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TMI Blog1987 (7) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... xylamine acid sulphates and methyl formulate. The manufacture of formulations should be based on their own production of sulphamethoxazole and import of Trimathoprim will be considered only for one year. Thereafter, it should be based on locally produced materials". 2. Clause 10 read thus : "This industrial licence will be valid only for a period of 2 years within which commercial production is to be established. If an extension to this period is found necessary, you may apply to the Ministry of P & C, New Delhi with full justification giving the circumstances under which and the period for which the extension is sought". 3. On 13th October, 1977 the appellants were issued an import licence valid for 24 months subject to the condition that all goods imported under it would only be used in the appellants' factory. The raw materials permitted to be imported included isoxamine (hereinafter referred to as "the said material"). 4. On 20th September, 1978 the appellants wrote to the 2nd respondents (the Union of India) in connection with the manufacture of SMX. They stated that they had commenced, as soon as the industrial licence was granted to them, the development work for the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 130 of the Customs Act. The notice recorded that the appellants had claimed clearance of the said imported material under OGL upon a declaration as required by condition No. 6 of Appendix 10 of the Import Trade Control Policy AM 79. They had declared that they were registered as an industrial unit and held an industrial registration licence dated 23rd April, 1974 which had not been cancelled, withdrawn or otherwise made inoperative for the manufacture of SMX. Accepting this declaration clearance had been allowed. The Collector had thereafter called for and had examined the industrial licence, the declaration and other documents. He noted that the industrial licence stipulated that after a period of 2 years the production of SMX should be based on locally produced material; and, therefore, that the appellants were not allowed to use imported material in the production of SMX after the expiry of 2 years, i.e. after 22nd April, 1976. The appellants were not actual users of the said imported raw material after 22nd April, 1976 as the industrial licence granted to them had ceased to be valid for the manufacture of the end-product except from locally manufactured raw materials. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the respondents that, in view of the terms of the industrial licence, the use of the said imported material was clearly prohibited and, therefore, the appellants should not have declared themselves to be the actual users thereof. The appellants had been informed by the industrial licence that it was granted on the condition that the use of the said imported material would be allowed for 2 years only and the appellants had utilised that facility. Their request for extension of the period during which they could import the said material had been refused. In spite of this refusal, the appellants had imported the said material between March and June, 1979 knowing that "they could not claim to be actual users. Once this conclusion is reached, then it is obvious that the order passed by the Collector of Customs is in accordance with the law and deserves to be upheld". 14. In our view, the conclusion reached by the learned Single Judge is unassailable. It is clear from the terms of the industrial licence that the appellants could import and utilise the said material for the manufacture of SMX only for a period of 2 years from the date thereof, i.e., only up to 22nd April, 1976. Knowin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Rana's answer, fairly, was that the importer had to be authorised to manufacture a product in which the item had to be used. In other words, the importer had to be an authorised user. At the relevant time the appellants were not authorised to use the said imported material in the manufacture of SMX. 17. Mr. Rana submitted that, in any case, there was no justification for the imposition upon the appellants of a heavy redemption fine and penalty. The redemption fine is of Rs. 19,000,00/-, i.e., of only half the value of the said imported material and the penalty is of only Rs. 5,000,00/-. Having regard to what we have said above about the conduct of the appellants, the amounts are most reasonable. 18. Mr. Rana submitted that the filing of the wrong declaration did not render the importation already effected invalid if it was otherwise valid; only clearance could not be permitted. It is difficult to understand this submission. The importation was made with the objective of clearance. The importation was made on the incorrect basis that the appellants were the actual users of the said material and, as such, authorised to import it. The importation, therefore, was as illegal as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring upon the question. The Customs authorities had to see whether the goods fell within the entry mentioned in the import licence and not some other entry. 22. Mr. Rana also referred to the judgment of the Supreme Court in appeal in the self-same matter (which is reported in A.I.R. 1971 S.C. 1558). The facts in the Tarachand Gupta case are quite different from those before us. The observations in a judgment cannot be read divorced from the facts on which they were made. The observations of this Court and the Supreme Court do not assist us here. 23. In M.G. Abrol, Addl. Collector of Customs, Bombay v. M/s. Shantilal Chhotelal and Co., A.I.R. 1966, S.C. 197, also cited by Mr. Rana, the question was whether the goods were other than those for which the import licence had been issued. It was found that the record disclosed that the Iron and Steel Controller had examined the goods at the time the licence was issued and at the time the goods were loaded on the ship for export. The licence had, therefore, been issued in respect of particular goods identified by the appropriate authorities who were authorised to issue the licence. The name given by the appropriate authorities to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne was to be enhanced or goods of greater value were to be confiscated, the order could not be passed unless the person affected had been given a reasonable opportunity of showing cause. 25. It is, first, clear from the provisions of the Customs Act that the Customs authorities are entitled to confiscate goods which are illegally imported. They are, therefore, entitled to ascertain the legality of the import. They could, then, ascertain whether the declaration of actual use made by an importer was justified having regard to the importer's authorisation to use the goods. The Customs authorities would, therefore, have been entitled to confiscate the said material when it arrived at Bombay between March and June 1979 on the ground that the declaration of actual use made by the appellants was not correct inasmuch as, under the industrial licence, they were not authorised to use the said material in the production of SMX after 22nd April, 1976. 26. Mr. Rana submitted, however, as we have indicated, that the Collector, exercising powers under Section 130, could only enhance a penalty or fine if it had already been imposed. In his submission, the Collector could not confiscate or impose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en imposed a penalty for late filing of the Return. The learned Judge took the view that since no reply had been made to the application for extension of time, the taxing authority must be deemed to have consented to such application. We do not think that the circumstances here are, in any way, similar. Here is a case of the import of the said material for use in the manufacture of SMX. The appellants were authorised to use the said imported material in such production only for a stated period. They had applied for extension of that stated period. They had been asked to furnish information. Within less than a month of their furnishing that information, they had already placed an order with a foreign supplier for the import of the said material. It is not possible to take the view that by then the 2nd respondent had given deemed consent. And by the time the said imported material arrived in Bombay, the 2nd respondent had refused the application. 30. Before we close we must note that the appellants' import licence dated 13th October 1977 was valid for 24 months. On the basis thereof the appellants could import, amongst other things, the said material. Mr. Rana submitted that the Col ..... X X X X Extracts X X X X X X X X Extracts X X X X
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