ORDER
K.S. Venkataramani, Member (T)
1. The appellants imported a consignment of aniline oil (quantity 5826.3 kgs.) valued at Rs. 58,263/- and claimed clearance of the consignment against their advance licence with a duty exemption entitlement certificate. The Customs House found that the value balance available in the licence did not cover the value of the goods imported and it was insufficient. Therefore, show cause notice was issued on 3-11-1987 and the appellants’ defence was that the short fall in value balance in the import licence has occured only because of the fact that in one of their import consignment of bon acid vide Bill of Entry No. 1606/91 against the same licence, the assessable value had been loaded, by the Appraising Group of the Customs House and the licence had also been debited for the enhanced assessable value. They submitted that had this not been done and if only the cif value as per the invoice had been debited/ the present short fall value would not have taken place. The Dy. Collector of Customs, Mumbai Customs House rejected this defence and observed that they had knowingly imported the present consignment of value higher than the balance in their import licence. He however allowed the clearance of the goods against the licence after cautioning the appellants but he ordered that they should pay duty on the goods in excess of licence value. This order of the Dy. Collector having been upheld by the Commissioner (Appeals) in the impugned order, the present appeal has been filed.
2. Shri R.M. Varday, the Sr. Manager of the appellants, reiterated the same defence and also relied upon the clarification given in the Customs Advisory Committee Meeting by the Commissioner of Customs, wherein the Chairman of the Committee observed that unless there is indication of fraud or evidence to establish that the foreign suppliers have been compensated through illegal channels, the question of debiting the Customs copy of import licence with the enhanced value under Section 14 of the Customs Act does not arise.
3. Shri S.V. Singh, the ld. DR pointed out that it does not advance the case of the appellants now to raise the issue that for the earlier consignment the licence value was debited by the enhanced assessable value. They should have raised this at that time itself.
4. We have carefully considered the submissions. We find that the Bombay High Court has had an occasion to examine this issue of the value to be debited to the import licence where the declared value is not accepted by the Customs authorities for the purposes of assessment of the goods to duty under Section 14 of the Customs Act, 1962. The High Court held in the case of Union of India v. Glaxo Laboratories (India) Ltd. -1984 (17) E.L.T. 284 that there is one kind of valuation for the purpose of assessment to customs duty but another for the purpose of cif value which is to be debited to the licence. This value to be debited consists of the price of the goods and the commission allowed and where the commission is not apparent on the surface, it is the duty of the Customs authority to find out and add to it the said price along with the freight and insurance so as to constitute cif price for the purpose of debiting the licence. The Bombay High Court further observed that the Customs officers had to perform two duties; one to guard the interests of revenue and second to assess an imported article on the basis of Section 14(1) of the Customs Act, 1962. Besides it is a part of their duty to debit the Customs copy of the licence with the value of the imported goods in such a manner that it shows how much of the foreign exchange permitted to be spent by a particular party has been utilised and what balance has remained to be utilised under a valid licence. In the same judgment, the Bombay High Court further noted what would be the result if in a case the enhanced assessable value for purpose of Section 14 of the Customs Act was to be taken to the cif value to be debited to the import licence. The Court observed – “the interpretation put by the Customs authorities would lead to the result that all valid imports would automatically become invalid when the last consignment exceeds the face value of the licence, owing to the value based on the international market price being debited to the licence instead of cif value”. It may be mentioned that in the case dealt with by the Bombay High Court the declared value by Glaxo was much lower than the international value because of their special relationship with the parent company in England. The above remark of the Bombay High Court has a parallel in this present case also where it was found that the value balance in the licence was insufficient when the last consignment was imported because the value of the earlier consignment had been loaded by the customs house and such loaded value had been debited to the licence.
5. For considering the nature of the offence in this case, it is also necessary to look at the type of licence with which we are concerned. It is an advance licence under the Duty Exemption Entitlement Certificate. Such licences are issued on the estimated requirement of the input for the given quantity and value of export goods. Such quantities are determined in accordance with standard input-output norms as laid down in the Import Policy. It is also subject to fulfilment of time bound export obligation and prescribed value addition. The particular licence with which we are concerned is one such advance licence which has limiting factor entitlement of quantity for each item of inputs permitted to be imported. In this case it is bon acid and aniline oil. There is also value limiting factor but this is an overall value limit. The admitted position here is that the quantity of the input aniline oil imported is within the quantity limit for which there was insufficient value balance in the licence. In the light of the foregoing discussion as regards the procedure for the issue of the licence and also in the light of the Bombay High Court decision regarding debiting of the licence, there is a lot of force in the appellants’ defence that the present situation was created by debiting of the enhanced value in the import licence in respect of the previous import of bon acid. The department’s understanding is also reflected in the remarks of the Chairman of the Customs Advisory Committee relied upon by the appellants which was in response to a specific point raised in the meeting regarding the propriety of debiting the customs copies of licence particularly advance licence, the quantum of enhanced loaded cif value under provision of Section 14. The answer was that unless there was an evidence of fraudulent transaction showing additional payment through illegal channels to the suppliers, such debiting should not be made. In such a context, it will be harsh and unreasonable to say that the failure of the appellants to question the action at the time of such debit should prove fatal to their present import also and for claiming the exemption. Therefore, considering the fact that the appellants are actual users engaged in export production for whom the advance licence has been issued and further having regard to the fact that the adjudicating authority has considered it a fit case to accept the licence on a caution, it will be in the interest of justice to condone the excess in the factual background of this case. Accordingly, the appeal is allowed and the appellants will be entitled to consequential relief, according to law.