OSWAL WOOLLEN MILLS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) This petition concerns the import of woollen rags.

(2.) Woollen rags, by reason of an exemption notification dated 21st March 1959, were totally exempt from Customs duty.

(3.) The petitioners imported five consignments of woollen rags in 1972-73. On 10th January 1973 they were served with a notice to show cause why the consignments should not be confiscated as they contained second-hand clothing. On 13th June 1973 the Collector of Customs held that the import was not covered by the petitioners' licence for woollen rags against which their clearance was claimed; it was unauthorised and contravened Section 111(d) of the Customs Act read with Section 3 of the Imports and Exports (Control) Act. He ordered absolute confiscation. In this order the Collector noted the argument on behalf of the petitioners that woollen rags need not be mutilated; it was sufficient if garments were old, used and discarded. The second argument on behalf of the petitioners was that "woollen" covered any fabric in which there was a mixture of wool. A number of definitions of 'rags' were noted by the Collector. From these it appeared to him that mutilation as such was not an essential pre-condition to the fabric or hosiery or garment being called a rag. This was, however, not to say that any unmutilated fabric, hosiery or garment could be called a rag. The emphasis in the definitions seemed to be on the old, used and discarded nature of the articles. It also appeared from the definition that serviceable hosiery or garments which could be sold in a second-hand clothing market for clothing purposes could not be called rags. They could be called rags only if they were in such a condition that no use was possible other than conversion into "shoddy or mungo". If hosiery or garments were discarded in richer countries at a stage when their useful life had not been exhausted, and if such hosiery to garments were likely to be sold in India they could not be considered rags in India. It was common knowledge that large numbers of such hosiery and garments had been sold in the Indian markets as second-hand clothing. The imported goods were not 'rags' in the condition in which they had arrived. They were, in fact, a mixture of rags and second-hand clothing. They could not be called 'woollen' rags.