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TMI Blog1998 (7) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... d before the Deputy Collector of Customs, Kandla Port the documents required for clearance of the said goods wherein the goods were described as "Cinematographic Colour Films (Unexposed) Positive" falling under Customs Tariff Heading 3702.41 and the Central Excise Tariff Item 3702.20 and entitled to exemption of Customs duty under Notification No. 52/86 read with Notification No. 157/88-Customs and of countervailing duty under Notification No. 50/88-C.E. Clearance of the goods was sought under OGL, the imported goods being Item No. 186(1) of Part I of List 8 of Appendix 6 of AM 85-88. 3.On examination at Kandla Customs House they were found to be "Colour films-jumbo rolls" and, therefore, not entitled to the benefit of exemptions under the said notifications. Therefore, the Collector of Customs, Rajkot initiated proceedings for confiscation under Section 111(m) of the Customs Act, 1962 and imposition of penalty. The appellant waived show cause notice and requested for a personal hearing. The appellant was charged for misdeclaring the goods as "Cinematographic Colour Films (Unexposed) Positive", with a view to evade Government revenue to the tune of Rs. 51,89,698/-. The appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the Notifications regarding Cinematographic Films were not applicable to Jumbo Films and, therefore, the appellant was not entitled to the benefit of exemption Notifications Nos. 52/86-Cus., dated 17-2-1986 and 50/88-C.E., dated 1-3-1988. The Collector did not examine whether the appellant was entitled to any other exemption as that was a matter of assessment of duty and not a subject-matter of the proceedings initiated by him. The Central Board of Excise and Customs found the order passed by the Collector as not legal and proper and, therefore, in exercise of its powers under Section 129D(1) of the Customs Act, directed the Collector to apply to CEGAT for determination of the points specified by the Board in its order. As directed, the Collector made such an application to CEGAT and it was heard as an appeal against the order of the Collector. It may be stated that before the Board the appellant had produced SSI Registration Certificate dated 24-8-1985 issued by the Director of Industries, Ghaziabad and the Central Excise L-4 Licence dated 23-12-1986. 7.The CEGAT agreeing with the finding of the Collector that the appellant had imported jumbo rolls of Photographic Fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not cinematographic colour films,....." he had no option but to hold that the act of describing the imported goods as "Cinematographic Films" amounted to misdeclaration. The Collector also held that in view of the finding recorded by CEGAT that the appellant did not possess a valid industrial licence under the IDR Act and was thus not an actual user (industrial), he was required to hold that the appellant was not eligible to import the said goods under OGL. In view of the findings recorded by CEGAT, the Collector had no other option and he also expressed his helplessness by observing that "these findings and conclusions of Hon'ble CEGAT forecloses any arguments/pleas of the importer against requirement of an industrial licence under IDR Act and hence the charge of unauthorized importation in the absence of such a licence." He then held that the charges of misdeclaration and unauthorized importation were established, rendering the goods liable to confiscation under Sections 111(d) and 111(m) of the Customs Act and rendering the appellant liable to penalty under Section 111(a) of the Customs Act. He ordered confiscation of the 59 rolls, imposed a redemption fine of Rs. 5 lacs and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods were considered as `Cinematographic Colour Films (Unexposed) Positive' their import under OGL was illegal. 12.Mr. Dushyant Dave, learned Counsel appearing for the appellant severely criticized the manner in which CEGAT had disposed of the earlier appeal. He submitted that it was highly improper and unfair. CEGAT considered all the points in detail and recorded categorical findings and then remanded the matter to the Collector for re-adjudication. He drew our attention to various parts of the order passed by the Collector to point out how he felt helpless and bound by the findings recorded by CEGAT and could not decide the questions of misdeclaration and legality of import independently. He also drew our attention to the observations made by the subsequent bench to show that even the said bench felt bound by the findings recorded earlier. We find much substance in this grievance made by the learned Counsel. On the second occasion also CEGAT did not deal with the appellant fairly as it allowed its business rival to oppose the appeal as an intervener. 13.It it, however, a fact that the appellant had not preferred any appeal against the first order of the Collector whereby it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication of goods was alleged to have been stated incorrectly and secondly the declaration with respect to entitlement of exemptions, under the notifications mentioned in the Bill of Entry was also incorrect. 16.We will examine the question of correct classification first. The appellant had imported goods in January, 1989 and the Bill of Entry and related necessary documents were produced by the appellant before the Customs authorities at Kandla sometime between 11-1-1989 and 19-1-1989. Therefore, Chapter 37 of the Customs Tariff for the year 1988-89 was applicable. Chapter 37 dealt with Photographic or Cinematographic goods. It divided those goods under several heads and various sub-heads. Heading No. 37.02 was in respect of "PHOTOGRAPHIC FILM IN ROLLS, SENSITISED, UNEXPOSED, OR ANY MATERIAL OTHER THAN PAPER, PAPER BOARD OR TEXTILES, INSTANT PRINT FILM IN ROLLS, SENSITISED, UNEXPOSED". If the width of the roll of `Photographic Colour Film' exceeded 610 mm and the length exceeded 200 m then such goods were included under sub-heading No. 3702.41. In the explanatory notes to HSN in Chapter 37, while explaining the heading `Photographic Films in Rolls (Unexposed)' falling under Headi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. This reasoning of the Collector and CEGAT is clearly erroneous and misconceived. The charge of misdeclaration of goods was based upon Section 111(m) of the Customs Act. According to the said provision the goods brought from a place outside India are liable to confiscation if the goods "do not correspond in respect of value or in any other particular with the entry made under this Act." Therefore, if the description of the imported goods given to the customs authorities does not correspond in respect of value or in any other particular including its description as mentioned in the Entry made under the Act, then only they can be said to have been misdeclared and, therefore liable to confiscation. The words "Entry" in the context of the facts of this case meant an Entry made in the Bill of Entry. Therefore, before holding that the goods were misdeclared the authorities were required to come to the conclusion that the imported goods did not correspond in respect of value or in any other particular with the description and the value of the goods as stated in the Bill of Entry. In the Bill of Entry the imported goods were described as Cinematographic Colour Films (Unexposed) Posit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ket holes. It was not even suggested by the Customs authorities that the imported goods were ordinarily used for or intended to be used for any other purpose. Therefore, even though the imported goods were not ready for being used as Cinematographic Films in the sense that they could be straightaway put on a projector or a camera, the appellant cannot be said to have misdeclared them by describing and classifying them as Cinematographic Colour Films (Unexposed). 18.The second ground on which it was held that the imported goods were misdeclared was that the appellant had wrongly stated in the Bill of Entry that it was entitled to the benefit of exemption Notification No. 52/86-Cus. as amended by Notification No. 157/88-Cus. and Notification No. 50/88-C.E. In the Bill of Entry and other related documents the appellant had given specific and clear description of the goods as can be seen from the following extract from the Bill of Entry : "Cinematographic Colour Films (Unexposed) Positive. Size : Length 1250 mtrs. x width 1140 mm. (Useable length 1250 m x width 1085 mm) Total Linear Metres : 59 Rolls x 1250 m = 73, 750 mtrs. Total sq.m. 1250 x 1140 x 59 = 84075." 19.The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered by Heading 37.02. If it was meant for X-Ray then the proper sub-heading for it was 3702.10 Cinematographic Film (Unexposed) were covered by sub-heading 3702.20 and for other types of Photographic Films in Rolls the proper heading was 3702.90. 22.As the goods imported by the appellant were being used and intended to be used as Cinematographic Film, the appellant had described them as Cinematographic Films covered by sub-heading 3702.20. No attempt was made by the customs authorities either before the Collector or before CEGAT to show that the goods imported by the appellant were ordinarily not used as Cinematographic Films or were not intended by the appellant for such a use. Moreover, looking to the Heading 3702 and its sub-heading, it does not appear that such goods were intended to be covered by sub-heading 3702.90. As regards the claim for exemption in payment of countervailing duty the appellant had stated that it was entitled to the benefit under Notification No. 50/88-C.E. The declaration made by the appellant has been found to be wrong by the Collector and CEGAT on the ground that there was a separate exemption notification in respect of jumbo rolls for Cinematographi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng was a small scale industrial undertaking and was registered as such with the Director of Industries, Uttar Pradesh. It was registered for conversion/cutting of jumbo rolls into Cinematographic Colour Films (Unexposed) Positive. Under Paragraph 56(3) of Chapter 5 of the Policy, actual users were permitted to meet the requirements of their imported inputs under OGL subject to the conditions prescribed in Appendix 6. Consistently with Import and Export Policy for the year 1988-91, the Central Government, in exercise of the powers conferred under Section 3 of the Import and Export Act, 1947, had issued an order on 30th March, 1988 giving general permission with effect from 1st April, 1988 to actual user (industrial) to import raw materials, components and consumables subject to the conditions specified therein. Condition No. 3 was that the raw material, components and consumables should have been required by the actual user (industrial) concerned for his own use. Condition No. 5 required the actual user (industrial), at the time of clearance of the goods, to furnish the Customs authorities, a declaration giving particulars of the industrial licence or the registration certificate is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IDR Act. It was the case of the appellant, and it had produced material in support of it, that in its factory not more than twelve workers were ever employed. This fact was not disputed by the Customs authorities. It thus becomes clear that the appellant's industrial undertaking, though engaged in the industrial activity pertaining to the scheduled industry, was not carrying on such industry in a factory as defined by the Act. It was, therefore, not necessary for it to obtain a licence under the IDR Act. It did have a certificate of registration issued by the Director of Industries, Uttar Pradesh. Even the definition of `actual user (industrial)' which we have quoted above makes it clear that licence under the IDR Act was required if the provision of the IDR Act in that behalf was applicable. As pointed out earlier, for the purpose of answering the definition of `actual user (industrial)' it was not necessary for the appellant to obtain a licence under the IDR Act. It was sufficient, for the appellant to be called an actual user (industrial), to have a certificate of registration issued by the competent authority. The CEGAT was, therefore, in error in holding that importation of 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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