ORDER
V.K. Ashtana, Member (T)
1. These are two appeals from Revenue against Order-in-Appeal No. C3A/107 & 108/98, dated 31-3-1998 passed by the Commissioner (Appeals) in respect of consignment of used old garments and synthetic/woollen rags imported by M/s. Textile International, Delhi and M/s. Evergreen Trading Corporation, Delhi. The impugned order-in-appeal is a common order involving two orders-in-original as the issue involved in both these cases is the same.
2. Briefly, in both cases used old garments have been imported along with synthetic woollen rags. Used old garments are covered under heading 63090000 of the ITC (HS) and can be imported only against a specific licence. Further, the synthetic rags are covered under Heading 63109009.10 of the ITC (HS). The policy indicated against this heading is verified. However, the goods are permitted for import subject to the condition that the mutilation must conform to the requirements specified by Custom Public Notice or Trade Notice. Chennai Custom has issued a PN 146/88 wherein norms of mutilation have been specified. It is alleged that synthetic rags imported in these cases did not conform to the normal specification specified in the said Public Notice and therefore the imports were to be treated as ‘restricted’.
3. In the Order-in-Appeal, learned Commissioner (Appeals) has upheld the confiscation order in both the cases but has reduced the redemption fine as follows:
(a) M/s. Textile International - From Rs. 7 lacs to Rs. 1,60,000
(b) M/s. Evergreen Trading - From Rs. 8 lacs to
Corporation Rs. 1,20,000/-
Personal penalty was also reduced to Rs. 16,000/- and Rs. 12,000/- respectively.
4. Heard ld. JDR Shri S. Murugandy. It is the contention of the Revenue that impugned order-in-appeal reducing the fine and penalty amounts does not appear to be legally correct and they have prayed for the restoration of order-in-original issued by the lower authorities.
5. Heard Learned Consultant Shri N. Singh for the respondents, who submitted that consignments were imported as actual user to take out fibre thereof. He did not dispute that the dimensions of the imported synthetic rags were not in confirmity with the above cited Public Notice of Madras Custom House. However, his grievance was that his request that remutilation before customs clearance was refused by the original authority on the ground that no rules under Section 24 of the Customs Act, 1962 were framed on this behalf. He further submitted that in case of imports of woollen rags, normal practice followed by the Custom Houses in the country in such cases was to levy redemption fine of 25% and a personal penalty of 10%. Even in the impugned order-in-appeal, the quantum of RF and personal penalty was much more than the normal practice of other Custom Houses. He further submitted that Bill of Entry still continues to be live one and cited the OIA passed by Commissioner of Customs bearing No. 35/97/CAC/CC-I, dated 30-4-1997 wherein Redemption Fine of 25% and penalty of 5% had been imposed. He further cited the judgment in the case of Saravanabava Mills Pvt. Ltd. v. CCE – 1997 (20) RLT 383. He also referred to the decision contained in this Tribunal Final Order No. 818/98 in the case of ANZ Overseas wherein the Single Member Bench had duly considered and followed the aforesaid cited cases.
6. I have carefully considered the submissions on both sides. In a similar case, this very Tribunal vide Final Order No. 818/98, dated 24-4-1998 had held that as in the case of Saravanabava Mills Pvt. Ltd. v. CCE reported 1997 (20) RLT 383 that garments which are cut into two by vertical slit on back is required to be considered as rags and not as “worn clothing or other worn articles”. This was in view of an earlier judgment of the Tribunal in the case of Kakkar & Co. v. CC reported in 1988 (35) E.L.T. 718 (Tribunal) wherein a view has been taken that if in the absence of any identifiable test of complete mutilation laid down in the policy for the guidance of importers and the enforcement agencies, the benefit has to be given to the importers. Therein the Tribunal also noted that the synthetic rags cut into 2-3 pieces or in two pieces wholly available are to be taken as completely mutilated ones. The Tribunal further observed that even if it is felt that mutilation is not sufficient, Customs authorities could have ordered mutilation on the anology of Section 24 of the Customs Act and, therefore, upheld the import under OGL. It is also seen that the judgment of Kakkar & Co. v. CC has since been confirmed by the Supreme Court.
7. In this case, the original authority had objected against imports on the ground that no rules have been formulated under Section 24 of the Customs Act for remutilation and had therefore denied importer’s request for the same. In view of aforesaid discussion, I find that this position taken by the original authority is not in consonance with clearly laid down law. I also find that the submission of Learned Consultant Shri N. Singh that normal practice followed by Custom House in such cases was to levy redemption fine of 25% and personal penalty of 10% is born out from the Order No. 35/97/CAC/CC-I, dated 30-4-1997 of the Commissioner of Customs, Bombay Custom House wherein in a worse case than this, where the consignment was ordered to be classified as ‘worn clothing and other worn garments’, yet the redemption fine of only 25% and penalty of 5% had been imposed. In the impugned order-in-appeal, learned Commissioner (Appeals) has merely scaled down the redemption fine and the penalty in question in view of arguments detailed therein but within these ranges. Since the case law clearly laid down that (a) request of remutilation of the importer should not be turned down and (b) in the absence of any specific definition of imported garment of rags (mutilated garment etc.) benefit of doubt should go to the party, therefore I do not find any infirmity in the said impugned order. Redemption fine and penalty as ordered in the impugned order-in-appeal appear to be consonant with the interests of justice. I therefore do not find any merit in the appeals of the Revenue and the same are dismissed accordingly.