1. This appeal is directed against the Order-in-Original No. S/ 10-23/94 Gr.I, dated 20-12-1994 of the Collector of Customs, Nhava Sheva confiscating 36000 Kgs. of Methyl Parathion under Section 111(d) of the Customs Act, 1962 with an option to pay fine of Rs. 10,00,000/- in lieu of confiscation and also imposing penalty of Rs. 10,00,000/- Under Section 112(a) of the Act.
2. The Appellants imported Methyl Parathion and sought clearance thereof under OGL. They initially filed Into Bond Bill of Entry. The item imported was covered under Insecticides Act, 1968. The appellants were holding Registration Certificate issued under Section 9 of the said Act. The said Certificates however did not specify the approved source of import. Instructions were issued vide letter dated 3-12-1993 addressed to the Collector of Customs from Central Insecticide Board and Registration Committee that no clearance of Insecticide be allowed on the Registration Certificates, where the country from which the import was made, was not shown as source of import. The Appellant, while filing into Bond Bill of Entry, reportedly stated that they would obtain such endorsement. Subsequently however, they filed Ex-Bond Bill of Entry, reportedly pleading that they were not in a position to produce such Certificate.
3. Any Insecticides prohibited for import under Insecticides Act, 1968, were not permitted to be imported in terms of Sr. No. 1 of Part 156E of the Import Policy 1992-97, and because the Certificates of Registration produced was not acceptable, as it did not specify the approved source of import, Show Cause Notice dated 10-8-1994 was served on the Appellant. The Appellants however, contested the same and pleaded that they did possess the required Registration Certificate as contemplated under Section 9 of the said Act and pleaded that the instructions sent by the Board vide their letter dated 3-12-1993 were beyond their powers as any such instructions could, if at all issued, be issued only by the Government of India and the Board was established only as an Advisory Body. They also referred the Supreme Court Judgment in Bengal Iron Corporation v. Commercial Tax Officer 4. The adjudicating authority however vide impugned order, discussed various provisions of Insecticides Act, 1968 and rejected the contentions of the appellants and passed the impugned order.
5. Dr. N.R. Kantawala, the ld. Advocate for the appellants has submitted that the appellants have been holding Certificate For Registration contemplated under Section 9 of the Insecticides Act, 1968, since 1973, and have also been causing import of the subject item ever since then, and have been getting them cleared under OGL at the port of Import. In his submission, Rule 4(4) of the Insecticides Rules, 1971, prescribed the Form under which such Registration Certificate to be granted vide Section 9 of the said Act, has to be issued and there is no provision anywhere that the source of acquisition has to be declared by the party seeking licence or should be specified in the Certificate to be issued. The ld. Advocate has pleaded that the said Act does not permit regulating the source of acquisition though other restrictions as to quantity etc. could be imposed and has referred to various provisions of Insecticides Act, 1968. The ld. Advocate has further referred to the letter dated 31-5-1994 from the Board to all Pesticides Association, where the Board have requested all the Associations to convey to their members to get the source of acquisition endorsed on their Registration Certificates within two months from that date, indicating that till that time, many Registration Certificates were issued without such endorsements and two months time was granted to get the endorsements made and that they had entered into contract on 24-3-1994, the goods were shipped on 9-5-1994 and had arrived in India on 13-6-1994 and all this happened before the time specified for causing the endorsements made on their Certificate.
In his submission, even assuming everything against them, the requirement for endorsement of source of original became effective only w.e.f. 31-7-1994 and before that the import had already taken place and when the Registration Certificate was otherwise in order, the clearance cannot be denied. He has also referred to the letter dated 5-7-1994 from the Association to the Board, The ld. Advocate has further pleaded that even subsequent to the subject import, clearances have been given in case of similar imports, on 22-6-1994, 15-9-1994 and 27-9-1994.
Referring to the impugned order, the ld. Advocate has pleaded that the order is conditional one, and such a type of order is not legally valid. The ld. Advocate has referred to the Supreme Court judgment in Sewpujanrai Indmsanarai Ltd. v. Collector of Customs 1983 (13) E.L.T.1305 (S.C.).
6. Mr. K.M. Mondal, the ld. SDR has submitted that the authority prescribed under the Insecticides Act, 1968 is the Board and the Collector of Customs have to be guided by the directions by said Board which basically are the directions from the Ministry of Agriculture. He has then pleaded, that the Act is intended to ensure safety of human and animal. Referring the Section 9 of the Act and Rule 4(4) of the Insecticides Rules, 1971, the ld. SDR has pleaded that the powers are invested in the Registration Committee to issue Registration Certificate and vide Section 9 (3C) the said Committee has powers to vary any condition subject to which such a Certificate is issued and pursuant to that if the decision is taken to include the source of acquisition of the import material it cannot be said that the said decision is without any authority. The ld. SDR has then pleaded that if there was a bona fide on the part of the appellants, they could have approached the Board (Committee) to get the necessary endorsement made, which does not appear to have been done. Referring to Section 17(1)(c) of the Act, the ld. SDR has stated that there is a ban on the import of any Insecticides except the same is in accordance with the conditions on which Registration Certificate is granted and unless the valid Registration Certificate exists, the import stands prohibited vide para 155-E of the Import Policy 1992-97 and when the Registration Certificate does not have the required endorsement, the import is unauthorised and liability to confiscation would arise. As regards the final order passed by the Adjudicating Authority, the ld. SDR has pleaded that the condition imposed is the one which is in conformity with the statutory provisions and there is no prohibition under Section 125 of the Customs Act, 1962 against laying down such a condition. As regards the past practice pleaded, the ld. SDR has pleaded that, merely because of that, the subject import cannot be considered as authorised.
For this the ld. SDR has referred to the decision of Calcutta High Court in Collector v. Uday Engineering - AIR 1980 Calcutta, 309.
7. Considering the submissions made and going through the record, there is no dispute that the item imported is Insecticides and that the appellants have been holding the required Registration Certificate contemplated under Section 9 of the Insecticides Act, 1962 and in ordinary course, but for the objection as to non-mention of the source of acquisition in the Certificate, the validity of the same is otherwise not challenged.
8. There does not appear any general instructions or any Notification issued by the Registration Committee established under Section 5 of the Insecticides Act, 1968 to the effect that Registration Certificates issued by them but which do not bear the endorsement of source of acquisition shall not be accepted as a valid document for the purpose of import of Insecticides or Pesticide referred to Para 155E of the Policy Book 1992-97 and the basis on which the Customs Authorities have objected the clearance is the letter dated 3-12-1993 written by the Registration Committee not to permit import of Pesticide by the present appellant without any endorsement of source of acquisition. In his said letter, there is a reference to some earlier import effected in August, 1993. The copy of the said letter however does not appear to have been sent to the appellants nor does it mention that the appellants were required to surrender their Certificate for the purpose of such an endorsement and that their having failed to do so, their Registration Certificate has been cancelled. Vide Section 28 of the said Act, any cancellation of the Registration Certificate has to be noticed in the official Gazette.
9. The Registration Certificate issued to the appellant in 1973, obviously does not bear any endorsement of source of acquisition. The same is issued vide Section 9 of the said Act. Sub-section (3C) of the said Section does authorise the Registration Committee to vary the condition and adding of any condition may also tantamount to varying of condition. However, as laid down in the said sub-section itself, for such variation a notice in writing has to be given to surrender the Certificate within a specified time. There is also no evidence that any such notice was served on the appellant at any time prior to writing letter dated 3-12-1993 to the Collector of Customs. On the contrary, the appellants have produced a letter dated 31-5-1994 addressed to all Pesticide Associations to require their members to surrender their Certificates within a period of two months therefrom, for the purpose of endorsement in relation to source of acquisition, further mentioning that after a suitable period the Customs Authorities shall be advised separately to verify in each case, the Certificate of Registration and not to allow import in case the name of approved exporter has not been mentioned therein.
10. It might be yet another debatable issue whether such a letter dated 31-5-1994 could be construed to have been issued in due compliance with the statutory requirement of Section 9(3C) of the said Act but assuming the said letter could be deemed to have complied with the said requirement, the said letter has given two months time from 31-5-1994, to get the endorsement made and on failure, they would instruct the Customs Authorities not to clear the goods under such unendorsed Certificate. With the data on which the letter dated 3-12-1993 to the Collector of Customs has been issued and with no evidence that individual notice to the Appellants has already been issued earlier, the presumption could be raised that the letter dated 31-5-1994 was also meant to cover the present Appellant. That being the case, the validity of the letter dated 3-12-1993 becomes a doubtful one.
11. With this being the position, the appellant was obliged to get the Registration Certificate adequately endorsed on or before 31-7-1994.
The Appellants, have, for the subject import placed an order on 24-3-1994, the goods have been shipped on 9-4-1994 and received at an Indian Port on 1-6-1994 and Ex-Bond Bill of Entry has been filed on 15-6-1994 and all these events are prior to the date specified for getting endorsement under letter dated 31-5-1994. The authenticity of this order is not doubted. The validity of a Certificate has to be determined as on the date on which the clearance is sought and in absence of any evidence that the said Certificate was cancelled or invalidated on or before that date or cancelled abinitio even subsequent thereto but before clearance, there is no justifiable ground to object to the clearance. A mere letter dated 3-12-1993 issued without due compliance with any statutory provisions- for non-acceptance of the Certificate, which otherwise was valid in all other respects, could not be taken as sufficient to withhold the clearance. It is true that the Registration Committee is the designated authority under the Insecticides Act, 1968 to perform the functions under the Act, such administrative directions given vide letter dated 3-12-1993 not backed by any other order contemplated under the Act, cannot be read as and taken to be the one, making the appellants ineligible to cause import of pesticide vide Para 155-E of the Policy Book 1992-97.
12. No evidence is brought on record as to whether the Appellants had surrendered their Certificate on or before 31-7-1994 and if yes, whether endorsement of source of origin is made and whether the country from where the subject consignment is imported is recognised and if not, whether any action is taken regarding cancellation or any intimation after expiry of the specified date, has been sent to the Customs Authority not to accept the Registration Certificate for imports already made.
13. The approach of the Customs Authority in objecting the clearance, therefore, does not appear justified and can not therefore be sustained.
14. When the appellants could succeed on this point, the discussion and decision on the other points would be merely an academic one, and need not be given.
15. The appeal under the circumstances is allowed. Impugned order is set aside. The Customs Authority shall clear the goods, if otherwise permissible for import. Consequential reliefs, if any to follow.