1993 (7) TMI 74 - SC - Customs

Whether the facts and circumstances of this case warrant a total or partial waiver of the redemption fine? - Held that - The importers contention that the redemption fine should be wholly waived or substantially reduced as their action in importing the goods under OGL was bona fide is not well founded. Even if the transaction has in fact resulted in a loss (we cannot delve into it for the first time in this Court) it will not make any difference. We feel that taking cover under the earlier orders passed in the case of M/s. Jain Shudh Vanaspati Ltd. and the letter of the STC the importers have tried to create the impression that they were innocent victims of the subsequent interpretation put on the relevant entry ignoring the fact that the licences were revalidated on certain terms and conditions which did not permit import except through the STC. We are therefore satisfied that the import under OGL was not a bona fide act. We therefore dismiss both the appeals as well as the writ petition with costs

Issues Involved:
1. Applicability of import policy year.
2. Classification of "coconut oil" under the import policy.
3. Authority of the Collector versus higher appellate bodies.
4. Alleged breach of natural justice and collateral considerations.
5. Quantum of redemption fine.
6. Bona fides of the importers.

Detailed Analysis:

1. Applicability of Import Policy Year:
The primary issue was whether the import policy of 1980-81 or the time when the import actually took place would be applicable. The Supreme Court held that the terms of the import policy of 1980-81 applied to the facts of the case.

2. Classification of "Coconut Oil":
The importers argued that only the edible variety of coconut oil was canalised. The Court held that under the import policy of 1980-81, all varieties of coconut oil, both edible and non-edible, were included in Paragraph 5 of Appendix 9. Therefore, there was no basis for assuming that only the edible variety was canalised.

3. Authority of the Collector:
The importers contended that the Collector could not take a contrary view to the decisions of the Board and Central Government. The Court clarified that while the Collector was bound by the decisions of higher authorities, the matter had progressed beyond that stage, allowing the Court to place its own interpretation on the concerned entry.

4. Breach of Natural Justice:
The importers alleged that the Collector's order was vitiated by a breach of natural justice and collateral considerations. The Court found no such breach and dismissed this contention.

5. Quantum of Redemption Fine:
The Tribunal initially had a split decision on the quantum of the redemption fine, leading to a larger bench decision which upheld the fine. The Supreme Court remitted the matter back to the Tribunal for reconsideration, emphasizing that the importers' bona fides should be considered. Upon rehearing, the Tribunal did not find the importers' actions bona fide and upheld the fine.

6. Bona Fides of the Importers:
The importers argued that their actions were bona fide, relying on previous interpretations and communications from the STC. The Court noted that the importers were experienced and should have been aware of subsequent clarifications that non-edible coconut oil was a canalised item. The importers failed to provide material evidence regarding the profit or loss from the transactions, which the Court found crucial. The Court concluded that the importers' actions were not bona fide and dismissed their appeals, including the writ petition, with costs.

Conclusion:
The Supreme Court affirmed that the import policy of 1980-81 applied and included all varieties of coconut oil as canalised items. The Collector's actions were upheld, and no breach of natural justice was found. The importers' failure to provide essential evidence regarding the transactions led to the rejection of their claims of bona fide actions. The appeals and writ petition were dismissed, and the importers were ordered to pay costs.

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