ORDER
P.K. Desai, Member (J)
1. As the Department has sought for stay against the implementation of the orders passed by the Commissioner of Customs (Appeals), and because, the goods have so far not been released in pursuance of the said order, the appeals have been granted out of turn hearing and are being disposed of by this common order.
2. Both the appeals, though are against different Respondents and are in relation to different orders-in-appeal, because both involve in consideration of the same issue, both the appeals are, on request of the parties, taken up for hearing together and are being disposed of by this common order. For the purpose of due identification, Appeal No. C/123/96 is against Order-in Appeal No. 814/95-BCH dated 12-12-1995, whereas Appeal No. C/124/96A-Bom is directed against Order-in-Appeal No. 917/95-BCH, dated 13-12-1995 and both the said orders are passed by the Commissioner of Customs (Appeals), Bombay.
3. Respondents M/s. Carpet House (Appeal C/123/96), imported “supranol Green BW” Dyes and sought clearance thereof under the licence dated 13-1-1994 and DEEC Pass Book dated 4-5-1994, whereas Respondents M/s. ABC Hitkari Enterprises (Appeal C/124/96) imported “Acid Green GS” Dyes and sought clearance under the licence dated 4-3-1993 and DEEC Pass Book of the same date. They both sought clearance under Customs Notification No. 203/92, dated 19-5-1992. It was however observed that Dyes were covered Entery No. 14 of the Sensitive List III and the licences required both quantity and value restrictions, and because the licences issued were not in conformity with the Policy requirement and did not provide for any quantity restriction, duty free clearance could not be permitted. On adjudication, the duty free clearances was refused.
4. Both the Respondents therefore, filed appeals against the said order and also submitted letter dated 4-8-1985 from the Jt. DGFT to the effect that when the licences were issued, Dyes did not figure in Sensitive List III and hence quantity restriction was not required to be inserted. The Commissioner of Customs (Appeals) therefore held that when the items did not figure in Sensitive List III on the date of issue of licence, and the guiding factor for the policy was the date of issue of licence, and when even the DGFT have opined accordingly, it was not open to the Customs authority to impose the condition of. quantity restriction in the subject licences and deny clearance duty free, under those licences. He therefore set aside both the orders and directed for clearance.
5. Mr. K.M. Mondal, the ld SDR, has submitted that on the date of issuances of licences, the Dyes did figure in Sensitive List I at Entry No. 6 and hence, the licence was required to have quantity restriction, irrespective of whether licence was quantity based or value based and the licences issued without quantity restriction were not in conformity with the Policy provision, notwithstanding the fact that Dyes at that time did not figure in Sensitive List-Ill. He has then pleaded that here, the issue is not one of objecting to causing of import under the licence, but is the one of allowing clearance duty free, vide Notification No. 203/92 and hence, it is within the powers of the Customs authority to refuse clearance duty free, if the licences produced do not fulfill the requirements of the policy provisions.
6. Mr. H.R. Shetty, the ld. Advocate has however pleaded that several similar consignments under similar licences have been cleared without charging any duty, and as such they should not be discriminated against. The ld. Advocate has strongly relied upon the clarification given by the DGFT and has submitted that the objection raised is not sustainable, and has been rightly rejected by the lower appellate authority.
7. Considering the submissions, there is no denial to the factual position, and to the position that item Dyes was added in Sensitive List III with effect from 30-5-1993 and both the licences have been issued prior to such entry. The licences issued are value based advance licences. It is also not under challenge that the Dyes figured in Sensitive List I on the date those licences were issued, and that the licences have no quantity restriction imposed under the licence.
8. According to the ld. SDR when the items figures under Sensitive List I, the licence, even if it is a value based licence, ought to contain quantity restrictions and hence, the licence being not in conformity with the policy provisions the same is not accepted. The Bombay High Court have, however, in Lokash Chemical Works v. M.S. Mehta -1981 (8) E.L.T. 235 (Bom.) held that the Customs authority can neither question the terms or validity of the licence and, has to permit import under the licence till the same is proved to have been validly issued.
9. The Ld. SDR has however submitted that it is not the validity of the licence that is challenged, but what is challenged is the entitlement of the importers to claim duty free import under Notification No. 203/92 which is being denied in view of the licence being not in conformity with the policy provision.
10. Going by the text of the said Notification for granting the benefit under the said Notification, the Customs authority has merely to satisfy as to whether the requirements laid down for availment of benefit thereunder have been duly complied with, and the conditions laid down thereunder are, (i) material imported are covered by a value based Duty Exemption Entitlement Certificate issued by the licensing authority in the form specified in Schedule attached, (ii) importer at the time of clearance of imported material (a) produces proof of having executed bond or legal undertaking before the licencing authority, and (b) makes a declaration before the Asstt. Collector binding himself to pay on demand, amount equal to the duty leviable but for exemption, if the imported material is not used as per the condition laid down. Thus, the Customs authority has been empowered to examine only those two conditions and have not been empowered to otherwise examine the validity of the said licences, and cannot object to grant of benefit of the Notification on any other extraneous ground.
11. The objection raised by the Customs authority on the subject import is not based on any of the grounds incorporated in the subject notification and plea that the benefit should be denied only because the licences are not in conformity with the conditions laid down for import of items figuring in Sensitive List I cannot be raised and when raised, cannot be upheld.
12. It may also be noted that, this was really not the ground on which the objection has been raised, as the ground for denial of duty free import, was that the item figured in Sensitive List III.
13. Because, on the date of issuance of the licences, the item did not figure in Sensitive List III, the question of issuing licence in conformity of the requirement thereunder, obviously does not arise, and for this due clarification is given by DGFT. The licence is governed by the policy provisions as they existed on the date of issuing of the same. The objection raised in that regards has therefore been rightly rejected by the authority below.
14. Further the letter from Jt. DGFT Varanasi, dated 4-8-1995, have amongst others, clarified that, “the Standard input output norms so filed by DGFT also restricts the value as an inviting mind factor for such inputs and not quantity”, by earlier observing that Dye is a consumable and not a raw material for carpet industries and as such quantity cannot be given on import of such item. This letter, besides clarifying as to why quantity restriction have not been imposed, also shows that the licences have been so issued knowingly, and as indicated earlier, the Customs authority have no jurisdiction to go beyond the licence issued.
15. As is shown by the ld. Advocate, by production of various documents as well as orders passed by the adjudicating authorities at the Bombay Customs, the same item has been given benefit of Notification No. 203/92 in relation to imports of other parties. There is no evidence that such orders have also been challenged before the appellate forum.
16. Considering all these aspects, therefore, the submissions made on behalf of the appellant are not convincing enough to warrant interference with the impugned order.
17. Both the appeals from the Department are therefore rejected.
