ORDER
U.L. Bhat, J. (President)
1. Appeal No. 476/95-A is by one party and the other two appeals are by a different party. The appeals are directed against the orders passed by the Commissioner of Customs, Bombay and the Commissioner of Customs, CFC, Sheva, Dist. Raigad (Maharashtra). Both the orders deal with import of rough marble slabs under DEEC Scheme on the basis of advance licences. Issues arising are similar and, therefore, we have heard them together and propose to dispose of the same by this common order.
2. The two appellants herein are merely transferees of advance licences obtained initially by other exporters. Goods exported were finished products made out of marble slabs. The goods imported according to the declaration are raw marble slabs. Exports of finished goods have been made by the respective exporters taking advantage of DEEC [Scheme] which enables duty-free import of raw material components of the exported product and allows transfer of advance licences. When the import declarations were received, the customs authorities inspected the goods and got the same examined and were prima facie satisfied that they were not raw marble slabs, but were processed or polished marble slabs, the import of which was not allowable in these cases under the DEEC system. Show cause notices were issued and duly rebutted but ultimately confirmed by the respective Commissioners. Their orders are now challenged.
3. The impugned orders appear to have taken the view, though not very unambiguously, that in spite of the entire procedure contemplated under DEEC [Scheme] being followed to its logical conclusion and endorsement of transferability made on the advance licences, at the stage of import, it is for the importer to prove afresh that the goods were manufactured out of material similar to those whose entitlement for import was recognised in the records and the transferability endorsement. This appears to be an extreme proposition which cannot be of universal application.
4. When an exporter invoking the DEEC scheme exports goods, they are subjected to scrutiny by the customs authorities who, on satisfaction make necessary entries in the export book of the quantity, description and value of the exported goods. The export book is required to be audited by the customs authorities on receipt of foreign exchange by the exporter. The audited book is submitted along with the licence to the licensing officer under DGFT since the import application would have already been made. Such authority if satisfied on examination and scrutiny makes an endorsement regarding transferability of the licence. It is by virtue of this endorsement that licence could be transferred thereby passing on entitlement to duty free import of the permitted raw materials or components. This being the procedure required to be followed the matter receives scrutiny at the hands of two different authorities at two different stages. It may be possible for either of the authorities at the respective stages to examine the matter and arrive at the conclusion that the exported goods were not manufactured out of the goods in respect of which the import licence has been sought. If the customs authorities are not satisfied on examination of the exportable goods and the declaration and other papers, they would not make the requisite entries in the export book and that will be ordinarily the end of the matter so far as the DEEC scheme is concerned. If, however, the customs authorities on the basis of examination are so satisfied, they are required to make appropriate entries in the export book which along with the licence will be presented before the licensing authority to examine the entire matter and be satisfied about the correctness of the averments placed before it. If the licensing authority is satisfied that no advance licence can be granted under the DEEC scheme in regard to the export obligation which is said to have been performed it is open to the authority to decline to grant advance licence. At the third stage in relation to chain, namely, the stage of import, neither the exporter nor the transferee of the licence would be required to be called upon to satisfy the customs authorities once again that the duty-free import entitlement was legitimate. It is unnecessary for us to consider that what would be the procedure required to be adopted if on further examination irregularities in the performance of the statutory functions at the earlier stages are discovered. Irrespective of whether further examination or formation of opinion is permissible in the ordinary course, the importer cannot be required to prove once again the eligibility for duty-free import of the permitted goods.
5. The more important question relates to the nexus between the goods. The duty-free import entitlement has been earlier allowed and goods imported or sought to be imported. The entitlement is, in some cases, in respect of “relevant raw marble slabs”, and in other cases in respect of “raw marble slabs”. The stand taken by the Commissioner was that the goods imported are not raw marble slabs but processed marble slabs. The customs authorities have taken the samples from various containers of imported marble slabs. These samples were got examined by Professor S.D. Shah of Department of Earth Sciences, IIT Bombay. Professor Shah submitted a preliminary report and promised to submit a final report but did not actually submit a final report. The samples were cut to specific dimensions. The edges of the samples were trimmed and smoothened. Report deals with four samples, all of white colour with one side rough or non-glazed and the other side smooth and non-glazed. He reported that the goods were ready to use depending on their end-use. All the polished glazed slabs/tiles can be used readily for facing stone, while the polished unglazed slabs/tiles can be used as kitchen platforms, sinks in both bathrooms and toilets. The appellants got the samples examined by Mr. Hafeez, Contractor, an architect of Bombay who opined that none of the samples is in finished condition and several processes have to be followed to make them ready to be used and the samples were absolutely rough samples. The Commissioner did not apply his mind to this report since the report of Professor S.D. Shah was considered favourable to the department. Our attention was also drawn to several reports of other experts also secured by the customs department. By the report dated 19-5-1995, Professor Sanjay V. Walavalkar of Sir J.J. College of Architecture, Bombay opined to the effect that he inspected the marble slabs belonging to one of the two parties in the presence of the customs shed appraiser and that the marble was completely in a rough/raw and unpolished condition and needed further processing before use. There are similar reports in regard to the consignments in two other appeals, in this respect. At the instance of the customs department, the Principal of Sardar Patel College of Engineering, Bombay inspected the samples. He opined that the samples have to undergo about 8 to 10 processes for them to be used in civil engineering construction. The final product would give a polished mirror form and the marble has to be classified as rough or raw marble in civil engineering/architectural parlance. At the instance of the department, Shri I.M. Kadri, Architect of Bombay inspected the samples and opined that the marble slabs would require further cutting, processing and polishing before they can be used in a building project.
6. The main grievance of the appellant is that though the opinion of Shri Hafeez, Contractor, an architect of Bombay was available, the Commissioner chose to consider only the report and opinion of Professor S.D. Shah of IIT, Bombay and disregarded the opinion given by Shri Hafeez, Contractor and ignored the reports of other experts which were also secured by the department itself. The department having consulted a number of experts, the Commissioner relied only on the report of Professor Shah, though according to the appellant, various reports contained data and were favourable to them. It would have been open to the Commissioner on proper consideration of the available material to arrive at a reasonable conclusion; the conclusion arrived at by ignoring substantial material available cannot be regarded as reasonable or germane. On this ground alone, the impugned orders deserve to be set aside and are hereby set aside. The three cases will be considered afresh by the Commissioner. It is for the Commissioner to consider whether in the circumstances any of the experts should be called for examination. It is also open to the appellants to suggest to the Commissioner that one or more experts should be examined by the Commissioner.
7. It is also open to the Commissioner to secure from Professor S.D. Shah final report in the matter.
8. If the appellants succeed in their contention, question of valuation would not arise. Accordingly, we record that the appellants have serious grievance about the method and manner of valuation adopted by the Commissioner. In case, after remand, the Commissioner arrives at a conclusion unfavourable to the appellants in regard to the matter referred to above, he should consider the valuation afresh, of course, after hearing the appellants in the matter.
9. The appeals are allowed in the manner indicated above. In view of the fact that the consignments involved are still under detention, the Commissioner may make all efforts to dispose of the cases at the earliest, preferably within six months from the date of receipt copy of the order. The appellants desire that the goods under detention may not be auctioned pending fresh disposal of the matter by the Commissioner. This request is allowed.