Tribunal overturns Board's order on skimmed milk powder import, upholds Government's revisional power.

The Tribunal allowed the appeal, setting aside the Board's order and restoring the Collector of Customs, Bombay's order. The import of skimmed milk powder was deemed impermissible under the initial license issued, and the Central Government's exercise of suo moto revisional power was upheld as valid. The decision was based on interpreting the term "milk powder" in line with the statutory import schedule, which included skimmed milk powder within the scope of "milk powder."

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Issues Involved:
1. Whether the import of skimmed milk powder was permissible under the import licence issued.
2. Whether the Central Government's exercise of suo moto revisional power to interfere with the Board's order was valid.

Detailed Analysis:

1. Whether the import of skimmed milk powder was permissible under the import licence issued:

The main issue revolves around the interpretation of the term "milk powder" in the context of the Import Policy for April 1977 - March 1978. The respondents imported skimmed milk powder against an initial licence issued under Para 106(1) of the Policy Book, which did not specify export products. The Customs authorities objected, stating that the import was permissible only against exports of specified products listed in Annexure II to Part B of the Policy Book, which included "milk powder" but not explicitly "skimmed milk powder."

The Board initially accepted the respondents' contention that "milk powder" and "skimmed milk powder" were distinct, relying on the Supreme Court's decision in Healthways Dairy Products v. Union of India, which differentiated between condensed milk and condensed skimmed milk.

However, the Central Government and the Tribunal later held that the term "milk powder" in the Import Policy should be interpreted in line with the statutory import schedule, which aligned with the Customs Tariff Act, 1975. Chapter 4 of the Customs Tariff Schedule defined "milk" to include both full cream and skimmed milk. Therefore, "milk powder" was deemed to include "skimmed milk powder."

The Tribunal concluded that the policy makers' use of "milk powder" in the export-linked list and "skimmed milk powder" in the canalised list did not imply a distinction but rather indicated that "milk powder" included all its varieties, including skimmed milk powder.

2. Whether the Central Government's exercise of suo moto revisional power to interfere with the Board's order was valid:

The Central Government issued a show cause notice under Section 131(3) of the Customs Act, 1962, to revise the Board's order, which had allowed the import of skimmed milk powder. The respondents argued that the Central Government should not exercise its revisional power unless there was a grave error of law resulting in a miscarriage of justice.

The Tribunal held that Section 131(3) did not restrict the Central Government's power to cases of grave error or miscarriage of justice. The provision allowed the Central Government to annul or modify any order passed under Section 128 or Section 130 of the Customs Act on its own motion. The Central Government's decision to revise the Board's order was deemed valid as it was based on the correct interpretation of the term "milk powder" in the import policy.

Conclusion:

The Tribunal, by majority opinion, allowed the appeal, setting aside the Board's order and restoring the Collector of Customs, Bombay's order. The import of skimmed milk powder was not permissible under the initial licence issued, and the Central Government's exercise of suo moto revisional power was valid. The final order reflects the majority view that the statutory definition of "milk" in the Customs Tariff Schedule should prevail over trade parlance interpretations, thus including skimmed milk powder within the scope of "milk powder."

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