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TMI Blog1981 (8) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... Tariff Act, 1934. The importers of woollen rags have to claim the said exemption under Item 49(4) of the Indian Customs Tariff read with the Notification before the clearance of the consignment of woollen rags from the Customs. 2. since the year 1966, the State Trading Corporation of India has been given exclusive monopoly in licences for importing woollen rags from outside India. The import licences are not granted to the shoddy woollen mills individually. The importers apply to the Textile Commissioner for allocation of quota of woollen rags and on the recommendation of the Commissioner, the S.T.C. gives allocation of the import woollen rags to various consumers. The procedure adopted by the S.T.C. in regard to the import of raw materials was to invite local tenders from foreign supplies for the import of old and used garments, mutilated or unmutilated. The S.T.C. publishes a list of foreign suppliers and the importers are required to choose the suppliers. The importers are thereafter required to establish a local letter of credit in favour of the S.T.C. as per the value of allocation made. After such letter of credit is established, the S.T.C. establishes a letter of credit a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letters explaining the position in detail. The petitioners claimed that the import of 37 bales was exclusively under the supervision of the S.T.C. and the petitioners had no control either over the suppliers or the goods imported. The petitioners also pointed out that in the first two tests carried out by the Customs authorities, it was found that the wool content was more than 50 per cent and it was difficult to understand why the third test was resorted to and that too only in respect of bale No. 19. The petitioners also pointed out that the requirement that the woollen rag should contain wool of 50 per cent is not provided in the exemption notification and it was wrong for the Customs authorities to rely upon some trade advice given by the Government. The Deputy Collector of Customs, Bombay, by his order dated November 22, 1976 held that the core-drilling sample showed the wool content to be only 26 per cent and as the consignment cannot satisfy the minimum of 50 per cent wool content, the petitioners are not entitled to claim exemption under the Notification. The Deputy Collector thereupon directed that the imported goods may be allowed clearance against the licence for woolle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est. 7. Shri Cama, the learned Counsel appearing in support of the petition, submitted that the impugned order suffers from serious infirmity as the respondents have proceeded to levy the duty on the imported woollen rags on the ground that the wool content was less than 50 per cent. It was urged by the learned Counsel that the Exemption Notification no where provides that the imported rags should contain 50 per cent wool and in absence thereof it is not permissible for the authorities to rely upon some trade advice to claim duty on such rags. The learned Counsel also complained that the orders of the two authorities below do not indicate any sound reason for discarding the first two tests which resulted into the finding that the wool content was more than 50 per cent and equally there is no sound reason as to why the result of the third test was blindly accepted as correct and that too for all the 37 bales. In my judgment, the submission made by Shri Cama on the question of payment of customs duty deserves to be accepted. The Exemption Notification dated April 20, 1966 totally exempted woollen wastes and woollen rags from the whole of the duty of customs leviable thereon. The Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icting. The letter over-looks that apart from the physical test the Authorities have carried out the chemical test and in both those tests the wool content was found to more than 50 per cent. The Deputy Collector, in his order observes that the samples showed different findings in respect of wool content on the basis of different analysis and therefore, it is not possible to rely on the analysis of samples. The Deputy Collector found this convenient method to ignore the physical test and the chemical test carried out by the authorities on the earlier occasion. The Deputy Collector accepted the finding of the core-drilling test as absolutely correct and proceeded to hold that the entire consignment is not available to exemption because the contents of wool was less than 50 per cent. In my judgment, the approach of the Deputy Collector was totally incorrect. Merely because the different analysis show different conclusions it is not permissible to select that conclusion which suits the authorities to levy the duty. The order of the Deputy Collector nowhere indicates that the first two tests carried out by the authorities were in any way defective in nature and the conclusion was not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the Scale of Rates notified by the Port Trust Authorities and on a note which appears in Section 3 dealing with the rates of page 13 of the Scale of Rates Charged at the Docks. The Scale of Rates are approved by the Board of Trustees under Sections 48 to 51 of the Major Port Trusts Act, 1963 and are in force from 1st July, 1975. The relevant Rule reads as under : "Goods detained by the Customs Department for special examination `involving analytical or technical tests other than the ordinary processes of appraisement,' will be exempt from demurrage fees during such period of detention as may be certified by the Collector of Customs to be not attributable to any fault or negligence on the part of importers or exporters plus two working days. Certification by the Customs will be given by endorsement on relative duplicate copies of Bill of Entry or shipping Bills." Shri Cama submits that in view of this Rule and on the finding that the goods were not detained because of any fault or negligence on the part of the petitioners, the demurrage charges should not be recovered from the petitioners. The submission is not correct. The rule on which reliance is placed provides for grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he goods earlier and therefore the liability of demurrage charges cannot be foisted on the petitioners. It is true, as found by me hereinabove, that the Customs authorities were in error in claiming duty on the imported woollen rags although the petitioners were entitled to the advantage of the Exemption Notification, but that fact itself is not sufficient to hold that the petitioners can clear the goods without payment of demurrage charges. It is open for the petitioners to pay the demurrage charges due after May 1975 and then claim the same from the Customs authorities in appropriate proceedings. The petitioners have not sought any relief against the Customs authorities in that connection in the present petition and as such the request of Shri Cama that the Customs authorities should be ordered to pay the demurrage charges cannot be accepted. The petitioners are entitled to the detention certificate from the Customs authorities only till end of May 1975. The reliance by Shri Chinoy in this connection on Ex. 4, a letter dated January 4, 1977 addressed by the petitioners and on averments in para 22(e) of the petition is very appropriate. The contents show that petitioners were full ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also relied upon the decision of the Division Bench of this Court in 1977 (Vol. 39) Sales Tax Cases page 386 = 1978 E.L.T. (J 646) (Punjab Business Supply Co. Pvt. Ltd. v. State of Maharashtra). For the reasons recorded in that judgment, it is not possible to accept the submission of the learned Counsel. The Division Bench was considering the definition of the term "cotton fabric" given in Item No. 12 of the First Schedule to the Central Excises and Salt Act, 1944, and held that the rags and Chindhis are covered by the definition. The Division Bench observed that merely because cloth is sold in pieces and not in the form of Tagas or bales manufactured by the Mills, it does not cease to be manufactured cloth or cotton fabrics. Therefore, although rags and Chindhis are pieces of cloth of regular shapes and sizes, it cannot be said that they are not manufactured cloth. In the present case, the question which arises is whether the expression `textile' in Item No. 85 of the Scales of Rates would cover the woollen rags. In my judgment, it would not be possible to hold so. What was contemplated by Item No. 85 was textile or fabrics in its pure form and not the woolen rags. 13. Relia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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