2007 (8) TMI 351 - SC - Customs

EXIM - DGFT circular on dried garlic - The Tribunal accepted the appeals and set aside the order-in-original holding that since the contracts had been entered into sometimes in July 1999 and the Letters of Credit opened in pursuance thereto sometimes in August 1999 the clarification issued by the DGFT on 17th of September 1999 could not apply to the cases of the assessees with retrospective effect. That it was also held that the clarificatory circular issued on 17th September 1999 could not be issued by the DGFT. That the Circular could only be issued by the Central Government as per Sections 5 and 6 of the Foreign Trade (Development and Regulation) Act 1992. Findings recorded by the Tribunal on questions of law to be correct. But we notice that in some of the cases the assessees themselves had conceded that the goods imported by them were not Dried Garlic but Fresh Garlic. The authority in original in its order has so recorded that some of the assessees had given such a concession under protest whereas others did not do so. The assessees who did not protest simply accepted the applicability of the policy circular dated 17th September 1999. The Tribunal while dealing with the questions raised by the assessees did not advert to the concession made by the assessees either under protest or under mis-apprehension of law with the presumption that the policy circular dated 17th September 1999 was applicable to them. - Matter remanded back.

Summary

Issues:
Appeal against Tribunal's decision on import of "Dried Garlic" under Customs Act, 1962 based on EXIM Policy provisions and DGFT circular. Tribunal's acceptance of appeals and Revenue's challenge. Tribunal's failure to address concessions made by some assessees regarding the nature of imported goods.

Analysis:
The appeals under Section 130-E of the Customs Act, 1962 challenged the Final Order of the Customs, Excise and Gold (Control) Appellate Tribunal, West Regional Bench at Mumbai, allowing the appeals of the Respondents-Assessees related to the import of "Dried Garlic" (Chinese White) based on the EXIM Policy provisions. The assessees imported the goods under the belief that no license was required as per the Open General Licence (OGL) category. However, a clarification issued by the Director General of Foreign Trade (DGFT) regarding the moisture content of Dried Garlic led to objections by Customs authorities post-importation.

The Customs authorities issued show cause notices proposing actions under various sections of the Act due to the moisture content exceeding 10%. The Commissioner of Customs confirmed the violations and imposed penalties and redemption fines. The assessees appealed to the Tribunal, which set aside the original order, stating that the DGFT's clarification could not apply retrospectively to contracts entered into before its issuance. The Tribunal also noted that the circular should have been issued by the Central Government, not the DGFT.

The Supreme Court found the Tribunal's legal findings to be correct but highlighted that some assessees had conceded that the imported goods were Fresh Garlic, not Dried Garlic. The Court noted discrepancies in the assessees' concessions and directed the matter to be remitted back to the Tribunal for a fresh decision considering the effect of these concessions. The Court emphasized the need for a thorough examination of the concessions made by the assessees before reaching a final decision.

The Court disposed of the appeals without costs, requesting the Tribunal to prioritize and expedite the fresh decision. It clarified that its decision did not express an opinion on the legal points or concessions, leaving them for the Tribunal to address in accordance with the law. The judgment aimed to ensure a fair consideration of all aspects before reaching a final decision on the import of "Dried Garlic" by the assessees.