ORDER
V.P. Gulati, Member (T)
1. This appeal is against the order of Addl. Collector of Customs, Madras. Under the impugned order the licence produced by the appellant for the import of Populated Printed Circuit Boards (PPCBs) has been held to be invalid and the goods valued at Rs 1,36,206/- has been confiscated and allowed to be redeemed on payment of fine of Rs. 68,000/-.
2. The learned Counsel for the appellant pleaded that the licence produced by the appellant covers the goods as per the list attached to the licence and pleaded that the goods mentioned under item SI. No. 3 of the list covers PPCB. He pleaded that in view of that, the appellant’s licence should be held to be valid for the importation of the goods. The learned Counsel also referred to the show cause notice issued by the lower authority. He pleaded that the lower authority first prima facie held that the goods imported were sub-assemblies and not PPCB as described in the Bill of Entry (BE) and import of the same could not be allowed in view of the fact that PPCBs have been specifically covered under SI. No. 135 and 149 of Appendix 2B of Import Policy 1988-91 and specific … for the goods was required. Initially the appellant did not produce the licence mentioned in the Bill of Entry but later produced the licence the validity period of which had been extended. This licence has not been accepted by the lower authority as valid for the import. The learned Counsel pleaded that the goods were not sub-assemblies but only PPCBs. He pleaded for acceptance of the licence for clearance of the goods and setting aside the order of the lower authority.
3. Heard Shri Namasivayam, the learned DR.
4. The lower authority has primarily held that the goods that could be imported during the extended validity period of the licence were only capital goods and has held that PPCBs cannot be considered as capital goods and gave reasons for the same in his order as under :
“The definition of Capital goods as per the ITC policy for 1985-88, is that “capital goods means any plant, machinery, equipment or accessories required by an investor for production of goods or for rendering services including those required for replacement or expansion. In the normal commercial parlance also a PPCB could not be considered as capital goods. If this be the interpretation of the endorsement on the list attached to the licence, the conclusion is inescapable that the subject goods imported in 1989 could not get the benefit of the extended period of validity and hence the licence produced by the importer would not cover the imported goods”.
5. We observe that the learned Counsel has not made any plea in regard to the validity of the licence before us and argued the matter on merits that inasmuch as the list attached to the licence covers the goods imported, the goods should be allowed importation.
6. We observe that in the original licence dated 23-10-1980, the validity period was shown as 18 months. However, a list was attached to the licence vide endorsement dated 10-2-1987. This endorsement was given vide para 51 (iii) of the policy book AM 1985-88. This para for convenience of reference is reproduced below:
“Export houses/Trading Houses may also be allowed to import non-OGL Capital Goods (Other than those in Appendix 1 Part A) upto Rs. 20 lakhs (cif) during a licensing period, subject to indigenous clearance, against REP licence/Additional Licences. The imported goods will be disposed of to Actual users (Industrial) in the same manner as laid down in the para 263 (4). Applications for such import will be considered by the regional licensing authorities concerned in consultation with DGTD”.
7. The appellant thus got the item (PPCB) endorsed even though it cannot be considered as capital goods for the reasons set out by the lower authority as reproduced above. However, later endorsement extending the validity of the licence specifically makes a mention that the validity period has been extended for the purpose of import of capital goods alone. Notwithstanding the earlier endorsement of the item in the list, for whatever reason, the fact remains that extended period of validity was for capital goods alone. Merely because the appellant got earlier endorsement for PPCB’s under para 51(iii) of the policy, 1985-88, it does not make PPCBs capital goods, for all purposes. If the appellant had imported the goods within the validity period of the licence since PPCBs are specifically mentioned in the list attached to the licence, there could not have been any objection to their importation. However, later a restrictive endorsement extending the validity period only for capital goods was made and it has to be taken to preclude PPCBs for importation during the extended validity period. The learned lower authority has clearly stated that PPCBs had been imported within the extended validity period and for that reason therefore, the licence has been rightly held to be not valid for the importation of the goods. In view of above, we hold that the order of the lower authority is maintainable in law.
8. No case has been made out before us for reduction of the redemption fine fixed. We, therefore, do not find any reason to interfere with the quantum of redemption fine fixed. The appeal is therefore dismissed.
Sd/-
(V.P. Gulati)
Member (T)
S. Kalyanam, Vice President
9. I have perused the order of my learned Brother and I am afraid I am not able to agree with him and hence this separate order.
10. The question that arises for consideration in the appeal is whether the imported goods namely, 250 sets of Populated Printed Circuit Boards of cif value of Rs. 1,36,206 from Singapore under licence No. P/K/L/M 3093299 and covered by Bill of Entry No. 007223, dated 28-2-1989 is valid or not in terms of the relevant import licence. It was mainly contended that the import licence referred to above on the strength of which clearance of the goods was sought for under the relevant licensing Policy AM 1988-91 mentioned populated printed circuit boards and since the endorsement has been made by the licensing authority, it is outside the jurisdiction of the Customs authorities to question the correctness or propriety of the same. It was further submitted the endorsement on the licence for import of PPCBs has been made on the recommendation of the D.G.T.D., whose recommendation is binding on the Customs authorities. The learned counsel for the appellant in this context placed reliance on the ratio of the judgment of the Madras High Court in the case of ‘Benzex Labs. Ltd. v. Collector of Customs, Madras’ in Writ Petition No. 14243 of 1988 [1990 (45) E.L.T. 19 (Mad.)] and also the judgment of the Bombay High Court in the case of ‘Kamal Traders Pvt. Ltd.’ in W.P. No. 864/88. It was further submitted that the consistent past practice of the Customs was to permit clearance of similar goods against such licences and reliance was placed on the copies of the Bills of Entry Nos. 021990 and 021027 of M/s. Colour Leathers Pvt. Ltd. The adjudicating authority himself in para 8 of the impugned order has observed as under :-
“…In the list attached to the import licence, the opening paragraph mentions that the licences mentioned in the list” are also valid for the import of the following items upto Rs. 20 lakhs subject to actual user condition under para 51(iii) of the Import and Export Policy Book for April, 1985 to March, 1988″. It then lists the items SI. No. 3 of the list of items covers PPCBs….”
As observed by learned Brother in his order the validity period of the original licence dated 23-10-1980 was shown as 18 months and a list was attached to the licence by the endorsement dated 10-2-1987 given in terms of para 51(iii) of the Policy AM 1985-88. The licence issued by the licensing authority contains a specific endorsement which would cover the goods imported and moreso on the basis of a recommendation of the D.G.T.D. which has been held by the Madras and Bombay High Courts to be binding on the authorities as per the rulings given above. The licence produced and referred to above contains a list attached and in the list of item Serial No. 3 relates to Populated Printed Circuit Boards, the goods in question. It is clearly stated in the list attached that the licences referred to therein are valid for the import of “the following items upto Rs. 20,00,000” subject to Actual User’ condition under para 51(iii) of the Import-Export Policy for April, 1985 to March, 1988. The licensing authority has not considered the scope and conditions of this express endorsement in the list attached to the licence in the impugned order. The list attached to the licence permitting import of the Populated Printed Circuit Boards would have no meaning at all, if the import of the populated printed circuit boards is not permissible on the ground that the same is not capital goods. The specific endorsement in the licence has to be harmoniously construed with the extended validity period which is for 24 months from the date of endorsement namely 10-2-1987; and the adjudicating authority has not considered the rulings of the Madras and Bombay High Courts cited and relied upon, nor the effect of the recommendation of the D.G.T.D. under the licensing procedure prevailing at the relevant time in terms of the Policy and procedure. The adjudicating authority has not gone into the relevant papers relating to the clearance of the same items under two Bills of Entry under similar Licence referred to in para 8 of the impugned order and given reasons as to why the clearances permitted by the Department in those items should be departed from in the present case. If the Department were to allow clearances in respect of identical goods under identical licences for one period and reject similar licences in respect of similar goods in certain cases, as in the present case, when the Policy in both the cases of goods imported is one and the same, it would only lead to an anomalous situation of the Department taking contradictory stand in respect of persons similarly placed and such a course by the departmental authorities would result in arbitrary decision, treating unequally people who are equal; offending the very spirit of Article 14 of the Constitution of India. In my view the learned adjudicating authority should have gone into the licence relating to the Bill of Entry, the goods imported and also given reasons as to why he does not choose to follow the prevailing practice in the Department in permitting clearances of similar goods in question. The adjudicating authority has not levied any penalty on the appellant and in para 10 of the impugned order he has observed as under : –
“…There was no intention to contravene any legal provisions. As stated earlier there were cases of similar goods having been imported in the past. The licence clearly mentions PPCBs. Under these circumstances, it cannot be said that the import was made improperly so as to attract the mischief of Section 112 ibid.”
(emphasis supplied).
The above observation would indicate that the adjudicating authority was not very clear in his mind as to whether the appellant had contravened the provisions of law in importing the goods. To sum up, the rulings of the Madras and Bombay High Courts and the binding nature of the recommendations of the D.G.T.D. have not been considered in the impugned order, the past practice of the Department, though referred to in paras 8 and 10, has not been gone into with reference to the records relating to the relevant Bill of Entry referred to in para 8 of the impugned order, the precise scope of the specific endorsement in the list attached to the licence in SI. No. 3 covering the goods in question has not been properly discussed. If two views are possible, it is the assessee who is entitled to the benefit of any ambiguity in the licensing provisions and this does not appear to have been borne in mind by the adjudicating authority. I am, therefore, of the view that the impugned order has to be set aside and the matter remitted to the adjudicating authority to specifically consider the licence of the appellant in the context of the pleas putforth by the appellant and the points set out by him above and in this view of the matter, in the interest of justice, I set aside the impugned order and remit the matter for reconsideration by the adjudicating authority.
Sd/-
(S. Kalyanam)
Vice President
26-8-1991
POINT OF DIFFERENCE
Whether in the facts and circumstances of the case the lower authority’s order confiscating the Populated Printed Circuit Boards (PPCBs) under Section lll(d) of the Customs Act, 1962 and allowing redemption of the same on payment of a fine of Rs. 68,000/- and duty at appropriate rate is maintainable and no case has been made before the Tribunal for reduction of the redemption fine as held by Member (Technical) or the impugned order has to be set aside and the matter remitted to the adjudicating authority to specifically consider the licence of the appellant in the context of the pleas putforth and the points set out before the Tribunal as held by Member (Judicial).
Sd/- Sd/-
(V.P. Gulati) (S. Kalyanam)
Member (T) Vice President
Dated 29-8-1991
S.L. Peeran, Member (J)
11. The points of difference between the members are already noted at [para] 8 of the differing orders.
12. I have heard Shri Anil Balani, the Learned Advocate for the appellants and Shri Victor, the Learned DR for the Revenue, who have reiterated their respective ground as already noted in the orders of the differing members. To avoid repetition, the same is not noted here.
13. The initial show cause notice dated 19-9-1989 issued by the Additional Collector of Customs pertained to -
(i) Import of excess quantity of 145 Nos. of PPCBs'.
(ii) Imported goods and sub-assemblies are specifically covered under SI. No. 135 and SI. No. 149 of Appendix 2B of Import Policy 1988-91 and hence the goods under the import appears to require a specific licence. The import licence cited in Bill of Entry was not produced. Hence the charge.
As regards the first charge, after re-examination of the goods, the Learned Additional Collector dropped the proceedings.
14. Regarding the second charge, the importer had heavily relied on the licence submitted by them and also about the endorsement made in the list that the licence was valid for 24 months from the date of endorsement (10-2-1987). It was also pleaded that it is not in dispute that the list attached to the licence specifically mentions PPCBs vid SI. No. 3 of the list and once this is accepted, then, there is no scope for further enquiry in the matter. It was submitted that the licence was issued by the competent authority, and in consultation with the DGTD, and after examining the import licence, and hence it was not open to the department to challenge the authority of the competent authorities like CCI & E & DGTD. In this context, the ruling of Bombay High Court rendered in the case of M/s. Kamal Traders and that of Madras High Court rendered in the case of M/s. Benzex Labs Ltd. was relied. Reliance was also placed on the acceptance of the licence in post clearance and in this regard, reliance on the ratio of the judgments reported in 1988 (37) E.L.T. 44 (Cal), 1984 (17) E.L.T. 50 (Bom.) and 1988 (34) E.L.T. 367, was placed. As regards the new point raised by Additional Collector during the hearing on the items being capital goods and hence, the licence being invalid, the counsel had relied on the ratio of the Bombay High Court rendered in the case of Bipin Chandra Uraj Lal Chelani v. UOI as reported in 1987 (37) E.L.T. 694, which held that the licence would not get invalidated even if it is issued in contravention of ITC Policy. The Learned Additional Collector, after noting the details of the licence vis a vis SI. No. 3 of the list and para 51(iii) of the Import & Export Policy Book for April, 1985 to March, 1988 held that:
“in view of the fact the PPCBs is specifically mentioned in the list of items and having regard to the various judicial decisions cited by the Ld. Advocate it could be viewed that PPCBs are covered by the licence.”
15. However, the Learned Additional Collector, dropping the charges, went beyond the scope of the show cause notice and proceeded to hold that the PPCBs are capital goods and hence the licence is invalid.
16. I have carefully considered the findings and I am of the opinion, that the order is perverse and unsustainable. The Additional Collector cannot go beyond the scope of the allegations made in the show cause notice. It is not the case of the department that the item being capital goods the licence is invalid and hence there is a violation. The case made out by the Additional Collector is totally an erroneous consideration and on a basis not proceeded by the department. The order is required to be set aside solely on this ground alone. There is a clear finding that in terms of the ratio of the citations relied the licence covered SI. No. 3 of the list of item of the policy. Then there is nothing more to see. Even otherwise, the point raised by the Additional Collector is not sustainable for the reasons already delivered by the Learned Member 0) in his differing order, with which I fully concur, without further elaborating on it by me, as it would be mere repetition of those reasonings assigned by Member (J). The Bombay High Court in the case of Shiv Shankar Tilakraj v. Union of India and Ors. as reported in 1987 (28) E.L.T. 342 (Bom.) has held in para 6 as follows :
“6. I have not a moment’s hesitation in rejecting Mr. Rege’s contention that the Customs Authorities here are in law empowered to investigate into the correctness or otherwise of an import licence given by the appropriate authorities. It is not the contention on behalf of the respondents before me that they are suspecting that the import licence is a forged licence, in which case, of course, they may investigate. But I do not see how the Customs authorities can sit in judgment over the power exercised by the office of the Controller of Imports and Exports, which office has already given an import licence. The Customs authorities in Bombay are justifying an action which is wholly unjustifiable as far as I can see on the facts of this case by having recourse to untenable arguments.”
17. This ruling also fully supports the stand taken by the appellants. In that view of the matter, I agree with the Learned Member (J) for remitting the case for de novo consideration.
18. The appeal papers shall be placed before the original Bench for passing the final order.
Sd/-
(S.L. Peeran)
Dated : 31-7-1995 Member (J)
FINAL ORDER
In the light of the majority view, the impugned order is set aside and the matter remanded to the adjudicating authority for de novo adjudication.