PATWARI TRADERS PVT LTD Vs. COLLECTOR OF CUSTOMS

JUDGEMENT

(1.) THESE two appeals are directed against two orders dated 18-2-1988 (Customs Appeal No. C/355/88) and dated 3-2-1988 (Customs Appeal No. C/526/88) passed by the Collector of Customs, Madras. As the issues involved are identical in these two appeals, a common order is passed.

(2.) The case relates to import by the two appellants herein of consignment of Hydroquinone against REP licence issued under Appendix 17 (A. 82 category) import policy period 1985-88. The consignments imported by appellant Patwari Traders Pvt. Ltd. (C/355/88) were valued at Rs. 6,82,628/- c.i.f. and the import by appellants M/s. Kantilal Manilal & Co. (C/526/88) was valued at Rs. 13,62,680.64 c.i.f. The Bills of Entry (B/E) for these were filed respectively during February 1988 and December 1987. The Collector held that the import licences produced were not valid to cover the goods imported and ordered confiscation of the goods under Section 111(d) of the Customs Act, 1962 imposing a fine in lieu of confiscation of Rs. 4,10,000/- in the case of appellant Kan- dial Manilal & Co. and Rs. 2,09,000/- in the case of appellant Patwari Traders Pvt. Ltd. No penalty was imposed. When the goods were imported at the Customs House, the Department took the view that REP licences produced for clearance issued under Appendix 17 (A. 82 category) were not valid to cover the import for the reasons that items Hydroquinone is mainly used in photographic Industry and in the rubber industry and the use of the item as brightener and electroplating salt appears negligible. Appellants claimed clearance of the goods against A. 82 category which allows for import of Electroplating salt and Brighteners against export of Bicycle components etc. The Customs House also found that as per the Condensed Chemical Dictionary there is no reference to use of Hydroquinone as an electroplating salt and brightener. Further according to para 21(c) of the ITC Policy, 1985-88 an item with specific description in Appendix 2, Part B or Appendix 3 Part A will prevail over item with generic description under all these appendices, and the Customs House found that Hydroquinone figures at Serial No. 217 of Appendix 3, Part A and is therefore limited permissible item. Therefore, show cause notice was issued in the case of appellant Kantilal Manilal & Co. to show cause as to why the goods should not be confiscated and penalty imposed on them. Appellant Patwari Traders requested for adjudication on merits waiving the issue of show cause notice. The Collector after granting personal hearing and considering the reply to the show cause notice held that the licences produced were not valid to cover the import of the goods and ordered confiscation of the goods levying redemption fine as already stated above.

(3.) SHRI K.K. Bhatia, the learned S.D.R. appearing for the Department contended that in considering the validity of the licences, due regard should be given to the provisions of para 21(c) of the ITC Policy 1985-88. Para 21 says "following principle will apply to the interse interpretation of the entries in the various Appendices as well as import under Open General Licence". Para 21(c) says that an item with a specific description in Appendix 2 Part B or 3 Part A will prevail over an item with a generic description in any of these Appendices. Therefore, when an item as in the case of Hydroquinone specifically figures in Appendix 3 Part A, then it will prevail over the generic description of Electroplating Salt and Brighteners occurring in Appendix 17 of the policy. The learned S.D.R. further pointed out that in arriving at this finding, the Collector had also relied upon the Supreme Court decision to the effect that predominant or ordinary purpose of usage of the commodity should be the deciding factor for classification thereof. The Supreme Court observed that it is generally the predominant use that determines the category in which the article will fall. The Collector had also found that as per Deputy Chief Chemist report 95% of the usage of the material Hydroquinone was only as Photographic developer material or as Rubber Chemical, and on this ground, following the criterion of the Supreme Court Judgment, he had held that the goods imported cannot be considered as Electroplating Salt and Brightener.