TMI Blog1981 (8) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... pping or mutilation of second-hand garments into rags was very heavy. The foreign exporters were not inclined to mutilate or strip the old garments. The cost of stripping or mutilation in the foreign country was a heavy burden upon the importers. The importers thereupon made representation to the concerned authorities and sought permission to permit the import of woollen garments in unmutilated and unstripped condition and to get them stripped or mutilated in India so as to make them wholly unfit for any other use other than as raw material for the purpose of shoddy woollen industry. 3. Accordingly, on November 29, 1961, the Additional Collector of Customs, Bombay, issued a public notice evolving the procedure with regard to the exemption granted by the Government to the unstripped woollen rags imported by the shoddy woollen units. The public notice, inter alia, provided that the goods before the clearance from the Docks should be cut to small pieces so as to render them unfit for any use other than rags. In view of the public notice, unstripped woollen rags were treated as falling within the ambit of Item 49(4) of the Customs Tariff and were exempted from the payment of Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its (b) OLD-Rags of woollen textile fabrics (including knitted and crocheted fabrics), which are required for manufacture of shoddy yarn and may consist of articles of furnishing or clothing or other clothing so worn out, soiled or torn as to be beyond cleaning or repair. In case serviceable garments have been imported they will have to be mutilated before release by Customs authorities'. 3. The above definition will also apply to consignments that had arrived prior to the date of issue of this Public Notice but are yet to be cleared. Sd/- *** (B.D. KUMAR) CHIEF CONTROLLER OF IMPORTS AND EXPORTS." In pursuance of this Scheme, the petitioner imported 43 bales of woollen garments unmutilated or not properly mutilated rags. The steamer arrived in the Bombay Port on August 13, 1977 and the goods were discharged from August 13, 1977. The petitioner filed the Bill of Entry on August 1, 1977 and the last free date was August 24, 1977. As per the rules framed by the Port Trust Authorities, the importer is liable to pay demurrage charges after the last free date. The goods were inspected by the Customs authorities on the first occasion on August 20, 1977 and on the second occasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te. 7. The learned Counsel advanced two-fold submission claiming that the petitioner was not liable to pay the demurrage charges and even otherwise the rate claimed by the Port Trust Authorities is not proper. It is not in dispute that in case the detention certificate is issued in favour of the petitioner, the petitioner is not liable to pay the demurrage charges. The respondent Nos. 1 and 2 have filed the return dated June 30, 1981 sworn by M.P. Gaonkar, the Assistant Collector of Customs, Woollen Rags Cell, New Customs House, Bombay and it is claimed that the petitioner had not done mutilation of the serviceable garments with utmost swiftness and the goods were detained with the Port Trust authorities for no fault of the Customs authorities and as such the petitioner and the petitioner alone is who liable to pay the demurrage charges. 8. The first question that requires answer is whether the petitioner is liable to pay the demurrage charges from August 24, 1977 to September 26, 1977. As stated hereinabove, the last free date was August 24, 1977 and if the petitioner had cleared the goods prior to that date, then there was no liability to pay any demurrage charges. The inspec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which may arise because of the exigency of the circumstances. In my judgment, the challenge to the payment of demurrage charges by the petitioner is without any basis and deserves to be repelled. 9. Shri Malik then urged that even assuming that the petitioner is liable to pay the demurrage charges, the amount of Rs. 10,810.75 charged by the authorities is incorrect. The learned Counsel placed reliance upon the scales of rate approved and published by the Port Trust authorities under Sections 48 to 51 of the Major Port Trust Act, 1963. Shri Malik urged that the item which would be applicable is Item No. 85 and the rate which can be levied is Rs. 5/-per tonne. Item No. 85 covers the goods which are "textiles" cotton, silk, woollen and synthetic". The Port Trust authorities, on the other hand, claimed that the demurrage charges were determined with reference to the scale fixed under Item No. 92. Item 92 refers to "unspecified items, non-heavy lifts each package weighing less than 1-1/2 tonne" and the rate fixed is Rs. 16/- per tonne. In view of the rival claims, the question which requires determination is whether the items imported by the petitioner are textiles so as to attract It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he definition of the term "cotton fabric" given in Item No. 12 of the First Schedule to the Central Excises and Salt Act, 1944 and held that the rags and Chindhis are covered by the definition. The Division Bench observed that merely because cloth is sold in pieces and not in the form of Tagas or bales manufactured by the Mills, it does not cease to be manufactured cloth or cotton fabrics. Therefore, although rags and Chindhis are pieces of cloth of regular shapes and sizes, it cannot be said that they are not manufactured cloth. In the present case, the question which arises is whether the expression "textile" in Item No. 85 of the Scale of Rates would cover the manufactured garments. In my judgment, it would not be possible to hold so. What was contemplated by Item No. 85 was "textile" or fabric in its pure form and not the garments. 12. Reliance by Shri Chinoy in this connection on the decision of the Division Bench of the Mysore High Court in the case of H. Anjanappa Son v. Commissioner of Commercial Taxes in Mysore, Bangalore reported in 1979, Vol. 26, Sales Tax Cases, 139 is very appropriate. The Division Bench was considering the ambit of Entry 8-A of the Fifth Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X
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