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TMI Blog1984 (11) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... ts Co. Limited M/s. Rallis India Limited 2. For the imports by Bombay Oil Industries (2 consignments) the Appellate Collector decided in favour of the Custom House. 3. The Government of India considered that the Appellate Collector was wrong in the decisions he took in favour of the importers. So it issued notices F.No. 380/21/80-Cus.II, dated 4-8-1980 and F. No. 380/155/80-Cus.II, dated 7-8-1981 under Section 131(3) of the Customs Act, 1962 to the importers asking them to show cause why the Appellate Collector s order should not be annulled or modified. 4. Bombay Oil Industries who had lost their appeals before the Appellate Collector have filed appeals against the order. 5. This is how we have these cases before us. Eight case arise from the notices of review issued by the Government of India and two are appeals filed by Bombay Oil Industries. 6. The companies were concerned with the import of tallow for which they claimed concession of duty under Notification No. 141/76-Cus., dated 2-8-1976. This notification exempted tallow with certain specifications; it is reproduced below : - In exercise of the powers conferred by sub-section (1) of section 25 of the Customs A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 192-202 192-202 Iodine value (Wijs) (iv) 32-50 30 - 56 Acid value, Max (v) 10 20 Unsaponifiable matter, percent by mass, Max (vi) 0.5 0.5 Titre of fatty acids, C (vii) 40-49 40 - 51 9. The 1977 edition carried the following table - Characteristics Type I Type II Moisture and insoluble impurities percent by mass, Max (i) 1.0 1.0 Colour in a 1 - in cell on the Lovibond scale expressed as Y+5R, (ii) not deeper than 15 40 Saponification value (iii) 192 to 202 192 to (sic) Iodine value (Wijs) (iv) Acid value, Max (v) 28 to 40 2 30 to 56 10 Unsaponifiable matter, percent by mass, Max (vi) 0.5 1.0 Titre of fatty acids, C (vii) 46 to 51 40 to 51 10. The Appellate Collector noted that the specifications given by Notification No. 141/76-Cus. were word for word and figure for figure lifted from the 1968 IS - 887 for Type-I and this is true enough. In his order he traces the history of IS 887 and, eventually, concludes th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an tallow for which the IS 887 and IS 548 were designed but foreign tallow and most probably beef tallow, it was reasonable to say that the standard of the tallow should be gauged in accordance with the grades or standards prescribed by the American Fats Oil Association. He reasoned that the specifications of export grade tallow by American Fats Oils Association do not attach as much importance to the colour value of tallow as to F.A.C. (Fats Analysis Committee) and other values. 13. The American Oils Chemists Society s publication the A.O.C.S. Official Method Cc 8d-55, Formerly Cc 8d -53, corrected 1958 defines the method for Refined and Bleached colour, and says this method determines the colour of the sample after treatment with alkali and a specified bleaching earth . It goes on to indicate that it was applicable to tallows and greases intended for soap production. This publication specifies in great details the apparatus and supplies for use, the. preparation of sample, method of determination of the free fatty acids and the actual procedure of testing. For bleaching it prescribes sodium hydroxide solution 0.25 N, accurately standardized and sodium hydroxide 20 Be pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollector of Central Excise [1978 (2) E.L.T. (J 350) (S.C.)]. He also quoted in support of his argument the Supreme Court s judgment in Dunlop India and Madras Rubber Factory v. Union of India; Civil Appeal Nos. 1446 and 2746 of 1972 [1983 (13) E.L.T. 1566 (S.C.)]. He said that there was no equity in a taxing statute and this is proved by the ruling of the Delhi High Court in Modi Rubber Limited v. Union of India (C.W.P. 1773 of 1979 with other Civil Writ Petitions of 1981) [1983 (12) E.L.T. 24 (Del.)]. The learned Counsel said that the parties admit that the colour specification was not satisfied for the tallows. He referred to order of the Tribunal 505 to 515/83-C interpreting Notification No. 115/73. 17. The learned Counsel criticised the part of Appellate Collector s order in which he said that the goods should be tested now in accordance with the A.O.C.S. Official method of testing of colour when he knew that the consignments had all been cleared out of charge and he would know, therefore that such an order was no longer capable of implementation. 18. On behalf of the Greaves International Limited, Dadlani Silk Stores, Rajendra Oil Mills and Refinery and Hyderabad Asbesto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20. The learned Counsel continued his argument to say that the notification was intended to give relief to the assessee; its object should not be frustrated by the quibbling of the Custom House. It was not correct to say that the Appellate Collector had made up his mind in advance. The learned Counsel said that the department s Counsel had quoted a judgment in which the Tribunal decided that the denial of the notification of exemption was justified in a case in which the consignment of fertilizer did not meet the test relating, among other things, to moisture content. He said that this is hardly an argument because it is not known what method is specified. He quoted the Supreme Court s ruling in the Dunlop case that trade understanding should be relied upon for the purpose of interpretation. There was ambiguity in the notification and the Appellate Collector had given an order that merely showed a correct and proper interpretation. 21. On behalf of M/s. Rallis Mr. A.N. Haksar, Advocate, said that he would adopt the argument put forward by the learned Mr. Nankani. He said that Notification 141/76-Cus. was silent on the method that should be adopted in testing. Therefore, the meth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he saw during the test. Instead, he has given an opinion. It is for the adjudicating officer to decide and form an opinion and not for the chemist who tested the sample to do so. Therefore, no decision can be based on such a test report. The show cause notice is, therefore, invalid. He said whether the A.O.C.S. method was adopted or not, he would like to adopt Mr. Haksar s argument. The method which gives the best effect to the notification should be adopted. 25. The Bench then heard the Advocate for M/s. Bombay Oils. The appeals by Bombay Oils failed because the Appellate Collector, in his order, found that Bombay Oils goods were mutton tallow. Since he had come to the conclusion that mutton tallow was to be correctly tested in accordance with IS 548 and that the test showed that Bombay Oils tallows did not meet the colour specification he ruled against this firm and held that it could not obtain the exemption. 26. The learned counsel for the importer M/s. Bombay Oil began by saying that the action of the Assistant Collector was wrong and that they had been denied natural justice. No notice was given to them by the Assistant Collector before he rejected their refund claim. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion is taken effecting his interest. They also established that the Tribunal in some of these decisions took the view that when there has been a denial of natural justice, the case can be remanded for a fresh look into the matter. They also underlined the need when any evidence is ignored or a cross examination of a vital witness is denied, there can be said to have been denial of natural justice and the matter can be remanded for observing the principles of judicial practice and to afford the affected party a full opportunity. In another judgment, the Tribunal held that since the chemical examiner s report had not been supplied that report cannot form the basis of findings and that such a report should be excluded. In AIR 78 judgment, the Supreme Court observed that no one shall be judged unheard as this was a part of natural justice. This importer was denied his due rights without hearing by the Assistant Collector and, therefore, all proceedings that were the basis of that decision were afflicted by the sickness of injustice. The learned Counsel argued that there was sufficient case for remanding this matter to the Assistant Collector for a fresh hearing so that the party is af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said that the appeals of the department in respect of all the importers should be allowed while the appeal by M/s. Bombay Oil should be dismissed. 32. Voluminous and learned arguments were advanced by both sides, to say nothing of the long orders of the Appellate Collector. What appears to have been lost sight of by most parties to the dispute is that the Notification No. 141/76-Cus. makes no distinction between mutton tallow, beef tallow and other animal tallow. The Appellate Collector was correct when he said that the notification for tallow agreed in all details with the specifications given by IS 887/968 for Type-I; it does appear, therefore, that standard Type-I specifications were originally meant for mutton tallow. But what he overlooked was that when the customs notification was promulgated in 1976 it did not specify whether it was for mutton tallow or beef tallow or vegetable tallow. It was only tallow that was exempted. The learned Counsel for M/s. Metro Exporter said that the notification was issued under Heading 15.01/06 of the Customs Tariff and this heading covered animal tallow and, therefore, the tallows covered by the exemption notification should be also anima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cations for all tallows whether beef or mutton. The Appellate Collector, in our opinion, was carried away by old history; he did not give sufficient weight to the fact that the notification specifies a number of properties that the tallow needs to have to be given exemption of duty in excess of 15%. It is not that it acts to ban to all tallows - all it does is to provide an exemption to such tallows as qualify and meet the specifications enlisted in it. It may be that some tallows will meet the requirements of exemption notification and some will not. But this is not sufficient to say that all tallows must, so to say, qualify for the exemption. 34. It is not to be overlooked that mutton tallow is produced in western countries and beef tallow is not the only tallow one can find there. What would be the position if one importer imports mutton tallow and another, beef tallow, from America ? That only the mutton tallow should be allowed to pass under the notification because the notification corresponds more closely to specifications for mutton tallow? We think that the more reasonable interpretation would be to say that of the two tallows only the tallow that meets the specificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted in these consignments were beef tallows they should receive certain conditioning in order to meet what he thought was the circumscription of Notification l41/76-Cus. The A.O.C.S. official method, which the Appellate Collector thought should be followed since these tallows were, according to him, beef tallows or mixed tallows, required prior treatment before the colour test. But this method which the Appellate Collector favours is a method for testing applicable to tallows and greases intended for shop production. The heading under scope says Applicable to tallows and greases intended for soap production . We have not been able to understand why, because the tallows are beef tallows, they should be colour treated in order to meet the specifications of A.O.C.S. method of testing. We should have thought that whether they are beef tallows or mutton tallows, the only natural conclusion one should arrive at was that they should qualify under the exemption notification only if they pass all the specifications. 37. It does appear that the imports were mutton tallow or at least had been described as mutton tallow although in some other cases there is no clear evidence for sayi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een first refined and bleached, they would have shown colour reading of 5 - 6 on the Lovibond 1" cell. 40. A surprising proposition was made that in the absence of any report saying the goods were not covered by the notification, certificates produced by the importer should be accepted. It is not possible to go into this at this time and stage. 41. Much was made by the importers counsels of the fact that the learned Counsel of the department argued that the samples were no longer available and it would notice possible to test them as directed by the Appellate Collector. The importers said that this was not their fault and they cannot be made to pay for this. But we do not think there is any need to labour this point because we do not favour a retest of the goods on the lines preferred by the Appellate Collector. If there was any dispute on the method of test by the custom house laboratory, the importers should have taken immediate counter-action, but they let it go, evidently because of the relief they obtained in appeal. They cannot agitate the matter now before us. 42. We are, therefore, of the opinion that the Appellate Collector s order was wrong and ought to be set a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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