M B IMPEX Vs. COLLECTOR OF CUSTOMS

JUDGEMENT

(1.) THIS appeal is directed against the order-in-original No. S/10-72/89-Gr.I MC114/89 passed by the Collector of Customs on 8-6-1989 confiscating the consignment of 49896 kgs imported as "seeds of Almonds non-peeled quality" under Section 111(d) of the Customs Act, giving option to pay fine of Rs. 18.00 lacs in lieu of confiscation and also imposing personal penalty of Rs. 2.00 lacs under Section 112 of the Act on the appellants.

(2.) The appellants imported 2200 bags containing 49896 kgs of Soft Shell Almonds non peeled quality, and claimed clearance against REP import licence dt. 24.7.87, issued under Export Product Gr-G2(i)(a) for fresh fruits, vegetables and flowers. The import was claimed against entry (d) in Column 4 of G2(i)(a) as "Seeds". The authority however found the goods as not importable under the said licence, as the goods imported were "soft shell Almonds" which were direct consumer agricultural product ready for consumption as "dry fruits". Further, the almonds were covered by entry 121 of Appendix 2 Part B of AM 1985-88 Policy, and in terms of para 5 of Appendix 17 of the same Policy, they could not be imported as seeds. Moreover, the imported goods were not related to Export Product Gr of G2(i)(a) entry and required specific licence under para 181(3) of the Policy. A show cause notice dated 16.3.89 was accordingly issued to the appellants, to the effect that the import was in contravention of the provisions of Section 3(1) of the Imports and Exports (Control) Act read with C1.3 of the Import Control Order, 1955, and hence liable to confiscation. The appellants submitted their written reply on 17.3.89 and pleaded that goods imported were "seeds" capable for germination, and cannot be considered as consumer item since they cannot be consumed without removing the shell. They also pleaded that Almonds were generally used as raw material for other product. They also raised a plea that Almonds are not specifically mentioned in Appendix 2 Part B or Appendix 3 Part A, and hence, it cannot prevail over generic description "seeds" in Appendix 17. Further pleading that relation of import product to export product is not relevant for admissibility of the import, it was pleaded that "Almonds" were classifiable as "Nuts". It was also contended by them that REP licence produced by them was for the Import Policy period 1985-88, and it was only in the Import Policy 1988-91 that the entry "Seeds excluding dry fruits and oil seeds" has been made, meaning thereby that the import was permissible during the earlier period. The Collector of Customs however negatived the contentions of the appellants principally relying upon the decision of CEGAT South Regional Bench in MM Exports v. Col-lector of Customs, reported in 1989(39) ELT 482 (Tribunal) which, according to the Collector, had similar set of facts, and which applied on all fours to the present case, and where it was held that import of almonds in shell was not permissible as "seeds". He also relied upon the clarification given by CCI&E to the effect that "Almonds" are consumer item falling under Appendix 2B. He also relied upon the ratio of the Delhi High Court Judgement in Jain Exports v. Union of India 1987(29) ELT 753. Relying upon the Supreme Court judgement in A/A Indo International Industry v. Commissioner of Sales Tax (1981 ELT 325) he also held that the meaning as understood in common or commercial parlance ought to prevail. He further held that under the Customs Tariff, which is based on HSN Code, "Almonds" were classified as "Edible fruits and nuts" under Chapter 8, and hence the same could not fall within "Seeds" for which the licence under question was issued. He also held Almonds as consumer item and passed the impugned order.

(3.) MR. K.M. Mondal, the learned SDR, however, supported the findings of the adjudicating authority and submitted that the point at issue has been squarely covered under the decision of CEGAT, South Regional Bench, in Re: MM Export (supra). He, without conceding, further submitted that even assuming that because of deletion of some conditions from the licence, which prevents applying the Policy and requires only terms in the licence to be considered, then also Almonds in shell are not importable under the licence which permits import of "seeds". He submitted that the licence is issued under the previsions of Import and Export (Control) Act, and Import (Control) Order 1955. Inviting our attention to Clause 3 of the Order, he submitted that as per the said clause, for the purpose of import of an item, the description of the goods given in the licence should conform to the description given in Schedule I to the said Order. He then referred to the note on the top of the said Schedule I, to the said Order, and submitted that as per the said note, the scope of interpretation of an item given in the said schedule would be the same as the one given in the Schedule to the Customs Tariff Act 1975 as amended. He then referred to Ch.8 sub-heading 08.02 of the Schedule I of the Import Control Order and submitted that item specified therein is "other nuts, fresh or dry. Whether or not shelled or peeled". Referring to the Schedule to the Customs Tariff Act, he submitted that the same description is given under sub-heading 08.02 of Ch. 8 and then pointed out that Almonds in Shell, are shown under heading 0802.11. He submitted that under Customs Tariff Act, Edible Fruits and Nuts fall within Chapter 8 of the Schedule, whereas seeds fall within Chapter 12. As pleaded by him, the Customs Tariff is based on the format provided by the Customs Co-operation Council and submitted that the Explanatory Notes of CCCN should be given due consideration, and for that, he cited in 1986(7) ECR 379, and then took us to page 45 of the Explanatory Notes of Vol. 1 where Almonds are included as nuts. He then took us to page 65 of the said Notes, and referred to item 12.01, where "Almonds" are specifically excluded from "seeds". He further submitted that the appellants have, for the purpose of import, classified the Almonds in shell as seeds falling within Chapter 12 whereas, for the purpose of payment of duty, they claim applicability of Ch.8. He relied upon the decision of the Bombay High Court in Greaves Cotton & Co v. Union of India, 1989 (43) ELT 263, and submitted that classification of goods cannot be made differently for the purpose of ITC and Customs duty. He also urged that, what is to be considered is the predominant use, and for that he cited the decision of Ashish & Co v. Collector, 1986 (25) ELT 115 (Tri).