1998 (6) TMI 270 - AT - Customs

Summary

Issues Involved:
1. Classification of imported non-woven fabric rolls.
2. Applicability of Open General License (OGL) for the import of non-woven fabric rolls.
3. Validity of the penalties and fines imposed by the customs authorities.

Issue-wise Detailed Analysis:

1. Classification of Imported Non-Woven Fabric Rolls:
The appellant argued that the non-woven fabric rolls should be classified under Chapter 56.03 of the Customs Tariff Act, and alternatively under Chapter 59.11. The Additional Collector classified the goods under Chapter 59.11 and imposed fines and penalties. The appellant contended that the non-woven fabric used in the manufacturing process of audio magnetic tapes acts as a filter media, not a wiper. The Tribunal referred to the case of Trijama Filterall Pvt. Ltd. v. Collector of Customs, which classified similar fabrics under sub-heading 5911.10 of the Customs Tariff Act. The Tribunal concluded that the non-woven fabric rolls perform a technical purpose of dust catching and are not used for wiping, thus fitting within the classification under Chapter 59.11.

2. Applicability of Open General License (OGL) for the Import of Non-Woven Fabric Rolls:
The appellant claimed that the non-woven fabric rolls were covered under OGL as per the Import Policy 1990-93, specifically at Sl. No. 354, Appendix 6, List 8, Part I. The appellant had sought and received clarifications from DGFT and CCI & E before importing the goods. Both authorities confirmed that the non-woven fabric rolls were covered under OGL subject to actual user conditions. The Tribunal noted that the customs authorities did not seek expert opinion or consult the Import Trade Control authorities as required by Clause 17(2) of the Import Policy. The Tribunal held that the opinions of DGFT and CCI & E were binding, and the non-woven fabric rolls were correctly imported under OGL without requiring a license.

3. Validity of the Penalties and Fines Imposed by the Customs Authorities:
The Additional Collector imposed a fine of Rs. 85,000 and a penalty of Rs. 20,000 on the appellant, which was upheld by the Collector of Customs (Appeals). The appellant argued that the penalties were unjustified as they had complied with all requirements and obtained necessary clarifications from DGFT and CCI & E. The Tribunal found that the lower authorities did not consider the expert opinions and misinterpreted the use of non-woven fabric rolls. The Tribunal concluded that the penalties and fines were not warranted as the appellant's actions were bona fide and in compliance with the OGL provisions.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned order and granting consequential relief to the appellant. The Tribunal affirmed that the non-woven fabric rolls were correctly classified under Chapter 59.11 and covered under OGL, thus not requiring an import license. The penalties and fines imposed by the customs authorities were deemed invalid.