ORDER
V.P. Gulati, Member (T)
1. The appellants have pleaded for condonation of delay in filing the appeals stating that they have been pursing the remedy before the Hon’ble High Court of Madras and that if the time taken by the appellants before the Hon’ble High Court is excluded, there is no delay in filing the appeals. We observe that while disposing of the writ petitions filed by the appellants, the Hon’ble High Court of Madras by their order dated 15-2-1994 has observed as under :
“If the appeals are barred by limitation, it is open to the petitioners to file an application to excuse the delay on the ground that he had prosecuted the matter in this Court. If such an application is made, I have no doubt in my mind, that the Tribunal will consider the same and pass orders in accordance with law”.
In view of the observation of the Hon’ble High Court, we condone the delay in presentation of the appeals before the Tribunal.
2. These appeals arise out of the orders of the Collector of Customs, Madras. Since these appeals involve common issue and common pleas have been made by both the sides, these are taken up for disposal together. After having both sides operative portion of the order was announced in the open court.
3. Shri Habibula Badsha, the learned Senior Advocate for the appellants pleaded that the short point that falls for decision in the appeals is whether the goods described by the appellants as handicrafts can be allowed export. He pleaded that the appellants have filed three shipping bills for export of handicrafts made of sandal wood declaring them as handicrafts. He pleaded that the lower authority has however held that the handicrafts sought to be exported had superficial engravings of sandal wood and were not permissible for export in terms of Item 33(i) of Part A to the Schedule of Import and Export Policy for AM 1985-88 Vol. E and has disallowed the export and after administering a warning has allowed the appellants to take back the goods to the town. He pleaded that the export policy governing the export of sandal wood at the relevant time envisages that the exporters shall be required to obtain a certificate from the Regional Officer of the All India handicrafts Board to the effect that the value addition of Handicrafts made of sandal wood is a minimum of 200 per cent of the average base price of sandal wood per M.T. announced by the Development Commissioner (Handicrafts) from time to time. He pleaded that the appellants had along with the shipping bills filed necessary certificate as required under the policy. This certificate, he pleaded has been signed by the Deputy Director (Handicrafts). He pleaded that this certificate clearly sets out that value addition in respect of handicrafts sought to be exported by the appellants is minimum of 200 per cent average based on the price of sandal wood per M.T. announced by the Development Commissioner handicrafts and that the certificate is issued in pursuance of Annexure II, para 3A of the licensing policy for export of wood and timber vide serial No. 33 of Part A, Vol. II of the policy 1985-88. He further pleaded that so far as the handicrafts are concerned, in the Import Export Policy 1985-88 in Appendix 17 provides that registered exporters can export handicrafts items as detailed under General Notes in Appendix 17 under heading “HANDICRAFTS” wherein the following is set out:
“Articles which are classifiable elsewhere in this policy will be deemed to be ‘Handicrafts’ falling in this group only if such articles besides being made by hand, have some artistic or decorative value they may or may not possess functional utility value in addition. Artistic or decorative value of the article exported need not necessarily come out of any art work, engraving or decoration done on the article but the very form, shape or design of the article could also be artistic and suggestive of the fact that the article is primarily meant for decorative and not for utility purposes”
He pleaded that the question of export of the goods in question has been examined by the authority in the context of the provisions relating to handicrafts in the import and export policy. He pleaded that the authorities have not considered the pleas made and has stated that no definition of handicrafts is available in the policy book. He pleaded that the exports are covered by the required certificate as per para 3A of Appendix II of the relevant policy. This certificate has been signed by the Deputy Director of Handicrafts who is the competent authority to issue this certificate. He further pleaded that this certificate clearly sets out that the goods sought to be exported are handicrafts. He pleaded that the Customs authorities who entertained doubt in regard to whether the goods were handicrafts or not examined the goods along with the said Deputy Director who again certified the same as handicrafts as seen from the order of the lower authority that the goods were inspected by the Assistant Collector (Docs) that he found the sandal wood carvings as handicrafts and referred to Annexure II, para 3A, SI. No. 33 of the import and export policy AM 1985-88. It is not the case of the Department that the Deputy Director (Handicrafts) was not the competent officer for the purpose of certifying as to whether the goods were handicrafts or not and in fact the Department had been accepting the certificates issued by the said Deputy Director all along. He pleaded that in the proceedings drawn there is no allegation in regard to the genuineness of the certificates given by the Deputy Director and in fact the certificate regarding value addition by 200 per cent has not been questioned. He pleaded that the Regional Director of Handicrafts came to be consulted by the authorities since the authorities did not apparently find the opinion of the Deputy Director on their second examination acceptable. He pleaded that the Regional Director in his opinion given on the representative samples shown to him has not in any way commented adversely on the certificate issued by the Deputy Director or has controverted about the nature of the goods. In the original orders dated 4-2-1986 and 4-6-1986 it is not stated anywhere that the goods being exported were not handicrafts and in fact his opinion as given in the certificates issued after inspection of the handicrafts as referred above, is in favour of the appellants in as much as he has accepted the fact that the sandal wood logs have been given surface ornamentation all around and that this has been done by traditional carvers of Tirupathi of Kalahasti area and also stated that these are ‘hand crafted’ only. He has also stated that there has been some effort on the part of the exporters to minimise labour by covering large areas of the logs with simple floral lines. He has also stated that packing is very unconvincing and that the depth of the carvings also needs to be little deeper. He pleaded that the said Directors has stated that the goods had been handi-crafted and that there is design on the wood which can be recognised as by the carvers of certain areas only and an inference that can be drawn is that a design of specific type has been engraved on the wood and therefore the item has acquired character of handicraft and once the same has been described as handicrafts, there is no other way but to describe the item as handicraft. He pleaded that in the background of the definition of Handicrafts given in the policy book as referred to above, all that is required to be shown is that the handicraft has some artistic or decorative value. He pleaded that the Regional Director has not given his findings/opinion in the context of this definition of handicraft as given in Appendix 17 of the policy book. He pleaded that whether an article has artistic value or decorative value or not, it is a matter of subjective satisfaction and that one of the experts viz. the Deputy Director has called it as handicraft, the other expert i.e. the Regional Director while calling it as hand-crafted has merely made a remark in regard to the economy of the work to the effect that the depth of the carvings should have been little deeper. He pleaded that once the work of an article can be made out as belonging to a particular school, or having been done by an artist of a particular area, it can be said that the item had artistic value. The policy merely required that the article should have some artistic or decorative value. In the present case, an inference can be drawn from the Director’s report that the article had acquired some artistic value. He pleaded that the appellants filed written submission as can be seen from the Order No. S16/5/85 SIB/SIB/115/85 dated 4-2-1986 and the appellants had asked for the opinion to be taken from the experts who are carvers and also National award winners. This prayer was not granted and the Collector has merely stated as under in this regard while refusing permission :-
“If some outside agencies are allowed to examine and take on record favourable opinion, some other agencies can also be brought in by the Department for giving contrary opinion and the case will prolong without any finality with cross examination of the opinions in favour of the contrary. Hence, in the interests of speedy disposal and also to comply with the principles of natural justice, the opinion rendered by the competent authority was made available for scrutiny and also for cross-examination and it is not necessary for some outside agencies to have access to the goods in the customs area for inspection and clarification of goods”
He pleaded that carvers and artists are the best judge to comment upon the work of carvings done. He pleaded that the Collector has gone by the opinion of the Regional Director of Handicrafts and has not commented on the opinion of the Deputy Director who is also an expert in the subject. He pleaded that in a situation where two opinions are available and the authority had not chosen to call in any carvers and artists who are engaged in this type of activity in spite of appellants request, and when whether a particular piece of work has artistic or decorative value is based on the subjective criteria and there is an element of doubt, the benefit of doubt should go to the appellants. He pleaded that taking into consideration the definition of handicrafts as given in the policy and also inasmuch as the appellants have fulfilled the requirement of value addition and in view of the fact that the Deputy Director is equally competent to opine about the nature of the goods, the export should be allowed.
4. The learned DR pleaded that the opinion of the Regional Director should be preferred over that of the Deputy Director. He pleaded that the opinion of the Deputy Director should be discarded and he adopted the reasoning of the learned lower authority.
5. We observe that the question to be decided in the appeals is whether in the context of the provisions of the import and export policy in regard to handicrafts and the specific provisions in regard to export of handicrafts made of sandal wood, the appellant’s prayer for setting aside the orders of the lower authority should be allowed. We observe that the policy for export of handicrafts made of sandal wood is given in Annexure II of import and export policy AM 1985-88 under heading policy for export of Wood and Timber. In this what is envisaged is that in case of export of Handicrafts made of sandal wood the exporters shall be required to obtain a certificate from the Regional Officer of the All India Handicrafts Board to the effect that the value addition of handicrafts made of sandal wood is a minimum of 200 per cent of the average base price of sandal wood per MT announced by the Development Commissioner (Handicrafts) from time to time. There is no dispute mat such a certificate signed by the Deputy Director in terms of this para has been produced. This certificate has not been questioned by the lower authority. The appellants filed shipping bills accompanied by this certificate as envisaged above. The authorities, after the goods have been entered for export conducted examination of the goods sought to be exported along with the Deputy Director, handicrafts and the examination report as set out in the order in Original dated 4-2-1986 is as under:
“Certified that the goods were inspected with Assistant Collector (Docs) and found the articles as Sandal wood carvings (handicrafts). Necessary added value certificates as per Annexure II Para 3A of Page 33 of Import and Export Policy Vol. II 1985-88 has already been issued”
The authorities however, after examination jointly done with the Deputy Director in the opinion of the Development Commissioner (Handicrafts) had some doubts and therefore sought the opinion of the Regional Director of Handicrafts and the opinion of the Regional Director as set out in the order dated 4-2-1986 is as under :
“I inspected a few sandal wood logs at the Customs House this morning in the presence of the Assistant Collector. The logs have been given surface ornamentation all round, and the work tells that the ornamentation has been done by traditional carvers of Tirupathi or Kalahasti area. From this point of view, have to record that these are “hand-crafted”. But there is an effort on the part of the exporters to minimise labour by covering large areas of this logs with simple floral lines.
One more point I have to add here is that the packing is very unconvincing. A little carelessness in handling these gunny bags would damage the surface ornamentation. This aspect needs to be looked into please. The depth of carving also needs to be little deeper.”
In respect of other consignments also similar opinion came to be sought from the Director of Handicrafts and the certificate given by the Director as set out in the order dated 4-6-1986 is as under :
“At the request of the Assistant Collector (Customs), inspected a few sandal wood logs from each of the two consignments shown to me at the B.D. These have been given surface ornamentation, partly with floral designs and partly with traditional designs. The work, of course, has been handicrafted by traditional wood carvers, probably of Tirupathi and Srikalahasti areas.”
Further opinion was asked for from the Director (Handicrafts) and he has certified as under as set out in the order dated 4-6-1986 :
“…I have said in another context that the carvings are not done all around the logs; that the depth of the carvings needs to be little deeper and the packing has to be more convincing. The surface ornamentation is done, no doubt, using traditional motifs, but there should be no effort to minimise the labour. With carvings on the surface, the protective packing has to be more sound”.
In the show cause notice issued in respect of goods covered by Order No. S16/S/85 SIB/SIB/ 115/85 dated 4-2-1986 it has been set out in para 6 that the goods do not appear to be handicrafts and this appear to be sandal wood logs with superficial carvings which are not artistic or decorative value and further it has been set out that the goods have been invoiced on weight basis and the goods are not suggestive of being handicraft items and samples were drawn to get the opinion of the Regional Director (Handicrafts).
6. The issue sought to have been examined in the context of the definition of Handicraft under the General Note under heading Handicraft in the policy AM 1985-88, in the General note under column 5, Appendix 17 against item Handicrafts. We observe that the opinion of the Regional Director (Handicrafts) had been sought for as to whether the item can be considered as Handicrafts. It does not appear from the records that the said Director was appraised of the definition of Handicraft given in the General Note as above, nor opinion has been elicited from him as to whether the pieces sought to be exported had some artistic value or not. There is nothing on record to show that the opinion given by the Deputy Director was commented upon by the Regional Director. He has not in any way stated that the opinion of the Deputy Director was in any way wrong. The opinion given by the Regional Director is that :-
(1) the sandal wood logs have been given surface ornamentation all round;
(2) the work has been done by traditional carvers of Tirupathi and Kalahsti area;
(3) from this point of view, I have to record that these are hand-crafted;
(4) there is effort on the part of exporters to minimise the labour by covering the large areas of the logs with floral lines;
(5) the packing is unconvincing, the logs may get damaged and this aspect needs to be looked into;
(6) depth of the carving also needs to be little deeper.
From the above it clearly shows that the pieces which are sought to be exported had carvings and from the carvings the Regional Director could clearly say as to the artists of which area would have done the job. Further he had gone on to say that the pieces can be said to be handicrafted. We observe that the authorities have gone to the Regional Director to get a categorical opinion from him as to whether the item can be considered as Handicrafts as envisaged in the import policy. The said Regional Director has not recorded his opinion based on parameters envisaged in the policy. He however, has entered his criticism of the nature of the work done recognising artists who might have done this work as belonging to Triupathi and Kalahsti and merely stated that the depth of the carving could have been little deeper. In this opinion nowhere he has stated that the items sought to be exported did not have any artistic or decorative value as evisaged in the definition of Handicraft as set out in the policy under the general note referred to above and based on which the lower authority had proceeded in the matter. It goes without saying that intricacy of the work done on a piece of log of sandal wood would depend upon what has been ordered for and the price it is going to fetch for the exporter. If less work is done, the exporter will get a less price and if the work done is more intricate the exporter will get higher price. But this is not to say that any body can get away with export of wood in the garb of handicrafts. To guard against such contingency, the framers of the policy have provided another parameters and i.e. the value addition. In the present case, the value addition as certified by the Director of Handicrafts as required in terms of para 3A Annexure II as referred to above is not less than 200 per cent of the value of sandal wood as fixed by the Director from time to time. There is no adverse comments in this regard either by the Regional Director or by the Ld. lower authority. This condition of value addition therefore has to be taken to have been fulfilled. The only other condition which is required to be satisfied relates to whether the item could be considered as handicraft for the purpose of export. In the show cause notice issued by the lower authority, it has been alleged as under:
“that the goods do not appear to be handicrafts as defined in the Import and Export Policy for AM 85-88 [(Vide General notes (i) in column 5 of Appendix 17 against “Handicraft” (page 268)]. As per this definition articles will be deemed to be handicrafts only if such articles besides being made by hand, have some artistic or decorative value. Artistic or decorative value of the article need not necessarily come out of any art work, engraving or decoration done on the article but the very form, shape or design of the article could also be artistic and suggestive of the fact that the article is primarily meant for decorative and utility purpose”.
So what is required to be shown is that the item has some artistic or decorative value. In the present case, the Deputy Director has certified the item as Handicraft which means he has accepted the item to be having artistic or decorative value. In terms of the definition of handicraft as given in the policy, the Deputy Director apart from giving a certificate after examination of the item along with the Assistant Collector has confirmed this position. On a reference by the customs authorities, the Regional Director has opined that there is a floral design on the sandal wood and also that carvings have been done by artists belong to Tirupathi or Kalahasti area and that effort has been made to minimise labour and that lines could have been little deeper. There is no finding that the item did not have some artistic or decorative value to take the item out of the purview of the definition of Handicraft as given in the policy. Even during the cross-examination of the appellants, the Regional Director in the proceedings before the lower authority, the lower authority has not elicited from him whether the item can be considered as having some artistic or decorative value and all that has been elicited from him was based on what he had already given in writing that he would not call the item as finished handicraft. On a question by the appellants he has stated that the certificate issued by him on reference by the Customs, he has not described the item as handicraft but as hand-crafted with surface ornamentation given all round. The Regional Director has stated that no norms have been fixed as to the depth of the carvings. He has also stated that the value of any handicraft item depends on the input of artistic labour and if the input of artistic labour is less, the value of the finished product is less. In regard to the nature of the goods, the Regional Director has stated while the item is hand-crafted, he would not call them as finished handicraft. We observe that at the relevant time the governing criteria was value addition at the percentage for sandal wood and also the definition of handicraft as given in Appendix 17 as shown in the show cause notice issued by the lower authority. The objective criteria at the relevant time was if the item sought to be exported had some artistic or decorative value. It has been clearly stated by the Deputy Director that the item under export is handicraft and the Regional Director has also stated that the work done on the logs is the work of artists or Tirupathi and Kalahasti area. The only objection taken by him is regarding the depth of the lines being little less to minimise the use of labour. However, he has not stated in the cross-examination as to how much more deeper the lines should have been. Once it is accepted that the work done on a piece reflects the workmanship or art of artists of a particular region it can be safely assumed that the article as an art form has come into existence and therefore has some artistic or decorative value. Merely because the Regional Director has made some observations in regard to the nature of the work done on the sandal wood logs, that by itself would not take out the item from the purview of Handicraft as given in the import and export policy particularly when the item sought to be exported has some artistic and decorative value. In a situation like this, the best course for the authorities would have been to have accepted the request of the appellants to bring in some artists of repute for their opinion. The denial of the lower authority to allow the appellants to bring in such expert by holding that if the appellants are able to bring in some favourable opinion from such experts, the Department would also be able to bring in some unfavourable opinion and such a course of action would only prolong the proceedings is not a correct approach to the issue to be decided. The observation of the lower authority goes to show that the lower authority was apprehensive that some artists may hold the item to be as described by the appellants and the lower authority did not want to make any further enquiry in case the opinion given by the expert brought by the appellants were not favourable to the Department according to his understanding. We observe that in fairness the request of the appellants in this regard should have been allowed by the lower authority in the face of the opinions given by the Deputy Director and the Regional Director. In the opinion of the Regional Director it is stated that these are hand-crafted and the work has been done by the artists of Tirupathi and Kalahasti and that the depth of carvings could have been little deeper. It is during the cross-examination of the Regional Director much later after the certificate issued by him that he has stated that “he would not call them as finished handicraft items”. The opinion of the Regional Director in our view is not conclusive. We observe that the degree of finishing of an item can be a matter of opinion and two experts may also differ in this regard and it is very difficult to conclude which of the two experts can be taken to be right. Taking into consideration therefore, the value addition as certified in terms of para 3A, Annexure II of the policy and in view of the definition of Handicraft given in Appendix 17 of the policy as extracted above and the nature of the certificates issued by the Deputy Director of Handicrafts and also the Regional Director of Handicrafts, and in view of what we have held above in tike facts and circumstances of the case, we hold that the appellants are entitled to benefit of doubt. We, therefore, allow the appeals with consequential relief.