TMI Blog1987 (6) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal was right in holding that the firm commitment came into existence on 1-9-1977 despite the fact that the letter of credit was opened on 5-9-1977 ? (3) Whether in terms of the ITC Public Notice No. 66/77, dated 2-9-1977 the Tribunal was right to hold that the firm commitment came into existence on 1-9-1977 when an application opening the letter of credit was received in the Bank ? (4) Whether in view of the facts and circumstances of the case, the Tribunal s decision brushing aside the evidence indicating that the date of opening of letter of credit was 5-9-1977 not 1-9-1977 as the Collector had agreed not to pursue the charges of manipulation of documents against the Bank, the suppliers and the importers, is correct ? The respondents M/s. Gokaldas Harbhagwandas have opposed the reference and they had filed a reply giving the reasons for opposing the Collector s request vide their application received on 29-4-1987. 2. On behalf of the Collector Shri Pal made submissions in support of the Collector s request. He contended that when the appeal of the respondents was heard by the Tribunal there was a difference of opinion between the two Members of the Tribunal and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had clearly held that once a letter of credit is established there is a contract between the bank and the seller. Shri Pal submitted that the two Members referred two points of difference for resolution by the third Member. But the third Member dealt with only the first point and did not deal with the second point. In his findings, the third Member went beyond the limits prescribed by Section 129C of the Customs Act and if the findings of the majority view on the respondents appeal were to be left unchallenged, they would militate against the construction and interpretation of firm commitment for the purpose of administration of the ITC policy. Shri Pal therefore prayed that the points mentioned in the Collector s application be referred to the High Court. In reply to the Tribunal s query Shri Pal conceded that the points were overlapping to some extent and that the point No. 3 in the Collector s application had not been drafted properly. But the views of both the Members who constituted the Bench originally were unanimous so far as the L/C as the document had come into existence on 5-9-1977 only and this fact had not been given up by the Tribunal in their order. Therefore, the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advocate had not correctly placed reliance on the third Member s findings in this behalf. 5. We have examined the submissions made on both the sides. The points of difference which were referred to the President in terms of Section 129C(5) were as follows : (1) On the facts and in the circumstances of the case could it be said that the imports in question were in violation of the Public Notice No. 67/77 dated 2-9-1977; and (2) On the facts and in the circumstances of the case could it be said that there was deliberate contravention of the Public Notice No. 67/77 requiring imposition of penalty and fines. These two points would boil down to the question of interpreting the L/C which was issued on 5-9-1977 and therefore the short point involved was whether the firm commitment came into existence when the L/C was issued in the form of the document on 5-9-1977 or when the respondents made the application to the Bank on 1-9-1977 for opening the L/C. In our opinion, this is the main point which arises out of the Tribunal s decision and which can be referred to the Hon ble High Court for clarification in terms of Section 130 of the Customs Act. However, on the basis of the submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered by our views expressed in that respect. For the aforesaid reasons we find that the main reason for the Collector to come up in reference to the Tribunal, stood resolved by the Supreme Court s judgments and that there is therefore no purpose in referring the same to the High Court again. Accordingly, we decline to accept the Collector s request and reject his application for reference of the questions to the Hon ble Bombay High Court for clarification. 6. [Per : K. Gopal Hegde, Member (J)]. - I have had the advantage of going through the order proposed by brother Dilipsinhji. I agree with his conclusion that the Collector s reference application should be rejected. But then not entirely for the reasons stated by brother Dilipsinhji, but for the reasons recorded hereunder. 7. As this reference application arises out of the order bearing No. 972-974/86 WRB, dated 4-8-1986, in appeal No. CD(T)(BOM)161/80, 233/80 and 431/80, it is necessary to set out briefly the facts as well as the issues involved in these appeals. 8. M/s. Gokaldas Harbhagwandas imported various consignments of polyester filament yarn and sought clearance against import licence Nos. 2796886, dated 17-8- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no substance in the submission of the learned advance that the trade notice should be made effective from 9-9-1977. Having regard to his findings brother Dilipsinhji rejected all the appeals and confirmed the orders of the authorities below. 10. I, however, took a view that even though the letter of credit as a document came into existence on 5-9-1977, it was actually opened on 1-9-1977 and it was on that day there was firm commitment by the State Bank of India to the foreign suppliers. I also held that the Gazette dated 2-9-1977 containing the Public Notice No. 67/77 was made available to the public only on 9-9-1977 and therefore the imports were not in deliberate violation of the ITC Regulations and as such the Collector was not justified in imposing penalty of Rs. 50,000/- in one case or imposing fine in lieu of confiscation in the other two cases. Having regard to my findings I allowed all the appeals by setting aside orders regarding penalty and fine. 11. As there was difference of opinion between the two Members, the following points were referred to the President in terms of Section 129C(5) of the Customs Act : (1) On the facts and in the circumstances of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nction between the opening of letter of credit and the issue of letter of credit. There was difference of opinion between the two Members who originally heard the appeals as to the firm commitment. Member (Technical) had held that on 2-9-1977 there was no firm commitment as stipulated by para 3 of the ITC Public Notice No. 66/77, dated 2-9-1977. Member (Judicial), however, had held that during the hearing the Collector agreed to give up the allegation of manipulation. The effect of this agreement would be that on 1-9-1977 there was not only an indent but also a confirmation of indent and also commitment on the part of the bank to the foreign suppliers. In the said circumstances the Collector s finding that no letter of credit was opened prior to 2-9-1977 cannot be accepted. As has been observed earlier there is a clear distinction between the opening of a letter of credit and issue of a letter of credit. There can be commitment on the part of the bank even without issuing a formal letter of credit. Thus, it is evident that the Collector and Shri Pal were not correct in contending that there was no difference of opinion between the two Members who originally heard the appeals as to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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