TMI Blog1989 (8) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... s - Jumbo Rolls. It was, therefore, considered by the Customs that the goods were deliberately mis-declared as Cinematographic colour film as, if assessed as such and not as Jumbo Rolls, the Respondents would have paid duty of Rs. 16,19,842 instead of Rs. 68,09,504. The Customs also felt that there was an attempt to camouflage the nature of the goods and to hoodwink the Customs as the labels pasted on the rolls also declared the goods to be Colour Cine Positive Film . Suspicion arose that the declarations etc. were done in a pre-planned manner and documents were prepared to fit in the description given in Notification No. 52/86-Cus. under which the amount of duty payable would have been much less. 3. Customs started proceedings and according to the impugned order, the Respondents waived show cause notice and requested for personal hearing. The Collector, in his order (para 2.1) records as follows : Right at the beginning the Advocate and his clients were informed that at their request show Cause Notice has been waived but the prima facie charge against them was (1) mis-declaration of description in the Bills of Entry for the purpose of classification/availing of exemption; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d width and also having pointed out the particular item of OGL, there could not have been any deliberate mis-declaration. 7. From the Collector s order it is further seen that the Respondents were specifically asked whether the goods as imported were capable of being used as Cinematographic Colour Films as it is, by putting it on a projector or camera etc. and this was answered by the respondents in the negative. In this background of facts (which are practically those recorded by the Collector) the Collector came to the finding that there was no case of mis-declaration for the purpose of classification under Customs Tariff and for import under OGL and that the importer appears to be eligible to import the said Item as actual user (Industrial) in terms of Entry No. 297 of Part I of List 8 of Appendix 6 of the Import Policy for 1988-91. The Collector, after discussing the provisions of Notification No. 52/86-Cus. and Notification No. 266/86-Cus. as also Notification No. 50/88-C.E. and Notification No. 40/88-C.E., held that the Importers were not eligible to concessional assessment either of Customs duty or CV duty. He ordered to drop proceedings with reference to charge of mis-dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o an order passed by the Collector. He explained that as the Respondents waived the show cause notice in this case and only personal hearing was given, the Department was handicapped to the extent that all that was in the mind of the Customs could not be recorded. The learned JDR further submitted that prior to the establishment of this Tribunal, the Central Board of Excise and Customs had powers to review the Collectors orders under Section 130 as it was then and Section 129D(1), as it is now, is a successor to the same. The learned DR pointed out that if a Collector passes an order which in the view of the Board is totally incorrect, there is no forum which the Board can approach by way of an appeal except this Tribunal. Therefore, an order passed by the Collector which is in the view of the Board, defective can be challenged only before the Tribunal and to fetter the Board and the Collector in this regard and to hold a very restrictive view that an appeal can only be against what is actually contained in the Collector s order would amount to injustice and also would defeat the very purpose of enacting Section 129D(1). He submitted that it is not only the legality but also the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that according to the Policy of the Government for importing Jumbo Rolls, the importer had to be an actual user (industrial) as defined in para 6.3 of the Import and Export Policy for April, 1988 - March, 1991. 15. He submitted that for importing Jumbo Rolls, an industrial licence under the IDR Act is required and unless such an industrial licence is held by an importer he cannot be considered as an actual user (industrial) and the goods cannot be released under OGL. Shri Sunder Rajan averred that the respondents did not have an industrial licence under the IDR Act nor did they produce the import licence to cover the goods. Therefore, the goods were clearly not covered under OGL for the respondents. The learned Representative referred extensively to the IDR Act and to the Notification issued thereunder on 18-7-1986 and submitted that the Small Scale Industries had to register with the Central Government within six months from the date of Notification if such Units intended doing slitting/confectioning of Jumbo Rolls. The DR stated that in a subsequent order the Collector changed his mind and stated that a copy of this order which was an enclosure to the paper Book filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c colour papers and not photographic colour films in Jumbo Rolls. He argued that the letter dated 8-4-1987 referred to cutting of Jumbo Rolls of photographic colour papers, graphic art films, cinematographic colour films unexposed and X-ray films but not to Jumbo Rolls of Cinematographic Colour films. In this context the learned Representative referred to the judgment of the Delhi High Court dated 8-5-1989 and submitted that the High Court came to the finding that in spite of these letters the respondents went on representing that they have not only the permission for importing all the four varieties of photo sensitized papers but also to do so at concessional rates of duty. He pointed out that it appeared to the Court that the Single Judge who heard the matter earlier was misled by the said submission of the respondents. Shri Sunder Rajan submitted that the ban covered all sensitized material but licence was given only for photo sensitized paper (photographic colour paper). 19. The learned DR argued that the goods imported must be considered by Customs for purposes of classification as well as licence in the form in which they are imported and not with reference to what would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nilal Co. v. Union of India [1985 (22) E.L.T. 32 (Bombay)] and Bloomfeld Trading Company v. Union of India [1985 (22) E.L.T. 398 (Bombay)] in support of his arguments. 25. Concluding his arguments Shri Sunder Rajan submitted that the impugned order was passed without application of mind, without taking the legal requirements into consideration and without proper discussions and findings and, therefore, had to be set aside. He submitted that the Collector should be directed to readjudicate the matter with reference to relevant materials. While reiterating that the Tribunal had powers to order confiscation and to impose penalty, Shri Sunder Rajan submitted that as the necessary information like the margin of profit was not available to the Bench, they may consider whether the Collector may be directed to consider such matters and to impose penalty and to order confiscation. 26. Shri Sanghi, the learned Advocate appearing on behalf of the Interveners (M/s. HPF) took us through the relevant provisions of the IDR Act, 1951 with special reference to Section 24 which deals with penalty. He submitted that the objective of the Act was to implement the Industrial Policy which came into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... result all the provisions of IDR Act would apply to this activity (slitting/confectioning) from 18-7-1986 after a period of six months therefrom. Shri Sanghi summed up saying that Northern Plastics licence was only for photographic colour papers and not for colour films which was a mandatory requirement under the IDR Act. He submitted that by not having obtained an Industrial Licence they cannot manufacture films from Jumbo Rolls and, therefore, they are not actual users (industrial). As a result they cannot be permitted to import Jumbo Rolls and cannot claim OGL. 27. Dr. Kantawala, the learned Advocate for the Respondents, in his reply, submitted that the appeal filed by the Revenue is not maintainable. He argued that only the contentions made before the Collector and his findings thereon are relevant and the appeal filed by the Revenue cannot go beyond what was contained in the Collector s order. He referred to Section 129D and sub-section (1) thereof and submitted that the scope of an appeal filed by the Revenue under this Section was limited to the examination of the legality and propriety of the same. He stated that legality meant whether the provisions invoked in the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to these definitions, the learned Advocate argued that the factual position is that the Respondents have only 10 workers and, therefore, they were not a factory and, not being a factory, they cannot be an industrial undertaking. Therefore, Dr. Kantawala argued that the Act did not apply to them as they were only a small scale industry. In this coptext the learned Advocate cited State of M.P. Ors. v. Nandlal Jaiswal Ors. (AIR 1987 S.C. 251). He submitted that paragraph 30 of this Judgment clinches the issue in favour of the Respondents. The learned Advocate then went on to argue that even if IDR Act applies (which he does not accept), the Respondents are still entitled to OGL. Explaining this, he submitted that the Collector had no jurisdiction or power to look at the IDR Act and apply its provisions as the said Act was not an analogous enactment to Customs Act and Import Export Trade Control Act. The Collector had to confine himself to these two Acts only. 31. Referring to the term actual user (industrial) , the learned Advocate drew our attention to Appendix 5B of the Hand Book, where the provisions of SSI Units were mentioned and submitted that it is the District Indust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and full description including the measurements in the Bill of Entry and in the invoice and there could not be a question of mis-declaration in this regard. There was not even mis-description in the Bill of Entry. Referring to the dictionary meaning of Jumbo Rolls , the learned Advocate submitted that the omission to describe the goods as Jumbo Rolls in the Bill of Entry did not lead to an implication that these were goods of small size. He explained that the Bill of Entry description conformed to the description given in the invoice and reiterated that the Respondents imported cinematographic film only; whether it is in jumbo rolls or not was not material. He submitted that in the Tariff there is no reference to Jumbo Rolls and the words Jumbo Rolls were only colloquial words. The description given by the Respondents was in accordance with the Tariff and the length and breadth of the film having been mentioned quite clearly, the full description was there for the Customs to see. 35. The learned Advocate referred to two judgments and submitted that these judgments dealt with OGL and how to treat it. These were (i) U.O.I, v. Suksha International Nutan Gems Another [1989 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and omissions and when the adjudicating authority does not take into consideration the relevant provisions of law and passes an order, it is within the powers of the Tribunal to direct the Officer to take such matters into consideration. He submitted that the IDR Act is directly applicable to the Respondents and to the Import Policy and is, therefore, relevant to the Customs Department who decide whether the goods imported are covered by a valid licence or whether OGL is extendable to them. He submitted that OGL also refers to Jumbo Rolls and the Notifications issued both under the Customs and Central Excise Acts referred to Jumbo Rolls and, therefore, there is no question of giving a dictionary meaning or a popular meaning to these words. He pointed out that the words Jumbo Rolls also appear in the SSI licence of the Respondents themselves. He submitted that the scope of Section 111(d) has been examined by the Supreme Court in the case of Sheikh Mohd. Omer (supra) and no contrary Judgment having been cited, the Tribunal should follow the same. 39. Shri Sunder Rajan, the learned JDR reiterated that what was imported was not cinematographic film but Jumbo Rolls and that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself does not show any failure on the part of the Board to appreciate the omissions and commissions of the Collector as reflected in the Order. When a Collector passes an Order in total disregard of certain provisions of Law, the Board cannot be expected to be a silent and mute spectator especially when it is empowered and is required by Section 129D to take appropriate action. The only action that the Board can take against the Orders of a Collector is to direct the Collector to file an appeal before the Tribunal and to approach it for Orders on the specified points. We cannot interpret Section 129D in a restrictive way as desired by Dr. Kantawala as such a restrictive interpretation will defeat and render nugatory the very purpose of the Section which is to safeguard against any Orders passed by the Collector in disregard of legal requirements, and to the detriment of the country. If a Collector passes an Order without taking into consideration or wrongly deciding about the requirements of a licence, it cannot be said that to raise the point before the Tribunal against the Order would be illegal and beyond the purview of Section 129D. We entirely agree with the submissions made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce; or was it covered by OGL in 1988-91 policy; (iii) whether the Collector was right in not invoking Section 111(d) in his order; (iv) whether the Collector s order can be sustained; and (v) if not, what would be the legal and just order to be passed. 47. In so far as the identity of the imported goods is concerned it is quite clear that what has been imported are Jumbo Rolls and not cinematographic colour films. It was never the case of the Respondents that the imported goods were not Jumbo Rolls. Besides, the perusal of the invoice and the Bill of Entry which clearly give the measurements of the film shows that the imported goods are Jumbo Rolls as defined in the Exemption Notifications. Dictionary meaning and case law are not necessary. Besides, we also keep in mind that if the imported goods are to be considered as cinematographic colour films the Respondents would not, in any event, be allowed to import them as such films are canalised and only NFDC can import them. After considering the evidence, there is no doubt in our mind that what the Respondents imported were Jumbo Rolls and are not cinematographic films. 48. That brings us to the second question as to wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quite clear that for the purpose of OGL the importer should be an actual user (industrial) and according to the definition of the term actual user (industrial) he must be an industrial undertaking of any size engaged in the manufacture of goods for which it holds a licence etc. If the respondents argument that they are not an industrial undertaking as a consequence of not being a factory (in terms of IDR Act definitions) is upheld, they are ab-initio shut out from claiming OGL, not being actual users industrial as defined in the Policy. 52. However, not having the facts before us we examined the only possible alternate situation assuming that the respondents are an industrial undertaking. Because the IDR Act is there and it concerns industries, the respondents cannot be taken to be exempt or to be outside the purview of that Act unless they are covered by the provisions within the Act which helps them to get out of its purview. We note that the Act has a Schedule (First Schedule) which lists any industry engaged in the manufacture or production of any of the articles mentioned thereunder. Sl. No. 20 thereof deals with photographic raw film and paper (i) cinematographic films ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt that the words and other law can be interpreted to restrict their meaning without specific sanction of the law to do so. 53. In the light of these discussions we do not find it necessary to go into the detailed arguments, and the case law cited by both sides and the interveners on these questions. The facts of this matter are such that there is no earlier judgment which covers them. The questions before us arose, in this forum, for the first time. Therefore, the exercise of going through the many judgments would not be useful especially as we have to examine only Customs Act and IDR Act all of which are before us. 54. As a result of the legal position applicable to these facts, we conclude that in any event, whether they are a factory or not, the Respondents should hold a valid im port licence or have a valid industrial licence for claiming the benefit of OGL for import of Jumbo Rolls. 55. The next point that arises is whether the Collector was right in not having invoked Section 111(d) of the Customs Act. Earlier in this order we observed that the Collector in several parts of his order took note of the issue relating to the licence without mentioning Section 111(d). It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by ordered to be set aside. We have given our views about the aspect of licensing, about the necessity for in voking Section 111(d), and, even though indirectly, the necessity to go into all the facts, circumstances, documents, law, evidence arguments pertaining to this matter which involves substantial financial stakes. In these circumstances we feel that it will be fair and just to direct that the Collector should readjudicate the matter after keeping in mind what we have said in earlier paragraphs. We further direct that before readjudication he should issue a show cause notice in writing as the earlier show cause notice was oral and the respondents are entitled to be informed of the detailed charges against them. 58. In view of our findings above we feel it is not necessary to go into the other arguments, case law etc. cited before us during the course of the hearing. As observed by us earlier, this would not help further the course of Justice in view of the exclusive na ture of the issue before us, and elaborate discussions, merely leading to the dismissal of other arguments as irrelevant would merely add to the length of this order. In view of our findings, we allow thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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