TMI Blog1986 (12) TMI 206X X X X Extracts X X X X X X X X Extracts X X X X ..... per Paragraph 106(1) (C) the import is permissible only against exports of specified product but the goods imported, viz., skim milk powder was listed at serial No.47 of the List at Annexure II to Part B of the Policy Book, Vol. II, A.M. 1978 and the licence produced was not valid against clearance of the goods in question. The respondent sent a reply inter alia contending that the interpretation placed by the Customs authorities was erroneous. The Collector of Customs, Bombay who held the enquiry did not accept the contentions of the respondent herein and he ordered confiscation of the imported goods but allowed redemption on payment of a fine of Rs. 1,50,000/-. He also imposed a personal penalty of Rs. 15,000/-. 2. It appears the respondent herein also imported another consignment of Spray skim milk powder which were also ordered to be confiscated, The redemption on payment of fine was allowed besides the Collector imposed a penalty of Rs. 10.000/-. Being aggrieved by the orders of the Collector, the Respondent herein preferred two appeals before the Central Board of Excise Customs. The Board combined the two appeals and by its Order bearing Nos.999 and 1000 of 1980 dated 29 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutorily stood transferred to the Tribunal for being heard as an appeal. Hence this appeal. 6. Shri. pal, SDR, who appeared for the appellant put forward the following contentions. (1) The licences produced were governed by Para 106(1) of the Policy A.M. 1978. They did not contend export products. The licences are Initial Licences . As per Paragraph 106(1) (C), the licences can be allowed to import only against export of specified products as indicated in list -Annexure II to Part B of Red Book, Vol.II and to the extent permitted therein, (2) The appellants are not the manufacturers but are only stockist. As per Item 47 of Part B Annexure 2 milk powder can be allowed to be imported against export linked Items mentioned in column 3 of the said Annexure which are biscuits and factory instant foods, milk products malted foot containing cocoa. The appellants were not the exporter of any of the above and the licence did not list those Items as export products. In the circumstances, the Collector was justified in ordering confiscation and imposing penalty. (3) The Board also committed an error in applying the ratio of decision of the Supreme Court reported in AIR 1977 page 22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd their nominees/transferees will be valid for import of raw materials, components, packing materials and consumable stores as laid down in this policy. Shri Nankani then referred to Section I, Part B scope and contents of REP licences the relevant provision reads: REP licences issued in 1977-78 will have no list of raw materials, components, consumable stores and packing materials except Items which are specifically endorsed on the licence. Import licences will be automatically valid for import of Items in accordance with the relevant provisions of the import policy for Registered Exporters . 9. Shri Nankani further contented that the policy as the notifications clearly make a distinction between skimmed milk powder and milk powder. He particularly drew our attention to serial No.12 in Central Excise Notification No, 170 dated 1-3-70. The said serial number reads milk powder including skimmed milk powder, but excluding such powder specially prepared for feeding of infants. Shri Nankani contended that if there was no distinction between milk powder and skimmed milk powder it would not have been necessary to state in the notification milk powder including skimmed milk powder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to refer to certain Paragraphs of the Board s order. In Para 6 the Board referred to the contentions urged by Shri Nankani. It was stated the rein: The argument is that the milk powder is different from skimmed milk powder , as the former would refer only to whole milk powder. Further, the very fact that the ITC authorities in the same policy have chosen to use both the terms would indicate that they too had differentiated between milk powder per se and skimmed milk powder. This would be fortified by the Entry 333 to Appendix 3 in the subsequent policy April-March 1979 which at serial No. 333 specifies milk powder (all types) . 13. The Paragraph 7 of the Board s order reads: It has to be conceded that there is force in the argument. The Advocate also referred to the Ruling of the Supreme Court in the case Health-ways Dairy Products v. Union of India (AIR 1976 SC 2221) where the Supreme Court drew a line of distinction between condensed milk and condensed skimmed milk . To quote the Supreme Court. It is well-established by several authorities of this Court that for the purpose of levy of excise duty or any other similar tax the description of goods as popularly and comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n given is only of the expression milk and not milk powder. Neither the Central Government in its show cause notice nor Shri Pal had pointed out to any definition of the expressions milk powder or skimmed milk powder in the Policy. In the absence of such a definition the Central Government and Shri Pal were not justified in contending that the Board committed an error in relying upon the ratio of decision of the Supreme Court in Healthways Dairy Product s case. 17. We shall proceed to consider the Policy A.M.1978 made a distinction between milk powder and skimmed milk powder . The export linked Item is described in Annexure II to part B as milk powder . As stated earlier, the expression milk powder is not defined or explained in the Policy A.M.1978. In the same policy, the policy makers have used the expression skimmed milk powder (see Section III page 79, Volume I). Thus it is clear that the policy makers themselves have been made a distinction between milk powder and skimmed milk powder . Further in the subsequent policy, namely A.M.1979 while listing the banned Items in Appendix 3, the policy makers have stated milk powder all types . If there had been no distinct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e accordingly reject this appeal. Bombay, 12th June, 1986 Sd/- (K. Gopal Hegde) Member (Judicial) 19. [Order per: Dilipsinhji] - I have very carefully gone through the order proposed to be issued by Brother Hegde. But for reasons to be recorded hereafter I am unable to persuade myself to agree with the same. Hence this dissenting finding. 20. M/s. K. Hargovindas Co. Exports Pvt. Ltd. imported 995 bags of skimmed milk powder valued at Rs. 107314/- cif under B/E No.2290/35 dated 16.1.78 per s.s. United Vulcan. The same were sought to be cleared against Licence No.P/L/2796882/CXX/64B/77 dated 11.8.77. The appraiser SIIB issued a show cause notice to the importers alleging that the licence was not valid as it was an initial licence issued to a manufacturing export house for raw materials etc. in accordance with Para 106(1) of Part (C) of Section 1 of the Policy Book Volume II for 1977-78. A condition of sub-para (C) of Para 106(1) stipulated that only those Items appearing in the export-linked import list Annexure II to Part B could be imported against exports of specified products as indicated in the said list. Since the goods imported were, skimmed milk powder, the impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ways Dairy Products v. Union of India AIR 1976 SC 2221-1978 E.L.T. J 457). Hence the Board set aside the Collector s order of confiscation and remitted the penalty amount. However, the Government of India issued a notice under old Section 131(3) of the Customs Act proposing review of the aforesaid order of the Board and restoration of the Collector s order dated 15.2.79 vide the Notice F. No. 374/3/81-Cus.II dated 24.1.81. M/s. K. Hargovindas Co. Exports Pvt. Ltd. were asked to show cause against the proposed action within 30 days of the receipt of the notice. It was admitted during the course of the hearing by the Respondent s advocate Shri S.D. Nankani that no reply was sent to this notice. On the creation of this Tribunal, the pending proceedings initiated by the Government were transferred to the Tribunal in terms of Section 131 B of the Customs Act and have to be treated as an appeal before this Tribunal. 21. On behalf of the appellants, the learned SDR Shri Pal contented that the licence submitted by the importers was an initial licence and the product permissible to be imported thereunder could be allowed clearance only if the licence holder had exported the Items shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d particularly on the Supreme Court s decision in the case M/s. Healthways Dairy Products which held that condensed milk did not include condensed skimmed milk. Shri Nankani also discussed the omission of the policy which had done away with the shopping list against REP licences and the change in the subsequent policy for the year 1978-79 vide Serial No.333 of Appendix 3 of the Policy which covered milk powder of all types. Shri Nankani therefore urged that the licence submitted by the importers was valid and that the Board had correctly allowed the importer s appeal under old Section 128 of the Customs Act. He therefore submitted that there was no reason for the Government to initiate the proposed review of the Board s order under old Section 131(3) of the Customs Act. Shri Nankani further submitted that the review could be initiated only when there was gross illegality or impropriety which was not the case with the present imports and hence the Government should not have exercised the powers vested in them under old Section 131(3) of the Customs Act. Accordingly Shri Nankani submitted that the present appeal by the Collector of Customs Bombay before the Tribunal should be rejecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation of any Item for the Import Trade Control purpose is available statutorily only. The Schedule to the Customs Tariff Act, 1975 had been annexed as Schedule I to the Imports (Control) Order 1955 as amended. Note 1 to this Schedule clarifies that each heading corresponds to the heading number of the first schedule to the Customs Tariff Act and each Entry has the same scope and meaning as the corresponding headnote and Chapter of the First Schedule to the Customs Tariff Act. Therefore, the Head note to Chapter 4 in the BTN defining milk to include full cream or skimmed milk would govern the Entry at Serial No.47 to Annexure II to Part B in the Import Control Policy Book 1977-78 Vol. II. The contention of the learned advocate Shri Nankani that this Entry has to be read along with the Entry relating to the canalisation of skimmed milk powder through the Indian Dairy Development Corporation in interpreting the respective entries is not correct or acceptable. What had been canalised under the relevant 1977-78 policy was only spray dried skimmed milk powder. It cannot mean that the other Entry at Serial No.47 would not therefore cover skimmed milk powder also. For this very reason, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Government When this is the position it cannot question the discretion of the Government to exercise the powers of revision under old Section 131(3). There is no qualification for the exercise of these powers and hence Shri Nankani s contention that the present case was not one of grave irregularity is not correct. As held above the Board s order was illegal and improper and the Central Government has taken the correct step to remedy this illegality and impropriety by issue of the notice, dated 24.1.81. Bombay 17.7.86 Sd/- (K.S. Dilipsinhji) Member (Technical) Since there has been a disagreement between the Member (T) and the Member (J) this matter is referred to the President in terms of Section 129C(5) of the Customs Act for deciding the following points:- (1) Whether the appeal of the Collector of Customs Bombay should be allowed as held by Member (T) or rejected as held by Member (J); (2) Whether the proposed interference by the Central Government to issue a show cause notice No-374/3/81-Cus.II dated 24.1.81 with the Board s Order No .999-1000 of 1980 dated 29-11-80 was proper in the circumstances of this case even if the Central Government held that there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sales Tax v. M/s. Aggrawal Company was also relevant to the point at (1) above. In this judgment, the Bombay High Court had discussed the Supreme Court judgment in the case of M/s. Healthways Dairy Products Company v. Union of India [reported at AIR 1976 S.C. 2221=1978 E.L.T. (3457)] which has been relied on by the respondents. In addition, the Bombay High Court noticed and discussed number of other Supreme Court judgments also and thereafter arrived at the conclusion that in a fiscal legislation a general term used for any commodity covered all its forms and varieties. We invited attention of both the parties to this judgment of the Bombay High Court and adjourned the hearing for a while to give them time to study the judgment. After both parties informed us that they had read the judgment and were ready for resumption of the hearing, we re-assembled in the court to resume the hearing. We heard both sides at length and reserved our orders. 28. We have since given our careful thought to the matter. We find that the respondents insist on the export-linked Entry milk powder being interpreted according to its meaning in trade parlance and in support cite the Supreme Court judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... import policy. They added that the policy itself did not define milk powder . We do not agree with them. The import schedule annexed to the Imports (Control) Order covered everything out of which the import policy drew up lists of permissible, banned and restricted Items. If, therefore, doubt arose in respect of the meaning and scope of an expression occurring in the policy, one had naturally to turn to the parent document, i.e., the statutory import schedule to ascertain the said meaning and scope. There was no need to define words and expressions in the import policy again once they stood defined in the statutory import schedule. Both the Imports (Control) Order as well as the import policy were under the Imports and Exports (Control) Act. While the Imports (Control) Order was a piece of delegated legislation and hence had statutory force, the policy was an administrative decision which was liable to undergo changes time to time. We hold, therefore, that meaning and scope of milk powder occurring in the import policy (list of export-linked Items) had to be ascertained from the statutory import schedule i.e., by a reference to the statutory definition in the customs tariff sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der included all varieties of milk powder , just one variety of it, namely, skimmed milk powder was canalised for import through the State Trading Corporation. In the next year s policy, when the expression milk powder all types was used it was quite evidently done as a measure of abundant caution to allay any unnecessary doubts and controversies which certain interested parties may have been trying to kick up. 32. We now come to the other point of difference, namely, the validity of show cause notice issued by the Central Government under the then Section 131 (3) of the Customs Act, 1962. This Section read as under:- The Central Government may on its own motion annul or modify any order passed under Section 128 or Section 130". We find nothing in the above provision to the effect that it could be invoked only in cases of grave error of law which would result in miscarriage of justice. The provision occurs in a fiscal legislation where the controversy that often arises relate to the question whether the lower order assessed nil duty or the lower duty correctly or not. As applied to import control legislation, the type of cases thrown up would generally be involving the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
