Umesh Chandra Banerjee, J. - (1.) This writ petition is directed against the order of refusal on the part of the Customs Authority to clear vinyl coated steel sheets imported by the petitioner on the strength of Open General Licence (OGL) issued by appropriate authority. Two short, but interesting questions arse for determination in this writ petition, viz. at the importability of vinyl coated steel sheets; and (b) under invoicing of the aforesaid materials. Before adverting to rival contentions a brief reference to facts ought to be made for the purpose of proper appreciation of the matter. (2) The petitioner is an actual user within the meaning of the Import Po-icy as announced by the Government of India for the year 1984-85 and is also a holder of an additional import licence, being No. P/W/0497274/C/XX/89/C/83/Addl. dated I6tb November, 1983, on the strength of which importation of vinyl coated steel sheets can said to be effected by the petitioner. Being a holder of an import licence the petitioner entered into a contract with one M/s-East West Corporation of Japan for supply of 220 Metric tonnes of vinyl coated steel sheets at the rate of $ 220 (US) per Metric tonne. In the usual course, the petitioner opened a letter of credit for $ 44,000 (US) for 220 Metric tonnes of vinyl coated steel sheets and in pursuance whereof for different consignments arrived at the Port of Calcutta by four different vessels between August, 1984 and December, 1984. The Assistant Collector of Customs however refused to clear the goods. It is this refusal which has been challenged in this writ petition as being arbitrary and illegal The petitioners also challenge the action of the Customs Authority as discriminatory inasmuch as the self-same Customs Authority allowed clearance of vinyl coated steel sheets at the rate of $ 220 (US) per tonne, imported by one Hindusthan Products of Tiusukhia. As appears from records that though initially, the refusal was on the ground of under invoicing but in the counter affidavit filed by the Customs Authority, the plea of non-importability has also been raised on the ground of the material in question not : being of prime quality and also being a canalised item within the meaning of the Policy.
(2.) Mr. Somnath Chatterji, appearing in support of the petitioners, contended that such a plea cannot and ought not to have been raised by a Governmental agency, whose duty is to act fairly and whose actions ought to be free from malafides and arbitrariness.
(3.) Mr. Chatterjee contended that while it is true that, normally, all items of steel to be imported under the policy, should be prime in nature but by reason of specific exception under Chapter VIII, paragraph 53 of the Policy read with Appendix 5, Part A, vinyl coated steel sheets need not be of prime quality. Mr. Chattetjee further contended that the question of vinyl coated steel sheets being termed as a canalised item and importable through canalised agencies also does not and cannot arise. Mr. Chatterjee contended that Appendix 5, Part A, Item No. 51 specifically exempts vinyl coated steel sheets and strips from being canalised item and there neither is nor can there be any dispute in regard thereto. Moreso, by reason of specific admission on the part of the Customs Authority as contained in paragraph 7 of the counter affidavit, though subject to two conditions, viz. (a) the base material should be mild steel and (b) the steel should be prime and both the conditions been in any event fulfilled. Mr. Chatterjee, contended that the Customs Authority acted in a manner contrary to ail recognised principles of law. The materials in question were, as a matter of fact, inspected and none of the inspection report indicated that the materials in question are not prime in quality. Had it been otherwise Mr. Chatterjee contended, it would have been reflected on the inspection report itself. In order to appreciate the contentions of Mr. Chatterjee it would be worthwhile to set out the relevant provisions of the Policy in particular Chapter 8, paragraph 53 which reads as follows:- "All items of iron, steel and ferror alloys to be imported under the policy should be of prime quality only, except in case of items individually appearing otherwise in Appendices 3 Part-B, 4 Part B and Part-C, 5 Part-A and 6. In case of any doubt whether an item of particular specification/size, etc. is for the purpose of making an application covered within the description contained in any of the entries in the said Appendices or can be imported against a licence or under Open General Licence, the importer/applicant may seek clarification in advance from the Department of Steel, Udyog Bhavan, New Delhi. This would include queries as to whether material required by an Actual User (Industrial) is melting scrap or not. The terminology and definition for iron, steel and ferro alloy items arc in accordance with those appearing in the Customs Tariff Act, 1975, unless otherwise indicated in Chapter 22". Relevant extracts from Appendix 5 Part A is also set out hereunder for convenience sake at this juncture. Appendix 5 Canalised Items Part A List of Items import of which is canalised through public sector agencies : .......................................................................... Steel Authority of India 48. .............................................................................. Carbon Steel Items (all grades) 4 9............................................ 5 0............................................ 51 "All coated/plated including galvanised, aluminium and aluminium alloy coated and uncoated sheets/strips/coils of all grades of carbon steel hot rolled or cold rolled not elsewhere mentioned but excluding plastic vinyl coated sheets/strips/coil.s". Mr Pranab Kumar Dutt, appearing for the respondent Customs Authority, however contended that paragraph 53 of Chapter 8 of the Import Policy ought to be read along with clause XI of sub-paragraph (2) of paragraph 244 under chapter 22. Clause XI reads as follows : (xi) "All items of iron and steel to be imported under the policy including REP should be of prime quality only unless specifically mentioned otherwise against any item appearing in the appendices, such as, 'scrap' or 'defectives, and the like are permitted for import against specific entries,";