9911796707
TMI Blog1989 (4) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... authority issued in their favour by M/s National Engineering Works, Bhopal. A doubt was entertained by the Cochin Customs authorities regarding the licence and the enquiries of the said authorities revealed that some action was contemplated against M/s National Engineering Works for obtaining the endorsement in respect of para 148 of Import Policy with the list of permissible items allowed under the licence fraudulently and the licensing authorities requested the customs authorities not to release the goods. The licensing authorities issued a show cause notice to M/s National Engineering Works on 24-4-1985 and the licence was later suspended by an order by the Joint Chief Controller of Imports Exports, Bombay vide his letter dated 9-9-1985. 2. Further, the goods were examined and arranged to be tested to ascertain their quality, namely, whether the same were of prime quality or seconds as claimed. From the test result, the authorities came to the tentative conclusion that the goods were of prime quality. A test weighment of the ten coils was done and the weight was found to be higher than that of declared and the weight of the consignment was arrived at on the basis of weight o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same was accepted by the appellants on 30-3-1985. He stated that the goods were originally bound for Mangalore but the same except for 10 coils could be unloaded only at Cochin and the appellants filed the necessary bill of entry for the same on 30th July, 1985. The sample for test was drawn and the test report for the same was furnished by the Cochin Shipyard on 26-8-1985. He pleaded that the licence against which the letter of authority had been issued was suspended vide JCCI s order dated 9-9-1985 and a show cause notice for the suspension of the licence was issued on 24-4-1985. The goods were surveyed on 24-4-1985 by an independent surveyor. The learned advocate advanced arguments on the following four aspects involved in the case - (i) the validity of the licence for covering the goods; (ii) regarding the quality of the goods i.e. whether they were of prime quality or second quality; (iii) valuation of the goods; (iv) the excess quantity found. 5. The learned advocate pleaded that the licence was issued in the name of Ganpathy Exports Ltd. and the same was transferred to M/s National Engineering Works on 25-3-1985 and a letter of authority was issued in the name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s NIPPON KOKAN to M/s Nakamura Enterprises who in turn despatched the goods at the behest of the London party who raised the invoice, at a later date as the test of goods would have been apparently done at the time of manufacture and was the result of quality control check immediately after manufacture. He had no explanation to offer in this regard. He however, pointed out that in this test report of the manufacturers, the goods had been classified as second grade due to off gauge which occurred through rolling miss in the factory and bungled zinc coating on surface. He pleaded that the Department had sent the sample for test to Cochin Shipyard while normally the samples are tested by the Departmental Dy. Chief Chemist. He pointed out that the sample drawn was a small one. He drew our attention to para 29 and 30 of the order-in-original and pleaded that the relivance of the Collector on the opinion of the Cochin Shipyard was misplaced and that he had not appreciated their plea in this regard. He pleaded that the Cochin Shipyard was not a recognised test house for testing of the steel sheets and he pleaded that the test report cited by the Department has no value. He pleaded that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious aspects as above. In regard to the licence produced, he stated that no order as such was placed against the licence for the supply of the goods. He pleaded that the letter of the appellants dated 13-3-1985 was not an acceptance of an order. He pleaded that in this view of the matter, it could not be said that the import had been made against any particular licence or any order, was covered by the licence. He pleaded that there was no reference in the invoice to the import licence. He pointed out that the original licence was issued in the name of M/s Ganpathy Exports and the same was endorsed in the name of another party and endorsement was also obtained on the licence for import in terms of para 148 of the Import Trade Control Policy for import of material by the licence holder for his actual use for the purpose of manufacture of goods for reexport. The show cause notice was issued by JCCI vide letter dated 24-4-1985. He cited at this stage the order of the licensing authority dated 5-6-1987 regarding cancellation of the licence and wanted the same to be admitted as additional evidence. The said oral request made was turned down by the Bench as the learned SDR wanted to rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the Customs was in terms of Section 14 of the Customs Act. 14. It is seen that the original licence was issued in the name of M/s Ganpathy Exports Ltd. with the description of the goods OTS containers. The licence is dated 12-2-1985 and Policy applicable is April/March, 1985. This license was acquired by transfer by M/s National Engineering, Bhopal and was endorsed for the import of items as per list attached under para 148 of the Import Policy 1984-85, subject to conditions as laid down in the Schedule V to Import Control Order, 1955 and other conditions as per para 148 (x) and (xi) of the 1984-85 Policy. M/s National Engineering also executed a legal undertaking as per para 148 (x) and that it is stated in the licence that it is not transferable. This endorsement, as seen from the copies of the licence from the licencee, were made by the Licensing authority. The licence was valid for the following items in the list attached. These are as under - Appendix - 5 Serial - 51 All coated/plated including galvanised aluminium and aluminium alloy coated and uncoated sheets/strips/coils of all grades of carbon steel not rolled or cold rolled not elsewhere mentioned but excludi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Date of the invoice 13-5-1985 The appellants have stated other relevant dates related to the imports. The same are - 1. Date of offer 14-3-1985 2. Date of acceptance 30-3-1985 3. Date of filing the bill of entry. 30-7-1985 16. The pleas of the Revenue is that action was contemplated by the Licensing authority on 11-4-1985, and show cause notice for suspension of the licence was issued on 24-4-1985 that M/s National Engineering in whose name the licence had been endorsed, would have become aware about the proceedings being drawn against them and in turn the letter of authority holder would have been made aware of the same, by them. The learned SDR pleaded that the appellants instead of taking any action to stop the consignment, imported the goods notwithstanding the action contemplated against the licence. This action was initiated by the show cause notice on 24-4-1985. From the facts on record, no doubt, we observe the transaction for the import of goods was done in a very unusual manner. On a query from the Bench, the learned advocate could not produce any evidence that there was any correspondence which l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould have been examined particularly when the invoice is dated 13th May, 1985. All that is pleaded by the Revenue is that the appellants must have been made aware by the licence holder as to the action that was being taken. The question is, is that enough to disallow the importation which had been put through by the appellants. In this connection, we may observe the issue stand settled by the judgements of the Hon ble Supreme Court in the case of East India Chemical Company v. Collector of Customs, Calcutta [1983 E.L.T. 1342] and the judgement of the Hon ble High Court of Calcutta in the case of Camey Colour Agency andAnother v. Chief Controller of Imports and Exports [1987 (30) E.L.T. 175 Calcutta] and the judgement of this Tribunal in the case of Prabhat General Agencies, Bombay [1984 (16) E.L.T. 519]. We observe that the Hon ble Supreme Court in their judgement cited (supra) have held as under - Nor is there any legal basis for the contention that licence obtained by misrepresentation makes the licence non est, with the result that the goods should be deemed to have been imported without licence in contravention of the order issued under Section 3 of the Act so as to bring t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt while deciding the issue whether the cancellation of the licence was involved. The Tribunal in their judgement in the case of Prabhat General Agencies, Bombay v. Collector of Customs, Bombay [1984 (16) E.L.T. 519] have held as under - We have carefully considered the submissions of both sides. The crucial question to be answered is whether the subject goods could be said to have been imported without a valid licence attracting the mischief of Section 111(d) of the Customs Act. We are not concerned in these proceedings with the correctness or otherwise of the order of cancellation of the licence passed by order, though it purports to be under Clause 9(a) of the Import Control Order, is really one under clause 9(cc) in view of the clear ground expressly stated therein. The order does not on the fact of it, show anything to indicate that the cancellation was to take effect from a prior date, the date of issue of licence. It is relevant to note here that clause 9(3) of the Import (Control) order provides that the competent authority may, by order, render ineffective or suspend the operation of any licence where proceedings for clearly implies that unless an order in terms of cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om para 18 of the order-in-original by stating that they were prepared to clear the goods on payment of appropriate duty on the excess weight provided the licence for the additional value was not insisted upon as the goods. According to them, the excess over the declared weight had been shipped to them without their knowledge. Even at the time of personal hearing, the same plea was taken. The appellants, we observe, have not ascertained from the suppliers as to the circumstances under which the goods in excess of the invoiced weight had been sent. There is no explanation in this regard before us as to how the goods were sent in excess of invoiced weight. 22. There is an endorsement on record by the appellants that they are ready to accept the weight on payment of duty on the consignment or the ascertained weight whichever is applicable under the circumstances. In this endorsement, they have stated, we accept the weight of ten coils to be true as it was done in the presence of our clearing agent. From the above, it is clear that the appellants for their own reasons, chose to accept the weight of the total consignment based on the test weight of the ten coils and not after getting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. at the Quality Control stage of the manufacture and the sale of the goods takes place thereafter. The description of the goods as sought to be made out for acceptance by the appellants is not based on an acceptable evidence. Further more, no standard specifications have been produced to show as to how these goods could be treated as of second quality or defective with reference to the prime quality goods. The Revenue on the other hand has arranged for the goods to be tested by Cochin Shipyard. During the course of the hearing, the learned SDR was asked as to what was the terms in which the test of the material was asked to be done. The learned SDR has given a copy of the letter dated 23rd August, 1985 addressed by the Assistant Collector to the Officer in Charge of the Metallurgical Laboratory, Cochin. The operative portion of the letter is reproduced below for convenience of reference - I am herewith sending two samples of galvanised steel sheets for ascertaining whether they are of uniform gauge and also for ascertaining whether there is any defect in the galvanising . It is seen the parameters which were asked to be ascertained were the gauge and the defects in the galva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not request for re-test for their own reasons. In the facts and circumstances therefore the findings of the Collector cannot be considered in anyway based on no evidence or perverse. He has held the goods to be of prime quality and in the circumstances of the case, these findings have to be held to be correct. We, therefore, dismiss the plea of the appellants in this regard. 25. In regard to the valuation, the appellant s have pleaded that the Collector has arrived at the value based on a communication from another Customs House and that no evidence of contemporaneous import has been given. We observe that the Collector has not brought on record the particulars of import which have formed the basis of his valuation. He has recorded his enquiries from other Customs House which revealed that actual rate Rs. 650 per MT. and defective galvanised sheets at the rate of Rs. 3000 per MT. The appellants have a right to contest the basis adopted and for that, it was imperative for the Collector to have given the appellants full particulars of the import of the other goods, the value of which was adopted as the basis for valuation and it was for the Collector to record as to how that valu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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