1990 (6) TMI 174 - AT - Customs

Summary

Issues Involved:

1. Applicability of AM-81 Policy.
2. Coverage of Rapeseed Oil under OGL.
3. Applicability of Replenishment Benefits vs. Flexibility under REP Licences.
4. Justification for Imposition of Penalty.

1. Applicability of AM-81 Policy:

The primary issue was whether the AM-81 Policy or the AM-82 Policy was applicable to the import transactions in question. The adjudicating authority admitted that the AM-81 Policy was applicable, as the contracts were registered during this period. The Supreme Court's decision in Mahendra Singh (AIR-1978-SC-851) and the Bombay High Court's decision in Ashok Leyland v. Union of India (1986 (26) E.L.T.-676) were cited to support that the validity of an order must be judged by the reasons mentioned at the time it was made. Thus, the AM-81 Policy was deemed applicable.

2. Coverage of Rapeseed Oil under OGL:

The second issue was whether rapeseed oil, both edible and industrial, was covered under the Open General Licence (OGL). The appellants argued that the Board's decision in 1982-ECR-530 indicated that Appendix-9 of the AM-81 Policy concerned only the edible variety of oil. However, the Supreme Court's decision in Jain Exports Pvt. Ltd. (1988 (17) ECR-631) clarified that all varieties of coconut oil, and by analogy rapeseed oil, were covered under Paragraph-5 of Appendix-9, including both edible and non-edible varieties. Therefore, rapeseed oil was not covered under OGL, making the imports liable for confiscation under Section 111(d) of the Customs Act, 1962.

3. Applicability of Replenishment Benefits vs. Flexibility under REP Licences:

The third issue was whether the benefit of registration of contract applied only to replenishment items and not to other flexibility allowed against REP licences. Given that the imported goods were specifically canalised in the AM-82 Policy, the adjudicating authority's decision on the second issue rendered further analysis on this point unnecessary.

4. Justification for Imposition of Penalty:

The final issue was whether the imposition of penalties was justified. The appellants argued that executing a bond should preclude the imposition of penalties. However, the tribunal cited the Supreme Court's decisions in R. S. Joshi v. Ajit Mills Ltd. (AIR-1977-SC-2279) and J. D. Crighton v. S. K. Srivastava (AIR-1969-Calcutta-266), which clarified that mens rea is not required for imposing penalties under Section 112 of the Customs Act, 1962. The tribunal also referenced the decision in Calcutta Motor Dealers Association v. Collr. of Cus. (1988 (37) E.L.T.-400), which stated that penal action could be taken in addition to enforcing the terms of the bond. The penalties imposed were approximately 5% of the total CIF value, in line with the High Court's directive for leniency.

Conclusion:

The tribunal upheld the applicability of the AM-81 Policy, determined that rapeseed oil was not covered under OGL, and justified the imposition of penalties under Section 112 of the Customs Act, 1962. Consequently, all four appeals were dismissed.