Collector
of Customs, Bombay Vs. Swastic Woollen (P) Ltd. &
Ors [1988] INSC 216 (10
August 1988)
Mukharji,
Sabyasachi (J) Mukharji, Sabyasachi (J) Rangnathan, S.
CITATION:
1988 AIR 2176 1988 SCR Supl. (2) 370 1988 SCC Supl. 796 JT 1988 (3) 558 1988
SCALE (2)479
CITATOR
INFO : F 1989 SC 627 (8) RF 1989 SC 644 (13) RF 1990 SC1579 (46)
ACT:
Customs
Act, 1962: Sections lll(d), (m), 112 and 130 E.
'Wool Waste'_DUty-Levy
of-Whether particular goods is 'wool waste Primarily and essentially a question
of fact- decision based on relevant material facts and correct legal
principle-Jurisdiction of Supreme Court in appeals from Customs, Excise and
Gold (Control] Appellate Tribunal.
%
Statutory Interpretation: Customs/Central Excise Act- No/statutory definition
provided in respect of an Item-Trade understanding the safest guide.
HEAD NOTE:
Respondent
No. 1 imported consignments of wool material and claimed that the imported
goods were wool waste and hence not liable to customs duty. The goods were
examined by an Expert Committee, who appalled that the goods were other than
wool waste. Based on the Committee's opinion, the Additional Collector or
Customs, after notice, examined the whole case, charged the respondent with the
violation of the Import Control Regulations and held that the goods were not
wool waste but processed woollen products other than wool tops/raw wool.
The
Appellate Tribunal allowed the respondent's appeal.
Dismissing
the appeal it was,
HELD:
(1) When no statutory definition is provided in respect of an item in the
Customs Act or the Central Excises Act. the trade understanding, meaning
thereby the understanding in the opinion of those who deal with the goods in
question, is the safest guide. [374B] Union of India v. Delhi Cloth &
General Mills, [I963] Supp 1 SCR 586; South Bihar Sugar Mills Ltd. v. Union of
India, [1968] 3 SCR 21; Dunlop India Ltd. v. Union of India, [1976] 2 SCR 98;
In re, Colgate Palmolive (India) Pvt. Ltd., [l979] ELT 567; Commissioner of
sales-tax, U.P. v. S.N. Bros, Kanpur, [1973] 2 SCR 852 and His Majesty The King
v. Planters Nut and Chocolate Co. Ltd. [1951] CLR (Ex) 122, referred to.
PG NO
370 PG NO 371 [2] The expression "wool waste" is not defined in the
relevant Act or in the notification. This expression is not an expression of
art. It may be understood, as in not of financial measures where the
expressions are not defined, not in a technical or on any preconceived basis
but on the basis of trade understanding of those who deal with those goods.
[376D-E] [3] Whether a particular item and the particular goods in this case
are wool wastes or not is primarily and essentially a question of fact The
decision on such a question of fact must be arrived at without ignoring the
material and relevant facts and bearing in mind the correct legal principles.
Judge by these yardsticks, the finding of the Tribunal in this case is
unassailable. [376F] {4) If a fact-finding authority comes to a conclusion
within the parameters, honestly and bona fide, the fact that another authority be
it the Supreme Court or the High Court may have a different perspective of that
question is no ground to interfere with that finding in an appeal from such a
finding under Section l30E of the Act though in relation to the rate of duty of
customs or to the value of goods for purposes of assessment, the amplitude of
appeal is unlimited. But because the jurisdiction is unlimited, there is
inherent limitation imposed in such appeals. [376G-H; 377B]
CIVIL
APPELLATE JURISDICTION: Civil Appeal Nos. 1016-25 of 1988.
From
the Judgment and Order dated 19. 1. 1987 of the Customs Excise and Gold
(Control) Appellate Tribunal, New Delhi in Appeal Nos. CD(SB) (T) 1776, 1777,
1797 to 1799, 1800, -1911, 2263, 2264 and 2265 of 1986-D in Order Nos. 68 to 77
of 1987-D.
Kuldip
Singh, Additional Solicitor General, Pramod Swarup and Mrs. Sushma Suri for the
Appellant.
V Lakshmi
Kumaran, Madhava Rao, V. Krishnamurthy, K. Karanjawala, Mrs. M. Karanjawala and
Ms. Indu Malhotra for the Respondents.
The
Judgment of the Court was delivered by PG NO 372 SABYASACHI MUKHARJI, J. These
appeals under section 130E of the Customs Act, 1962 (hereinafter called 'the
Act') arise from the decision of the Customs, Excise and Gold (Control)
Appellate Tribunal, New
Delhi [hereinafter
called 'CEGAT'). Section 130E(b) permits appeal to this Court from any order of
the said Tribunal relating, among other things, to the date mansion of any
question having a relation to the rate of duty of customs or to the value of
goods for purposes of assessment. The appeals are at the instance of the
revenue authorities, namely, the Collector of Customs, Bombay. The respondent No. l/importer is a
company of small scale sector in Punjab and manufactures various kinds of yarns. It is stated that on 19th May, 1984, the respondent No. 1 imported
consignment of wool materials valued at Rs.3,75,079 and claimed the benefits
under Notification No. 240/76-cus. The respondent also claimed that the wool
materials were wool waste, hence, the goods in question were not liable to customs
duty. It is stated that on 6th November, 1984, an Expert Committees, comprised of Deputy Chief Chemist, AssisTant
Collector and Senior Scientific Officer was set up for the examination of the
goods in question. The Expert Committee,: after examination opined that the
wool goods were other than wool waste, hence, the goods were liable to duty of
customs. On or about 2nd January, 1985, the department issued a notice to the
respondents calling upon them to show cause as to why action under section Ill(d) & {m) and section 112 of the Customs Act and
section 3 of the import and Export Central) Act, 1942 should not be taken
against them. The respondents submitted the reply to the notice. The Additional
Collector of Customs examined the whole case and adjudicated on 19th March, 1986 and the respondents were charged
with the violation of the import Control Regulations. The Additional Collector
of Customs held that the classification of the goods should be under the
heading 53.01/05 and also found the import to be unauthorised. Accordingly, the
goods in question were confiscated but he gave option to the respondents to
redeem the goods on payment of Rs.90,000 as fine. The respondent No. l/importer
preferred an appeal to the Appellate Tribunal, New Delhi, against the order of the Assistant Collector. Bombay, and the Appellate Tribunal, New Delhi, after going through the provisions
of the Act and the notification allowed the appeal and set aside the order of
the Additional Collector on 19th January 1987.
The
question involved in these appeals before the CEGAT and the question involved
herein in these appeals is, whether these goods are wool wastes and, as such,
entitled to the benefit of exemption under the aforesaid notification. As it is
apparent from the Tribunal's order, PG NO 373 the assessee or the dealer
contends that these are wool wastes. The consignments were examined on
percentage basis.
On
examination, it was found, however, that these items contained long length of
slivers/tops etc. A thorough examination of these consignments was, therefore,
ordered to verify the actual description of the goods. A technical panel was
constituted for the purpose consisting of the Deputy Chief Chemist, Bombay, as Chairman, the Assistant
Collector of Customs and a Senior Scientific Officer of the Office of the
Textile Committee as the members. Based on the panel's findings, show cause
notices were issued to the importers that the goods appeared to be other than
wool wastes, there were long lengths of slivers/tops or deliberately broken
tops which could be easily joined at the end to prepare them ready for
spinning. The importers were charged with the violation of the Import Control
Regulations and asked to explain why action should not be taken under sections
111(d) and (m) of the Act. and also why the goods should not be charged to duty
under heading 53.01 and now 53.01/05(1) of the Customs Tariff Schedule read
with Customs Notification No. 154-Cus dated 4th July, 1979 at the rate of 40% +
auxiliary duty at 10% + additional duty of customs at Rs.9.375 per kg. under
item No. 43 of the Central Excise Tariff Schedule read with the relevant
notification. As mentioned hereinbefore: adjudication proceedings were held by
the Additional Collector of Customs. Bombay. In the said adjudication proceeding
the members of the technical panel were cross-examined by counsel. The
Additional Collector held that the goods were not wool waste but processed woollen
products other than Wool tops/raw wool and were classifiable under heading
53.01/05 [1]. In other words, he found that since the goods were found to be
not wool wastes, the licenses produced for wool waste were not acceptable and,
therefore. the imports were unauthorised. Accordingly, the confiscation of the
goods were ordered but option to redeem the goods on payment of fine was
permitted. This order as mentioned hereinbefore was challenged before the
CEGAT.
The
Tribunal noted the history of the case and addressed itself to the points at
issue. 'the question before the Tribunal was whether the goods were wool waste
or processed woollen products other than wool tops/raw wool. The revenue's case
was that the goods could not be treated as wool wastes. lt may be reiterated
that the goads were held to be not entitled to duty exemption under the
relevant customs notificAtion in issue. The Tribunal went into the details of
the report of the export panel. That report recognised that it was not possible
to give opinion by visual observations of the material and that there was no PG
NO 374 specification laid down for the same by the I.S.I. or International
Standard Organisations. The Tribunal noted that the question would have to be
understood on the basis of trade understanding.
We are
of the opinion that when no statutory definition is provided in respect of an
item in the Customs Act or the Central Excises Act, the trade understanding,
meaning thereby the understanding in the opinion of those who deal with the
goods in question is the safest guide. See Union of India v. Delhi Cloth &
General Mills, [ 1963] Suppl 1 SCR 586; South Bihar Sugar Mills Ltd. etc. v.
Union of lndia & Ors., [1968} 3 SCR 21; Dunlop lndia Ltd. v. Union of lndia
and Ors., [l976} 2 SCR 98; in re: Colgate Palmolive (India) Pvt. Ltd., [l979}
ELT 567; Commissioner of Sales-tax, U.P. v. M/s. S.N. Bros, Kanpur, [1973} 2
SCR 852 and also the famous observations of Justice Cameron in His Majesty The
King v. Planters Nut and Chocolate Co. Ltd., {1951} CLR (Ex) 122.
Dealing
with the transactions in question, the Tribunal noted that the goods in the
present case, had been indented and supplied as wool wastes. Attention of the
Tribunal was also drawn to the explanatory notes to the Customs Cooperative
Counsel Nomenclature (for short C.C.C.N.) which stated at page 738 that wool
waste could be of different types arising at different stages on processing of
wool and in spinning of wool, that Iap .and silver ends could comprise wool
waste, that these could be carded or combed wool waste and that wool wastes
might be used for spinning.
The Tribunal
noted that nowhere had it been laid down that wool wastes comprising of pieces
of sliver should not exceed 3 meters in length or that it should be packed in
gunny bags and not in machine pressed bales. Some reliance was placed on a
letter dated 5th July,
1981 from S.C.S. India
Pvt. Ltd. to Deluxe Spinning Agency, Bombay that lap and sliver (broken pieces) could comprise wool waste. Wool
tops would have lengths ranging from 250 to 1166 meters. But in the peasant
case, the material was about 4 meters only. Some reliance was also placed on
two letters to L.W.S. from the Principal Scientific Officer, Punjab Test House,
Ludhiana, regarding the definition of wool tops and soft waste which was set
out in the order of the Tribunal. It is not necessary for our present purpose
to set out the definition in extenso.
But this
definition of materials disproved the revenue's contention that pieces of
sliver, as in this case, of 4 or 5 meters length were directly spinnable and
were not wool wastes. There was cross-examination of the Deputy Chief Chemist
and that cross- examination also does not support the revenue's case. lt is
true that the Additional Collector of Customs, Bombay by his order dated 19th
March, 1986 had PG NO 375 rejected the defence put forth by the dealer and held
that the goods were not wool wastes but were "processed woollen products
other than wool tops/raw wool" and were classifiable under heading
53.01/05(1) of the Customs Tariff Schedule. But the question is whether he was
right in so doing. It appears that the goods varied in length from 4 meters and
above. It also appears that the goods were found by the Committee to be cut
pieces of slivers which were parallely laid, homogeneous and of even thickness
and that these were nothing but cut pieces of wool tops, which could be
considered to have arisen during the process of manufacture of yarn from wool
tops in order to quality as soft waste viz. small cut ends of wool
tops/slivers. It may be relevant in this connection to refer to the Board's Tariff
Advice which suggested that wool wastes may consist of free fibres and
clippings, cuttings etc. These should~d not consist of long lengths of yarn or
of rovings or slivers. The Tribunal was of the view that rovings, slivers/tops
of short lengths or ends alone could be considered as wool wastes. The wool
contents of the present disputed consignments are more than 98% or completely
wool and it is not mixed with any other wastes. The lengths of samples were not
less than 3 meters but ranged between 3 to 30 meters or even more. lt was,
therefore, urged that these could not be treated appropriately as wool wastes.
The
Tribunal, however, noted that the experts produced by the importers are said to
have based their views on their experience, no literature or evidence regarding
accepted trade practice with regard to any technical literature has been
produced. The experts had no occasion to see the goods in dispute. lt appeared
before the Tribunal when the consignment was examined for the first time, the
customs staff reported that the goads could be considered as wool wastes. The
expert panel's report was not unanimous. 'The report did not say that the
subject goods were the result of deliberate cutting of slivers. lt said that
the fibres were of varying, different lengths. But the majority report
considered that the goods were not wastes apparently on the basis of the length
of the fibres being above 3 meters. The term "wool waste" could cover
slivers provided these were not deliberately cut and were not of uniform
length. The evidence produced in support of the contention that slivers upto,
and even more than ~5 meters in length could be considered as wastes was,
without justification, ignored.
The
Tribunal noted all these. lt is clear that the goods comprised fibres of
uniform~ length, the result of deliberate cutting. That was the basis on which
the Additional Collector proceeded but there was no evidence to that effect.
After taking ail these factors and sub-mission into consideration, the Tribunal
came to the conclusion that PG NO 376 these are classed as "wool
waste". The propriety and the validity of this finding are under
challenge.
Learned
Additional Solicitor General appearing for the appellant contended that the
Tribunal has ignored vital material and relevant factors. He submitted that
Technical Committee's report about the expression wool waste", CCCN's
observations and the Board's Tariff Advice had been ignored.
We are
unable to accept this criticism advanced on behalf of the revenue.
The
short question involved before the Tribunal and the validity of which is under
challenge in these appeals is, whether the goods in question are wool wastes or
not. If these are then these are entitled to exemption under the relevant
notification and if these are not wool wastes, these are not entitled to
exemption.
The
expression "wool wastes" is not defined in the relevant Act or in the
notification. This expression is not an expression of art. It may be understood
as in most of financial measures where the expression are not defined not in a
technical or any preconceived basis but on the basis of trade understanding of
those who deal with these goods as mentioned hereinbefore. The Tribunal
proceeded on that basis. The Tribunal has not ignored the Technical Committee's
observations. We have noted in brief the Tribunal's handling of that report.
The tribunal has neither ignored the observation of CCCN nor the Board's Tariff
Advice. These observations have been examined in the light of the facts and
circumstances of the case. One of the basic factual disputes was long length of
sliver tops.
Having
regard to the long length, we find that the Tribunal was not in error. Whether
a particular item and the particular goods in this case are wool wastes. should
be so considered or not is primarily and essentially a essentially a question
of fact The decision on such a question of fact must be arrived at without
ignoring the material and relevant facts and bearing in mind the correct legal
principles. Judged by these yardsticks the finding of the Tribunal in this case
is unassailable. We are, however, of the view that if a fact finding authority
comes to a conclusion within the above parameters honestly and bona fide, the
fact that another authority be it the Supreme Court or the High Court may have
a different perspective of that question, in our opinion, is no ground to,
interfere with that finding in an appeal from such a finding. In the new scheme
of things, the Tribunals have been entrusted with the authority and the jurisdiction
to decide the questions involving determination of the rate of duty of excise
or of the value of goods for purposes of assessment. An appeal has PG NO 377
been provided to this Court to over-see that the subordinate Tribunals act
within the law. Merely because another view might be possible by a competent
Court of law is no ground for interference under section l30E of the Act though
in relation to the rate of duty of customs or to the value ot goods for
purposes of assessment, the amplitude of appeal is unlimited. But because the
jurisdiction is unlimited, there is inherent limitation imposed in such
appeals. The Tribunal has not deviated from the path of correct principle and
has considered all the relevant factors. If the Tribunal has acted bona fide with
the natural justice by a speaking order, in our opinion, even if superior Court
feels that another view is possible, that is no ground for substitution of that
view in exercise of power under the clause (b) of section l30E of the Act.
In the
facts and in the circumstances, in our opinion, the Tribunal has acted within
jurisdiction. The Tribunal has taken all relevant and material facts into
consideration.
The
Tribunal has not ignored any relevant and material facts. The Tribunal has not
applied any wrong principles of law. Therefore, the decision of the Tribunal is
unassailable even in the appeal before this Court.
In the
premises, the appeals preferred herein are rejected. No order as to costs.
R.S.S.
Appeals dismissed.
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