JAGMOHANDAS KUBERDAS KATAKIA Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner is an Importer and runs a Woollen Handloom Industry using shoddy wool and woollen rags as raw material for spinning woollen yarn.

(2.) The petitioner runs his business in the name of "Vishnu Cottage Industry" situated at Kalol in Panchmahal District of Gujarat State. Prior to the year 1956, the raw material required for the weaving sector of the shoddy sector of the woollen industry was met by the import of shoddy woollen yarn, largely from Italy. The import of raw material was regulated under the provisions of the Imports and Exports (Control) Act, 1947 and the Import Control Order. The import of the woollen rags was exempted from payment of customs duty, whereas the import of second-hand clothes was not exempted and 100% duty was leviable thereon. The importers of woollen rags were faced with his disadvantage by reasons of the fact that in the foreign countries, the cost of stripping or mutilation of second-hand garments into rags was very heavy. The foreign exporters were not inclined to mutilate or strip the old garments. The cost of stripping or mutilation in the foreign country was a heavy burden upon the importers. The importers thereupon made representation to the concerned authorities and sought permission to permit the import of woollen garments in unmutilated and unstripped condition and to get them stripped or mutilated in India so as to make them wholly unfit for any other use other than as raw material for the purpose of shoddy woollen industry.

(3.) Accordingly, on November 29, 1961, the Additional Collector of Customs, Bombay, issued a public notice evolving the procedure with regard to the exemption granted by the Government to the unstripped woollen rags imported by the shoddy woollen units. The public notice, inter alia, provided that the goods before the clearance from the Docks should be cut to small pieces so as to render them unfit for any use other than rags. In view of the public notice, unstripped woollen rags were treated as falling within the ambit of Item 49(4) of the Customs Tariff and were exempted from the payment of Customs Duty.