TaxTMI 
TaxTMI 
1990 (10) TMI 220
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....1988. Along with the Bills of Entries the appellants submitted other relevant shipping documents like invoices, packing lists, insurance certificates, country of origin certificate etc. 3. Declaration given by the importers (appellants) with respect to the Bills of Entries is to the effect that Bill of Entry No. 1498 dated 19-5-1989 pertains to M.S. cold rolled sheets weighing 62 M.T. with thickness of 0.17 mm to 0.35 mm and the Invoice No. is 590 dated 25-8-1989. With respect to Bill of Entry No. 1474 dated 22-9-1988, the description of the goods is mentioned as M.S. cold rolled steel sheet weighing 34.9 M.T. with thickness of 0.440 mm to 1.25 mm and the Invoice No. 1031 dated 28-7-1988. With respect to Bill of Entry No. 1992 of 29-7-1988 the description of the goods was mentioned as M.S. cold rolled steel sheets weighing 147.950 M.T. with thickness of 0.63 mm and 0.75 mm and the Invoice No. is IAG-3700 dated 28-5-1988. With respect to Bill of Entry No. 614 dated 9-9-1988 the description of the goods was mentioned as M.S. cold rolled steel sheets weighing 38.780 M.T. with thickness of 0.5 nun/0.4 mm/0.6 mm/1 mm and the Invoice No. was mentioned as N88/2801/03/OC dated 23-6-1988....
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....rs, chains, wheels and crank, ship plate, saddle grip, hub, rim, mud guard, seat pillar, frame pipes and carrier. It also came to the notice of the department that the Ludhiana factory of the appellants was closed without any manufacturing from July, 1988 to May, 1989. There were also no record showing consumption and production before July, 1988. From the statement of the General Manager of the appellant firm, Shri Sampuran Singh, it was revealed that the above bicycle parts were manufactured by them from CRCA sheets of thickness in the range of 18 to 26 gauge and they purchased raw materials from Steel Authority of India Limited. Shri Gurcharan Singh, proprietor of the appellant company, gave a statement under Section 108 of the Customs Act, 1962 to the effect that he was the sole proprietor of the firm and they manufacture bicycle parts at their factory and also buy some parts from local markets. They procure raw materials indigenously from SAIL and from local markets. He also stated that the imported CRCA sheets were meant for manufacture of cycle parts. But it appeared to the department that the imported CRCA sheets which were imported by the appellants, were not suitable for ....
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....ure for frame pipes. It, therefore, appeared to the department that the CRCA sheets imported by the appellants were not suitable for manufacture of cycle parts indicated in the relevant DEEC book and advance licence since they were less than 1.25 mm in thickness. Therefore, it appeared to the department that the appellants imported the above consignments of 283.630 M.T. of CRCA sheets unauthorisedly by misdeclaring and suppressing the fact and have thereby contravened the provisions of Import & Export (Control) Act, 1947 read with Section 11 of the Customs Act, 1962, rendering the goods liable to confiscation under Sec. 111(d), (m) and (o) of the Customs Act, 1962. 7. Accordingly, the department issued a show cause notice to the appellant firm and its proprietor Shri Gurcharan Singh asking them to show cause as to why the duty exemption under Notification 116/88-Cus., dated 30-3-1988, as claimed by them, should not be denied and why the duty should not be levied and as to why the goods should not be confiscated under Section 111(d), (m) and (o) of the Customs Act, 1962 and as to why a penalty should not be imposed on the appellants under Section 112(a) of the Customs Act, 1962. ....
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....exchange for the said products. These products were also inspected by the Export Inspection Agency and were certified to be in accordance with the standard specification and requirements. The same was scrutinised by the Customs authorities and they endorsed on each of the certificates. It was, therefore, contended that the entire exports of the consignments were as per the norms of the Export Inspection Agency, which is a wing of the Department of Commerce, Government of India. He also contended that 29 consignments were exported between the period 22-4-1988 and 18-7-1988, which were endorsed in the DEEC Book. Shri Mullick contended that under the provisions of Para 164 of Chapter 15 of Import & Export Policy - April 1988-91, the object of duty exemption scheme is to provide to the registered exporters by way of import replenishment, the essential inputs required in the manufacture of the products exported and also to allow certain flexibility to enable diversification of the export products. In this connection, he drew our attention to the advance import licence issued by the R.A.L.C., which is a high-power committee, allowing them to import defective CRCA steel sheets without any....
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....pellants duly acted upon and made application for advance import licence and completed the export obligation by way of export of bicycle parts and accessories consisting of 67 consignments and imported the said goods under the said licence, the concerned Customs authorities are legally estopped from contending anything to the contrary including the matter of duty exemption in respect of the said imported goods under the Doctrine of Promissory Estoppel. 10. The learned Barrister further submitted that the adjudicating authority failed to appreciate that the factory of the appellants was closed pursuant to an order of the Court between July, 1988 and May, 1989 and thereafter the factory was reopened and as such there was no question of producing any documentary evidence to prove that the appellants manufactured the export products at the material point of time. It was also contended that the learned Collector failed to appreciate and erred in not holding that the imported steel must correspond in all characteristics and specification to the steel used for the export of the components and supplies which have been already made by the appellant. In this connection, he pointed out tha....
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.....T. can possibly be used for manufacture of Hub Barrels and Hub Cups. The remaining quantity of 269.83 M.T. is not suitable for manufacture of Cycle Parts indicated in the relevant advance licence and DEEC Books and the same should be charged to duty in terms of the undertaking given by the appellants under the Notification 116/88-Cus., dated 30-3-1988. It was also contended that Para 244.1 clearly lays down that the replenishment would be on account of export supplies already made by utilising materials of same characteristics and technical specifications in anticipation of import of duty exempt materials specified in the licence issued under the scheme. It was, therefore, contended that from the opinions and certificates of different manufacturers, Small Industries Service Institute and Export Inspection Agency that the importers could only have used CRCA sheets of more than 1.25 mm for the manufacture of bicycle parts like handle bar, chain, wheel and crank, sheet plate, sheet clip and hub, and frame pipes, the imported materials could not be used for the manufacture of the same. Shri Choudhuri also contended that the first Bill of Entry covered 62 M.Ts. of CRCA sheets bearing t....
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....ifications of raw materials were taken from the competitors and is not valid. It was his contention that the opinions were taken not only from the other manufacturers but also from two technical authorities viz. SISI and Export Inspection Agency, who are independent authorities. In this connection, he contended that all the above companies and authorities were of the opinion that the said bicycle parts cannot be manufactured from CRCA sheets of thickness less than 1.25 mm except perhaps Hub Barrels and Hub Cups which require thickness of 0.79 mm. He also contended that the opinion of the SISI and Export Inspection Agency were obtained after showing them actual representative samples of exported goods and their opinion has corroborated the opinions given by different manufacturers, which includes even some of the Government of India Undertakings. It was, therefore, contended that these opinions having not been challenged either by cross-examining those authorities or by production of some other materials, are to be accepted in toto. 12. Relying on Para 244.1 of the Import & Export Policy 1988-91 Shri Choudhuri contended that the para is self-explanatory and it clearly lays down t....
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....ccordance with the law; (ii) Whether the Doctrine of Promissory Estoppel applies to the facts of this case; (iii) Whether the imposition of penalty on the firm viz. M/s. Overseas Cycle Company and on its Partner Shri Gurcharan Singh to the extent of Rs. 1 lakh each is in accordance with the law ? 14. Point No. (i) : It is seen that the appellant received the export orders and none of the export orders stipulate any condition about the thickness of the materials. The appellants applied for advance licence for importing defective CRCA sheets/coils and the application does not contain any specification about the thickness of materials to be used in the export products. The letter of the Small Industries Service Institute, Government of India, Ministry of Industry dated 20-1-1988 mentions the fixation of input and output norm for issue of advance licence to the appellants and the same had been examined by the Deputy Director (Mechanical) of that Institute. The Deputy Director opined that for executing the export order of bicycle parts to Bangladesh, the quantity of materials, i.e. defective CRCA sheets, coils, rounds required by the appellants would be 295.630 M.T. as against ....
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....ive CRCA sheets ought to have a particular dimension to manufacture the resultant product in question the licensing authority would have specified the same in the licence. In this connection, the learned Advocate for the appellants had relied on the document furnished along with the appeal at Annexure H. According to the above-said Annexure it is seen that similar goods, i.e. defective CRCA sheets of Raghubir Cycle Private Ltd. were allowed by the Customs authorities wherein no specification as regards thickness or gauge were mentioned. The contention of the learned Departmental Representative that these imported goods are not fit for manufacturing bicycle parts cannot be accepted for several reasons. 16. In the first instance, we may observe that the functions of the licensing authorities and the Customs authorities operate in different fields though they may at time inter est so as to operate in some common area. The main function of the licensing authority is to consider whether any particular item should be allowed to be imported or not and for that purpose they will look into various circumstances such as the requirement and the item, the amount of foreign exchange involved....
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....mstances such as the requirement of the item, the amount of foreign exchange involved, permissibility for import and other relevant factors. If satisfied about the feasibility and permissibility of import it is their function to permit the import by grant of licence and impose such conditions as they find necessary. This granting of licence may be dependent upon a policy enunciated in advance by the Government or may even be made to depend on the individual judgment of the licensing authority. Such a policy may be publicised for the convenience of the importers or kept confidential and made known only to the officers concerned. It may be that from time to time import of certain items instead of being governed by a policy laid down in advance, be left to the individual judgment of an officer who may not enunciate any policy in advance. As against this the functions of Customs Authorities start only after the goods are imported and brought into the territorial water of the country. Customs authorities are concerned with the recovery of Customs duty and to check evasion of payment of duty and with the prevention of entry of the goods which are prohibited goods as defined by the Custom....
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.... policy one way and the Customs authorities may take contrary view producing a conflict between the two authorities resulting in harassment to the importer. It is, therefore, that the functions of the two authorities which operate in two different spheres must be kept within their proper ambit. If a licence is granted in respect of a particular item by the licensing authority the Customs authority wll have no right or power to go beyond the licence and the licensing authority who has to determine the said question at the time of granting licence." 18. In that particular case, again, the Bombay High Court relied on the decision of the Supreme Court, reported in AIR 1971 SC 1558 = 1983 (13) E.L.T. 1456 (SC) (Union of India v. Tarachand Gupta & Ors). After discussing the principles laid down by their Lordships of the Supreme Court, the Bombay High Court at pages 244 and 245 held as follows :- "It is clear that in the present case also the Collector's duty was to satisfy himself whether the licences which the petitioner possessed permitted it to import items indented by it and which actually arrived in India. He had to satisfy as to whether this item was covered by the item menti....
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....vent import of items mentioned in the licence except by cancellations thereof in compliance with the Import (Control) Order, 1955." 20. Applying the above principles to the facts of this case, it is clear that when the licence clearly mentions CRCA coils defective without mentioning the thickness or gauge, the imported goods are permissible to be imported in accordance with the licence. The Import Control Order is a complete scheme for prohibition, restriction and control of import of goods as also for the distribution and use of goods imported. The said order provides for issuance of licence for refusal of the same and for amending of the same and for suspension of the grant of the licence and for cancellation of the licence. Therefore, once licence is granted, it can be made ineffective or cancelled as per the Import Control Order by following the procedure under Clause 9 and Clause 10 of the above-said order. But the Customs authorities have no right to sit upon the judgment. 21. In the aforesaid judgment of the Bombay High Court, it was further held at Para 25 as follows :- "At the most it would amount to granting of licence through inadvertence or mistake or it having....
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....this view, the Customs Authorities had no jurisdiction to confiscate thescrap on the ground that the same was a misdescription. The conclusion arrived at by the High Court is, in our view, correct. 14. If the goods were not prohibited goods, the Customs Authorities had no jurisdiction to impose the penalty." 22. Applying the above-said decision to the facts of this case it is clear that the Customs authorities have no jurisdiction to confiscate the CRCA sheets and coils imported in this case which are covered by the licence issued by the licensing authorities. In fact, the learned Collector of Customs had himself found that the goods cannot be confiscated under Section 111(d) of the Customs Act, 1962. The description of the goods tallied with the description of the goods mentioned in the licence. Once, however, that is so, it cannot be said that the goods in question are imported unauthorisedly and against the prohibition imposed under the Customs Act, 1962. 23. The learned Barrister Shri Mullick further relied on the decision of the Supreme Court in the case of Union of India v. Tarachand Gupta, reported in AIR 1971 SC 1558 = 1983 (13) E.L.T. 1456 (SC). In that particular....
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.... with the steel products and I am conversant with the cycle and I can certainly certify that even the cheapest cycle cannot have above parts made of CRCA sheets of less than 1.25 mm." We may observe that this is personal knowledge of the learned adjudicator which should not have been imported in an order delivered by him. His personal knowledge cannot be made use of in the order. Moreover, it is only the opinion of an expert which can be taken into consideration, and that too by giving an opportunity to the other side to rebut the same. But to rely on a proposition based on the personal knowledge of the learned adjudicator and that too without giving any opportunity to the other side to rebut the same, is not in accordance with the law. 26A. In fact, the licence permits import of defective CRCA sheets and the appellants have done exactly that and have not imported anything other than that mentioned in the licence. When the licensing authority had applied its mind and had given a licence in this regard allowing the appellants to import the goods in question, it is presumed that they had applied their mind to the requirements of the appellants in this regard. The Customs author....
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.... of the appellant and to determine whether the goods imported were chemicals or not is incorrect. It was also held that the Customs authorities were bound and concluded by the certificates and were not justified in refusing the refund claim of the petitioners. It was also held therein by relying on the decision of the Supreme Court reported in AIR 1966 197 SC that a certificate given by DGTD cannot be challenged by the Customs-authorities. 29. Relying on the above decision it is clear that the Customs authorities are bound by the licence given by the licensing authority wherein the appellants were permitted to import the CRCA sheets. 30. In fact, this position was also appreciated by the learned Collector. In dealing with the contravention of Section 111(d) of the Customs Act, the learned Collector, in his order, observed as follows :- "The department has alleged that the goods are all liable to confiscation under Section 111(d), (m) and (o) of the Customs Act, 1962. The importer had refuted this allegation in toto. It is seen that the licence permits import of defective CRCA sheets and importers have done exactly that and have not imported anything other than that mention....
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....laration is to the effect that these goods are replenishment of the materials used in the manufacture of goods which are already exported by the appellants. In this case, since the appellants had already exported the bicycle parts in question their using these materials for manufacture of cycle parts does not arise. They have already fulfilled their obligation by exporting the materials and have already earned foreign exchange to the Government. The whole scheme of the Notification No. 116/88-Cus., dated 30-3-1988 is that the Central Government being satisfied that it is necessary in the public interest to do so exempted these goods against advance licence issued under the Import Control Order which are required to be imported for the manufacture of products or replenishment of materials used in the manufacture of resultant products. The appellants have already fulfilled their condition by exporting the cycle parts by manufacturing it out of the indigenous products and these products which are now sought to be cleared are replenishment of the materials used in the manufacture of goods. When the appellants aver that they have used similar materials as the ones which are imported, fo....
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....f the department that the appellants had not fulfilled this condition of exporting the bicycle parts. Under the above-said para if the appellants had already fulfilled the export obligation they may utilise the replenishment materials for further export/domestic production and subject to actual user condition. Similarly, the licensing authority may consider the request of the appellant after fulfilment of export obligation for transfer of the replenished materials to the exporting manufacturers concerned whose names appeared in the DEEC for further export of domestic production and subject to actual user condition. It is, therefore, clear that now the appellants have to approach the licensing authority for disposal of these imported products. Therefore, the licensing authority is again coming into the scene for disposing the request of the appellants if they make such a request for disposing of these imported materials. In so doing the licensing authority will look into the overall aspect of the matter and it is for them to see whether such a permission is to be given or not. This also clearly goes to show that once when the licence is granted and the imported materials are in acco....
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....s. In the present case the appellants were made to believe that they could import CRCA sheets of any dimension and the appellants were also issued with a licence in this behalf for the import of CRCA sheets without mentioning the dimensions of the same, on this representation of the Government, by issuing the licence in this behalf by the competent authority the appellants had already manufactured bicycle parts and had already exported the same to Bangladesh and the Government also earned foreign exchange in this regard. Thus, the appellants having been made to believe that they were fully within the competence to import CRCA sheets by virtue of the licence granted to the appellants, the Customs authorities cannot turn round and say that what is imported though in accordance with the licence, is not permissible as the imported materials are not capable of being used in the manufacture of bicycle parts. When a High-powered Committee had already granted the licence it is presumed that they had applied their mind to the facts of this case and had allowed the appellants to import CRCA sheets without reference to the thickness or gauge and when the appellants had already exported cycle ....
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....e was emphatically negatived in the Indo-Afghan Agencies case and the supremacy of the rule of law was established. It was laid down by this Court that the Government cannot claim to be immune from the applicability of the rule of promissory estoppel and repudiate a promise made by it on the ground that such promise may fetter its future executive action." 34. This decision was not followed by another later decision of the Supreme Court reported in AIR 1980 SC 1285. But the later decision in the case of Union of India v. Godfrey Philips India Limited approved the decision in Motilal Sugar Mills case and held that it is difficult to understand how a Bench of two Judges in Jeet Ram's case (AIR 1980 SC 1285) could possibly overturn or disagree with what was said by another Bench of two Judges in Motilal Sugar Mills case. Their Lordships also held that if they wanted to disagree from that decision, the same should have been referred to a Larger Bench. In this regard their Lordships, at Para 12 of the Godfrey Philips India Limited judgment, had held as follows :- "12. There can therefore be no doubt that the doctrine of promissory estoppel is applicable against the Government in t....