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TMI Blog1984 (11) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... ners was that "woollen" covered any fabric in which there was a mixture of wool. A number of definitions of 'rags' were noted by the Collector. From these it appeared to him that mutilation as such was not an essential pre-condition to the fabric or hosiery or garment being called a rag. This was, however, not to say that any unmutilated fabric, hosiery or garment could be called a rag. The emphasis in the definitions seemed to be on the old, used and discarded nature of the articles. It also appeared from the definition that serviceable hosiery or garments which could be sold in a second-hand clothing market for clothing purposes could not be called rags. They could be called rags only if they were in such a condition that no use was possible other than conversion into "shoddy or mungo". If hosiery or garments were discarded in richer countries at a stage when their useful life had not been exhausted, and if such hosiery or garments were likely to be sold in India they could not be considered rags in India. It was common knowledge that large numbers of such hosiery and garments had been sold in the Indian markets as second-hand clothing. The imported goods were not 'rags' in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lidity. 6. The respondents in the Nagesh Hosiery Mills petition filed an appeal against the judgment and order of Bhatt J. 7. It is the case of the petitioners that an arrangement was arrived at between the importers of woollen rags affected by orders of confiscation thereof, including the petitioners, on the one hand and the Customs authorities on the other that, pending the final decision in the Nagesh Hosiery Mills' case, consignments would be permitted to be cleared subject to the condition that appeals filed against confiscation orders before the Central Board of Excise and Customs would be unconditionally withdrawn; that the goods imported would be mutilated; and that the importers would execute bank guarantees to pay the full duty on woollen rags, if it was found to be leviable by the final decision in the Nagesh Hosiery Mills' case. 8. It is the petitioners' case that, accordingly, on 13th February 1978 they wrote to the Central Board of Excise and Customs withdrawing the appeals filed by them against the confiscation order dated 13th June 1973. 9. On 3rd March 1978, the Assistant Collector of Customs wrote to the petitioners a letter. It reads thus: "In considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Customs/Excise in such a manner that the same cannot be used as serviceable garments, but, will have to be used as rags only............. On the above undertaking given by the Respondents, the Appellants apply for leave to withdraw the Appeal. Appeal allowed to be withdrawn. No order as to costs." 12. The petitioners cleared two of the five consignments imported by them on furnishing bank guarantees as required by the arrangement, as recorded in the Assistant Collector's letter dated 3rd March 1978. 13. By letters dated 11th May 1979, 12th November 1980 and 3rd January 1981 the petitioners asked for permission to clear their three uncleared consignments on the basis that the judgment of Bhatt J. had become final. 14. On 18th April 1981 the Assistant Collector of Customs wrote to the petitioners to say that: "...... even though you had withdrawn the appeals unconditionally in terms of the letter dated 3-3-1978, you did not execute any bond as required therein. In the circumstances, the bales in question stand confiscated to the Government. It is regretted that your request to allow clearance of the 3 consignments after mutilation at this stage cannot be considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Pending that final decision, the consignments were allowed to be cleared provided appeals filed against the orders of confiscation thereof were unconditionally withdrawn, the woollen rags contained in the consignments were mutilated and the importers gave guarantee to pay the full duty leviable on woollen rags, if found payable by the final judgment in the Nagesh Hosiery Mills' case. The consequence of the arrangement is this: If the judgment of Bhatt J. in the Nagesh Hosiery Mills' case was reversed, the orders of confiscation of consignments would stand; if consignments had been cleared under the arrangement, the guarantees given in respect thereof would become enforceable. If, on the other hand, the judgment was upheld, the orders of confiscation would become inoperative and the consignments could be cleared freely and without any conditions; the guarantee given in respect of consignments cleared under the arrangement would be unenforceable and would stand discharged. 20. That this arrangement was arrived at between the petitioners and the Customs authorities is clear from the fact that there is no affidavit in reply; from the fact that two of the five consignments importe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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