1971 (1) TMI 55 - SC - Customs

Whether the sheets imported were not according to the conditions of the licence because they did not comply with the condition as to the size and gauge subject? Held that - there was no proper investigation of the dispute by the Collector of Customs and the Central Board of Excise and Customs. We are also of the view that in view of the infirmities disclosed in the orders made by the departmental authorities the Central Government in revision should have proceeded to consider the merits of the appeals relating to the six consignments in respect of which fine was not remitted in full. The Government should have given to the appellants adequate opportunity to prove that there had been no substantial deviation from the terms of the licence or for other reasons on which they claimed that the fine may be remitted in full. set aside the order passed by the Central Government in respect of the six orders passed by the Collector, where fine has not been remitted in its entirety and direct that the Central Government do consider the revision applications on their merit.

Issues:
1. Interpretation of import licences for steel sheets.
2. Compliance with quality standards for imported goods.
3. Authority of Collector of Customs and Central Board of Excise and Customs in imposing penalties.
4. Application of "prime quality" condition to imported goods.
5. Proper investigation and consideration of appeals by the Central Government.

Detailed Analysis:

1. The judgment involves the interpretation of import licences for steel sheets obtained by a private limited company engaged in manufacturing drums and barrels. The company imported steel sheets under two licences with specific terms and conditions regarding the quality and type of sheets allowed for import.

2. The issue of compliance with quality standards for the imported goods arose when the Chief Customs Appraiser at Bombay raised concerns about the quality of the imported steel sheets. The Collector of Customs and the Central Board of Excise and Customs found that the imported sheets did not meet the criteria of "prime quality" as required by the licences, leading to penalties being imposed on the company.

3. The authority of the Collector of Customs and the Central Board of Excise and Customs in imposing penalties for non-compliance with import regulations was questioned. The Collector imposed penalties based on the perceived deviation from the "prime quality" standard, while the Board upheld the confiscation of goods due to non-alignment with quality requirements.

4. The application of the "prime quality" condition to the imported goods was a central point of contention. The Collector and the Board based their decisions on the absence of "prime quality" in the imported sheets, overlooking the specific conditions mentioned in the licences and the retrospective nature of the quality standard introduced by the Iron and Steel Controller.

5. The judgment highlighted the lack of proper investigation and consideration of the appeals by the Collector and the Board. The Central Government, in its revision, failed to thoroughly examine the merits of the appeals and did not provide the company with adequate opportunity to substantiate their claims regarding the compliance of the imported goods with the licence specifications.

In conclusion, the Supreme Court set aside the Central Government's order and remanded the cases for proper consideration based on the terms of the import licences and the permissible tolerance criteria. The judgment emphasized the importance of a thorough investigation and adherence to legal procedures in matters of import regulations and penalties.

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