COLLECTOR OF CUSTOMS, BOMBAYversusM/S. ELEPHANTA OIL AND INDUSTRIES LTD., BOMBAY

                 COLLECTOR OF CUSTOMS, BOMBAY                                       A


...
                                v.
         M/S. ELEPHANT A OIL AND INDUSTRIES LTD., BOMBAY

                                JANUARY 31, 2003

                     [M.B. SHAH AND ARUN KUMAR, JJ.]                                B

           Import Policy, 1981-82:

            Appendix Item 44:/Import Control Order, 1955; Section 3: Import of
      Mutton Tallow, a canalised item-Notice under Impori Policy substituting C
      Tallow of any animals for mutton tallow-Import of Beef Tallow under Open
      General Licence-Permissibility of-Levying ofpenalty-Correctness of-Held,
      since import of Bee/Tallow, a canalised item was not permitted in accordance
      with the term of licence/Import Policy, the Collector was justified in imposing
      penalty on the importer under Section I I 2 of the Customs Act-Customs Act,
      1962; Sections 112 and 125.                                                     D
            The question which arose in this appeal was whether import of Beef
      Tallow under Open General Licence was permissible after issuance of
      Import Trade Control Public Notice clarifying the existing description
      Mutton Tallow under Entry No.44 suhstituted by Tallow of any animal            E
      origin.

            It was contended for the appellant that since the Revenue directed
      to re-export the imported goods, levying of penalty was not justified; and
      that there was no bar on import of Beef Tallow.

            Allowing the Appeal, the Court                                           F
            HELD: 1.1. It is apparent that provisions· of Law under Sections
      112 and 125 of the Customs Act operate in different fields-one requires
      imposition of penalty and other provides for confiscation of improperly
      imported goods. Confiscation of goods and thereafter permitting the
      respondent to re-export the same would ·not mean that penalty under G
      Section 112 of the Customs Act cannot be levied. (776-B]
             /

           1.2. It is settled law that once import of goods is canalised, it is not
      open to the holder of REP licence to import the goods which are canalised
      and that goods must be in conformity with the Import Policy at the time H
                                          771
    772                  SUPREME COURT REPORTS                  (2003] I S.C.R.

A of import. 1776-D-EJ
          Union of India v. Mis. Godrej Soaps Pvt. Ltd. and Anr., 1198613 SCR
    771; D. Navinchandra & Co., Bombay v. Union of India, 11987 2 SCR 989
    and Mis. Darshan Oils Pvt. Ltd. v. Union of India, 119941 Supp. 5 SCR 278,
                                                          \
    relied on.
B
          1.3. Customs, Excise and Gold (Control) Appellate Tribunal relying
    upon its earlier decision on the same issue held that the right to import
    the goods under OGL is a statutory right and cannot be over-ruled by a
    P.ublic notice and that the import of Beef Tallow which ceased to be an
    OGL item when it was canalised by the public notice is governed by the
C   Import Policy when the licence was issued and not by the public notice;
    public notice has no statutory force under SectiOn 3 of the Imports and
    Exports (Control) Act; and that since SLPs against that decision were
    dismissed by the Supreme Court summarily, import of Beef Tallow under
    OGL was not unlawful. But it is well settled law that in case where SLP is
D   dismissed without assigning any reason, that order would not constitute a
    binding prece«Jent. 1774-E-F-G; 777-E] .

          Ajit Kumar Rath v. State ofOrissa, [1999] Supp. 4 SCR 302, relied on.

          Jain Sudh Vanaspati Ltd. v. Collector of Customs, Bombay, [1990) 29
E ECR 321 (CEGAT SB-C), referred to.
          1.4. Before issuance of licence to the respondent by Import Trade
    Control Public Notice, it was clarified that existing description 'mutton
    tallow' in Entry No.44 shall be read as any tallow of any animal origin
    including mutton tallow. The bills of entry were tendered only thereafter,
F and at that time Import-Export Policy of 1983-84 was in force which
    prohibited import of beef tallow. Therefore, respondent has imported a
    prohibited item. Section 3 of the Import Control Order 1955, inter alia
    specifically provides that no person shall import any goods of the
    description specified in Schedule 1 except under and in accordance with
G a licence. Respondent knowing fully well the ,import policy imported
    prohibited goods i.e. import of canalised item, namely, beef tallow and,
 ' therefore, the Collector was fully justified in imposing the penalty under
   .Section 112 of the Customs Act. [777-F; 778-DI                                +

H   relied on.
                                                                            .
          Jain Export Ltd. and Ors. v. Union of India, (1993) Supp. 1 SC~ 185~
     COLLECTOR OF CUSTOMS, BOMBA Yv. ELEPHANTA OIL AND INDUS. LID. [SHAH, J.]    773
         CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4958 of A
    1994.

         From the Judgment and Order dated 18.2.1992 of the Customs Excise
    & Gold (Control) Appellate Tribunal in Appeal No. C/247/84-C and Final
    Order No. 52/92-C.
                                                                                         B
         A. Subba Rao, Amar Jyoti Shrraa and B. Krishna Prasad, for the
    Appellants.

         G.L. Sanghi, A.K. Agarwal, A.K. Upadhyay, D.K. Garg, Ms. Ritu Puri
    and B.S. Billoria, for the Respondent.
                                                                                         c
         The Judgment of the Court was delivered by

+        SHAH, J. The question involved in this appeal is whether import of
    Beef Tallow under Open General Licence (hereinafter referred to as 'OGL'}
    was permissible after issue of Import Trade Control Public Notice No.29-ITC
    (PN/81) on 5th June, 1981 clarifying that existing description 'Mutton Tallow' D
    in Entry No.44 shall be read as 'Tallow of any animal origin including
    Mutton Tallow'?

          Appendix to Import Policy 1981-82 provides for list of items, import
    of which is canalised through public sector agencies. Item 44 provides that
    import of tallow of any animal origin including mutton tallow was canalised          E
    through State Trading Corporation of India.

           It is contended by the respondent that OGL item was imported against
    licence dated 29.6.1981 which was an impress licence issued to Mis B. Arun
    Kumar and Co., Bombay under the import-export policy for the period 1981-            F
    82 and that respondent entered into a contract for import which was notorised
    on 6.6.1981. Subsequently, the written contract signed by the supplier was
    submitted to the New Bank of India for issuing letter of credit. However, as
    Bank refused the same and as on 3rd February 1983 notice was issued by the
    supplier for cancellation of the contract, Writ Petition No. 313 of 1983 was
    filed in the High Court of Delhi for various reliefs including the directions        G
    to the Bank to open letter of credit. On 30th March, 1933, letter of credit was

+   actually opened. On 16th June, 1983 and 1st July, 1983, bills of entries for
    import of beef tallow were filed.

          It is to be stated that before respondent could enter into alleged contract,
    it was clarified by the Import Trade Control Public Notice dated 5th June,           H
    774                   SUPREME COURT REPORTS                     (2003] I S.C.R.

A 1981 that existing description 'mutton tallow' under Entry 44 Appendix 8 is
    to be read as 'tallow of any animal origin including mutton tallow'.

          Hence, on 15.7.1983, the Department issued show-cause notice to the
    respondents. After receiving the reply and after hearing the respondents, the
    Collector of Customs, Bombay on 20th December, 1983 passed an order
B   relevant part of which reads thus:

                "I order that the consignments of beef tallow imported by M/s
            Jain Shudh Vanaspati Ltd. for which they had presented the Bills of
            Entry listed in Annexure-1 to this order, be confiscated under Section
c           11 l(d) of the Customs Act, 1962 read with Section 3(2) of Imports
            and Exports (Control) Act, 194 7 and Section 11 of the Customs Act,
            1962. I, however, permit them to re-export the goods within fifteen
            days of the receipt of this order or such extended time as may be
            allowed by the adjudicating authority. I impose a penalty of Rs.5
            Crores (Rupees five crores only) on M/s Jain Shudh Vanaspati Ltd.
D           under Section 112 of the Customs Act, 1962."

          Aggrieved by the said order, respondents preferred Appeal No.C/247/
    84-C before the Customs Excise and Gold (Control) Appellate Tribunal, New
    Delhi (hereinafter referred to as 'the Tribunal'). The Tribunal held that the
    question involved was considered in detail by it in its earlier judgment in
E   Jain Sudh Vanaspati Ltd. v. Collector of Customs, Bombay, [(1990) 29 ECR
    321 (Cegat SB-C)]. In the said decision, the Tribunal held that the right to
    import the goods under OGL is a statutory right and cannot be over-ruled by
    a public notice and that the import of Beef Tallow which ceased to be an
    OGL item when it was canalised by the public notice is governed by the
F   Import Policy when the licence was issued and not by the public notice.
    Public notice has no statutory force under Section 3 of the Imports and
    Exports (Control) Act, 1947. The Tribunal also noted that the said decision
    was challenged before this Court by filing SLP Nos.14605-06 and those
    SLPs were summarily dismissed by order dated 10th November, 1990. The
    Department's reference application against the said order was also dismissed.
G   The Tribunal by its Final Order No.52192-C dated 18th February, 1992 allowed
    the appeal and held that the import of beef tallow under OGL was not unlawful
    and, therefore, question of confiscation or redemption fine or imposing personal   +
    penalty under Section 112 of the Customs Act will not arise.

          That order is challenged by filing this appeal.
H
 COLLECTOR OF CUSTOMS, BOMBAY" ELEPHANTA OIL AND INDUS. LTD. [SHAH. J.]     77 5

       We would first deal with the contention raised by the learned senior        A
counsel Mr. Sanghi appearing on behalf of the respondent that once the
impo11ed article is re-exported as directed by the department, there is no
question of levying any penalty or redemption fine. In our view, this
submission is without any substance because confiscation of goods and
thereafter permitting the respondent to re-export the same would not mean          B
that penalty under Section 112 of the Customs Act cannot be levied. The
power to levy penalty under Section 112 for improper importation of goods
is different from the power of confiscation of goods under Section 125 and
giving an option to pay in lieu of confiscation such fine as authority thinks
fit which are exercised under Section 125 of the Act. Relevant part of Section
 112 reads thus:                                                                   C
      "112. Penalty for improper importation of goods, etc. Any person, -

        (a)   who, in relation to any goods, does or omits to do any act which
              act or omission would render such goods liable to confiscation
              under section 111, or abets the doing or omission of such an act,    D
              or
        (b) ............ shall be liable, -

        (i)   in the case of goods in respect of which any prohibition is in
              force under this Act or any other [aw for the time being in force,
              to a penalty not exceeding the value of the goods or five thousand   E
              rupees."

      As against this, Section 125 empowers the concerned officer to confiscate
the goods which are illegally or improperly imported. After confiscation of
the goods under the said section, the Collector of Customs is empowered to
give an option to the concerned party to get the same back after paying            F
redemption fine. Section 125 (l) reads thus:

        "Section 125. Option to pay fine in lieu ofconfiscation. (I) Whenever
       confiscation of any goods is authorised by this Act, the officer
       adjudging it may, in the case of any goods, the importation or
       exportation whereof is prohibited under this Act or under any other G
       law for the time being in force, and shall, in the case of any other
       goods, give to the owner of the goods or, where such owner is not
       known, the person from whose possession or custody such goodo/'
       have been seized, an option to pay in lieu of confiscation such fine
       as the said officer thinks fit."                                       H
    776                    SUPREME COURT REPORTS                     [2003) I S.C.R.

A         From the aforesaid two sections, it is apparent that both operate in
    different fields, namely, one requires imposition of penalty and other provides
    for confiscation of improperly imported goods. Section 111 provides that
    goods brought from the place outside India are liable to confiscation if the
    goods are improperly imported as provided therein. In cases where goods are
B   liable to confiscation, discretion is given to the authority to impose penalty.
    Further, Section 125 empowers confiscation of such goods and thereafter,
    confiscated goods vest in the Central Government. The Section further
    empowers the authority to give an option to the owner or the person from
    whom goods are seized to pay fine in lieu of such confiscation for return of
    the goods and the fine is also limited up to the market price of the goods.
C   Therefore, levy of fine in Iieu of confiscation is in addition to levy of penalty
    imposable under Section 112.

          Learned senior counsel Mr. Sanghi next contended that there was no
    bar on import of beef tallow by the respondent. This submission is without
    any substance as law on this. issue is settled. This Court has taken a consistent
D   view that once import of goods is canalised, it is not open to the holder of
    REP licence to import the goods which are canalised and that goods must be
    in conformity with the Import Policy at the time of import.

        In Union of India v. Mis Godrej Soaps Pvt. Ltd. and Anr., [1986] 3                  ~,
    SCR 771, it was held thus:
E
            "As the importation of canalised items directly by holders of additional
            licences are banned, it should not be construed to have been permitted
            by virtue of the order of this Court and the items sought to be imported
            do not come within List 8 of Part 2 of Appendix 6 of the Import
            Policy of 1985-88 against additional licences. The goods in question
F           which were sought for by the respondents fall under item 9 Part B of
            Appendix 5 which is the canalised item and such cannot be allowed
            to be imported against additional licence granted pursuant to the order
            of this Court dated 18th April, 1985."

G       Further, in D. Navinachandra & Co., Bombay v. Union of India, [1987]
    2 SCR 989, this Court held thus:

                 "The items had to pass through two tests, firstly, they should         +
            have been importable under the import policy 1978-79 and secondly
            they should also have been importable under the import policy 1_98.5-
H           88 .. Canalised items are thos~ items which are ordinarily open to
     COLLECTOR OF CUSTOMS, BOMBAY,. ELEPHANT A OIL AND INDUS.LTD. \'SHAH. J.J   777

           import only through a public sector agency .. ··                           A
          The aforesaid aspect was further considered in ,\ 11s Durslum Oils Pvt.
    Ltd v. Union of India. [1994] Supp. 5 SCR 278. wherein this Court held
    thus:

               "In D. Navinchandra & Co .• Bombay and Anr. v. Union of India          B
           and Ors., [1987] 2 SCR 989, it was clearly held that the entitlement
           to import items which were canalised or not, is governed by the
           Import Policy prevalent at the time of Import. In the present case the
           import of a canalised item being made after amendment of the Policy
           by the public notice dated 11.11.1983, in a manner not permitted by        C
           the amended Policy, the appellants cannot claim to avoid the logical
           consequences of the import being made contrary to the Import Policy
+          prevailing at the time of import of the goods .. .''

         It is to be stated that the Tribunal relied upon its earlier decision by
    observing that the SLP against the said decision was dismissed by this Court      D
    summarily. But it is well settled law that in case where SLP is dismissed
    without assigning any reason, that order would not constitute a binding
    precedent. [Re: Ajit Kumar Rath v. Stale ofOrissa, [1999] Supp. 4 SCR 302.]

           For levying of the fine also, it is to be stated that before issuance of
    licence to the respondent on 29.6.1981 by Import Trade Control Public Notice,     E
    it was clarified that existing description 'mutton tallow' in Entry No.44 shall
    be read as any tallow of any animal origin including mutton tallow. The bills
    of entry were tendered only on 16.6.1983 and 1st July, 1983 respectively and
    at that time Import-Export Policy of 1983-84 was in force which prohibited
    import of beef tallow. Therefore, respondent has imported a prohibited item.      F
    It is also to be stated that respondent was experienced Export House well
    versed in the policies and procedure in regard to the import and export of
    goods as noted by this court in other matter of respondent. [Re: Jain Export
    Ltd and Ors. v. Union of India, [1993] Supp. I SCR 185.]

          Apart from the aspect that respondent was well versed with import and       G
    export policy, section 3 of the Import Control Order 1955, inter alia
    specifically provides that no person shall import any goods of the description
+   specified in Schedule I except under and in accordance with a licence. The
    Collector has also referred to the conditions of licence and has observed that:

                "The first condition on the reverse of the licence states that the    H
    778                    SUPREME COURT REPORTS                    [2003] I S.C.R.

A            import policy in relation to the goods and amendments made thereto
             up to and including the date of issue will be applicable to the goods.
             The licence was issued on 29.6.1981 on which date beef tallow was
             canalised."

          Further, in the Import Policy for April 1981-March 1982 in paragraph
B 2, it has been specifically stated that "any amendment to this policy which
    may become necessary in the course of the year will be notified by means
    of Public Notices issued by the Chief Controller of Imports and Exports,          T
    from time to time". Same thing is stated in Import-Export Policy of the year
    1982-83.

c         In this view of the matter, it is apparent that respondent knowing fully
    well the import policy imported prohibited goods i.e. import of canalised
    item namely beef tallow and, therefore, the Collector was fully justified in
    imposing the penalty under Section 112 of the Customs Act.

D         In the result, the appeal is allowed. The impugned judgment and order
    passed by the Tribunal is set aside and the judgment and order passed by the
    Collector of Customs is restored. There shall be no order as to costs.

    S.K.S.                                                        Appeal allowed.
                                                                                          ~·.




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