9911796707
TMI Blog1986 (12) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... custom agent Sirgiroh H.R. Khan and Sons filed two shipping bills No. 6555 dated 13.5.1985 and 7215 dated 14.5.1985 for shipment of 1950 and 1100 bags said to contain Basmati rice per s.s. Tilia for export to Dubai. The exporters submitted certificate No. A 2035 S. No. 074 dated 8.5.1985 issued by the Deputy Senior Marketing Officer, Directorate of Marketing and Inspection, Government of India, Amritsar, certifying that the rice was of Basmati quality and the same had been Graded with agmarking. The rice was said to be in three lots with destination meant as Dubai. The rice was inspected on 6.5.1985 and the period of validity was shown as 60 days. However, when the goods were brought in the docks for shipment they were examined by the Customs authorities and found to be other than Basmati. As a result the Customs Officers requested the Agmarking authorities of Bombay to draw fresh samples for determining the type of the rice under export. This was done by the Senior Marketing Officer, Western Region, Bombay, Directorate of Marketing and Inspection of the Ministry of Rural Reconstruction; and in his letter dated 4.6.1985 addressed to the exporters the officer stated that the consign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy Book. The Advocate further contended that the Amritsar Agmark authorities had carried out the proper test while the Bombay Agmark authorities did not give the details of the test carried out by them for determining as to whether the rice was of Basmati quality. In particular the length/breadth ratio of the rice-grain was very much relevant in coming to the conclusion as to whether the rice was of Basmati variety. But this test did not appear /to have been carried out by the Bombay authorities as their report was silent in this matter. Shri Deshpande read out the instructions for grading and Agmarking Basmati rice and referred to the procedure for Agmarking. The Advocate further explained that since the rice was not held to be falling under the Basmati category covered by Heading B. 20(2a) of the Policy which came under OGL 3, the export of the non-Basmati rice fell within the category of banned goods. Hence the Additional Collector took the penal action and did not permit the export. The Additional Collector had held that the exporters violated Section 50 of the Customs Act. But this was only a procedural Section requiring subscription of a correct declaration regarding the natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the actual examination done by the Customs Officer. The report shows that 40 bags from each of the two consignments were taken up for consideration and samples were drawn and sent to the Export Department for verification of the description of the goods. As per the Additional Collector's order the samples were shown to reputed trade merchants who gave opinion that they contained very high percentages of non-Basmati rice. Accordingly the Agmarking authorities carried out the sampling and testing and as per their report the percentage of non-Basmati rice was found to be 91.05% as mentioned in the Additional Collector's order. During the course of the arguments in the appeal the learned Advocate contended that whenever there was difference between the two Agmarking authorities, the procedure prescribed in the Basmati Rice Grading and Marking Rules, 1979 should have been followed for obtaining a third opinion. The learned Advocate contended that this was not done in the present case and therefore the first report of the officer at Amritsar should be accepted. It is seen that there is not much of substance in the aforesaid contention of the learned Advocate. When the exporter was aware ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 and 1428 bags of rice under shipping bill number 12352 dated 23.5.1985 for FOB value of Rs. 8,49,660/- which were reported to have been released on caution, no particulars have been furnished by the Appellants in support of that consignment to merit comparison between the two exports. Therefore, so far as the present appeal is concerned, it is seen that the two shipments totally violated the provisions of the Customs Act and the Imports and Exports (Control) Act and Exports (Control) Order as above. In addition the Additional Collector has held the exporter as guilty of misdeclaration by furnishing a wrong statement in terms of Section 50 of the Customs Act. Therefore, if there is any discrimination in the treatment of the two exporters on the identical facts as contended by the Appellants, the discrimination needs to be removed by taking action against M/s. Empire Exports, Bombay, rather than setting aside the order of fines and penalties on the Appellants. Since, however, the matter relating to M/s. Empire Exports, Bombay, is not before us, "no action in this behalf can be taken by the Tribunal. So far as the present appeal is concerned, it is seen that the orders of fine and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are not Basmati rice as per their standards, exports cannot be allowed. The goods are liable to confiscation for misdeclaration. The Agmark report says that there is 91.5% of non-Basmati grains. Thus, there is gross misdeclaration and a serious view is taken of this while adjudicating this case. The offending goods attempted to be exported against both S/Bills are confiscated ......" 10. The operative portion of the order of the Additional Collector in M/s. Kailachand Devchand & Co. Pvt. Ltd. reads:- "After carting of the goods in the docks, representative sample was drawn from the consignment. On verification of the sample it was found to be predominantly non-Basmati variety of rice. The Agmark authorities in Bombay were also asked to inspect the consignment and draw samples, for verification. As per their report, the goods contained 83% non-basmati rice. As per serial No. B20 of the ETC policy 85-86 export of non-Basmati rice is not permitted. The exporters have therefore attempted to export non-admissible Items by misdeclaring thereby violating provisions of Section 50(2) of C.A.62 and the restrictions of Export policy (B.20). The goods are liable to confiscation unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the said 3050 bags contained Basmati Rice and were in accordance with the Basmati rice Grading and Marketing Rules 1979. On the basis of the aforesaid certificate, the exporters tendered the goods for shipment. Shri Deshpande has further urged that the Agmark authorities had sealed each bag and impressed each bag with Agmark number. He also contended that the Amritsar Agmark authorities had carried out proper test for determination as to whether the rice was Basmati or not. In particular, they had taken into consideration length/breadth ratio for grading Basmati rice. Shri Deshpande had urged that the certificate on which the Addl. Collector relied did not contain the length and breadth or ratio which determines the nature of the rice namely whether it is Basmati or other than Basmati. Shri Deshpande had placed reliance on the Instructions for Grading and Marketing issued by the Agricultural Marketing Adviser to the Government of India under Rules 2 and 4 of the General Grading and Marketing Rules 1937 and Rules 6, 7 and 8 of the Basmati Rice (Export) Grading and Marking Rules, 1979 (Appendix III). 14. In the appeal of M/s. Kailachand Devchand i & Co. Pvt. Ltd., Shri B.P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essary to set them out again. 17. The points that fall for determination in these appeals are whether the Additional Collector was unjustified in ordering confiscation and imposing fine in lieu of confiscation in respect of the three consignments which are the subject matter of these two appeals, and (2) whether the Additional Collector was unjustified in imposing the penalties on the appellants. 18. Before proceeding to consider the points set out above, it would be necessary to refer to certain statutory provisions. The Agricultural Produce (Grading & Marketing Act, 1937) authorises the Government ...... rules ...... to : (a) fixing Grade designation to indicate the quality of any scheduled article, (b) defining the quality indicated by every Grade designation, (c) specifying Grade designation marks to represent particular Grade designation, (d) authorising a person or a body of persons, subject to any prescribed conditions, to mark with a Grade designation mark any article in respect of which such mark has been prescribed or any covering containing, or label attached to any such article, (e) specifying the conditions referred to in clause (d) including in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication was required to be sent through Senior Marketing Officer in charge DMI, Northern Region, 4/20 Asaf Ali Road, New Delhi. The officer who received the application was required to make necessary inquiries and after ascertaining the bona fides of the applicants should forward the application on his recommendation to the Joint Agricultural Adviser to the Government of India of Nagpur. As per the instructions of the Chief Agricultural Adviser on receipt of the party's application and the recommendation of the Regional Officer his certificate for authorisation to Grade and mark Basmati rice under Agmark will be issued from the private head office, Nagpur. The certificate of authorisation will be valid for a period of one year. It was specifically provided in these instructions that no Agmark mark shall be done unless a letter of authorisation has been issued. It further provides that grading of Basmati rice shall have to be undertaken only at the premises included in the certificate of authorisation. The instructions also contain as to the period within which intimation has to be sent to the Inspecting Officer for sampling and design. It also provided procedure for drawing up sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one more than 15 days prior to the date of actual shipment. Further, the instructions provided for check/port inspection even after the lots have been checked, sampled and passed. The authorised officer could carry out check inspection, i.e. re-check of the lot at any stage, at the authorised premises, in transit, in a warehouse, at the port or the wharf or at any other place. If as a result of check inspection, a lot is found not to conform to the prescribed standards, the same will be rejected. 23. It may be stated here that the instructions issued by the Agricultural Marketing Adviser were in pursuance of the powers conferred on him under the Basmati Rice (Export) Grading and Marking Rules, 1979. The special characteristics as well as maximum limit of tolerance (by weight) of Basmati or milled rice for export only are set out in Schedule II under the Heading General Characteristics. Several characteristics have been set out including the colour as well as the length and breadth and the length breadth ratio. Now coming back to the facts of the two appeals both the appellants have produced certificates issued by the Agmark authorities. The two certificates are in accordan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities of Amritsar after following the instructions of the Agricultural Marketing Adviser and after taking samples and after analysing Graded the Basmati rice and issued the certificate to be the Basmati rice in 'B' Grade. There was no allegation of a collusion between the appellants and the Government of India officer. Therefore, due weight should have been attached to the certificate issued by the said authority. Shri Deshpande had also contended that no weight should have been attached on the certificate issued by the Bombay Agmark Marketing authorities. He had urged that one is required to follow the instructions of the Agricultural Marketing Adviser to issue a certificate. If one is to follow the elaborate instructions issued by the Agricultural Marketing Adviser, then a minimum of two to three days would be required to carry out the test but then the Agmark authorities at Bombay have informed the appellant on the very day on which they took that sample that it was not Basmati rice. Shri Deshpande further contended that proforma a had been prescribed as to the issue of certificate. This preforma among other things provided for stating the length breadth as well as the aver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne, 1985 addressed to M/s. Sachdeva & Sons, the Senior Marketing Officer, Western Region, Bombay informed them that check inspection by the officer of the Department was made on 3.6.1985 at Bombay on request from the Collector of Customs, Bombay. But the actual certificate was issued by an Inspecting Officer and it was signed by the Chemist on 1.6.85. Thus a doubt is cast as to the test certificate issued by the Agmark authority, Bombay. Brother Dilipsinhji in his order has stated that the certificate issued by Senior Marketing Officer, Bombay should carry more weight. The reason given by brother Dilipsinhji reads :- "It is further seen that the officer at Bombay, namely, the Senior Marketing Officer, Bombay has given a direction to the exporters not to export the consignment and to remove the Agmark labels and lead seals from the rice bags and to surrender the certificate. It, therefore, appears that the Senior Marketing Officer, Bombay, had greater authority than the Deputy Senior Marketing Officer, Amritsar and hence the certificate issued by the former should carry more weight." This reason appears not correct. Firstly, the certificate as such does not indicate that it was is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e including red grains, average length, average breadth as well as L/B ratio. In the certificate issued by the Bombay authorities relied on by the Collector, the weight of other rice including red grains is given as 16.6 gms which works out to 83%. But whereas in the other certificate the weight is given as 8 gms. In another certificate the percentage of other grains was given as 57.5%. These two certificates issued by the Bombay Agmark authorities also do not tally. When such was the position, the Additional Collector was not justified in relying only on one of the certificates in support of his finding that what was sought to be exported was non-Basmati. 32. M/s. Kailachand Devchand & Co. P. Ltd. are not the authorised packers. They are only merchant exporters. There was no allegation that they knew that the bags which they sought to export contained non-Basmati rice. They had relied upon the certificate issued by the Agmark authorities Delhi. There was no allegation of substitution of the bags or collusion between the Officer of the Government of India and the appellant. When the Additional Collector found that the rice sought to be exported are not Basmati rice he should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficates disclose that the bags which were brought for export contained Basmati variety of rice. As observed earlier, there was no allegation of collusion between the appellants and the Agmark authorities who issued the certificates. There was no charge of forgery or fabrication. Having regard to the penal provisions in the Agricultural Produce (Graded & Marketing Act) it is very unlikely that the Agmark authorities would venture to issue false certificates. The certificate issued by the Bombay authority has no overriding effect on the certificates issued by the Agmark authorities of Amritsar and Delhi. The least that could have been done by the Additional Collector who was to allow the exporters to take back the consignments and not to order confiscation or to impose penalty. 35. In view of the conflict between the certificates issued by the two Agmark authorities, and having regard to the infirmity contained in the order of the Additional Collector, the proper course for me is to remand the matter. But then, no purpose will be served by remand because the bags had been already cleared and no further testing is possible. 36. In the order of brother Dilipsinhji he has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Customs were well within their rights to re-check the goods before shipment. Once the re-check revealed that the goods contained predominantly non-Basmati rice, they could not be expected to pass the shipment for export. But whether, in addition, the goods and the exporters ought to have been proceeded against for confiscation and penalty is quite another matter. This was not a simple case in which mis declaration could be presumed on the ground that the goods were not found conforming to the description given in the shipping bill filed for export. The reason is that the goods were accompanied by an Agmark certificate issued at the source (Amritsar/Delhi) certifying the goods to be Basmati rice and the original labels and Agmark seals were found intact on the rice bags when examined at Bombay. What the exporters declared was the same thing as certified by the source Agmark authority. In the circumstances, it becomes difficult to hold them guilty of misdeclaration straight away and subject them to heavy fine and penalty. Once it became a question of one Agmark certificate versus the other, the authorities ought to have investigated further, preferably through the Chief Agmark Advi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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