1988 (4) TMI 86 - HC - Customs

Summary

Issues Involved:
1. Compliance with Import Policy for Synthetic Rags
2. Legality of Public Notice No. 173
3. Authority of Customs Officials to Permit Further Mutilation
4. Application of Section 24 of the Customs Act

Summary:

1. Compliance with Import Policy for Synthetic Rags:
The petitioning-Companies, actual users of synthetic rags for manufacturing shoddy yarn, imported old completely pre-mutilated fumigated synthetic rags under an Open General Licence as per the import policy for 1985-88. Upon arrival at Kandla Port, the goods were examined and found to be synthetic rags. However, the authorities held that the condition of the rags did not comply with Public Notice No. 173 issued by the Principal Collector of Customs, Bombay, and thus could not be cleared as 'completely pre-mutilated'. Consequently, fines and penalties were imposed u/s 111(d) and (m) and u/s 112(a)(i) of the Customs Act.

2. Legality of Public Notice No. 173:
The petitioners initially challenged the legality of Public Notice No. 173, which laid down guidelines for the import of woollen/synthetic rags in completely pre-mutilated condition. However, this challenge was abandoned during the hearing. The guidelines required specific mutilation methods, such as cutting garments into six pieces or, as amended on 14th February 1986, into four pieces if rendered totally unserviceable.

3. Authority of Customs Officials to Permit Further Mutilation:
The petitioners argued that the Collector of Customs should permit further mutilation at the port if the initial mutilation did not meet the guidelines. They highlighted the high cost of mutilation abroad and the impracticality of importing garments if strict adherence to the guidelines was enforced. The practice at Bombay Port allowed further mutilation on arrival, which was supported by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi.

4. Application of Section 24 of the Customs Act:
Section 24 of the Customs Act empowers the Central Government to make rules for permitting the mutilation of imported goods to render them unfit for purposes other than intended. The court found that the practice of allowing further mutilation at the port, as followed by Bombay Customs, was in consonance with the spirit of Section 24. The court directed the Customs Officials at Kandla to adopt this practice, permitting clearance after further mutilation and imposing a personal penalty if necessary.

Conclusion:
The court upheld the procedure followed by Bombay Customs as just and equitable, directing Kandla Customs to permit further mutilation at the port if required. The rule was made absolute for Special Civil Application No. 1698 of 1988, allowing clearance of goods after compliance with the directions. The other two petitions were dismissed as the goods had already been cleared.