1986 (3) TMI 219 - HC - Customs

Summary

Issues Involved:
1. Validity of the import of beef tallow under the R.E.P. licences.
2. Jurisdiction of respondent No. 2 to issue show-cause notices and impose penalties under Clause 8 of the Import (Control) Order, 1955.
3. Applicability of the Division Bench judgment in M/s. Oswal Woollen Mills' case.

Issue-wise Detailed Analysis:

1. Validity of the import of beef tallow under the R.E.P. licences:
The petitioner-Company, a Public Limited Company engaged in manufacturing and exporting power cables, relied heavily on imported materials, specifically PILC Cables, with 85% of the raw materials being imported. The company held several R.E.P. licences and issued Letters of Authority to various holders to import permissible goods. The Letters of Authority holders and a transferee imported consignments of inedible beef tallow, which were cleared by the Customs authorities after payment of the stipulated duty. However, respondent No. 2 issued show-cause notices alleging that the import of beef tallow was unauthorized since it ceased to be an open general licence item (O.P.G.L.) from 5-6-1981 and was canalized through the State Trading Corporation. The petitioners contended that the imports were legal as they were cleared by the Customs authorities without any controversy.

2. Jurisdiction of respondent No. 2 to issue show-cause notices and impose penalties under Clause 8 of the Import (Control) Order, 1955:
Respondent No. 2 issued show-cause notices to the petitioners, alleging violations of the Import (Control) Order, 1955, and subsequently imposed a penalty of "debarment" on the petitioners. The petitioners challenged the vires of Clause 8 of the Control Order and argued that once the Customs authorities cleared the goods, it implied no violation of the Control Order or Import and Export Policy. The judgment emphasized that the Customs authorities' clearance of goods under Section 47 of the Customs Act should be presumed to be after due adjudication, and the proper officer's order permitting clearance must be considered an order "after due adjudication." Therefore, respondent No. 2's action under Clause 8 of the Control Order was deemed without jurisdiction.

3. Applicability of the Division Bench judgment in M/s. Oswal Woollen Mills' case:
The judgment relied on the Division Bench judgment in M/s. Oswal Woollen Mills' case, which held that once the Collector of Customs under the Customs Act cleared the goods, it implied no violation of the Control Order or Import and Export Policy. It was concluded that respondent No. 2 or any other subordinate authority could not review the matter and pass a contrary order. The judgment reiterated that if the Customs authorities cleared the goods, it meant no provisions of the Imports and Exports (Control) Act or the Control Order were violated, and respondent No. 2 could not exercise powers under Clause 8 of the Control Order to pass the impugned order.

Conclusion:
Respectfully following the Division Bench judgment in M/s. Oswal Woollen Mills' case, the court held that respondent No. 2, in view of the clearance of the imported goods by the authorities under the Customs Act, could not exercise powers under Clause 8 of the Control Order to pass the impugned order. Consequently, the petition was allowed, and the order dated 20-5-1985 (Annexure P.22) of respondent No. 2 was quashed. There was no order as to costs.