1986 (8) TMI 302 - AT - Central Excise

Summary

Issues Involved
1. Validity of import licenses for "brandy concentrate."
2. Classification of imported goods as "brandy concentrate" or "over-proof brandy."
3. Interpretation of Import Trade Control Regulations and B.T.N. (Brussels Tariff Nomenclature).
4. Determination of appropriate fine in lieu of confiscation.

Detailed Analysis

1. Validity of Import Licenses for "Brandy Concentrate"

The primary issue was whether the import licenses used by the appellants were valid for the imported goods. The licenses permitted the import of "brandy concentrate," and the appellants argued that the imported goods fell under this category. The customs authorities, however, contended that the goods were over-proof brandy and not "brandy concentrate." The Tribunal noted that the licenses were issued for the Policy Period A.M.-1973 and allowed the import of "brandy concentrate" as per the Import Trade Control Policy Volume II.

2. Classification of Imported Goods as "Brandy Concentrate" or "Over-Proof Brandy"

The appellants argued that the imported goods were "brandy concentrate," used for blending with Indian-made foreign liquor to impart the aroma of French brandy. They presented various pieces of evidence, including certificates from suppliers and the Circle Inspector of Excise, Varanad, which supported their claim. The customs authorities, however, classified the goods as over-proof brandy based on the description in the invoice and the French Customs Certificate. The Tribunal examined the evidence, including the I.S.I. Standard 4450-1967 and the Compendium of Classified Opinions, and concluded that the imported goods were indeed "brandy concentrate" and not over-proof brandy.

3. Interpretation of Import Trade Control Regulations and B.T.N.

The customs authorities relied on the B.T.N. (Brussels Tariff Nomenclature) to classify the goods under heading No. 22.09, which includes alcoholic beverages. The appellants argued that the B.T.N. should not be used for interpreting the Import Trade Control Schedule. The Tribunal noted that while the B.T.N. could serve as a guideline, it should not be the sole basis for classification. The Tribunal also referenced the Government of India's decision in the case of Modern Engineering and the Bombay High Court's decision in the case of Halldyne Glass Works, which supported the appellants' argument that the B.T.N. should not be used for interpreting the excise tariff.

4. Determination of Appropriate Fine in Lieu of Confiscation

The appellants contended that the fine of Rs. 6 lakhs imposed in lieu of confiscation was excessive and against Section 125 of the Customs Act. They argued that the maximum limit for the fine, based on the c.i.f. value of Rs. 96,539/- and the duty leviable of Rs. 8,72,364/-, should be Rs. 2,00,000/-. The Tribunal examined the submissions and concluded that the fine should be reduced substantially to come within the statutory limit if not totally set aside.

Conclusion

The Tribunal allowed the appeal, concluding that the imported goods were "brandy concentrate" and not over-proof brandy. The Tribunal also noted the Bombay High Court's decision in the case of Tata Exports Ltd., which supported the appellants' case. The fine imposed by the Collector was deemed excessive and was ordered to be reduced to comply with Section 125 of the Customs Act.