1994 (4) TMI 140 - AT - Customs

Summary

Issues Involved:
1. Classification of imported goods (Nutmegs and Mace) under the Import Policy.
2. Validity of confiscation and redemption fine imposed by the customs authorities.
3. Applicability of recommendations from the Director General of Foreign Trade (DGFT).
4. Bona fide belief and conduct of the appellants in importing the goods.
5. Precedent and future implications of allowing the import.

Detailed Analysis:

1. Classification of Imported Goods:
The appellants imported Nutmegs and Mace valued at Rs. 781,450/- and claimed that these goods were freely importable as they were not listed in the negative list of the ITC Policy 1992-97. The authorities, however, classified these goods under the category of spices covered under Sl. No. 156-Part II of Chapter XV of the Import Policy, thus considering them restricted items under consumer goods of agricultural origin. The appellants contended that the imported items were for preparing Ayurvedic and Unani medicines and should not be classified as consumer goods.

2. Validity of Confiscation and Redemption Fine:
The original authority proceeded to confiscate the goods and allowed them to be redeemed on payment of a fine of Rs. 9,70,000/-, without imposing any personal penalty. The lower appellate authority upheld this decision, arguing that releasing the goods without adjudication would set a precedent, making it difficult for the Department to deny similar future claims.

3. Applicability of Recommendations from DGFT:
The DGFT had recommended the release of the goods as a special case, acknowledging that the goods could be considered consumer goods but suggesting their release based on the appellants' bona fide belief and the clarification given by the JCCI & E, Madras. The lower authority, however, deemed the DGFT's recommendation as advisory and not binding, and thus did not accept it.

4. Bona Fide Belief and Conduct of the Appellants:
The appellants argued that they acted under a bona fide belief that the goods were freely importable based on clarifications from the JCCI & E, Madras, and the DGFT. They cited a Supreme Court judgment (Akbar Badruddin Jiwani v. Collector of Customs) to support their claim that goods imported under bona fide belief should not be confiscated or subjected to redemption fines. The appellants also highlighted that similar goods were cleared in Bombay, which further reinforced their belief.

5. Precedent and Future Implications:
The lower authorities were concerned that releasing the goods based on the DGFT's recommendation would set a bad precedent, encouraging other importers to claim similar benefits. However, the Tribunal noted that the DGFT is the statutory authority for policy interpretation and that the appellants acted in good faith based on official clarifications. The Tribunal emphasized that only imports made during the period when the clarification was operative should be considered, and future imports should not be affected.

Conclusion:
The Tribunal held that the DGFT's recommendation and the bona fide belief of the appellants should be given due weight. The confiscation and redemption fine were set aside, and the appeal was allowed with consequential relief. The Tribunal emphasized that the appellants' conduct was bona fide and that the lower authorities' concern about setting a precedent was not a correct appraisal of the situation. The judgment of the Hon'ble Supreme Court and the Calcutta High Court's observations were deemed applicable, supporting the appellants' case for relief.