D.A.B. EXPORTS Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) THE appellants in all these appeals had imported various quantities of what they described as 'Dried Garlic' and sought clearance thereof under ITC (HS) Heading 071290.04 and Customs Tariff Heading 0712.90 under Bills of Entry filed on different dates in the year 1999. They had no specific licence for the imports. The Department took the view [hat the imported goods were not 'dried garlic' falling under ITC (HS) Heading 071290.04 but fresh garlic falling under ITC (HS) Heading 070320.00, which was a restricted item, for which specific import licence was required. The importers waived show cause notice and obtained clearance of the goods on the basis of orders passed by the proper officer of customs. In a few of these cases, the Commissioner of Customs was the proper officer, while, in the rest of the cases, the Additional Commissioner of Customs was the proper officer. The Commissioner or the Additional Commissioner, as the case may be, confiscated the goods under Section 111(d) of the Customs Act with option for redemption thereof on payment of fine and also imposed penalty on the importer under Section 112(a) of the Act. Where orders were passed by Addl. Commissioner, appeals were preferred to Commissioner (Appeals) and the latter upheld the orders passed by the lower authority. Such orders of the Commissioner (Appeals) are impugned in some of these appeals. The remaining appeals before us are against the orders passed by the Commissioner as adjudicating authority. In any case, the question arising for our consideration is whether the goods imported by the appellants should be classified under ITC (HS) Heading 071290.04 as 'dried garlic' or under Heading 070320.00 as 'fresh garlic'. We may, at once, note a fact which is not disputed in these appeals - that the garlic imported by all the appellants had a water content which was far above 10% w/w.

(2.) LEARNED Counsel for the appellants submit that the common parlance test has to be applied to determine the classification inasmuch as the item is described merely as 'dried garlic' under ITC (HS) Heading 071290.04 without reference to the percentage of any moisture content. The subject goods should be held to be falling under ITC (HS) Heading 071290.94 and to be freely importable. With reference to the Policy Circular dated 17 -9 -99 issued by the Joint Director General of Foreign Trade with the approval of the Director General of Foreign Trade (DGFT), which is relied on by the department in these cases to deny the benefit of the above ITC (HS) heading to the appellants in respect of the goods in question, learned Counsel submit that the Tribunal (West Zonal Bench) has held that the circular is not valid and binding as it does not indicate that any doubt had arisen before the DGFT for clarification. The Tribunal has also held that, where any garlic under import is known as 'dry garlic' in commercial parlance, it should be so classified for ITC (HS) and Customs Tariff purposes. The decision cited by the Counsel is the one rendered by the West Zonal Bench in the case of J.B. Impex v. CC, Nhava Sheva [2001 (134) E.L.T. 210 (Tri. - Mumbai)]. It is, further, submitted that various co -ordinate benches of the Tribunal have followed the above decision to allow free import of garlic declared as 'dried garlic' but containing considerable water content. The cited decisions are the following : -

(3.) LEARNED DR has opposed the above arguments. It is his contention that the DGFT had authority vested in him under Para 4.13 of the EXIM Policy, 1997 -2002 to clarify any question or doubt which arose in respect of interpretation of any provision contained in the policy or regarding ITC (HS) classification of any export/import goods. When a doubt arose as to the classification of garlic imported into India by various importers it was examined by the DGFT and the clarificatory circular dated 17 -9 -99 was issued. Such a clarification had also retrospective effect to cover all imports from the date of commencement of the policy period. In this connection, learned DR relies on the Supreme Court's decision in Aero Leather Pvt. Ltd. [2003 (154) E.L.T. A98 (S.C)] as well as in Collector v. Bhadrachalam Paper Boards Ltd. [1991 (55) E.L.T. A67 (S.C). While, in the former case cited by the DR, the Apex Court held that an amendment of the Income -tax Act by the Finance Bill 1999 was clarificatory and hence had retrospective effect, in the latter case, it was held that an amendment brought about by an amending notification (No. 214/84 -C.E.) was clarificatory and retrospective. Adverting to the description of the goods, learned DR refers to Section Note 2 in Section I of "ITC -HS Classification on Import items".