Import policy on complete mutilation construed in favour of importer where trade evidence supported the goods' claimed character.

An import policy condition requiring complete mutilation of woollen rags and synthetic garments was interpreted by the SC in favour of the importer because the policy did not prescribe an objective standard for measuring completeness. Trade practice and the record showed the goods were cut pieces, but not proven to be capable of restoration as garments merely by the cuts. On that basis, the goods were treated as satisfying the policy description, the Tribunal's view was upheld, and Customs' challenge failed. The principle stated is that ambiguity in an undefined import condition should be resolved in favour of the importer where trade evidence supports the claimed character of the goods.

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Issues: Whether imported woollen rags and synthetic garments were entitled to the benefit of the relevant import policy notification on the footing that they were completely mutilated at the time of entry into India.

Analysis: The relevant condition required complete mutilation, but the policy did not lay down any identifiable standard for judging completeness. In the absence of such a test, the burden of any ambiguity could not be placed on the importer. The evidence of national and international trade practice supported the importer's understanding of mutilation, and the record did not show that the goods were capable of being restored as garments merely because they were cut into pieces. The assessment and examination material did not establish that the cuts followed seams so as to make the goods retrievable or re-stitchable as clothing.

Conclusion: The goods satisfied the policy condition as understood in trade and the Tribunal's view was correct. The challenge by Customs failed.

Final Conclusion: The appeals were rejected and the importers retained the benefit of the policy treatment for the disputed goods.

Ratio Decidendi: Where an import policy uses the expression complete mutilation without defining an objective standard, the ambiguity must be resolved in favour of the importer when the trade evidence supports the claimed character of the goods.

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