ORDER
S.K. Bhatnagar, Vice President
1. These are appeals against the order of Collector (Appeals), Calcutta dated 30-4-1991.
2. Ld. Counsel stated that the appellants cultivate, manufacture and export tea. The foreign buyers were insisting that conventional packing should be replaced by a modern packing which should be (i) moisture-proof, (ii) durable, (iii) able to withstand rough handling, (iv) enable maximum utilisation of space, (v) is easy for storage and transportation, and (vi) light in weight.
3. M/s D.R. G. Sacks, U.S.A. developed a new type of sack with the trade name ‘CADISAC’. These were made by using, inter alia, three plys of high strength craft paper and one ply of high strength craft paper with aluminium inside ply. These have a valve like mouth opening on the corner from which tea can be filled or taken out. They do not require closing by stitching or pasting.
4. The appellant imported these ‘CADISACS’ under OGL in the light of clarification by DGTD.
5. The Calcutta Customs had also given clarification to them that the CADISACS are covered by Notification No. 97/79.
6. It is only after such clarifications that they imported the consignment of CADISACS in question and filed the Bill of Entry for home consumption claiming benefit of Notification No. 97/79.
7. The Customs however, took the view that Notification No. 150/80 (as amended) was more appropriate.
8. It was their contention that under both the notifications full exemption was available subject to re-export within six months or extended time.
9. As a matter of fact in the Bills of Entries which were filed earlier, benefit of 97/79-Cus. was claimed by them but changed by the Customs Authorities to 150/80. Therefore, subsequently they started mentioning 150/80 as per the directions of the Customs. All the Bills of Entries were assessed as per the orders of the Addl. Collector/D.C. Customs and the consignments were assessed ‘duty free’ as evident from the copies of the Bills of Entry and their endorsement of D.C’s order thereon.
10. At the time of clearance they were required to execute a bond for provisional assessment and an undertaking that the CADISACS would be used for packing tea only and the appellants had produced proof in this regard to the satisfaction of the Collector. The CADISACS containing tea have since been exported within the time allowed.
11. They were therefore surprised to receive a show cause notice from the A.C. alleging inter alia that Notification No. 150/80 granted exemption in respect of printed bags (whether made of polythene, PVC, high molecular or high density polythene) and that it did not include craft paper bags or multi-wall paper sacks. And therefore, they were not entitled to the benefit of the above notification and were liable to pay duty short levied.
12. After hearing, the A.C. confirmed the demand and therefore they filed an appeal. The Collector (Appeals) rejected their stay petition ex parte. The appellants filed a writ petition and the Hon. Calcutta High Court set aside the Collector’s order dated March 1, 1991 and remanded the matter to Collector (Appeals).
13. The Collector thereafter heard them and dismissed their appeal.
14. It was their submission that this matter involves five main issues :-
(A) Whether exemption under Notification No. 97/79-Cus., dated 2-5-1979 is available in respect of CADISACS?
(B) Alternatively whether exemption under Notification No. 150/80-Cus., dated 23-7-1980 is available in respect of CADISACS?
(C) Whether the Doctrine of Promissory Estoppel is applicable in the facts and circumstances of the instant case?
(D) Whether it was permissible for the Assistant Collector to raise demand contrary to the order passed by the Deputy Collector?
(E) Whether the Assistant Collector’s order was passed in violation of the principles of natural justice?
15. It was their contention that they fully satisfy the conditions of Notification No. 97/79 as the CADISACS are durable and they had executed the bond for the export. In this connection they would draw attention to the meaning of expression ‘durable’ as given in Webster’s New Dictionary, New Lexicon by Webster and the Collins Dictionary which shows that ‘durable’ is something which is able to last long or endure and resist wear or decay for long time. In fact the nature of raw material used and the nature and construction of the product and its capability of withstanding rigours and toughness of export therein from tea gardens to foreign destinations on board trucks/trains/ships itself shows their durable nature. This is further buttressed by foreign suppliers certificate.
16 The items like drums, gas cylinders and bottles referred to in CBEC Circular are only illustrative and do not restrict the scope or ambit of the exemption.
17. It was also their submission that the Ld. Collector has erred in holding that they did not claimed 97/79. In any case they cannot be prevented from claiming that exemption when Customs Authorities have subsequently changed their stand and in this connection he would rely on the case of FCI reported in 1987 (30) E.L.T. 963 and in the case of Hindustan Aeronautic Ltd. reported in 1990 (47) E.L.T. 70.
18. Further the Collector (Appeals) has erred in holding that no bond was executed because they did execute a bond although instead of 97/79 it was given under 150/80 as required by Customs but there was no difference in the bond required to be executed under the two Notifications. Therefore, the bond executed for 150/80 would be equally valid for 97/79 and in this connection they would rely on the case of Auto Tractors, reported in 1989 (39) E.L.T. 494.
19. It was their contention that there was substantial compliance on their part and therefore, such a procedural aspect or even irregularity should not come in the way and he would rely on the case of Wockhardt Medical Centre reported in 1993 (66) E.L.T. 522 and Vamsadara Paper Mills, reported in 1988 (37) E.L.T. 243 and Meltron Semi Conductors, reported in 1987 (31) E.L.T. 117 in this connection.
20. Alternatively, the exemption Notification No. 150/80 is allowable.
21. The benefit of this notification was allowed by an order of D.C. and therefore could not be reversed or modified by an order of A.C. In fact A.C. could not ignore the order of D.C.
22. Notification No. 150/80 is available for printed bags (whether made of polythene, polypropylene, PVC, high molecular or high density polythene) and the CADISACS are printed bags of the type mentioned therein.
23. It was their contention that the exemption was not limited to the printed bags made of the raw material mentioned in bracketed portion for then it would have read differently as indicated in their written submission. In this connection, they would draw attention to the use of the word ‘whether’ before word ‘made of. In the circumstances, the A.C.’s interpretation was mis-conceived. They would like to emphasise in this respect that the materials mentioned in bracket were by way of illustration only. And the list was not exhaustive. And there Was no scope for implying or assuming anything not specifically mentioned thereof. It was therefore, their submission that the notification was granted in respect of printed bags and the same cannot be curtailed or restricted because of some enumeration in bracketed portion. In this connection, the Ld. Counsel would like to rely upon the Privy Counsel decision in the case of Common Wealth of Australia v. Bank of New South Wales reported in 1950 A.C. 235 ( at 302-303). This decision was quoted with the approval of the Hon. Supreme Court of India in the case of State of Bombay v. RMD Chamar Bagwala, reported in A.I.R. 1957 SC 699.
24. It was also his submission that in any event the Doctrine of Promissory Estoppel is applicable and the Customs Authorities cannot go by or resile from the stand taken by them earlier. And in this connection he would rely upon the Hon. Supreme Court decision in the case of Godffrey Philips (India) reported in 1985 (22) E.L.T. 306.
25. It was also their contention that A.C. had no right, authority or jurisdiction to raise demand contrary to the order passed by the Deputy Collector which was also endorsed on the Bill of Entry. Since the order was not appealed against, the said order was binding and the A.C. could not ignore it and pass a different order. In this connection, he would rely on the Tribunal’s order in the Case of Essel Packaging, reported in 1990 (50) E.L.T. 430.
26. Last but not the least, the A.C.’s order was passed in violation of the principles of natural justice. In spite of their requests a copy of the D.C.’s order was not supplied to the appellants. Similarly the alleged clarification by the board was also not supplied to the appellants.
27. The Ld. D.R. drew attention to Order-in-Original and the Order-in-Appeal. He stated that at the time of clearance the Bills of Entry were passed free of duty under Customs Notification No. 150/80 although initially the importers had claimed the benefit of 97/79 but the same was not accepted and the goods were assessed under 150/80. Subsequently, the appellants had themselves claimed 150/80 and the goods were assessed duty free under the said notifications.
28. It was department’s view that 97/79 exempts containers of durable nature but the appellants had imported paper sacks which could not be treated as durable. In fact their ordinary commercial packings made for single use and the appellants have not been able to show that they could be repeatedly used in the way drums or cylinders could be used.
29. The Ld. D.R. further emphasised that he would like to draw attention to the judgment of the Rajasthan High Court in the case of Ramnagar Cane and Sugar Co. reported in 1983 (12) E.L.T. 6 just to show that returnability is a criterion for considering a container durable and in the case of Commercial Product, reported in 1984 (16) E.L.T. 177 pointed out by the Ld. Counsel, the criteria of returnability and re-use having borne in mind. The definition given in the dictionaries also do not help the cause of the appellants because they also emphasis some sort of permanency or persistency which in his opinion the drums or cylinders of metal normally possess. In fact, in Ramnagar Cane and Sugar Co. case even small tin containers were not treated as durable.
30. As it was observed that in fact the benefit of Notification No. 150/80 was also not available to them, they were served with a show cause notice and the case was adjudicated by the A.C. Notification No. 150/80 exempts printed bags made of the materials mentioned in the bracket but the imported sacks are not made of any of these materials.
31. In the circumstances, the A.C. has correctly denied the benefit and the Collector (Appeals) has rightly confirmed his order.
32. It was also his submission that the initial assessments were admittedly provisional and therefore there was no violation of principles of natural justice and the Assistant Collector had jurisdiction and authority to pass the impugned order.
33. It was also his submission that there was no estoppel against the law and if the appellants had taken benefit of notification which was not otherwise available, the authorities could always take corrective action in accordance with law.
34. We have considered the above submissions. We observe that first and foremost we have to consider the issue of jurisdiction and authority of the A.C. to pass the impugned order.
35. In this respect, we notice that the assessments were admittedly provisional and the appellants had furnished a bond to re-export the CADISACS within six months or such extended period as A.C. may allow, according to a provision which is there both in Notification Nos. 97/79 and 150/80. In the circumstances, the D.C’s order also assumes a tentative or provisional character.
Further, Clause 2 of the Notification No. 150/80 (as also second proviso to 97/90) give authority to the Assistant Collector (by designation) to take action.
36. In this connection, Ld. Counsel’s argument that this provision was related merely to re-export aspect does not affect this position as it does not take away the authority of the A.C. to reconsider the matter as a whole in view of the provisional nature of the order of clearance at the time of importation and the power vested in the A.C.
37. We therefore, hold that the A.C. was within his jurisdiction and authority to pass the impugned order and there is no doubt that the A.C. was a competent authority to finalise the assessment. –
38. In so far as the merits are concerned however, the Ld. Counsel’s arguments have a lot of force.
39. First and foremost the words ‘durable containers’ have to be considered. In view of the definitions which have been indicated as well as the common understanding, it is evident that these have to be interpreted and understood in the context in which they are used and with reference to the type of article or articles of which the container is made and for which they are used or intended to be used.
With the advance of technology many materials have been discovered which are capable of providing strength, persistency, permanency and resistance to wear and tear etc. and they are available for making containers in addition to conventional materials. Not only that durability is a relative term and containers of different materials may be durable to a varying extent. [Repeated use or capacity thereof is an inferring criterion and not the only one which could be resorted to in the above context. (Further repeated use is generally related or relatable to a product and purpose and may not be always advisable even if the article was otherwise durable)]. Therefore, in the case of the type of containers imported by the appellants, a test was required to be conducted before deciding whether such containers could be considered as durable or not. But no test report/technical literature or market report has been produced before us by either side. In the circumstances, we find that the material produced before us is insufficient to record a specific finding in this regard.
40. At the same time, we notice that whatever may have been the initial claim of the appellants, the goods have been admittedly cleared with reference to Notification No. 150/80. We are therefore, primarily and principally concerned with this Notification at present. A perusal of this Notification shows that Ld. Counsel’s contentions have strong force in as much as his contention that the containers are a type of printed bags has not been contradicted or shown to be wrong. The whole controversy in fact centres around the words in the bracket used after ‘printed bags’. Here the inclusion of the word ‘whether’ before the words ‘made of polythene…’ is significant and goes to show that it is not necessary for the purpose of this notification that such bags should be made of only the type of materials mentioned in the brackets. This view draws support from the judgment of the Privy Council in the case of Commonwealth of Australia v. Bank of New South Wales (1950 A.C. 235) cited by the Ld. Counsel and we note that this decision has been quoted with approval by the Hon. Supreme Court in the case of State of Bombay v. R.M.D. Chamarbagwala as reported in AIR 1957 S.C. 699. In the circumstances, we hold that the appellants were eligible for the benefit of Notification No. 150/80. We, therefore set aside the impugned order and accept the appeal.