contention of Mr. S.K. Mitra, learned Advocate for the respondents, is that the machine arrived when the policy for1980-81 was not in force. This is a clear and an undisputed fact. According tohim, nothing further is required to be considered. The validity of the importshould be considered with reference to the policy for 1983-84 which did notpermit the impugned importation. Hence, the order is justified. He has submitted that the Tribunal took into account all the relevant facts and suchfinding cannot be held to be perverse. According to Mr. Mitra, mens rea and/ormotive is wholly irrelevant in the context of confiscation and imposition ofredemption fine. Mr. Mitra has also sought to suggest mala fides on the part ofthe applicant. It is contended that the conduct of the applicant was such thatlevy of redemption fine and/or penalty was fully justified and was reasonable.
13. The Counsel for the parties have relied on several decision towhich we shall presently refer.
14. Before we deal with the respective contentions, it is necessary tohighlight certain facts appearing from the order of the Collector of Customsand the Tribunal.
15. The Collector of Customs held against the applicant on the undernoted allegations :-
(i) The date of shipment of the said machine is to be taken as 11thFebruary, 1984 when it was re-shipped after rectification of thedamage/defects and not 30th March, 1982 when it had beenoriginally shipped;
(ii) The applicant had mis-declared the diameter of screw in collusionwith the foreign supplier;
(iii) Catalogue of the foreign supplier relied upon by the applicant insupport of its contention that the foreign supplier the machine withscrew diameter in British system of inches was not genuine sincethe other dimensions of the machine mentioned in the saidcatalogue were in round figures in millimetres and only the screwdiameter was in fractions of millimetre.
16. At the time of hearing before the Tribunal, the various aspects of thecase were highlighted and the order of the Collector was assailed with reference to each of the aforesaid aspects which led him to order for confiscation ofthe said machine and imposition of the said redemption fine and penalty. TheTribunal in its order did not at all deal with the contentions of the applicant onthose issues in it. The Tribunal considered the materials produced before it. TheTribunal in its order held that 'it was immaterial from the point of view of theCustoms Act whether the mis-statement was the result of a collusion betweenthe supplier and the importer or not. The fact of mis-statement was itselfsufficient to establish an offence.'
17. With regard to the catalogue on which reliance was placed by theCollector, the Tribunal held that 'the controversy regarding diameter shows inthe catalogue in mms. and fraction of mms. is in our opinion of no significance.'Thus, the Tribunal brushed aside the only finding of the Collector on the basisof which he sustained the charge of collusion. The Tribunal proceeded merelyon the basis that the date of shipment of the machine had to be considered as11th February, 1984 and on the same material date a specific licence wasrequired which the applicant was not having; proceeding on the aforesaidbasis, the Tribunal came to the conclusion that the applicant had taken acalculated risk in importing the machine without licence. The Tribunal heldthat there had been a wrong statement in the Bill of Entry with regard to thediameter of the screw of the machine and the question of mens rea, motive orbonafides was not relevant for confiscation or imposition of redemption fine. Inthe context of imposition of penalty, an observation was made that the applicant was not innocent. The Tribunal, accordingly, upheld the order of the Collector confiscating the same machine and levying the same redemption fine and penalty.
18. In our view, Mr. Bajoria is right in his submissions that the Tribunalcame to its finding by ignoring relevant materials without taking into consideration some relevant evidence. Firstly, the Tribunal completely ignored theconditions and in particular condition 4, governing imports under OpenGeneral Licence (OGL) specified in Appendix-10 of the said Import Policy for1980-81. The said Clause 4 reads as under :-
'(4) In the case of capital goods, equipment and permissible spares coveredunder Open General Licence (OGL), vide Items 3, 4, 5 and 6 above, if theeligible actual User Importer enters into a firm contract for import upto 28-2-1982 but the goods cannot be shipped on or before 31-3-1981 on account of thelonger delivery period involved the shipment may be allowed upto 31-3-1982in pursuance of such firm contract, provided the contract, in question, is dulyregistered with a foreign exchange dealer (Bank) on or before 28-2-1981.'
19. The said Clause 4 makes it clear that the condition of the OpenGeneral Licence (OGL) was that the machine should be shipped before 31stMarch, 1982. The approval of the Reserve Bank also contained the samestipulation. The date of the original shipment on 30th March, 1982 could not beignored by the Tribunal since the shipment for the purpose of the said importwould only be that date and not the subsequent re-shipmet necessitated onaccount of unforeseen circumstances of the impounding of the machine at theGreek Port. Further, neither the Open General Licence (OGL) nor the approvalof the Reserve Bank stipulated any particular date by which the importationwas required to be completed. The actual arrival of the machine in the countryin 1984 is not relevant for the purpose of deciding the legality of its import.
20. Secondly, Tribunal did not consider the fact of shipment of the saidmachine within 30th March, 1982, its subsequent detention at the Greek Port,its being taken back to the manufacturer's premises for rectification of thedamage suffered due to detention.
21. These facts were ignored by the Tribunal solely on the ground thatthey were merely historical. The said facts were very material and relevant forthe purpose of judging the circumstances in which the said machine came to beimported and for determining whether there was any act of omission on thepart of the applicant which could justify the confiscation of the machineand /or imposition of the redemption fine and penalty.
22. Thirdly, the fact that substantial payment had been made under theletters of credit and it would have been a total loss if the machine was not takenand would have exposed the applicant to charges of wasting the foreignexchange and not having utilised it for the purpose for which it was allowed,was also ignored.
23. Fourthly, the Tribunal did not uphold the finding of the Collectorwith reference to the catalogue of the foreign supplier and inference sought tobe drawn by him from the fact that whereas the other dimensions were givenin whole millimetres only the screw diameter was expressed in fractions ofmillimetre. It did not agree with the finding of the Collector that there wascollusion between the applicant and the foreign supplier. Tribunal was of theview that the said finding was wholly irrelevant and, accordingly, did not dealwith or advert to the evidence on record, e.g. proforma invoice of the foreignsupplier, the order placed by the applicant, the foreign supplier's acknowledgement, letters of credit, Bill of Lading, Packing lists, suppliers invoices andconfirmation, payments made, disputes between the applicant and the foreignsupplier, proceedings in this Court, statement of the foreign supplier's representative before the Collector etc. This evidence undoubtedly establishes thatthere was no basis for the finding of collusion.
24. Fifthly, the Tribunal proceeded on the basis that the bonafides andthe other attending facts and circumstances concerning the import were whollyirrelevant in the matter of imposition of redemption fine and, accordingly,ignored all these aspects and the evidence and/or materials relating thereto.
25. Sixthly, the Tribunal proceeded on the erroneous assumption thatsince the machine was re-shipped in 1984 it could not be imported under OpenGeneral Licence (OGL) of the Import Policy for 1980-81 and that a licence wasrequired for its import. On the said assumption, the Tribunal held that theapplicant not having made any attempt to obtain a licence took calculated riskto import the machine without licence. In our view the Tribunal mis-directeditself in coming to the said finding. As already stated, the material date ofshipment in the instant case was 30th March, 1982 and since the applicantbonafide believed that the screw diameter of the machine was 6' (152.4 mm), itdid not apply for or obtain any licence. The mere fact that the machine wasre-shipped in 1984 was wholly irrelevant and it could not be said that theapplicant took any calculated risk since it sought to import the said machineunder Open General Licence (OGL) in the bonafide belief that its screwdiameter was 6' (152.4 mm).
26. Seventhly, the casual observation, if at all it could be considered afinding, to the effect that the applicant was not innocent and that there wasmis-statement, is totally perverse. As indicated, the Tribunal failed to take intoaccount the facts and circumstances under which the said machine had beenimported as well as the materials and evidence produced before it to show thecircumstances under which the import was delayed. According to the Tribunal,whether there was any collusion between the applicant or the foreign supplierwas immaterial and the Tribunal proceeded on the footing that bonafide ormens rea was not relevant for the purpose of imposition of redemption fine. Inthis context, and setting of facts, the finding of the Tribunal that the applicantwas not innocent or there was a mis-statement is unwarranted. In our view, theTribunal proceeded to equate an incorrect statement with a mis-statementtotally overlooking the fact that mis-statement implies making an incorrectstatement with the knowledge that the statement was not correct. Havingrefused to go into the circumstances leading to the import of the said machine,the conduct of the applicant and all the other relevant materials and/orevidence, the Tribunal could not arrive at any finding that there was mis-statement or that the applicant was not innocent.
27. Eighthly, it is now well-settled that in the matter of imposition ofredemption fine and/or penalty, mens rea and/or conduct and/or attendingextenuating circumstances are material and relevant.
28. In Akbar Badruddin Jiwani v. Collector of Customs reported in : 1990(47)ELT161(SC) , the Supreme Court held as follows :-
'57. Before we conclude it is relevant to mention, in this connection, that evenif it is taken for argument's sake that the imported article is marble fallingwithin Entry 62 of Appendix-2, the burden lies on the Customs Department toshow that the appellant has acted dishonestly or contumaciously or with thedeliberate or distinct object of breaching the law;
58. In the present case, the Tribunal has itself specifically stated that theappellant has acted on the basis of bonafide belief that the goods were importable under OGL and that, therefore, the appellant deserves lenient treatment.It is, therefore, to be considered whether in the light of this specific finding ofthe Customs, Excise & Gold (Control) Appellate Tribunal, the penalty and finein lieu of confiscation required to be set aside and quashed. Moreover, thequantum of penalty and fine in lieu of confiscation are extremely harsh,excessive and unreasonable bearing in mind the bonafides of the appellant, asspecifically found by the Appellate Tribunal;
59. We refer, in this connection, the decision in Merck Spares v. Collector ofCentral Excise & Customs, New Delhi, Sharma Engine Valves Ltd., Bombay v.Collector of Customs, Bombay and Madhusudan Gordhandas & Co. v. Collector ofCustoms, Bombay wherein it has been held that in imposing penalty the requisite mens rea has to be established. It has also been observed in Hindustan SteelLtd. v. State of Orissa : [1972]83ITR26(SC) by this Court that :-
'The discretion to impose a penalty must be exercised judicially. Apenalty will ordinarily be imposed in case where the party actsdeliberately in defiance of law or is guilty of contumacious or dishonestconduct, or acts in conscious disregard of its obligation; but not, in caseswhere there is a technical or venial breach of the provisions of the Act orwhere the breach flows from a bonafide belief that the offender is notliable to act in the manner prescribed by the statute.'60. In the instant case, even if it is assumed for argument's sake that the stoneslabs imported for home consumption are marble still in view of the findingarrived at by the Appellate Tribunal that the said product was imported on abonafide belief that it was not marble, the imposition of such a heavy fine isnot at all warranted and justifiable.'
29. In Jain Exports Private Limited v. Union of India, reported in : 1990(47)ELT213(Bom) , the Supreme Court observed as follows :-
'5. In our opinion, the Tribunal committed apparent error in refusing to takeinto account the extenuating circumstances leading to the import of the disputed goods for purposes of determining the quantum of redemption fine.
'6. While determining the question of quantum of redemption fine it is essential to consider the facts and circumstances relevant to the bonafide conduct ofthe importer in importing the goods. The question of bona fide import isrelevant for determining the quantum of redemption fine as held by this Courtin M/s. D. Navinchandra & Co., Bombay & Ors. v. Union of India & Ors. : 1987(29)ELT492(SC) ; and B. Vijay Kumar v. Union of India, reportedin AIR 1987 SC 1794. In these two decisions, this Court held that whileimposing fine or penalty for the import of goods in contravention of theImport Policy, the authorities should consider the plea of bonafides in thebackground of the facts attending to the import of the relevant goods.'
30. In P. Ripakkumar and Company v. Union of India, reported in : 1991ECR318(Bombay) , a Division Bench of the Bombay High Court set aside the confiscationon the finding that the importer had acted bona fide. It was held at page 71 of thereport as follows :-
'8. On the specific statement made by both the counsels, we propose toexamine the question as to whether on the facts and circumstances of the case,the order of confiscation passed by the Customs authorities and the order ofimposition of redemption fine in lieu thereof should be sustained. In thesecircumstances, Shri Mehta submitted that the action of the petitioners wasbonafide and consequently the order of confiscation and redemption fine inlieu thereof should be set aside....In these circumstances, in our judgment,the import made by the petitioner cannot be faulted on the ground of mala fideand the order of confiscation is required to be set aside. As the petitioners havealready cleared the goods on payment of redemption fine, it is necessary todirect the respondents to refund the said amount to thepetitioners.'
31. The principles which can be culled out from the aforesaid decisionsare that facts and circumstances relevant to the bona fide conduct of an importer in importing the goods and the extenuating circumstances leading to theimport have to be taken into consideration for determining as to whether thegoods should be confiscated and any redemption fine imposed. Even if theimport be in contravention of any prohibition, the importer should not bevisited with confiscation if his conduct in making the import is bona fide. Evenif confiscation is made in such A case, the redemption fine can only be a tokenone. Merely because action against goods is action in rem it does not mean thata person who had committed no offence in respect of them or with reference tothem could be made to suffer by way of payment of fine or otherwise. Imposition of fine, in effect amounts to awarding a punishment to the person heldliable to pay the same and a person can be held liable to punishment only if heis found to be responsible for some act of omission or commission with reference to the law and the goods in question. In our view, to impose or inflictpunishment on a person who is not guilty is against all canons of natural justiceand fair play. Even otherwise, merely because the goods are liable to confiscation it is not always necessary to impose a fine in lieu of confiscation, in thesame way, as merely because a penalty is imposable under a provision, it is notnecessary that it must always be imposed. The facts and circumstances of thecase as a whole have to be borne in mind and it has to be ensured that absurdsituations unintended by law do not re6ult. There are innumerable cases inwhich goods are released on caution or warning when some technical violationor breach of provision is noticed and imposition of fine or penalty is notwarranted. Both in cases of fine and penalty, it is the non-observance of law bythe person concerned which is required to be established in the first instance. Inour view, the principles laid down by the Supreme Court in Hindustan Steel Ltd.(Supra) have to be kept in mind and duly applied, mutatis mutandis, in cases ofconfiscation of goods and imposition of redemption fine as well. In the instantcase, however, the Tribunal fell in error in holding that the question of intentionis irrelevant in deciding upon the confiscation and quantum of redemptionfine. The instant case is a fit one where confiscation should not have been madehaving regard to the bonafide conduct of the applicant.
32. Mr. Mitra, learned Advocate appearing for the respondents, hashowever relied on a decision of Supreme Court in Collector of Customs v. D.Bhoormul, reported in : 1975 CriLJ545 . In that case,the Supreme Court held that proceedings for confiscation of contraband goodswere proceedings in rem and the penalty of confiscation was enforced againstthe goods irrespective of whether the offender was known or unknown. Goodsfound to be smuggled could be confiscated without proceeding against anyperson and without ascertaining who is their real owner or who were actuallyconcerned in their illicit import. It was held that penalty on the other hand wasenforced against the person concerned in the smuggling of the goods and wasone in personem.
33. He has also relied on the decision of this Court in Charandas Malhotra v. Assistant Collector of Customs, reported in : AIR1968 Cal28 . In that case,a Division Bench of this Court held that whereas confiscation could be orderedirrespective of knowledge of the person in whose possession goods werefound, the imposition of a penalty required deliberate action and knowledge. Itwas held that Section 112 of the Act which provides for imposition of penaltyrequired such knowledge.
34. He has further relied on a decision of the Supreme Court in Sewpujanrai Indrasanrai Limited v. Collector of Customs, reported in : 1958 CriLJ1355 . There the Supreme Court held that confiscation ofgoods was a proceeding in rem and the penalty was enforced against the goodswhether the offender was known or not known and the order of confiscationoperated directly upon the status of the property.
35. On a perusal of the aforesaid decisions, it would appear that thesedecisions are no authority for the proposition that for the purpose of levy ofredemption fine and/or penalty, the conduct of the parties is irrelevant. Inthese cases, the issues involved were altogether different. Goods which hadbeen smuggled like gold, wrist watches etc., were sought to be confiscated inthe hands of the person possessing them. The plea of such persons that theyhad nothing to do with the smuggling themselves and were bonafide purchaser/possessors and as such the goods could not be confiscated was rejectedon the ground that proceedings were in rem against the goods. The ratio of thesaid decisions is that the owner or possessor of smuggled goods could notavoid liability for confiscation of smuggled goods on the ground that hehimself had nothing to do with the smuggling although on such plea he canavoid personal penalty. The question of bona fide importer of technical breach ofimport regulations or bonafide conduct of the importer in bringing the goodswere not at all involved. The sole issue in the said cases was whether smuggledgoods once they leave the custody of the actual smuggler could be confiscatedin the hands of subsequent owners/possessors who had nothing to do with thesmuggling. These cases had nothing to do with the question of bona fides ofimport or imposition of redemption fine.
36. Mr. Mitra, learned Advocate for the respondent has also contendedthat even for the purposes of imposition of penalty under Section 112 of theAct, presence of mens rea is not a condition precedent. This contention, however, is contrary to even the authorities relied upon on behalf of the respondent.On the other hand, Akbar Badruddin Jiwani (supra) and Jain Exports Private Ltd.(supra) clearly lay down that for imposition of penalty mens rea is a necessarycondition. In our view, the decisions in Gujarat Travancore Agency v. Commissioner of Income Tax, reported in : [1989]177ITR455(SC) ; Kirloskar v. Union of India,reported in : 1988(34)ELT30(Bom) ; Nizam Sugar Factory v. Collector, reported in : 1987(27)ELT40(AP) and Arun Spinning Mills v. Collector of Customs and Central Excise,reported in 1988 (33) E.L.T. 270, do not assist the respondent as they wererendered on construction of the provisions of different statutes.
37. The respondent has also submitted that the intention of the importer was mala fide and the conduct of the importer justified the levy ofredemption fine and penalty. The Tribunal, as indicated, neither considered norhad given any finding on the bona fide and otherwise of the applicant. None ofthe aspects sought to be raised by the respondent has been considered by theTribunal. In our view, these aspects, having not been considered and havingbeen ignored by the Tribunal, cannot be urged by the respondent in thisreference. These do not arise out of the appellate order. As a matter of fact, thecontroversy, in this reference, as we have already indicated, is the failure of theTribunal to consider these aspects and the Tribunal fell in error in ignoring thesame.
38. One other aspect of the matter has to be considered. From the factsfound and/or admitted, it appears that the question of collusion between theforeign exporter and the applicant is a vital aspect of the whole matter. It is notdisputed that there was some obstacle to the consignment arriving at theIndian port on time. The admitted position is that the goods were despatchedby the exporter on time, but the consignment was detained by the ship's ownerin Greece. It is accepted as fact that the applicant after protracted correspondence and litigation could secure the release of the goods after a long time. It isalso a fact that the delay caused damages to the goods being some machines.This was noticed on delivery abroad. The same had to be returned to themanufacturer for replacement. Therefore, the fact that the import policy for AM 1984 excluded extruder as an item under OGL was a development subsequent to the import order which was governed by Import & Export Policy of1980-81 which allowed import of extruder having screw diameter above 150mm as an item under OGL. It is not disputed that the order as placed on18-1-1981 was for extruder with diameter of 6' equivalent to 152.4 mm. Nowthe allegation is that even going by the benefit of OGL available under thepolicy of 1980-81 the applicant made a violation as the diameter of the screwultimately arrived in 1984 was found to be 150 mm only, though the applicantdeclared in the Bill of Entry that the said machine had a screw diameter of 152.4mm.
39. But one fact has to be kept in mind that the history of this particularconsignment is out of the ordinary. It had to pass through many odds. Firstly,the arrival of the shipment was unusually delayed and second the manufacturer in the process of rectifying the damage by replacement could have possibly deviated from the specification without the knowledge of the applicant.Therefore, the learned Counsel for the applicant was right in laying emphasison the question of proof of collusion as the most decisive question of fact in thecase. Unless it could be said that the applicant consciously and in collusionwith the exporter sought to pass off the mis-statement to get away with theviolation, it would not be proper to take an adverse inference against theapplicant, particular regard being had to the fact that the exceptional circumstances which disrupted shipment and the normal arrival of the goods.The applicant's statement in the Bill of Entry could be said to be a mis-statement only if the mis-statement was the result of a collusion between thesupplier, i.e. the foreign exporter and the Indian importer, the applicant.
40. It is clear from the correspondence between the foreign exporterand the applicant that the applicant was not aware that the exporter replacedthe earlier machines damaged by new machine with screw of 150 mmdiameter. The deviation again appears to have crept in because of the longperiod during which litigation was going on and the foreign manufacturerchanged over to metric system and 150 mm diameter was adopted as the usualsize. It was principally on account of the obstructions in the import that thismistake could creep in. The correspondence also shows that the applicant wastotally unaware of these eventualities until the imports arrived. Thus, theTribunal failed to appreciate the facts and circumstances of the case and arrivedat an important conclusion which is not sustainable.
41. For the reasons aforesaid, the question in this reference must beanswered in the affirmative.
42. There will be no order as to costs.
43. Shyamal Kumar Sen, J.
I. agree.