2003 (1) TMI 108 - SC - Customs

Supreme Court upholds Customs decision on beef tallow import, clarifies penalty vs. confiscation.

The Supreme Court upheld the Collector of Customs' decision to confiscate imported beef tallow and impose a penalty under Section 112 of the Customs Act. ... Canalisation of imports - Import Policy prevailing at the time of import - Effect of Import Trade Control Public Notice on import entitlement - Penalty under Section 112 for improper importation - Confiscation and option to pay redemption fine under Section 125Canalisation of imports - Import Policy prevailing at the time of import - Effect of Import Trade Control Public Notice on import entitlement - Import of beef tallow under Open General Licence after the Public Notice of 5-6-1981 was not permissible where the item had been canalised and the Import Policy prevailing at the time of import prohibited such import. - HELD THAT: - The Court held that once import of an item is canalised it cannot be imported by licence-holders contrary to the Import Policy in force at the time of actual import. The Public Notice dated 5-6-1981 clarified that the description 'mutton tallow' be read as tallow of any animal origin and thereby canalised the item. A licence issued earlier does not confer an entitlement to import when the Import Policy as amended by public notices in force at the time of import prohibits the import. Reliance by the Tribunal on its earlier decision did not prevail because the summary dismissal of Special Leave Petitions against that decision without reasons does not create a binding precedent. The bills of entry were presented in June-July 1983 when the Import-Export Policy 1983-84 prohibited import of beef tallow; accordingly the imports were prohibited and contrary to the prevailing Import Policy and licence conditions which incorporate subsequent amendments by public notice. [Paras 11, 15, 16, 19, 20]Import of beef tallow under OGL in June-July 1983 was impermissible as the item was canalised and the Import Policy in force at the time of import prohibited such import; the Collector's finding to that effect is upheld.Penalty under Section 112 for improper importation - Confiscation and option to pay redemption fine under Section 125 - A penalty under Section 112 can be imposed notwithstanding that confiscated goods are permitted to be re-exported or an option to pay a redemption fine is given under Section 125. - HELD THAT: - The Court explained that the power to impose a penalty under Section 112 for improper importation is distinct from the power to confiscate goods and to permit payment of a redemption fine under Section 125. Confiscation and an option to redeem deal with the fate of the goods and vesting in the Central Government, whereas Section 112 addresses personal liability for improper importation; consequently permitting re-export or imposing a redemption fine does not preclude imposition of penalty under Section 112. [Paras 8, 9, 10]Penalty under Section 112 is maintainable in addition to confiscation/redemption measures under Section 125; the Collector was justified in imposing the penalty.Final Conclusion: The appeal is allowed; the Tribunal's order is set aside and the Collector of Customs' order of confiscation and imposition of penalty is restored. No order as to costs. Issues involved:Whether import of Beef Tallow under Open General Licence was permissible after the issuance of Import Trade Control Public Notice No. 29-ITC (PN/81) clarifying the existing description under Entry No. 44.Analysis:The case involved a dispute regarding the import of Beef Tallow under Open General Licence (OGL) after the issuance of a public notice clarifying the description under Entry No. 44. The respondent imported the item against a license issued in 1981, which was an impress license. The respondent entered into a contract for import, which faced challenges, leading to legal proceedings. The Collector of Customs passed an order confiscating the imported beef tallow and imposing a penalty of Rs. 5 crores under the Customs Act. The respondents appealed to the Customs Excise and Gold (Control) Appellate Tribunal, which allowed the appeal, stating that the import of beef tallow under OGL was not unlawful. The Tribunal's decision was challenged in the Supreme Court.The Supreme Court analyzed the legal provisions related to confiscation and penalty under the Customs Act. It clarified that the power to levy a penalty for improper importation is different from the power of confiscation of goods. The Court highlighted the sections of the Customs Act that deal with penalty and confiscation, emphasizing that both operate in different fields and are distinct powers of the authority.The Court also examined the settled legal principles regarding canalized items and import policies. It referred to previous judgments that established the requirement for imported goods to conform to the import policy prevailing at the time of import. The Court cited specific cases to support the principle that import of canalized items must comply with the Import Policy in force at the time of importation.Moreover, the Court addressed the respondent's argument that there was no bar on the import of beef tallow. It emphasized that once goods are canalized, holders of relevant licenses cannot import canalized items against additional licenses. The Court cited previous cases to support this position and reiterated that import policies must be adhered to at the time of import.In conclusion, the Supreme Court upheld the Collector of Customs' decision to confiscate the imported beef tallow and impose a penalty under Section 112 of the Customs Act. The Court set aside the Tribunal's decision and restored the Collector's judgment. The appeal was allowed with no order as to costs.