1988 (4) TMI 271 - AT - Customs

Summary

Issues Involved:
1. Validity of REP import licenses for importing almonds in shell.
2. Classification of almonds in shell as consumer goods.
3. Interpretation of import policy and the role of the Chief Controller of Imports and Exports (CCI).
4. Quantum of fines and penalties imposed.

Issue-wise Detailed Analysis:

1. Validity of REP Import Licenses for Importing Almonds in Shell:
The appellants imported various quantities of almonds in shell under REP import licenses issued against G.I (i)(a) of Appendix 17 of the import policy for April-March 1985-88. The Custom House held that almonds in shell are consumer goods of agricultural origin, falling under Serial No. 121 of Appendix 2 Part B of the import policy, which restricts their import and does not allow it against REP licenses. The Collector concluded that the licenses produced were not valid for importing almonds in shell, leading to the confiscation of goods and imposition of fines and penalties.

2. Classification of Almonds in Shell as Consumer Goods:
The appellants argued that almonds in shell, being seeds, do not qualify as consumer goods as defined in the import policy, which refers to items that directly satisfy human needs. They contended that the almonds must be de-shelled before consumption, thus they are not consumer goods. The Horticulturist's certificate confirmed that the almonds were seeds capable of germination. However, the Custom House and the CCI classified almonds as consumer goods due to their agricultural origin and commercial classification as dry fruits.

3. Interpretation of Import Policy and the Role of the Chief Controller of Imports and Exports (CCI):
The Custom House sought clarification from the CCI, who confirmed that almonds are consumer items under Appendix 2 Part B and cannot be imported against REP licenses. The appellants argued that the Horticulturist's opinion should prevail, but the policy mandates that the CCI's interpretation is final and binding. The Tribunal upheld this view, emphasizing that the policy specifies the CCI as the authoritative body for such clarifications, making the CCI's decision binding in law.

4. Quantum of Fines and Penalties Imposed:
The Collector imposed varying fines and penalties on the appellants, considering the high margin of profit (220%) on the imported goods. The appellants argued for a reduction in fines, citing lower fines in similar cases and Supreme Court rulings on excessive fines. The Tribunal found the fines and penalties reasonable, noting that they were intended to prevent profiteering from illegal imports. The Tribunal referenced the Delhi High Court's stance that fines should not result in a bonanza of profit for illegal transactions, and upheld the Collector's decision.

Conclusion:
The Tribunal concluded that the import of almonds in shell was not covered by the REP licenses due to their classification as consumer goods under Appendix 2 Part B. The CCI's clarification was deemed final and binding. The fines and penalties imposed by the Collector were upheld as reasonable, considering the high profit margins and the need to deter illegal imports. The appeals were accordingly rejected.