SHAWKAT KAMAL Vs. COLLECTOR OF CUSTOMS CALCUTTA

JUDGEMENT

(1.) The present writ petition under Article 226 of the Constitution of India has been filed praying inter alia for issuance of a Writ of Mandamus commanding the respondents to assess forthwith the Bill of Entry being Annexure "E" as referred in the petition on the basis of Exemption Notification No. 224/85-Cus, dated 9th July, 1985, and 158/85-Cus, dated 24th May, 1985 as amended by 225/85-Cus, dated 9th July, 1985 without any objection whatsoever and further commanding the respondents not to impose any condition contrary to the exemption notifications as aforesaid and for other consequential orders directing the respondents to withdraw, recall and/or rescind the endorsement on the back of the Bill of Entry submitted by the petitioner being Annexure "E" to the writ petition. It is stated that the petitioner is carrying on business under the name and style of "ES-KAY LEATHER PRODUCTS", as sole proprietor thereof. He claims to be a registered exporter under the Council for Leather Exports as manufacturer-exporter having registration certificate dated 26th July, 1985. 'ES-Kay Leather Products' allegedly a registered SSI Unit under the Directorate of Cottage and Small-Scale Industries bearing proper registration number. It is further stated that in the usual course of business the petitioner entered into a contract with MESSRS. METAPLAST GMBH COMPANY of West Germany for supply of stamping foils for the purpose of stamping brand names in different colours on the leather products as also to foil leather in different shapes. It is the specific case of the petitioner that he is an "actual user" within the meaning of the Imports and Exports Policy 1988-91 and stamping foils are items of raw materials components and samples allowed for import under Open General Licence by actual user (industrial) subject to an actual user conditions and the same appear in Appendix VI, List 8 Part I of the Imports & Exports Policy, 1988-91 at Serial No.558. It is placed on record that the foreign seller despatched the one consignment of metalised stamp-foils contained in 8 (eight) Pallets on 15(fifteen) packages and the consignment arrived at the Calcutta Airport and was duly discharged. The petitioner is alleged to have instructed its clearing agents to file Bill of Entry for home consumption who in turn led the same and a copy of the said bill is marked annexure "E" to the writ petition. A statement under Section 108 of the Customs Act was taken from the petitioner where it is made clear that the goods imported with the use in leather industry. It is further placed on record that stamping foils are cleared under Chapter 32 of the First Schedule of the Customs Tariff Act, 1975 and the rate of duty was specified against the said sub-heading in the Customs Tariff Act in 150% + Rs.15/- per kg. By exemption notification, dated July 9, 1985 the rate of basic Custom duty to an exemption notification No. 224/85-Cus, dated July 9, 1985 the rate of basic Custom duty on Stamping Foils was reduced to 40% ad valorem and the whole of additional duty was exempted. There are other notifications which exempted said goods from the whole of auxiliary duty leviable under sub-section (1) of Section 43 of the Finance Act. It is strongly alleged by the petitioner that the Custom Authorities even after filing of relevant documents including Bill of Entry are not releasing the goods without any reason whatsoever. According to the petitioner, he was informed in or around April, 1989 that in order to get release of the goods, the petitioner must produce : (i) End Use Bond ; (ii) Bank Guarantee for whole of the difference between standard and concessional rate of duty with a condition that the consumption to be verified and issued by the Central Excise Authority; (iii) Manufacturers' Catalogues/Literature regarding the use in leather industry; (iv) Explanation regarding valuation in terms of 1" ? 200'' (on surface area basis) . Such requirement was endorsed at the back of the Bill of Entry filed by the petitioner.

(2.) Elaborating all these facts in details, the petitioner has come to this Court on the ground that it is wrongful, illegal and without jurisdiction on the part of the Custom Authorities to demand compliance with the above requirements when the notification does not provide for the same. It is asserted that after the aforesaid notifications, the Custom Authorities have no jurisdiction to demand the duty so exempted or demand any security for the difference in standard rate and the concessional rate of duty.

(3.) The writ petition is strongly contested by the Custom Authorities by filing an affidavit. It is disclosed that during the course of searches carried by the Specially Intelligence and Investigation Branch (SIIB) some catalogues of the manufacturers of the stamping foils were seized. A perusal of the said catalogue will show that the stamping foils were and are being produced for such diversified industries as packaging, greeting cards, bookbinding, graphic arts, radio, television, automotives etc., and there are various types of stamping foils. It is asserted that while ordering import of stamping foils, it is imperative that the importer must specify the grade/quality as well as the colour of the Stamping Foil. The application of each type of Stamping Foil has to be determined by factors such as general characteristics, substrates, definition, release, coverage and stamping temperature and above all the specific industry for which it is manufactured. It is claimed further that intelligence has been gathered that large quantities of Stamping Foils cleared under Notification No. 224/85-Cus for use in the leather industry are actually sold in the open market at a very high premium to industries involved in the manufacture of greeting cards, plastic articles, packing materials, book binding, printing designs or textiles, picture frames, marking or labelling of finished products. It is placed on record that the Collectorate of Bombay intimated Calcutta Collectorate of the Custom Department about the result of the investigation as to the racket and on the basis of that information Calcutta Collectorate undertook investigation into the importation of Stamping Foils sought to be cleared under the concessional rate of duty under Notification No. 224/85-Cus. Many houses were alleged to have been searched on the basis of the documents seized and the documents gathered. It was experienced that the exported goods were not of "foiled leather". It is the case of the contesting Custom Authorities that since the benefit of the Notification No. 224/85-Cus subject to the Stamping Foils being used in the leather industry of the importer and because the clearance is allowed under Open General Licence subject to actual user/industrial condition before allowing the clearing of stamping foils, the importers, as indicated in the guidelines must be asked to submit the manufacturer's catalogue to establish their claim that the stamping foils are meant for use in leather industry. It is also their case at since the importers are claiming benefit of concessional rate of duty the onus is on them to establish beyond reasonable doubt that the imported stamping foil is specially meant for use in leather industry. No vague letters or certificates may be entertained. Besides, the submissions of the manufacturer's catalogue the importer is also required to execute an end use bond backed by bank guarantee for whole of the difference in duty between standard rate of duty and concessional rate of duty. Thus 'end use bond' and the 'bank guarantee' will be cancelled only after importers submit a certificate issued by the concerned Central Excise Authority to the effect that the said imported Stamping Foil was utilised by the importers in terms of Notification No. 224/85-Cus. It is specifically stated in the affidavit-in-opposition that all the terms and conditions that were put to the petitioner for fulfilment before the clearance of the goods were and are by way of abundant precaution and protecting and safeguarding the interest of the revenue. According to the Custom Authorities if the goods arse allowed to be cleared then the main evidence will go out of the hands of the Custom Authorities.