Home Case Index All Cases Customs Customs + AT Customs - 1991 (10) TMI AT This
Issues Involved:
1. Whether the authorities can institute adjudication proceedings after an order for deposit of the goods had been passed and whether the proceedings under Section 129D alone could have been drawn. 2. Whether the goods can be considered as lining material and can be taken to be covered by the licences produced. Issue-wise Detailed Analysis: 1. Institution of Adjudication Proceedings: The appellants argued that once the Bill of Entry (BE) had been completed and the licence accepted, the authorities could only review the matter under Section 129D of the Customs Act, 1962, and not through adjudication proceedings initiated by a show cause notice. The Tribunal examined the relevant provisions of the Customs Act, 1962, particularly Sections 59 and 60, which govern the warehousing of goods. It was noted that under Section 60, the proper officer may permit the deposit of goods in a warehouse without payment of duty, provided the provisions of Section 59 are complied with. Section 59 requires the execution of a bond binding the importer to observe all provisions of the Act and pay duties and penalties. The Tribunal clarified that at the stage of bonding the goods, the acceptance of the import licence is not a condition precedent. The proper officer's satisfaction regarding the validity of the licence is required at the stage of clearance for home consumption under Sections 47 and 68 of the Act. Therefore, preliminary scrutiny of the licence at the bonding stage does not preclude the authorities from instituting adjudication proceedings later. Consequently, the Tribunal held that there was no legal infirmity in the adjudication proceedings initiated after the goods were bonded in the warehouse. 2. Validity of Licences for Lining Material: The appellants imported nylon fabrics described as interlining cloth and sought clearance against REP licences. The authorities contended that the fabric was not lining material but umbrella cloth, which required a separate licence. The Tribunal noted that the goods were described as interlining cloth of 60" width and sought clearance under Sl. No. 0.1 of Appendix 17 of the Import Policy, which permitted the import of lining and interlining materials excluding nylon taffeta coated fabric. The Tribunal observed that the term "lining cloth" was defined in the Mercury Dictionary of Textile Terms, and the appellants failed to provide documentary evidence to establish that the imported goods met the specifications for lining material. The authorities did not conduct a thorough investigation or obtain expert opinions to ascertain the nature of the goods. The Tribunal emphasized that the appellants bore the burden of proving that the goods fell within the exception to the general ban on man-made fabrics under Appendix 4 of the Import Policy. The Tribunal concluded that the lower authority did not examine the matter in depth and failed to bring on record any market enquiries or expert opinions regarding the use of the material. Consequently, the Tribunal set aside the lower authority's order and remanded the case for de novo adjudication, directing the lower authority to decide the matter after giving the appellants an opportunity for a hearing. Conclusion: The Tribunal held that the adjudication proceedings were validly instituted after the goods were bonded in the warehouse, as preliminary scrutiny of the licence at the bonding stage did not preclude further scrutiny. The Tribunal also set aside the lower authority's order regarding the classification of the imported goods as lining material, directing a de novo adjudication with a thorough examination of the nature of the goods and relevant evidence.
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