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Cham Ice and Cold Storages Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Mumbai
Decided On
Reported in(1990)(46)ELT373Tri(Mum.)bai
AppellantCham Ice and Cold Storages
RespondentCollector of Customs
Excerpt:
1. this appeal arises out of and is directed against order bearing no.s/16-deec-1063/84 exempt. dated 30-6-1986 passed by the collector of customs, bombay. the facts necessary for the disposal of this appeal lie in a narrow compass.2. m/s. cham ice & cold storages (appellant) imported a consignment of 120 bales of tokai brand white cardboard weighing 25,995 kgs. and sought clearance against an advance licence p/w/2962994/c/xx/90/a/83, dated 12-1-1984 and d.e.e.c. no. 6964, dated 18-2-1984. the licence was valid for import of white card board/paper and paperboard all sorts, other than ivory board. the customs, however, objected to the clearance on the ground that the goods imported are ivory board. initially the addl. collector of customs held the enquiry and by his order dated.....
Judgment:
1. This appeal arises out of and is directed against Order bearing No.S/16-DEEC-1063/84 Exempt. dated 30-6-1986 passed by the Collector of Customs, Bombay. The facts necessary for the disposal of this appeal lie in a narrow compass.

2. M/s. Cham Ice & Cold Storages (appellant) imported a consignment of 120 bales of Tokai Brand White Cardboard weighing 25,995 kgs. and sought clearance against an Advance Licence P/W/2962994/C/XX/90/A/83, dated 12-1-1984 and D.E.E.C. No. 6964, dated 18-2-1984. The licence was valid for import of White Card Board/Paper and Paperboard all sorts, other than ivory board. The Customs, however, objected to the clearance on the ground that the goods imported are ivory board. Initially the Addl. Collector of Customs held the enquiry and by his order dated 25-1-1985 ordered confiscation but allowed redemption on payment of fine of Rs. 3 lakhs. Being aggrieved by the said order, the appellant preferred an appeal CD(BOM.) A 142/85 before this Bench. This Bench, by its order dated 5-11-1985, set aside the order of the Addl. Collector and remanded the matter to the Addl. Collector for consideration afresh. After the remand the Collector of Customs, Bombay held the adjudication. The Collector also held that the goods imported were liable for confiscation under Section lll(d) of the Customs Act read with Section 3 of the Imports & Exports (Control) Act. He ordered confiscation but gave the importers an option to pay in lieu of such confiscation a fine of Rs. 1,50,000/-. It is this order of the Collector that is the subject-matter of challenge in this appeal.

3. During the hearing of this appeal, Shri Sogani, Consultant, submitted that the burden of estblishing that the goods are ivory board was on the Department and the Department had failed to discharge their burden. He contended that the goods imported are not ivory board but are card board covered by the importer's licence. Shri Sogani further submitted that in all there are three test reports - two by the Dy.

Chief Chemist and the third by the Department of Chemical Technology, University of Bombay. In its first test report, the Dy. Chief Chemist has stated the sample was white paper sheet made of chemical wood pulp GSM 315. It has been characterised as card board/ivory board. Besides, the test report the Dy. Chief Chemist had furnished his opinion based on certain authorities. According to the Dy. Chief Chemist, the distinction between ivory board and card board is not based on its grammage but chiefly in the high quality of paper used and particularly in the finish, and a high degree of transparency, certain stiffness and ivory tint. He has further opined that the sample tested was found to be a white board having smooth egg shell finish having a high degree of transparency and certain stiffness. Therefore, the sample tested merits to be considered as an 'Ivory based'. On the said opinion, Shri Sogani contended that the Addl. Collector ordered confiscation but then in the appeal this Bench was of the opinion that there had been no sufficient material for the adjudicating authority to classify the goods as ivory board. Therefore, the Bench remanded the matter to the Addl. Collector for drawing fresh samples. The Bench also directed that one sample should be made available to the appellants for getting it tested independently. After the remand, samples were drawn and a sample was sent to the Dy. Chief Chemist and the sample given to the appellants were got tested in the Department of Chemical Technology, University of Bombay. Shri Sogani submitted that the Chemical Examiner gave a report to the effect "sample is a cut piece of sheet of paperboard made of chemical wood pulp GSM 315. The term "Card Board" includes ivory board also. It has got the characteristics of ivory board." The Customs authorities were, however, not satisfied with the report of the Chemical Examiner. Therefore, a request was made to the Deputy Chief Chemist to give opinion on the following: (2) Whether a board can be regarded as ivory board despite its having a high contrast ratio.

Shri Sogani then referred to the Dy. Chief Chemist's opinion in paragraph 1. The Dy. Chief Chemist stated: "Ivory boards are boards ususally made by pasting papers made from well beaten pulp. There is even distribution and there is no patchy appearance. Hence they have a clear and even look through, which will not be obtained in other boards like mill board and coated boards." Shri Sogani submitted that the present opinon of the Dy. Chief Chemist was diametrically opposite to his earlier opinion which was relied on by the Addl. Collector, Shri Sogani submitted that the earlier opinion of the. Dy. Chief Chemist "that distinction between the ivory boards and card board is not based on its grammage but chiefly in the high quality of the paper used and particularly in the finish and a high degree of transparency, certain stiffness and ivory tint. The Dy. Chief Chemist had also stated then that the sample tested was found to be a white board having a high degree of transparency and certain stiffness". Shri Sogani submitted that the Dy. Chief Chemist having stated in unequivocal term that a high degree of transparency is one of the characteristics of ivory board, was not justified in ignoring the absense of that characteristic. Shri Sogani further submitted that the sample, which was given to the importer, was got tested by the Department of Chemical Technology, University of Bombay and the test report showed that the sample for all practical purposes, was completely opaque. Therefore, the important characteristic of ivory board was not found and therefore the goods cannot be classified as ivory board. It was also contended by Shri Sogani that the Collector in his order had observed that the goods imported are meant for printing cards and not for packing and therefore they are to be taken as ivory board. This observation of the Collector, according to Shri Sogani, is again based on the opinion of the Dy. Chief Chemist and further those factors cannot be relevant for consideration to classify the goods as ivory board. Shri Sogani then urged that the Dy. Chief Chemist did not carry out any test. Therefore, no value can be attached to his opinion.

The Dy. Chief Chemist had only set out what should be the qualities of ivory board and he did not state that the sample tested had those qualities. It was also urged by Shri Sogani that ivory board has a use for packing cartons. In that connection, he referred to Item No. G. 18 (iii) Appendix 17 of the Policy 1985-88. Shri Sogani also submitted that Dy. Chief Chemist is only competent to test the composition of a substance and he is not a Paper Technologist and therefore, his opinion, as to the nature of the goods, carries no weight.

4. It was further submitted by Shri Sogani that one of the samples were sent to Institute of Paper Technology, Saharanpur and the Head of that Institute, after conducting test, had given its report that the sample cannot be classified as an ivory board and it can be termed as a white card board. Finally, Shri Sogani urged that the Addl. Collector imposed a fine of Rs. 3 lakhs, the Collector imposed a fine of Rs. 1,50,000/- but then both the authorities did not state any reason for imposing heavy fine. He urged that eventhough an appeal was pending, 60 bales out of 120 bales were sold by Port Trust Authorities and the amount realised works out to Rs. 34.60 per kilogram. If duty and other expenses are taken into consideration, there would be no margin of profit. On the other hand, the c.i.f value and the cost would be much more than the market value and as such, the fine imposed in lieu of confiscation is irrational and may be set aside.

5. Shri Pal, appearing for the Collector, initially objected to the receipt of the report of the Institute of Paper Technology, Saharanpur.

He submitted that report had not been produced before the adjudicating authority. The appellant was given an opportunity to adduce fresh evidence in the order of remand but the appellant did not avail of that opportunity. Shri Pal, however, submitted that even the report of the Institute of Paper Technology cannot be relied upon because the test conducted by them was only with regard to the thickness and gloss and no other test. There is no material as to what should be the thickness of the ivory board and therefore the test of thickness will have no relevance. As regards the gloss the test carried out disclosed that it was low which is consistent with the gloss of the ivory board. It was further contended by Shri Pal that the appellant had an opportunity to cross-examine the Dy. Chief Chemist. He had not availed of that opportunity and therefore he is not entitled to challenge his report.

The appellant, if wanted, could have requested for testing the sample by the Central Laboratory at Delhi and he had not even availed of that opportunity. Shri Pal also submitted that opacity is not the same as transparency and the report produced by the appellant does not show the ratio. The test report is also not complete in that it does not give the other specifications. It is then submitted by Shri Pal that the advance licence was given to the appellants for the export of fish and not for export of coffee or tea; therefore, the imported goods could not be required for packing of fish. And hence reliance cannot be placed on Item No. G 18 (iii) Appendix 17 of the Policy 1985-88. Shri Pal then contended that if an entry in the I.T.C. Schedule is capable of two interpretation then the interpretation placed by the Department should be accepted and in that connection, Shri Pal relied on the decisions of the Supreme Court reported in (1) AIR 1963 S.C. 1390, (2) AIR 1973 S.C. 194. As regards fine imposed, Shri Pal contended that it is within the discretion of the Collector and he could have even ordered absolute confiscation. Finally, Shri Pal "submitted that there is no infirmity in the order passed by the Collector and therefore the appeal may be rejected.

(i) Whether the Collector was unjustified in classifying the imported goods as ivory board and therefore the licence produced was not valid for import, and (ii) Whether the fine in lieu of confiscation is excessive, harsh and unjust.

Point No. (1). Admittedly, the licence produced was valid for the import of white card board/paper and paperboard all sorts other than ivory board. In the invoice, the description of the goods is given as Tokai Brand White Card Board. The same description is carried to the Bill of Entry. The packing list also contained the same description.

The goods were examined on first check. The sample was sent for testing to the Custom House Laboratory. The Test Report disclosed that the sample was white paper sheet made of chemical wood pulp GSM 815 having characteristics of card board/ivory board. The opinion of the Dy. Chief Chemist was obtained by the then adjudicating authority, namely, the Addl. Collector of Customs. The Dy. Chief Chemist, Shri M.K.Ranganathan, after referring to the technical books available in the Laboratory, opined that the distinction between the invory board and card board was not based on its grammage but chiefly in the high quality of the paper used and particularly in the finish, and a high degree of transparency, certain stiffness. Therefore, he concluded that the sample merits to be considered as an ivory based. In his report, Shri Ranganathan has referred to the following Technical Books: According to the three technical books referred to in the Dy. Chief Chemist's report, the ivory boards are transparent. Besides transparency, they will have low gloss finish, certain stiffness and ivory tint.

7. The test report of the Department of Chemical Technology of University of Bombay was to the effect: "That the results show that the opacity of the white card board is 98.9%. For all practical purposes it may be considered as completely opaque.

8. As per the Test Report of the Department of Chemical Technology the sample tested shall have to be considered as a completely opaque. If that be so, one of the important characteristics of ivory board, namely transparency was absent in the sample.

9. In his order, the Collector has observed : "The Dy. Chief Chemist has categorically given the opinion that the goods are ivory board.

Transparency to the fullest extent is not the only consideration. The quality of the board, the good beating and uniform setting of the pulp have also been considered by the Dy. Chief Chemist in giving his opinion which is also based on long experience. The goods are, therefore, be taken as ivory board. I have seen the goods. They are meant for printing cards and not for packing...." The observation of the Collector that the Dy. Chief Chemist has categorically given the opinion that the goods are ivory board is not borne out from the report of the Dy. Chief Chemist. In his latest report dated 13-2-1986, the Dy. Chief Chemist had observed : "The correct procedure to decide the issue will be to conduct comparative tests on genuine ivory boards of similar thickness, grammage and tint and the goods under reference. He had further observed if the Appellate Tribunal is going to base their decision on transparency/opacity alone then a standard ivory board sample of identical thickness, grammage and tint obtained from the market may be subjected to this test under identical conditions." Thus it is clear even according to the Dy. Chief Chemist the correct procedure was to conduct comparative test on genuine ivory board and the goods imported. It is not clear why the Department did not undertake such a test.

10. In this report of 13-2-1986, the Dy. Chief Chemist had referred to the characteristics of ivory board. It reads: "Ivory boards are made from well beaten pulp and this confers on them the clear, even look through because of the even uniform pulp distribution free from patches of pulp. The translucency, transparency would also depend apart from the above factor on the thickness of the board, fillers coatings etc.

Ivory boards being free from fillers and coatings have better transparency than other high class boards. All these characteristics should be taken together for consideration and not one factor alone i.e. transparency." We may compare this opinion with the opinion of the same Dy. Chief Chemist given in respect of the another sample dated 18-2-1984. The material portion reads: "the distinction between ivory board and card board is not based on its gram-mage but chiefly in the high quality of the paper used and particularly in the finish and a high degree of transparency certain stiffness and ivory tint. He has further opined that the sample tested was found to be white board having smooth eggshell finish having a high degree of transparency and certain stiffness. According to this opinion, the finish and high degree of transparency should be there in an ivory board. As has been pointed out earlier, the test report of the Department of Chemical Technology, University of Bombay disclosed that the opacity of the sample was 98.9%. For all practical purposes it should be considered as completely opaque. The Collector in his order did refer to this report and he had not stated whether that report should be accepted or not.

The Dy. Chief Chemist in his report dated 13-2-1986 had stated something about transparency. The relevant portion reads: "The term 'high degree of transparency' used in the T.0.14 dated 22-12-1984 (his earlier report) should be interpretated with reference to the context and in comparison with other printing boards and should not be interpretated in isolation or literally." The most transparent paper (glassine paper) has only 10 - 40% parallel transmittance and a total transmittance of 60 - 85% only and tissue paper has 85% total reflection and only 3% parallel transmittance. An opaque bread board wrapper has an opacity of only 60% whereas an opaque book paper may have an opacity of 90%. Thus, these terms are only mostly used in paper industries (Ref: P. 1405/1406 Pulp and Paper by Caxy Vol. HI, 2nd Edition)".

So according to the opinion of the Dy. Chief Chemist, the opaque book paper will have an opacity of 90%. The opacity found by the Department of Chemical Technology was 98.9%. That report has not been challenged by the Department.

11. Having regard to the description of the goods allowed for import under the licence, the burden of establishing that the goods imported was ivory board lies on the Department. Having regard to the two conflicting opinions given by Dy. Chief Chemist, much weight cannot be attached to his opinion. The Collector in his order had stated that he had seen the goods, they are meant for printing cards and not for packing. Shri Sogani had contended that the Collector was inspired by the observation made by the Dy. Chief Chemist in his subsequent opinion dated 13-2-1986 wherein the Dy. Chief Chemist had stated that ivory boards are used for high class printing works like visiting cards, menus cards and business cards. The end-use of the goods cannot be taken as a criterion for the purpose of I.T.C. classification. Assuming that enduse can be taken, the observation of the Collector that the goods in question was meant for printing cards, and therefore merit consideration in classifying it as ivory board is not apt. Merely because the goods are meant for printing, they cannot be classified as ivory board. Printing can also be done even on pulp board. As a matter of fact, pulp boards are used for all printing works, such as, tickets, cards, menus etc. The other reason given by the Collector was that the goods imported were not meant for packing. It is not his finding that the goods imported cannot be used for packing. As has been observed earlier, in the latest policy, namely, Policy 1985-88, ivory board is considered as a packing material. See Item G. 18 Appendix 17. Thus it is seen that even ivory board can be a packing material. But then it was not the case of the importers that what had been imported was ivory board. The Collector's observation would have been correct if there was clinching evidence to establish that what had been imported was ivory board. The Department on whom the burden rested did not even chose to get any trade opinion in respect of the imported goods. How the imported goods are treated or considerd in trade parlance would have been the best evidence to classify as to whether it is an ivory board or a white card board other than ivory board. In the absence of evidence as to how the trade considered the goods one has necessarily to look into the technical books. Ivory board is described by F.H.Norris as "thin superfine quality paste boards formerly made entirely from rag pastings. Now usually manufactured from esparto or screw pastings in white mainly, but also in tints with smooth eggshell or low gloss finish and a clear even look through. Some qualities today are made on twin wire machines and thus are not pasted boards".

"Pulp boards made from strong stuff furnishes of wood with or without esparto or straw are quite common. The boards must be even, hard-sized, and well rolled to give a good writing surface and lie perfectly flat for accurate ruling, printing and cutting. Made in buff, white and tints for card-index systems in single thickness, as pasted boards bend and split at the corners with frequent handling." The description of "Pulp Board" is given by the same author as: "White and tinted straw and wood or esparto boards made on ordinary Fourdrinier machine, well sized and finished in matt supercalendared or water finishes in 2 sheet up to 8 and 10 sheet substances in Royal and Postal sizes...used for all kinds of general printing work, such as tickets, cards, menus etc." "Made in many qualities from common grey or granite board to the tough glazed boards, made from differing grades of waste papers.

Folding box board in caliper 0.01 and up is usually glazed one side and made from mechanical pulp with or without waste papers. Superior qualities are white lined with glazed line with a bleached sulphite or waste white paper liner; also made lined both sides where required. Sometimes chromo coated for very high class carton and fancy box work and toys and games." 12. From the descriptions of the various boards, given by the author Shri F.H. Norris, it is clear that ivory boards are paste boards. They are thin, superfine with a smooth eggshell or gloss low and a clear even look through.

13. Neither the Chemical Examiner nor the Dy. Chief Chemist in their opinion stated that the sample tested are paste boards. The Chemical Examiner in the report endorsed on the Bill of Entry stated: "The sample is white paper sheet made of chemical wood pulp GSM 325.1. It had the characteristic of card board/ivory board. In the report dated 16-1-1986, the Chemical Examiner stated "sample is a coated sheet of paper board made of chemical wood pulp, GSM 315. The report of the Chemical Examiner fits in more with the description of wood pulp board given by F.H. Norris in his book "Paper and Paper Making". The description of wood pulp board given therein reads: "May be either fine bleached or unbleached sulphite wood, well sized and moderately well beaten and used either for printing or box making. The majority of the board made is produced solely for mechanical wood pulp in glazed or unglazed finishes and sized or unsized. The thinner calipers are machine made and the thicker once cylinder made. Used for box making, egg fillers and flats, paper-plates and dishes beer and table mats.

14. During the hearing of this appeal, Shri Sogani had filed the test report of the Institute of Paper Technology, Saharanpur. It is true that this report was not produced before the adjudicating authority. It is also true that the appellant was given an opportunity to produce fresh evidence in the order of remand. But all the same to meet the ends of justice we have admitted this additional evidence. In this report, it was stated that the sample had been tested in the Laboratories-and following observations were made: (1) It is a thick board and is not produced by pasting together a number of layers, (5) Stiffness could not be tested as our equipment has developed some fault.

The opinion given was "as such, the sample does not meet the requirement of an ivory board in following respects: 15. Shri Pal appearing for the Collector had contended that test carried out are only regarding thickness and gloss, as per the test report of the institute. And no standard is laid down as to the thickness of ivory board. And therefore the report of this institute should not be accepted. But then in his opinion dated 22-12-1984, the Dy. Chief Chemist had stated that the sample tested was found to be a white board having smooth eggshell finish. Having a high degree of transparency and certain stiffness. The Institute of Paper Technology, Saharanpur also found the sample to be smooth with eggshell finished, the gloss of the board is very low and the board was highly opaque.

Further, in this report itself, the Institute has stated due to these major differences, the sample cannot be classified as ivory board. It meets most of the requirements of card board, as given in the definition of the dictionary of paper and American Pulp and Paper Association, New York 1965 page 104 which is as follows: "A general term applied to boards 0.006 of an inch (0.1524 mm) or more in thickness, where stiffness is the paramount characteristic.

The word card board is used by the public is too vague to be technical. In the paper industry, the term board is generally used in combination with words indicating its character or use." 16. The Institute found the thickness to be 0.38 mm. The contention of Shri Pal that no standard has been laid down regarding thickness is answered by the Institute's report referred to above.

17. The Dy. Chief Chemist had not given the thickness of the board. He had also not stated that the board is a pasted board. His opinion in the first instance was that it had a high degree of transparency. In his second opinion, he however stated that ivory board being free from fillers and coatings have better transparency than other high class boards. The two test laboratories found the board to be opaque. One of the test laboratories found it to be totally opaque. The Chemical Examiner who examined the two samples had opined that they are made of chemical wood pulp. Neither the Chemical Examiner nor the Dy. Chief Chemist found the board to be a pasted board. They have not measured its thickness. As regards transparency, Dy. Chief Chemist's opinion was not consistent. The board, no doubt, did have two other characteristics, namely, smooth with eggshell finish and the gloss of the board was very low. There is no evidence that high quality card boards will not have these two characteristics. That apart the evidence in the form of test reports of reputed institutes established that the sample was transparent but opaque, it is not thin, but thick and it does not consist of pasted layers. In the said circumstances, we are unable to agree with the finding of the Collector that what was imported was ivory board.

18. Relying on the decisions of the Supreme Court reported in AIR 1963 SC 1319 and AIR 1973 SC 194, Shri Pal had contended that if an entry in the ITC Schedule is capable of two interpretations then the interpretation placed by the Department should be accepted. The ratio of the decision of the Supreme Court in both the judgments is that the High Court under Article 226 of the Constitution had no jurisdiction to interfere with the reasonable views of the Customs Authorities. It may be stated here that the decisions of the Supreme Court are an authority for the proposition, that the High Courts in exercise of their writ jurisdiction, cannot interfere with the possible and reasonable view taken by the Customs authorities in regard to the interpretation of an entry in the ITC Schedule. The decisions would not apply to the appellate authority. As an Appellate Authority, the Tribunal has jurisdiction to examine the correctness of the view taken by the Collector. That apart the decision of the Supreme Court would apply only if alternative interpretations are plausible and if the interpretation of the Customs Authorities was reasonable. On the material placed, we are unable to hold that the interpretations are possible. He also hold that the interpretation adopted by the Collector in the circumstances of the case, cannot be considered as reasonable.

19. Shri Pal had further contended that the advance licence was given to the licensee for the export of fish and therefore the goods imported would not be required for export of fish. This argument is based on the assumption that the goods imported are ivory boards. It was not the case of the Appellant that they had imported ivory boards. Our finding is also that the goods imported are not ivory boards. In the said circumstances, the goods imported would not be required for packing of fish cannot be accepted. The import licence is an advance licence. The appellants would have executed a Bond. The licence also contains certain conditions. Violation of the Bond conditions and the licence conditions entails penal action. Possible post import violations cannot be made a ground to object to the clearance.

20. On careful consideration of all aspects, we hold that the Collector was not justified in treating the goods imported as ivory boards. We, therefore, while allowing this appeal, set aside the order passed by the Collector and direct release of the goods. Having regard to our above finding, the Point No. 2 does not survive for consideration.

21. During the hearing of this appeal, Shri Sogani had brought to our notice that in spite of the appeal being pending, the Port Trust Authorities had sold in auction 120 bales. Since the goods are not liable to confiscation, we direct that the appellants be given the sale proceeds after deducting the expenses incurred in bringing the property to sale.

22. I have given the most careful consideration to the order proposed by Brother Hegde in Appeal No. CD (BOM.) 524/86 of M/s. Cham Ice & Cold Storages. However, I am not able to agree with his conclusion and hence this separate order. So far as the facts of the appeal are concerned, as also the arguments of the appellants and the respondent, the same have been reproduced in the order drafted by Brother Hegde. Therefore in the interest of brevity I adopt them and do not find it necessary to repeat them in this order.

23. The main consideration for determination in this present appeal is the question as to whether the goods imported are Ivory Board as held by the Collector or as White Card Board permitted to be imported under the licence produced by the importers. A lot of arguments were advanced by both the sides in explaining the correct nature of the goods imported. They have also relied on the two technical opinions by the Deputy Chief Chemist of the Bombay Custom House, the test report of the Bombay Custom House laboratory, the letter dated 13-9-1986 of the Institute of Paper Technology, Saharanpur the letter dated 14-1-1986 from the Department of Chemical Technology, University of Bombay and other documents. Before I proceed to examine this matter further, I would like to deal with and settle the objection raised by Shri Pal regarding the additional evidence being led by the appellants by submitting the Saharanpur Institute's test report at the later stage.

Brother Hegde in para 5 of his proposed order has overruled Shri Pal's objection and admitted this additional evidence. I agree with him in this behalf. The appellants could have sought permission of the Tribunal earlier for submitting this additional evidence which they have not done. But the interest of the other side are not seriously hampered by this omission as the report of the Saharanpur Institute is quite brief and this could have been and it has betually been perused by Shri Pal and he has offered arguments concerning this additional piece of evidence. Therefore, the Tribunal cannot go behind the technicalities of procedure in shutting out this evidence in the interests of justice. I therefore find no objection in this additional evidence being submitted before the Tribunal and being considered by the Tribunal.

24. The Customs Officers are empowered to draw samples of the goods imported in the presence of the owner or for any purposes under the Act including ascertaining the value of the goods. Under these provisions, the samples had been drawn and they had been tested to find out whether the imported goods are prohibited or not under the provisions of the Imports and Exports Control Act, 1947 read with the Customs Act, 1962.

This was done by testing the samples in the Custom House laboratory.

The first opinion T.O. No.1457/22-11-1984 with reference to the consignment under import clearly opined the imported goods were ivory board. In coming to the aforesaid opinion, the C.E.I. Shri M.K.Ranganathan referred to the various technical authorities in support of his opinion. Since the import licence excluded ivory board form its purview, the imported consignment was held to be offending the Import Control Regulations and the same was confiscated by the Addl. Collector in his order dated 25-1-1985. On appeal to the Tribunal, the Tribunal in their Order dated 5-11-1985 remanded the matter for re-adjudication to the Addl. Collector after making certain observations and coming to the conclusion that no sufficient material at the stage of adjudication was available to hold that the consignment imported was ivory board.

The Tribunal further directed that fresh samples should be drawn in the presence of the importers under the supervision of the Dy. Collector and that the same should be re-tested and a copy of the test report furnished to the importers. The Tribunal also directed that one sample should be made available to the importers for getting it tested independently.

25. As per the aforesaid directions, test results were carried out by the laboratory. A copy of the same is available under the test memo dated 16-1-1986. This report states as follows:- "Sample is a cut piece of sheet of paper board made of chemical wood pulp 'GSM 315'. The term Card Board includes Ivory Board also. It has got the characteristics of Ivory Board." This test report was elaborated further in the test opinion No. 2204 dated 13-2-1986 of the Deputy Chief Chemist Shri M.K. Ranganathan. This test report also cited the various characteristics of ivory board and concluded that it would not be correct to decide as to whether the goods are ivory board merely on a single characteristic of transparency. The test opinion of the Deputy Chief Chemist was given in the context of the Tribunal's order dated 5-11-1985 for the re-test of the goods for fresh adjudication. After taking all the evidence into account, the Collector in his order under appeal dated 30-6-1986 held that the goods were ivory board and hence not permissible to be imported under the licence submitted by the appellants. Accordingly the Collector confiscated the consignment, but allowed it to be redeemed on payment of a fine of Rs. 1,50,000/-.

26. The test opinion dated 22-12-1984 and the second test opinion dated 13-2-1986 deal with the various characteristics of ivory board including the manner of manufacturing the same. In this context it is seen that the sample tested by the Institute of Paper Technology, Saharanpur found that the board was not produced by pasting together a number of layers which was considered as one characteristic of ivory board. This method for manufacturing ivory board is not the only method for manufacture of ivory board. The learned SDR Shri Pal contended that as per the relevant explanatory notes on page 671 under Chapter 48 of CCCN, the process of manufacture of ivory board was also by producing it on twin wire machines under pressure. This has been further confirmed by A Glossary of Paper and Board Qualities for ivory board page 303. Therefore in case the Saharanpur Institute of Paper Technology did not find that the board in question was not made by pasting together a number layers, the board cannot be taken out of the category of ivory boards only on this ground. The Saharanpur Institute carried out only two tests out of the 5 envisaged by it so far as the categorisation of board as ivory board was concerned. These two tests were with reference to thickness and with reference to gloss. So far as the thickness is concerned, the same is not relevant because ivory board is also cardboard, the latter term being generic while the former being a kind of cardboard. The second test carried out by the Institute was with reference to gloss. In this behalf, the Institute's report stated that the gloss of the board was very low and this is one of the characteristics of ivory board. The other tests for determining as to whether the board was ivory board or not were not carried out and hence the test report of the Institute is not complete. As opposed to these, the reports carried out by the Customs House laboratory are complete and categoric. The Dy. Chief Chemist after testing the samples has given a clear opinion that the goods were ivory board. The Custom House laboratory performs the statutory function in terms of Section 144 as mentioned above. The Collector has also observed that they have a great deal of experience. It is therefore not possible to brush aside the opinion of the Deputy Chief Chemist in technical matters like the present one.

27. The appellants have also obtained a letter from the University of Bombay dated 14-1-1986. The University carried out only one test regarding transparency. The Dy. Chief Chemist's opinion dated 13-2-1986 implies that all characteristics should be taken into account in determining whether the board is ivory board or not. Therefore on the basis of tests carried out by the University for one characteristic it cannot be held that the board is ivory.

28. In view of the foregoing circumstances, I cannot accept the test reports carried out by the Institute of Paper Technology, Saharanpur and the University of Bombay in determining the nature of the board imported by the appellants. The Dy. Chief Chemist is the technical adviser of the Customs Department. He has tested the sample and given the opinion and in support of his opinion he has cited the various authorities. The opinion of the Deputy Chief Chemist could have been challenged by subjecting him to cross-examination as argued by the learned SDR. This has not been done. Therefore the opinion of the Deputy Chief Chemist and the test result of the laboratory have remained unchallenged. In such circumstances if any other evidence in produced, like the one from Saharanpur and the Bombay University, it would only show that two interpretations on ITC Schedule are possible.

In that view the judgments of the Supreme Court reported in AIR 1963 SC 1319 and AIR 1973 SC 194 would come into play and the ratio of these decisions would require that the issue be decided in favour of the Department as there is nothing to show that the decision of the Collector of Customs was perverse or biased.

29. The learned Representative of the appellants contended that the fine levied by the Collector was very high and it offended the provisions of Section 125 of the Customs Act. In this connection he submitted that out of 120 bales imported, 60 bales had already been sold by the BPT on 20-10-1986 for a sum of Rs. 4,49,488/- which was at the rate of Rs. 34.60 per kg. As against this, the Collector had levied a fine of Rs. 1,50,000/- for the whole consignment and in doing so he had transgressed the statutory limit prescribed under Section 125.

Subjecting the contention of the learned Representative to scrutiny, it is seen that the landed cost of 120 bales was declared as Rs. 5,12,742/-in the B/E. Half the number of bales namely 60 have been sold for Rs. 4,49,488/-. Therefore the... fine of Rs. 1,50,000/- for the whole consignment does not cross the statutory limit of Sec. 125 of the Customs Act. There is therefore no substance in the aforesaid contention of the learned Representative of the appellants. He has required that the Collector be directed to refund the sale proceeds.

This question would arise only if the appeal is allowed. In my view I have held that the licence does not cover the goods and therefore the Collector's order is both legal and proper. In view of these findings, I see no reason to interfere with the order of the Collr. of Customs, Bombay and I reject the appeal.

30. During the course of the hearing of the appeal, Shri Sogani requested that the Collector of Customs be directed to issue a certificate to the appellants for the detention of the goods so that the appellants could claim relief from the Bombay Port Trust for the demurrage charges. The Tribunal observed that this was not an order of the Collector under the Customs Act and therefore there could not be any appeal to the Tribunal in this behalf. Besides, the Collector's order under reference does not make any mention about the issue or otherwise of such a certificate. Therefore, this request of Shri Sogani is also untenable and the same is rejected.

Since there has been a difference of opinion between two Members of the Bench, the following point of difference is referred to the President in terms of Section 129-C (5) of the Customs Act: "Whether on the facts and in the circumstances of the case the goods imported are classifiable as Ivory Board and therefore the licence produced is not valid for the import." The point of difference between the two Members of the West Regional Bench who heard this matter has been formulated as follows: "Whether on the facts and in the circumstances of the case the goods imported are classifiable as Ivory Board and therefore the licence produced is not valid for the import." The said point has been referred for disposal by me as a third member in terms of Section 129-C(5) of the Customs Act.

32. I have heard Shri N.C. Sogani, Consultant for the appellants and Shri K.C. Sachar for the Department.

33. The facts leading to this appeal have been set forth in extenso in the orders of the Members of the West Regional Bench and therefore need not be repeated here. The import was in terms of a licence valid for imports of White Card Board/Paper and Paper Board, all sorts, other than Ivory Board. The import documents described the subject goods as Tokai brand white card board. The issue is whether it is ivory board as claimed by the Department and hence not covered by the licence. Shri Sogani contended that the burden was on the Department to establish that the goods were ivory board and not covered by the licence. It appears to me that this would not be correct. The import being sought to be claimed to be covered by a valid licence therefor, it is for the importer to establish that the goods satisfied the description as in the licence. Unless he is able to establish that fact he would not be entitled to lawful import thereof. It appears to me that the burden is on the importer to establish that the goods sought to be imported are covered by the licence. Hence It would be the burden on the appellants to establish that the goods in question are not ivory board and hence not excluded from the licence.

34. Several text books have been referred to by the Deputy Chief Chemist as to the definition of ivory board. Shri Sogani further referred to the book Paper Trade Manual (Paper and Allied Trade Handbook) published by Raghunath Dutt & Sons (P) Ltd. (1955 Edition). I find that the Glossary of Terms used in Paper Trade and Industry published by Indian Standards Institution (IS: 4661-1968) contains no definition of Ivory Board.

(1) Raghunath Dutt & Sons (P) Ltd. (Page 96) : A highly finished superfine quality thin paste board made from chemical pulp and used for high class correspondence and invitation cards. It has a clear and translucent look-through.

(2) F.H. Norris - Paper & Paper Making (Page 303) : Thin superfine quality pasteboards formerly made entirely from rag pastings. Now usually manufactured from esparto or straw pastings in white mainly, but also in tints with a smooth eggshell or low gloss finish and a clear, even look through. Some qualities today are made on twin wire machines and thus are not pasted boards.

(3) Edward A. Dawe - A Treatise for Printers and others - 4th Revised Edition - Vol. 1 (Page 71) : H-ard, white, transparnt boards, made from well-beaten stuff, the substance being obtained by pasting two or more webs of paper together. Ivories are obtainable in three or four substances, white or cream, and are used for high-class work, such as visiting, business, and menu cards. Stocked in royal boards, and also in various cut sizes.

(4) EJ. Labarre - A dictionary of paper and paper making terms -1937 Edition (Page 134) : Ivory board or cardboard may be homogeneous i.e. of one thickness or more, produced by pressing several moist webs of paper together or by pasting (PASTEBOARD), the distinction being chiefly in the quality of the paper used and particularly in the FINISH, (sometimes with beeswax) and a high degree of transparency. It is also (U.S.A.) referred to a 'translucent'. (CDP) 36. Since the term "look-through" is to be found in some of these definitions it will be convenient to the extract the definition thereof in the several books. The same reads as follows: (a) Raghunath Dutt & Sons (P) Ltd. (Page 99): It is the appearance of a sheet of paper when looked at against light.

(b) E.J. Labarre (Page 149): A term applied to the appearance of paper when held to the light, thus disclosing the texture or FORMATION. The look-through may be WILD or CLOUDY or, as indicative of the method of manufacture, LAID, WOVE, ANTIQUE LAID, MEDIAEVAL LAID, etc.

(c) Glossary of terms published by ISI (Page 18): Structural appearance of a sheet of paper observed when viewed by transmitted light.

37. A perusal of the above definitions discloses that in order to qualify as Ivory Board the product must have the following qualities: (4) Smooth Egg Shell Finish; Formerly it would have been of paste board but now not necessarily so.

A clear look-through, would not necessarily mean it is wholly transparent but would indicate a certain degree of translucence.

38. In the first test report Lab. No. 14203 dated 1-12-1984 it was only mentioned that the test showed the goods to be white paper sheet made of chemical white pulp GSM 325.9 having characteristics of card board/Ivory Board. Thus this report gave no reasons or details as to why the goods were held to be ivory board. In the report of Shri M.K.Ranganathan, CEI dated 22-12-1984 he had referred to the several books cited earlier and noted that the distinction between ivory board and card board is not based on gram-mage but chiefly in the high quality of the paper used and particularly in the finish and a high degree of transparency, certain stiffness and ivory tint. Regarding the goods in issue he stated that the sample had smooth eggshell finish and a high degree of transparency and certain stiffness. On the basis of these characteristics he held the goods to be ivory board. It was on the basis of the above two opinions that the Additional Collector held the goods to be ivory board and hence not covered by the licence. It was this order that was set aside by the Tribunal under its order dated 5-11-1985 and a re-adjudication was ordered on remand. Though Shri Sachar contended before me that this order of remand was itself unjustified, it was pointed out to him that the nature of the present proceedings would not permit him to raise any such plea.

39. In pursuance of the said order of remand fresh samples had been drawn. A sample was got tested by the Department. The party also got his sample tested. The case for the appellants is that such a test on behalf of the assessee was carried out by the University of Bombay as well as by the Institute of Paper Technology at Saharanpur. Shri Sachar contended that this report of the Saharanpur Institute ought not to be permitted to be produced or considered. But here again it was pointed out to him that both Members of the West Regional Bench have already admitted this document in evidence and therefore the admissibility thereof cannot be questioned at this stage. In their report the University of Bombay have stated that the sample had been tested for transparency/opacity and that the test revealed the opacity to be 98.9/% and hence for all practical purposes the goods may be considered completely opaque. Shri Sogani submits that it was only the question of high transparency that was in issue when the appeal was earlier heard by the Tribunal (resulting in the remand) and hence when sample was drawn thereafter the same was got tested by the University for that quality only. The Saharanpur Institute in its report mentions that the sample was a thick board not produced by pasting together a number of layers; it was smooth with eggshell finish; it had low gloss and was highly opaque. Shri Ranganathan appears to have been enquired about this finding of the Bombay University. In answer to such queries (by then he was Deputy Chief Chemist) he has stated in his report dated 13-2-1986 that transparency alone was not the sole criterion for deciding whether the goods would be ivory board and that if the decision is to be based on that test only a comparative test with a standard ivory board of identical thickness may be conducted.

40. It is with reference to the above material that the question at issue has to be answered. It is not disputed for the assessee that the goods imported had a low gloss, good finish and were sufficiently stiff. As regards the fact that they were not paste boards (in the sense of layers being pasted together) it may be noted that the definition given by F.H. Norris indicated that nowadays ivory boards need not necessarily be paste boards, as they are now manufactured on twin wire machines. The issue therefore reduces itself to the question whether the goods have a high transparency or clear look-through and whether in the absence of sufficient transparency the goods could be called ivory board.

41. As to what would constitute a clear even look-through or a high degree transparency no material has been made available as to the extent or degree thereof in terms of any standard units of measurement thereof, if any is prescribed. It appears from (1) Page 61 of Raghnunath Dutt; (2) page 277 of F.H. Norris; (3) Page 32 of E.A. Dawe; and (4) Page 176 of Labarre that there are scientific instruments to measure the extent of transparency. These are referred to as a Diaphonometer or Opacimeter or Blancometer. It is not known whether with reference to readings on such instrument any minimum percentage of transparency has been prescribed to qualify in trade as ivory board.

The reports in the case do not indicate as to which of these instruments had been, if at all, used. The reports of the Chemical Analysis Department do not give any percentage as to the transparency, except to state that there was high transparency. The report of the University of Bombay gives the percentage of opacity to be 98.9% and therefore declares the goods to be completely opaque for all practical purposes. Since a percentage is given it is likely that some instrument had been used to measure the extent thereof. The report of the Saharanpur Institute declares the goods to be highly opaque but without indicating the percentage of opacity.

42. The contention of Shri Sogani is that since this high transparency is an essential condition for ivory boards the absence thereof (as is established by the reports of the University of Bombay and Saharanpur Institute) establishes it beyond doubt that the goods in issue cannot at all be called ivory board. In this connection it may be noted that though in his report dated 22-12-1984 Shri Ranganathan had declared that the sample tested had high degree of transparency he had not subsequently in his report dated 13-2-1986 fully stood up to this position. He stated therein that transparency is a relative term and that to find out as to what would be the extent of transparency or opacity that would distinguish the ivory board from other paste board it would be necessary to compare a standard ivory board of identical thickness with the goods in issue. In the several books cited it has been mentioned that the comparative degree of opacity could be identified by covering a printed matter with a standard board and by the goods to be tested. It is not known why such a test could not have been carried out by the Deputy Chief Chemist at least after the report of the University of Bombay was obtained and his opinion was sought with reference to contents thereof.

43. Shri Sachar contends that no cross-examination had been sought for of the Deputy Chief Chemist and hence his report should be held to be beyond challenge. It may be noted that in his report dated 22-12-1984 the CEI had mentioned the sample to have a high degree of transparency and this was certainly challenged in the appeal before the Tribunal and therefore a remand was ordered. It is thereafter that the report of the University of Bombay had been obtained that the sample was practically opaque, the opacity being to the extent of 98.9%. It was with reference to this report that the Department had sought for further opinion of Shri Ranganathan (by then Deputy Chief Chemist) and he had then offered his opinion dated 13-2-1986 wherein he does not appear to have challenged the correctness of extent of opacity found by University of Bombay (evidently with reference to one of the instruments mentioned supra though the name of any such instrument is not indicated in the report of the University).

44. As earlier seen all the definitions in the standard books cited supra indicate that in order to qualify as ivory board there must be a clear even look-through or a high degree of transparency. On a consideration of the reports of the Dy. Chief Chemist the University of Bombay and the Saharanpur Institute one can only conclude that the sample of the imported goods did not have this characteristic as the same was practically opaque. I therefore hold that the appellants have established that the subject goods could not be classified as ivory board.

45. So far as the decision of the Supreme Court in AIR 1963 S.C. 1319 and AIR 1973 S.C. 194 these only laid down that if the Customs authorities have come to a particular conclusion on a question of fact the Supreme Court, in exercise of its writ or writ appeal jurisdiction, would not interfere with that finding, unless it is shown to be perverse. But such a principle would have no application in proceedings before the appellate authority, such as this Tribunal, which is entitled to go into the correctness of the conclusions of the lower authorities on questions of fact and come to its own conclusions on a reassessment of the material.

46. I therefore hold on the point referred to me that the goods imported are not classifiable as Ivory Board and the licence produced was therefore valid for the import.

47. The difference of opinion between the members of this Bench was referred by the President for hearing to the 3rd member Shri V.T.Raghavachari in terms of Section 129-C of the Customs Act. Shri Raghavachari has reported his order dated 5-6-1987. In terms of the provisions of Section 129-C, the appeal is to be decided on the basis of the majority opinion. In the majority view the imported goods are not classifiable as Ivory Board and hence the import licence tendered for the clearance is valid. Accordingly the order No. S/16-DEEC-1063/84 exem. dated 30-6-1985 passed by the Collector of Customs, Bombay confiscating the imported goods under Section lll(d) of the Customs Act and permitting them to be redeemed on payment of fine of Rs. 1,50,000/- is set aside and the appeal of M/s. Cham Ice & Cold Storages is allowed. Since the Bombay Port Trust have sold in auction 120 bales and since the goods are not liable to confiscation as decided in this order an appeal, the Collector of Customs, Bombay is directed to give the sale proceeds of the sold goods to the appellants after deducting the expenses incurred in the sale thereof.


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