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1992 (6) TMI 116
Issues Involved:
1. Dismissal of stay application due to non-appearance.
2. Restoration of stay application.
3. Compliance with pre-deposit requirements.
4. Tribunal's inherent powers to recall or modify orders.
5. Procedural justice vs. substantive justice.
Issue-wise Detailed Analysis:
1. Dismissal of Stay Application Due to Non-Appearance:
The Bench had dismissed the stay application on 30th April 1992 as none appeared on the hearing date. The Registry was directed to issue a notice to the appellants, asking them to show proof of compliance with the pre-deposit requirements and indicating that the appeal would be liable for dismissal if no such proof was furnished by the specified date.
2. Restoration of Stay Application:
The appellants filed a Miscellaneous application supported by an affidavit, explaining that their Consultant, who was handling the matter, was sick and could not appear. They argued that the dismissal of the stay application was a harsh step causing undue hardship. They requested the restoration of the stay application to address arguments on its merits.
3. Compliance with Pre-Deposit Requirements:
The learned DR contended that the appellants had not produced any proof of deposit of the penalty amount, and hence, the appeal should be dismissed for non-compliance. The appellants countered that the Tribunal should consider their explanation and restore the application, as it is a general practice to do so if the reply to the show cause notice is satisfactory.
4. Tribunal's Inherent Powers to Recall or Modify Orders:
The Tribunal examined whether it had the inherent power to restore the stay application. It was noted that Section 129E of the Customs Act allows the Tribunal to dispense with the deposit of duty or penalty if it would cause undue hardship, subject to conditions safeguarding the interests of Revenue. Rule 20 of the CEGAT (Procedure) Rules, 1982, allows the Tribunal to restore appeals dismissed for default. The Tribunal inferred that it has inherent powers to restore stay applications dismissed for non-pursuance if the explanation is satisfactory.
5. Procedural Justice vs. Substantive Justice:
The Tribunal referenced the Supreme Court ruling in Kalipada Dass Others v. Bimal Krishna Sen Gupta, emphasizing that procedural requirements are steps in aid of justice, not substantive justice itself. Penalties for procedural lapses should be commensurate with the gravity of the lapse. The Tribunal also considered rulings from the Calcutta and Madras High Courts, which supported the restoration of appeals or stay applications if procedural lapses were satisfactorily explained.
Conclusion:
The Tribunal concluded that the explanation given by the appellants for non-appearance due to their Consultant's sickness was satisfactory. It emphasized that justice should not be denied due to procedural lapses. Hence, the order of dismissal of the stay application was recalled, and the stay application was restored to be disposed of on its merits after hearing the appellants.
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1992 (6) TMI 115
The Appellate Tribunal CEGAT, Bombay directed the appellants to deposit Rs. 1,75,712/- towards duty for transformer coils classification and Rs. 15,304/- for alleged suppression of copper strips value. The appellants argued that clearances were made as per approved classification lists. The Tribunal found prima facie satisfaction on the ground of time bar and directed the appellants to furnish a personal bond covering the duty amounts within four weeks to avoid rejection of their appeal.
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1992 (6) TMI 114
Issues: Violation of principles of natural justice in the order of the Collector
1. Facts and Background: The appellants, who manufactured cigarettes, were subjected to a Show Cause Notice proposing duty based on prices charged by wholesale dealers. The Director General's order determined the assessable value by adding additional money value considerations to the declared prices.
2. Contentions and Findings: The appellants argued that the additional consideration should only be added to the price, not the assessable value directly. The Director General's order and a Tribunal judgment supported this view. The Collector passed an order without fully hearing the appellants, violating principles of natural justice.
3. Legal Proceedings: The appellants challenged the additional demands raised by the Department in the Patna High Court, which quashed the demands due to the violation of natural justice. The Department's appeal is pending in the Supreme Court. Subsequently, a Show Cause Notice was issued by the Assistant Collector, leading to further disputes.
4. Challenges in Proceedings: The appellants raised jurisdictional issues and sought clarifications regarding the addition of additional consideration to the assessable value. The Patna High Court allowed contentions based on previous Tribunal judgments and government clarifications.
5. Collector's Order and Appeal: The Collector's order, passed without full hearing and consideration of relevant orders, was challenged by the appellants. The Tribunal found that the order violated principles of natural justice and remanded the case for de novo adjudication after hearing the appellants fully.
6. Conclusion: The appeal was allowed, setting aside the Collector's order and emphasizing the importance of providing a complete opportunity for personal hearing and considering all relevant submissions before making a decision.
This detailed analysis highlights the issues surrounding the violation of principles of natural justice in the Collector's order and the subsequent legal proceedings undertaken by the parties involved.
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1992 (6) TMI 113
Issues Involved:
1. Classification of natural rubber latex under Customs Tariff.
2. Eligibility of natural rubber latex for benefit under Notification No. 21/85.
3. Applicability of Notification No. 82/86 to natural rubber latex.
Detailed Analysis:
1. Classification of Natural Rubber Latex under Customs Tariff:
The primary issue revolves around the classification of natural rubber latex under Chapter 40 of the Customs Tariff. The original authority assessed the imported goods under Heading 40.01, which includes "Natural rubber, balata, gutta-percha, guayule, chicle and similar natural gums, in primary forms or in plates, sheets or strip." Specifically, sub-heading 4001.10 covers "Natural rubber latex, whether or not prevulcanised." The authorities noted that the imported goods were in the form of a white liquid with a solid content of 61.5%, classifying it under Chapter 40 as natural rubber latex.
2. Eligibility of Natural Rubber Latex for Benefit under Notification No. 21/85:
The Respondents claimed the benefit of Notification No. 21/85, which exempts natural raw rubber falling under Heading 40.01 from customs duty in excess of 20% and the whole of the additional duty. The Collector (Appeals) allowed this claim, stating that "Notification 21/85 Cus dated 1-2-1985, as amended exempts Natural Raw Rubber falling under Heading 40.01 from the customs duty in excess of 20% ad valorem and from whole of the additional customs duty." The Collector (Appeals) found that there was nothing in the definition of 'Rubber' in Chapter Notes under Chapter 40 to exclude natural raw rubber latex from the ambit of Chapter 40.
3. Applicability of Notification No. 82/86 to Natural Rubber Latex:
The original authority held that Notification 82/86, which covers raw rubber, synthetic or natural latex, among other items, with an effective duty rate of 40%, was applicable. The Department argued that latex is different from natural rubber and that Notification 82/86 specifically covers natural rubber latex. They contended that "a specific description will always prevail over any other general description," implying that Notification 82/86 should apply instead of Notification 21/85.
Conclusion:
The Tribunal examined the nature of natural rubber latex and raw rubber in solid form. It noted that latex is a milky colloid in which natural rubber is suspended in water, and upon processing, it can be transformed into solid rubber. The Tribunal found that latex is considered a form of natural rubber and can be used as raw material for various products, making it eligible for the benefit of Notification 21/85. The Tribunal held that "natural rubber latex is covered by the term natural raw rubber," thereby rejecting the Department's appeal and upholding the Collector (Appeals)'s decision to grant the benefit under Notification 21/85 to the Respondents.
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1992 (6) TMI 112
Issues Involved:
1. Classification of rocker lever castings.
2. Classification of camplates.
3. Application of Rule 2(a) of the General Rules for the Interpretation of the Schedule.
4. Entitlement to exemption under Notification 254/76-Cus., dated 2-8-1976.
5. Substantive rights under the Customs Act versus Interpretative Rules.
Detailed Analysis:
1. Classification of Rocker Lever Castings:
The appellants imported three consignments of rocker lever castings assessed under sub-heading No. 84.10(3) of the Customs Tariff Act (CTA) at 100% + 20% + countervailing duty @ Rs. 100/- per M.T. under Item 68 of the erstwhile Central Excise Tariff. They claimed these should be classified under sub-heading No. 73.33/40 CTA as "other articles of iron and steel" at 60% + 15%, arguing that the goods were semi-finished castings. However, the Asstt. Collector of Customs and Collector of Customs (Appeals) rejected this claim, determining that the castings had acquired the essential character of finished articles based on Rule 2(a) of the General Rules for Interpretation. The Tribunal upheld this view, noting that the items had specified part numbers and had attained the approximate shape of the finished article, thus classifiable under sub-heading No. 84.10(3).
2. Classification of Camplates:
The fourth appeal involved camplates, similarly assessed under sub-heading 84.10(3). The appellants argued these were semi-finished steel forgings requiring further processing. However, the authorities, including the Tribunal, found that the camplates had the essential character of finished components, with further processing considered minor finishing steps. Hence, they were correctly classified under sub-heading No. 84.10(3).
3. Application of Rule 2(a):
The Tribunal emphasized that Rule 2(a) of the General Rules for Interpretation allows for the classification of incomplete or unfinished articles as complete or finished if they have the essential character of the finished article. This rule was crucial in determining that both rocker lever castings and camplates, despite being semi-finished, had the essential character of finished articles and thus should be classified under sub-heading No. 84.10(3).
4. Entitlement to Exemption under Notification 254/76-Cus., dated 2-8-1976:
The appellants contended that their goods should be exempt under Notification 254/76-Cus., which applies to iron or steel castings and forgings. However, the Tribunal clarified that exemption considerations arise only after proper classification. Since the goods were not classified as "castings" under sub-heading No. 73.33/40 but under sub-heading No. 84.10(3), they were not entitled to the exemption.
5. Substantive Rights under the Customs Act versus Interpretative Rules:
The appellants argued that their substantive rights under the Customs Act were being overridden by the application of an Interpretative Rule. The Tribunal rejected this argument, explaining that the classification process under the Customs Tariff Act, which incorporates the General Rules for Interpretation, is integral to determining duty rates. The application of Rule 2(a) was thus legitimate and did not infringe on any substantive rights.
Conclusion:
The Tribunal concluded that the rocker lever castings and camplates were correctly classified under sub-heading No. 84.10(3) based on their essential character as finished articles per Rule 2(a). Consequently, the appeals were rejected, and no exemption under Notification 254/76-Cus. was applicable.
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1992 (6) TMI 111
The Appellate Tribunal CEGAT, Madras granted waiver of pre-deposit of duty and penalty pending appeal based on a circular clarifying that Diesel Generating Sets assembled at the site would not attract duty. The Board accepted that duty was not required to be collected for Generating Sets treated as immovable property until a certain point. The petitioner's goods were covered by the circular, causing undue hardship if pre-deposit was required.
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1992 (6) TMI 110
Issues Involved:
1. Calculation of market price of seized goods.
2. Acceptance of the market price determined by the Customs Department.
3. Determination of correct market value based on evidence provided by the applicant.
4. Compliance with previous Tribunal orders regarding payment of market value.
Issue-wise Detailed Analysis:
1. Calculation of Market Price of Seized Goods:
The applicant, Sri Samsuddin Sheikh, contested that the market value of the seized goods, calculated at Rs. 4.28 per piece, was arbitrary and lacked a basis. The goods in question were 16,617 pieces of old/used readymade garments (long pants) of foreign origin. At the time of seizure, the department valued the goods at Rs. 1,66,170/-. The applicant provided evidence, including several annexures, indicating that the value of the garments during August/September 1989 was Rs. 15 to 16 per piece. The Tribunal had previously ordered that the market value of the goods as on 11-9-1989 should be paid to the applicant.
2. Acceptance of the Market Price Determined by the Customs Department:
The Collector of Customs, West Bengal, stated that a wide market survey revealed no open market for old and used readymade garments, and no seller kept authentic documents for such items. The N.C.C.F., a Government of India agency, bought similar consignments at Rs. 4.28 per piece in 1985. The department argued that the value of Rs. 71,121/- was correctly determined based on this market survey and requested the Tribunal to order payment at this rate.
3. Determination of Correct Market Value Based on Evidence Provided by the Applicant:
The applicant's counsel, Shri K. Chatterjee, argued that the market value should be based on the rate at which the garments were sold and purchased publicly, not the rate used by cooperative organizations. He contended that the market value should be Rs. 15 per piece, totaling Rs. 2,49,255/-, but the applicant would be satisfied if the seizure value was accepted as the market value. The Tribunal referred to previous decisions, including the case of M/s. Oswal Spinning & Weaving Mills Ltd. v. Collector of Customs, Calcutta, which established that the market value should be the value as on the date of the order setting aside the confiscation.
4. Compliance with Previous Tribunal Orders Regarding Payment of Market Value:
The Tribunal noted that the Customs department had sought permission to sell the garments, which was rejected by the Magistrate of Murshidabad district. Despite this, the department sold the goods while the appeal was pending. The Tribunal emphasized that the applicant should be compensated for the pecuniary loss, placing him in the same position as if the goods were available in their original condition. The Tribunal concluded that the market value should be the value determined by the department at the time of seizure, which was Rs. 1,66,170/-.
Conclusion:
The Tribunal ordered the Collector of Customs (Preventive), West Bengal, and the Assistant Collector of Customs, Krishnagar Customs Division, to pay Rs. 1,66,170/- to the applicant as the market price of the goods, to be carried out promptly by 1st September 1992. This decision was based on the principle that the applicant should be compensated for the pecuniary loss resulting from the wrongful seizure and sale of the goods.
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1992 (6) TMI 109
Issues:
1. Modification of the order for re-export of confiscated items - Canon Camera and gold chain.
2. Applicant's contention of ignorance and request for re-export.
3. Respondent's argument based on Customs Act provisions.
4. Comparison with a previous case for re-export permission.
5. Analysis of Customs Act provisions and declaration requirements.
6. Comparison with a previous case where re-export was allowed.
7. Evaluation of applicant's actions and lack of declaration.
8. Decision on re-export permission based on circumstances.
Analysis:
The judgment concerns an application for modifying an order to allow re-export of confiscated items - a Canon Camera and a gold chain. The applicant, represented by Shri Ashish Roy, argued that due to ignorance, the goods were not declared while passing through the Green Channel. He emphasized the applicant's truthful disclosure upon interception and requested re-export based on a similar case precedent. On the other hand, the J.D.R. contended that re-export cannot be allowed as there was no declaration as required under Section 77 of the Customs Act, 1962, citing a Delhi High Court decision. The applicant's counsel countered, stating the Delhi High Court decision was not applicable as the applicant disclosed the possession of the goods when questioned, claiming ignorance of the law. The judge, after considering both sides, deliberated on the necessity of a declaration under the Customs Act for re-export benefits, concluding that in this case, no such declaration was made.
The judgment referenced a previous case where re-export was allowed based on the appellant's intent to declare the goods before interception. However, in the present case, the applicant did not make any declaration and opted for the Green Channel without acknowledging the necessity of declaration. Despite the applicant's admission of possessing the gold chain, the judge found it implausible that the applicant was unaware of the declaration requirement. The judge emphasized that the applicant's actions indicated an attempt to clear the goods without declaration, dismissing the application for re-export permission based on the circumstances presented.
In conclusion, the judgment highlights the importance of complying with Customs Act provisions, specifically the requirement of declaring goods for re-export benefits. The judge's decision to dismiss the application for re-export permission was based on the lack of declaration by the applicant and the circumstances indicating an attempt to bypass the declaration process. The judgment serves as a reminder of the legal obligations and consequences related to customs declarations and re-export permissions under the Customs Act, 1962.
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1992 (6) TMI 108
Issues Involved:
1. Legality of the demand of duty amounting to Rs. 1,18,065.79.
2. Legality of the imposition of penalty under Rule 173Q of the Central Excise Rules, 1944.
Detailed Analysis:
1. Legality of the Demand of Duty:
The appellants challenged the demand of duty confirmed by the Additional Collector of Central Excise, Bolpur, amounting to Rs. 1,18,065.79, for the removal of ultramarine blue from their Dhadka factory to their Behala factory without payment of Central Excise duty. The appellants contended that they had applied for permission to remove the goods under Rule 56B on 28-2-1986, prior to the removal dates (5-3-1986 to 13-3-1986). They argued that there is always a gap between the application date and the approval date, and the effective date for availing of permission should be the application date. The appellants also asserted that the duty was paid when the goods were removed from the Behala factory, and thus, duty should not be charged twice.
The Tribunal noted that the Adjudicating Authority relied on the Superintendent's observations of short payment of duty in the RT-12 returns for March-April 1986. However, the appellants had already removed the goods from the Behala factory after paying the duty. The Tribunal concluded that the demand of duty made in the impugned order was not sustainable since the goods were dutiable only when converted to the finished stage at the Behala factory, and the duty was already paid upon removal from there. Thus, the demand of Rs. 1,18,065.79 was set aside.
2. Legality of the Imposition of Penalty:
The appellants argued that they applied for permission to remove goods on 28-2-1986, but due to business exigencies, they began removal before receiving formal permission, which was granted on 27-3-1986. They contended that the effective date for permission should be the application date and that the imposition of penalty without mens rea was unwarranted, citing the Supreme Court decision in Hindustan Steel Ltd. v. State of Orissa.
The Tribunal, however, held that the permission could not have retrospective effect and that the goods were removed without obtaining the necessary permission under Rule 56B. The Tribunal referenced the Supreme Court's ruling in Gujarat Travancore Agency v. Commissioner of Income Tax, which established that for statutory offences, intention or mental state is irrelevant, and the mere act of non-compliance constitutes the offence. Consequently, the penalty of Rs. 5,000/- was confirmed, as the removal of goods without permission was a statutory violation.
Conclusion:
The Tribunal set aside the demand of duty amounting to Rs. 1,18,065.79, finding it unsustainable as the duty was already paid when the goods were removed from the Behala factory. However, the imposition of a penalty of Rs. 5,000/- under Rule 173Q was confirmed, as the removal of goods without prior permission constituted a statutory offence. The appeal was disposed of accordingly.
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1992 (6) TMI 107
The judgment involves a dispute regarding the repair of a Tumbling digester. The impugned order was issued by the Collector of Central Excise, but communicated by the Superintendent. The Tribunal remanded the matter to the Collector for reevaluation with proper reasons and granted a stay, directing a decision by June 20, 1992.
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1992 (6) TMI 106
Issues Involved:
1. Whether the conversion by way of slitting and cutting of jumbo rolls of Video Magnetic Tapes into Pancakes amounts to manufacture u/s 2(f) of the Central Excises & Salt Act.
2. Whether the resultant Pancakes are liable to duty again.
Summary:
Issue 1: Whether the conversion by way of slitting and cutting of jumbo rolls of Video Magnetic Tapes into Pancakes amounts to manufacture u/s 2(f) of the Central Excises & Salt Act.
The appellants contended that the process of slitting jumbo rolls into Pancakes does not amount to manufacture under Section 2(f) of the Central Excises & Salt Act, as there is no change in the characteristics of the film except a change in width. They relied on various judgments, including Computer Graphics (P) Ltd. v. U.O.I. and C.C. v. Hindustan Photo Films, which held that mere change in physical form does not constitute manufacture. The Department argued that there is a change in use and name in commercial parlance, and thus, Pancakes are distinct and separate products, making the process of slitting equivalent to manufacture.
The majority opinion held that slitting jumbo rolls into Pancakes does not amount to manufacture as the character of the goods remains unchanged despite the change in name and use. It was emphasized that mere application of processes like slitting does not transform the original product into a new product, referencing the judgments of the Madras High Court and the Tribunal in similar cases.
Issue 2: Whether the resultant Pancakes are liable to duty again.
The appellants argued that since both jumbo rolls and Pancakes fall under the same tariff sub-heading 8523.13, no additional duty should be levied on Pancakes. They cited trade notices and previous judgments supporting that duty paid on one form should not be levied again on another form if both fall under the same tariff heading. The Department countered that the specific mention of Pancakes in the tariff entry indicates a legislative intent to levy duty on Pancakes as a distinct product.
The dissenting opinion by Member (Technical) held that the process of slitting jumbo rolls into Pancakes amounts to manufacture, making Pancakes liable to duty. This view was supported by the legislative intent reflected in the specific tariff entry for Pancakes and the Supreme Court's judgments, which emphasized that the creation of a new commodity with a different name, character, and use constitutes manufacture.
Final Order:
In view of the majority opinion, the appeal was dismissed, confirming that slitting jumbo rolls into Pancakes does not constitute manufacture, and thus, Pancakes are not liable to additional duty.
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1992 (6) TMI 105
Issues Involved:
1. Violation of principles of natural justice.
2. Legality of confiscation under Sections 111(d) and 111(m) of the Customs Act, 1962.
3. Appropriate order regarding redemption fine.
Issue-wise Detailed Analysis:
1. Violation of Principles of Natural Justice:
The appellant contended that the test report from the Custom House was not provided to them, denying them the opportunity to contradict it. They also argued that they were not allowed to cross-examine the person who conducted the test. The appellant relied on the Calcutta High Court decision (1967 AIR Calcutta 200), where it was held that non-provision of the test report violated natural justice principles. However, in this case, the Tribunal found that the appellant did not request the test report or dispute its correctness in their reply to the show cause notice. The show cause notice contained the test report's substance, which the Supreme Court in AIR 1976 S.C. 143 (City Corner v. Personal Asstt. to Collector) deemed sufficient for making a representation. Therefore, the Tribunal concluded that there was no violation of natural justice principles.
2. Legality of Confiscation under Sections 111(d) and 111(m) of the Customs Act, 1962:
The appellant argued that the adjudicating authority did not consider the foreign supplier's test report, which described the goods as terneplates. However, the adjudicating authority found that the foreign test report did not indicate the goods were coated with lead or an alloy of tin and lead, which is necessary for classification as terneplate. The Custom House laboratory's test revealed the goods were mild steel coated with tin, classifying them as tinplates, not terneplates. The appellant did not challenge this test report or request cross-examination of the tester. Consequently, the Tribunal upheld the adjudicating authority's decision that the goods were not permissible under OGL and their confiscation under Sections 111(d) and 111(m) for unauthorized import and misdeclaration was justified.
3. Appropriate Order Regarding Redemption Fine:
The Tribunal acknowledged that the appellant is a small SSI unit and the proprietor is a retired Army person facing financial trouble due to the heavy redemption fine. Considering the CIF value of the goods (approximately Rs. 3 lakhs), the Tribunal found the redemption fine of Rs. 1 lakh in each case excessive. Therefore, it reduced the redemption fine to Rs. 75,000 in each case, granting the appellant consequential reliefs.
Conclusion:
The appeals were dismissed with a modification in the redemption fine, reducing it to Rs. 75,000 in each case from Rs. 1 lakh. The Tribunal found no violation of natural justice principles and upheld the legality of the goods' confiscation under Sections 111(d) and 111(m) of the Customs Act, 1962.
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1992 (6) TMI 104
Issues:
- Classification of imported goods under the Import-Export Policy, 1988-91.
- Confiscation of goods under Sec. 111(d) of the Customs Act, 1962.
- Applicability of OGL and additional license requirements for imported goods.
Classification of Imported Goods:
The appellants imported goods described as "labels imprinted in rolls" under an additional license, claiming they fell under OGL and Appx. 6, List 8, Part I of the Import-Export Policy, 1988-91. However, upon inspection, it was found that the goods were strips of woven fabrics in running length, falling under Serial No. 44 of Appx. 2, Part-B of the policy. The Additional Collector held that these goods did not qualify as labels and were fabrics made from man-made fiber/yarn, necessitating an additional license for importation.
Confiscation under Customs Act:
The Additional Collector confiscated the goods under Sec. 111(d) of the Customs Act, 1962, as they were deemed to be strips of woven fabrics and not labels for affixing on garments. The charge of misdeclaration under Sec. 111(m) was dropped. The appellants argued that the goods were declared as being in rolls, not in running length, and contended that strips of fabrics should be considered under OGL, Appx. 6, List-8. However, the Tribunal upheld the confiscation under Sec. 111(d) due to the nature of the imported goods as strips of woven fabrics.
Applicability of OGL and Additional License:
The Tribunal determined that the goods imported as "labels unprinted in rolls" were actually strips of woven fabrics in running length, requiring further processing to become labels. As such, they were classified as fabrics under Serial No. 44 of Appx. 2, Part-B of the policy, not qualifying for import under OGL. The Tribunal reduced the redemption fine imposed on the appellants, considering them a Small Scale Industry (SSI) unit, but upheld the confiscation of the goods under Sec. 111(d) of the Customs Act, 1962. The appeal was dismissed, with the appellants granted consequential reliefs.
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1992 (6) TMI 103
Issues:
- Confiscation of goods brought as baggage by the appellant
- Allegation of smuggling and violation of Customs Act
- Request for re-export of goods
- Interpretation of Section 111(d) and Section 111(1) of the Customs Act, 1962
- Declaration of goods under Section 77 of the Customs Act, 1962
- Consideration of goods as bona fide baggage
- Principles of confiscation and re-export under Customs laws
Confiscation of Goods Brought as Baggage:
The appeal was filed against the order confiscating goods brought as baggage by the appellant. The Additional Collector of Customs confiscated the goods under Section 111(d) and Section 111(1) of the Customs Act, 1962, alleging that the goods were part of an organized smuggling operation. The appellant argued that he declared the goods under Section 77 of the Customs Act by opting for the Red Channel and should be allowed to re-export the goods. The Tribunal noted that the appellant's intention to declare the goods was evident by choosing the Red Channel, and there was no evidence of smuggling as the goods were seized after inventory, not in excess of the declaration.
Allegation of Smuggling and Violation of Customs Act:
The Department contended that the goods in the appellant's baggage were in large quantities, indicating commercial purposes rather than personal use, thus violating Section 111(1) of the Customs Act. The Department also argued that the request for re-export could not be granted due to lack of invoicing details. However, the appellant maintained that any quantity of goods could be imported on payment of duty, and confiscation was unwarranted.
Request for Re-Export of Goods:
The appellant requested re-export of the goods, citing his short trip abroad and the goods being brought as baggage. The Tribunal noted that the appellant's request for re-export was made after the inventory, and to grant re-export, the goods must belong to a specific person with detailed particulars. As the appellant was an Indian national returning after a short trip, the Tribunal found the request for re-export unnecessary.
Interpretation of Customs Act Sections:
The Tribunal interpreted Section 111(d) and Section 111(1) of the Customs Act, emphasizing that a violation occurs when goods exceed the declaration. Since the appellant intended to declare the goods by opting for the Red Channel, there was no contravention of these sections.
Consideration of Goods as Bona Fide Baggage:
The concept of bona fide baggage was discussed, highlighting that baggage rules permit the import of personal and household effects within free allowances. The Tribunal clarified that the appellant's goods were considered baggage under Section 77 of the Customs Act, and confiscation was not justified.
Principles of Confiscation and Re-Export under Customs Laws:
The Tribunal set aside the confiscation order and directed the release of goods to the appellant upon payment of assessed duty. It emphasized that the re-export of goods requires specific details of the owner, which the appellant failed to provide. The appeal was disposed of, ordering the release of goods upon payment of duty, as assessed.
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1992 (6) TMI 102
Issues:
1. Liability to pay interest on duty payable on imported goods.
2. Interpretation of provisions of the Customs Act, 1962 regarding payment of interest.
3. Applicability of case law on liability to pay interest on duty.
Analysis:
1. The appeal was filed against the orders passed by the Collector of Customs (Appeals) regarding the liability to pay interest on duty payable on imported goods. The appellants imported goods and warehoused them, clearing only a portion of the goods for home consumption. The remaining goods were re-exported after being warehoused for a specific period. The issue was whether interest should be paid on the duty payable for the goods re-exported after being warehoused beyond the normal period.
2. The learned Advocate for the appellants contended that under the Customs Act, the liability to pay interest is linked to the liability to pay duty, and both must go together. He argued that since no duty was payable on the re-exported goods, the appellants should not be burdened with interest on a non-existing duty. The J.D.R. supported the Assistant Collector's reasoning that re-exportation does not absolve the liability to pay interest on duty payable on imported goods beyond the normal warehousing period.
3. The Tribunal considered the submissions and referred to a decision of the Kerala High Court, emphasizing that the liability to pay interest is connected to the liability to pay duty. The Court highlighted that when goods are exempted from duty before removal from the warehouse, no interest can be charged on a non-existing duty. Applying this principle, the Tribunal ruled in favor of the appellants, stating that since the goods were re-exported without payment of duty, they should not be liable to pay interest on a non-existent duty. The appeal was allowed, setting aside the lower authorities' orders demanding interest from the appellants.
This judgment clarifies the interconnection between the liability to pay duty and interest under the Customs Act, emphasizing that interest is a consequence of duty payment. It underscores that when goods are re-exported without duty payment, no interest should be charged on a non-existing duty.
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1992 (6) TMI 101
Issues:
- Interpretation of Open General Licence (OGL) under Import Policy 1990-93
- Validity of Letter of Credit (L.C.) for importation of goods
- Allegation of fresh commitment post-deletion of item from OGL
- Confiscation of imported goods under Section 111(d) of Customs Act, 1962
- Imposition of fine and penalty under Sections 111(d) and 112(a) of Customs Act, 1962
Analysis:
Interpretation of Open General Licence (OGL) under Import Policy 1990-93:
The case involved the appellants filing a Bill of Entry for clearance of a consignment declared as Moulds under the Open General Licence (OGL). The dispute arose when the item covering Moulds was deleted from the OGL. The appellants argued that their shipment was covered under OGL based on certain Public Notices issued by the Chief Controller of Imports and Exports. The Additional Collector confiscated the goods, but the appellants contended that their import was permissible under specific Public Notices allowing pre-ban commitments for goods covered by irrevocable Letter of Credit opened before the deletion of the item from OGL. The Tribunal examined the relevant Public Notices and found in favor of the appellants, allowing the appeal.
Validity of Letter of Credit (L.C.) for importation of goods:
The dispute centered around the validity and extension of the Letter of Credit for the importation of goods. The appellants argued that the extension of the Letter of Credit by their bank amounted to a revalidation of the original L.C. opened before the deletion of the item from OGL. The Tribunal analyzed the timeline of the L.C. extension, shipment dates, and relevant communications between the banks. Based on the findings, the Tribunal concluded that the goods were imported against the original L.C. and within the permissible period, as outlined in the Public Notices, supporting the appellants' position.
Allegation of fresh commitment post-deletion of item from OGL:
The Revenue contended that any fresh commitments made by the appellants after the deletion of the item from OGL were not permissible. The Additional Collector imposed penalties and fines based on this argument. However, the Tribunal found that the extensions of the L.C. by the appellants did not constitute new commitments but were valid extensions of the original L.C., allowing the importation of the goods under OGL as per the relevant Public Notices.
Confiscation of imported goods under Section 111(d) of Customs Act, 1962:
The Additional Collector had confiscated the imported moulds under Section 111(d) of the Customs Act, 1962, citing non-compliance with OGL provisions. However, the Tribunal's analysis of the L.C. validity and extension, along with adherence to Public Notices, led to the decision to set aside the confiscation order and allow the clearance of the goods against OGL.
Imposition of fine and penalty under Sections 111(d) and 112(a) of Customs Act, 1962:
In addition to confiscation, the appellants were imposed a fine and personal penalty under Sections 111(d) and 112(a) of the Customs Act, 1962. The Tribunal's ruling in favor of the appellants negated the basis for these penalties, as the importation of the goods was found to be permissible under the OGL provisions and the original Letter of Credit terms.
Overall, the Tribunal set aside the impugned order, allowed the appeal, and upheld the appellants' right to clear the imported moulds against the Open General Licence, emphasizing the importance of adherence to the terms of the Letter of Credit and relevant Public Notices in import transactions.
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1992 (6) TMI 100
Issues:
- Disallowance of regional discounts in invoices.
- Allegation of not passing discounts to buyers.
- Requirement to exhibit discounts on invoices.
Analysis:
The appeal was against an Order-in-Original by the Assistant Collector regarding the disallowance of regional discounts in invoices for PVC Resin manufactured by the appellants. The Assistant Collector alleged that regional discounts were not passed on to customers and demanded a differential duty. The appellants argued that the discounts were approved and known to customers, and it was unnecessary to exhibit them on invoices. During the hearing, the appellants contended that there was no evidence of non-passing of discounts to customers or diversion of goods. They cited the Supreme Court's decision in Bombay Tyres International, stating that showing discounts on invoices was not mandatory.
Upon examination, the Commissioner found that regional discounts were approved by the department and shown on approved price lists. The disallowance was solely based on discounts not being exhibited in invoices and the presumption of non-passing of discounts to buyers. The Commissioner noted the lack of evidence supporting these allegations and that the appellants had raised invoices based on approved values. Referring to the Bombay Tyres International case, the Commissioner concluded that not showing discounts on invoices did not render them inadmissible. The judgment in Ballarpur Industries Ltd. further supported this view.
The Commissioner held that the disallowance of regional discounts due to non-indication on invoices and alleged non-passing to customers was incorrect and unsustainable. Since the department did not claim the discounts were inadmissible, the impugned order was set aside, allowing the appeal. The decision was based on incorrect legal grounds, lack of evidence, and incorrect facts presented by the department.
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1992 (6) TMI 99
Issues Involved:
1. Applicability of the Supreme Court's directive in the ONGC case regarding disputes between Public Sector Undertakings (PSUs) and government departments.
2. Interpretation of statutory rights of appeal in light of the Supreme Court's directive.
3. The role of the Committee of Secretaries in resolving disputes before litigation.
4. Whether stay applications are exempt from the Supreme Court's directive.
5. Judicial propriety and the Tribunal's obligation to follow the Supreme Court's directive.
Issue-wise Detailed Analysis:
1. Applicability of the Supreme Court's Directive:
The department raised a preliminary objection based on the Supreme Court's directive in the ONGC case (Civil Appeal No. 2058-59 of 1988), which mandates that disputes between the Government of India and PSUs must first be examined by a Committee of Secretaries before proceeding to litigation. The Tribunal noted that this directive aims to save public money and time by encouraging amicable settlements. The directive explicitly states that no litigation should proceed without clearance from the Committee, and this applies to all courts and tribunals.
2. Interpretation of Statutory Rights of Appeal:
The counsels for the PSUs argued that the Supreme Court's directive cannot override statutory rights of appeal provided by law. They contended that the right of appeal originates when a dispute arises and that the Supreme Court cannot legislate or impair statutory procedures. They emphasized that the directive should be interpreted to apply only to disputes arising after the directive's issuance or the Committee's appointment. They cited several precedents, including AIR 1988 Supreme Court 1531 and 1991 (4) S.C.C 496, to support their arguments.
3. Role of the Committee of Secretaries:
The Tribunal highlighted that the Supreme Court's directive aims to resolve disputes through the Committee of Secretaries before resorting to litigation. The directive requires that all disputes between PSUs and government departments be referred to the Committee, and only if the Committee fails to resolve the issue, can the matter proceed to litigation. The Tribunal emphasized that it would be improper to interpret or sit in judgment over the Supreme Court's directive, and it must be respected in the interest of judicial discipline and decorum.
4. Exemption of Stay Applications:
The Tribunal considered whether stay applications are exempt from the Supreme Court's directive. It noted that stay applications are interim reliefs and do not decide disputes finally. Therefore, they could be construed to be outside the purview of the directive. However, the Tribunal also acknowledged that the revenue should not take coercive action until the Committee of Secretaries has settled the disputes.
5. Judicial Propriety and Tribunal's Obligation:
The Tribunal concluded that it must adhere to the Supreme Court's directive and refrain from proceeding with disputes between PSUs and government departments until clearance from the Committee is obtained. The Tribunal recognized that the directive does not take away the statutory remedy of filing appeals, but it requires that the Committee of Secretaries be approached for an early settlement. The Tribunal also noted that the revenue should not resort to coercive measures until the Committee has given its decision.
Separate Judgment by Judicial Member G.P. Agarwal:
G.P. Agarwal, Judicial Member, expressed reservations about the majority view. He noted that different benches of the Tribunal had taken conflicting views on the issue. He referred to the West Regional Bench's decision in Digvijay Textile Mills (N.T.C.) Another v. CCE, Bombay-I & Vadodara, which held that appeals should not be entertained without clearance from the Committee. In contrast, the Special Bench-B in ONGC v. CCE, Calcutta, held that the right of appeal cannot be taken away. Agarwal suggested that the matter be referred to a Larger Bench for a definitive resolution.
Majority Order:
The majority order, endorsed by Members R. Jayaraman and S.L. Peeran, concluded that:
1. Appeals of Public Undertakings must be heard by the Committee of Secretaries constituted by the Cabinet Secretary, notwithstanding pending appeals in the Tribunal.
2. The revenue should not resort to coercive measures until the Committee of Secretaries has settled the disputes.
Conclusion:
The Tribunal disposed of the preliminary issue by adhering to the Supreme Court's directive, emphasizing the need for clearance from the Committee of Secretaries before proceeding with litigation involving PSUs and government departments. The Tribunal also noted that the revenue should refrain from coercive actions until the Committee has resolved the disputes.
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1992 (6) TMI 98
Issues:
- Dispute over reducing capital base by the difference in depreciation as per income-tax records and books.
- Appropriation of profit and treatment of depreciation difference.
- Claim for exclusion of depreciation difference from general reserve.
- Disagreement on the treatment of dividend and investment allowance in relation to depreciation difference.
Analysis:
1. The appeals were filed against the order of the Commissioner of Surtax (Appeals) for assessment years 1981-82 to 1987-88, with a common dispute addressed in a consolidated order for convenience.
2. The primary dispute revolved around the CST (Appeals) decision to reduce the capital base by the difference in depreciation as per income-tax records and books. The assessee argued that the profit available for appropriation included the depreciation difference, and the choice of appropriation should be left to the assessee. However, the CST (Appeals) upheld the decision based on legal precedents and the absence of evidence separating the depreciation difference from general profits.
3. The assessee reiterated their contentions, emphasizing that the depreciation difference should not be deducted from the general reserve. They argued that other appropriations, such as dividends and investment allowances, were already made from the profit before transferring to the general reserve. The Departmental Representative supported the previous decisions and contended that the depreciation difference must be deducted from the general reserve as per legal precedents.
4. The Tribunal agreed with the CST (Appeals) and cited the Bombay High Court's decisions, emphasizing that the depreciation difference must be deducted from the general reserve. The Tribunal highlighted the specific language and interpretation of the law supporting this deduction, dismissing the assessee's arguments regarding dividend and investment allowance.
5. The Tribunal further clarified that the dividend and investment allowance should not be linked to the depreciation difference, as they are separate components governed by specific provisions of the Income-tax Act. The Tribunal rejected the assessee's claim and upheld the CST (Appeals) decision, emphasizing the legal principles and precedents governing the treatment of depreciation difference in capital computation.
6. Ultimately, the Tribunal found no merit in the appeals and dismissed them, affirming the deduction of the depreciation difference from the general reserve and rejecting the arguments regarding dividend and investment allowance. The decision was based on legal interpretations and established principles governing capital computation and profit appropriation.
This detailed analysis of the judgment highlights the key issues, arguments presented by the parties, legal interpretations, and the final decision rendered by the Tribunal.
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1992 (6) TMI 97
Issues Involved:
1. Addition of Rs. 38,820 as profits from the supply of G.I. pipes.
2. Penalty under section 271(1)(c) for concealment of income.
Detailed Analysis:
1. Addition of Rs. 38,820 as Profits from the Supply of G.I. Pipes:
The assessee, an individual engaged in the business of oil engines, machines, spare parts, and insecticides, supplied G.I. pipes to the Executive Engineer, Zilla Parishad. The payments received amounted to Rs. 3,12,000 against supplies worth Rs. 2,73,271, resulting in a profit of Rs. 38,820. The Income Tax Officer (ITO) added this amount as taxable profit for the year, asserting that the contract was for supply and the profit was realized upon supply. The assessee, however, treated this amount as a credit balance in the account of the Executive Engineer, arguing it was part of a running account and would be squared up against future supplies. The assessee did not press this ground before the Commissioner of Income Tax (Appeals) [CIT(A)], leading to the finalization of the addition for the assessment year 1982-83. Consequently, the assessee claimed and was allowed a deduction of the same profit for the assessment year 1983-84.
2. Penalty under Section 271(1)(c) for Concealment of Income:
The ITO imposed a penalty of Rs. 51,242 under section 271(1)(c) for the alleged intentional concealment of income of Rs. 38,820. However, the CIT(A) canceled this penalty, and the department appealed against this cancellation. The Tribunal upheld the CIT(A)'s order, concluding that there was no deliberate and intentional concealment of income. The Tribunal noted that the assessee treated the transactions on a cash basis, as evidenced by the ITO's findings. The credit balance of Rs. 38,820 was offered as income for the assessment year 1983-84, and the assessee had sought a deduction for this amount to avoid double addition, which the ITO accepted. The Tribunal emphasized that the assessee did not press the ground before the CIT(A) because the relief was already obtained for the subsequent year.
The Tribunal referred to several judicial precedents, including CIT v. Net Ram Ram Swarup, Sir Shadilal Sugar & General Mills Ltd. v. CIT, and CIT v. Vinaychand Harilal, to support its decision that mere failure to prove the nature and source of income does not automatically imply deliberate concealment. The burden of proving concealment lies with the revenue, and the assessee had provided a plausible and bona fide explanation. The Tribunal concluded that the facts of the case did not attract Explanation 1 to section 271(1)(c), which deals with failure to offer a bona fide explanation or to substantiate it.
Conclusion:
The Tribunal dismissed both the assessee's appeal against the addition of Rs. 38,820 and the department's appeal against the cancellation of the penalty under section 271(1)(c). The Tribunal upheld the CIT(A)'s order, finding no deliberate or intentional concealment of income by the assessee.
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