B. Vijay Kumar And Co., Etc. v. Collector Of Central Excise And Customs

Cases Referred: UOI v. Rajni Kant Brothers (C.A. No. 1423/84); Indo-Afghan case 1986 (3) SCR 88; Raj Prakash Chemicals case 1986 (1) SCR 448; Navinchandra's case 1987 (3) SCC 66 : 1987 (11) ECR 824 SC : ECR C Cus 1249; UOI v. Godrej Soaps Pvt. Ltd. and Anr. 1986 (3) SCR 771 : 1986 (9) ECR 1 (SC); ECR C Cus 1190 SC; UOI v. Rajni Kant Brothers (C.A. No. 1423/84, decided on 18.4.1985);Indo-Afghan [1986(3) SCR 771];Raj Prakash Chemicals [1986(1) SCR 4];Navinchandra [1987(11) ECR 824 SC : ECR C Cus 1249 SC];UOI v. Godrej Soaps Pvt. Ltd. & Anr. [1986(9) ECR 1 (SC) : ECR C Cus 1190 SC]

Disposition: In Favour of Assessee

Citing Reference: Mentioned  5

Case Note: ITC - OGL--Canalised items imported under bona fide belief that permissible--Confiscation and redemption fine set aside in special circumstances, but order not to be taken as precedent.Facts: In a case decided on 18.4.1985 (UOI v. Rajni Kant Brothers), the Supreme Court had directed the Union of India to issue additional licences to the importers for the import of items under OGL during the Policy period 1978-79, stating that "save and except the items which are specifically banned under the relevant Import Policy at the time of import, such licence holders would be entitled to import all other items canalised or otherwise.......". The appellants as well as the customs authorities took the words "canalised or otherwise" to mean that canalised items could also be imported under the additional licences. However, when some canalised items were imported by the appellants, the Collector of Customs imposed a penalty and ordered confiscation of the goods, with the option of a redemption fine. In appeal, the Tribunal upheld the confiscation/redemption fine portion of the Collector's order, but set aside the penalty, accepting the bona fides of the appellants in importing the canalised items under the genuine belief that such import was permissible in view of the Supreme Court's decision aforesaid. This appeal is against the order of the Tribunal.Held: OGL--Canalised items--Confiscation/redemption fine set aside as Tribunal accepted that appellants' import of canalised items was made in the bona fide belief that such import was permissible in view of an earlier Supreme Court judgment.".......we are of the opinion that in view of the special facts and circumstances of the case specially having regard to the findings of the Tribunal that the appellants imported the canalised items of goods bona fide under the additional import licence granted to them in pursuance of the express conditions contained in the orders of this Court, which finding has not been challenged before us, rather the Additional Solicitor General has fairly conceded the correctness of the findings of the Tribunal relating to the bona fides of the appellants in importing the disputed goods, we are of the view that the Collector and the Tribunal both were not justified in confiscating the goods or in imposing redemption fine. ........We accordingly allow the appeal, set aside the order of the Collector and the Tribunal with regard to the confiscation of the goods and imposition of redemption fine. Since the respondent authorities have already realised the redemption fine from the appellants, we direct the respondent to refund the amount of redemption so realised within a period of one month from today."2 Precedent--this order is not to be taken as a precedent, as it is made in special circumstances. "We would like to emphasise that since we have decided the matter in view of the special facts and circumstances available in these cases this order will not be treated as a precedent."

ORDER

1. Delay condoned. Special Leave granted. Heard counsel for the parties. These appeals are directed against the judgment and order of the Customs, Excise and Gold (Control) Appellate Tribunal (hereinafter referred to as the Tribunal) West Regional Bench Bombay, dated 10.8.1987 rejecting the appeal filed by the Appellants against the order of the Collector of Customs confiscating the goods imported by them and imposing redemption fine in view of confiscation and imposing penalty against them.

2. The Appellants imported canalised items under additional import licence granted to them pursuant to this Court's order dated 18.4.1985 in Civil Appeal No. 1423/84, Union of India v. Rajni Kant Brothers. By that order this Court directed the Union of India to issue additional licences for the import of items placed under OGL during the policy period 1978-79, with direction that "save and except the items which are specifically banned under the relevant import policy at the time of import, such licence holders would be entitled to import all other items either canalised or otherwise in accordance with the relevant Rules". (emphasis supplied). The importers as well as the Customs Authorities and the Union of India interpreted the order of this Court as authorising import of canalised items under the additional import licence. In fact the Principal Collector, Customs and Central Excise, Bombay by his letter dated 15th May, 1986 informed the Federation of Indian Export Organisations that in view of the Supreme Court's orders regarding the permissibility of import of the canalised items a decision had been taken that the canalised items shall be cleared unconditionally imported against additional import licence. The Appellants thereupon entered into contract for the import of the canalised items and imported the same but when the goods arrived, the same were not cleared; instead, the Collector imposed penalty and also issued orders for the confiscation of the goods, although he permitted Appellants to take delivery of the goods on payment of redemption fine. The Appellants preferred appeals before the Tribunal. In their appeals the Appellants urged that in view of the various orders of this Court and further in view of the Customs Authorities' own order the Appellants bona fide believed that they could import canalised items under the additional licence issued to them and in pursuance thereof they bona fide imported the goods which were not prohibited items. Since the Appellants acted bona fide in accordance with the orders of this Court and the communication issued by the Customs Authorities, they had not committed breach of any law and they were not liable to pay any penalty or fine and the goods so imported were not liable to be confiscated. The Tribunal allowed the appeals partly; it held that the disputed imports had not been made in defiance of the Import Policy or the law laid down by the Supreme Court; it observed "at best there was a wrong understanding of the law laid down by the Supreme Court. This wrong understanding was not only on the part of the importers but was also on the part of the licensing authority and even the Union Government and the importers were also entitled to seek sustenance from the judgment of the Bombay High Court.". On these findings the Tribunal set aside the penalties imposed on the Appellants. But while considering the question of confiscation of goods the Tribunal recorded inconsistent findings holding that though the imports were not in wilful disobedience of law or in deliberate defiance of the policy and the law laid down by the Supreme Court, yet their action was not bona fide. On these findings the Tribunal upheld the order of imposition of redemption find but it set aside the order of the Collector imposing penalty against the Appellants.

3. Learned Counsel for the parties referred to the decisions of this Court in Rajni Kant Bros.' case, in Raj Prakash Chemicals case 1986 (1) SCR 448, and Indo-Afghan case 1986 (3) SCR 88 and Godrej Soap case 1986 (3) SCR 771 : 1986 (9) ECR 1 (SC); ECR C Cus 1190 SC and the latest decision of this Court in Navinchandra's case 1987 (3) SCC 66 : 1987 (11) ECR 824 SC; ECR C Cus 1249 SC and also to the various orders and communications issued by the Customs Authorities and the Union Government in support of their pleas. They raised several questions of law with regard to the interpretation of the provisions of the Customs Act 1962, and of the judgments of this Court and their effect. We do not consider it necessary to deal with these submissions in detail as we are of the opinion that in view of the special facts and circumstances of the case specially having regard to the findings of the Tribunal that the Appellants imported the canalised items of goods bona fide under the additional import licence granted to them in pursuance of the express conditions contained in the orders of this Court, which finding has not been challenged before us, rather the Additional Solicitor General has fairly conceded the correctness of the findings of the Tribunal relating to the bona fides of the Appellants in importing the disputed goods, we are of the view that the Collector and the Tribunal both were not justified in confiscating the goods or in imposing redemption fine. We accordingly allow the appeal, set aside the order of the Collector and the Tribunal with regard to the confiscation of the goods and imposition of redemption fine. Since the Respondent authorities have already realised the redemption fine from the Appellants, we direct the Respondent to refund the amount of redemption so realised within a period of one month from today. We would like to emphasise that since we have decided the matter in view of the special facts and circumstances available in these cases this order will not be treated as a precedent. There will be no order as to costs.