RUPANI SPINNING MILLS PRIVATE LIMITED Vs. UNION OF INDIA
LAWS(GJH)-1988-4-23
HIGH COURT OF GUJARAT
Decided on April 19,1988

RUPANI SPINNING MILLS PRIVATE LIMITED Appellant
VERSUS
UNION OF INDIA Respondents


Cited Judgements :-

SCHNEIDER ELECTRICAL INDIA P. LTD. AND ORS. VS. COMMISSIONER OF CENTRAL EXCISE [LAWS(CE)-2014-1-164] [REFERRED TO]


JUDGEMENT

A.M.AHMADI - (1.)Rule. Mrs. Metha waives service of Rule on behalf of the respondents. The two petitioning-Companies having textile units are actual users of synthetic rags used in the manufacture of shoddy yarn. In terms of the import policy for the years 1985-88 the petitioning-Companies were entitled to import such synthetic rags under an open general licence. The petitioning-Companies placed orders with foreign Companies for the supply of old completely pre-mutilated fumigated synthetic rags. As required by the import policy the indents placed by the petitioning. Companies were registered with the Textile Commissioner Bombay. In terms of the indents irrevocable letters of credit were opened shipments were effected by the foreign suppliers and the description of the goods in the invoices as well as in other shipping documents was stated to be old completely pre-mutilated fumigated synthetic rags. Bills of Entry were filed for clearance of the goods for home consumption. The description of the goods in the Bills of Entry was the same as furred in the invoices and other documents. On arrival of the goods at the Kandla Port they were examined and were found to be synthetic rags as declared. The authorities however furred that since the condition of the synthetic rags did not comply with the requirements of Public Notice No. 173 issued by the Principal Collector of Customs Bombay they could not be cleared as completely premutilated. In the case of the petitioner Rupani Spinning Mills Private Limited the Collector of Customs held that the import was in violation of the provisions of the Customs Act and imposed fine and penalty including personal penalty. As the petitioner of the third petition Swastika Woollen Industries Private Limited was aware of this development it sought an audience with the Collector of Customs and pointed out the practice prevailing in the Bombay Customs House which permitted clearance of such goods after they were cut into four pieces as Completely pre-mutilated. At the time when the petition was filed no final decision was taken on the representation made by the petitioner but it appears that during the pendency of the petition the Collector of Customs has by his order dated 30/03/1983 ordered confiscation under Sec. 111(d) and (m) of the Customs Act of the imported goods and has given an option to the petitioner under Sec. 125 of the said Act to pay a fine of Rs. 60 0 in lieu of such confiscation within thirty days from the receipt of the order. The petitioner was also directed to pay duty as assessed in add tion to the fine imposed in case the option was exercised. A penalty of Rs. 10 0 was imposed under Sec. 112(a)(i) of the said Act and this was directed to be paid forthwith.
(2.)The petitioners contend that the conditions governing imports under open general licence are found in paragraph 37 which read as under:
"37 (i) Import of woollen rags/shoddy wool/synthetic rags will be allowed only when these are imparted in completely pre-mutilated condition

(i) Definition of woollen rags is as follows:

(a) New waste woollen cloth whether woven or knitted which is left after a garment has been cut out including genuine tailor cutting piece ends discard pattern bunches and sample bits.

(b) Old rags of woollen textile fabric including knitted and crocheted fabrics which are required for the manufacture of shoddy yarn and may consist of articles of furnishing or clouting so worn out soiled or torn as to be beyond cleaning or repair.

(ii) xxx xxx xxx

(iii) the above definition also apply mutatis mutandis to synthetic rags."
Reference may now be made to Sec. 24 of the Customs Act which reads as under:
"24. Power to make Rules for denaturing or mutilation of goods :- The Central Government may make Rules for permitting at the request of the owner the denaturing or mutilation of imposed goods which are ordinarily used for more than one purpose so as to render them unfit for one or more of such purposes and where any golds are so denatured or mutilated they shall be chargeable to duty at such rate as would be applicable if the goods had been imported in the denatured or mutilated form."
Notwithstanding the said provision the petitioners contend that the Collector of Customs ordered confiscation of the imported goods under Sec. 111(d) and (m) of the Act. He gave an option to the petitioners to pay fine in lieu of confiscation and also imposed personal penalty under Sec. 112(a)(i) of the Act. In the case of the third petitioner Swistika Woollen Industries Private Limited the impugned order was passed during the pendency of the petition whereas in the first two petitions it was done before the filing of the petitions.
(3.)The Collector of Customs Bon bay issued Public Notice No. 113 dated 13/12/1985 laying down guidelines in pursuance of the policy for the period AM 88 providing for the import of woollen rags/synthetic rags under open general licence in completely premutilated condition. Taking note of the fact that mutilation of woollen rags/synthetic rags was done abroad with the help of cutting machines chopping machines and punching machines while the same had to be done in our country manually certain guidelines came to be laid down in paragraph 4 of the Public Notice insofar as mutilation by that method was concerned. It provided that in the case of coat frock and other like body garments the cutting should result in making six pieces of the garments the details regarding the nature of cutting having been stipulated. In the case of trousers and other like garments also details regarding the nature of cutting are set out. It was further provided that any other serviceable article should be cut into four or five parts but not at seams or at stitchings. By a subsequent amendment dated 14/02/1986 it was provided that when the cutting results in making only four pieces of the garments the garments will be accepted as properly premutilated subject to the condition that it is rendered totally unserviceable In regard to hosiery rags it is stipulated that it would be sufficient in they are cut into two pieces only but not at seams or at stitchings rendering it wholly unserviceable to the satisfaction of the concerned officer. In regard to mutilation by chopping machines it was stated that the importer should ensure that each garment was substantially damaged rendering it totally unfit for use as such. Similarly when mutilation was by pouching machines it was stipulated that the holes in the garments should be to such an extent that the entire piece of the garment was substantially damaged rendering it wholly unserviceable. The Collector of Customs Rajkot followed the guidelines set out in this Public Notice in the cases on hand and came to the conclusion that the synthetic rags could not be said to be completely pre-mutilated as they did not comply with the guidelines. The petitioners complain that in doing so the Collector of Customs Rajkot omitted to bear in mind the amendment made in the Public Notice by the subsequent order of 14/02/1986. The petitioners challenge the legality validity and propriety on the said Public Notice issued by the Principal Collector of Customs Bombay. However this challenge was given upto the hearing of the petitions. We are therefore not required to consider whether the guidelines issued under the Public Notice No. 173 of 13/12/1985 duly amended try the subsequent notice of 14/02/1986 are legally unsustainable.
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