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TMI Blog2023 (3) TMI 1029X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 and the letter addressed by the Principal Collector of Customs to the Federation of Indian Export Organization dated 14th/15th May, 1986 all clarified position that the appellant would be entitled to import canalized items under the additional licenses which were issued to them. It cannot be disputed that the contract having been entered into and processed, it is virtually next to impossible to stop, the consignment mid sea which the Customs Department would be well aware and there are several procedures intervening such matters if at all it is feasible of being performed. Therefore, the Collector of Customs has faulted the appellant not performing of an act (stoppage of the shipment in the mid sea) which was next to impossible. In any event, the conduct of the appellant should be examined on the date when they placed the order i.e. on 12th and 14th March, 1986 and as stated earlier the law on the subject was clearly in favour of the appellant and the concerned department were also of the clear view that canalized items can be imported on additional license. Therefore, failure to examine bonafides of the appellant on the above facts has led to an erroneous approach by the departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factual background. Therefore, we are inclined to interfere with the quantum of redemption fine which was imposed. The orders passed by the authority imposing a redemption fine of Rs. 80,00,000/- is set aside and the fine stands reduced to Rs. 50,00,000/- and the penalty imposed on the appellants is set aside in its entirety - Appeal allowed in part. X X X X Extracts X X X X X X X X Extracts X X X X ..... period 1978-79 will be valid only for import of items appearing in appendix 6, List 8, Part II of the Import Policy, 1985-88 and, therefore, it was held that the licences submitted by the appellant are not valid for import of such goods by virtue of them being included in appendix 5, Part I of ITC Policy, 1985-88. Thus, it was held that the imports have been unauthorisedly made in contravention of Clause 3(2) of Import (Control) Order, 1955 and with Section 3 of the Import and Export (Control) Act, 1947 as amended. In the light of the above there was a proposal to confiscate the goods under Section 111 (d) of the Customs Act, 1962 and also proposing action against the persons concerned in the unauthorized importation under Section 112 of the Act. The appellant in the written statement dated 4th October 1986 contended that the judgement of the Hon'ble Supreme Court dated 18th April 1985 clearly holds that the appellant shall be entitled to import all other items whether canalised or otherwise in accordance with the relevant goods. Chief Controller of Imports and Exports, New Delhi has issued three clarifications dated 17th March, 1986, 23rd April, 1986 and 4th May, 1985 that Import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B. Vijay Kumar & Co. etc. Versus Collector of Central Excise in Civil Appeal no. 3335 and 4446 of 1988 and held that the said decision in would be binding and accordingly the order passed by the Collector of Customs dated 31st October, 1986 was set aside and the department was directed to refund the redemption fine and penalty paid by the appellant. The Collector of Customs filed reference application before the Tribunal seeking reference to this Court on certain questions of law. This application was rejected by the Tribunal and thereupon reference application was filed before this Court, seeking a direction upon the Tribunal to refer the case to this Court on the following two questions (i) whether on the fats and in the circumstances of the case the Tribunal was right in law in setting aside the order of the Collector dated 31st October, 1986 and directing the refund with interest, (ii) weather on the facts and in the circumstances of the case the Tribunal was right in law in transferring the cross-objection to be decided by the Special Bench of the Tribunal. The Division Bench of this Court by order dated 15.01.2010 held that the second question on which reference was sought f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled for Additional Licence for direct import of Palm Fatty Acid distillate and Palm Acid Oil and under the policy period 1978-79 these items were not canalised. The Import Trade Control Authorities rejected the claim for grant of Export House Certificate to the appellant. The appellant and other similarly placed persons aggrieved by such decision challenged the same before the High Courts and relief was granted by the High Court of Bombay and the High Court of Delhi. The Hon'ble Supreme Court disposed of several Special Leave Petitions by order dated 18th April, 1985 (Union of India Versus Rajanikant Brothers) confirming the order passed by the High Court with a direction to issue Export House Certificate for the year 1978-79 within 3 months with a condition that save and except items which are specifically banned under the prevalent import policy at the time of import, the diamond exporters shall be entitled to import all other items whether canalised or otherwise in accordance with the relevant rules. In terms of the said direction, the appellant was issued Additional Licence on 28th August, 1985 for import of items permissible to export house under an Additional Licence cate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration the legal position as held by Hon'ble Supreme Court in Rajanikant Brothers and as explained in Raj Parkash Chemicals Limited, the appellants were under the bonafide belief that the goods can be imported directly under the additional licenses though it were canalized items in the 1985-1988 import export policy. 8. The appellant placed orders for purchase of the goods on 12.03.1986 and 14.03.1986 from a supplier in Malaysia and the total value of the goods is stated to be Rs. 60,00,000/-.The appellant in order to strengthen their case referred to the clarifications issued by the Joint Chief Controller of Imports dated 17.03.1986 stating that against the additional licenses issued in terms of the order passed by the Hon'ble Supreme Court in Rajanikant Brothers, import of items permissible against additional licenses in terms of policy for 1978-1979 would be allowed even if such items were in the list of canalized items in the policy. The appellant also referred to the meeting of the Member of the CBEC and the Principal Collector held on 03.04.1986 wherein minutes were recorded with effect that the items which were under OGL during 1978-1979 and subsequently canalized in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed penalty. In the mean time, another mater came before the Hon'ble Supreme Court in the case of D Navinchandra and Company, Bombay and Another Versus Union of India and others 1987 (29) ELT 492 (SC) wherein the Hon'ble Supreme Court held that the canalization was not done away with in the order dated 18.04.1985 (Rajanikant Brothers) and that items which were canalized under 1985-1988 policy could not be imported under the said additional licenses. On the question of penal action, the Hon'ble Supreme Court held that the authorities should decide the same after taking into consideration all the facts and circumstances and taking into consideration of the case of the petitioner and their alleged claim of bonafide on their part. In the case of B. Vijay Kumar and Company the order of confiscation and imposition of redemption fine was set aside however the Hon'ble Supreme Court observed that the order has been passed in the special circumstances and should not be treated as precedent. On reading of the said judgment, it is evidently clear that what weighed in the minds of the Hon'ble Supreme Court was the bonafides of the importer who was issued the additional licenses and this was held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tervening such matters if at all it is feasible of being performed. Therefore, the Collector of Customs has faulted the appellant not performing of an act (stoppage of the shipment in the mid sea) which was next to impossible. In any event, the conduct of the appellant should be examined on the date when they placed the order i.e. on 12th and 14th March, 1986 and as stated earlier the law on the subject was clearly in favour of the appellant and the concerned department were also of the clear view that canalized items can be imported on additional license. Therefore, failure to examine bonafides of the appellant on the above facts has led to an erroneous approach by the department. Reference was made by the Tribunal to the decision in the case of the Pine Chemicals, the said decision can have no application to the case on hand as the said decision arouse out of the case of willful mis-declaration of the goods. Coming to the aspect as regards levy of penalty, as held by the Hon'ble Supreme Court in Pratibha Processors Versus Union of India 1996 (88) ELT 12 (SC) penalty is ordinarily levied on the assessee for some contumacious conduct or for deliberate violation of the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shashi Kant. In the said case the importer imported a canalized item which is Palm Acid Oil which is also the product imported by the appellant. The quantity imported was 4000 metric tons and the redemption fine imposed was Rs. 58,00,000/-. In the case on hand the total quantity of both the products imported by the appellant more or less is 3700 metric tons and if the same yardstick as applied by the department in the case of Shashi Kant is applied to the case on hand the redemption fine could at best be imposed to the tune of around Rs. 50 to 53 lakhs and definitely not Rs. 80,00,000/-. Therefore, we are of the view that redemption fine imposed on the appellant was excessive and disproportionate and inconsistent with the stand taken by the department in other contemporaries imports of same product in the same factual background. Therefore, we are inclined to interfere with the quantum of redemption fine which was imposed. 10. In the result, the appeal is allowed in part and the orders passed by the authority imposing a redemption fine of Rs. 80,00,000/- is set aside and the fine stands reduced to Rs. 50,00,000/- and the penalty imposed on the appellants is set aside in its entir ..... 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