ORDER
R. Jayaraman, Member (T)
1. The aforesaid two matters were listed as appeals and heard by this Bench, consequent to the order of the Hon’ble Supreme Court of India in the Writ Petition (Civil) No. 568/1989 dated 23-1-1990, setting aside the earlier order of the full Bench of the Tribunal dated 5-12-1986, New Delhi and remanding the issue back to the Tribunal for determining the question of quantum of redemption fine. The papers, which were originally received by the Delhi Registry of the Tribunal, were transmitted to this Bench, since the matter falls within the competence of the West Regional Bench. Thereupon, these were listed as appeals from Jain Exports Pvt. Ltd. and heard by this Bench on four days, namely on 22-3-1990, 23-3-1990,12-4-1990, and 4-5-1990, when Shri G.L. Rawal, the learned advocate on behalf of the appellants and Shri K.M. Mondal, the learned SDR for the Revenue advanced extensive arguments.
2. At this juncture, it would be necessary to briefly indicate the long history of the case and also mention the relevant dates and events in the course of that history.
3. The appellants imported two consignments declared to be of Refined Industrial Coconut Oil, one consignment weighing 3002.557 MT-CIF value of Rs. 16367050/- and another consignment weighing 5342.369 MT CIF value of Rs. 29121450/-at the Port of Kandla. These imports were sought to be covered by Export House Additional Licences and Split Licences of the main licences and the imports have been effected by the appellants under the Letters of Authority by those licence holders. The appellants claimed that only edible variety of coconut oil was canalised in the 1980-81 Policy period and not the industrial non-edible variety of coconut oil. For this purpose they placed reliance on the letter from the Chief Marketing Manager of the State Trading Corporation of India, dated 30-10-1980 addressed to one of their sister concern Jain Shudh Vanaspati Ltd. to the effect that the State Trading Corporation of India are only importing and distributing edible oil for vanaspati industries as well as under public distribution scheme and they are not importing coconut oil for manufacture of soap, as industrial coconut oil is not under their purview, as it is not canalised with them. Two show cause notices dated 24-11-1982 and 26-11-1982 were issued objecting to the import of the coconut oil under the additional licences produced, alleging that all varieties of coconut oil are canalised and they cannot be imported under OGL and hence under the additional licences, these goods cannot be imported as OGL items The Collector of Customs & Central Excise, Ahmedabad, passed two orders dated 17-12-1982 and 20-12-1982 confiscating the goods but allowing redemption on payment of fine of Rs. 2.00 crores in one case and Rs. 3.00 crores in another case. The appellants filed two Writ Petitions bearing No. 4037/82 and 4038/82 before the Hon’ble High Court of Delhi in December, 1982. They also paid the redemption fine totalling Rs. 5.00 crores and cleared the consignments in January and February 1983. The Hon’ble High Court of Delhi, dismissed the writ petitions filed by the appellants, in their judgment dated 20-12-1984, by majority judgment. However, the Hon’ble High Court of Delhi remanded the matter to the Tribunal for determining the quantum of redemption fine and only for this limited question, it was directed that the matter may be taken as appeals, though actually no appeals were filed originally by the appellants against the Orders of the Collector before the Tribunal. Hence as per the direction of the Hon’ble High Court of Delhi, the matter was heard by two Members of the Tribunal, West Regional Bench. However, since there was a difference of opinion, between the two members, the matter was referred to the President of the Tribunal, for resolving the difference of opinion. Thereafter, the Full Bench of the CEGAT, New Delhi, heard the matter and finally dismissed the appeals of the appellants, in their order dated 5-12-1986. The appellants are reported to have moved the Hon’ble High Court of Bombay by filing Writ Petition against the aforesaid orders of dismissal of appeals by the Full Bench of CEGAT, New Delhi but since reportedly withdrawn. They had also approached, simultaneously, the Hon’ble Supreme Court of India in Writ Petition (Civil) No. 468/89 against the order of the Full Bench of the CEGAT, New Delhi. The appellants also went in appeal against the judgment of the Delhi High Court. The Hon’ble Supreme Court dismissed two appeals filed by the appellants against the judgment of the Delhi High Court on the legality of import of industrial coconut oil under OGL. However, in the Writ Petition filed against the order of the CEGAT Full Bench, the Hon’ble Supreme Court have set aside the order dated 3-12-1986 and remanded the matter back to the Tribunal for determining the question of quantum of redemption fine in the light of the decisions in the case of D. Navinchandra & Co., Bombay and B. Vijay Kumar and also in the light of the observations contained in their judgment. The relevant portion of the judgment of the Hon’ble Supreme Court giving direction to the Tribunal for determining the question of quantum of redemption fine are necessary to be reproduced here so as to appreciate the arguments from either side and proceed to determine the quantum of redemption fine on the basis of the direction from the Hon’ble Supreme Court. The relevant portion reads:
“While determining the question of quantum of redemption fine it is essential to consider the facts and circumstances relevant to the bonafide conduct of the importer in importing the goods. The question of bonafide import is relevant for determining the quantum of redemption fine as held by this Court in D. Navinchandra & Co., Bombay & Ors. v. Union of India & Ors. 1987 (3) SCC 66; and B. Vijay Kumar v. Union of India – AIR 1987 SC 1794. In these two decisions this court held that while imposing fine or penalty for the import of goods in contravention of the Import Policy, the authorities should consider the plea of bona fide in the background of the facts attending to the import of the relevant goods.
Learned counsel for the petitioners urged that in view of the Tribunal’s observation that the Collector’s order imposing redemption fine of Rupees five crores was not based on any material, this Court should determine the redemption fine on the basis of 35% of the landing cost of the goods as has been done by the Department in similar cases. We do not consider it fit or proper to determine the quantum of redemption fine, as in our opinion determination of quantum of fine should be made by the statutory authorities constituted under the Act. We, therefore, reject this contention of the petitioners.
In view of the above discussion, we allow the writ petition and set aside the order of the Appellate Tribunal dated 5th December 1986 and remand the mat-ter to the Appellate Tribunal to determine the question of quantum of redemption fine in the light of the decisions of this Court in D. Navinchandra & Co., Bombay & Ors. and B. Vijay Kumar and also in the light of the observations contained in this judgment. We direct the Tribunal to decide the appeal within three months. It would be open to the parties to place additional material, if any, relevant for the purpose of determining the question of quantum of redemption fine. There will be no order as to costs.”
4. The arguments on behalf of the appellants advanced by the learned advocate Shri G.L. Rawal, can be briefly summed up as below:
(i) Though the Letter of Credit has been opened on 31-7-1982 and imports have been taken place during 1982-83 Policy period, they have imported the industrial coconut oil against the additional licences issued during the Policy period 1980-81. The Supreme Court have also categorically held that the import of the appellants is to be covered in terms of Policy 1980-81. As per Import Policy 1980-81, the item sought to be canalised was coconut oil. The description ‘coconut oil’ was construed to be applied only to edible variety of coconut oil, as is evident from the letter from the Chief Marketing Manager of State Trading Corporation of India dated 30-10-1980. It was also interpreted so by the Full Bench of the CBEC and this Appellate order of the CBEC dated 23-1-1981 was confirmed by the Government of India in their order dated 31-3-1981. In the context of the aforesaid background, the question of bona fide is to be looked into having regard to the direction given by the Supreme Court.
(ii) The jurisdiction of this Tribunal is restricted within the directions issued by the Supreme Court in the terms set out by the Supreme Court. The limited question to be decided is only as to the bonafide of the appellants, which led to the import of the items in question. If the bona fides are established, then applying the ratio of the judgment of the Supreme Court in D. Navinchandra & Co. and B. Vijay Kumar & Ors., the entire redemption fine is required to be remitted. The Supreme Court’s clear directions are to determine the question of bonafide in the light of decisions of the Supreme Court in the aforesaid cases. Once the bona fides are established, there is nothing else to be looked into and it is not necessary on their part to produce any further materials with regard to the margin of profit, their sale price and other expenses incurred by them.
(iii) The Full Bench of the Tribunal in its order dated 5-12-1986 refused to look into various extenuating circumstances for considering the bonafide of the appellants and hence the Hon’ble Supreme Court have accepted their Writ Petition against the aforesaid order and set aside the same. Hence it is neither open for the department to reagitate the quantum of profit or other factors pertaining to the landed cost. Since the Supreme Court has set aside the order of the Full Bench of the Tribunal, it is not open for this Bench to put itself in the same very controversy, again by calling for these materials.
(iv) Legality of import is not a matter to be considered at this stage, since it has already been decided against the appellant by the Supreme Court. The Supreme Court itself have remanded the case back to the Tribunal for determining the question of quantum of redemption fine. The Supreme Court never intended to see whether the appellants have a correct approach that would lead to the import as being lawful.
(v) Though the judgment of the Supreme Court in B. Vijay Kumar & Co. case and D. Navinchandra & Co.’s case contain observation that the decision should not be taken as a precedent, since in this case, the Supreme Court itself have directed to adopt the ratio of these two decisions, it is incumbent on the part of the Tribunal to go by the principles laid down in those decisions. The same principles have also been adopted by the Tribunal in the case of Shama Engine Valves Ltd v. Collector of Customs, Bombay reported in 1984 (18) ELT 533 (Tribunal).
(vi) Even though the Hon’ble Supreme Court have held the import as not lawful, it has chosen to remand the case back to the Tribunal for determining the question of quantum of redemption fine and one of the main and relevant factors is the question of bona fides. Hence if the bona fides in their imports are established, there is no question of imposition of any redemption fine. Thus the learned advocate emphasises in the aforesaid arguments that the one and only issue to be determined in these two appeals is the question of their bona fide at the time of import.
Shri G.L. Rawal, the learned advocate, also gave the various definitions of “bona fides” and also the relevant portions from the judgments to emphasise what the term “bona fide” means. He contended that “the concept of good faith without any fraud and in honest belief that what is being done is correct, establish the bona fide”.
In this case the matter is not to be looked upon by the subsequent judgment of the Delhi High Court and the Supreme Court declaring the import as unlawful for judging the bona fides. The factors prevalent at the time of import are relevant for determining the question of bona fide.
(vii) On the question of their claim for bona fide, his arugments rested on the following grounds:
(a) State Trading Corporation of India is a Corporate Body 100% owned by the Government of India and it is a canalising agency. In terms of Appendix 9 of the Import Policy, import of coconut oil is canalised only through this agency.
(b) The Chief Marketing Manager, one of the senior officers of State Trading Corporation, in his letter dated 30-10-1980, has categorically informed that they are not importing industrial variety of coconut oil and they are importing only edible variety of coconut oil for vanaspati industries as well as under public distribution scheme. They also confirmed that it is not canalised through them. This is one of the factors, which led the appellants to bona fide belief that they can go ahead in importing the goods under OGL as per 1980-81 AM Policy.
(c) When Jain Shudh Vanaspati imported a consignment of industrial coconut oil, the Collector of Customs, Bombay held that the import was not lawful and imposed a redemption fine of Rs. 25.00 lacs, as per his order dated 17-12-1980. However, on appeal before the CBEC, the Board set aside the order of the Collector of Customs and held that the import of industrial variety of coconut oil was not canalised. This order of the Board is dated 23-1-1981, which was also confirmed by the Government of India by their order dated 31-3-1981. On this basis, certain clearances were also effected in May 1981 through Bombay Customs House and in July 1981 by the Collector of Customs, Kandla. Even as late as in June 1982, the Collector of Customs, Kandla cleared the consignment of the appellants under OGL. These factors also led them to bonafide belief that they could import industrial variety of coconut oil as an OGL item under the additional licences.
(d) The Collector of Customs, Ahmedabad , ought to have gone by the decision of the Government of India, since he is lower in the hierarchy and the decision of the higher authority is binding. However, the Delhi High Court came to its own conclusion that the High Court is not bound by the quasi-judicial opinion of the Board of the Central Government. Only on that ground, the High Court came to its own conclusion that the entry ‘coconut oil’ pertains to both the varieties and this was also confirmed by the Supreme Court. However, in so far as the departmental authorities are concerned, particularly the Collector who adjudicated the case, ought to have gone by the decision of the Government of India.
(e) Even the DGTD, in its letter dated 12-7-1985 have confirmed that industrial coconut oil can be allowed to be imported under OGL during 1980-81 Policy period. Though this clarification is subsequent to the import in question, but this letter from the DGTD clarified the position of thinking on the part of the appropriate authorities themselves, who are competent to give the clarification. This will go to strengthen the bona fides on the part of the appellants.
f) The Customs authorities have, at different ports, been clearing the same item under OGL in terms of Import Licences issued under the Policy 1980-81. Even the Bills of Entry in Jan. 83 were cleared by the Collectorate at Calcutta in the case of Jayant Oil Mills and Metro Exports against licences issued during the Policy period 1979-80 and 1980-81. Hence, no doubt can be raised on the bona fides of the appellants in taking steps on the genuine belief that the import is lawful.
(g) Even the Delhi High Court’s judgment against the appellants were on the basis of the decision of the majority. The dissenting judge Hon’ble Justice Wad had agreed with the submission of the appellants that the import is lawful. If one of the judges of the Delhi High Court, who himself was convinced of the lawful nature of the import, any ordinary citizen like the appellants could have entertained the bona fide belief that the import is lawful. Hence there cannot be better circumstances than that of the present case to give bona fides on the part of the appellants. Even when the Full Bench judgment was delivered, a request for grant of certificate of fitness to take up the matter in appeal before the Supreme Court was granted.
On these grounds, the learned advocate contended that the appellants were under the bonafide belief that the import was lawful and accordingly proceeded to import the goods.
(viii) As an alternative prayer, it was also submitted by the learned advocate Shri G.L. Rawal that if the Tribunal comes to the conclusion that the appellants failed to prove their bona fides, the appellants be given relief by way of reduction in the quantum of redemption fine as has been done by the Tribunal in the case of Jayant Oil Mills and Allana Jmpex (Pvt.) Ltd.
5. Shri K.M. Mondal, the learned SDR on behalf of the Revenue, vehemently opposed the arguments of the learned advocate Shri G.L. Rawal, and contended that there is no case for setting aside the redemption fine nor for reduction of the quantum of redemption fine, already imposed and paid by the appellants. His arguments are briefly summed up as under:
(i) The Hon’ble Supreme Court’s direction in the Writ Petition (Civil) 568/89 is to the effect that the Tribunal should determine the question of quantum of redemption fine in the light of the case of D. Navinchandra and B. Vijay Kumar & Co. and also in the light of the observations contained in the judg-ment. In so far as the Supreme Court decision in the case of D. Navinchandra & Co. is concerned, it appears in AIR 1987 SC 1794. In this judgment the Supreme Court have held that in the case of imports of canalised items against additional licences issued to the diamond exporters, adjudication proceedings are perfectly valid in law and they must proceed with. Even the Government’s understanding of the matter at one point of time is irrelevant. The judgment does not envisage any principle that if there is no malafide in import, redemption fine is not called for. Only in the case of B. Vijay Kumar and Co. in Civil Appeal Nos. 4445 and 4446 of 1988, the Supreme Court have set aside the order of the Tribunal and remitted the redemption fine, on the ground that the Tribunal itself have held the absence of malafide as regards imposition of penalty, but gave different findings, when it came to the question of confiscation of goods and imposition of redemption fine. He, therefore, submitted that the direction of the Supreme Court for following the ratio of the decision in D. Navinchandra & Co. leaves no scope or room for doubt that irrespective of the Government’s understanding of the matter, adjudication proceedings are to proceed and when such an adjudication takes place holding the goods liable for confiscation, the Collector cannot be expected to pass an order merely holding the goods liable to confiscation and leaving the matter at that stage. The goods which are ordered confiscation can be allowed redemption only on payment of fine. In the case of B. Vijay Kumar and Co., the order of the Supreme Court is esoteric to that case. They themselves have observed that in the peculiar facts and circumstances of that case and in the context of the findings of the Tribunal, they are remitting the redemption fine. However, in the case of the present appellants, the facts are to be critically examined and the findings are yet to be given by the Tribunal on the alleged claim of bona fide. Moreover, for applying the ratio of the judgment of B. Vijay Kumar & Co., the facts dealt with by the Supreme Court in that case are required to be compared with the present appellants. Though these facts may not be identical, at least cirumstances should be somewhat similar, if not identical.
(ii) The arguments of the learned advocate Shri G.L. Rawal on behalf of the appellants, claiming bona fides in the imports rest on the following evidences :-
(a) They were guided by the letter from the State Trading Corporation of India, dated 30-10-1980 and the State Trading Corporation being the canalising agency and the letter having been given by the Chief Marketing Manager that provided adequate background for entertaining the bona fide belief to go ahead with the import. This is also strengthened by DGTD letter dated 12-7-1985 issued to General Foods Pvt. Ltd., wherein the DGTD had clarified that the import of coconut oil was allowed under OGL under the Import Policy AM 1980-81. During 1980-81 Policy, the term used is “coconut oil” import of which was canalised through STC. There was no classification as “edible” or “non-edible”. Only in 1981-82, the position was made clear by clarifying that the entry covered by both edible and non-edible and hence the subsequent clarification given in the Policy 1981-82 will not hold good for the imports effected under the licences issued during 1980-81 Policy period. Hence they are claiming bona fide belief that import was lawful, on the previous clearances effected by them at Bombay and Kandla and other Ports like Calcutta giving the requisite bona fide belief. The order passed by the Board in appeal against the order of confiscation of the Collector in another case which was confirmed by the Government of India holding that during the 1980-81 Policy period, coconut oil sought to be canalised was only edible variety also provided them bona fide belief that the import was legal.
6. After summing up the arguments as above, Shri K.M. Mondal, the learned SDR contended that none of these arguments is sustainable to establish the bona fides for the following reasons :-
(i) The appellants are established Export House and they are well versed with the Import/Export Policy and procedures. It is not their case that they were not aware of the specific amendements carried out in 1981-82 Policy, making it clear that coconut oil sought to be canalised included both edible and non edible varieties. The Letter of Credit has been opened for two huge consignments as late as on 31-7-1982 and the imports have taken place in September 1982, when 1982-83 Policy had also come into existence. The appellants are only Letter of Authority holders and their assignment is only to import the goods and hand over the same to the licence holders, who, in turn, are required to dispose of the goods in accordance with the conditions specifed in the licences. Notwithstanding this position, in this case, the goods have been sold on high sea sale basis by the Letter of Authority holders, though reportedly under the cover of separate agreements with the licence holders. In the context of the aforesaid factual position, their alleged claim of bona fide is required to be critically evaluated. Even assuming that there was a scope for different interpretation in the wording of the term “coconut oil” during 1980-81 Policy, the position has been made amply clear during the subsequent policy with effect from 3-4-1981. The only document which they hold before us is a letter from the State Trading Corporation that too issued during the 1980-81 Policy period. They are well aware of the fact that for getting any authoritative and binding opinion, they should approach the Chief Controller of Imports & Exports (CCI & E) and no one else. This is the authority recognised in the Policy itself as the final authority, whose clarification is binding on the departmental authorities. It is also clear in the policy that clarification given by any other agency is not binding. The appellants, being reputed Export House well-versed in the Import and Export Policy and Procedures cannot be expected to lose sight of this important requirement. The have deliberately kept away from approaching the competent authority for getting the clarification, before launching on a massive import by opening the Letter of Credit as late as on 31-7-1982. It is also to be noted that at that time, the clear provisions of the scope of the policy relating to coconut oil are also very much available in the Policy. Having noticed this, if they still cling to the State Trading Corporation Letter, they cannot blame anyone else excepting themselves. It is therefore quite evident that this letter from the State Trading Corporation has only been used as a ploy for covering up this illegal import, even after knowing fully well that they are canalised items and cannot be imported as OGL item under the additional licences. Shri K.M. Mondal, posed the question, whether this is not a malafide act on the part of the appellants ?
(ii) The appellants are not actual users of the goods. It is not the case of the appellants, that they have imported industrial variety of coconut oil for actual use. It is an undisputed fact that they acted under the Letter of Authority. They sold the goods on high sea sale basis to make a huge profit out of this illegal deal. Though such a sale is reported to have been covered by a separate contract, it is evident that even before the goods reached the shore, they wanted to make a fast buck on high seas itself. Even if they claim that they are only the Letter of Authority holders and effected sales on high seas under the contract with the licence holders, profit motive is quite evident, whether it accrues to Letter of Authority holders or the Licence Holders. It is also to be appreciated that during the period of import, even the actual users of industrial coconut oil are to get their requirements through the State Trading Corporation. The appellants by holding some old licences revalidated from time to time seek to claim special benefits, which are not available even to actual users at the time of import. Shri K.M. Mondal, posed the question, whether such an attitude can be termed “bona fide”?
(iii) On the question of clearances of industrial coconut oil, through Bombay and Kandla port and also through the Calcutta port, Shri Mondal, contended that excepting the photo copies of some Bills of Entry which also do not give any details regarding the date of opening the Letter of Credit, nothing has been produced by the appellants. It is also evident that all these imports are reported to have been effected during 1981-82 policy, against the licences issued during the earlier policy period. In the case of the appellants, the undisputed fact is that the imports have been effected in 1982-83 policy period the Letter of Credit having been opened on 31-7-1982 i.e. during the 1982-83 policy period. The circumstances under which the releases were ordered in those other cases cannot be precisely stated by him. All the same, based on their own claim, it is observed that in the case of the appellants, they have gone with the massive import even after coming to know that the Policy has been changed effective from 3-4-1981 and Letter of Credit has been opened as late as on 31-7-1982. The appellants have also cited the cases of Allana Impex Pvt. Ltd. and Jayant Oil Mills Pvt. Ltd. in their alternative arguments for adopting the same ratio. It is pertinent to note that in both the cases, the licences were issued during 1980-81 policy but the imports were made in 1981-82 policy period and the cases were adjudicated and went up in appeal before the Tribunal and the order of the Collector was confirmed excepting the modification in the quantum of redemption fine. Hence it is to be presumed that the appellants were also aware of the position regarding the departmental stand on such imports against the licences issued during 1980-81 policy but imported during 1981-82 policy period. Such being the case, the plea that they were guided by some releases effected without giving the details thereof does not speak well of their bona fides. From the aforesaid two cases cited by the appellants, themselves, it is evident that the department was not allowing such consignment without confiscation and without imposing redemption fine. When such is the factual position, their alleged claim of bona fide based on the past clearances does not carry conviction.
(iv) Their reliance on the Board’s order in appeal and also the order of the Government of India affirming the Board’s order are nothing but another ploy to project their bona fides. The decision of the Central Government is dated 31-3-1982 and the imports in that case must have taken place much earlier to that, presumably those imports would have taken place even before the change in the policy effected in April 1981. In any case, when the subsequent policy is clear that both edible and non-edible varieties of coconut oil are canalised, they cannot continue to seek shelter in the Government of India order dated 31-3-1982.
(v) As regards the clarification obtained from the DGTD Shri Mondal submitted that it is much after the import, that too, in the year 1985. It does not clearly bring out as to in what reference the clarification is given. In any case, this cannot be construed to be the understanding of the Government or the competent authority namely the C.C.I. & E. On the contrary, the C.C.I. & E. directed that such non-edible variety should not be permitted for import and this was also made a grievance by the appellants before the Delhi High Court to contend that the Collector has not acted quasi-judicially but under the directions of the C.C.I. & E. On the basis of these arguments, Shri Mondal, vehemently contended that there is absolutely no bona fide behind the imports. The appellants have deliberately flouted the import policy provisions.
7. On the alternative plea of the appellants, Shri Mondal, submitted that from the side of the department, they have given all the details in the affidavit filed before the Delhi High Court justifying the quantum of redemption fine. However, the appellants, despite the direction from the Delhi High Court to produce relevant details for determining the quantum of redemption fine have not given any details regarding the landed costs and other expenses including the sale price on high sea sale basis for arriving at the appropriate quantum of profit. On the contrary, the fine of Rs. 5.00 crores has been paid and the goods cleared, obviously showing that the appellants have made more than this and their present intention is to get back the money in one way or other, so as to get more margin of profit and enrich themselves at the cost of public interest. Hence no reduction in quantum of redemption fine is called for. The cases cited by the learned advocate are not comparable to the one now under consideration. In the matter of fixing the quantum of redemption fine, each case has to be decided on the facts and circumstances pertaining to the import. He, therefore, pleaded that the Collector’s order, in so far as the quantum of redemption fine is concerned, does not call for any interference.
8. Shri Mondal, the learned SDR, also cited the judgment of the Supreme Court reported in AIR 1974 SC 228 to the effect that mens rea is not relevant in the case of unauthorised importation and also the Delhi High Court judgment in the case of the same appellants, where the High Court has clearly held that in so far as confiscation proceedings are concerned, metis rea is not relevant and no one can get away with bonanza of profit through any illegal deal.
9. Shri K.M. Mondal, the learned SDR, also referred to the relevant portion of the order of the learned Member (Technical) and also the Delhi High Court judgment in the appellants’ case and also gave other citations, which we are not recording, since we have covered the essential arguments of the learned SDR.
10. After hearing both the sides elaborately, we find that in this case, the main question to be decided is whether the appellants were motivated by a bona fide belief that the goods can be imported lawfully during the period, when they opened the Letter of Credit and imported the goods.
11. Though Shri K.M. Mondal, the learned SDR, has contended that the ratio of the decision in the case of D. Navinchandra & Co. does not indicate that redemption fine cannot be imposed in a case where there is no malafide, we observe that the Supreme Court has in the case of B. Vijay Kumar & Co. in Civil Appeal Nos. 4445 and 4446/88 set aside the redemption fine, where it was held that there had been bona fide belief. In this case B. Vijay Kumar & Co. imported canalised items under additional licences granted to them pursuant to the Supreme Court order. The items permitted to be imported under these licences was the subject matter of debate and litigation from time to time. The Supreme Court have finally held that they had meant and always meant that only items figuring in Appendix 6 can be imported under those licences and in the case of D. Navinchandra, the Supreme Court held that canalised items cannot be permitted under additional licences. The Tribunal in the case of B. Vijay Kumar & Co., while confirming the redemption fine imposed by the Collector, set aside the order imposing penalty, after giving a finding that even the statutorily approved authority, namely the C.C.I. & E. has clarified that the canalised items can be imported against those licences. The Supreme Court in the aforesaid civil appeals, set aside the order of the Tribunal, confirming the redemption fine, on the ground of inconsistent findings in regard to the question of bona fides by upholding confiscation for lack of bona fide but at the same time setting aside the penalty because of the absence of malafides. The Supreme Court held that once the bona fides are established on the basis of specific findings of the Tribunal, the Collector and the Tribunal were not justified in confiscating the goods or in imposing any redemption fine. This order of the Supreme Court is only with reference to the particular case before them and they, themselves, have clearly indicated that it is not to be treated as precedent. However, in the case of the present appellants before us, the Supreme Court themselves have specifically directed for following the ratio of these cases of B. Vijay Kumar & Co. and D. Navinchandra & Co. In the case of D. Navinchandra & Co. reported in AIR 1987 SC 1796, a plea of bona fide belief was raised before the Supreme Court, when the other contentions of the petitioners on the legality of import of canalised item were rejected by the Court. The Supreme Court directed that the adjudicating authorities will decide the same taking into consideration all the facts and circumstances and taking into consideration of the case of the petitioners and the alleged claim of bona fide on their part.
12. Hence the direction from the Supreme Court to us in the light of their aforesaid decisions, can only be to the effect that we have to go into the question of their claim of bona fides. For determining whether the appellants before us had launched on the imports on a bona fide belief that the imports were lawful, we are not to be guided by the subsequent declaration of the imports as unlawful by the High Court of Delhi and the Supreme Court in the appellant’s own case, as pleaded by the learned advocate. But we are to look into the mental frame of the appellants at the time of import and the factors influencing that for assessing whether at the point of time of import, the appellants could have been under a bona fide belief that the imports were lawful and hence proceeded to import the goods. We are to put the clock back and take into account only those factors prevalent at that time for assessing their good faith.
13. The learned advocate has cited the following factors influencing them and contributing to their good faith at the time of import :-
(i) Letter dated 30-10-1980 from the Chief Marketing Manager, State Trading Corporation.
(ii) Government of India’s order in Revision Petition dated 31-3-1982 confirming the Board’s order in appeal dated 23-1-1981 and
(iii) Previous clearances of these items under OGL at Bombay, Kandla and at Calcutta.
14. How far these factors could have influenced and brought about their mental frame of good faith are required to be judged not only on the basis of these factors but also on the entire background of the appellants, the motivation for imports and such other factors relevant. We proceed to go into those aspects, as well.
15. The undisputed position is that the appellants are an established export house and they are well conversant with Import and Export Policy and procedures. The imports have been made by the appellants as Letter of Authority holders on behalf of the holders of Additional Licences. As per the terms of Letter of Authority, the appellants were not authorised specifically to import industrial coconut oil but generally authorising import of permitted goods under the Additional Licences. These licences have been issued in 1980-81 Policy period but have been revalidated for period extending to 1981-82 and 1982-83 periods. The goods are neither for actual use of the appellants nor for the licence holders but admittedly sold on high sea sales to actual users, who during the period of import could not get this material, excepting through S.T.C. since as per 1981-82 Policy and thereafter, it is clear that both edible and non-edible variety of coconut oil is canalised through S.T.C. Letter of Credit has been opened and firm commitment established on 31-7-1982, during 1982-83 policy period, when the policy itself has made it clear leaving no scope for any different interpretation on the type of coconut oil canalised for import.
16. Their claim of bona fide is required to be judged in the context of the aforesaid factors as well, since the mental frame of the appellants in entertaining good faith also, to a great extent, depends on the aforesaid factors. Accordingly, we proceed to consider the arguments of the learned advocate, in regard to the claim of bona fide.
17. The letter from the State Trading Corporation is addressed to Jain Shudh Vanaspati, which is reported to be one of their sister concerns. This letter is dated 30-10-1980 issued by the Chief Marketing Manager of the S.T.C. The learned advocate, contended that he is a very senior officer and he himself has stated that industrial variety of coconut oil intended for soap manufacturing is not imported by them and it is not within its purview, being not canalised. Hence this letter influenced them to entertain the good faith. Such a claim would have been normally acceptable to us, if the appellants were an ordinary citizen not well versed with the import and export policy, procedures and law. This argument could have found acceptance, in a case, where an actual user, not conversant with the policy and procedures, had gone to import their requirement on the basis of this letter. But in this case, the appellants are well versed and knowledgeable in the import and export policy and procedures. They ought to know that the authoritative clarification can be had only from the Chief Controller of Imports &. Exports, whose clarification is binding, in the matter of interpretation of the policy and the items permissible for import. The appellants, admittedly, have not chosen to approach this authority for clarification, but have chosen to entertain their good faith purely based on the letter from the S.T.C. We also observe that C.C.I. & E. has been keen in stopping such imports of industrial coconut oil and has been issuing circulars to that effect, which is made as a point of grievance by the appellants in the writ petition, before the High Court for contending that the Collector has not acted in a quasi-judicial manner but under the direction of the office of the C.C.I. & E. (Vide para 48 of the Delhi High Court Judgment 1987 (29) ELT 753 in the case of the applicants). In the circumstances, we are led to believe that the appellants, knowing well that the authoritative clarification can be given only by the C.C.I. & E., deliberately kept away from approaching him and the letter from the S.T.C. was only utilised as a cover in their defence for their claim of bona fide and good faith. Moreover, this letter is dated 30-10-1980 issued during the Policy Period of 1980-81. The Letter of Credit has been opened as late as in 1982-83 Policy period, when the subsequent policy as early as in April 81 has clearly indicated that coconut oil, both edible and non-edible varieties is canalised through S.T.C. Hence the appellants being well-versed with the import export policy and procedures, must have known the clear policy with regard to the import of coconut oil at the time of opening the Letter of Credit. They have not chosen to approach the C.C.I. & E. for clarification even after taking note of the clear position regarding non-eligibility of industrial coconut oil under OGL. This factor also leads us to believe that the appellants have deliberately remained contented with the letter of S.T.C. even after noticing the policy changes prevalent at the time of opening the Letter of Credit. The learned advocate, has contended that even the Tribunal in the case of Shatna Valves Ltd., Bombay v. Collector of Customs, Bombay reported in 1984 (18) ELT 533 (Tribunal) has held that the redemption fine is not leviable, when the bona fide is established. The case of Shama Engine. Valves Ltd. relates to import by actual user manufacturing valves out of import of alloy steel, where the Tribunal has held that the appellants had been importing all along stainless steel even during the period when the stainless steel bars were canalised but import had been allowed by the Customs authorities and the materials had in fact been used for the purpose and the end-use certificate has been furnished and even during the period of import, the Customs authorities treated the goods as alloy steel for the purpose of exemption notification. In the light of all these factors, the Tribunal held that confiscation and imposition of redemption fine were not warranted. In the case of appellants, the goods have been imported not for actual use by the appellants or by the licence holders. The admitted fact is that they have been disposed of on high sea sale basis. Hence the obvious motive is for trading in the imported goods. The motivation for trading can only be on availability of profits through the import from the goods imported. We are therefore led to believe that the appellants, motivated by profit considerations, have launched on the massive import as late as on 31-7-1982 by opening the Letter of Credit knowing fully well that during the period of import, even the actual users have to approach the canalising agency for their requirement and by importing this canalised item they could make considerable profit by way of sale. We are therefore unable to appreciate the plea of the learned advocate that there was good faith about the lawful nature of the import and the good faith was provided by the letter from the S.T.C.
18. The learned advocate pleaded that only 1980-81 policy is required to be considered and not the subsequent developments and policy changes effected in 1981-82 and 1982-83. In this context, he referred to the judgment of the Supreme Court in their case holding that the High Court has come to the correct conclusion that the terms of Import Policy 1980-81 would apply to the facts of these cases. We are unable to appreciate this argument, because of the fact that the Delhi High Court judgment gave a ruling on the scope of the term “coconut oil” which was sought to be canalised as per 1980-81 Policy. That judgment itself recognises that the appellants had imported the goods as late as in 1982-83 policy when the policy itself makes the position abundantly clear. Hence for the limited purpose of judging the good faith, it is not only relevant but also necessary to look into the policy prevalent at the time of import of the goods for assessing the mental frame and the factors influencing the same at the time of import. In these cases, when the Policies 1981-82 and 1982-83 make the position abundantly clear-that both edible and non-edible variety of coconut oil are canalised, if the appellants have gone to import industrial variety of coconut oil under OGL, it can only be with the motive of importing canalised items at a time, when even the actual user cannot import on their own for actual use either under OGL or otherwise. Such an action on the part of the appellants can only be motivated by profit considerations and for making huge profit taking advantage of the position provided by the letter from the S.T.C. during 1980-81 policy period. This letter, in our opinion, could not have provided the motivation for good faith at the point of import of the goods.
19. The learned advocate also seeks to draw his support from a letter from the DGTD issued in the year 1985; firstly, this letter could not be a factor prevalent influencing the mental frame at the time of import, since it is much after the import and even after the adjudication. The learned advocate’s argument is that by this letter, he wants to establish that it was the Government’s understanding of the policy of 1980-81. Be that as it may, in this case, the appellants having imported the goods by opening the Letter of Credit, as late as on 31-7-82 when the policy itself clearly indicates the position regarding the canalisation of industrial coconut oil. Having noticed this, it is our opinion that the appellants could not have acted in good faith without getting the clarification from the C.C.I. & E. before launching on a massive import of a canalised item, presuming that the Government’s understanding of 1980-81 policy could only be according to their own line of thinking and imports could be effected against the additional licences, which have been revalidated from time to time extending to the subsequent policy periods.
20. We also observe that the licences, though issued during 1980-81 policy period, were revalidated for the periods extending to 1981-82 and 1982-83 policy periods, when the appellants were operating under such revalidated licences, it is all the more necessary for them to have sought for an authoritative clarification from the C.C.I. & E. since the licences at the time of revalidation are subject to the conditions and prohibition prevalent as per the policy during the period of revalidation. In view of this factual position also, we are unable to appreciate the plea of the learned advocate that the Government’s understanding was reflected in the letter from the DGTD, which could have provided the basis for good faith.
21. On the question of previous clearances effected through Bombay, Kandla and Calcutta Ports, some photo copies of the Bills of Entry have been filed. From these Bills of Entry, we are unable to ascertain the particulars, which are essentially required to assess whether the facts and circumstances are identical, such as the date of opening Letter of Credit, the type of licences, whether they are revalidated or the imports have been effected under the original lice ces within the licencing period etc. In the absence of these details, we are unable to come to any firm conclusion on the question of their entertaining the good faith based on these clearances. Even assuming that these relate to additional licences and the clearances were effected in 1981-82 policy period, we also take note of the fact that the appellants themselves have produced two judgments of the Tribunal in support of their alternative argument, namely Allana Impex Pvt. Ltd. and Jayant Oils Mills Pvt. Ltd. It is clearly evident that in these two cases importation of industrial variety of coconut oil made during 1981-82 period against additional licences was held to be unauthorised and confiscation and redemption fines were ordered by the Collector. The orders of confiscation and imposition of fine were upheld by the Tribunal, but the quantum of redemption fine was ordered to be modified. From these two judgments cited by the learned advocate, it is evident that the department has not accepted the additional licences in similar cases but were adjudicated and redemption fine imposed. In view of this position, the person, well versed in the policy of import and export and procedures, cannot be expected to derive his good faith based on some clearances allowed by the Customs authorities, unless he is fully satisfied that the facts and circumstances of their case are identical to those cases. It cannot also be said to be the established practice of the Customs Houses to allow clearances of industrial coconut oil under OGL, since the two orders cited by the learned advocate in their favour themselves indicate the position otherwise.
22. Now coming to the claim of the learned advocate that their claim of good faith and bona fide is also derived from the Government of India order, we observe that the said Govt. of India order was passed as early as on 31-3-1982 relating to the imports effected much earlier. As earlier pointed out, the Collectors were also adjudicating on such imports and imposing redemption fine, which has been subsequently upheld by the Tribunal. Hence in the context of the aforesaid factual position relying on the Govt. of India order dated 31-3-1982 cannot be said to have provided the requisite motivation of good faith in understanding that all clearances of industrial coconut oil could be imported lawfully, irrespective of the fact that circumstances of the case of the appellants are different as discussed above.
23. We also would like to observe that in the case of B. Vijaykumar, imports were made on the basis of the clarification from the C.C.I. & E. whose clarification is binding on the authorities as per the Policy. The Tribunal, in that case, gave a finding of bona fide in the context of this position and the Supreme Court, based on such a finding, set aside the redemption fine. But in this case before us, they have avoided going to C.C.I. & E. for getting any clarification and acted on their own presumption. We are, therefore, of the view that the case of the appellants stands on a different footing from that of B. Vijaykumar on the question of bonafide and their claim of bonafide based on the letter from the S.T.C. or from the order of the Revision of Govt. of India, does not carry conviction.
24. The learned advocate Shri G.L. Rawal, also contended that even the Delhi High Court judgment was not unanimous and a dissenting judgment has been given in their favour and even after the majority judgment, the High Court referred the case as fit for appeal before the Supreme Court and hence the position of law was still debatable requiring the matter to be taken up before the Supreme Court. Against this background, it cannot be imagined how an ordinary citizen can understand this position clearly and hence bona fides can be attributed on this ground. This argument, though attractive, has to be approached with caution. The judgment of the Delhi High Court deals elaborately with various points of law not only regarding the scope of the term ‘coconut oil’ but also other issues as to whether the Government’s order is binding on the Collector, the competent authority for clarifying the import licencing matters etc. All these are considered to be questions of law and the Delhi High Court thought it fit to grant leave of appeal before the Supreme Court for a final decision. That does not, however, entitle the appellants to derive the basis for entertaining the bona fide belief regarding the lawful nature of the imports, especially, when they, having noticed the policy changes carried out in 1981-82 policy and they were launching on these imports as late as on 31-7-1982. Appreciation of the intricacies of law and the arguments based on that may ultimately have to be resolved by the Supreme Court, but the judgment on the question of bonafide is to be arrived at on the basis of factual position and not on the intricacies of law canvassed before the Courts of Law. Here the simple matter is whether the ap-pellants had the bona fides to presume that the imports were lawful, especially when they have noticed the policy changes in 1981-82, which puts the matter beyond any pale of doubt that non-edible variety of coconut oil cannot be allowed import under OGL.
24. From the discussion above, we are led to the conclusion that the claim of bona fide and good faith are not established in the case of the appellants. In this view of the matter, the order of confiscation and imposition of redemption fine are well justified.
25. We are now proceeding to consider the alternative argument advanced by the learned advocate Shri G.L. Rawal whether the quantum of redemption fine is required to be reduced, adopting the ratio of the decisions of the Tribunal in Jayant Oil Mills Pvt. Ltd. and in Allana Impex Pvt. Ltd. case. In both the cases, we find that there were two angles of confiscation and imposition of redemption fine, one of mis-declaration of value and another of contravention of import policy. The Tribunal held that the allegation of mis-declaration is not established. However, the allegation of violation of import policy was upheld and hence in the absence of relevant factors for determining the exact quantum of redemption fine, the Tribunal chose to reduce the redemption fine. In this case, the learned SDR, pleaded that all the details such as market price at the time of import and the margin of profit have been given in the affidavit filed before the High Court by the Department. He contended that the appellants, despite the direction from the Delhi High Court, have not produced any material to show at what price they have sold the goods on high seas and what are the various cost elements which effected the margin of profit for claiming the reduction in the quantum of redemption fine. The learned advocate on the other hand vehemently contended that nothing is required to be furnished by them to establish their landed cost and the sale price and the Tribunal should not find itself in the same predicament, as the Full Bench did, whose order was set aside by the Supreme Court. After considering the arguments from both the sides, we observe that we are not interested in having the details from the appellants, which are within their exclusive knowledge nor we are calling upon them to furnish those details. If, however, they allege that the redemption fine is excessive, it is open for them to produce such materials, which can convince us that there is a scope for reduction in the quantum of redemption fine. This is why the Delhi High Court have directed the appellants to produce such materials as may be necessary for assessing the” quantum of redemption fine. Since the appellants have not chosen to produce the details regarding the sale price on high sea sale, the expenditure on other charges, which have cut into their profits we are only to take note of the fact that the redemption fine of Rs. 5.00 crores has already been paid and the goods have been cleared and hence on that basis reasonably believe that the appellants have made up their margin, even after payment of this redemption fine. In view of this position, we have no other alternative but to reject the alternative prayer for reducing the quantum of redemption fine. At this juncture, we also would like to observe that the quantum of redemption fine is dependent on various factors, namely whether the items are imported for actual use by the actual user, whether the goods on sale have a high margin, whether there is any bonafide in the import and such other factors regarding the sale price vis-a-vis costs of import and the margin left behind. For assessing the quantum of redemption fine, each case is to be decided on the basis of facts and circumstances of the particular case. The learned advocate has emphasised that if there is no malafide, redemption fine should be remitted in full. On the claim of bonafide, we have rejected their contention. Even then, we could have considered relief in the quantum of redemption fine, if the relevant factors were put forward before us. This, having not been done, we are left with no alternative but to believe that even after payment of the redemption fine imposed by the Collector, the appellants have made their margin of profit and hence the quantum of redemption fine does not call for any modification.
26. In the result, both the appeals are dismissed.
27. We are much thankful to Shri G.L. Rawal, the learned advocate and Shri K.M. Mondal, the learned SDR, for their lucid presentation of facts and also points of law, which enabled us to give this finding.