1985 (12) TMI 230 - HC - Customs

Court clarifies scope of REP licences for aligning tools & customs authority's right to adjudicate

The court addressed three main issues in this case: whether aligning tools (dial indicators) are covered by the REP licences, if customs authorities can ... Import - Goods whether covered by import licence Issues Involved:1. Whether aligning tools (dial indicators) are covered by the REP licences.2. Whether the customs authorities can refuse release of goods previously allowed under similar licences.3. Whether the customs authorities can hold an adjudication proceeding to determine the nature of the goods.Summary:Issue 1: Whether aligning tools (dial indicators) are covered by the REP licences.The principal issue is whether aligning tools (dial indicators) are covered by the REP licences. The goods must fulfill two conditions: (a) they are aligning tools in the strict sense, and (b) they are special production aids to the electronic industry. The writ petitioners claim the goods are aligning tools but are not specific about their use as special aids in the electronic industry. Expert opinions were presented, but no final decision can be made based solely on these opinions. The customs authorities argue that the goods are precision measuring instruments, supported by expert Dr. Mrs. Chowdhury. The materials on record are insufficient to conclude whether the aligning tools (dial indicators) meet the description in entry A 35, Appendix 17, and hence are covered by the licences. A thorough adjudication based on expert evidence is required.Issue 2: Whether the customs authorities can refuse release of goods previously allowed under similar licences.The customs authorities previously allowed importation of similar goods under similar licences. Although they claimed earlier releases were based on wrong information, they failed to provide evidence of any misrepresentation. The customs authorities have bona fide grounds to doubt the correctness of their previous decisions. The learned trial Judge held that previous decisions would not operate as res judicata or estoppel. An importer must know what goods can be lawfully imported under a licence. If the goods are not covered by the licence, an error by the appraising authorities does not confer a right to import such goods again. Customs authorities have the right to correct their errors and hold an adjudication if necessary.Issue 3: Whether the customs authorities can hold an adjudication proceeding to determine the nature of the goods.The customs authorities should be allowed to hold an adjudication to determine whether the goods are covered by the licences. The learned trial Judge commented on the customs authorities' failure to hold adjudication proceedings earlier. The court directs that an adjudication based on expert evidence should be conducted to determine if the goods are aligning tools and special aids to the electronic industry. The customs authorities must follow the direction that if they erroneously allowed release of such goods earlier, they cannot penalize such importation later without notifying the error. The goods should be released upon the writ petitioners furnishing a bank guarantee of Rs. 50,000, with three samples kept for adjudication.Conclusion:The appeal and the application are disposed of accordingly, with directions for adjudication and conditional release of goods. The operative part of the order is to be communicated to the appellant, Collector of Customs, and the Union Bank of India.