1993 (4) TMI 179 - AT - Customs

Issues Involved:
1. Import of jumbo rolls of medical X-ray films under OGL.
2. Requirement of COB license under the Industrial Development Regulation Act, 1951.
3. Confiscation and penalty for violation of Import Policy.
4. Validity of interim orders and their impact on import.
5. Quantum of redemption fine and penalty.

Detailed Analysis:

1. Import of Jumbo Rolls of Medical X-ray Films Under OGL:
The appellants, a small-scale industrial unit, imported consignments of jumbo rolls of medical X-ray films and claimed clearance under OGL (Open General License) as per Appendix V, List-8, Part-I, Sl. No. 297 of A.M. 1988-91 Import Policy. The Department contended that the appellants were not actual users since they did not possess a COB (Carry-On-Business) license required under the Industrial Development Regulation Act, 1951, for slitting/confectioning photo-sensitive materials.

2. Requirement of COB License Under the Industrial Development Regulation Act, 1951:
The activity of slitting/confectioning of photo-sensitive materials was taken out of the purview of SSI (Small Scale Industries) and required a DGTD (Director General of Technical Development) license. The appellants argued that as an SSI unit, they were not required to obtain a COB license. The Department, however, did not allow clearance on this ground. The Calcutta High Court initially issued an interim order deeming the appellants as COB license holders, which was later varied to limit the benefit to slitting of photographic papers only.

3. Confiscation and Penalty for Violation of Import Policy:
Show Cause Notices were issued alleging violation of the Import Policy and proposing confiscation and penalty. The adjudicating authority confiscated the goods, allowing redemption on payment of a fine of Rs. 15 lakhs and imposed a penalty of Rs. 5 lakhs in each case. The appellants contended that they acted in conformity with the interim court orders and were actual users as per the Import Policy.

4. Validity of Interim Orders and Their Impact on Import:
The appellants opened Letters of Credit based on the interim order dated 12-1-1989, which allowed them to import the goods. The interim order was later modified on 13-7-1989, limiting the benefit to photographic papers only. The final order of the Calcutta High Court dated 26-6-1991 held that the appellants could not import without the necessary license and vacated all interim orders. The Tribunal found that the import was not in accordance with the law, but the interim order's existence was a factor to consider in determining the redemption fine.

5. Quantum of Redemption Fine and Penalty:
The Tribunal reduced the redemption fine from Rs. 15 lakhs to Rs. 8 lakhs and the penalty from Rs. 5 lakhs to Rs. 1 lakh in each case, considering the interim order's impact and the medical use of the goods. The Tribunal relied on the Supreme Court's decision in Jain Exports Pvt. Ltd. v. Union of India, which emphasized considering extenuating circumstances in determining fines.

Conclusion:
The Tribunal upheld the confiscation of goods and imposition of a penalty but reduced the quantum of redemption fine and penalty, taking into account the interim court orders and the appellants' bona fide actions. The appeals were disposed of accordingly, and the goods were ordered to be released upon payment of the revised redemption fine and penalty, along with applicable duties. The department's cross-objections were disposed of as they did not seek any variation of the impugned orders.

← Previous Next →