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TMI Blog1990 (2) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... n on payment of fine of Rs. Five lakhs in lieu of confiscation under Section 125 of the Customs Act, 1962. The appellant cannot be said to have imported calcareous stones without an import licence and as such, there being no violation of the Import Control Policy the imposition of penalty of Rs. Ten lakhs under Section 112 of the Customs Act, 1962 is also unwarranted and not sustainable. In the present case, the Tribunal has itself specifically stated that the appellant has acted on the basis of bona fide belief that the goods were importable under OGL and that, therefore, the Appellant deserves lenient treatment. allow the appeal and set aside the judgment and order passed by the Appellate Tribunal and direct the Tribunal to release the goods to the appellant forthwith. We also direct the Tribunal to release the personal bond given by the Appellant for a sum of ₹ 2,50,000/- on the basis of which one container was released as per order of this Court dated October 25, 1989 and also to release the appellant from payment of detention charges and demurrage for retaining the goods - 3655 of 1989 - - - Dated:- 14-2-1990 - B.C. Ray and S. Ratnavel Pandian, JJ. [Order pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsible for the preparation of this standard has taken into consideration the views of producers, consumers and technologists and has related the standard to the manufacturing and trade practices followed in the country in this field." (2) The appellant obtained from the foreign exporters a sample tile of `Botticino', the calcareous rock proposed to be imported and had the same tested by a reputed Geologist, Dr. S.F. Sethna who tested the sample and by his report dated October 13, 1988 confirmed that the same was not marble. His letter dated October 14, 1988 explains now the sample tested was limestone, different from marble. The sample tile tested and attested by Dr. Sethna was submitted to the Customs Department vide their letter dated February 20, 1989. (3) The appellant then referred to an Italian Book MARMI ITALTA wherein the index evidenced the fact that `Botticino' varieties were covered under `polishable calcareous rocks' and not under `true marbles' (re-crystallised calcareous rocks). (4) The appellant specifically placed an order for calcareous stones (other than marble) and asked the Exporter to certify that the said goods were not marble. The exporter Elle Marmi o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 20th February, 1989 that the said goods could not be regarded as `marble' in terms of the expression `marble' appearing in heading 25.15 in Schedule I, Appendix I-B, Customs Tariff Amendment Act, 1985. The appellant also requested for release of part of the goods pending the technical test of the sample from imported goods. 8.Pending the technical test report, by a letter dated February 17, 1989 the appellant was permitted to clear 50% of the goods upon the appellant submitting 100% ITC bond for the whole backed by a bank guarantee. The balance 50% of the imported consignment was detained. The appellant accordingly cleared 50% of the imported consignment. The appellant, however, paid import duty on the full consignment. 9.The Assistant Collector of Customs (Group I) sent the sealed samples of the imported goods for testing to the Deputy Director General, Petrology Department, Geological Survey of India, Central Region, Nagpur. The sealed cover containing the samples was sent through the appellant's representative. The appellant also by a letter dated February 25, 1989 sent a sample of the same consignment for testing to the Geological Survey of India. 10.The appellant addr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecific import licence. He also held that these goods are liable for classification as marble and the import of these goods under O.G.L. is not admissible and therefore, in exercise of the powers conferred under Section 111(d) of the Customs Act, 1962, the Collector of Customs ordered the confiscation of the imported goods and further ordered that the Bond be enforced towards a fine of Rs. 4,93,199 imposed on the said goods in lieu of confiscation. The Assistant Collector of Customs was directed to enforce the said Bond and the Bank Guarantee for realisation of this amount of fine. However, the importer was given option to clear the said goods for home consumption on payment of fine of Rs. 5,00,000 in lieu of confiscation under Section 125 of the Customs Act, 1962, the option to be exercised within 60 days from the date of receipt of the said order. He further held that since the importer contravened the provisions of Section 111(d) of the Customs Act, 1962 read with Section 3 of the Import and Export (Control) Act, 1947 rendering the said goods for confiscation, the importer is liable for penal action under provisions of Section 112 of the Customs Act. Accordingly, the penalty of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h entry in Column (2) has the same scope and meaning as the corresponding Chapter and heading of the said first Schedule. 18.It is appropriate to refer to Appendix 6 of the Import and Export Policy for April, 1988 to March, 1991 which mentions import of items under Open General Licence. The categories of importers, the items allowed to be imported by them under Open General Licence and the conditions governing their importation have been set out therein : Items Category of eligible importers 1. Raw materials components and consumables (Non-iron and steel items) other than those included in the Appendices 2, 3 Part A, 5 and 8 Actual Users (Industrial) 19.In Appendix II-B, in the List of Restricted Items, Entry 62, of Import and Export Policy for March 1988 to April 1991 refers to Marble/granite/onyx. 20.Mr. Diwan, learned counsel appearing on behalf of the appellant has submitted that for the purpose of understanding the meaning of `marble' occurring in Appendix I-B, Schedule I of the Imports (Control) Order, 1955 it is necessary to refer to Mineral Products, in Chapter 25, Tariff Entry No. 25.15 which refers to Marble, Travertine, Ecaussine and other calcare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the tariff item appears, requires such a departure. If the application of the commercial meaning or trade nomenclature runs counter to the statutory context then the said principle of interpretation cannot and should not be applied. Commercial nomenclature of trade understanding is merely a general principle of interpretation. It is well settled that the principles of interpretation are never embodied rules and the same must always yield to the context of the particular statue which comes up for interpretation. It has also been submitted in this connection that the trade meaning or commercial nomenclature would be applicable if a particular product description occurs by itself in a Tariff Entry, and there is no competition between that Tariff Entry and any other Tariff Entry, nor is there any need to reconcile and harmonise that Tariff Entry with any other. It has been submitted in this respect that the reading of the Tariff Entry No. 25.15 in Appendix 1-B of Imports (Control) Order, 1955 which refers to Marble, Ecaussine, Travertine and other calcareous monumental or building stones as well as Entry No. 62 in Appendix 2-B of Import and Export Policy, April 1988-March 1991 refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the market as a species of granite and may be dealt with and treated as a type of granite, the same is, nevertheless not classified as granite under Chapter Heading 25.16. This is only because the technical nature of ecaussine has been taken into consideration and applied by HSN as opposed to the trade nomenclature or commercial understanding. 22.It has also been submitted that the said HSN also contains specific note regarding serpentine rocks to the effect that the same are sometimes called `marble', but the same is excluded from Chapter Heading 25.15. This clearly shows that according to HSN, Chapter Heading 25.15 must be construed according to its technical meaning. Technically, serpentine does not fall under Heading 25.15 and the same is accordingly excluded therefrom by the HSN. If, on the other hand, the commercial meaning is to be applied, then, serpentine would definitely have to be classified under Chapter Heading 25.15 inasmuch as it is sometimes called marble. The HSN Explanatory notes, therefore, clearly and conclusively establish that Chapter Heading 25.15 must necessarily be construed by its technical meaning and not by applying the commercial nomenclature test. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpentine are also polished and used in trade as marble. Mr. Ganguli further submits that taking into consideration this note, calcareous stone imported by the appellant falls within marble which is one of the restricted items in the list of restricted items as mentioned in Appendix 2, Part B of the Import and Export Policy, April 1988-March 1991. Mr. Ganguli further submitted that the word marble cannot be taken in its geological or petrological sense inasmuch as the whole purpose of putting the marble stone slabs in the list of restricted items for import is to restrict the outflow of foreign exchange from the country. Mr. Ganguli next submitted that the end-use of the product i.e. marble and calcareous stone mentioned in Item No. 25.15 of Appendix 1-B of the Import and Export Policy April 1988-March 1991 has to be taken into consideration in the determination of the other items of stones mentioned in that Entry. Viewed from this angle, the said calcareous stone being capable of polish and used for monumental or building purposes has to be taken to be marble as has been done by the Revenue and it being one of the restricted items, a licence for import of the same is mandatory. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the corresponding Chapter and heading of the said first Schedule. 26.It is also appropriate to set out hereunder the relevant portion of Appendix 6 of the Import and Export Policy for April 1988-March 1991 :- Item Categories of eligible Importers Raw materials, components and consumables (Non-iron and steel items) other than those included in the Appendices 2, 3 Part A, 5 and 8. Actual Users (Industrial) 27.Section 3(1) of the Imports and Exports (Control) Act, 1947 as amended upto 30th April, 1979 provides that :- "The Central Government may, by order published in the Official Gazette, make provisions for prohibiting, restricting or otherwise controlling in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the order......" 28.Chapter 25 of Schedule I, Appendix 1-B of the ITC Schedule mentions mineral products which can be imported under O.G.L. Entry No. 25.15 refers to marble which is as under :- "Marble, travertine, ecaussine and other calcareous monumental or building stone of an apparent specific gravity of 2.5 or more and Alabaster, whether or not roughly trimmed or merely cut, by sawing or other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are calcareous stone slabs of good quality. He also certified that these are calcareous stones other than marble because they are not recrystallized calcareous rocks and that the calcareous stone slabs in the above consignment are not marble. 32.In Indian Standard Specification for Marble, IS:1130-1969, Entry No. 2 marbles have been described as metamorphic rocks capable of taking polish, formed from the re-crystallization of limestones or dolomitic limestones and are distinguished from limestone by even visibly crystallined nature and non-flaggy stratification. Note to the said Entry states that sometimes rocks, such as serpentine are also polished and used in trade as marble. 33.The Director, Regional Petrology Laboratory where the appellant sent a sample of the rocks ordered for importation, for examination has also forwarded a technical report on study of sample by Dr. H.H. Ramachandra, a Geologist, which states : "The rock is an allochemic (Pelmicritic) limestone, it cannot be termed as a marble". 34.The Indian Bureau of Mines in its letter dated March 3, 1982 has mentioned that:- "Technical Definition : Geologically (petrologically) marble is recrystallised (metamo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two Entries it is apparent that travertine, ecaussine and other calcareous monumental or building stones are not intended to be included in `marble' as referred to in Entry No. 62 of Appendix 2 as a restricted item. Moreover, the calcareous stone as mentioned in ITC Schedule has to be taken in scientific and technical sense as therein the said stone has been described as of an apparent specific gravity of 2.5 or more. Therefore, the word `marble' has to be interpreted, in our considered opinion, in the scientific or technical sense and not in the sense as commercially understood or as meant in the trade parlance. There is no doubt that the general principle of interpretation of Tariff Entries occurring in a text statute is of a commercial nomenclature and understanding between persons in the trade but it is also a settled legal position that the said doctrine of commercial nomenclature or trade understanding should be departed from in a case where the statutory content in which the Tariff Entry appears, requires such a departure. In other words, in cases where the application of commercial meaning or trade nomenclature runs counter to the statutory context in which the said word wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charcoal was not `coal' and was taxable at 4% as it fell under the residuary Entry I of Part VI of Schedule II. The Board of Revenue and the High Court held in favour of the respondent relying on the dictionary meaning of the word `coal'. The Commissioner of Sales-tax appealed. It was held by this court that in interpreting items in statutes like the Sales Tax Acts resort should be had not to the scientific or technical meaning of the terms used but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, in their commercial sense. Viewed from this angle, both a merchant dealing in coal and a consumer wanting to purchase it would regard coal not in its geological sense but in the sense as ordinarily understood and would include `charcoal' in the term `coal'. 40.It may be pointed out that this Court has clearly and unequivocally laid down that it is not permissible but in fact it is absolutely necessary to depart from the trade meaning or commercial nomenclature test where the trade or commercial meaning does not fit into the scheme of the commercial statements. This Court referring to the observation of Pullock B. in Grenfell v. Inland R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Notification could not be interpreted according to the well-settled commercial meaning of that term which was accepted by all persons in the trade, in as much as the said commercial meaning would militate against the statutory context of the said exemption Notification issued in June 1962. The word `hank' as used in the Notification meant a `coil of yarn' and nothing more. 44.In Collector of Central Excise, Kanpur v. Krishna Carbon Paper Co. - 1988 (37) E.L.T. 480 (S.C.) = 1989 (1) SCC 150 - it has been observed by this Court that it is a well settled principle of construction that where the word has a scientific or technical meaning and also an ordinary meaning according to common parlance, it is in the latter sense that in a taxing statute the word must be held to have been used, unless contrary intention is clearly expressed by the legislature. It has also been observed that whether the general principle of interpretation was applicable or not depended on the statutory context. If a special type of goods is subject matter of a fiscal entry then that entry must be understood in the context of that particular trade, bearing in mind that particular word. The trade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme, the statutory definitions must prevail over the trade parlance or any other aides to interpretation." 46.In Collector of Customs, Bombay v. Swastic Woollens (P) Ltd. and Ors. - 1988 (37) E.L.T. 474 (S.C.) = 1988 (Supp.) SCC 796 - this Court has observed that the expression `wool wastes' which has not been defined in the Customs Tariff Act, 1975 or in the relevant Notification is not an expression of art. It may be understood, as in most of financial measures where the expressions are not defined not in a technical or pre-conceived basis but on the basis of trade understanding of those who deals with these goods. When no statutory definition is provided in respect of an item in the Customs Act or the Central Excise Act, the trade understanding, meaning thereby the understanding in the opinion of those who deal with the goods in question, is the safest guide. It has also been observed therein that the Tribunal has not ignored the Technical Committee's observation nor the Board's Tariff Advice. 47.On a conspectus of all these decisions mentioned hereinbefore the position thus emerges is that when the expression `marble' has not been defined in the Customs Tariff Act as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od quality. These are calcareous stones other than marble because they are not recrystallized calcareous rocks. He further certified that the calcareous stone slabs in the above consignment are not marble. One Shri S.V. Chaudhary, Director, Regional Petrology Laboratory, Geological Survey of India after examination of the sample sent a report dated March 13, 1989 under the signatures of Dr. H.M. Ramachandra, Geologist to the appellant. The said report states that, `the rock is a allochemic (Palmicritic) limestone, it cannot be termed as a `marble'. In Invoice No. 126-88 a certificate has been given by the exporter to the following effect :- "We certify that merchandise is of Italian origin. Contents are true and authentic, prices correct and current and that it is the only invoice for the goods described therein." 48.In the said invoice the goods has been described as slabs of calcareous stone of 2 Cms. thick quantity. Thus it appears from all the aforesaid reports and certificates that the slabs of stone which have been imported from Italy are nothing but calcareous stones and the same cannot be termed as 'marble'. Even according to Item No. 0.2 of Indian Standard Specificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been concluded that the specimen under reference is marble as per commercial definition. The Director of Mines, and Geology Department, Udaipur also sent a report to the Assistant Collector of Customs. It has been stated in the said report that the sample is of a fine grained off-white rock. It gives very good effervescence with dilute hydrocholoric acid and its hardness indicates that it is a fine grained carbonate rock. It takes good polish and can be used as `marble'. Regarding the microscopic characters it states that the rock is mainly composed of very fine grained cherty calcitic mass and iron oxides. No polygonal crystals are present. Recrystallization has not taken place. The rock sample has been identified as `fine grained cherty limestone'. It has also been stated that technically `marble' is a product of thermal metamorphism of limestone (impure limestone) in which recrystallisation takes place and silicate minerals are also produced. Commercially the term `marble' has been applied to any stone, other than those known in trade as granite, that has a pleasing appearance and will take a polish. Thus, the term `marble' adopted in the trade is based on the general properti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitution has also given a similar definition of marble as recrystallization of limestones or dolomitic limestones. Furthermore, Petrologically and Geologically the slabs of stones which have been imported are allochemic (pelmicritic) limestone and it cannot be termed as `marble'. The Indian Bureau of Mines also observed on testing the sample of rock that it is cryptocrystalline, fine grained, mildly metamorphosed with few bigger grains of calcite and identified the same as very fine grained cherty calcitic limestone. 53.It is apparent from all these reports that the calcareous stone of specific gravity of 2.5% is not marble technically and scientifically. The finding of the Appellate Tribunal is, therefore, not sustainable. It is, of course, well settled that in Taxing Statute the words used are to be understood in the common parlance or commercial parlance but such a trade understanding or commercial nomenclature can be given only in cases where the word in the Tariff Entry has not been used in a scientific or technical sense and where there is no conflict between the words used in the Tariff Entry and any other Entry in the Tariff Schedule. In the instant case, in the Tariff E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without metamorphism and recrystallisation not being opaque or translucent will fall within the category of stone called `marble' in Entry No. 62 of Appendix 2 as one of the restricted items. The appellant before placing the order took considerable precaution in ascertaining from the exporter that the calcareous stone to be imported from Italy is calcareous stone and not marble. Moreover, he referred the sample of the calcareous stone to be imported to the Department of Geology, Bombay and to the Regional Petrology Laboratory of the Geological Survey of India to ascertain whether calcareous stone in question is marble or not in order to enable him to import the same under open general licence. He also asked his exporter to send a certificate whether calcareous stone for which order is placed is marble or not. The exporter sent a certificate along with the report of the expert stating that the slabs of calcareous stones contained in the containers sent by the exporter are calcareous stones and not marble. No tangible evidence has been produced nor even affidavits of persons attached to this trade to the effect that the slabs of calcareous stone imported by the appellant are marble a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or understanding in the trade should not be taken recourse to in interpreting the word `marble'. The reference to the requirement of gravity of 2.5% or more is also a purely technical criteria or requirement which shows that the principle of trade nomenclature or commercial understanding is not applicable to that Tariff Item. Moreover, the said Harmonised System of Nomenclature (HSN) contains a specific note regarding serpentine rocks to the effect that the same are sometimes called marble, but the same is excluded from Chapter Heading 25.15. This again clearly shows that according to HSN, Chapter Heading 25.15 has to be construed according to its technical meaning. Technically, serpentine does not fall under Heading 25.15 and the same is accordingly excluded therefrom by the HSN. If commercial meaning is to be applied then serpentine would have to be classified under Item 25.15 in as much as it is sometimes called `marble' in the trade. The HSN Explanatory Notes, therefore, establish that Chapter Heading 25.15 must be construed by its technical sense and not by applying a commercial nomenclature test. 56.Considering all these aspects, there is no other alternative but to conclud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cretion to impose a penalty must be exercised judicially. A penalty will ordinarily be imposed in cases where the party acts deliberately in defiance of law, or is guilty of contumacious or dishonest conduct, or acts in conscious disregard of its obligation; but not, in cases where there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute." 60.In the instant case, even if it is assumed for arguments sake that the stone slabs imported for home consumption are marble still in view of the finding arrived at by the Appellate Tribunal that the said product was imported on a bona fide belief that it was not marble, the imposition of such a heavy fine is not at all warranted and justifiable. 61.In the premises aforesaid, we allow the appeal and set aside the judgment and order passed by the Appellate Tribunal and direct the Tribunal to release the goods to the appellant forthwith. We also direct the Tribunal to release the personal bond given by the Appellant for a sum of Rs. 2,50,000/- on the basis of which one container was released as per order o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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