| SooperKanoon Citation | sooperkanoon.com/3061 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Mumbai |
| Decided On | Dec-31-1986 |
| Judge | D T K.S., K G Hegde |
| Reported in | (1987)(11)LC545Tri(Mum.)bai |
| Appellant | JaIn Exports Pvt. Ltd. |
| Respondent | Collector of Customs and Central |
2. Advocate Shri Ashok Desai submitted on behalf of the appellants that both the orders of the Collector of Customs & Central Excise, Ahmedabad were identical and that the appeals raised common issues and therefore both should be heard together and decided accordingly. Coming to the facts of the cases, Shri Desai explained that M/s. Jain Exports Private Limited imported a consignment of 3002.557 M/Ts of Refined Industrial Coconut oil valued at Rs. 1,63,67,050.00 C.I.F. per M.T. SEO JOO IGM No. 181 of 10.9.1982 which arrived at Kandla on 10.9.1982 from Colombo and another consignment of 5342.369 M/Tons of Refined Industrial Coconut oil and valued at Rs. 2,91,21,450.00 C.I.F. per MT COCHISEIGM No. 191 of 82 dated 22.9.1982 which arrived at Kandla on 22.9.1982 from Colombo. The importers filed several Bills of Entry for clearance of these two consignments of refined industrial coconut oil but the clearance was not allowed and after issue of show cause notices and holding the proceedings for adjudication of the cases, the Collector confiscated the two consignments (and allowed their redemption on payment of fines of Rs. Two crores and Rupees Three Crores respectively.). Shri Desai stated that under para 5(1) of Appendix 9 of A.M. 81 Import Policy, coconut oil was a canalised item and import of this item could be made only by the State Trading Corporation of India under Open General Licence (OGL) on the basis of foreign exchange released by the Government. The question involved in these two appeals before the Tribunal was determination as to whether refined industrial coconut oil was permitted to be imported under the additional licences submitted by the appellants to the Kandla Custom House or whether the goods were banned on import as per the aforesaid provisions of Appendix 9 to others except the STC. Since the STC was the canalising agency for coconut oil, the appellant's sister concern had enquired from STC and the Marketing Manager of the STC had clarified in the letter dated 30.1.0.1980 that the industrial coconut oil was not a canalised item.
The reply from the STC accordingly clarified that the appellants could import industrial coconut oil In addition, the appellant's sister concern M/s. Jain Shudh Vanaspati Ltd. had also imported the industrial coconut oil and in their case the Central Board of Excise & Customs allowed their appeal and set aside the confiscation order of the Collector of Customs, Bombay holding that coconut oil of non-edible variety was not a canalised item under the Import Policy for the year 1980-81. Thereafter series of orders were issued by the Collectors of Customs at different Ports, the Central Board of Excise & Customs and the Government of India, all to the same effect. In view of this position, the appellants made the imports of the two consignments under appeal. But the same question was raised by the Collector of Customs & Central Excise, Ahmedabad once again and he decided the matter against the appellants. The appellants thereafter filed Writ Petitions No. 4037 and 4038 of 1982 before the Delhi High Court who, by their decision dated 20.12.1984, upheld the validity of the orders of the Collector of Customs, Ahmedabad and remitted to the Appellate Tribunal the limited question of redemption fine. In reply to a query from the Bench, the Advocate stated that the appellants had filed an appeal to the Supreme Court against the Delhi High Court's order. He, however, further clarified in reply that though the same question regarding the validity of the order of the Collector had been taken up before the Supreme Court, there was no contradiction in the appellant's conduct in filing an appeal to the Supreme Court and coming to the Tribunal as per the directions of the Delhi High Court on the limited question regarding the quantum of fine. Advocate Shri Desai therefore submitted that the issues involved in the appeals needed to be set out before us. He submitted that both these imports were mad in September, 1982. To help the Tribunal understand the sequence of event; the learned Advocate gave a typed synopsis of dates and events which were material to these appeals; he clarified that the dates referred to the fire appeal. The Advocate read operative part of the Collector's order covere by the first appeal. He elucidated that the Collector had confiscate (sic)3002. 577M/Ts of refined industrial coconut oil under Section 111(d) of the Customs Act, but he gave an option to the importers to redeem the goods on payment of a fine of Rs. two crores within three months from the date of receipt of the order. Referring further to the operative portion of the Collector's order, the Advocate stated that the Collector had found that this was normally a case of levy of a penalty under Section 112 of the Customs Act but the Collector had refrained from levying the penalty in view of the sufficient amount of redemption line imposed on the goods in lieu of confiscation. The Advocate argued that in the show cause notice an action for levy of the penalty was also proposed. But no such penalty had been levied under the Collector's orders in the show cause notice proceedings. This was because the importers did not deliberately flout the import policy and the redemption fines included the element of penalty also. The Advocate further submitted that till the decision of the High Court dated 20.12.1984 in the Writ Petition Nos. 4037 and 4038 of 1982 it had been universally accepted by the trade that the import of industrial coconut oil was not canalised through the STC. In this behalf, the Advocate referred to the observations of Justice S.B. Wad of the Delhi High Court. The Advocate referred us to the Order No. 85 of 81 F.No.381/10/81-AU (B) dated 23.1.1981 of the Central Board of Excise & Customs, the order F.No. 374/12/81-Cus. II dated 31.3.1981 of the Special Secretary to the Government of India and Order No 179-A-189A and 190B of 1982 dated 28.5.1982 of the Central Board of Excise and Customs under which the Appellate and the Revisionary authorities had taken the same view that the import of industrial coconut oil was not canalised through the STC. The appellant's conduct in the import of the two consignments was therefore governed by the aforesaid orders. During May, 1981 to July, 1981 the appellants M/s. Jain Exports Private Ltd. also imported industrial coconut oil through the same Custom House, namely, Kandla and the clearance of this consignment was allowed without any let or hindrance. The other importers in the trade had also imported identical goods at different ports and these had also been cleared without any fine or penalty. The learned Advocate referred to the imports of industrial coconut oil (inedible) by M/s. Jayant Oil Mills Ltd. and M/s. Metro Exports at Calcutta. The Collector of Customs, Calcutta had permitted clearance of these consignments of industrial coconut oil without taking any objection. The importers were therefore under the bona fide belief that they could import the industrial coconut oil under the licences and the letters of authorities held by them. The Advocate submitted that the confiscation of the goods in question and the levy of fine were not in order particularly when the importers' action to import these consignments arose from bona fide belief that they could very well do so. In this behalf, the learned Advocate relied on the decision of the WRB of the Tribunal in the case of Shama Engine Valves Ltd. v. Collector of Customs, Bombay . The Advocate also relied on another decision of the North Regional Bench in the case of Merck Spares, Delhi v. Collector of Customs & Central Excise, New Delhi 1983 ELT 1261 : 1983 ECR 1473D. The Tribunal in this case had held that mens rea should be established before ordering confiscation of goods and imposition of penalty under Sections 111 and 112 of the Customs Act. The Advocate submitted that there was no such case of mens rea in the importations covered by the present appeals and therefore he would urge that the orders of confiscation of the goods and imposition of fines should be set aside. In the alternative, the Advocate contended that the fine should be reduced substantially. He argued that the total fine of Rs. 5 crores seemed to have been plucked from the air. The quantum of fine should be related to the type of imports and the circumstances of imports. Considering these circumstances, in the two cases of imports the Advocate submitted that the fine should be reduced to nominal sums.
He submitted that the industrial coconut oil has been imported for consumption by Actual Users in the manufacture of soaps, shampoos and hair oil, Therefore, the fine should be reduced to nominal sums as urged by him. As a third alternative, the Advocate submitted that the fines should be reduced to 12-1/2% of the c.i.f. value of the goods in both these cases. This figure of 12-1/2% was suggested on the basis of the order of the Collector of Customs, Bombay dated 17.12.1980 in the case of imports of industrial coconut oil by the appellant's sister concern M/s. Jain Shudh Vanaspati Ltd. in which case the Collector of Customs Bombay had levied a redemption fine of Rs. 25 lakhs. Shri Ashok Desai submitted that even the s mall fine of 12 1/2% was struck down by the Board under their order dated 23.1.1981. He referred to the Board's Order in this behalf. Shri Desai further submitted that there was a move on the part of Central Government to review the order of the Board under old Section 131(3) of the Customs Act; but the Government of India did not deem it fit to issue the show cause notice for the review of the aforesaid order. He drew our attention to the Government's order passed by the Special Secretary, Ministry of Finance Department of Revenue, New Delhi. Shri Desai finally submitted that the fine of Rs. 5 crores was enormous and the appellants have paid the huge fine after taking bank loans on which they had to pay an interest of 21 %. The interest was compoundable every quarter and the same came to Rs 4 crores by now and hence he requested that the Collector's orders of fine should be set aside or the fines reduced to nominal amounts.
3. Shri G.D. Pal, SDR for the Respondent Collector submitted that the imports of the industrial coconut oils were deliberate and in violation of the Import (Control) Regulations. These had been set out in the Collector's orders which had been upheld by the Delhi High Court. The importers held letters of authority against licences issued to third parties and imported these two consignments from M/s. Manila! & Sons (P) Singapore. The learned Advocate of the appellants had emphasised the fact that the letters of authorities issued to the appellants were valid to import industrial coconut oil which was not canalised for import through the S.T.C. Apart from this objection, the licences were otherwise not valid for import. In this behalf the learned SDR drew our attention to para 4 (A) & (B) of the Collector's order regarding the validity of the licences produced by the importers for the clearance of the goods. The learned SDR read upto para 6 of the Collector's order to show how the importers contravened the various requirements of Import Trade (Control) Regulations. Referring to the findings of the Collector, in para 23 onwards of his order, Shri Pal stated that the arguments urged by the learned Advocate of the appellants about the canalisation of the edible coconut oil through the STC and the orders dated 23 1 1982 and 28.5.1982 of the CBEC and order dated 31.3.1981 of the Government of India had been taken into account by the Collector in arriving at the aforesaid findings and the orders. In para 25 of his order dated 17.12.1983 he had further referred to the rules of interpretation and applied these criteria in interpreting the import policy. Shri Pal referred us to Appendix 9 of the Import Policy A.M.1982 and stated that whether edible or non-edible coconut oils and oil seeds were canalised through the STC, Therefore this Policy unlike the previous policy for A.M. 81 made it very clear that both the edible as well as non-edible coconut oil was canalised through the STC under AM 1982 policy. The goods were shipped during A.M. 1983 period and hence the policy applicable would be for this year. In this Policy also both edible and non-edible coconut oil was canalised through STC as per Appendix 9. Shri Pal referred to para 27 of the collector's findings in his order Mo. 6 dated 17.12.1982 and he read the order from para 27 to para 31 of the Order. Shri Pal argued that the Collector had taken various arguments of the importers into account while arriving at the conclusion that the licences were not valid to cover the goods. Shri Pal observed that the Collector's findings had been upheld by the Delhi High Court. He drew our attention to the order of Justice Sachhar at page 6 of the order and stated that the Hon'ble Justice Sachhar raised five queries to consider the validity of the imports. After examining all the arguments adduced by the petitioners before him he had held that the imports offended the ITC Regulations. Shri Pal drew our attention further to the Hon'ble Judge's findings with reference to page 16 of the order regarding the letter of the Chief Marketing Manager of the STC which was claimed by the appellants to be the authority for the import of the inedible coconut oil. Shri Pal argued that the same contentions had been raised by the appellants before the Hon'ble Delhi High Court and these had been turned down in the aforesaid order of the Hon'ble High Court. The Hon'ble High Court had also dealt with the quantum of redemption fine. In this behalf, Shri Pal drew our attention to the findings on page 58 of the High Court's order. Shri Pal further contended that the High Court's order also considered the appellant's request that no fines should be levied and after considering the request the same was turned down and he drew our attention to the High Court's decision on page 60 of the judgment. Shri Pal also drew our attention to page 64 of the judgment to the effect that the Advocate's efforts to arouse sympathy of the court had miserably failed and the High Court had observed that there could not be any equity about tax. Our attention was further drawn by Shri Pal to the High Court's finding that the importers had paid the redemption fine totalling Rs. 5 crores and got the coconut oil released and this action reflected that it was still considered advantageous by them to pay the fine and subsequently market the goods. The Customs authorities had urged that even after paying such heavy fines the importers had made substantial profits. This was accepted by the Hon'ble High Court.
Relying on the judgment of the Calcutta High Court in the case of Shaikh Mohamed Unimer v. Collector of Customs, Calcutta AIR 1966 237 Shri Pal contended that the imposition of fine was discretionary and that no reason need be given by the adjudicating authority to give the reasons for the amount of fine fixed by him. Reverting to the facts of the appeals, Shri Pal argued that these were deliberate imports in flagrant violations of import control regulations and they were meant for profit. The Court's observations in this behalf on page 68 were cited in support. However, the Court had left it to the responsibility of the Tribunal (page 68 of the judgment) to determine the quantum of fine after taking into consideration the justification which the appellants have to offer in this behalf. in the words of the High Court, the appellants could not be given any bonanza or profit from the illegal imports. Referring to the affidavit of the Assistant Collector of Customs, Kandla, Shri Mody, the learned SDR argued that even after paying the huge fine, the importers had made a profit. Shri Pal drew our attention to the averments of Shri Mody in his affidavit to the effect that the market value of 3002.577 M/Ts of industrial coconut oil valued at Rs. 1,63,67,050 c.i.f was more than 5.7 crores at the rate of Rs. 19,000-per M.T. of the oil at the market rate. Shri Pal also referred to the affidavit filed by the Collector of Customs Shri Kumar and drew our attention to para 1 of his affidavit. In this para Shri Kumar had deposed that he fixed the redemption fine of Rs. 2 crores for the same consignment taking into account the quantity of goods imported, the c.i.f. value, the margin of profit the importers would gain by selling the goods at the market price, etc. He considered Rs. 2 crores as the reasonable amount of fine in view of the aforesaid considerations. The S.D.R. also wanted to refer to the Collector's notings in the file and started reading therefrom. But the learned Advocate of the appellant Shri Desai objected to Shri Pal's reading from the file and accordingly Shri Pal did not proceed with reading the Collector's notings from the file. Shri Pal submitted that the fine fixed under Section 125 of the Customs Act was based on the market value of the goods as per the affidavit of Shri Mody. The market value for purposes of Section 125 of the first consignment consisting of 3002.557 M/Ts came to Rs. 4.76 crores and the market value for the second consignment consisting of 5,342.369 M/Ts came to Rs. 8.47 crores, Shri Pal submitted that the Customs duty was leviable at 40% ad valorem plus 15% plus Rs. 105 per M.T. The import of coconut oil from Ceylon was eligible to a lower rate of duty and the appellants had claimed the benefit of this Notification even though they described the oil as industrial coconut oil. The Delhi High Court had also observed that while contending that the industrial coconut oil was a different commodity from coconut oil canalised for import control purposes, the appellants had claimed exemption of lower rate of duty on coconut oil.
The market value of coconut oil at the time of import was Rs. 19,000/- per metric ton and at this rate the margin of profit was 185%. In the petition filed by the appellants before the High Court they had implied that they sold the coconut oil at the rate of Rs. 14,500/- M.T. to M/s.
Hindustan Lever Ltd. If this selling price were to be accepted for the purpose of argument, the margin of profit would come to 103%. The fine imposed was 105% of the c.i.f. value. Shri Pal explained how the margin of profit was worked out by the Customs authorities. This was as follows; MOP=100 X Selling Price minus landed cost (c.i.f. + 5% + duty) divided by c.i.f. price.
The importers had the sole profit motive in importing these consignments and taking into account the circumstances as mentioned by Shri Pal above, the fines were not harsh or unreasonable. In answer to a question from the Bench as to why the other Custom Houses allowed imports of coconut oil without any penal action, Shri Pal submitted that this point had been considered by the Delhi High Court who had observed that this action of the other Custom Houses could not act as an estoppel against the Collector of Customs, Ahmedabad in allowing clearance of the consignments without any penal action. Shri Pal, therefore contended that the Collector's orders were correct and therefore the appeals of M/s. Jain Exports Pvt. Ltd. should be rejected.
4. Advocate Shri Ashok Desai observed in reply that the learned SDR had taken up four arguments against the appellants. These were: (1) the import of coconut oil was canalised, (2) the licences were otherwise invalid, (3) the fine was appropriate and (4) the calculations for the alleged profit by the appellants.
Dealing with these aspects, Shri Desai drew our attention to the findings of the Collector in para 26 of his order dated 17.12.1982 wherein the Collector had concluded that the Board would have also held the same view as himself if the dimensions of the matter were properly brought to the notice of CBEC. Shri Desai did not agree with the aforesaid findings of the Collector. He further contended that the licences were endorsed with the extension of the validity period before the issue of the Public Notice No. 11/ITC/PN/82 dated 25.2.1982 which clarified that the condition of para 185(3) of the Import Policy A.M.82 would apply to all imports of Open General Licence items by Export Houses/Trading Houses whether against REP licences issued in their own name or transferred to them. The licence holders had applied for re-validation of the licences expressly in terms of paras 185 and 222 of the I.T.C. Policy. It was the appellant's case that the restrictions under para 185 applied to REP licences only. The Public Notice dated 25.2.1982 also covered REP licences. On the other hand, the licences tendered by the appellants bore specific endorsements which saved them from the provisions of para 222(3) of the policy. Shri Desai drew our attention to the Delhi High Court's order (page 27) in this behalf, In view of these arguments, Shri Desai stated that the finding of the Collr. in para 29 of his order dated 17.12.1982, that coconut oil, whether edible or non-edible was covered by Appendix 9, was not correct. There was no deliberate flouting of the Import Control Regulations by the appellants. The Collector had not given any arguments in his order about the amount of fine and therefore the Collector's order was bad in law. It lent itself to arbitrariness as the yardstick for the fine was not mentioned. Besides the Collector had not disclosed the process of arriving at the margin of profit. The affidavits of the Assistant Collector Shri Mody and Collector Shri Kumar were countered by the affidavit in rejoinder of Shri Raj Kumar Jain dated 28.2.1983. Shri Desai drew our attention to para 7 of his affidavit in rejoinder and argued that the affidavit of Shri Kumar had tried to explain his adjudication order. This was not permissible and Shri Desai relied in this behalf on the judgment of the Supreme Court in AIR 78 S.C. 851. In reply to the question from the Bench, Shri Desai drew our attention to the same paragraph of the affidavit in rejoinder about the appellants selling the industrial coconut oil to M/s.
Hindustan Lever Ltd. at the same rate. However, in reply to a further question from the Bench, neither the Advocate nor the representative of the appellants who was present in the court, could furnish the date of sale or exact price to M/s. Hindustan Lever Ltd. and also explain the fact that whether the sale was on high sea basis or after the import of the goods. Referring to para 15 of the same affidavit in rejoinder Shri Desai argued that through this para the appellants had demolished the Collector's contention regarding the margin of profit. Shri Desai submitted that there were two orders passed by the CEGAT in case of identical imports of industrial coconut oils where the fines were reduced to a small extent. One case was that of M/s. Jayant Oil Mills Pvt. Ltd, v. Collector of Customs, Ahmedabad in appeal No. CD(SB) 891/83A decided by the Appellate Tribunal, New Delhi on 27.9.1984. In this case, the Collector had levied a fine of Rs. 1.5 crores which was reduced to Rs. 62.5 lakhs by the Tribunal and this came to about 35% of the c.i.f. value of the goods. Shri Desai drew our attention to para 53 of the Tribunal's order. He stated that the second order of the Tribunal was on appeal CD(SB) 1410/83A in the case of Allana Impex Pvt.
Ltd. v. Collector of Customs, Rajkot Order No. 503A/85 dated 16.7.1985.
He drew our attention to para 25 of this order and stated that the redemption fine of Rs. 75 lakhs was reduced to Rs. 25 lakhs which came to about 40% of the c.i.f. value of the goods. Shri Desai undertook to file a copy of this order subsequently. He contended that the present appeals were on stronger footings than those decided by the Tribunal under the aforesaid orders. The fines in the two appeals before us would come to Rs. 65 lakhs and Rs. 1.16 crores if the basis of the Tribunal's decision in the case of M/s. Jayant Oil Mills were to be followed and to Rs. 89 lakhs and Rs. 1.60 crores if the decision of Tribunal in the appeal of M/s. Allana Impex Pvt. Ltd. were to be followed. Shri Desai pleaded that the present appeals be decided on the basis of the Tribunal's decisions in either of the two cases.
5. Since the two decisions of the Tribunals referred to by Advocate Shri Desai were not argued by him while dealing with the oral submissions earlier, the learned SDR requested that he should be heard in this matter and accordingly we agreed to hear him. Shri Pal submitted that the two decisions of the Tribunal cited by Advocate Shri Desai were the orders of a Co-ordinate Bench and these would not be binding on this Bench. The redemption fines were levied on the basis of the margin of profit to ensure that the person contravening the law did not walk away with the fruits of breaking the law. The redemption fines were calculated on the basis of margin of profit in the present cases and therefore Shri Pal submitted that the redemption fines should be maintained and that the appeals should be rejected.
6. Before dealing with the merits of the arguments of the appellants, and the respondents, it is noteworthy to observe that the appellants' petitions before the Delhi High Court created history in a way as seen from the Court's order. They say history repeats itself. But the lessons of history go home to some and not to the others, who like the Bourbons of early 19th century France do not learn anything nor forget anything. In any case, the lessons of history are instructive, particularly to a student of history; and it remains to be examined what the history of the present two appeals to the Tribunal has to show and where it leads the Tribunal.
7. The submissions made on behalf of the appellants and the respondents have been carefully considered. The main thrust of the argument of the appellants is that only edible coconut oil was canalised and therefore industrial coconut oil could be imported by the appellants. They have made much of the letter dated 30.10.1980 from the Chief Marketing Manager of the STC to the effect that STC was only importing edible variety of coconut oil as per Appendix 9 of the then ITC Policy. It is to be remembered that the appellants are a big Export House and would be very well conversant with the imports and exports policies and the changes therein from time to time. They are therefore expected to have taken care to ensure that their imports and exports are in accordance with the relevant import and export policies. In this behalf, it is not necessary for the Tribunal to go into the question as to whether the clarification from the STC was authoritative and authentic. This point has been carefully considered and decided by the Hon'ble Delhi High Court against the appellants and therefore this need not be repeated here. However, what is required to be emphasised is the fact that the imports of industrial coconut oil were made in September, 1982 at Kandla. As per Chapter VIII of the Hand Book of Import and Export Procedures 1982-83 and particularly para 207, it is very clear that the policy applicable to any import is the one prevailing on the date of the actual shipment of the goods from the supplying country. The appellants being an Export House would have been very well familiar with the provisions of the policy. The Import Policy for the year 1982-83 left no doubt that as per Appendix 9 para 5, coconut oil, whether edible or non-edible, could be imported only by the STC of India. This position had continued from the earlier import policy also for the year 1981-82. Therefore, a reply given in October, 1980 by an authority who was not competent to clarify the import policy, could not have misled the appellants into importing two huge consignments of offending goods valued at Rs. 1.64 crores and Rs. 2.91 crores c.i.f.
This fact leaves no doubt that the appellants were deliberately importing these two consignments in contravention of the laws and taking a chance with the Customs authorities of having their goods passed without any penal action. This would be further apparent when it is considered that the goods were shipped from Colombo in ships which were not liner vessels and which went specifically to Kandla for discharging the cargo even though the cargo had been sold on the high sea basis to several purchasers in Bombay. It is needless to mention that geographically Bombay is nearer to Colombo and with better facilities as a port. It would have taken less time to receive the goods in Bombay and to give delivery of the goods to the purchasers in Bombay than to import the goods at Kandla and undertake their transport from Kandla to the ultimate purchasers all of whom were in Bombay. Such a course of action was more time consuming which entailed an additional expense of Rs. 50,000/- per day vide para 28 of C.W.P. No. 4037 and cost of cartage from Kandla to Bombay vide para 8 of Affidavit in Rejoinder of Shri R.K. Jain dated 28.2.1983. In this behalf, the appellants' application dated 27.12.1982 under Section 151 to the Delhi High Court (para 5) refers, which talks of the appellants' commitments to the actual users. Even in this behalf, the design for importing the goods at Kandla and not at Bombay can well be gauged when it is seen that Shri Takhat Ram, Jt. CCI&E had issued a circular dated 4.9.1982 to the Collectors of Customs, at Bombay, Calcutta, Madras and Cochin not to allow clearance of imports of coconut oil without reference to the CCI&E. A copy of the Circular was sent to Kandla Custom House only on 11.10.1982 in response to a telegraphic request and the appellants took a calculated chance in importing the goods through Kandla in September, 1982 and not through Bombay. The appellants have shown themselves resourceful in obtaining copies of the correspondence exchanged between the Finance and Commerce Ministries of the Government of India and the subordinate officers under the Ministries as seen from the writ proceedings initiated by the appellants before the Delhi High Court and Shri Takhat Ram's letter dated 4.9.82 would not have been beyond the knowledge of such resourceful persons as the appellants. They seem to have acted immediately to arrange for the imports of the goods at Kandla, with a view to making further massive profits. But unfortunately for them the Kandla Custom House detained the consignments as their imports were not otherwise valid and initiated adjudication proceedings which resulted in the levy of fines on the imports by the Collector of Customs, Ahmedabad. It is necessary to refer to these facts to demolish the contentions of the appellants that they were led into importing the industrial coconut oil based on the clarification of the STC, orders of the Board in appeal, and the order of the Government of India in terms of old Section 131 of the Customs Act. The Delhi High Court has also made observations in this behalf particularly regarding the Government of India's order dated 31.3.1981 under old Section 131 of the Customs Act and these are material to consider that the imports are deliberate. Apart from this aspect, the same pattern of flouting the trade control regulations emerges when we consider the other grounds as per the Collector's orders for not treating the imports as valid. These grounds have been extensively dealt with both in the show cause notices and the Collector's orders.
Briefly stated they relate to imports on invalid licences and letters of authority shipment of the goods after the expiry of grace periods of the licences, non-compliance with the terms of revalidation of the licences, etc. Thus there is not one but several aspects of the imports which show studied violations of the trade control regulations. There is no explanation for this type of conduct by the appellants. It cannot therefore but be concluded that there has been deliberate contraventions of law. These aspects have also been dealt with by the Hon'ble Delhi High Court in their judgment and their findings have to be accepted with great respect.
8. When such is the conduct of the appellants, the question arises whether the fines levied by the Collector were harsh as contended by the appellants. The appellants argue that they are without any basis.
The learned Advocate for the appellants pleaded that the amounts of fine appear to have been plucked from air. He tried to ridicule the Collector's orders regarding the quantum of fines and termed the figures as astronomical. On the other hand, the learned SDR contended that the quantums of fine were based on certain principles which were recorded by the Collector in his files. His efforts to read from the files the Collector's notes to inform the Tribunal of the basis for arriving at the amounts of fine were opposed by learned Advocate Shri Desai. However, there is no gainsaying the fact that the main purpose in levy of the fine is to take away the profit which the perpetrator of the crime seeks to derive therefrom. The Government of India have issued repeated instructions to the Customs authorities in this behalf.
As contended by the learned SDR the intention behind the levy of the fine is to take away the margin of profit sought to be gained through the imports. The SDR has explained the method as to how the margin of profit is arrived at. Besides, the affidavits of Shri H.G. Modi, Assistant Collector of Customs, Kandla and Shri B.V. Kumar, Collector of Customs & Central Excise, Ahmedabad make it very clear that the fines were based on the profit margin prevailing at that time. In fact, it has been averred by Shri Modi in his affidavit that even after paying the fines of Rs. 2 crores and Rs. 3 crores, the appellants have made huge profits. The market prices of the two consignments were reported to be Rs. 5.7 crores and Rs. 10.15 crores at the relevant time at the rate of Rs. 19000/- per metric tonne. On the other hand, in answer to the query from the Bench about the total sale price of the two consignments in question, the appellants have maintained a very discrete silence except drawing the Tribunal's attention to the affidavit in Rejoinder dated 28.2.1983 of Shri R.K. Jain regarding the appellants' version of the market price of the coconut oil of Rs. 14,500 per M.T. approximately and implying the sale of coconut oil to M/s. Hindustan Lever Ltd. at that rate. No further details of sales have been disclosed. Even at this rate, the appellants have made profits as per the contentions of the respondents. It is further observed that the appellants imported two consignments consisting of 3002.577 M/Ts and 5342.369 M/Ts of refined industrial coconut oil. Out of these quantities, only 1834.350 M/Ts were sold to M/s. Hindustan Lever Ltd. who were the Actual Users of such oil for the production of soaps, shampoos, hair oils etc. The bulk of the goods were sold to others like Tata Oil Mills Ltd., M/s. Jai Hind Oil Mills Ltd., M/s.
Bombay Oil Industries and M/s. Kamani Oil Industries who except for M/s. Tata Oil Mills Ltd. appear to be traders in oil rather than manufacturers as seen from the addresses. These traders would have further sold the goods with profit only. In their appeals, M/s. Jain Exports Pvt. Ltd. admit that the market value of coconut oil at the relevant time was Rs. 18,000/- per M.T. as against the calculation of Rs. 19.000/- by the respondents. As shrewd business persons, it is not likely that they sold the goods at a lower rate than the market value.
The deliberate silence regarding the sale price of the two consignments indicates that the appellants want to hide these facts. As seen from the above narration, the total market value of the two consignments comes to Rs. 15.85 crores, against their landed cost of Rs. 12.20 crores which is inclusive of the duty and fines. This still leaves a balance of Rs. 3.65 crores which should take care of other charges and the profit. This analysis confirms the respondent's contention that even after paying the alleged astronomical amounts of fines, the appellants have made profit. Had it not been so, the appellants could have relinquished their title to the goods under Section 23(2) of the Customs Act and not cleared the same after they knew of the Collector's orders of fine. In that event, they would have saved themselves from fines and duties, and their only loss would have been to the extent of the c.i.f. values of the goods viz. Rs. 4.55 crores approximately as opposed to a much higher amount of Rs. 7.54 crores on account of bank loan and interest upto 30.4.85 as per Shri R.K. Jain's application supported with the affidavit, port charges, storage expenses and to add, the cost of litigation. The fact of clearance of the goods would prove that even after paying the fines, the importers have made profit.
The appellants' submissions reveal that the appellants had to borrow money from the banks to pay the BO called huge amounts of fines. This in turn cast the responsibility on the appellants to pay interest to the bank on borrowed capital. It has been stated at different places that these liabilities by way of interest, storage charges, etc. came to Rs. 50,000/- per day. Even as late as the day of hearing of the appeals, the learned Advocate stated that the interest charges had accrued to Rs. 4 crores. The appellants' logic is not understood. The appellants have stated that they sold the goods while on high seas.
After clearance they would have given delivery of the goods to the buyers and realised the full sale price. There is not a murmer or squeak from the appellants that they did not receive this sale price from the various buyers of the coconut oil. The question then arises as to what the appellants did with the huge amounts if they did not immediately repay the loans. It is pertinent to notice that the main reason for request to expedite the hearing and the decision of the appeals was the recurring liability. Even as late as the hearing of the appeals, learned advocate Shri Desai had observed that the interest etc. would outstrip the principal. However, this burden of the appellants' song appears only for the consumption of the Tribunal, and it cannot be taken at its face value. The appellants' sale price had sufficient cushion to absorb all these charges and yet make a neat profit for the appellants.
9. The appellants have further attacked the Collector's order and termed it as arbitrary as the grounds for arriving at the amounts of fine have not been disclosed. The fine amount is determined in terms of Section 125 of the Customs Act. The maximum amount is limited under the statute. But within this outer limit, how much quantum of fine should be actually levied is left to the discretion of the adjudicating authority. The Government of India have issued instructions to pitch the fine at the level where the profit margin of the importer is wiped out. This has been mentioned above. There are repeated instructions from the Ministry and the CBEC to the Customs authorities in this behalf. Therefore, even though the Collector did not mention the reasons for arriving at the quantum of fine in his orders, it is amply clear that this would be sufficient to take away a chunk of the margin of profit. In the Collector's affidavit and in the affidavit of Shri Modi, the respondents have justified the quantum of fines. However, the learned Advocate of the appellants seems to have argued that the justification and consequently the amounts of fine are not proper and legal and in this behalf, he has relied on the decision of the Supreme Court in the case of Mahendra Singh Gill . It is seen that this decision of the S.C. was given in an election matter. On the other hand, the law and the practice in such cases in the Customs Department do not require the exact reasons to be mentioned in the orders. All the same the Collector recorded the reasons in his files, which the learned Senior Departmental Representative wanted to read for the benefit of the Tribunal and the appellants but he could not do so.
The affidavits of S/Shri Modi and Kumar would have presumably contained these reasons. These affidavits were filed before the Delhi High Court to meet the contentions of the petitioners. Therefore, the ratio of the Supreme Court's decision in Mahendra Singh GUI's case cannot apply to the two appeals before the Tribunal. In this behalf the learned SDR has drawn the Tribunal's attention to the judgment of the Calcutta High Court in the case of Shaikh Mohammed Omer. The Calcutta High Court held in that case that it was not necessary for the Collector to record reasons for imposing a fine, as this was discretionary under the law with the Collector. This decision of the Calcutta High Court was upheld by the Supreme Court vide . Therefore, as against the order of the Supreme Court in an election petition, the analogy of which is sought to be applied to the present appeal, we have a direct decision of the Supreme Court on the law in question, namely that the Collector need not record the reasons for the amount of fine. There is therefore no illegality or impropriety in the Collector's orders in this behalf. It may be added that the learned advocate for the appellants should be aware that hardly any adjudicating officer makes actual mention of the reasons for the quantum of fine in the order as per the prevailing practice unless it is a case of leniency. This practice is continuing for the past several years and no court, including the highest in the land, has found any fault with it.
10. The next plea of the appellants for leniency is based on extending the benefit of the analogy of decisions of the Collector of Customs, Calcutta in the identical cases of imports as the present appeals. The appellants plead that similar imports by others through Calcutta were not penalised. They point out the instances of clearances of coconut oil by M/s. Jayant Oil Mills Pvt. Ltd., Bombay and M/s. Metro Exports, Bombay at Calcutta without any penal action. These imports were made in or around December, 1982. The Calcutta Custom House did not take any penal action against these imports. Based on these instances, the appellants plead that no fine should be levied on the imports of the two consignments in question and therefore the orders of fine should be set aside and the amounts remitted. The appellants have furnished photocopies of the relative Bills of Entry in their paper book though they are not quite legible. They have also produced a copy of the letter No. 202/GR. I/66/82A dated 25.1.1983 of Shri T.S. Swami-nathan, Collector of Customs, Calcutta in the paper book of the appeals. A perusal of this letter reveals the Collector's reasons for treating the two imports as valid under the licences produced for their clearance with reference to the ITC Policy. On the contrary, the jurisdictional Collector of Customs, Ahmedabad held that the licences and the release advices tendered by the appellants in the two cases under appeal were not valid. He further held that the imports were in deliberate violation of ITC regulations. The Collector's orders were upheld by the Delhi High Court, before whom the two imports of M/s. Jayant Oil Mills Pvt. Ltd., Bombay and M/s. Metro Exports, Bombay through Calcutta Port were cited. Therefore, it was immaterial that the Department did not file any appeals against the orders for release of these two consignments and there is no question of extending any benefit to the appellants on this score. The appellants have also cited the decisions of the Tribunal in the case of Shama Engine Valve Ltd. v. Collector of Customs, Bombay 1984 ECR 2375 Cegat and Merck Spares Pvt. Ltd., Delhi v. Collector of Central Excise, Delhi 1983 ECR 1473D and based on these decisions the appellants contend that no fines should be levied on the two consignments in question. So far as the Tribunal's decision in the case of Shama Engine Valve Ltd. is concerned, it is seen that the Tribunal set aside the order of fine because it held that the import of stainless steel was bona fide and that the steel was meant for use by the Actual User for manufacture of essential industrial components for the Indian Railways. On the other hand, in the present case, the imports are in deliberate contravention of the Trade Control Regulations and therefore there is no merit in the appellants' contention that the ratio of the Tribunal's decision in the case of Shama Engine Valve Ltd. (1984 ECR 2375 Cegat) be extended to them in the present appeals. Besides, the appellants are not the Actual Users as per their own averments. The appellants' argument is therefore not tenable. The second decision of the Tribunal relied upon by the appellants is in the case of Merck Spares, New Delhi 1983 ECR 1473 D.In this case, the Tribunal was dealing with goods purchased by M/s.
Merck Spares Pvt. Ltd., Delhi from the market. In case of these goods, the burden of proof that these are smuggled, was on the Department and the officer who adjudicated the case could not prove this burden. On the other hand , M/s. Merck Spares Pvt. Ltd. were able to produce purchase bills which accounted for the entire quantity. Therefore, the Tribunal held in that case that the order of the adjudicating officer was not sustainable. Accordingly, the order of confiscation and levy of penalty was set aside. The ratio of this decision would not apply to the present appeals. The goods have been imported by the appellants and the imports were in deliberate contravention of the trade control regulations. Not only the Departmental authorities but even the Delhi High Court have held this view. Though a penalty was proposed on the appellants in the show cause notices, the Collector did not levy a.
penalty. So far as the fine is concerned, the contravention of law is establish-ed. Therefore, the analogy of the order of the Tribunal in the case of Merck Spares, Delhi 1983 ECR 1473D, is not available to the present appeals. Besides, the appellants had contended before the Hon'ble High Court that no fine should be levied on the two imports made by them. But the High Court turned down their plea. On the other hand, the High Court had observed that the appellants did not deserve any sympathy in respect of their] deliberate contravention of the import trade control regulations. Hence it is not possible to accept the appellants' contention that the orders of fine should be set aside.
11. Another argument advanced by the appellants' advocate regarding the quantum of fine is to suggest that the level should be based on the order No. S-10-223/80 III A dated 17.12.1980 of the Collector of Customs, Bombay in levying the fine of 12-1/2% of c.i.f. value on the import of industrial coconut oil made by the appellant's sister concern M/s. Jain Shudh Vanaspati Ltd. The Advocate has contended that even this small fine was set aside by the Board on appeal vide Order No. 85 of 1981 dated 23.1.1981. It may be observed that a copy of the Collector's order has not been furnished and in its absence it is not possible to know whether the analogy of the earlier decision can prevail in these appeals. However, from the copy of the Board's order in appeal dated 23.1.1981, it is seen that the Collector was influenced in fixing the amount of fine by the letter dated 30.10.1980 of the Chief Marketing Manager of the STC addressed to M/s. Jain Shudh Vanaspati Ltd. Besides, the import by M/s Jain Shudh Vanaspati Ltd. was made during April 1980 to March, 1981 policy period. It is to be remembered that the STC's letter created a controversy in interpreting this policy and opened the flood gates for imports of coconut oil by all and sundry. These circumstances are likely to have weighed with the Collector of Customs, Bombay while passing the order dated 17.12.1980.
Thereafter the next policy for April, 1981 to March, 1982 became quite explicit in this behalf. By the time, the two import under the appeals could be made in September, 1982 one more policy year A.M. 83 had gone by. Besides, there is nothing in the Board's order or the documents filed in the paper book to indicate that the import of coconut oil by M/s. Jain Shudh Vanaspati Ltd. was otherwise invalid or the licences submitted by them for the clearance of the goods had other defects as in the present cases. Moreover, no indication of market value of the goods during December, 1980 is available. Hence blind extension of analogy is not permissible.
12. Shri Desai has finally urged this Bench of the Tribunal to follow the decisions of the A Bench of the Tribunal in the case of Jayant Oil Mills Pvt. Ltd. or M/s. Allana Impex Pvt. Ltd. As per these decisions, the suggested fines in the two appeals before the Tribunal come to Rs. 65 lakhs and Rs. 1.16 crores, and Rs. 89 lakhs and Rs. 1.60 crores in the two appeals respectively. The Advocate therefore pleads acceptance of one set out of two sets of figures suggested by him. Copies of the Tribunal's orders in the case of M/s. Jayant Oil Mills and M/s. Allana Impex have also been submitted. These are Nos. 656/84A (CD-SB/891/83A) and No. 503/85-A (CD-SB-A No. 1410/83A). So far as the Tribunal's decision in the case of M/s. Jayant Oil Mills is concerned, it is seen from the perusal of the order that the A Bench of the Tribunal reduced the fine from Rs. 1.5 crore to Rs. 62.5 lakhs in the case of imports of identical goods valued at Rs. 1,16,64,281.42 c.i.f. Though the market price of Rs. 18.000/- per M.T. was urged by the learned advocate for the Department and the SDR before the Tribunal, the Tribunal observed that this figure was for the edible variety of coconut oil though no reasons were given and therefore the Department's contention about the profit margin based on this market price was turned down. It is seen that this order of the Tribunal was issued on 27.9.1984. Thereafter, much water has flowed under the bridge and the judgment of the Delhi High Court in CWP Nos. 4037/82 and 4038/82 has held that there is no distinction between the edible and inedible varieties of coconut oils and it is the same commodity for import control regulation purposes and otherwise. The Tribunal's order has been thus proved false and it has become otiose. It cannot be accepted as a good precedent for the present purposes. In addition, the Tribunal did not accept the Collector's order with regard to the value of the goods for assessment at the rate of U.S. $ 587.25 per M.T. but arrived at the conclusion that it should be less, at the rate of U.S. 556.75 per M.T. This reduction in value naturally affected the quantum of fine leviable even on the basis of the adjudicating officer's yardstick. No such consideration in the reduction of the assessable values is involved in the two cases of appeals. Besides the A Bench of the Tribunal made its own educated guess and felt that 35% can be taken as a reliable estimate of the margin of profit for the goods at the material time. By urging the acceptance of the ratio of this decision, the learned Advocate for the appellants wishes jus to forsake the concrete datas per the affidavits of the Collector and the Assistant Collector and to go into the realm of an educated guess as resorted to by the 'A' Bench of the Tribunal. While education is a life long process and it is never too late to learn, the path offered by the learned advocate does not lead to commanding heights of true knowledge but to murky depths of guesses or assumptions and presumptions. Such a contention of the advocate is not acceptable. If indeed this were to be accepted, the Tribunal can justifiably be accused of colluding with the appellants in allowing the appellants to make more profit out of deliberate contraventions of law. Furthermore as contended by the learned SDR, the decision of A Bench in the case of M/s. Jayant Oil Mills is that of a co-ordinate Bench and the decision is not binding on this Bench. Apart from this fact, it would be discriminatory to leave the common yardstick of punishment for dealing with all unauthorised imports and lapse into slippery field of educated guess work and be an unwitting or willing partner with the perpetrator of crime. As regards the Tribunal's decision in the case of Allana Impex Pvt. Ltd. it is seen that in this case of import of industrial coconut oil valued at Rs. 59,09,522/- c.i.f. the same adjudicating officer, namely, the Collector of Customs and Central Excise, Ahmedabad levied a fine of Rs. 75 lakhs.
This was based on the c.i.f. value of the goods having been arrived on the basis of U.S. dollars 587,50 per M.T. On appeal, the Tribunal held that the c.i.f. value should be reduced to US $ 555 per M.T. Based on this reduction, it was logical that the quantum of redemption fine should be reduced. Apart from this fact, the Tribunal's decision was governed by its earier order in the identical case of M/s. Jayant Oil Mills Pvt. Ltd. Based on these considerations, the Tribunal reduced the redemption fine from Rs. 75 lakhs to Rs. 25 lakhs. The considerations which prevailed with the Tribunal in the case of M/s. Allana Impex Pvt.
Ltd. are absent in the present appeals. Firstly, there is no reduction in the c.i.f. value of the goods under appeal. Secondly, the ratio of the Tribunal in the case of M/s. Jayant Oil Mills Pvt. Ltd. is no longer valid as already dealt with earlier. Therefore, these analogies are not valid and cannot apply. While arguing the appeals, Advocate Shri Desai urged acceptance of these two ratios of the Tribunal's decisions in the present appeals. Otherwise, he submitted that there would be discrimination between those cases and the present ones. These two decisions cannot serve as good precedents as seen already. Besides, the appellants' plea for a lower margin of profit in oil was not upheld by the Delhi High Court. Shri desai has further relied on the Supreme Court's decision in the case of Jaisinghani v. Union of India to say that discrimination should be avoided. There cannot be any two opinions about this contention. The Collector's orders are not based on arbitrary whims or fancy, but on the criteria laid down by the Government that the fines should take away the profit margin from the importer. These instructions are in consonance with the Supreme Court's judgment regarding the exercise of discretionary powers and are uniformly followed by the adjudicating authorities in dealing with cases of contraventions of trade control regulations. If at all any arbitrariness was involved it was on the part of the appellate authorities who interfered with the original quantums of fines. The principle of equality before law has been very well brought out by the decision of the Delhi High Court in the appellant's writ petition Nos.
4037 and 4038 of 1982. The High Court found these fines quite appropriate in the circumstances of the case and turned down the appellant's request for sympathy. However, the High Court was exercising writ jurisdiction in dealing with the matter and not sitting as a court of appeal against the Collector's impugned orders and therefore the High Court understandably refrained from dealing with the quantum of fines and remitted the same to the Tribunal which was the appellate authority against the Collector's order. In view of these circumstances, there is no substance in the learned advocate's contention that the Collector's orders were arbitrary so far as the quantum of fines were concerned, or that they were not in consonance with the Supreme Court's judgment, or that the ratio of the decisions in other cases be extended to the present appeals.
13. In dealing with each of the contentions of the appellants, it is seen that none of the arguments advanced by them is valid or carry any conviction or come to assistance of the appellants in support of their prayer which is for setting aside the fines wholly or partly The examination of the appellant's arguments on the other hand, brings out the fact that the offences relating to the contravention of the Import Control Regulations were premeditated. In fact, they fully conform to the standards set by the oft quoted and famous dictum of the Supreme Court in the case of Hindustan Steel v. State of Orissa 1970 A.S.C. 253 and 1978 ELT J. 519 : ECR C 321 SC. If these contraventions of the Import Control Regulations cannot be called deliberate defiance of law or M/s. Jain Exports Pvt. Ltd. cannot be considered as persons guilty of contumacious or dishonest conduct or they cannot be held as having acted in conscious disregard of their statutory obligations, it is not understood what else can be held to amount to this type of conduct. The offences committed by the appellants are not a technical or venial breach of the Customs Act read with the Imports and Exports (Control) Act and the Imports (Control) Order. These are not cases of bona fide belief that they were not liable to act in the manner prescribed by the statute. Besides confiscation of the imported goods, a levy of penalty was also proposed on the appellants. But the Collector refrained from levying the penalty under Section 112 as he imposed an adequate amount of fine. Therefore, in the opinion of the Collector, the amount of fine covers an element of penalty also. The conduct of the appellants in importing the two consignments fully warrants the Collector's conclusion. Therefore, any interference in the amount of fine would also tantamount to interfering with the element of penalty. This cannot be warranted from the circumstances of these appeals. This is the inescapable conclusion arrived at after critical examination of the appellant's overwhelming emphasis for the benefit of belief being based on the letter of S.T.C. dated 30.10.1980 as observed by the High Court.
The High Court further observed that the details of actual income, sale price, and other expenses can only be shown by the petitioner to the authorities concerned who have to pass the final orders. But the appellants have singularly failed to reveal any transactions of sale.
In these circumstances, to borrow the phrases from the High Court's order, the resort to Section 125 of the Act to impose fine in lieu of confiscation cannot be so exercised as to give bonanza or profits for an illgeal transaction of import", or that "there would appear to be hardly any justification for letting an importer make monetary gain from any illegal transaction of imports". Hence it is not possible to accept any of the con-Itentions of the appellants either to do away with the fines or to reduce them.
14. So much for the merits of the appeals. Besides, the appeals suffer from another lacuna, namely, of time-bar under Section 129A(3) In the prescribed proforma for filing the appeal to the Tribunal, the appellants have left serial No. 3 blank relating to the date of communication of the order appealed against. The Collector's orders are dated 17.12.1982 and 18.12.1982. It is expected that they would have been received by the appellants within a week or so. In any case, it is seen on the basis of the two petitions and applications dated 27.12.1982 filed on behalf of the petitioners under Section 151 CPC before the High Court of Delhi that the two orders had been received by the appellants before that date. The two appeals to the Tribunal were filed on 22.2.1985. There is no explanation for the delay or request for condonation of the same. The preamble to the Collector's orders were to be filed. It is not the appellant's case that they were ignorant of the appellate remedy available to them with the Department.
They have employed the best of legal brains in the country to conduct the proceedings before the High Court and elsewhere. They have averred that the remedy of appealing to the Tribunal under Section 129A of the Customs Act is not adequate. If therefore the appellants choose not to file the appeals before the expiry of the time limit for doing so and make no request for condonation of the delay when the High Court directed them to approach the Tribunal nor offer any explanation for the delay they have only themselves to blame. Even during the course of the proceedings before the High Court they were informed of the remedy by way of appeal to the Tribunal under the application dated 8.2.1983 of Shri D.P. Wadhwa, Central Government Standing Counsel under Section 151 CPC to the High Court. This application was well in time; and if even at that stage the appellants had filed the appeals to the Tribunal the same would have been within the prescribed time-limit under Section 129A(3). While the appellants through their written submissions dated 18.4.1983 of their senior Advocate countered the arguments put forward by the Government Counsel and commented on the availability of the appellate remedy with the Department, no efforts were made to seek that remedy in time. In the same submissions on page 38 the appellants , contended that the Tribunal's power for condoning the delay in presentation of the appeal was meaningless as this was a discretionary power and not a matter of right for the appellant. All the same, the Hon'ble Delhi High Court remitted the matter to the Appellate Tribunal only on the limited question of redemption fine. This was despite the fact that in his judgment Justice S.B. Wad had held that the petitioners could not be sent to the Appellate Tribunal where the remedy of appeal was barred by limitation. But the appellants chose to approach the North Regional Bench of the Tribunal in pursuance of the Hon'ble High Court's order rather than this Bench of the Tribunal, in spite of the clear advice contained in the preamble to the Collector's orders. If one were to hazard a guess about the motive of the appellants in not coming up before the appropriate Bench pursuant to the High Court's directive, it can be inferred that the appellants chose the Tribunal in New Delhi to encash on the earlier two decisions of the same. A perusal of the appeals and applications purporting to be under Section 151 of C.P.C. addressed to the then President brother Fauja Singh Gill for expediting the hearing of the appeals reveal that they breathe of confident optimism in retrieving substantially if not fully the losses sustained through the fines. After making repeated applications dated 5.3.1985,8.5.1985,30.7.1985, 2.8.1985 and 4.10.1985 to the President, the appellants finally succeeded in getting their appeals posted before the North Regional Bench of the Tribunal consisting of brothers Fauja Singh Gill and Devki Nandan Lal, even though this was just before brother Fauja Singh was to demit the office on completion of his tenure. It is also seen from the records of the cases that he agreed to take up these two appeals in preference to others for reasons best known to him. However, the S.D.R. objected to the jurisdiction of the North Regional Bench to hear the appeals, and after hearing the matters for two days on 4.11.1985 and 5.11.1985, the SDR's objection was upheld, and the appeals were transferred to the West Regional Bench, after finding fault with the Registry that it did not send these two appeals to the West Regional Bench, but unfortunately kept them in New Delhi and listed for hearing. At best, this observation can be described as an illustration of amnesia on account of advancing age as each of the applications made from time to time was specifically put to the President and the request for early hearing was deliberately deferred. While agreeing to transfer the appeals, brothers Fauja Singh Glli and D.N. Lal observed in their order on appeal No. C 248 of 1985 dated 5.11.1985 that the High Court's directions implied that the delay had been condoned for the purpose of filing the appeals before the Tribunal. With due deference to the opinion of the learned brothers, it may be mentioned that when they had no jurisdiction to deal with the appeals, they had no authority to interpret the High Court's directions as to whether the delay in preferring the appeals to the Tribunal had been condoned. Moreover, there is no warrant to inject this interpretation in the High Court's directions. While the Hon'ble High Court in writ cases has powers to travel beyond the limits of the Customs Act, 1962, this Tribunal is a creature of the statute and cannot go beyond the limitations prescribed by the statute. This is accepted by the Delhi High Court in the judgment (p. 53). It is also confirmed by the Supreme Court in the case of Miles India Ltd. (1985 ECR 289 S.C.) and other decisions. While there is discretion on the part of the Tribunal under the Customs Act to condone the delay in presentation of an appeal, if the same is explained to the satisfaction of the Tribunal, the Tribunal on its own cannot take up the question of going into the delay and condone it mo moto. Therefore, while dealing with the merits of the appeals as regards the quantum of fine in compliance, with the directions of the Hon'ble Delhi High Court, it is held that both the appeals are barred by limitation and in absence of any request for condoning the delay, the appeals have to be treated as time-barred under the provisions of Section 129-A (3) of the Customs Act. With much regrets, therefore, it is not possible to be persuaded to accept the findings of brothers Fauja Singh Gill and Devaki Nandan Lal that the Hon'ble High Court of Delhi had condoned the delay in presentation of these appeals to the Tribunal. Brother Fauja Singh Gill recorded the said findings perhaps while reminiscing of the days when he adorned the bench of the same Delhi High Court. He was approaching the Biblical span of life of three score and ten years and such an aberration on his part is pardonable in those circumstances. As regards the concurrence of brother Lal, it has to be taken as a true expression of the customary Indian tradition of showing respect to the elder brother. However, the call of conscientious duty drags this Bench elsewhere from the path of giving blind respect to the elders. It is seen that the petitioners were yet to approach the Tribunal in terms of the Delhi High Court's decision.
It was up to the appellants whether to do so or not. No request, oral or written, was made by the petitioners to the High Court, that as and when they filed the appeals the delay in doing so should be condoned.
The appellants were very much aware of this aspect. The appellants' Advocate Shri Rawal made an oral application on 20.12.1984 to appeal to the Supreme Court which was granted by the Delhi High Court. He could have made similar request for condoning the delay in approaching the Tribunal. But no such request was made. Had a request been made, the High Court would have probably conceded the same and directed the petitioners to file the appeals with a specified time frame. In absence of any such request, there is no warrant to interpret the High Court's order that the delay had been condoned for the purposes of Section 129A(3) and (5). Besides, it is seen that the Hon'ble Delhi High Court pronounced its judgment on 20.12.1984. The appeals under Section 129A were filed to the Tribunal on 22.2.1985, i.e. after more than 2 months.
No explanation for this delay is also forthcoming. The Hon'ble Supreme Court held in the case of Ramlal v. Rewa Coalfields Ltd. that even after sufficient cause had been shown, a party was not entitled to the condonation of delay as a matter of right. Similarly in the case of State of West Bengal v. Administrator Howrah Municipality , the Supreme Court held that each day's delay had to be explained to the satisfaction of the concerned authority. No such explanation is forthcoming in the present appeals.
The ratios of the Supreme Court's decisions have to prevail. Besides, nothing better can be done than to reproduce the salient observations from the Delhi High Court's judgment as follows: When such had been the strategical procedure adopted by the petitioner, I should not have been inclined to require the Tribunal to go into the propriety of the quantum of redemption amount. This is veritably putting the petitioner in advantageous position as if he has actually filed an appeal before the Tribunal. I would have felt more inclined to leave the petitioner himself to file the appeal and agitate the matter before the Tribunal and seek condonation of delay. The discretion in that regard would rest with the Tribunal and the same should not be fettered by us by requiring the Tribunal to treat the petitioner as if he has already filed an appeal before him.
15. In the end, both these appeals are rejected on merits and as time-barred.
1. I have had the advantage of going through the order passed by my brother Shri K.S. Dilipsinhji. I respectfully disagree not only with his conclusion but with his reasonings and also disassociate myself with the insinuations and disparaging remarks made against the former President of the Tribunal and the Hon'ble Member Shri D.N. Lal.
2. My brother Shri Dilipsinhji had rejected the appeals as barred by time. It is necessary to state that on behalf of the Respondents no contention was urged that the appeals were barred by time. The learned SDR, on behalf of the Respondent, did not urge that the appeal should be rejected as barred by time. It is pertinent to point out that the Delhi High Court, while disposing of the two Civil Writ Petitions, remanded the matter to the Tribunal on the limited question of redemption fine since the matter was remitted by the High Court to the Tribunal, the SDR rightly did not contend that the appeals were barred by time.
3. As 1 totally disagree with the reasonings and the conclusions of my brother Shri Dilipsinhji, I consider it necessary to write a separate order. Accordingly, a separate order is placed below.
1. The Appeal 863/85 arises out of and is directed against the Order-in-Original bearing No. 6/ Collr./82 dated 17.12.1982 passed by the Collector of Customs and Central Excise, Ahmedabad.
2. The Appeal 864/85 arises out of and is directed against the Order-in-Original No. 7/Collr./82 dated 18.12.1982 passed by the Collector of Customs and Central Excise, Ahmedabad.
3. As these appeals involve common questions of law and facts, they were heard together. Hence this common order.
4. The Collector of Customs and Central Excise, Ahmedabad, in his Order No. 6/82 ordered confiscation of 3002.557 Mts. of Refined Industrial Coconut Oil imported by the appellants under Section 111(d) of the Customs Act. He, however, gave an option to the appellants to redeem the goods on payment of a fine of Rs. 2 crores. In his Order No. 7/82 the Collector ordered confiscation of 5342.369 Mt of Refined Industrial Coconut Oil imported by the appellants under Section 111(d) of the Customs Act. He, however, gave an option to the appellants to redeem the goods on payment of a fine of Rs. 3 crores.
5. Being aggrieved by the order of the Collector the appellants M/s.
Jain Export Pvt. Ltd., filed two Civil Petitions bearing Nos. C.W. 4037 and C.W. 4038/82 before the High Court of Delhi. The two Writ Petitions came up for consideration before the full Bench of Delhi High Court.
Two of the Judges, namely, Mr. Justice Rajindar Sachar and Mr. Justice D.R. Khanna dismissed the Writ Petitions and upheld the orders of confiscation passed by the Collector. The other Judge Mr. Justice S.B.Wad, however, allowed the Writ Petitions by holding that the orders of confiscation are illegal. In view of the majority decision the matter was remitted to the Appellate Tribunal only on the limited question of redemption fine. The Hon. High Court also granted leave to appeal to the Supreme Court.
6. After remand, the matter came up for consideration before the North Regional Bench. On the objection raised by the SDR regarding the North Regional Bench's jurisdiction to hear the matter, the President by his Order C/248/85 NRB C/249/85 NRB dated 4.11.1985 transferred the records to this Regional Bench.
7. The scope of the appeals being limited, namely : as to whether the Collector was unjustified in imposing a fine of Rs. 2 crores in his Order No. 6/82 and Rs. 3 crores in his Order No. 7/82 it would not be necessary to set out the facts in detail.
8. The appellants in both the appeals is a private Limited Company. It carries on business of imports and exports and distribution of various raw materials to actual users. The appellants were a letter of authority holder issued to export houses. As letter of authority holder, they imported 5341.369 M/T of Refined Coconut Oil at the Port of Kandla in the State of Gujarat on or about 22.9.1982. When they sought clearance by filing Bills of Entry, the Customs, did not allow clearance but issued a show cause notice as to why the goods imported should not be confiscated as they were not permitted to be imported by any person other than a canalising agency, namely : State Trading Corporation of India. It was also alleged in the show cause notice that the clearances produced were not valid to cover the importation. The Collector of Customs and Excise, Ahmedabad, held two separate adjudications and as stated earlier he ordered confiscation of the consignments but allowed redemption on payment of a fine of Rs. 2 crores and Rs. 3 crores, respectively. In these appeals the appellants only challenged the quantum of redemption fine imposed by the Collector.
9. On behalf of the appellants. Shri Desai made the following submissions: (a) The Collr. had ordered confiscation mainly on the ground that Industrial Coconut Oil imported by the appellants was canalised through State Trading Corporation of India, and therefore, the import was unauthorised. (b) Sh. Desai urged that the contention of the appellants before the Collector was that what had been canalised was edible coconut oil and not industrial coconut oil. (c) Shri Desai urged that the appellants contention that the canalised item was edible coconut oil was based on the consistent view taken by the Customs Authorities including the Central Board of Excise & Cus. and the Central Government. (d) Shri Desai submitted that the Collector for the first time had taken a view different from the view taken by his superior authorities. Uptil then the imports of industrial coconut oil were freely allowed. (e) Shri Desai further submitted even if the Collector's view was that what was canalised was not merely edible coconut oil but industrial coconut oil also was to be accepted the Collector was unjustified in levying redemption fine having regard to the long standing practise followed in his Collectorate and in the other Collectorates. (f) Shri Desai submitted that the Collector should have allowed clearance on warning. In any case according to Shri Desai there was no justification whatsoever for the Collector to impose a heavy fine of Rs. 2 crores in one case and Rs. 3 crores in another case. The Collector according to Shri Desai had not assigned a single reason to impose such heavy fine amounts. (g) It was submitted by Shri Desai that all the licences in respect of which the appellants were the letter of authority holders of the year 1981. They were governed by the Policy 1980-81 and during the Policy period their sister concern M/s. Jain Shudh Vanaspati Ltd. imported a consignment of industrial coconut oil of the c.i.f value of Rs. 2 crores. The Collr. of Customs Bombay ordered confiscation and allowed redemption on payment of a fine of Rs. 25 lakhs. The sister concern M/s. Jain Shudh Vanaspati Ltd., preferred an appeal against the order of the Collr. of the Central Board of Excise & Cus. and the Board by its order dt. 23.1.81 allowed the appeal and held that the industrial coconut oil was not a canalised item under the Import Policy 1980-81. This order of the Board was confirmed by the Central Government by its order dated 31.3.1981.
10. In May, 1981 the appellants imported industrial coconut oil and the Collector of Bombay allowed clearance. Further, in July, 1981 the appellants imported industrial coconut oil and the very Collectorate of which the present Collector who ordered confiscation allowed clearance without raising any objection. Shri Desai further submitted that the question whether industrial coconut oil was canalised again came up for consideration before the full Bench of the Central Board of Excise & Customs and the Board by its order dated 28.5.1982 held that only edible variety was canalised. Shri Desai further submitted that the opening of letter of credit in respect of the consignments in question was on 31.7.1982. By that time the question regarding the canalisation of industrial coconut oil was settled by the highest authority, namely, the Central Government. Therefore, the appellants cannot be attributed with any mala fide when they placed orders or opened letter of credit.
Shri Desai further submitted that even though the majority of the Judges of the Delhi High Court had upheld the orders of confiscation made by the Collector they had granted leave to appeal to the Supreme Court and in the said circumstances the Collector was wholly unjustified in observing that the appellants deliberately flouted the Import Policy and its provisions. Shri Desai further submitted that as late as in the year 1983 the Customs Collectorate Calcutta allowed clearance of industrial coconut oil of 5,000 M.T. imported by M/s.
Jayant Oil Mills Pvt. Ltd., Bombay, without raising any objection. Shri Desai urged that the appellants made the imports under a bona fide belief that industrial coconut oil had not been canalised and in the said , circumstances the imports cannot be considered as unauthorised.
There was no justification to impose any fine much less than the huge fine of Rs. 2 crores and Rs. 3 crores levied by the Collector. Finally, Shri Desai submitted that the Tribunal may take into consideration the following aspects and reduce the fine to a token amount.
11. Firstly, that uptil the date of placing orders and opening of letter of credit the Central Board of Excise as well as the Central Government have held that the industrial coconut oil was not a canalised item.
12. The Collector of Customs, Calcutta as late as on 12.1.1983 allowed clearance on huge quantity of 5,000 M.T. of industrial coconut oil imported by M/s. Jayant Oil Mills Pvt. Ltd., Bombay, and another 5,000 M.T. imported by M/s. Metro Exports Bombay, without raising any objection. The Collector for the purpose of levying fine had taken the price at Rs. 19,000 per M.T. whereas the appellants had disposed of the import quantity to actual users at a lower rate.
13. The Tribunal may take into consideration incidental expenses such as licence premium, import duty, bank charges, customs clearance charges, transport charges from the port to the factory, octroi charges, interest charges on the capital blocked as well as the shortage of 1/2% for which no insurance claim is admissible. Shri Desai submitted that if all those aspects are taken into consideration the appellants would not even get a margin of profit of 10%.
14. It was further submitted that this Hon. Tribunal in Appeal No.CD(SB)/891/83-A dated 26.2.1983 arising out of the order in original passed by the very Collector in respect of the very commodity came to the conclusion that the margin of profit would be about 35% on the total landed cost of the goods. Shri Desai, however, submitted that in view of the huge storage charges and interest charges incurred by the appellants due to time gap in making the deliveries to the various actual users because of the adjudication proceedings the margin of profit for the appellants was wiped out completely. Further, the interest paid to the bankers for the amount of Rs. 2 crores paid as redemption fine has resulted in huge losses and the same is increasing every month as this amount of Rs. 2 crores is yet to be repaid.
15. Shri Desai also submitted that the Collector of Customs who ordered confiscation of industrial coconut oil of the c.i.f value of Rs. 2 crores had imposed only Rs. 25 lakhs but even that fine had been subsequently set aside by the Board.
16. Shri Desai finally, submitted that the Tribunal may if it deems fit impose a token fine in respect of both the consignments.
17. Shri Pal appearing for the Collector, however, defended the quantum of fine levied by the Collector in lieu of confiscation. The submissions of Shri Pal may be summarised as under: All the licences which were produced for clearance of the goods were not valid for import. Firstly, because at the time of import the goods imported were canalised. Secondly, because validity period of the licences had expired. Further the licences produced did not authorise import of coconut oil either industrial or edible since coconut oil was not one of the items appearing in Appendix 5 or Appendix 7 having regard to conditions imposed at the time of extending the validity of the licences. The Collector had at great length considered the validity of the licences and he had recorded his findings which are found in paragraphs 23 to 30 of his order.
18. The Collector's findings were upheld by two Judges out of the three Judges at the Delhi High Court. The majority of the Judges found the licences were not valid for import of coconut oil at the time of import.
19. The points that came up for consideration before the High Court were set out by His Lordship Justice Sachar in his judgment at pages 385 and 386 of the paper-book. Among the points set out Point No. 2 was to the effect: even if the word 'coconut Oil' in the above entry in the 1980-81 policy is to be taken to cover only the edible variety of coconut oil, could the same have still been validly imported in July-September, 1982 when admittedly Import Policies for 1981-82 and 1982-83 both edible and non-edible variety of coconut oil were canalised items and could only be imported by the STC.20. The learned Judge answered this point No. 2 and his answer is found at pages 405 to 407 of the paper-book. The finding of the learned Judge reads: the petitioner cannot rely for import of coconut oil on a licence which prohibits the particular item of goods. The effect of this endorsement is to make it as if there is no licence for the import of coconut oil in September, 1982 but subject to certain conditions in fact he had no licence to import coconut oil at all when the goods arrived. It would be a case of import without any licence.
21. Shri Pal further urged that the learned Judges of the Delhi High Court did go into the question of quantum of fine. In that connection he referred to pages 437 and 439 to 444 of the paper-book. Shri Pal particularly referred to the observation contained in page 446 of the paper-book which read: I may incidentally note that the petitioners overwhelming emphasis on the benefit belief being based on the letter of STC dated 25th October 1980 would need to be examined rather critically by Appellate Tribunal to whom I intend remitting but only on the question of redemption fine. It is to be noted that the licences were originally issued in November 1980 and January 1981. Two letters of authority were obtained in February 1981 and third one in December 1981. Now STC prima facie view could only have had, if at all any relevancy for 1980-81 policy during the currency of policy.
But the import was made in September, 1982. Could it not be said by the respondents that import was made because of the market condition. That a deliberate calculated chance risk was taken knowing fully well that by September 1982 industrial coconut oil had become a canalised item. But I need not pursue any further, as the Tribunal will no doubt examine this aspect.
22. Shri Pal also relied upon the further observations contained in pages 446 and 447 of the paper-book.
23. Shri Pal then referred to the order of His Lordship Justice Khanna and particularly to the passage found in page 557 of the paper-book. It reads: the redemption amount levied in the two cases before us totalled Rs. 5 crores. These heavy amounts were still paid by the petitioner and the coconut oil got released which perhaps reflects that it was considered yet advantageous. It has subsequently been marketed. The customs authorities have, of course, referred to the prevailing market rates (hen and pointed out that the petitioner has still made substantial profits. The petitioner has, however, disputed that the market rate was as mentioned by the respondent and has pleaded that the same was much less. It has also been pointed out that the petitioner had to pay considerable interest to the banks from which loans were taken for payment of that large amount. Be as it may, brother Sachar J. has directed the consideration of the propriety of the quantum of redemption amount to the Tribunal. The circumstances and considerations which prevailed in doing so have been mentioned in my brother's judgment. It has been taken note that the present cases have taken considerable time to decide and passed through various stages...
24. Shri Pal then urged that granting of an opinion to redeem is not obligatory and in support of his contention he placed reliance on the judgment of the Supreme Court reported in 1957 S.C. 648 and .
25. Shri Pal further urged that the Collector's observation that the appellants deliberately imported in violation of the law is correct and it was done with a view to making profits.
26. As regards the quantum of fine Shri Pal drew our attention to the affidavit filed by Hasmukhlal Gulabchand Modi, Assistant Collector of Customs and the affidavit filed by the adjudicating authority, Shri B.V. Kumar. Shri Pal urged that in the affidavit the Assistant Collector had stated that the market rate at the relevant time was Rs. 19 thousand per M.T. The adjudicating authority in his affidavit affirmed that the facts stated by the Assistant Collector in his affidavit are correct.
27. Shri Pal then referred to the statement made by the appellants that they had sold the goods at the rate of Rs. 14.500/- per M.T. Even if this rate was accepted still there is a margin of profit of 103% whereas the fine imposed in lieu of confiscation by the Collector works out little over 100% Finally, Shri Pal submitted that having regard to deliberate violation of the Import Control Order the fine imposed by the Collector cannot be considered as excessige or unjuste and in any case it was not harsh.
28. Shri Desai in reply submitted that the expression 'profit motive' is a dirty word. Nobody does business without a profit motive. He reiterated the interpretation of paragraph 185, Public Notice dated 22.5.1982 and paragraph 222 of the Policy in question. He particularly pointed out that while validating the certain of the licences reference was made only to paragraph 222(1), (2) and (4) and not sub-para (3) and therefore, the conditions regarding opening of a Letter of Credit, etc., would not apply. Shri Desai further submitted that the market rate metioned in the affidavit of the Assistant Collector does not indicate as to whether it was for edible or industrial oil and what was the exact date on which that market rate was prevailing. He further pointed out the question of redemption fine in identical cases on identical facts which came up before the Special Bench at Delhi. The Special Bench had held 35% of the landed cost in one case and 40% of the c.i.f value in another case as fair amounts.
29. As the above judgments referred to by the learned Advocate during his reply Shri Pal submitted that the orders of the Special Bench have no binding effect as they are co-ordinate Benches.
30. Anxious consideration has been given to the submissions made on both the sides. The scope of this appeal is very limited. This scope has been further narrowed down by the remand order of the High Court of Delhi. The majority opinion of the Delhi High Court reads: In view of the decision of the majority, the result will be that the contentions of the petitioner fail excepting that the matter will be remitted to the Appellate Tribunal only on the limited question of redemption fine. All other pleas raised by the petitioner fail. The writ petition disposed of accordingly, but with no order as to costs.
31. Thus, it is clear in this appeal that we are not required to go into the legality of the order of confiscation made by the Collector.
We are also not required to examine the legality or otherwise of the option to pay fine in lieu of confiscation granted to the appellants by the Collector. The limited question for our consideration is as to the quantum of fine levied by the Collector in lieu of confiscation.
32. Section 125 of the Customs Act authorises the officer adjudging confiscation to give an option to the owner of the goods to pay in lieu of confiscation such fine as the said officer thinks fit. The Section thus leaves discretion to the adjudging officer in the matter of fine required to be paid by the owner of the goods in lieu of confiscation.
It is axiomatic that the discretion vested in an authority by law affecting the rights of the parties is required to be exercised not whimsically, unjustly or unreasonably. It should be exercised judicially, honestly, reasonably and fairly as well as justly.
33. The contentions urged by either side had been referred to in the earlier paragraphs. In the matter of imposition of fine in lieu of confiscation on behalf of the appellants it was contended that the order is arbitrary, capricious and unjust, It was urged that any order which is not supported by reason is an arbitrary order. It was contended that in his order the Collector had not assigned a single reason as to why he was levying a fine of Rs. 2 crores in respect of one consignment and Rs. 3 crores in respect of another consignment. It was further contended that looking to the past practice, uniformly followed by the Collectorates, the Board and the revisional authority, no fine was required to be levied. A warning would have been sufficient and at best there should have been a token fine and not an unreasonable fine which is almost confiscatory in nature.
34. For the Collector it was however contended that there was deliberate violation of the Import Control Order with the avowed object of making profits. Though the licences did not permit import of the goods in question, the import was effected. The Collector could have ordered absolute confiscation. He was not required even to give an opinion. He was considerate. He granted an option to pay the fine which he had imposed. Looking to the margin of profit which the appellants were making the fine imposed was just and reasonable. The Collector was not required under law to assign any reason as to why he was imposing a fine of Rs. 2 crores in respect of one consignment and a fine of Rs. 3 crores in respect of another consignment. The exercise of his discretion was proper and not arbitrary, whimsical, unreasonable or unjust as contended by the other side. In order to appreciate the rival contentions it would be necessary to set out a few more facts which are either admitted or over which there is no controversy.
35. The licences relied upon by the appellants were not issued to them.
They are letters of authority holders. The licences produced bear the dates 4.11.1980, 15.1.1981 and 23.1.1981. The licence date 4.11.1980 was valid for 12 months. It was revalidated for a period of 6 months from the date of expiry subject to para 222 of the Import Policy 1981-82. This was again revalidated on 28.6.1982 for a further period of 6 months from the date of revalidation subject to the condition that during the extended period of validating the item which do not appear in Appendix 5 and 7 of the Import Policy 1982-83 will not be imported.
There were other conditions also which are not relevant. The licence bearing the date 23.1.1981 was also valid for 12 months. It was also revalidated for 6 months from 22-1-1982 subject to the condition that during the extended period of shipment the licence would be subject to the conditions of para 222(1), and 222(4) of the Import Policy 1981-82 and also subject to the restrictions contained in pararaph 185(3) of Import Policy 1981-82. The licence dated 15.1.1981 is a main licence and there were split up licences in respect of that very licence. The split up licence was originally valid upto 14.1.1982. They were revalidated for 6 months from the date of expiry and were also subject to the provisions made in para 222(1), 222(2) and 222(4) as well as subject to the restrictions contained in para 185(3) of the Import Policy 1981-82. Thus, originally all the three licences were issued during the Policy AM. 1981 or the Policy period 1980-81.
36. A letter of credit was opened in respect of the consignments in question on 31.7.1982 during the Policy period 1981-82.
37. Appendix 9 of the Policy AM. 81 contained canalised items as well as the canalising agencies permitted to import the canalised items.
Under the heading Oils/Seeds 'coconut oil' had been mentioned as a canalised item. In the Policy AM. 82 the canalised items as well as the canalising agencies were set out in Appendix 9. Under the heading Oils/Seeds one of the items mentioned was 'coconut oil'. So far as the description of the item is concerned there is no difference between 1981 Policy and 1982 Policy. But paragraph 5 of Appendix 9 AM. 81 began with the words 'in the case of the following items, import will be made only by the State Trading Corporation of India (STC), under Open General Licence...'. But in the Policy 1982 the said paragraph began with the words 'in the case of following items whether edible or non-edible, import will be made only by the State Trading Corporation of India (STC), under Open General Licence...'. Thus, the expression whether 'edible or non-edible' came to be incorporated only in the Policy AM. 82.
38. Even though the Policy AM. 81 did not have the expression 'edible or non-edible', the Collector of Bombay ordered confiscation of the consignment of industrial coconut oil imported by M/s Jam Shudh Vanaspati Ltd., said to be the sister concern of the present appellants holding that the Policy 1981 prohibited import of coconut oil whether edible or non-edible and he allowed redemption of payment of a fine of Rs. 25,00,000/- and c.i.f value of the goods imported was stated to be nearly Rs. 2 crores, M/s. Jain Shudh Vanaspati Ltd., preferred an appeal to the Central Board of Excise. The Board by its order dated 23.1.1981 allowed the appeal holding that what was canalised in the Policy 1981 was edible coconut oil and that industrial coconut oil was not a canalised item. The Central Government issued a show cause notice in exercise of their power under Section 131(3) of the Customs Act as it then stood, but after hearing affirmed the order of the Board dated 23.1.1981. The order of the Government of India is dated 31.3.1981.
39. The appellants herein imported a consignment of industrial crude coconut oil of the c.i.f value of Rs. 1,16,25,000/- and in May, 1981, the Bombay Custom House allowed clearance without raising any objection.
40. Again the appellants herein imported industrial coconut oil of the value of Rs. 81,72,000/- through Kandla Port. The very Collectorate which had imposed fine in lieu of confiscation in respect of the imports in question allowed clearance in July, 1981 without raising any objection.
41. On behalf of the appellants it was submitted in respect of the two consignments of industrial coconut oil valued at Rs. 5 crores each, imported by M/s. Jayant Oil Mills Pvt. Ltd., and Metro Exports, were cleared by the Customs Collectorate at Calcutta in January, 1983 without raising any objection.
42. As has been seen earlier that inspite of the clear Policy canalising both the varieties of coconut oil whether edible or non-edible, the Bombay Collectorate, the Ahmedabad Collectorate during the Policy AM. 82 and the Collectorate at Calcutta during the Policy AM. 83 allowed clearance of industrial coconut oil without raising any objection.
43. The grounds on which the Collector of Customs and Central Excise, Ahmedabad held the imports as unauthorised or illegal was that the industrial coconut oil was a canalised item both during the Policy AM.80-81 as well as during the Policy 81-82, and therefore, no agency other than the canalising agency could import. The second ground on which the Collector held the import as unauthorised or illegal was that the licences produced were not valid for import as they did not authorise import of industrial coconut oil.
44. Both the orders of the Collector are identically worded in so far as they relate to confiscation and imposition of fine in lieu of confiscation excepting of course as to the quantum of fine. For the purpose of these appeals it is suffice if a paragraph of the final order is extracted: This is a case where normally the provisions of Section 112 of the Customs Act, 1962 ought to have been invoked inasmuch as the Import Policy and its provisions were deliberately flouted. However, the redemption fine imposed in lieu of confiscation of the impugned goods is sufficient to meet the ends of justice. In view of this, 1 refrain myself from imposing a personal penalty on the importers.
45. The question that appropriately falls for consideration in both these appeals is whether on the facts and in the circumstances of the case, the Collector was unjustified in imposing a fine of Rs. 2 crores in respect of the import of 3002.557 MT and Rs. 3 crores in respect of the import of 5342.369 MT. In his order the Collector has not assigned any reason as to why he is imposing a fine of Rs. 2 crores or Rs. 3 crores. Section 125 leaves it to the discretion of the Collector as to the amount of fine to be levied in lieu of confiscation. In the said circumstances, not specifying any reason in the order by itself may not be a good ground to invalidate the order. On behalf of the Collector, the learned Departmental Representative had urged that while quantifying the fine amount the Collector had taken into consideration the market value of the goods at the time of import, and the margin of profits. In that connection he had referred to the affidavits of the Assistant Collector as well as the adjudicating authority filed in the Delhi High Court during the pendency of the writ petition.
46. Shri Pal had also referred to certain observations of their Lordships in the matter of quantum of fine and reference has been already made to those observations in the previous paragraphs of this order. Therefore, it is unnecessary to refer to them again. For the appellants it was contended that the market price stated by the Assistant Collector and affirmed by the Collector were not shown to be the market price, firstly, because of industrial variety of coconut oil, secondly, there was no evidence as to the market price prevailing at the time of import and thirdly, no proof was there regarding the rate stated in the affidavit. It was urged that affidavit was also filed on behalf of the appellants wherein they had stated that bulk of the imported goods were sold to the actual users and at the rate of Rs. 14,500/- per MT and the duty on each MT would be about Rs. 6,000/-. The main contention of the appellants was that the finding of the Collector that the appellants deliberately flouted the provisions of Import Policy was wrong and this deliberate flouting influenced his mind in quantifying the fine. The Collector according to Shri Desai failed to take into consideration the presents of his own Collectorate, and other Collectorates such as Bombay and Calcutta, the Superior authority, namely the Board and the highest authority namely, the revisional authority. They were of the opinion that during the Policy AM. 81 the industrial coconut oil was not canalised and what was canalised was only edible variety of coconut oil. There appears some force in this contention. Reference has been already made to the various orders passed by the Bombay Collectorate, Ahmedabad Collectorate, Calcutta Collectorate, the Board and the Government of India. Significantly even after coming into force the Import Policy AM. 82, the three Collectorates namely, Bombay, Calcutta as well as Ahmedabad (Kandla) cleared industrial variety of coconut oil without raising any objection. Further, the clearance of two consignments by Calcutta Port was during the year 1982 subsequent to the two orders which are now challenged before us.
47. In the matter of imposition of fine in lieu of confiscation the Custom Houses have been taking into consideration the margin of profits. It cannot be said that margin of profits cannot be a criteria in fixing the amount of redemption fine. Another factor which was being uniformly followed is the past practice in the matter of clearance. The other criterion applied in certain cases has been whether the import was for stock-in-trade or for utilisation in the manufacturing activities of the importer. Yet another criterion that is being applied is about the bona fide or mala fide conduct of the importer.
48. The Collector had no doubt stated in his orders that the importers had deliberately flouted the Import Policy and its provisions. The Collector, however, does not impose any personal penalty inspite of such a positive finding. His reasons for not imposing personal penalty was that the fine in lieu of confiscation imposed was sufficient to meet the ends of justice. The Collector's order is susceptible to the interpretation that the redemption fine imposed would take care of the penalty aspect. Therefore, separate imposition of penalty was not required. In other words, the quantum of fine imposed consists of fine as well as penalty. It is reasonable to take such a view because if the violation as has been characterised by the Collector was deliberate, the Collector by not imposing the penalty would be violating the statutory requirement in the matter of imposition of penalty which could not be so because the Collector himself had stated in his order that the fine imposed is sufficient to meet the ends of justice, and therefore, he is refraining from imposing a personal penalty.
49. If the past practice and the orders passed by the various Collectorates is a guide it is difficult to agree with the conclusion of the Collector that there was deliberate flouting of the Import Policy and its provisions.
50. As has been stated earlier upto the highest authority namely, the revisional authority, the view that prevailed was that the Policy 1980-81 (AM. 81) canalised only edible variety of coconut oil and not non-edible variety of industrial coconut oil. Another view which has been prevailing was that the licences issued are valid for import of the goods permitted during the Policy during which the licences were issued. As has been seen earlier all the licences were issued during the Policy AM. 80-81. They were no doubt revalidated and certain restrictions were also placed regarding the imports. It is not now open to canvass that the confiscation orders passed by the Collector are not valid because two Judges of the Delhi High Court out of three Judges had upheld the order of confiscation. As has been stated earlier only two important issues were before the Collector and also before their Lordships of the Delhi High Court. The first issue was whether at the relevant time the industrial variety of coconut oil was a canalised item or not, The second issue was whether the licences which were revalidated permitted import of industrial coconut oil as OGL items.
The Collector's view was upheld by the majority judgment of the Delhi High Court. Significantly, one of the Judges who constituted the full Bench took a different view. More significantly, the Delhi High Court granted special leave to the appellants to file appeals before the Supreme Court. Under Article 133 (1) of the Constitution of India an appeal would lie to the Supreme Court if the High Court certifies under Article 13: (a) that the case involves a substantial question of law of general importance; and (b) that in the opinion of the High Court the said question needs to be decided by the Supreme Court.
The above provisions under Article 133 came to be incorporated by 30th Amendment Act, 1972 which came into effect on 27.2.1973.
51. When the High Court itself considered that the case involves substantial question of law of general importance and that in the opinion of the High Court the said question needs to be decided by the Supreme Court, it is difficult to accept the finding of the Collector that there was deliberate flouting of the Import Policy and its provisions.
52. In the circumstances it cannot be said that the appellants were guilty of mala fide in the import of industrial coconut oil.
53. The past practice as has been seen earlier is in favour of the appellants even after the industrial variety of coconut oil came to be canalised. The Collectorates of Bombay, Ahmedabad (Kandla) and Calcutta allowed clearance without raising any objection.
54. The Bombay High Court in Gujarat State Export Corporation Ltd. and Anr. v. Union of India and Anr. Bombay while considering the argument regarding the past practice of the Bombay Custom House observed: the petitioners relied upon the long standing practice of the Bombay Custom House and effected the import and as the Custom House itself was in doubt as to whether the import was valid or not and was releasing the import on previous occasions; including the import of the identical items of the petitioners, it cannot be said that the import was in contravention of the provisions of Section 111(d) of the Customs Act.
The Division Bench of the Gujarat High Court in Bhor Industries Limited v. Union of India 1980 ELT p. 752 : 1982 ECR 345D Gujarat approved the following observation of the Calcutta High Court in Mercantile Express Co. Ltd. v. Assistant Collector of Customs and Ors. in 1978 ELT (J 552): whether the doctrine of precedents applies in its full rigour to Administrative Agencies and Officers, and whether a reasonable latitude should be given to them or administrative tribunals to correct or modify their previous decisions may still remain a debatable controversy in the world of law; nevertheless I am clearly of the opinion that neither the Appraiser nor the Collector of Customs can change his mind from time to time in respect of the same articles by assessing them in the case of one importer under one section and then assessing them for another importer under different section. To allow the customs to do so will lead to utter confusion in the very basis and principles of taxation and grave uncertainity in business and foreign trade of India. Its more serious result will be the most unfair discrimination of taxes in respect of the same goods with regard to different importers. That cannot be permitted by the Construction which insists on the equality of law as one of its fundamental guarantees. I am therefore inclined to hold that the customs are bound by their own precedents in administrating taxing statutes involving the very basis of taxation in respect of a particular article and not leave it to them to modify their own previous decisions but to leave it to them to apply to Courts or Parliament or Legislatures as the case may be to put the Law beyond doubt.
The Central Excise authorities cannot go on changing their mind from time to time and cannot be allowed to create uncertainly in the realm of taxation....
54. There are any number of instances where the Board as well as the revisional authority have reduced the quantum of fine considerably.
Even this Bench when it was satisfied as to the bona fide of the importer have considerably reduced the fine amount. In Appeal CD(BOM) No. 736/85. Crown Measurements Private Limited v. Collector of Customs, Bombay, this Bench reduced the fine in lieu of confiscation from Rs. 1,60,000/- to Rs. 16.000/-. In CD(T) (BOM) 274/80 Shri Bhagwati Solvent Extraction Private Limited v. Collector of Customs, Bombay, this Bench reduced the fine from Rs. 1,08,000/- to Rs. 28,500/-.
55. During the course of the hearing of these appeals the learned Advocate for the appellants had referred to the two orders passed by the Special Bench A, Delhi. CD(SB) 891/81 Jayant Oil Mills Private Ltd. v. Collector of Customs, Ahmedabad, the Special Bench reduced the fine from Rs. 1.5 crores to Rs. 62.5 lakhs. Incidentally, the issues involved in that appeal are identical to the issues involved in these appeals. The Collectorate which imposed the fine is also the Collector of Customs & Central Excise, Ahmedabad. The goods imported was also industrial coconut oil refined, The appellants, M/s. Jayant Oil Mills Private Limited imported a consignment of 2149.538 metric tons of industrial coconut oil and sought clearance against two Export House Additional licences as letter of authority holders. The licences were dated 25.3.1981 and 15.1.1981. They were revalidated on 15.3.1982 and 17.9.1982 with certain conditions. The Collector of Customs, Ahmedabad, who held the adjudication, by his order dated 26.2.1983 held that the coconut oil (including industrial coconut oil) was one of the canalised item under item 5(i) of Appendix 9 of the Import Policy 1980-81, and therefore, could be imported by the canalising agency only, and was therefore, not an item under the Open General Licence. In respect of another licence the Collector held that no grace period of 60 days should be allowed in view of the restrictions under para 185(3) which was one of the conditions of revalidation. The Collector ordered confiscation but allowed redemption on payment of a fine of Rs. 1.5 Crores.
57. M/s. Jayant Oil Mills preferred an appeal before the Special Bench.
The Special Bench upheld the Collector's order of confiscation, but then reduced the fine from Rs. 1.5 Crores to 62.5 lakhs.
58. As in these appeals on behalf of the appellants therein it was urged that the Collector has not assigned any reason to impose a fine of Rs. 1,50,00,000/- and the import was made bona fide and in that connection the earlier decision of the Board, the revisional authority were all brought to the notice of the Special Bench. On behalf of the Collector it was contended that having regard to the large quantity of goods the redemption fine imposed was not excessive and the market value was Rs. 18.000/- per M.T. etc. The Special Bench found that the c.i.f. value of the import was Rs. 1,16,74,281.48 and the duty paid was Rs. 70,76,657.09. The total landed cost of the consignment including the duty and landing charges would be roughly about Rs. 1 crore 80 lakhs. The Special Bench rejected the appellants' contention that the margin of profit could only be 10%. The Special Bench observed; It appears to us that the 10% margin suggested by Shri Desai as the probable profit is too low. At the same time, the Collector's judgment placing the margin of profit over 100% may not be wholly acceptable. Considering all circumstances, and making an educated guess in the absence of thoroughly reliable data, we feel that 35% can be taken to be a reliable estimate of the margin of profit at the material time, in respect of these goods. It further appears to us that the profit margin has to be calculated not on the c.i.f.
value, as suggested for the appellants, but on the total landed cost since the profit would be expected to be realised by the importer on the total landed cost and not merely on the c.i.f. value without reference to the landing charges and duty payable.
The Special Bench also rejected the appellants' contention that they had acted in entirely bona fide manner. The observation of the Special Bench in this regard reads: We are hence of the view that the contention, that the appellants had acted in an entirely bona fide manner, and that there had been no contumacious infraction of the local provisions, cannot be accepted as justified.
Taking note of all the above circumstances and on a very anxious consideration of the submissions of both sides, we feel that the redemption fine may be reduced to Rs. 62.5 lakhs.
58. The above decision of the Special Bench related to the adjudication order passed by the same Collector on 26.2.1983. The facts as well as the law involved in the Special Bench case and the facts and law involved in the present appeals are practically identical. In the circumstances, there is no justifiable reason to adopt a different yardstick than adopted by the Special Bench.
59. Similar questions again came up before the Special Bench in Appeal No. 1418/83-A, M/s. Allana Impex (P) Ltd , v. Collector of Customs, Rajkot. The brief facts of that case are: The appellants M/s. Allana Impex (P) Ltd., imported two consignments totalling 1092.463 M.Ts. of industrial coconut oil (Refined). The consignments arrived at Kandla on 4.11.1982 from Colombo. The appellants claimed benefits of preferential rates of duty under Customs Notification dated 1.11.1976. They sought clearance on the basis of Export House Additional Licences dated 6.1.1981 and 24.9.1979. The Department objected for the clearance on the ground that the licences were revalidated and the industrial coconut oil did not appear under Appendices 5 and 7 of the Import Policy A.M. 81 and 83 and further it was a canalised item. The Collector of Customs and Central Excise, Ahmedabad, ordered confiscation but allowed redemption on payment of a fine of Rs. 75 lakhs. In the appeal the Special Bench reduced the fine from Rs. 75 lakhs to Rs. 25 lakhs. I laving regard to the similiarity of facts in the appeals under consideration and the appeal before the special Bench the above judgments also can be relied upon in the matter of imposition of fine.
60. As has been held by me that there was no precise evidence as to the market value of the edible variety of coconut oil. In the absence of precise evidence regarding the market price and in the absence of evidence as to the price at which bulk of the imported edible oil was sold by the importers, it cannot be said with certainty as to the actual profit earned by the importers. For the purpose of imposing fine what is relevant is the net profit made by the importers. 'Net profit' is the gain made by selling goods at a price beyond all costs and charges. On behalf of the appellants it was contended that the licences were all transferred licences and huge premiums had to be paid. Further the importers had to pay import duty charges, Customs clearance charges, transport charges from the Port to the factory, octroi duty, interest charges on the capital locked as well as the shortage 1/2% for which no insurance claim is admissible. It was also urged that the appellant had to pay huge storage charges, and also interest to the banks the time gap making deliveries of the goods to the actual using because of the penal proceedings. It was also urged that heavy interest was paid to the Bankers on the amount of Rs. 2 crores paid as redemption fine as a result the appellants are incurring huge losses.
On behalf of the Department, it was not contended that the appellants were not required to incur the expenses urged by the learned Advocate for the appellant. In order to determine the net profit it would be necessary to deduct all costs and charges incurred by the appellants. | Taking into consideration the various expenses incurred and having regard to the fact that the Delhi High Court had certified under Article 134-A of the Constitution of India the appeals involve a substantial question of law of general importer and that in the opinion of the High Court the said questions need be decided by the Supreme Court; and having regard to my findings that mala fide cannot be attributed to the appellants and considering the past practice of the various Collectorates in the matter of clearance of edible coconut oil even during the Policy period A.M. 81-82 and 82-83 and also taking into consideration the amount of fine imposed by the Special Bench A in similar matters, it is quite reasonable and just to reduce the quantum of fine to 35% of the landing cost in respect of both the consignments, 61. Accordingly, I allow this appeal and reduce the fine in lieu of confiscation to 35% of the landing cost of the two consignments. The appellants be granted consequential relief.
Since there is difference of opinion between the two Members, the records are submitted to the President for referring the points of difference to one or more Members of the Tribunal as required under Section 129-C(5).
(1) Whether the appeals could be rejected as time barred even though no such contention was taken by the Respondent and when the High Court has remitted the matter to the Tribunal (2) Whether the appellants are entitled to reduction in the quantum of fine to 35% of the landing cost as has been held by the Member (Judicial), This matter is submitted to the President in terms of Section 129C(5) of the Customs Act for the consideration of the following points: (1) Whether on the facts and circumstances of the case the appeals of M/s. Jain Exports Private Ltd. for reduction in redemption fine deserve to be rejected as held by Member (Technical) or whether the fines should be reduced to 35% of the landed cost of the two consignments as held by Member (Judicial).
(2) Whether the appeals are time barred under Section 129A (3) of the Customs Act and as such they are required to be rejected.
1. These two appeals were heard by the West Regional Bench, Bombay ("WRB", for brevity's sake) of this Tribunal. The two Members comprising the Bench wrote separate orders and also framed separately and differently two questions each representing the points on which they differed. In view of this position, the WRB referred the matter to the President under Section 129-C(5) of the Customs Act 1962. The President by his Order dated 14.8.1986, referred the points of difference to the present Bench for hearing. Since the two Members of the WRB had formulated the points of difference differently and separately, this Bench formulated the points of difference such that the points separately and differently formulated were merged and consolidated. Copies of the order written by the two Members ' of the WRB and the points of difference as formulated by them together with the points of difference as formulated by this Bench were furnished to both sides along with the notice of hearing.
2. When this matter was taken up for hearing, Shri Sundar Rajan, learned Departmental Representative for the respondent questioned the competence of this Bench to formulate in its own words the points of difference which happened to have been separately and differently formulated by the two Members of WRB. Dr. L.M. Singhvi, learned Counsel for the appellants, however, submitted that in view of the separate and different formulation of the points of difference by the two Members of the WRB, the course of action adopted by this Bench was the proper one and that the Bench was competent to do so. The Bench, however, did not wish to get involved in this controversy and enquired of the learned Departmental Representative and the Counsel whether they would be prepared to make submissions on the points of difference as formulated by the Members of the WRB to which both replied in the affirmative.
Therefore, these proceedings are on the basis of the submissions made with regard to the points of difference as formulated by the Member of the WRB.3. It is not necessary to set out the facts of the cases in any detail for our purpose since they have been set out at length in the two separate orders written by the Member (Technical) and the Member (Judicial) of the WRB. The points of difference as formulated by them are as follows: (1) Whether the appeals could be rejected as time barred even though no such contention was taken up by the Respondent and when the High Court has remitted the matter to the Tribunal ?" (2) "Whether the appellants are entitled to reduction in the quantum of fine to 35% of the landing cost as has been held by the Member (Judicial).
(1) "Whether on the facts and circumstances of the case, the appeals of M/s. Jain Exports Private Limited for reduction in redemption fine deserve to be rejected as held by Member (T) or whether the fines should be reduced to 35% of the landed cost of the two consignments as held by Member (J) " (2) "Whether the appeals are time barred under Section 129A(3) of the Customs Act and as such they are required to be rejected.
4. We shall first deal with the question whether it is open to this Tribunal to reject the appeals as time barred under Section 129A(3) of the Customs Act on the facts and in the circumstances of the cases.
Before dealing with the question, it is necessary to narrate briefly the circumstances in which these two matters have come before this Tribunal.
5. By Order-in-Original No. 6/Collr/82 dated the 17th December, 1982, the Collector of Customs and Central Excise, Ahmedabad, confiscated 3,002,557 metric tonnes of refined industrjal coconut oil, imported by M/s. Jain Exports Private Limited, under Section 111 (d) of the Customs Act, 1962, based on his finding that the goods are not covered by valid import licences for their import and that, therefore, they had been imported in violation of the prohibition on their import under the Import Trade Control Policy. However, he gave an option to the importers to redeem the goods* on payment of a fine of Rs. 2 crores only within three months from the date of receipt of the Order. The Collector observed in his Order that this was a case where normally the provisions of Section 112 of the Customs Act ought to have been invoked inasmuch as the Import Policy and its provisions had been deliberately flouted. The Collector, however, refrained from imposing penalty on the importers since, in his view, the redemption fine imposed in lieu of confiscation of the goods was sufficient to meet the ends of justice.
He further stated in his Order that in case the importers exercised the option to redeem the goods on payment of the fine imposed, they could clear the goods on payment of duty at preferential rates applicable to goods of Sri Lanka origin inasmuch as they had produced the certificate of origin duly certified by the appropriate authorities.
6. Similarly, the Collector, by his Order-in-Original No. 7/Collr/82 dated the 18th December 1982, for the same reasons, confiscated 5,342.369 metric tonnes of refined industrial coconut oil imported by the same importers, under Section 111(d) of the Customs Act. However, he gave an option to the importers to redeem the goods on payment of a fine of Rs. 3 crores only within three months from the date of receipt of the Order. As in the other case, the Collector refrained from imposing a penalty on the importers since, in his view, the redemption fine imposed in lieu of confiscation was sufficient to meet the ends of justice though, according to the Collector, this was a case where normally Section 112 of the Customs Act ought to have been invoked. The Collector, as in the other case, also stated that the goods if redeemed, could be cleared on payment of duty at preferential rates applicable to goods of Sri Lanka origin.
7. These two orders-in-original were challenged by M/s. Jain Exports Private Limited by Writ Petitions (Nos. CW 4037 and CW 4038/82) filed before the Delhi High Court. The two petitions were disposed of by the Full Bench of the Delhi High Court consisting of Hon'ble Mr. Justice Rajender Sachar, Hon'ble Mr. Justice S.B. Wad and the Hon'ble Mr.
Justice D.R. Khanna, by its judgment dated the 20th December 1984. The three learned judges wrote three separate judgments. While Mr. Justice Khanna agreed with Mr. Justice Sachar, Mr. Justice Wad wrote a dissenting judgment. The common majority order reads thus: In view of the decision by the majority, the result will be that the contentions of the petitioner fail excepting that the matter will be remitted to the Appellate Tribunal only on the limited question of redemption fine. All other pleas raised by the petitioner fail. The writ petition is disposed of accordingly, but with no order as to costs.
On an oral application for leave to appeal to the Supreme Court, the Bench granted leave. We were informed during the hearing that the Special leave matter was pending before the Supreme Court.
8. The contention of the learned Counsel for M/s. Jain Exports Private Limited before us was that the High Court was fully conscious of the fact that the importers had not, during the pendency of the proceedings before the High Court, challenged the two orders-in-original passed by the Collector, by appeal before the Tribunal. In this connection, our attention was drawn to the following passages occurring in Mr. Justice Sachar's Judgment: However, as mentioned above only on the redemption fine, the matter has to be remitted to the authorities under the Customs Act. I am not inclined to send it back to the Collector for the reason that had the petitioner availed of the remedy of appeal this matter would have been heard by the Appellate Tribunal. I would, in the circumstances, remit the matter to Appellate Tribunal, but only on, the question of consideration of quantum of redemption fine. The Appellate Tribunal would hear and dispose of this matter as if it was hearing an appeal filed by the petitioner but only on the question of quantum of redemption fine. I, having held that the order of confiscation passed by the Collector was legal, there is no question of that point other points being reopened before the Appellate Tribunal. It will only hear and decide the question of quantum of redemption fine. Of course, it will be open to the petitioner and the Collr. to place before the Appellate Tribunal any relevant material or facts, necessary for this purpose so as to enable it to decide this question in accordance with law.
As a result, all the contentions of the petitioners fail, except for the matter being remitted to the Appellate Tribunal on the limited point mentioned above. The Writ Petition is disposed of as above.
Our attention was also drawn to the following passages occurring in Mr.
Justice Khanna's judgment: When such has been the strategical procedure adopted by the petitioner, I should not have been inclined to require the Tribunal to go into the propriety of the quantum of redemption amount. This is virtually putting the petitioner in advantageous position as if he has actually filed an appeal before the Tribunal. I would have felt more inclined to leave the petitioner to himself file the appeal and agitate the matter before the Tribunal and seek condonation of delay. The discretion in that regard would rest with the Tribunal and the same should not be fettered by us by requiring the Tribunal to treat the petitioner as if he has already filed an appeal before him.
...Be that as it may, Brother Sachar J. directed the consideration of the propriety of the quantum of redemption amount to the Tribunal. The circumstances and considerations which prevailed in doing so have been mentioned in my Brother's judgment. It has been taken note that the present cases have taken considerable time to decide and pass through various stages. Requiring the petitioner to move appeal before the Tribunal against the order of the Collector has been considered to be cumbersome and may further delay the matters. Moreover, this Court in the exercise of the Writ jurisdiction would not like to probe into and weigh the facts and circumstances relevant for determination of proper quantum of redemption amount. As such in the ultimate analysis I am inclined to concur with Brother Sachar J. when he has referred the matter to the Tribunal.
9. Dr. Singhvi, therefore, contended that the direction or mandate given by the High Court to the Tribunal was quite clear. The Tribunal was to go into only the question of the quantum of the redemption fines imposed by the Collector. The Court remitted the matter to the Tribunal only for this limited purpose. This was not a case of remand. The High Court's orders could not be construed as having remanded the matter to the Appellate Tribunal because remand could be only in instances where matters before the Tribunal had been disposed of by the Tribunal and the Court sent the matter back to the Tribunal for reconsideration in accordance with the observations and directions of the Court. In the present two matters, the importers had not suo moto, filed appeals before this Tribunal against the two orders passed by the Collector.
They had come before the Tribunal because, in pursuance of the Court's directions, they were bound to assist the Tribunal in determination of the quantum of redemption fine. Therefore, this was not an instance of the Court remanding the matter to the Tribunal. The Court, on the other hand, remitted the matter to the Tribunal even though it was aware that no appeals had been filed before the Tribunal. Dr. Singhvi submitted that the importers were under no obligation to file appeals before the Tribunal. However, the importers had filed sets of papers (may be they have been called mistakenly as appeals) with the purpose of facilitating the Tribunal's consideration of the matter remitted to it by the Court. Since the importers were under no obligation to file appeals, the question of the importers having to pray for condonation of delay in filing the appeals or of the Tribunal going into that question simply would not and did not rise.
10. Shri Sundar Rajan, the learned Departmental Representative, however, contended that the importers had, in fact, filed appeals against the two orders of the Collector but after the disposal of the writ petitions by the Delhi High Court. These appeals were hopelessly barred by limitation under Section 129 of the Customs Act. Shri Sundar Rajan drew our attention to the following passages occurring in Mr.
Justice Sachar's judgment: It (the Tribunal) will only hear and decide the question of quantum of redemption fine. Of course, it will be open to the petitioner and the Collector to place before the Appellate Tribunal any relevant material or facts, necessary for this purpose so as to enable it to decide this question in accordance with law.
Shri Sundar Rajan stressed on the words "in accordance with law". All the provisions of law would, therefore, have to be applied to the two appeals. The importers had not even sought condonation of the delay in filing the appeals. He further contended that no writ had been issued by the High Court to this Tribunal and that the Court's direction was not mandatory and further that there was no obligation on the part of the importers to approach the Tribunal since leave to appeal to the Supreme Court had been granted. So far as this Tribunal was concerned, the jurisdiction to go into this case or any other case would arise only if there was an appeal in terms of the provisions of Chapter XV of the Customs Act. There was no other provision conferring jurisdiction on this Tribunal Once it was an appeal all the provisions relating to appeals would apply and inasmuch as the importers had not filed applications nor prayed for condonation of the delay in filing these appeals and so long as the said delay had not been condoned by the Tribunal, they were no valid appeals in the eyes of law before this Tribunal on which it could adjudicate in accordance with law as directed by the High Court.
11. On the question of limitation, Member (Technical) WRB, has noted in his order that the two orders passed by the Collector had been received by the importers before 27.12.1982 and the two appeals were filed in Tribunal on 22.5.1985. Since the importers had not availed themselves of the appeal remedy in time and they had not prayed for condonation of the delay in filing the two appeals nor explained the reasons for the delay, the two appeals had to be held as barred by limitation. In this view of the matter, Member (Technical) has passed an order dismissing both the appeals on the ground (also) of limitation. Member (Judicial), WRB on the other hand, has observed that the question of the appeals being barred by limitation was not raised on behalf of the respondent nor had the departmental representative, on behalf of the respondent urged that the appeals should be dismissed as barred by limitation. He further observed that the Court had remitted the matter to the Tribunal on the limited question of redemption fine, and the departmental representative rightly did not contend that the appeals were barred by time.
12. Several authorities were cited before us by Shri Sundar Rajan, the learned Departmental Representative for the respondent, in support of his submissions on the aspect of limitation. However, in the view we are taking on this aspect, we do not consider it necessary to refer to and discuss these citations. The operative part of the majority judgment is quite clear and admits of no doubt or ambiguity. The Court stated that the matter was being remitted to the Tribunal only on the limited question of redemption fine. This, as rightly urged before us, is not an Order of remand. There was no decision of this Tribunal which was under challenge before the Court in the two writ petitions before it and there would, therefore, have been no occasion for the Court to remand the matter to the Tribunal for reconsideration of its (the Tribunal's) order in the light of the Court direction. The Court was conscious of the fact that the importers had notified appeals before this Tribunal while the Writ Petitions were pending before the Court, and that any appeal filed now would be barred by limitation unless the delay in filing appeals was condoned by the Tribunal. In fact, there are observations in the judgment to the effect that in the ordinary course the appellants should have filed appeals to the Tribunal and it would have proceeded to consider them in accordance with law. However, even though appeals had not been filed, the Court remitted the matters to this Tribunal for considering the quantum of redemption fines. We are, therefore, of the opinion that this is not a case of two appeals in the strict, normal and conventional sense of the term. It is a matter which had been remitted to this Tribunal with a direction to consider a limited aspect of the matter. We have no doubt that we are bound by the Court's direction to consider the limited aspect of redemption fine and not any other aspect of the matter. We are also clear in our mind that having regard to the express direction of the Court, it is not open to this Tribunal to consider whether the appeals are barred by limitation under Section 129A(3) of the Customs Act or to proceed on that basis to reject the appeals as barred by limitation.
13. Shri Sundar Rajan contended before us that Point 1 as formulated by Member (Judicial), WRB, contains a factual error inasmuch as it states that no contention regarding limitation was taken by the respondent. We observe from the order dated 5th November, 1985 passed by the North Regional Bench of this Tribunal sending both the appeals for disposal to the WRB that there is an observation to the following effect: It is evident that the writ petitions had been finally disposed of and only the question of redemption fine has to be considered by the Appellate Tribunal, treating the matter as appeals. In other words, the delay had been condoned for limitation purposes as the appeals would be against the orders of the Collector passed in December, 1982.
We cannot, however, discover from this order that the question of limitation was raised before the North Regional Bench by the Departmental Representative for the respondent. The aforesaid observation was made by the Bench on its own as it viewed the situation arising out of the remittance of the matters to the Tribunal by the High Court. The Bench felt that the delay had been condoned (by the High Court) for limitation purposes. In observing that there was no contention as to limitation taken by the respondent, Member (Judicial), WRB, was evidently referring to the proceedings before the WRB. It is seen from the orders written by Member (Judicial) and Member (Technical) of the WRB that the Departmental Representative for the respondent did not raise any plea of limitation with regard to the two matters being heard by the Bench. As such, we do not think there was any factual error in point No. 1 as formulated by Member (Judicial), WRB.14. We now turn to the substantive question of the quantum of redemption fine imposed by the Collector in his two adjudication orders, The results of these two orders have already been briefly narrated in the opening paragraphs of this Order.
15. Before we take up this question in any detail, we would like to discuss at the outset a contention raised by the learned Departmental Representative for the respondent. It is that once an order of confiscation is passed by the adjudicating authority under the provisions of the Customs Act, the quantum of fine in lieu of confiscation to be imposed is in the absolute discretion of the adjudicating authority. The only limiting factor under Section 125 is that such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon. In this connection he cited the Supreme Court's observations in Indo-China Steam Navigation Co. Ltd, v. Jasjit Singh, Additional Collector of Customs, Calcutta and Ors. 1983 ELT 1392 S.C. : 1984 ECR 467 S.C. In that case, the Supreme Court found that having regard to the value of gold illegally imported, the presence of many suspicious alterations in the panelling walls and other parts of the ship and the value of the ship, the fine of Rupees 25 lakhs imposed in lieu of confiscation of the ship was not unreasonable and excessive. Their Lordships held that no case had been made out for the Court's interference under Article 136 of the Constitution. We do not see in these observations authority for the contention of Shri Sunder Rajan that the discretion of the adjudicating authority in the matter of imposition of redemption fine under Section 125 is absolute subject only to the limiting factor specified in the provision itself and that the said discretion is not open to scrutiny by the higher fora in the quasi-judicial hierarchy. Section 125 of the Customs Act empowers the adjudicating officer to give to the owner of the goods an option to pay in lieu of confiscation such fine "as the said officer thinks fit". The words are not "as the said officer likes". The fine should be as the officer thinks fit (emphasis supplied). In other words, the amount of fine should fit in with the facts and circumstances of the case and should be just and reasonable. We have no doubt whatsoever that the quantum of redemption fine imposed by the adjudicating officer is open to scrutiny and, in appropriate cases, modification, and even complete cancellation by the higher authorities in the quasi-judicial hierarchy, if the facts and circumstances of the case so warrant.
16. Before dealing with the quantum of redemption fines, we may observe here that the High Court has recorded in no uncertain terms its categorical finding that the consignments of Refined Industrial Coconut Oil imported by the importers in the present two matters had been imported in violation of the Import Trade Control Policy and that they were rightly liable to be confiscated. This aspect of the matter is a closed chapter in so far as the present proceedings before us are concerned. Though Dr. Singhvi initially wished to address arguments on this aspect of the matter, he refrained from doing so when the above position was pointed out to him.
17. Dr. Singhvi, in the circumstances, addressed arguments only with respect to the circumstances surrounding the import of the goods in question which, according to him, extenuated or mitigated the illegality of the imports. However, the learned Counsel made it clear that in view of the fact that this Bench was functioning as a Reference Bench to hear on the points of difference that had arisen between the two Members of the WRB, he would be addressing arguments only on the question whether the fines in lieu of confiscation as imposed by the Collector, should stand or be modified or reduced to 35% of the landed cost of the goods as opined by Member (Judicial) WRB. Since the High Court has rendered a categorical verdict that the import was in violation of the Import Trade Control Regulations, he would not be able to urge before us that the import was not unauthorised and that, therefore, no confiscation and no fines were warranted. The choice before this Bench was limited : either to agree with Member (Technical) W.R.B. and confirm the fines imposed by the Collector or agree with Member (J), WRB, and return a finding that the fines should be reduced to 35% of the landed cost of the goods. In this connection, Dr. Singhvi submitted that, for the reasons spelt out at great length in the order of the Member (Judicial), his conclusion was the correct one. He laid particular stress on the fact that similar goods imported in similar circumstances had been cleared by the customs authorities at different ports without taking any objection, that in instances where objection was taken, the authorities ultimately released the goods on the appellate authority (the Board) taking the view that Industrial Coconut Oil was not a canalised item and was permissible for import by importers other than S.T.C. and such view being affirmed in review proceedings by the then highest quasi-judicial authority, namely, the Central Government. All these, coupled with the clarificatory letter written by the S.T.C. were circumstances in favour of M/s. Jain Exports Pvt. Ltd. and should be considered as extenuating or mitigating circumstances. This would be so even if the above conclusions have now been proved to be wrong in the light of the Delhi High Court's judgment. Though the finding of the Delhi High Court as to the illegality of the present imports was under challenge before the Supreme Court, the aforesaid circumstances would, according to the learned Counsel, be relevant, and should be taken into consideration, while arriving at the proper quantum of redemption fine. Apart from these considerations, this Tribunal had, in two similar instances of imports by M/s. Jayant Oil Mills Pvt. Ltd. and M/s. Allana Impex (P) Ltd., on a full consideration of all the relevant circumstances, reduced the redemption fine to 35% of the lauded cost in the former case and roughly 27% of the landed cost in the latter case. The present imports should, therefore, be treated likewise and the redemption fine should be reduced to 35% of the landed cost of the goods as opined by Member (Judicial) WRB. In this connection, he submitted that Member (Technical) WRB, had fallen into error in arriving at the margin of profit on the basis of the C.I.F. prices of the goods. The correct basis would be the landed cost, i.e. the C.I.F. price plus landing charges plus duty and other incidental charges. Though the member had referred to the C.I.F. prices in his order, in the points formulated by him, the reference is to the landed cost which was also the basis adopted by this Tribunal in the two orders referred to earlier. In the case of Jayant Oil Mills, the Tribunal had observed that the import could not be considered as bona fide and yet the fine was reduced to 35% of the landed cost of the goods. The present imports were on a better footing. The High Court had refrained from making any observations on the pre-importation conduct of the importers. The Court's observations were only in respect of the post-importation conduct, namely, that of approaching the High Court without first filing appeals to the Tribunal. The post-importation conduct would not be relevant for the present purpose. Further, the Court itself had stated that the Tribunal should look into all the facts and circumstances and then arrive at a conclusion as to the appropriate quantum of redemption fine. In this connection, the learned Counsel submitted that point No. 2 figuring at pages 7-8 of Mr. Justice Sachar's judgment (the page reference is as on the copy of the judgment in the Paper Book of the importers) had arisen for the first time before the High Court. It was not there before the Collector. The point was whether even if the word "coconut oil" in Appendix 9 para 5 of the Import Policy 1980-81 was to be taken to cover only the edible variety of coconut oil, could non-edible or industrial coconut oil have still been validly imported in July-September, 1982 (in the present cases, the imports took place during this period), when, admittedly, edible and non-edible varieties of coconut oil were both canalised items and could be imported by the S.T.C. only. The present imports had to be viewed with reference to the state of understanding of the relevant entries of the 1TC Policy of 1980-81 during the time these imports took place as exemplified by the Order of the Board and the Central Government later (which was all in favour of the concerned importers) and not with reference to what the policy said in 1981-82 or 1982-83.
The counsel further contended that though the High Court had observed the STC was not an authority competent to issue clarifications in respect of the 1TC policy, its letter dated 31.10 1980 to the effect that STC as a canalising agency was not importing industrial coconut oil, should be considered as an extenuating circumstance in favour of the present importers since the STC was the canalising agency and knew what it was talking about though it might not have been the authority competent to clarify the I.T.C. Policy. The ratio of the Board's Order-in-Appeal dated 23.1.1981 in the case of M/s. Jain Shudh Vanaspati Limited (a sister concern of the present importers) which was affirmed, in review proceedings by the Central Government by its Order dated 31.3.1981 (and-by analogy-of the Order-in-Appeal dated 28.5.1982 passed by a three Member Bench of the Board in respect of imports of palm stearin), was that Appendix 9 in the 1TC Policy of 1980-81 covered only the edible variety of coconut oil as the item canalised for import by S.T.C. and that industrial variety of coconut oil was not so canalised. In the case of Jain Shudh Vanaspati, the Collector had imposed a fine of only 12.5% in view of the S.T.C's letter of clarification. Even subsequent to the Central Government order of 31.3.1981, imports of industrial coconut oil made by the present importers had been allowed clearance by the Customs authorities at Kandla and Bombay. These assertions made by the present importers have not been controverted by the Department.
18. Continuing, the learned Counsel for M/s. Jain Exports Private Limited, submitted that the Delhi High Court had not made any observations to the effect that the present imports were mala fide nor had the Court laid down any criteria which should be adopted by the Tribunal in determining the quantum of redemption fine. Therefore it was open to the Tribunal to take all relevant circumstances as narrated earlier into account. In fact, at page 27 of his judgment, Mr. Justice Sachar has noted that in view of the Board's order dt. 23.1.1981 setting aside the Collector's order of confiscation and holding that industrial coconut oil was not canalised through STC which order was confirmed by the Central Government by its order dated 31.3.81, a doubt had been cast about the correct position which led to a pressing need to clarify the position and the Central Government clarified the same out of abundant caution in the immediately next Import Policy of 1981-82 & 1982-83 that coconut oil was always meant to include both edible and industrial varieties. In view of the doubtful position that prevailed at the material time it was not unnatural for the present importers to think that industrial coconut oil was permitted for import by importers other than the STC.19. Dr. Singhvi then referred to the observation of the Collector in his adjudication orders that these were cases where normally penalty ought to have been imposed since the provisions of the Import Control Policy had been deliberately flouted but that he was not imposing penalties since the redemption fines imposed were sufficient to meet the ends of justice. This would imply that the amounts of redemption fines already included an element of penalty. Therefore the fines imposed by the Collector ought to be scaled down. In this connection, the learned Counsel referred to the decisions of this Tribunal, one in Shama Engine Valves Limited, Bombay v. Collector of Customs, Bombay Cegat and the Collector of Central Excise & Customs, New Delhi 1983 ELT 1261 : 1983 ECR 1473 D in support of the contention that in cases of bona fide imports, there would be no justification for imposition of redemption fines. In this context, the observation of Member (Judicial) WRB, in para 31 of his order that if the past practice and Orders passed by various Collectorates was any guide, it was difficult to agree with the conclusion of the Collector that there was deliberate flouting of the Import Policy and its provisions, and the further observation in para 34 that, in the circumstances of the case, it could not be said that the present importers were guilty of mala fide in the import of industrial coconut oil were also referred to and relied upon.
20. Opposing the plea for reduction of the redemption fines to 35% of the landed cost of the goods, as opined by Member (Judicial) WRB, Shri Sundar Rajan, the learned Departmental Representative, drew our attention to the five points framed by Mr. Justice Sachar in his order all of which had been answered in the judgment against the importers.
The judgment goes on to say that while extenuating factors could be taken into account for saying that a bona fide mistake was not visited with unduly harsh penalty or irreparable injury to the importers, it was equally clear that resort to Section 125 of the Customs Act in imposing fines in lieu of confiscation could not be so exercised as to give a bonanza or profit for illegal transactions by importers. It was further observed that the circumstance of bona fide belief may be relevant but only in the matter of imposition of penalty. The Court had further concluded that the STC's letter of clarification could have relevance, if at al, only for the 1980-81 1TC Policy. The present imports were made in September, 1982. Though the Court had left the question of bona fide belief and other circumstances for the determination of this Tribunal, the observations of the Court had to be given due weight. The importers had not placed before the Tribunal any data as to the sale income, the charges incurred by them etc. as directed by the Court. The circumstance of clearance of similar imports by the Customs authorities at various ports, the Orders of the Board and the Central Government setting aside the orders of confiscation and fines, all these had been considered by the High Court and rejected in coming to the conclusion that the import was illegal. These, therefore, could not again be urged now before the Tribunal as extenuating circumstances. Only fresh factual material such as sale income, expenses etc. if submitted by the importers before the Tribunal, could be taken into account now.
21. Turning to the decisions of this Tribunal in the cases of M/s.
Jayant Oil Mills and M/s. Allana Impex, Shri Sunder Rajan submitted that they had no application to the facts of the present cases. Both these decisions had been challenged by the department before the Supreme Court. While the appeal in the matter of Allana impex was dismissed by the Supreme Court in view of the delay in filing the appeal, the appeal in the case of Jayant Oil Mills was pending. It has not come up for admission yet. In any event, in those two cases, apart from the licensing angle (which was decided in favour of the Department), there was a finding on the question of undervaluation of the goods in favour of the importers in those cases. Therefore, the Tribunal granted partial relief. This additional factor was absent in the present two cases.
22. Concluding, Shri Sundar Rajan submitted that the Tribunal should not follow the arbitrary figure of 35% of the landed cost of the goods in arriving at the quantum of redemption fines. The provisions of the Act must receive such consideration at the hands of the Court as would advance the object and purpose underlying the Act and, at any rate, not defeat it. In this connection, certain authorities were referred to.
Further where executive discretion (as in the present matters) was not based on mala fide, judicial intervention by applying the rule of educated guess would be arbitrary and open to criticism. The Delhi High Court had observed in its judgment that it was not shown that the Collector had any bias against the importers.
23. We have carefully considered the submissions made by both sides on the quantum of redemption fine. We must straightaway observe that while remitting this question to this Tribunal, the Delhi High Court had observed that the importers as well as the Collector would be at liberty to place before the Tribunal material as to relevant facts which would enable the Tribunal to arrive at a proper finding on the said question in accordance with law. Some of the factual aspects would be the storage charges, if any, incurred on the goods while the adjudication was in progress, the interest charges paid to the bankers till the goods were got released from the customs on payment of fine, the actual sale proceeds realised by sale of the goods etc No such data, it is observed from the order passed by the WRB, were placed before that Bench either. It is a matter of regret that both sides have not chosen to place before us any such material. We are, therefore, constrained to proceed on the basis of such information as is available on record and the submissions of both sides.
24. We propose to deal first with the two decisions of this Tribunal cited by the learned Counsel for the importers in support of the plea for reduction of the fines imposed by the Collector. In Shama Engine Valves Ltd., Bombay v. Collector of Customs, Bombay Cegat the facts were that a consignment of steel bars imported by the appellants was confiscated by the Additional Collector and allowed to be redeemed on a fine of Rs. 1 lakh. The Additional Collector had held that, at the material time, such goods were canalised through the Steel Authority of India Ltd. and should have been imported through that agency and not directly by the importers. The Tribunal observed that despite the well known definition of stainless steel (containing over 12% chromium) which was clearly applicable to goods such as those in question, the customs authority had been treating them as alloy steel.
The appellants had been issued licences with the description "iron and steel items and ferro alloys" specifically for the manufacture of the end-product which also specified as "engine valves". Clearly, therefore, it was the intention of the licensing authority that the actual user be allowed to import this material for the manufacture of its product. It was also noted that it was equally clear that the customs authorities had been allowing importation of such material earlier even though under the licensing policy for the earlier periods, stainless steel was a canalized item. Even during period under consideration, the customs authorities treated the goods as "alloy steel" for the purpose of the customs duty exemption notification.
Moreover, there was no question or allegation that the imported material was diverted for highly profitable or non-essential purposes which could be the case with stainless steel sheets etc. It was, in these circumstances, that the Tribunal found considerable weight in the appellant's contention that no penal action should have been taken in that case and a warning could have been given and the Tribunal felt that, having recorded that a lenient view was being taken, the Additional Collector ought not to have imposed a fine of Rs. 1 lakh.
While upholding the Additional Collector's finding that the goods in question were a canalized item, the Tribunal set aside the confiscation and fine.
25. We do not think that the aforesaid decision contains any ratio which can be said to apply to the facts and circumstances of the present cases. As already noted, the goods in the Shama Engine Valves Ltd. case fell under the description alloy steel as well as stainless steel. The licence had been issued for the import of inter alia alloy steel and for a specific purpose. On the other hand, in the present cases, there is no specific description of the goods authorised to be imported under the import licences. The whole discussion centres around the question whether industrial coconut oil is permissible for import within the meaning of the term "coconut oil" figuring in the import policy. Since coconut oil figures as an item in the list of canalized items, it is not as if industrial coconut oil was specifically allowed for import by the present importers unlike in the Shama Engine Valves Ltd. where stainless steel was authorised to be imported under the description alloy steel. In the circumstances, we do not think that the decision cited has any application to the facts of the present case.
26. In the second case cited before us by the learned Counsel for the importers, Merck Spares, Delhi v. Collector of Central Excise and Customs, New Delhi 1983 ELT 1261 (Cegat) : 1983 ECR 1473D Cegat the goods were Main Thin Walled Engine Bearings. The Tribunal observed that there was no finding anywhere in the orders of the authorities below that they were smuggled goods or that they were acquired by the appellants who knew or had reason to believe that they were liable to confiscation under Section 111 of the Customs Act. In fact, the Tribunal observed, the impugned orders did not deal with the said goods at all nor did they discuss the aspect of mens rea. (There were other goods as well but only Thin Walled Engine Bearings were the subject of the appeal.) It was in these circumstances that the confiscation and penalty were set aside. We fail to see the relevance of this decision to the present matters. Firstly, there is no penalty on the importers in the present cases. Secondly, the Collector's orders devote pages and pages on the question whether the goods in dispute, namely, industrial coco-aut oil were validly imported and, ultimately, there is the finding of the Delhi High Court that the imports in these two cases were in violation of the Import Control Regulations and were, therefore, illegal. Nothing more needs to be said in this regard.
27. Strong reliance has been placed by the learned Counsel for the importers on two other decisions of this Tribunal. In those two cases, the goods and the issues were similar. In the case of Jayant Oil Mills Pvt. Ltd., Bombay (supra), the Collector had imposed a redemption fine of Rs. 1.5 crores. The Tribunal reduced the fine to Rs. 62.5 lakhs. The Bench noted that while there was no material on record to show on what basis the Collector had arrived at the quantum of the redemption fine, the appellants had also not placed any material before the Tribunal. In the circumstance, the Bench was inclined to remand the matter to the Collector for a fresh adjudication but only on the quantum of fine, after disclosing the material he relied on and giving an opportunity to the appellants to put forth their case. However, since both the parties submitted that they would not like the matter to be remanded to the Collector but would like the Tribunal to give a decision, the Bench, on a consideration of all the circumstances and making an "educated guess" in the absence of thoroughly reliable data felt that 35% of the landed cost of the goods could be taken to be a reliable estimate of the margin of profit at the material time. There is one significant factor in the Jayant Oil Mills case. It is that the Bench went at great length into the assessable value of the goods and gave a finding that the value for the purpose of assessment of duty should be taken as $ 556.75 per metric tonne and not, as the Collector had taken, as $ 589.25.
(There is no dispute about the assessable value of the goods in the proceedings before us). This factor may also have been kept in view by the Bench in reducing the redemption fine.
28. In the second decision of the Tribunal, namely, the case of M/s.
Allana Impex Pvt. Ltd., Bombay (supra) also there was a dispute about the assessable value as in the Jayant Oil Mills case. The Bench determined the assessable value to be $ 555.00 per metric tonne as against $ 587.50 per metric tonne. The Collector in that case had imposed a redemption fine of Rs. 75 lakhs. Considering the nature of the commodity and the use to which such goods could be put to, the Bench took the view that the ends of justice would be met if the redemption fine was fixed at Rs. 25 lakhs and accordingly reduced the fine to Rs. 25 lakhs.
29. We have very carefully and thoroughly gone through the two orders of the Tribunal referred to in the preceding two paragraphs. The two orders do not show the exact basis on which the reduced amounts of fine have been arrived at. The counsel for the importers, however, strongly urged before us that we should adopt 35% of the landed cost of the goods as a fair basis for arriving at the redemption fines as had been done in the Jayant Oil Mills case. When the Bench pointed out that the importers could have but had not placed before it relevant factual material on factors such as sale income, storage charges etc., as indicated in the High Court's order, there was no satisfactory reply as to why the importers had failed to do so. We must at the same time note that the Collector who had also been given liberty by the High Court to place relevant material before the Bench had also failed to do so. In the circumstances, and in the normal course, the proper course to adopt, in our view, would be to remand the matters to the Collector for fresh adjudication limited to the quantum of fine. However, this course cannot be adopted in the present two matters for the simple reason that the jurisdiction of this Reference Bench is strictly limited by the parameters set out in Sub-section (5) of Section 129-C of the Customs Act 1962. According to this provision, the Reference Beach shall hear the point or points of difference between the Members comprising the original Bench which heard the appeals and such point or points shall be decided according to the opinion of the majority of the Members of the Appellate Tribunal who have heard the case including these who first heard it. It is thus clear that this Bench has to give its opinion agreeing either with Member (Technical) WRB who has opined that there is no case for interfering with the fines imposed by the Collector or agreeing with Member (Judicial) WRB who has opined that the fines should be reduced to 35% of the landed cost of the goods.
There is no other choice for this Bench.
30. It is thus really a Hobson's choice because there is no material before us to support either the fines imposed by the Collector or 35% of the landed cost of the goods which the importers want us to adopt.
We would have expected, as indeed the High Court had given the liberty to the importers to do, that relevant factual material would have been placed before us in support of the importer's plea for reduction of the fines. Regrettably, this has not been done. There is no allegation before us that the fines imposed by the Collector had exceeded the upper limit set by Section 125 of the Customs Act, namely, the market price of the goods less the duty chargeable thereon. In these circumstances, we would be slow to interfere with the discretion which the Collector had exercised in fixing the quantum of redemption fines unless it be shown to us (and it has not been shown to be so) that the Order suffers from infirmity, bias or perversity. In fact, we find from the High Court's judgment that the Court did not find any bias on the part of the adjudicating Collector.
31. We have also carefully gone through the affidavits filed by the petitioners and the respondent before the High Court, While the petitioners have denied that they had made huge profits after the clearance of the goods on payment of the redemption fines imposed by the Collector, the respondent has stated that the market value of coconut oil for industrial purposes was Rs. 19,000 per metric tonne, the petitioners have stated that the market value of industrial coconut oil was Rs. 14.500/- per metric tonne. It is apparently in these circumstances, that the High Court had observed that it would remit the matter for determination of the quantum of redemption fines to this Tribunal and had given liberty to the petitioners and the Collr. to place factual material before the Tribunal for its consideration. We have already seen that no such material have been placed before us by either side. If, as the petitioners contended before the High Court, they had not made huge profits out of these transactions, we would presume that it would have been easy enough to adduce factual evidence in support of this contention by submitting relevant documentary evidence as to the various charges incurred by them and the income derived from the sale of these goods. The least that they could do was to file an affidavit, controverting the facts stated by the Local Assistant Collector and the adjudicating Collector, in the affidavits filed by them before the High Court. Even that has not been done. In this connection, we find the following observations in Hon'ble Justice Sachar's judgment very pertinent, namely, ...Could it not be said by the respondents that import was made because of the market condition, "That a deliberate calculated chance risk was taken knowing fully well that by September, 1982 industrial coconut oil had become a canalised item. But I need not pursue any further, as the Tribunal will no doubt examine this aspect.
32. We can reasonably infer from this, that the Hon'ble High Court considered the prevailing market condition to be a very relevant factor, while remitting the matter to the Tribunal on the issue of redemption fine. It cannot be said that evidence of market price or of actual returns received by the petitioners for these transactions, was beyond their reach. The failure on their part, in this regard, is bound to give rise to an adverse inference.
33. As noted earlier, there is no allegation before us that the fines imposed by the Collector had exceeded the limit stipulated in Section 125 of the Customs Act. In this background we have also to note and keep in mind the observation of the Delhi High Court that "resort to Section 125 of the Act to impose fine in lieu of confiscation cannot be so exercised as to give a bonanza or profit for an illegal transaction of import." 34. We also note from the order written by Member (Technical) WRB that neither the Counsel nor the representative of the importers could furnish, in reply to a question from the WRB, the date of sale or exact sale price to M/s. Hindustan Lever Limited to whom the importers state that they sold the goods at the rate of Rs. 14,500/- per metric tonne.
They could also not explain whether the sale was on high sea basis or after the import of the goods. It also appears that the importers did not answer the WRB's query about the total sale price of the two consignments in question. It also appears from the Member (Technical's) order that out of the two consignments consisting of 3,002.577 and 5,342.369 metric tonnes of refined industrial coconut oil imported by the present importers, only a quantity of 1,834.350 tonnes was sold to M/s. Hindustan Lever Limited. The remaining quantity appears to have been sold to other parties. On all these aspects, the importers have not made any submissions before us during the course of arguments in spite of the Hon'ble High Court giving them opportunity to do so.
35. Considering the facts and circumstances of the two cases and having regard to the discussion in the foregoing paragraphs, we now proceed to give our opinion on the points of difference formulated by the two Members of the WRB. Point 1 : "Whether the appeals could be rejected as time barred even though no such contention was taken up by the respondent and when the High Court has remitted the matter to the Tribunal ?".
Opinion : The appeals cannot be rejected as time barred. The High Court has remitted the matters to the Tribunal for consideration of the sole question as to the quantum of redemption fines, Point 2 : "Whether the appellants are entitled to reduction in the quantum of fine to 35% of the landing cost as has been held by the Member (Judicial) ?" Point 1: "Whether on the facts and circumstances of the case, the appeals of M/s. Jain Exports Pvt. Ltd. for reduction in redemption fine deserve to be rejected as held by Member (Technical) or whether the fines should be reduced to 35% of the landed cost of the two consignments as held by Member (Judicial) Opinion : The appeals for reduction in redemption fines deserve to be rejected as held by Member (Technical).
Point 2 : "Whether the appeals are time barred under Section 129(A)(3) of the Customs Act and as such they are required to be rejected ?" Opinion : The High Court having remitted the matters to the Tribunal for consideration of the sole question as to the quantum of redemption fines, it is not open to the Tribunal to reject the appeals as time barred.
36. We direct that the records of the cases received from the WRB shall be transmitted to that Bench along with a copy of the order of this Bench for further disposal of the two matters in accordance with law.
37. Before parting with these matters, we would like to place on record our appreciation of the very lucid exposition of their respective cases by the learned Counsel for the importers and the learned Departmental Representative for the respondent and the valuable assistance rendered by them to the Bench.
38. We would also like to place on record that we totally dissociate ourselves with the insinuations and disparaging remarks made by Member (Technical) WRB in his order against the former President of the Tribunal and (ex-) Member Shri D.N. Lal.Sd/- (H.R. Syiem) Sd/- (S. Duggal) Sd/- (G. Sankaran) Member.
Member.
Vice-President.
In view of the difference of opinion between the two Members of this Bench who first heard the appeals of M/s. Jain Exports Pvt. Ltd., the points of difference were referred by the President to a Bench of three Members in terms of Section 129C (5) of the Customs Act and these three Members have given their findings on the points of difference.
Therefore these appeals have to be decided on the basis of the majority opinion. In this view, the appeals for reduction in redemption fines deserve to be rejected and we reject the same.