ORDER
K.S. Venkataramani, Member (T)
1. These appeals arise out of six separate Orders of the Collector of Customs, Madras, dated 26-11-1987 and 16-12-1987. Since the issues involved in these appeals are identical they are all heard together and are disposed of by this common Order.
2. The facts in brief are that the appellants imported various quantities of almond in shell for which they produced REP import licence issued against G.2 (i)(a) of Appendix 17 of import policy for April-March 1985-88. Appellants M.M. Exports, A.S. Mehta & Co. and Rajendra Enterprises filed four B/E each for identical quantities of 5500 lbs in each B/E and each to the value of Rs. 77,828/. These quantities are equivalent to 2494.75 Kgs in each B/E. Similarly appellants General Traders filed 4 B/E for which value in each B/E was declared Rs. 97,008/-; M/s. Shangvi Amritlal Chunnilalji filed two B/E with value of Rs. 66,130/- and Rs. 80,840; Arun Agencies in one B/E to the value of Rs. 97,008/-. The Custom House took the view that the goods imported, namely, Almond in shell, is nothing but dry fruits, of which there is no cultivation in India on a large scale, and that it is a consumer item of agricultural origin, falling under Serial No. 121 of Appendix 2 Part B of the import policy, the import of which is restricted, and not to be allowed against REP licence, except when an item is specifically mentioned therein in terms of para 5, Appendix 17 of the policy. It was also found that the import of dry fruits require specific licences under the policy. Show cause notice was therefore issued to the appellants. Personal hearing also granted to them which was availed of by some of them while others chose to have their case decided on the basis of written replies to the Show cause notice. The Collector after considering the written and oral submissions found that the licences produced were not valid to cover the import of Almonds in shell, which he held to be consumer goods, and confiscated the goods and levied redemption fine of Rs. 1,50,000/- against each B/E filed by the appellants A.S. Mehta, Rajendra Enterprises and M.M. Exports under Section 111(d) of the Customs Act, 1962, and imposed personal penalty of Rs. 10,000/- on three appellants under Section 112 thereof. The redemption fine in the case of appellant General Traders was Rs. 1,75,000/- in each B/E filed by them and for Shangvi Amritlal Chunnilalji redemption fine was Rs. 1,20,000/- in respect of one B/E and Rs. 1,50,000/- in respect of another B/E; in the case of Arun Agencies the fine was Rs. 1,75,000/-. The penalty on the appellant General Traders was Rs. 10,000/-; on Shangvi Amritlal Chunnilalji Rs. 5,000/- and on Arun Agencies Rs. 3,000/-.
3. Appearing for the appellants A.S. Mehta and Rajendra Enterprises, the learned Counsel Habibulla Badsha contended that the Collector erred in holding that the goods, namely, Almonds, were not covered by licences produced and pointed out that the description against serial No. 121 of Appendix 2 Part B is generic referring to consumer goods of agricultural origin. The Collector himself has not disputed that the Almond imported are seeds, which fact is also confirmed by the Certificate given by the Horticulturist issued to the Department produced in the matter. Seeds are not specifically included in Appendix 2 Part B of the policy. Thus seeds cannot be considered as consumer goods, the Counsel further argued, because they do not come within the criterion consumer goods, as defined in the import policy, namely, those which directly satisfy the human needs. The seeds in question, according to the Counsel, have to be deshelled and thereafter only the kernel within it can be consumed. Therefore, it is not consumer goods. The Horticulturist has clearly opined that the item are seeds capable of have germination. The Collector has placed reliance of the fact that the import is in large quantity and on the inclusion of the goods as dry fruits in economic journals in the absence of commercial cultivation in India, but the Counsel urged that the quantity cannot be the criterion for determining the nature of the import, and the classification made by the economic journals as dry fruits is not conclusive to hold the item to be a consumer product, and in fact the Counsel informed that there is cultivation of Almond in India namely in Kashmir. The Counsel also referred to the Pamphlet on Almond published by the Almond Board of California wherein it has been stated that Almond nuts are seeds. It was also argued that if the intention was to exclude Almond from the purview of permissible item in Appendix 17, it will be specifically done. In this connection he referred to the specific exclusion of Sodium Cyanide which though figuring against Appendix 2B was specifically excluded by Public Notice on 9-10-1986 from the purview of Appendix 17. It was further submitted that the Custom House had on a similar issue relating to import of Poppy seeds against Appendix 17, taken a lenient view in the matter of fine and penalty on adjudication, but no such leniency has been shown to the appellants herein, although admittedly the question” whether Almond will be covered by entry in Appendix 17 or not was without ambiguity, and the Department itself had sought clarification from the Horticulturist and from the CCI also. Hence in any case, fine and penalty should be reduced. The Counsel further pointed out that the end-use is not relevant in the case of REP licence which are freely transferable, and in this connection placed reliance on the judgment of Madras High Court in the case of Kerala Food Packers wherein a single Judge decision had held to the effect that so long as the goods imported against the import licences are as per the description of the item in the licence, the end-use thereof is not material, and this conclusion of the single judge was upheld by the Bench of the High Court in a Writ Appeal No. 61/84-85 of 1975 decided on 6-2-1975.
4. The learned Counsel Shri Thyagarajan appearing for the other appellants while adopting the submissions made by the learned Counsel Shri Habibulla Badsha, urged that para 5 of Appendix 17 contains general condition that no import of item appearing in Appendix 2 shall be allowed against REP licence except if the item appearing in Appendix 2 Part B is specifically described for import either under column 4 or under column 5 of the Appendix, he pointed out. It is, therefore, clear that the item must appear in Appendix 2 Part B and Almond described as such does not appear in Appendix 2 Part B. In such a situation it cannot be said that Almonds are covered by Serial No. 121 by a process of logic or deduction, because as.per para 5 of Appendix 17 it should appear in Appendix 2 Part B as such.
5. Shri K.K. Bhatia, the learned S.D.R. appearing for the Department refuted the above submissions by referring to the description at Serial No. 121 in Appendix 2 Part B which covers all consumer goods howsoever described, of industrial, agricultural or animal origin, and also it would be a stupendous task to list out each and every consumer item under the serial No. for exclusion. He pointed out that in this case, the Collector has made reference to the Chief Controller of Imports and Exports specifically on the import of Almond against REP licence in respect of items mentioned at G.2 (i)(a) of Appendix 17, along with Horticulturist’s opinion that they can be considered as seeds capable of germination, and to this the CCI has clarified categorically that Almond is a consumer item falling under Appendix 2 Part B, and cannot be imported against REP licence. The CCI is the constituted authority under the policy for giving clarification and as such it is binding on the Department as well as the Importer. He also referred to the well known fact that there is no large scale cultivation in India except sparse cultivation in Kashmir. It is this aspect which has been referred to by the Collector, in the context of the large quantities imported, which is valid. The learned S.D.R. submitted that the appellants themselves have admitted before the Collector during the personal hearing that the goods are consumer goods. He further placed reliance on the order of the Tribunal in the case of Sapna Garments, Bangalore v. Collector of Customs, Madras decided by this Tribunal on 15-7-1986 in Customs Appeal No. 165/86, holding that it is not capability of use, but the aspect of general use of the imported goods, which has to be seen for deciding the validity of the licence. He placed further reliance upon the full Bench decision of the Delhi High Court in the case of Jain Exports Ltd. v. Union of India 1987 (29) ELT 753 for the submissions that in dealing with the question of interpretation of the policy and any other matters relating to actual users of other class of importers, only the CC Import/Export is competent to give advice and that any interpretation of the import policy given in any other manner will not be binding in law. In this case, the Collector has obtained clarification from the CCI that Almond will not be covered by REP licence against serial No. G.2 (i)(a) of Appendix 17. The Collector has further relied upon the economic journal treating the goods as dry fruits only to show that in commercial parlance they are known as dry fruits. Further, the Delhi High Court decision referred to supra has also clearly laid down that the approach in a taxing statute, in case of any ambiguity or the matter being capable of two opinions, the benefit should go to the subject does not hold good with regard to export and import matters or the levy of customs duty. In the case of V.V. Iyer of Bombay v.Jasjit Singh (AIR 1973 S.C. 194) it was observed that where two alternatives are possible of the scope and item, import control Order 1955 made under Section 1(e) of the Act, 1947 and Customs authorities adopt a reasonable view relating thereto, which is favourable to Revenue, such finding of the authorities cannot be interfered with by the High Court, under Article 226 even though another view contrary to one adopted is in favour of the subject. The learned S.D.R. also asserted that in this case the margin of profit on the goods was estimated to be 220%, and, in such a situation, the Collector has imposed fine in lieu of confiscation high enough to wipe off such high profit on the goods imported in contravention of the prohibition in the import policy. In this context, he again referred to Delhi High Court decision supra wherein in their Lordships had held that Section 125 of the Customs Act 1962 relating to redemption fine in lieu of confiscation cannot be so exercised to give a bonanza or profits for illegal transaction of imports. Therefore, the fine and penalty adjudged in this case on the appellants also does not call for any modification, according to tine S.D.R. The almonds imported are also in such condition as to be easily de-shelled by pressure and consumed.
6. Shri Habibulla Badsha, the learned Counsel in reply referred to a decision of the Supreme Court reported in 1987 (31) ELT 66 wherein the Supreme Court had found redemption fine excessive and Ordered reduction thereof in the case of irregular imports against advance licences. Therefore, discretion is vested with the authorities in the matter of determining quantum of fine in lieu of confiscation. He also referred to the case law reported in 1977 ELT (J) 355 (SC) para 26 to the effect that if two views are possible the one favourable to the assessee should be accepted. The Counsel further submitted that with regard to para 25(2) of the Policy to the effect that any interpretation of Import-Export policy given by the CCI will prevail over any other clarification in the matter given by any other authority, it was stated that this is essentially relating to the procedure to be followed for seeking any clarification, whereas in their case the certificate given by the Horticulturist to the Department was at the instance of the Custom House itself, and it was clearly to the effect that samples tested are Almond seeds which are viable and fit for soil. Further, the CCI has only stated that the goods are consumer items, and the Collector also has not disputed that the goods are seeds. In such a situation, as seeds are specifically covered against Serial G.2(i)(a) of Appendix 17, the import is permissible against REP licence. The Delhi High Court decision in Jain Export case is a decision by the High Court in exercise of its power of writ jurisdiction as distinct from the Departmental proceedings. It was also submitted that in respect of similar imports in Bombay Custom House only a lower fine in lieu of confiscation @ 100% of c.i.f. value had been imposed, and that margin of profits on their actual realization in the present consignment was far less. Therefore, there is a case for modification in the quantum of fine in lieu of confiscation.
7. We have given careful consideration to the submissions made by the learned Counsels and also the learned S.D.R. The main issue is whether the Almond in shell imported by the appellants is covered by the licences produced by them for items against serial No. G.2(i)(a) of Appendix 17 of the import policy 1985-88. This item allows for import of seeds/bulbs/mother plant, germ plasm against export of fresh fruits/vegetables and flowers. Custom House held that Almonds are nothing but dry fruits covered by separate policy for their import, and are in the nature of consumer goods of agricultural origin, and hence covered by Appendix 2 Part B at Serial 121 thereof, which covers “consumer goods howsoever described, or industrial, agricultural or animal origin not appearing individually in Appendix 3 Part A and 5 or specifically listed for import under OGL”. The Customs House also went by the condition contained in para 5 of Appendix 17 to the effect that no import of item appearing in Appendix 2 Part B shall be allowed unless the item is specifically described against column 4 in Appendix 17. During the examination of the issue the Customs House had obtained the opinion of the Horticultural Officer, who, by his communication dated 15-10-1987, on examination of the sample from the consignment, opined that the samples of Almonds seeds are thin shelled American variety, and are viable and fit for sowing. Subsequently, the Customs House sought clarification from the CCI in a telex dated 23-10-1987 as under:
“S. Misc. 142/87 GrJ (.) IMPORTERS CLAIM CLEARANCE OF ALMONDS IN SOFT SHELL UNDER REP LICENCE ISSUED UNDER SL.NO. G2 l(a) OF APPENDIX 17 CLAIMING THEM AS SEEDS (.) LOCAL HORTICULTURIST HAS OPINED THAT THE SEEDS ARE CAPABLE OF GERMINATION TO THE EXTENT OF 90% AND ARE VIABLE AND FIT FOR SOWING. (.) ALMOND IS CONSIDERED AS A DRY FRUIT IN TRADE FALLING UNDER PARA 181(1) OF CHAPTER XIII (.) MOREOVER ALMOND IS A CONSUMER ITEM OF AGRICULTURAL ORIGIN FALLING UNDER SL. No. 121 OF APPENDDC 2B (.) CLARIFICATION IS REQUESTED FOR AS TO WHETHER THE LICENCE PRODUCED UNDER G.2(i)(a) IS VALID TO COVER THE ALMONDS IN SOFT SHELL UNDER IMPORT (.) SINCE THE CONSIGNMENT IS UNDER DETENTION REPLY BY RETURN TELEX IS REQUESTED.”
Telex clarification was provided by the CCI in their reply telex dated 19-11-1987 which reads as under:
“PLEASE REFYOURTEL DATED 23-10-1987 REGARDING IMPORT OF ALMONDS UNDER REP LICENCE (.) ALMOND IS A CONSUMER ITEM FALLING UNDER APPENDIX 2-B (.) THERE IS A SEPARATE POLICY FOR ITS IMPORT UNDER DRY FRUITS (.) ALMOND CANNOT REPEAT CANNOT BE IMPORTED UNDER REP LICENCE.”
This clarification had been put to the appellants during the adjudication proceedings, and their response was that Horticulturist’s opinion was in their favour, and that if it was CCI’s view that Almond imported are not covered by REP licence, then that authority should take steps to amend the policy itself. During the hearing before the Tribunal, it has been argued that the requirement to seek clarification only from the CCIE is more in the nature of laying down the procedure for the importers to follow in seeking clarification and that the Collector himself has admitted that the goods imported are seeds and that since they are not specifically appearing in Appendix 2 Part B, and as they are covered by the description ‘seeds’ in Appendix 17, import was not irregular and was duly covered by REP licence. Case law has also been cited to show that end-use is not the criterion so long as goods imported answer to the description in the licence. We are however, unable to agree with the contentions of the appellants because the policy itself lays down that in all matters relating to import policy and interpretation thereof and procedure relating thereto, the persons concerned should address this to the CCIE or the prescribed authorities, and any interpretation of the policy given in any other manner or by any other person will not be binding on the CCIE or in law. Para 25(2) of the policy further states that interpretation of the import/export policy or procedure given by the CCIE will prevail over any other clarification of the same matter given by any other authority or person. In the same policy it is further laid down in para 27(2) thereof, “As in the matters relating to import-export policy and procedures, the interpretation given by the Chief Controller of Imports & Exports is final, incase of doubt regarding these matters the custom authorities should consult the Import Trade Control authorities before clearance of the goods”. Therefore, it is clear that for intending importers as well as even for the Customs department, the competent authority for giving clarification is the CCIE. In this case the importers, who are appellants, had not chosen to seek any clarification, but the Customs authorities had consulted the CCIE as prescribed in the policy, who has categorically given clarification “Almond cannot repeat cannot be imported under REP licence”. The fact that the Horticultural Officer had opined that the goods to be seeds will not advance the case of the appellants because of the position in law discussed above, especially as clarification had been sought by the Customs authorities incorporating the opinion of the Horticultural Officer. In the case of Kerala Food Packers cited by the appellants, it will be seen that the Bench of the High Court had held that the Department in that case should not have any apprehension because in fact there was an end-use certificate for the goods to ensure that the materials imported are to be put to the prescribed use. We are also unable to agree with the contention that the requirement of condition contained in para 5 of Appendix 17 is that the item should be excluded there from to appear in Appendix 2 Part B, because this would lead to enumeration of a very large number of items for the purpose of Appendix 2 Part B. In any case, on £ specific reference, on this very consignment to the CCIE, categorical clarification has been given by that authority, which, as per the policy, should prevail and is binding in law. The arguments advanced that where two views are possible relating to a particular entry, the one favouring the subject should be adopted, cannot also be accepted because of the specific provision in the policy which lays down that CCIE’s opinion regarding interpretation of the policy is final and authoritative. In this context the observations of the High Court in the case of Liberty Oil Mills v. Union of India (1984) 3 SC 465 relating to the context of formulation of Import/Export Policy could also be usefully referred to:
“The import policy of any country, particularly a developing country, has necessarily to be tuned to its general economic policy founded upon its constitutional goals. The requirements of its internal and international trade, its agricultural and industrial development plans, its monetary and financial strategies and last but not the least the international political and diplomatic overtones depending on “friendship, neutrality or hostility with other countries”. There must also be considerable number of other factors which go into the making of an import policy. Expertise in public and political, national and international economy is necessary before one may engage in the making or in the criticism of an import policy. Courts do not possess the expertise and are consequently incompetent to pass judgment on the appropriateness or the adequacy of a particular import policy”. In the result, therefore, the conclusion of the Collector that Almond in sheel imported are consumer goods covered by Serial No. 121 of Appendix 2 Part B, and hence holding that the REP licence produced are not valid for import of the goods, is well founded, being supported by CCI’s clarification, and is therefore upheld. On the question of quantum of fine in lieu of confiscation it was urged that a lower fine has been imposed in similar cases in Bombay Customs House and also in Madras in the case of import of Poppy seeds under Appendix 17. It is however, found that the Bombay Customs House decision, a copy of which was furnished, is dated 16-2-1988 in the case of M/s. Agro Impex, Bombay, and in that decision, there are no details discussed regarding the margin of profit, whereas in the present case the Collector has specifically gone into this aspect while fixing the fine in lieu of confiscation. He has also given consideration to the fact that there had been slight fall in the price and also the fact that in that case of the later import, higher ci.f. price had been paid. The decision of the Supreme Court referred to by the appellants in this context (1987) 31ELT 66 was one relating to the import of raw material against advance licence which was found unauthorised, and confiscated by the Customs authorities, and the Supreme Court modified the decision regarding quantum of redemption fine in that case on the condition that importers therein would undertake to fulfil the fundamental objective of allowing import of raw materials against advance licence, namely, to utilise it in effecting exports, and on a direction that importers therein should comply with the export obligations. Apart from this, the observation of the Delhi High Court in Jain Export case on the determination of fine in lieu of confiscation under Section 125 of the Customs Act, 1962 are also relevant. The High Court had observed in para 71 of the judgment “the amount of redemption fine would and must necessarily be determined by these considerations that it should not result in bonanza of profit for illegal transaction of import”. The Court observed “No doubt the various features can be taken into account for seeing that a bona fide mistake may not unduly harshly penalise or cause irreparable injury to the importer but it seems to me_ equally plain that the resort to Section 125 of the Customs Act to impose fine in lieu of confiscation cannot be so exercised as to give a bonanza or profits for an illegal transaction of import. Some justification offered by the importer may be taken into account for not proceeding for personal penalty under Section 112 of the Act or for not proceeding under Section 135 of the Act against the importer. But there would appear to be hardly any justification for letting an importer make monetary gain from any illegal transaction of imports and/or exports”. It is further found that the quantum of penalty on the appellant is very reasonable considering the value of the goods imported and the nature of offence. In the result, we see no reason to interfere with the Order passed by the Collector and the appeals are accordingly rejected.