1979 (12) TMI 79 - HC - Customs

Summary

Issues:
1. Interpretation of import licences for industrial diamonds.
2. Classification of imported diamonds as gem quality or industrial diamonds.
3. Confiscation and fine imposed by customs authorities.
4. Assessment of customs duty and refund claim.
5. Legitimacy of customs authorities' assessment and contradictory actions.

Analysis:
1. The petitioner, a public limited company importing industrial diamonds, applied for import licences for the period 1971-72. Customs authorities alleged that the imported diamonds were gem quality, not covered by the licences. Confiscation orders were issued, and fines imposed by Deputy Collector, upheld in appellate and revisional orders. The petitioner challenged these orders through a writ petition.

2. The Customs Appraiser observed the imported diamonds could be mistaken for gem quality, leading to the confiscation orders. However, the petitioner contended the diamonds were industrial grade, as per subsequent assessments for customs duty purposes. The court noted the contradictory stand of customs authorities in assessing the diamonds as gem quality for confiscation and industrial grade for duty assessment.

3. The court found the customs authorities' actions contradictory and unsustainable. It emphasized the necessity for consistent classification of the imported diamonds as either gem quality or industrial grade. The petitioner's willingness to pay the higher duty rate for industrial diamonds further supported their claim.

4. Regarding the assessment of customs duty and refund claim, the court highlighted the discrepancy in the duty rates applicable to gem quality and industrial diamonds. The petitioner's refund application for excess duty paid on the premise of industrial diamonds was initially rejected, but subsequent appellate orders supported their classification.

5. Ultimately, the court set aside the confiscation orders and fines, directing the authorities to refund the fine paid by the petitioner. It ruled in favor of the petitioner, emphasizing the need for coherence in customs authorities' assessments and actions. The judgment favored the petitioner's claim of importing industrial diamonds, leading to the relief granted in the writ petition.