ORDER
S.L. Peeran, Member (J)
1. The appellant is the importer and they have challenged the order-in-original dated 5-10-1983 passed by the Collector of Customs, Calcutta. The importer had imported one automatic 2 colour sheet fed off-set printing machine Model No. J 2203A valued at Rs. 4,49,165,40P (CIF) and filed a bill of entry for the clearance of the same. The clearance of the consignment was sought to be made under OGL as in force during the policy period April-March 1983 utilising the benefit of importation during the extended period of shipment as provided under condition (7) of Appendix-10 of the said policy, as the goods were said to have been despatched on 22-4-1983 which falls within the policy period AM ’84.
2. The department had issued a show-cause notice dated 4th Aug., 1983 alleging contravention of Clause 3(1) of Import (Control) Order, 1955 as amended read with Section 3 of the Imports & Exports (Control) Act, 1947. Hence, the Importer was called upon to show-cause as to why the offending goods should not be confiscated under Section 111(d) of the Customs Act, 1962 and why penalty should not be imposed on them under Section 112 of the Customs Act, 1962. It has also been alleged that as per S. No. 12(18) of Appen-dix-2 of April-March 1983 Policy, 4 colour/2 colour off-set machines were permitted to be imported under OGL by the eligible actual users. However, there had been a change in the April-March 1984 Policy and therefore, S. No. 12(14) of Appendix-2 of this policy permitted importation of only 4 colour sheet fed off-set printing machines only. Therefore, it was alleged that importation of 2 colour off-set machines are not permitted under OGL during the Policy period AM ‘4 pertaining to the consignment in question. It ws also alleged that in terms of condition stipulated under condition 7 of Appendix-10 of the April-March 1983 Policy, the eligible actual user who entered into a firm contract for import upto 28-2-1983 and in case the goods cannot be shipped on or before 31-3-1983 on account of longer delivery period involved the shipment may be allowed before 31-3-84 in pursuance of such firm contract provided the contract in question had been registered with the foreign exchange dealer (Bank) on or before 28-2-1983. Therefore, it was stated that requisites for enjoying this facility of importation during the extended period of shipment is subject to fulfilment of conditions namely the eligible actual user importer should enter into a firm contract for import upto 28-2-1983 aand the firm contract should be registered with the foreign exchange dealer (Bank) on or before 28-2-1983. It was also stated in the show-cause notice that on scrutiny of the bill of entry, it was found that one Mr. Md. Omer signed on the reverse of the bill of entry as importer. Subsequently another declaration was signed by one said to be a representative of M/s. Shama Magazines in a separate sheet which was attached to the bill of entry. The signature of the latter, however, does not agree with the signature of the partner of the firm in other documents such as registration certificate, sale confirmation, and the letter of authorisation issued to Md. Omer on 9-7-1983. It was also stated in the show-cause notice that the proforma invoice is dated 24-1-1983. The indent was placed on the Indian Agent M/s. Mehras International, Calcutta vide indent No. 118 of 14-2-1983. Therefore, it was stated that immediately after placing the order on the Indian Agent, Letter of Credit was opened on 19-2-1983 without waiting for confirmation from the suppliers. The proforma invoice is only an offer and cannot be regarded as a contract. The Indian Agent in their letter dated 23-2-1983 had intimated about the placement of the Order No. 118, dated 14-2-83 with them and had sought approval of the overseas suppliers. Two copies of sale confirmation had also been submitted one dated 20-2-1983, and the other dated 18-4-1983. In the sale confirmation dated 20-2-1983, the shipment date had been shown as 15-1-1983. Therefore, it has been stated that the date of sale confirmation shown as 20-2-1983 is obviously wrong. The sale confirmation dated 18-4-1983 will have to be taken as the correct one and the same had been confirmed only on 18-4-1983. Therefore, it was stated that there was no firm contract before 18-4-1983 and hence in no case it can be said that the firm contract was registered before 28-2-1983. Therefore, it was alleged that it appeared that the condition regarding registration of the firm contract with the bank before 28-2-1983 had not been satisfied in this case. It was, however, observed that even by registering the contract in terms of the provisions in condition No. 7 of Appendix-10 of April-March 1983 Policy Book, the clearance of the subject goods under OGL cannot be allowed and the reasons given in the S. No. 3 as follows :
“Condition 7 of Appendix-10 of 83 Policy stipulates that an eligible actual user (importer) should enter into the firm contract. The importer M/s. Shama Magazine, Asaf Ali Road, New Delhi, had obtained a provisional registration certificate for the proposed activity “Job work of off-set printing” as shown in the certificate No. 55/55/8060/Prov. /SSI, dated 28-4-1983 issued by the Directorate of Industries, Delhi. The unit was not in production on 28-4-1983 when the said registration certificate had been issued. Therefore, it was alleged that importer would not be considered as actual user (industrial or non-industrial) in terms of the definition of actual user (industrial) and actual user (non-industrial) given at pages 1 and 2 of the Policy Book of April-March 1983. Therefore, it was alleged that the importer was not eligible actual user for importation of these goods under OGL during April-Maarch 1983 Policy. Therefore, the question of allowing clearance of the subject goods shipped on 22-4-1983 (when the goods were not under OGL) by extending the benefit of condition No. 7 of Appendix-10 of AM ’83 Policy does not arise.”
3. The importer gave a detailed reply denying all the charges and claiming the benefit as actual user. They replied that Mr. Md. Omer had signed the bill of entry as their agent as he had been authorised to appear as their representative of the SHAMA MAGAZINE, in whose name the Bill of Entry had been filed. It was stated that M/s. Jeena & Co., Calcutta were engaged by Grindlays Bank pic., to clear the above consignment. They are Customs Licensed clearing agents and only they can guide the importers and their agents on following correct documentation. They stated that import documents were signed only on the advice of the clearing agents. The bill of entry was filed in their name as importers and Mr. Omer had signed the bill of entry on their behalf and on being requested and authorised by them over the telephone. Therefore, it was stated that he acted within his authority and as per the guidance of the clearing agents.
They also stated that there is no such procedure laid down for registration of the import contracts, under para 7 of Appendix-10 of the AM ’84 Policy. After referring to the provisions of the Import & Export Policy for AM ’84, the imorter had pleaded that all ingredients of a contract were present.
In this case, the suppliers had sent a Proforma Invoice No. MI/PP dated 24-1-1983 offering to supply the printing machine to be shipped within about three months after receipt of L.C. This offer was accepted by them on 17-2-1983. Therefore, this created a firm contract. They also stated that the letter of credit No. 1201/83/34, dated 19-2-1983 established by Grindlays Bank plc., 10 Sansad Marg, New Delhi in favour of the suppliers in China is also a firm contract in any and every sense of the term. It contains all the particulars mentioned in para 1 of Appendix-20 quoted above and also meets the requirements of Note (2) of the said para, which stipulates that the date of the letter of credit itself will be taken as the date of the contract. They stated that even in common law, an irrevocable documentary credit (L.C.) is a firm and irrevocable contract and recognised as such by all concerned.
They also stated that the onus of determining that there is a firm contract and of registering the same is upon a foreign exchange dealer (Bank) and not upon Customs or Import Trade Control Authorities. The Grindlays Bank had issued a certificate dated 14-7-1983. It was stated that the Grindlays Bank had satisfied themselves about their being actual users before establishing their letter of credit. They also stated that they are Publishers of Books, Magazines & Journals from the inception of the firm in 1953 and in fact such publication business was started in 1939 by one of their erstwhile partners. The requirement for Newspapers and Journals to be registered with a Government Authority came only in 1957 by an amendment of the Press and Registration of Books Act, 1867 whereby the Registrar of Newspapers for India (RNI) was made the Registering Authority. The RNI is also the Sponsoring Authority for all requirements of the Newspaper Industry under the Import Policy for AM ’83 as well as AM ’84 as per Appendix-7 of the Hand Book of Import-Export procedures 1983 and 1984 and similar provisions for the earlier years. They stated that their Shama Urdu Monthly had been registered since 1957 with the RNI under their Registration No. 643/57. They stated that the Chemicals & Allied Products Export Promotion Council (CAPEXIL), Calcutta as publisher-exporters (manufacturer exporters) under their Registration No. CAPEXIL/REG/PUBLICATIONS/ SM-50, dated, 1-4-1971 which was kept valid upto 31-3-1983 and renewed by another Registration No. DKM/NR/BOOKS-10/SM/S-9/90, dated 1-7-1983 valid upto 31-3-1987 as publisher-exporter (manufacturer exporter). From both these registration-cum-membership certificates, it was cleared that they had satisfied the terms of paragraph 52(2) of Chapter IV of the Hand Book of Import-Export Procedures 1983-84 relating to registered exporters and similar provisions of the Import-Export Policices for earlier years. They also stated that they had been importing newsprint for use as actual users under licenses issued to them by the Chief Controller of Imports & Exports. In proof of the said statement, they produced a licence dated 22-11-1982 issued by the Jt. Chief Controller of Imports & Exports with a value of Rs. 1,56,566/- only. They also filed a Municipal Licence dated 12-9-1978 for running Light Industrial Unit consisting of paper cutting, book binding and printing press which is valid upto 31-3-1984. They also submitted that the registration secured by them with the Director of Industries, Delhi Administration under the provisional category was for “job work of offset printing” which is in addition to their other industrial activities. They referred to the Declaration provided to Customs in terms of Appendix-10, Paragraph 21(a) of the Import & Export Policy for AM ’84 and similar provisions for AM ’83 they had mentioned that only this SSI Registration Number was required and hence the provisional registration number produced by them was valid at that time. Therefore, they submitted that they had been eligible actual user for the importation of the above-captioned goods under OGL during April-March 1983 Policy period as well as the subsequent period and hence they were fully entitled to the benefit of Condition No. 7 of Appendix-10 of AM ’83 Import Policy. They submitted that the shipment had taken place under a Bill of Lading dated 22-4-1983 and suppliers invoice dated 15-4-1983 when the previous policy was still applicable and hence relaxation for seven days was permissible under the new policy as per Condition No. 7 of Appendix-10 of AM ’83 Import Policy. They denied any contravention of any rule or law and hence pray for dropping of the proceedings.
4. The ld. Collector after giving them an opportunity of the hearing did not accept the plea and held that the charges made out in the show-cause notice were sustainable and in that view of the matter held that the importation of the goods had been without a proper licence is prohibited under Section 11 of the Customs Act, 1962 read with Section 3(2) of the Imports & Exports (Control) Act of 1947 and as per Govt. of India, Min. of Commerce & Industries’ Order No. 17/55, dated 7th Dec., 1955. He ordered for the confiscation of the goods under Section 111(d) of the Customs Act, 1962. However, he granted them the option under Section 125 for redeeming the same on payment of a fine of Rs. 1,00,000/- the ld. Collector however had accepted the plea pertaining to the signing the bill of entry by Shri Omer. The ld. Collector also accepted the plea of registration of the contract with the Banker. He rejected the plea pertaining to the SSI Registration Certification as not very satisfactory. He had held that it is true that being a newspaper establishment, it had registered itself with the Registrar of Newspapers, who is designated as one of the sponsoring authorities for newspaper establishment.
Consequent upon this registration, the importer had been getting quota for the newsprint. In this case, this two-colour off-set printing machine is imported not only for the purpose of printing the magazine, and also taking the job work on behalf of others. Therefore, it comes under printing establishment, as specified in S. No. 26 of Appendix-7 of the Hand Book of Import & Export Procedures 1983-84 and the sponsoring authority in such cases is the State Director of Industries. In other words, he held that it becomes clear that S.S.I. Registration Certificate becomes essential, since in the changed circumstances it would have to be considered as a printing establishment rather than as a newspaper establishment, as job work will also have to be undertaken by them. He has held that it is also a fact that the S.S.I. Certificate had been issued on 24-4-1983 i.e. subsequent to the relevant date of importation concerned. He has held that it is also pertinent that this two-colour off-set printing machine had now been removed from Appendix-2, while in the earlier Policy AM ’82-83 was under OGL. In the light of this position, one of the conditions under Appendix-10 i.e. condition 7 of AM 1982-83 also had not been fulfilled and, therefore, he held that they would not be eligible for the delayed import. To this extent, he held that the importation is not covered under OGL and a specific I.T.C. Licence from the Licensing Authorities is required for clearance of the goods. In the absence of the same, the importation of the impugned goods has been held as unauthorised.
5. We have heard ld. Advocate Shri V. Sridharan for the appellant and Shri A.K. Singhal, ld. JDR for the revenue. The ld. Advocate reiterated the grounds taken up by the appellants in their reply to the show-cause notice and submitted that the department had not made out any case against them. He pleaded that they were actual users and the SSI Certificate produced by them should be accepted and their import should be considered under OGL category and the benefit should be granted to them in this regard. He also relied on the Tribunal’s order rendered in the case of Bharat Brass & Silver Mfg. Co. v. CC, Delhi as Final Order No. A/829/94-NRB, dated 26-9-1994 and the ratio of the following rulings rendered in the case of
1. Resham Singh Brothers v. Collector of Customs, 1989 (41) E.L.T. 171
2 Asha Cellulose (I) Pvt. Ltd. v. Collector of Customs, 1992 (59) E.L.T. 550.
6. Ld. DR submitted that the violation of the I.T.C. Regulation was quite clear as they were not ‘actual users’ (Industrial). He submitted that the registration of newspaper with Registrar of Newspaper has nothing to do with the industrial activity. They might be bringing out magazine and newspaper but they were printed in a different place and hence they were required to show that they owned a press and the same had been registered with the Director of SSI. He submitted that on the date of import, they did not have an “actual user of certificate”. In this regard he referred to paras 202 and 203 of Handbook of Import & Export. Therefore, he submitted that the confiscation of imported machinery and release of the same on payment of redemption fine of Rs. one lakh is quite appropriate.
7. We have carefully considered the submissions made by both the sides and have perused the records. The ld. Advocate relied on the ruling rendered in the case of Bharat Brass & Silver Mfg. Co. The contravention alleged in this is about non-registration of contract. On examination of facts of the case, the single Member Bench of the Tribunal held that a mere technical breach did not seriously affect the provisions of Import Policy in general, and it would be wrong to order for confiscation of goods, as goods were not prohibited items and were eligible for import under OGL, and there was substantial compliance with requirement of law and therefore, the confiscation of goods and redemption fine was set aside. As noticed from the facts of this case, the ld. Collector himself has dropped the allegation pertaining to the registration of contract. Therefore, this ruling is clearly distinguishable. The only question before us is with regard to the “actual user certificate”, which was required for the purpose of clearance of the impugned goods. The ld. Collector has held that the importer was required to have produced a SSI Registration Certificate from the State Director of Industries to prove the actual user of the machinery, for the purpose of utilizing the imported machinery for their own use. In this regard, the appellant has produced a certificate of registration obtained from Registrar of Newspaper for India. The certificate indicates that the appellant had registered the title of the newspaper ‘Shama’ an Urdu monthly, and that this certificate pertains to registration of newspaper. As can be seen from Col. 9 of the Certificate of Registration three units namely Tej Press, Bahadur Shah Zafar Marg, New Delhi, Indian Printing Works, M.M. Road, New Delhi and Grafik India, N.S. Marg, New Delhi are shown as their printers. Therefore, this certificate from the Registrar of Newspapers for India is not sufficient to prove the actual user (Industrial), as the certificate shows about the registration of their newspaper as required per law. The certificate issued by the Chemical & Allied Products Export Promotion Council pertains to the export of the goods. It does not show about the actual user of the machinery. They have produced a licence for Import Trade Control. In Col. 3 “description of goods” it is stated “A. Newsprint/Transfer of REP Licence for the said item shall be governed by the provisions of Newsprint Control Order”. This licence is sent to the actual user for the period AM ’83 for importing goods value at Rs. 1,56,566/-. This licence also gives the warning that it is “granted under the Govt. of India, Min. of Commerce and Industry Order No. 17/55, dated 7-12-1955, as subsequently amended, issued under the Imports and Exports (Control) Act, 1947 and is without prejudice to the application of any other prohibition or regulating affecting the importation of the goods which my be in force at the time of their arrival”. We have gone through the records and we do not find any certificate from the Directorate of Industries in the file. The same has not been placed for our perusal. The appellants are merely relying upon the certificate issued by the Registrar of Newspapers and that of Chemical & Allied Products Export Promotion Council. Both these certificates are not pertinent. The allegation is that as per S. No. 12(18) of Appendix-2 of April-March ’83 Policy, 4 colour/2 colour off-set machines permits import under OGL by the eligible actual user. There had been a change in the April-March 1984 Policy and importation of 2 colour off-set machines are not permitted under OGL under S. No. 12(14) of Appendix-2 of April-March 1984 Policy period. As per the records, it is clear that the appellant did not have an industrial establishment for the actual use of the machinery as “actual users”. We have perused the definition of actual user as given in Chapter II. The definition of ‘Actual User’, ‘Actual User Condition’ and ‘Actual User (Industrial)’, ‘Actual User (Non-industrial)’ and ‘Small Scale Industry’ is produced herein below :
” “Actual User” means a person who applies for/secures a licence for the import of any item or an allotment of an imported item required for his own use, and not for business or trade in it. Thus, in the case of an industrial undertaking, the item concerned shall be utilised for the manufacturing processes or operations conducted within its authorised premises (or made available to jobbing units or other units outside for intermediate processing only as a part of such production effort). In the non-industrial category such as hospitals, research and development units or any other institutions, commercial establishments and individuals, the concerned item shall be utilised for its/his own use i.e. for the purpose for which the item was sought for import.
2. “Actual User Condition” shall be construed accordingly.
3. “Actual User (Industrial)” shall mean an industrial undertaking, be it in the large scale, small scale or cottage industries sector, engaged in the manufacture of any goods for which it holds a licence or Registration Certificate from the appropriate Government authority, wherever applicable.
4. “Actual User (Non-industrial)” means :
(a) any commercial establishment which has been registered or holds a certificate for at least 3 years under the local law applicable to Shops and Establishments generally and which carries on any business, trade or profession, whether for the purpose of gain or not, but does not include a shop, factory, residential hotel, restaurant or eating house; or
(b) any establishment holding a licence for at least 3 years under the local law relating to the exhibition of cinematographic films to the public at the authorised premises; or
(c) any person who, not being an employee or wage earner, is himself engaged in any profession or calling and has been assessed to income-tax as such; or
(d) any laboratory, scientific or research and development institution, university or other educational institution or hospital; or
(e) any service industry in existence and holds a licence for the purpose under the local law for atleast three years; or
(f) public sector (non-industrial) undertaking, not run departmentally; this will not include a residential hotel, restaurant or eating house; or
(g) any local authority.
5. “Small Scale Industry” means all industrial units with a capital investment of not more than Rs. 20 lakhs irrespective of the number of persons employed. Capital investment for the purpose of this definition will mean investment in plant and machinery only. When calculating the value of plant and machinery, the original price paid by the owner, irrespective of whether the plant and machinery are new or secondhand, will be taken into account. Ancillary units covered by the Notification issued by the Ministry of Industry No. IDRA/29B/75, dated 19th May ’75 will be treated as small scale units even if the fixed asset of such units is not more than Rs. 25 lakhs”.
As can be seen from the definition, the imported item should be utilised for the manufacturing processes or operations conducted within its authorised premises. The actual user (Industrial) has been referred to Small Scale Industry. In the present case they do not hold a licence from the appropriate Govt. authority namely Director of Small Scale Industry. As can be seen, a Small-scale Industry unit means a unit with a capital investment of not more than Rs. 20 lakhs irrespective of the number of employees. The appellant has not produced any evidence to show that they were having a small scale industry at the relevant time of registration of contract for importing the machinery. Therefore, they cannot fault the order of the Collector. They have relied on the ratio of the judgment rendered in the case of Resham Singh Brothers. In this case, they had produced a certificate under Shops and Establishments Act and pleaded that they had a registered unit. The lower authorities had rejected the same. However, the Tribunal accepted the same as the certificate which satisfies the condition of a actual user. In the case of Asha Cellulose (I) Pvt. Ltd., the Tribunal had noticed substantial compliance of OGL conditions and therefore, granted the relief. Both these citations are not applicable to the facts of the case. We notice that the case of Shashwat Printers (P) Ltd. v. CC as reported in 1993 (65) E.L.T. 641, the Tribunal had gone into great detail on the aspect pertaining to the newspaper establishment and newspaper industry, the appellant therein had imported graphic arc films under Notification No. 103/89-Cus., dated 1-3-1989. The importer had been denied the benefit of the said notification on the ground that they were not owning the newspaper establishment. The notification specifically granted benefit in respect of goods to those who owned the newspaper establishment. The Tribunal held that the importer had only a certificate of registration in respect of a newspaper and they did not own a newspaper establishment of their own and hence the benefit was denied. The ratio of this judgment is that the importer should have their own newspaper establishment for claiming the benefit of the notification. The ratio laid down in the judgment has relevance to the present case. The appellants are not having SSI Unit on the date of importation and therefore, the order passed by the ld. Collector for absolutely confiscation and granting the release on redemption fine is justified. We notice that the redemption fine is excessive. Taking into consideration the value of the imported goods, we reduce the redemption fine to Rs. 50,000/- with this modification otherwise, the appeal is dismissed.
