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TMI Blog1986 (12) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal under Order No. C-248 of 85 (NRB) and C-249 of 85 (NRB), both dated 5-11-1985. Both these appeals were taken up for early hearing under the order of the then President of the Tribunal dated 8-11-1985. 2.Advocate Shri Ashok Desai submitted on behalf of the appellants that both the orders of the Collector of Customs and Central Excise, Ahmedabad were identical and that the appeals raised common issues and therefore both should be heard together and decided accordingly. Coming to the facts of the cases, Shri Desai explained that M/s. Jain Exports Pvt. Ltd. imported a consignment of 3002.557 M/Ts of Refined Industrial Coconut oil valued at Rs. 1,63,67,050.00, C.I.F. per M.T. SEO JOO IGM No. 181 of 10-9-1982 which arrived at Kandla on 10-2-1982 from Colombo and another consignment of 5342.349 M./Tons of Refined Industrial Coconut oil and valued at Rs. 2,91,21,450-00 C.I.F. per MT/ COCH/ISE/IGM No. 191 of 82, dated 22-9-1982 which arrived at Kandla on 22-9-1982 from Colombo. The importers filed several Bills of Entry for clearances of these two consignments of refined industrial cocount oil but the clearance was not allowed and after issue of show cause notices and holding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal to the Supreme Court against the Delhi High Court's order. He, however, further clarified in reply that though the same question regarding the validity of the order of the Collector had been taken up before the Supreme Court, there was no contradiction in the appellant's conduct in filing an appeal to the Supreme Court and coming to the Tribunal as per the directions of the Delhi High Court on the limited question regarding the quantum of fine. Advocate, Shri Desai, therefore submitted that the issues involved in the appeals needed to be set out before us. He submitted that both these imports were made in September, 1982. To help the Tribunal understand the sequence of events, the learned Advocate gave a typed synopsis of dates and events which were material to these appeals; he clarified that the dates referred to the first appeal. The Advocate read operative part of the Collector's order covered by the first appeal. He elucidated that the Collector had confiscated 3002.577 M/Ts of refined industrial coconut oil under Section 111(d) of the Customs Act, but he gave an option to the importers to redeem the goods on payment of a fine of Rs. two crores within three months from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore under the bona-fide belief that they could import the industrial coconut oil under the licences and the letters of authorities held by them The Advocate submitted that the confiscation of the goods in question and the levy of fine were not in order particularly when the importers' action to import these consignments arose from bonafide belief that they could very well do so. In this behalf, the learned Advocate relied on the decision of the WRB of the Tribunal in the case of Shama Engine Valves Ltd. v. Collector of Customs, Bombay - 1984 (18) E.L.T. 533. The Advocate also relied on another decision of the North Regional Bench in the case of Merck Spares, Delhi v. Collector of Customs and Central Excise, New Delhi - 1983 E.L.T. 1261. The Tribunal in this case had held that mensrea should be established before ordering confiscation of goods and imposition of penalty under Sections 111 and 112 of the Customs Act. The Advocate submitted that there was no such case of mensrea in the importations covered by the present appeals and therefore he would urge that the orders of confiscation of the goods and imposition of fines should be set aside. In the alternative, the Advocate con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imported these two consignments from M/s. Manilal Sons, Singapore. The learned Advocate of the appellants had emphasised the fact that the letters of authorities issued to the appellants were valid to import industrial coconut oil which was not canalised for import through the STC. Apart from this objection, the licences were otherwise not valid for import. In this behalf, the learned SDR drew our attention to para 4 (A) (b) of the Collector's order regarding the validity of the licences produced by the importers for the clearance of the goods. The learned SDR read upto para 6 of the Collector's order to show how the importers contravened the various requirements of Import Trade (Control) Regulations. Referring to the findings of the Collector, in para 23 onwards of his order, Shri Pal stated that the arguments urged by the learned Advocate of the appellants about the canalisation of the edible coconut oil through the STC and the orders dated 23-1-1982 and 28-5-1982 of the CBEC and order dated 31-3-1981 of the Government of India had been taken into coconut by the Collector in arriving at the aforesaid findings and the orders. In para 25 of his order dated 17-12-1983, he had f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's efforts to arouse sympathy of the court had miserably failed and the High Court had observed that there could not be any equity about tax. Our attention was further drawn by Shri Pal to the High Court's finding that the importers had paid the redemption fine totaling Rs. 5 crores and got the coconut oil released and this action reflected that it was still considered advantageous by them to pay the fine and subsequently market the goods. The Customs authorities had urged that even after paying such heavy fines the importers had made substantial profits. This was accepted by the Hon'ble High Court. Relying on the judgment of the Calcutta High Court in the case of Shaikh Mohamed Ummer v. Collector of Customs, Calcutta -AIR 1966 237, Shri Pal contended that the imposition of fine was discretionary and that no reason need be given by the adjudicating authority to give the reasons for the amount of fine fixed by him. Reverting to the facts of the appeals, Shri Pal argued that these were deliberate imports in flagrant violations of import control regulations and they were meant for profit. The Court's observations in this behalf on page 68 were cited in support. However, the Court had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for import control purposes, the appellants had claimed exemption of lower rate of duty on coconut oil. The market value of coconut oil at the time of import was Rs. 19,000/- per metric ton and at this rate the margin of profit was 185%. In the petition filed by the appellants before the High Court they had implied that they sold the coconut oil at the rate of Rs. 14,500/- per M.T.. to M/s. Hindustan Lever Ltd. If this selling price were to be accepted for the purpose of arguments, the margin of profit would come to 103%. The fine imposed was 105% of the c.i.f. value. Shri Pal explained how the margin of profit was worked out by the Customs authorities. This was as follows : MOP = 100 x Selling Price minus landed cost [c.i.f. + 5% + duty] divided by c.i.f. price. The importers had the sole profit motive in importing these consignments and taking into account the circumstances as mentioned by Shri Pal above, the fines were not harsh or unreasonable. In answer to a question from the Bench as to why the other Customs Houses allowed imports of coconut oil without any penal action, Shri Pal submitted that this point had been considered by the Delhi High Court who had observed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself to arbitrariness as the yardstick for the fine was not mentioned. Besides the Collector had not disclosed the process of arriving at the margin of profit. The affidavits of the Assistant Collector Shri Mody and Collector Shri Kumar were countered by the affidavit in rejoinder of Shri Raj Kumar Jain dated 28-2-1983. Shri Desai drew our attention to para 7 of his affidavit in rejoinder and argued that the affidavit of Shri Kumar had tried to explain his adjudication order. This was not permissible and Shri Desai relied in this behalf on the judgment of the Supreme Court in AIR 78 S.C. 851. In reply to the question from the Bench, Shri Desai drew our attention to the same paragraph of the affidavit in rejoinder about the appellants selling the industrial coconut oil to M/s. Hindustan Lever Ltd. at the same rate. However, in reply to a further question from the Bench, neither the Advocate nor the representative of the appellants who was present in the court, could furnish the date of sale or exact price to M/s. Hindustan Lever Ltd. and also explain the fact that whether the sale was on high sea basis or after the import of the goods. Referring to para 15 of the same affidavit i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit in the present cases and therefore Shri Pal submitted that the redemption fines should be maintained and that the appeals should be rejected. 6.Before dealing with the merits of the arguments of the appellants, and the respondents, it is noteworthy to observe that the appellant's petitions before the Delhi High Court created history in a way as seen from the court's order. They say history repeats itself. But the lessons of history go home to some and not to the others, who like the Bourbons of early 19th century France do not learn anything nor forget anything. In any case, the lessons of history are instructive, particularly to a student of history; and it remains to be examined what the history of the present two appeals to the Tribunal has to show and where it leads the Tribunal. 7.The submissions made on behalf of the appellants and the respondents have been carefully considered. The main thrust of the argument of the appellants is that only edible coconut oil was canalised and therefore industrial coconut oil could be imported by the appellants. They have made much of the letter dated 30-10-1980 from the Chief Marketing Manager of the STC to the effect that STC was on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime to receive the goods in Bombay and to give delivery of the goods to the purchasers in Bombay than to import the goods at Kandla and undertake their transport from Kandla to the ultimate purchasers all of whom were in Bombay. Such a course of action was more time consuming which entailed an additional expense of Rs. 50,000/- per day vide para 28 of C.W.P. No. 4037 and cost of cartage from Kandla to Bombay vide para 8 of Affidavit in Rejoinder of Shri R.K. Jain, dated 28-2-1983. In this behalf, the appellants application dated 27-12-1982 under Section 151 to the Delhi High Court (para 5) refers, which talks of the appellants' commitments to the actual users. Even in this behalf, the design for importing the goods at Kandla and not at Bombay can well be gauged when it is seen that Shri Takhat Ram, Jt. CCI E had issued a circular dated 4-9-1982 to the Collector of Customs, at Bombay, Calcutta, Madras and Cochin not to allow clearance of imports of coconut oil without reference to the CCI E. A copy of the Circular was sent to the Kandla Custom House only on 11-10-1982 in response to a telegraphic request and the appellants took a calculated chance in importing the good through K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conduct of the appellant, the question arises whether the fines levied by the Collector were harsh as contended by the appellants. The appellants argue that they are without any basis. The learned Advocate for the appellants pleaded that the amounts of fine appear to have been plucked from air. He tried to ridicule the Collector's orders regarding the quantum of fines and termed the figures as astronomical. On the other hand, the learned SDR contended that the quantums of fine were based on certain principles which were recorded by the Collector in his fines. His efforts to read from the files the Collector's notes to inform the Tribunal of the basis for arriving at the amounts of fine were opposed by learned Advocate Shri Desai. However, there is no gainsaying the fact that the main purpose in levy of the fine is to take away the profit which the perpetrator of the crime seeks to derive therefrom. The Government of India have issued repeated instructions to the Customs authorities in this behalf. As contended by the learned SDR the intention behind the levy of the fine is to take away the margin of profit sought to be gained through the imports. The SDR has explained the metho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the two consignments come to Rs. 15.85 crores, against their landed cost of Rs. 12.20 crores which is inclusive of the duty and fines. This still leaved a balance of Rs. 3.65 crores which should take care of other charges and the profit. This analysis confirms the respondent's contention that even after paying the alleged astronomical amounts of fines, the appellants have made profit. Had it not been so, the appellants could have relinquished their title to the goods under Section 23(2) of the Customs Act and not cleared the same after they knew of the Collector's orders of fine. In that event, they would have saved themselves from fines and duties, and their only loss would have been to the extent of the c.i.f. values of the goods viz. Rs. 4.55 crores approximately as opposed to a much higher amount of Rs. 7.54 crores on account of bank loan and interest upto 30-4-1985 as per Shri R.K. Jain's application supported with the affidavit, port charges, storage expenses and to add, the cost of litigation. The fact of clearance of the goods would prove that even after paying the fines, the importers have made profit. The appellants' submissions reveal that the appellants had to borrow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in the affidavit of Shri Modi, the respondents have justified the quantum of fines. However, the learned Advocate of the appellants seems to have argued that the justification and consequently the amounts of fine are not proper and legal and in this behalf, he has relied on the decision of the Supreme Court in the case of Mahendra Singh Gill - AIR 1978 S.C. 851. It is seen that this decision of the S.C. was given in an election matter. On the other hand, the law and the practice in such cases in the Customs Department do not require the exact reasons to be mentioned in the orders. All the same the Collector recorded the reasons in his files, which the learned Senior Departmental Representative wanted to read for the benefit of the Tribunal and the appellants but he could not do so. The affidavits of S/Shri Modi and Kumar would have presumably contained these reasons. These affidavits were filed before the Delhi High Court to meet the contentions of the petitioners. Therefore, the ratio of the Supreme Court's decision in Mahendra Singh Gill's case cannot apply to the two appeals before the Tribunal. In this behalf the learned SDR has drawn the Tribunal's attention to the judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the contrary, the jurisdictional Collector of Customs, Ahmedabad held that the licences and the release advices tendered by the appellants in the two cases under appeal were not valid. He further held that the imports were in deliberate violation of ITC regulations. The Collector's orders were upheld by the Delhi High Court, before whom the two imports of M/s. Jayant Oil Mills Pvt. Ltd., Bombay and M/s. Metro Exports, Bombay through Calcutta Port were cited. Therefore, it was immaterial that the Department did not file any appeals against the orders for release of these two consignments and there is no question of extending any benefit to the appellants on this score. The appellants have also cited the decisions of the Tribunal in the case of Shama Engine Valve Ltd. v. Collector of Customs, Bombay and Merck Spares Pvt. Ltd., Delhi v. Collector of Central Excise, Delhi; and based on these decisions the appellants contend that no fines should be levied on the two consignments in question. So far as the Tribunal's decision in the case of Shama Engine Valve Ltd. is concerned, it is seen that the Tribunal set aside the order of fine because it held that the import of stainless steel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the quantum of fine is to suggest that the level should be based on the order No. S-10-223/80-IIIA, dated 17-12-1980 of the Collector of Customs, Bombay in levying the fine of 12 1/2% of C.I.F. value on the import of industrial coconut oil made by the appellant's sister concern M/s. Jain Shudh Vanaspati Ltd. The Advocate has contended that even this small fine was set aside by the Board on appeal vide Order No. 85 of 1981, dated 23-1-1981. It may be observed that a copy of the Collector's order has not been furnished and in its absence it is not possible to know whether the analogy of the earlier decision can prevail in these appeals. However, from the copy of the Board's order in appeal dated 23-1-1981, it is seen that the Collector was influenced in fixing the amount of fine by the letter dated 30-10-1980 of the Chief Marketing Manager of the STC addressed to M/s. Jain Shudh Vanaspati Ltd. Besides the import by M/s. Jain Shudh Vanaspati Ltd. was made during April, 1980 to March, 1981 policy period. It is to be remembered that the STC's letter created a controversy in interpreting this policy and opened the flood gates for imports of coconut oil by all and sundry. These circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e commodity for import control regulation purposes and otherwise. The Tribunal's order has been thus proved false and it has become otiose. It cannot be accepted as a good precedent for the present purposes. In addition, the Tribunal did not accept the Collector's order with regard to the value of the goods for assessment at the rate of U.S. $ 587.25 per M.T. but arrived at the conclusion that it should be less, at the rate of U.S. $ 556.75 per M.T. This reduction in value naturally affected the quantum of fine leviable even on the basis of the adjudicating officer's yardstick. No such consideration in the reduction of the assessable values is involved in the two cases of the appeals. Besides the 'A' Bench of the Tribunal made its own educated guess and felt that 35% can be taken as a reliable estimate of the margin of profit for the goods at the material time. By urging the acceptance of the ratio of this decision, the learned Advocate for the appellants wishes us to for sake the concrete data as per the affidavits of the Collector and the Assistant Collector and to go into the realm of an educated guess as resorted to by the 'A' Bench of the Tribunal. While education is a life lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not serve as good precedents as seen already. Besides, the appellants' plea for a lower margin of profit in oils was not upheld by the Delhi High Court. Shri Desai has further relied on the Supreme Court's decision in the case of Jaisinghani v. Union of India - AIR 1967 S.C. 1427 to say that discrimination should be avoided. There cannot be any two opinions about this contention. The Collector's orders are not based on arbitrary whims or fancy, but on the criteria laid down by the Government that the fines should take away the profit margin from the importer. These instructions are in consonance with the Supreme Court's judgment regarding the exercise of discretionary powers and are uniformly followed by the adjudicating authorities in dealing with cases of contraventions of trade control regulations. If at all any arbitrariness was involved it was on the part of the appellate authorities who interfered with the original quantums of fines. The principle of equality before law has been very well brought out by the decision of the Delhi High Court in the appellant's writ petitions Nos. 4037 and 4038 of 1982. The High Court found these fines quite appropriate in the circumstances of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onduct of the appellants in importing the two consignments fully warrants the Collector's conclusion. Therefore, any interference in the amount of fine would also tantamount to interfering with the element of penalty. This cannot be warranted from the circumstances of these appeals. This is the inescapable conclusion arrived at after critical examination of the appellant's overwhelming emphasis for the benefit of belief being based on the letter of STC dated 30-10-1980 as observed by the High Court. The High Court further observed that the details of actual income, sale price, and other expenses can only be shown by the petitioner to the authorities concerned who have to pass the final orders. But the appellants have singularly failed to reveal any transactions of sale. In these circumstances, to borrow the phrases from the High Court's order, "the resort to Section 125 of the Act to impose fine in lieu of confiscation cannot be so exercised as to give bonanza or profits for an illegal transaction of import", or that "there would appear to be hardly any justification for letting an importer make monetary gain from any illegal transaction of imports". Hence it is not possible to acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Department, no efforts were made to seek that remedy in time. In the same submissions on page 38 the appellants contended that the Tribunal's power for condoning the delay in presentation of the appeal was meaningless as this was a discretionary power and not a matter of right for the appellant. All the same, the Hon'ble Delhi High Court remitted the matter to the Appellate Tribunal only on the limited question of redemption fine. This was despite the fact that in his judgment Justice S.B. Wad had held that the petitioners could not be sent to the Appellate Tribunal where the remedy of appeal was barred by limitation. But the appellants chose to approach the North Regional Bench of the Tribunal in pursuance of the Hon'ble High Court's order rather than this Bench of the Tribunal, in spite of the clear advice contained in the preamble to the Collector's orders. If one were to hazard a guess about the motive of the appellants in not coming up before the appropriate bench pursuant to the High Court's directive, it can be inferred that the appellants chose the Tribunal in New Delhi to encash on the earlier two decisions of the same. A perusal of the appeals and applications purportin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the judgment [p. 53]. It is also confirmed by the Supreme Court in the case of Miles India Ltd. - 1985 ECR 289 S.C. and other decisions. While there is discretion on the part of the Tribunal under the Customs Act to condone the delay in presentation of an appeal, if the same is explained to the satisfaction of the Tribunal, the Tribunal on its own cannot take up the question of going into the delay and condone it suo motu. Therefore, while dealing with the merits of the appeals as regards the quantum of fine in compliance with the directions of the Hon'ble Delhi High Court, it is held that both the appeals are barred by limitation and in absence of any request for condoning the delay, the appeals have to be treated as time-barred under the provisions of Section 129A(3) of the Customs Act. With much regrets, therefore, it is not possible to be persuaded to accept the findings of brothers Fauja Singh Gill and Devaki Nandan Lal that the Hon'ble High Court of Delhi had condoned the delay in presentation of these appeals to the Tribunal. Brother Fauja Singh Gill recorded the said findings perhaps while reminiscing of the days when he adorned the bench of the same Delhi High Court. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not have been inclined to require the Tribunal to go into the propriety of the quantum of redemption amount. This is veritably putting the petitioner in advantageous position as if he has actually filed an appeal before the Tribunal. I would have felt more inclined to leave the petitioner himself to file the appeal and agitate the matter before the Tribunal and seek condonation of delay. The discretion in that regard would rest with the Tribunal and the same should not be fettered by us by requiring the Tribunal to treat the petitioner as if he has already filed an appeal before him". The appeals are thus time barred and are to be dismissed as such. 15. In the end, both these appeals are rejected on merits and as time-barred. Bombay, 4th April, 1986. Sd/- (K.S. Dilipsinhji) Member (Technical). 16. [Order per : K. Gopal Hegde, Member (J)]. - I have had the advantage of going through the order passed by my brother Shri K.S. Dilipsinhji. I respectfully disagree not only with his conclusion but with his reasonings and also disassociate myself with the insinuations and disparaging remarks made against the former President of the Tribunal and the Hon'ble Member Shri D.N, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or. The other Judge Mr. Justice S.B. Wad, however, allowed the Writ Petitions by holding that the orders of confiscation are illegal. In view of the majority decision the matter was remitted to the Appellate Tribunal only on the limited question of redemption fine. The Hon'ble High Court also granted leave to appeal to the Supreme Court. 24.After remand, the matter came up for consideration before the North Regional Bench. On the objection raised by the. SDR regarding the North Regional Bench's jurisdiction to hear the matter, the President by his Orders C/248/85-NRB, and C/249/85-NRB, dated 4-11-1985 transferred the records to this Regional Bench. 25.The scope of the appeals being limited namely; as to whether the Collector was unjustified in imposing a fine of Rs. 2 crores in his Order No. 6/82 and Rs. 3 crores in his Order No. 7/82, it would not be necessary to set out the facts in detail. 26.The appellants in both the appeals is a Private Limited Company. It carries on business of imports and exports and distribution of various raw materials to actual users. The appellants were a letter of authority holder issued to export houses. As letter of authority holder, they impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llector according to Shri Desai had not assigned a single reason to impose such heavy fine amounts. It was submitted by Shri Desai that all the licences in respect of which the appellants were the letter of authority holders of the year 1981. They were governed by the Policy 1980-81 and during the Policy period their sister concern M/s. Jain Shudh Vanaspati imported a consignment of industrial coconut oil of the c.i.f. value of Rs. 2 crores. The Collector of Customs, Bombay ordered confiscation and allowed redemption on payment of a fine of Rs. 25 lakhs. The sister concern M/s. Jain Shudh Vanaspati Ltd., preferred an appeal against the order of the Collector to the Central Board of Excise and Customs and the Board by its order dated 23-1-1981 allowed the appeal and held that the industrial coconut oil was not a canalised item under the Import Policy 1980-81. This order of the Board was confirmed by the Central Government by its order dated 31-3-1981. In May, 1981 the appellants imported industrial coconut oil and the Collector of Bombay allowed clearance. Further, in July, 1981 the appellants imported industrial coconut oil and the very Collectorate of which the present Collector ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per M.T. whereas the appellants had disposed of the import quantity to actual users at a lower rate. The Tribunal may take into consideration incidental expenses such as licences premium, import duty, bank charges, customs clearance charges, transport charges from the port to the factory, octroi charges, interest charges on the capital blocked as well as the shortage of 1/2% for which no insurance claim is admissible. Shri Desai submitted that if all those aspects are taken into consideration the appellants would not even get a margin of profit of 10%. It was further submitted that this Hon'ble Tribunal in Appeal No. CD(SB)/891/83-A, dated 26-2-1983 arising out of the order-in-original passed by the very Collector in respect of the very commodity came to the conclusion that the margin of profit would be about 35% on the total landed cost of the goods. Shri Desai, however, submitted that in view of the huge storage charges and interest charges incurred by the appellants due to time gap in making the deliveries to the various actual users because of the adjudication proceedings the margin of profit for the appellants was wiped out completely. Further, the interest paid to the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onut oil on a licence which prohibits the particular item of goods. The effect of this endorsement is to make it as if there is no licence for the import of coconut oil in September, 1982 but subject to certain conditions in fact he had no licence to import coconut oil at all when the goods arrived. It would be a case of import without any licence". Shri Pal further urged that the learned Judge of the Delhi High Court did go into the question of quantum of fine. In that connection he referred to pages 437 and 439 to 447 of the paper-book. Shri Pal particularly referred to the observation contained in page 446 of the paper-book which read : "I may incidentally note that the petitioners overwhelming emphasis on the benefit belief being based on the letter of STC dated 25th October, 1980 would need to be examined rather critically by Appellate Tribunal to whom I intend remitting but only on the question of redemption fine. It is to be noted that the licences were originally issued in November, 1980 and January, 1981. Two letter of authority were obtained in February, 1981 and third one in December, 1981. Now STC prima facie view could only have had, if at all any relevancy for 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l urged that in the affidavit the Assistant Collector had stated that the market rate at the relevant time was Rs. 19 thousand per M.T. The adjudicating authority in his affidavit affirmed that the facts stated by the Assistant Collector in his affidavit are correct. Shri Pal then referred to the statement made by the appellants that they had sold the goods at the rate of Rs. 14,500/- per M.T. Even if this rate was accepted still there is a margin of profit of 103% whereas the fine imposed in lieu of confiscation by the Collector works out little over 100". Finally, Shri Pal submitted that having regard to deliberate violation of the Import Control Order the fine imposed by the Collector cannot be considered as excessive or unjust and at any case it was not harsh. 29.Shri Desai in reply submitted that the expression 'profit motive' is a dirty word. Nobody does business without a profit motive. He reiterated the interpretation of paragraph 185, Public Notice, dated 22-5-1982 and paragraph 222 of the Policy in question. He particularly pointed out that while validating the certain of the licences reference was made only to paragraph 222(1), (2) and (4) and not sub-para (3) and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nably and fairly as well as justly. 33.The contentions urged by either side had been referred to in the earlier paragraphs. In the matter of imposition of fine in lieu of confiscation on behalf of the appellants it was contended that the order is arbitrary, capricious and unjust. It was urged that any order which is not supported by reason is an arbitrary order. It was contended that in his order the Collector had not assigned a single reason as to why he was levying a fine of Rs. 2 crores in respect of one consignment and Rs. 3 crores in respect of another consignment. It was further contended that looking to the past practice, uniformly followed by the Collectorates, the Board and the revisional authority, no fine was required to be levied. A warning would have been sufficient and at best there should have been a token fine and not an unreasonable fine which is almost confiscatory in nature. 34.For the Collector it was however contended that there was deliberate violation of the Import Control Order with the avowed object of making profits. Though the licences did not permit import of the goods in question, the import was effected. The Collector could have ordered absolute co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31-7-1982 during the Policy period 1981-82. 38.Appendix 9 of the Policy A.M. 81 contained canalised items as well as the canalising agencies permitted to import the canalised items. Under the heading Oils/Seeds 'coconut oil' had been mentioned as a canalised item. In the Policy A.M. 82 the canalised items as well as the canalising agencies were set out in Appendix 9. Under the heading Oils/Seeds one of the items mentioned was 'coconut oil'. So far as the description of the item is concerned there is no difference between 1981 Policy and 1982 Policy. But paragraph 5 of Appendix 9, A.M. 81 began with the words 'in the case of the following items, import will be made only by the State Trading Corporation of India (STC), under Open General Licence ......'. But in the Policy 1982 the paid paragraph began with the words 'in the case of following items whether edible or non-edible, import will be made only by the State Trading Corporation of India (STC), under Open General Licence .......'. Thus, the expression whether 'edible or non-edible' came to be incorporated only in the Policy A.M. 82. 39.Even though the Policy A.M. 81 did not have the expression 'edible or non-edible', the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... canalising agency could import. The second ground on which the Collector held the import as unauthorised or illegal was that the licences produces were not valid for import as they did not authorise import of industrial coconut oil. 45.Both the orders of the Collector are identically worded in so far as they relate to confiscation and imposition of fine in lieu of confiscation excepting of course as to the quantum of fine. For the purpose of these appeals it is suffice if a paragraph of the final order is extracted : 'This is a case where normally the provisions of Section 112 of the Customs Act, 1962 ought to have been invoked inasmuch as the Import Policy and its provisions were deliberately flouted. However, the redemption fine imposed in lieu of confiscation of the impugned goods is sufficient to meet the ends of justice. In view of this, I refrain myself from imposing a personal penalty on the importers'. 46.The question that appropriately falls for consideration in both these appeals is whether on the facts and in the circumstances of the case, the Collector was unjustified in imposing a fine of Rs. 2 crores in respect of the import of 3002.557 M.T. and Rs. 3 crores in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs some force in this contention. Reference has been already made to the various orders passed by the Bombay Collectorate, Ahmedabad Collectorate, Calcutta Collectorate, the Board and the Government of India. Significantly, even after coming into force the Import Policy A.M. 82, the three Collectorates namely, Bombay, Calcutta as well as Ahmedabad (Kandla) cleared industrial variety of coconut oil without raising any objection. Further, the clearance of two consignments by Calcutta Port was during the year 1982 subsequent to the two orders which are now challenged before us. 47.In the matter of imposition of fine in lieu of confiscation the Custom Houses have been taking into consideration the margin of profits. It cannot be said that margin of profits cannot be a criterion in fixing the amount of redemption fine. Another factor which was being uniformly followed is the past practice in the matter of clearance. The other criterion applied in certain cases has been whether the import was for stock-in-trade or for utilisation in the manufacturing activities of the importer. Yet another criterion that is being applied is about the bona fide or mala fide conduct of the importer. 48 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the licences which were revalidated permitted import of industrial coconut oil as OGL items. The Collector's view was upheld by the majority judgment of the Delhi High Court. Significantly, one of the Judges who constituted the full Bench took a different view. More significantly, the Delhi High Court granted special leave to the appellants to file appeals before the Supreme Court. Under Article 133(1) of the Constitution of India an appeal would lie to the Supreme Court if the High Court certifies under Article 134A : (a) that the cast involves a substantial question of law of general importance; and (b) that in the opinion of the High Court the said question needs to be decided by the Supreme Court. The above provisions under Article 133 came to be incorporated by 30th amendment Act, 1972 which came into effect on 27-2-1973. 51.When the High Court itself considered that the case involves a substantial question of law of general importance and that in the opinion of the High Court the said question needs to be decided by the Supreme Court, it is difficult to accept the finding of the Collector that there was deliberate flouting of the Import Policy and its provisions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bound by their own precedents in administering taxing statutes involving the very basis of taxation in respect of a particular article and not leave it to them to modify their own previous decisions but to leave it to them to apply to Courts or Parliament or Legislatures as the case may be to put the Law beyond doubt'. Besides, of proving the above observation the Division Bench observed 'The Central Excise authorities cannot go on changing their mind from time to time and cannot be allowed to create uncertainty in the realm of taxation'........ 55.There are any number of instances where the Board as well as the revisional authority have reduced the quantum of fine considerably. Even this Bench when it was satisfied as to the bona fide of the importer have considerably reduced the fine amount. In Appeal CD (BOM) No. 736/85, M/s. Crown Measurements Pvt. Ltd. v. Collector of Customs, Bombay, this Bench reduced the fine in lieu of confiscation from Rs. 1,60,000/-to Rs. 16,000/-. In CD(T)(BOM) 274/80, Shri Bhagwati Solvent Extraction Pvt. Ltd. v. Collector of Customs, Bombay, this Bench reduced the fine from Rs. 1,08,000/- to Rs. 28,500/-. 56.During the course of the hearing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16,74,281.48 and the duty paid was Rs. 70,76,657.09. The total landed cost of the consignment including the duty and landing charges would be roughly about Rs. 1 crore 80 lakhs. The Special Bench rejected the appellants contention that the margin of profit could only be 10%. The Special Bench observed : 'It appears to us that the 10% margin suggested by Shri Desai as the probable profit is too low. At the same time, the Collector's judgment placing the margin of profit over 100% may not be wholly acceptable. Considering all circumstances, and making an educated guess in the absence of thoroughly reliable data, we feel that 35% can be taken to be a reliable estimate of the margin of profit at the material time, in respect of these goods. It further appears to us that the profit margin has to be calculated not on the c.i.f. value, as suggested for the appellants, but on the total landed cost since the profit would be expected to be realised by the importer on the total landed cost and not merely on the c.i.f. value without reference to the landing charges and duty payable'. The Special Bench also rejected the appellants contention that they had acted in entirely bona fide manner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed edible oil was sold by the importers, it cannot be said with certainty as to the actual profit earned by the importers. For the purpose of imposing fine what is relevant is the net profit made by the importers. 'Net profit' is the gain made by selling goods at a price beyond all costs and charges. On behalf of the appellants it was contended that the licences were all transferred licences and huge premiums had to be paid. Further the importers had to pay import duty charges, Customs clearance charges, transport charges, from the Port to the factory, octroi duty, interest charges on the capital locked as well as the shortage 1/2% for which no insurance claim is admissible. It was also urged that the appellant had to pay huge storage charges, and also interest to the banks the time gap making deliveries of the goods to the actual using because of the penal proceedings. It was also urged that heavy interest was paid to the Bankers on the amount of Rs. 2 crores paid as redemption fine as a result the appellants are incurring huge losses. On behalf of the Department, it was not contended that the appellants were not required to incur the expenses urged by the learned Advocate for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y are required to be rejected. Bombay, 4th July 1986 Sd/- (K.S. Dilipsinhji) Member (Technical). 63. [Per : G. Sankaran, Vice President, for himself and for Smt. S. Duggal, Member (J) and Shri H. R. Syiem, Member (T)]. - These two appeals were heard by the West Regional Bench, Bombay ["WRB", for brevity's sake] of this Tribunal. The two Members comprising the Bench wrote separate orders and also framed separately and differently two questions each representing the points on which they differed. In view of this position, the WRB referred the matter to the President under Section 129C(5) of the Customs Act, 1962. The President, by his Order dated 14-8-1986, referred i.e. points of difference to the present Bench for hearing. Since the two Members of the WRB had formulated the points of difference differently and separately, this Bench formulated the points of difference such that the points separately and differently formulated were merged and consolidated. Copies of the order written by the two Members of the WRB and the points of difference as formulated by them together with the points of difference as formulated by this Bench were furnished to both sides alongwith the not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the cases. Before dealing with the question, it is necessary to narrate briefly the circumstances in which these two matters have come before this Tribunal. 67. By Order-in-Original No. 6/Collr/82, dated the 17th December, 1982, the Collector of Customs and Central Excise, Ahmedabad, confiscated 3,002.557 Metric Tonnes of refined industrial coconut oil, imported by M/s. Jain Exports Pvt. Ltd., under Section 111(d) of the Customs Act, 1962, based on his finding that the goods were not covered by valid import licences for their import and that, therefore, they had been imported in violation of the prohibition on their import under the Import Trade Control Policy. However, he gave an option to the importers to redeem the goods on payment of a fine of Rs. 2 crores only within three months from the date of receipt of the Order. The Collector observed in his Order that this was a case where normally the provisions of Section 112 of the Customs Act ought to have been invoked inasmuch as the Import Policy and its provisions had been deliberately flouted. The Collector, however, refrained from imposing penalty on the importers since, in his view, the redemption fine imposed in lieu o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d leave. We were informed during the hearing that the Special leave matter was pending before the Supreme Court. 70. The contention of the learned counsel for M/s. Jain Exports Private Limited before us was that the High Court was fully conscious of the fact that the importers had not, during the pendency of the proceedings before the High Court, challenged the two orders-in-original passed by the Collector, by appeal before the Tribunal. In this connection, our attention was drawn to the following passages occurring in Mr. Justice Sachar's judgment :- "However, as mentioned above only on the redemption fine, the matter has to be remitted to the authorities under the Customs Act. I am not inclined to send it back to the Collector for the reason that had the petitioner availed of the remedy of appeal this matter would have been heard by the Appellate Tribunal. I would, in the circumstances, remit the matter to Appellate Tribunal, but only on, the question of consideration of quantum of redemption fine. The Appellate Tribunal would hear and dispose of this matter as if it was hearing an appeal filed by the petitioner but only on the question of quantum of redemption fine. I havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court to the Tribunal was quite clear. The Tribunal was to go into the question of the quantum of the redemption fines imposed by the Collector. The Court remitted the matter to the Tribunal only for this limited purpose. This was not a case of remand. The High Court's orders could not be construed as having remanded the matter to the Appellate Tribunal because remand could be only in instances where matters before the Tribunal had been disposed of by the Tribunal and the Court sent the matter back to the Tribunal for reconsideration in accordance with the observations and directions of the Court. In the present two matters, the importers had not suo motu, filed appeals before this Tribunal against the two orders passed by the Collector. They had come before the Tribunal because, in pursuance of the Court's directions, they were bound to assist the Tribunal in determination of the quantum of redemption fine. Therefore, this was not an instance of the Court remanding the matter to the Tribunal. The Court, on the other hand, remitted the matter to the Tribunal even though it was aware that no appeals had been filed before the Tribunal. Dr. Singhvi submitted that the importers we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicate in accordance with law as directed by the High Court. 73. On the question of limitation, Member (Technical), WRB, has noted in his order that the two orders passed by the Collector had been received by the importers before 27-12-1982 and the two appeals were filed in the Tribunal on 22-2-1985. Since the importers had not availed themselves of the appeal remedy in time and they had not prayed for condonation of the delay in filing the two appeals nor explained the reasons for the delay, the two appeals had to be held as barred by limitation. In this view of the matter. Member (Technical) has passed an order dismissing both the appeals on the ground (also) of limitation. Member (Judicial), WRB on the other hand, has observed that the question of the appeals being barred by limitation was not raised on behalf of the respondent nor had the departmental representative, on behalf of the respondent, urged that the appeals should be dismissed as barred by limitation. He further observed that the Court had remitted the matter to the Tribunal on the limited question of redemption fine, and the departmental representative rightly did not contend that the appeals were barred by time. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was taken by the respondent. We observe from the order dated 5th November, 1985 passed by the North Regional Bench of this Tribunal sending both the appeals for disposal to the WRB that there is an observation to the following effect :- "It is evident that the writ petitions had been finally disposal of and only the question of redemption fine has to be considered by the Appellate Tribunal, treating the matter as appeals. In other words, the delay had been condoned for limitation purposes as the appeals would be against the orders of the Collector passed in December, 1982". We cannot, however, discover from this order that the question of limitation was raised before the North Regional Bench by the Departmental Representative for the respondent. The aforesaid observation was made by the Bench on its own as it viewed the situation arising out of the remittance of the matters to the Tribunal by the High Court. The Bench felt that the delay had been condoned (by the High Court) for limitation purposes. In observing that there was no contention as to limitation taken by the respondent, Member (Judicial), WRB, was evidently referring to the proceedings before the WRB. It is seen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words are not "as the said officer likes". The fine should be as the officer thinks fit (emphasis supplied). In other words, the amount of fine should fit in with the facts and circumstances of the case and should be just and reasonable. We have no doubt whatsoever that the quantum of redemption fine imposed by the adjudicating officer is open to scrutiny and, in appropriate cases, modification, and even complete cancellation by the higher authorities in the quasi-judicial hierarchy, if the facts and circumstances of the case so warrant. 78. Before dealing with the quantum of redemption fines, we may observe here that the High Court has recorded in no uncertain terms its categorical finding that the consignments of Refined Industrial Coconut Oil imported by the importers in the present two matters had been imported in violation of the Import Trade Control Policy and that they were rightly liable to be confiscated. This aspect of the matter is a closed chapter in so far as the present proceedings before us are concerned. Though Dr. Singhvi initially wished to address arguments on this aspect of the matter, he refrained from doing so when the above position was pointed out to him. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court, the aforesaid circumstances would, according to the learned counsel, be relevant, and should be taken into consideration, while arriving at the proper quantum of redemption fine. Apart from these considerations, this Tribunal had, in two similar instances of imports by M/s. Jayant Oil Mills Pvt. Ltd. and M/s. Allana Impex (P) Ltd., on a full consideration of all the relevant circumstances, reduced the redemption fine to 35% of the landed cost in the former case and roughly 27% of the landed cost in the latter case. The present imports should, therefore, be treated likewise and the redemption fine should be reduced to 35% of the landed cost of the goods as opined by Member (Judicial), WRB. In this connection, he submitted that Member (Technical), WRB, had fallen into error in arriving at the margin of profit on the basis of the C.I.F. prices of the goods. The correct basis would be the landed cost, i.e. the C.I.F. price plus landing charges plus duty and other incidental charges. Though the Member had referred to the C.I.F. prices in his order, in the points formulated by him, the reference is to the landed cost which was also the basis adopted by this Tribunal in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t have been the authority competent to clarify the ITC Policy. The ratio of the Board's Order-in-Appeal dated 23-1-1981 in the case of M/s. Jain Shudh Vanaspati Limited (a sister concern of the present importers) which was affirmed, in review proceedings by the Central Government by its Order dated 31-3-1981 and - by analogy - of the Order-in-Appeal dated 28-5-1982 passed by a three-Member Bench of the Board in respect of imports of palm stearin), was that Appendix 9 in the ITC Policy of 1980-81 covered only the edible variety of coconut oil as the item canalised for import by STC and that industrial variety of coconut oil was not so canalised. In the case of Jain Shudh Vanaspati, the Collector had imposed a fine of only 12.5% in view of the STC's letter of clarification. Even subsequent to the Central Government order of 31-3-1981, imports of industrial coconut oil made by the present importers had been allowed clearance by the Customs authorities at Kandla and Bombay. These assertions made by the present importers have not been controverted by the Department. 80. Continuing, the learned Counsel for M/s. Jain Exports Private Limited, submitted that the Delhi High Court had not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Policy and its provisions, and the further observation in para 34 that, in the circumstances of the case, it could not be said that the present importers were guilty of mala fide in the import of industrial coconut oil were also referred to and relied upon. 82. Opposing the plea for reduction of the redemption fines to 35% of the landed cost of the goods, as opined by Member (Judicial), WRB, Shri Sunder Rajan, the learned Departmental Representative, drew our attention to the five points framed by Mr. Justice Sachar in his order all of which had been answered, in the judgment against the importers. The judgment goes on to say that while extenuating factors could be taken into account for saying that a bona fide mistake was not visited with unduly harsh penalty or irreparable injury to the importers, it was equally clear that resort to Section 125 of the Customs Act in imposing fines in lieu of confiscation could not be so exercised as to give a bonanza or profit for illegal transactions by importers. It was further observed that the circumstance of bona fide belief may be relevant but only in the matter of imposition of penalty. The Court had further concluded that the STC's lett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the rule of educated guess would be arbitrary and open to criticism. The Delhi High Court had observed in its judgment that it was not shown that the Collector had any bias against the importers. 85. We have carefully considered the submissions made by both sides on the quantum of redemption fine. We must straightaway observe that while remitting this question to this Tribunal, the Delhi High Court had observed that the importers as well as the Collector would be at liberty to place before the Tribunal material as to relevant facts which would enable the Tribunal to arrive at a proper finding on the said question in accordance with law. Some of the factual aspects would be the storage charges, if any, incurred on the goods while the adjudication was in progress, the interest charges paid to the bankers till the goods were got released from the customs on payment of fine, the actual sale proceeds realised by sale of the goods etc. No such data, it is observed from the order passed by the WRB, were placed before that Bench either. It is a matter of regret that both sides have not chosen to place before us any such material. We are, therefore, constrained to proceed on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide the confiscation and fine. We do not think that the aforesaid decision contains any ratio which can be said to apply to the facts and circumstances of the present cases. As already noted, the goods in the Shama Engine Valves Ltd. case fell under the description alloy steel as well as stainless steel. The licence had been issued for the import of inter alia alloy steel and for a specific purpose. On the other hand, in the present cases, there is no specific description of the goods authorised to be imported under the import licences. The whole discussion centres around the question whether industrial coconut oil is permissible for import within the meaning of the term "coconut oil" figuring in the import policy. Since coconut oil figures as an item in the list of canalized items, it is not as if industrial coconut oil was specifically allowed for import by the present importers unlike in the Shama Engine Valves Ltd., where stainless steel was authorised to be imported under the description alloy steel. In the circumstances, we do not think that the decision cited has any application to the facts of the present. 87. In the second case cited before us by the learned Counsel fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 35% of the landed cost of the goods could be taken to be a reliable estimate of the margin of profit at the material time. There is one significant factor in the Jayant Oil Mills case. It is that the Bench went at great length into the assessable value of the goods and gave a finding that the value for the purpose of assessment of duty should be taken as $ 556.75 per Metric Tonne and not, as the Collector had taken, as $ 589.25. [There is no dispute about the assessable value of the goods in the proceedings before us]. This factor may also have been kept in view by the Bench in reducing the redemption fine. 89. In the second decision of the Tribunal, namely, the case of M/s. Allana Impex Pvt. Ltd., Bombay (supra) also there was a dispute about the assessable value as in the Jayant Oil Mills case. The Bench determined the assessable value to be $ 555.00 per Metric Tonne as against $ 587.50 per Metric Tonne. The Collector in that case had imposed a redemption fine of Rs. 75 lakhs. Considering the nature of the commodity and the use to which such goods could be put to, the Bench took the view that the ends of justice would be met if the redemption fine was fixed at Rs. 25 lakhs an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porters to do, that relevant factual material would have been placed before us in support of the importer's plea for reduction of the fines. Regrettably, this has not been done. There is no allegation before us that the fines imposed by the Collector had exceeded the upper limit set by Section 125 of the Customs Act, namely, the market price of the goods less the duty chargeable thereon. In these circumstances, we would be slow to interfere with the discretion which the Collector had exercised in fixing the quantum of redemption fines unless it be shown to us (and it has not been shown to be so) that the Order suffers from infirmity, bias or perversity. In fact, we find from the High Court's judgment that the Court did not find any bias on the part of the adjudicating Collector. 92. We have also carefully gone through the affidavits filed by the petitioners and the respondent before the High Court. While the petitioners have denied that they had made huge profits after the clearance of the goods on payment of the redemption fines imposed by the Collector, the respondent has stated that the petitioners did make huge profits. While the respondent has stated that the market value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confiscation cannot be so exercised as to give a bonanza or profit for an illegal transaction of import". 94. We also note from the order written by Member (Technical), WRB that neither the Counsel nor the representative of the importers could furnish, in reply to a question from the WRB, the date of sale or exact sale price to M/s. Hindustan Lever Limited to whom the importers state that they sold the goods at the rate of Rs. 14,500/- per Metric Tonne. They could also not explain whether the sale was on high sea basis or after the import of the goods. It also appears that the importers did not answer the WRB's query about the total sale price of the two consignments in question. It also appears from the Member (Technical)'s order that out of the two consignments consisting of 3,002.577 and 5,342.369 Metric Tonnes of refined industrial coconut oil imported by the present importers, only a quantity of 1,834.350 Metric Tonnes was sold to M/s. Hindustan Lever Limited. The remaining quantity appears to have been sold to other parties. On all these aspects, the importers have not made any submissions before us during the course of arguments inspite of the Hon'ble High Court giving the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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