1990 (2) TMI 50 - SC - Customs

Whether the calcareous stone which has been imported by the appellant falling within the Tariff Item No. 25.15 of Schedule I, Appendix 1-B commonly known as I.T. Schedule is marble as mentioned in Entry No. 62 of the List of Restricted Items, Annexure 2, Part B of the Import and Export Policy for April 1988 to March 1991 and as such the import of calcareous stone made by the appellant being not covered under OGL, is liable for confiscation and penalty for illegal import without the specific import licence obtained from the respondent? Held that - the slabs of calcareous stone imported by the appellant are not marble as mentioned in Entry No. 62 of Appendix 2 of the Import and Export Policy for April 1988 - March 1991 and so it is covered by open general licence. The imported goods cannot be confiscated by the Government under Section 111(d) of the Customs Act, 1962 nor the appellant can be given the option to clear the said goods for home consumption on payment of fine of Rs. Five lakhs in lieu of confiscation under Section 125 of the Customs Act, 1962. The appellant cannot be said to have imported calcareous stones without an import licence and as such, there being no violation of the Import Control Policy the imposition of penalty of Rs. Ten lakhs under Section 112 of the Customs Act, 1962 is also unwarranted and not sustainable. In the present case, the Tribunal has itself specifically stated that the appellant has acted on the basis of bona fide belief that the goods were importable under OGL and that, therefore, the Appellant deserves lenient treatment. allow the appeal and set aside the judgment and order passed by the Appellate Tribunal and direct the Tribunal to release the goods to the appellant forthwith. We also direct the Tribunal to release the personal bond given by the Appellant for a sum of ₹ 2,50,000/- on the basis of which one container was released as per order of this Court dated October 25, 1989 and also to release the appellant from payment of detention charges and demurrage for retaining the goods

Summary

Issues Involved:
1. Classification of imported calcareous stones as marble under Tariff Item No. 25.15.
2. Interpretation of the term "marble" in the context of trade and commercial parlance versus scientific and technical definitions.
3. Applicability of penalties and confiscation under the Customs Act, 1962, for alleged illegal import without a specific import license.

Detailed Analysis:

1. Classification of Imported Calcareous Stones as Marble:

The core issue is whether the imported calcareous stones fall under the category of "marble" as defined in Tariff Item No. 25.15. The appellant argued that the stones imported were not marble but other calcareous stones, which are allowed under the Open General Licence (OGL). They provided multiple certifications and geological reports to support their claim, including tests from the Geological Survey of India and certifications from foreign exporters, which stated that the stones were not marble but limestone. The Customs Department, however, classified the stones as marble based on visual observations and commercial definitions, leading to the confiscation of the goods and imposition of penalties.

2. Interpretation of the Term "Marble":

The appellant contended that the term "marble" in Tariff Item No. 25.15 should be interpreted in its technical and scientific sense rather than in commercial parlance. They cited various geological reports and standards, including the Indian Standard Specification for Marble (IS:1130-1969), which defines marble as a metamorphic rock formed from the recrystallization of limestones. The Customs Department, on the other hand, argued that the term should be understood in its commercial sense, where any hard calcareous stone capable of taking a polish could be considered marble. The court noted that the general principle of interpreting tariff entries in tax statutes is based on commercial nomenclature, but this principle can be departed from where the statutory context requires a technical interpretation.

3. Applicability of Penalties and Confiscation:

The Customs Department confiscated the goods under Section 111(d) of the Customs Act, 1962, and imposed a penalty under Section 112, alleging that the import was illegal without a specific import license. The appellant argued that they acted in good faith, believing that the stones were not marble and thus importable under OGL. The court found that the appellant took considerable precautions to ensure compliance with the law, including obtaining certifications and test reports. The court also noted that the burden of proof lay on the Customs Department to show that the appellant acted dishonestly or with the intent to breach the law. Given the appellant's bona fide belief and the lack of clear evidence from the Customs Department, the court concluded that the penalties and confiscation were not justified.

Conclusion:

The court held that the imported calcareous stones could not be classified as marble in the scientific and technical sense. It emphasized that the term "marble" in the ITC Schedule should be interpreted technically, considering the specific gravity requirement and the geological definitions. The court set aside the order of confiscation and penalties, directing the release of the goods to the appellant and the release of the personal bond and bank guarantee. The court also waived any detention charges and demurrage for retaining the goods, recognizing the appellant's bona fide belief and efforts to comply with the import regulations.