2002 (3) TMI 157 - AT - Customs

Summary

Issues Involved:
1. Validity of REP licenses for importing "compound alcoholic preparations" described as under-proof whisky and brandy.
2. Classification of the imported goods as "concentrates of alcoholic beverages."
3. Justification for confiscation and penalties imposed by the Customs authorities.
4. Consideration of past judgments and clarifications relevant to the case.
5. Evaluation of evidence and technical opinions submitted by the importers.

Detailed Analysis:

1. Validity of REP Licenses for Importing "Compound Alcoholic Preparations":
The applicants imported goods described as "compound alcoholic preparations, namely under-proof whisky used only for the manufacture of IMFL - Indian Whisky" and claimed clearance against REP licenses valid for items covered in Appendix 3A. The Customs department objected, arguing that the goods were "concentrates of alcoholic beverages" covered by serial No. 31 of Appendix 2B, thus not covered by the REP licenses. Show cause notices were issued, proposing confiscation and penalties under Sections 111(d) and 112(a) of the Customs Act, 1962.

2. Classification of the Imported Goods as "Concentrates of Alcoholic Beverages":
The core issue was whether the imported goods were "concentrates of alcoholic beverages," which are restricted for import. The term "concentrates of alcoholic beverages" was not defined in the Import Policy. The Tribunal initially relied on a clarification dated 24-8-1990, which stated that imports of malt spirit as Ethyl Alcohol were not permissible. However, this clarification did not provide a clear definition of "concentrates of alcoholic beverages." The Tribunal later found that the evidence submitted by the importers, including technical opinions and test reports, indicated that only over-proof whisky/brandy is considered as concentrates of alcoholic beverages.

3. Justification for Confiscation and Penalties Imposed by the Customs Authorities:
The Tribunal initially upheld the confiscation and penalties but reduced the fines and penalties imposed. The importers filed applications for rectification, arguing that the Tribunal had overlooked crucial evidence and past judgments. Upon reconsideration, the Tribunal found that the Customs department had not provided sufficient evidence to prove that the imported goods were concentrates of alcoholic beverages. The Tribunal concluded that the confiscation and penalties were not justified and set aside the orders of the Collector of Customs.

4. Consideration of Past Judgments and Clarifications Relevant to the Case:
The importers cited a judgment by the Bombay High Court dated 4-8-1992, which allowed the clearance of similar goods under REP licenses. This judgment was upheld by the Supreme Court. The Tribunal initially did not consider this judgment, leading to an error apparent from the record. Upon review, the Tribunal acknowledged the significance of this judgment in supporting the importers' claim that the goods were covered by the REP licenses.

5. Evaluation of Evidence and Technical Opinions Submitted by the Importers:
The importers submitted various pieces of evidence, including:
- Bills of Entry and test reports indicating that over-proof whisky is considered as "whisky concentrate."
- Technical opinions from Chemical Examiners and affidavits supporting the view that under-proof whisky/brandy is not considered as concentrates of alcoholic beverages.
- A certificate from R.R. Tatlock and Thomson, Analytical and Consulting Chemists, stating that the imported goods were under-proof whisky and distinguishable from whisky concentrate.

The Tribunal found that this evidence was crucial and had been disregarded without proper reasoning. The Tribunal concluded that the burden of proving that the goods were prohibited or restricted for import lay on the Revenue, which it failed to discharge.

Conclusion:
The Tribunal found apparent errors in its initial order and concluded that the import of the compound alcoholic preparations described as under-proof whisky/brandy was not unauthorized. The Tribunal set aside the orders of confiscation and penalties, allowing the appeals and granting consequential relief to the importers.