1. The petitioner is a public limited Company which carries on business of manufacturing diamond tools for which purpose it imports industrial diamonds. Diamonds are of two categories, viz., gem category and non-gem category. A low gem category diamond can be mistaken for a high non-gem category diamond and a low gem category diamond can be mistaken for a high quality industrial diamond. The petitioner-Company applied for two licences for the import of industrial diamonds for the period 1971-72. On 22nd March 1972 the petitioner was granted two licences valid till 30th June 1972 with a grace period of 30 days. Under these licences the petitioner-Company imported industrial diamonds on the basis of invoices dated 11th April 1972. The import was covered by two Bills of Entry dated 23rd June 1972 and 28th June 1972. At the time of import, the Customs Appraiser made the following observation on the Bill of Entry :
'Looking to points, colour and size these are gem cutable. However, taking into account so many natural points, on the stones these could be used in industry also.'
On 10th October 1972 and 11th October the Assistant Collector of Customs issued a notice calling upon the petitioner-Company to show cause why the diamonds imported should not be confiscated on the ground that they were gem quality diamonds, the importation of which was not authorised under the petitioner's import licences. On 12th October 1972 and 14th October 1972 the petitioner-Company submitted its replies. After a personal hearing given to the petitioner by the Deputy Collector, on 17th March 1973 he passed two orders holding that the diamonds imported by the petitioner were gem quality diamonds, the importation whereof was not authorised under the petitioner's import licences. The Deputy Collector ordered confiscation of the goods and granted to the petitioner an option to pay in lieu of confiscation a fine of Rs. 7,500/- and Rs. 5,500/- respectively. Against these orders the petitioner preferred the requisite appeal which was disposed of by the appellate authority on 9th April 1974 which held that the diamonds imported by the petitioner were on examination found to be of gem quality and hence were not covered by the petitioner's import licence which was only for importation of industrial diamonds. Against that order the petitioner went in revision. The revisional authority by its order dated 4th December 1975 confirmed the appellate order on the ground that the diamonds imported by the petitioner had on examination been found to be of gem quality.
2. Here it may be stated that on 20th December 1972 the petitioner had paid the requisite 40% ad valorem duty on the diamonds imported on the basis that they were industrial diamonds. The duty on gem quality diamonds was only 2 1/2% ad valorem. After the two orders dated 17th March 1973 were passed by the Deputy Collector of Customs, the petitioner-Company applied for the refund of the excess duty paid by it. On that application an order was passed by the Assistant Collector on 1st May 1973 refusing the refund on the ground that the diamonds had industrial application. The petitioner's appeal was dismissed by the appellate authority on 6th March 1976 on the ground that the diamonds were industrial diamonds were industrial diamonds and hence the order dated 1st May 1973 of the Assistant Collector was correct.
3. It is in these circumstances that the petitioner filed the present petition for an appropriate writ challenging the orders dated 17th March 1973, 9th April 1974, 4th December 1975 and for alternative reliefs.
4. It was urged by Mr. Dada, the learned Counsel appearing on behalf of the petitioner, that it was not open to the customs authorities to assess the diamonds for I.C.T. purposes as gem quality diamonds and thereafter to assess the very same diamonds as industrial diamonds when the petitioner claimed refund of excess customs duty paid by it. This grievance made by Mr. Dada is perfectly legitimate. It is difficult to see how the customs authorities can blow hot and cold at the same time. Either the diamonds imported by the petitioner were gem quality or they were industrial diamonds. The customs authority had to make up its mind. Apparently, the reason for this contradictory stand taken by the customs authorities seems to flow from the fact that the duty on industrial diamonds is 40% ad valorem whereas the duty on gem quality diamonds is a mere 2 1/2% ad valorem. Thus for the purpose of assessing the customs duty it suited to the customs authorities to treat these diamonds as industrial diamonds so that the higher 40% ad valorem duty could be attracted. It is patently clear that these two sets of orders are mutually contradictory and destructive of each other and cannot stand together. Mr. Dada states that the petitioner has no objection in paying the 40% ad valorem duty for the simple reason that these diamonds imported by the petitioner are, in fact, industrial diamonds as is disclosed by the orders dated 1st May 1973 and 6th March 1976.
5. In the result, the two impugned orders dated 17th March 1973, the appellate order dated 9th April 1974 and the revisional order dated 4th December 1975 are set aside and the petition is allowed in terms of prayers (a) and (b). The authority shall refund to the petitioner the sum of Rs. 13,000/- being the fine paid by the petitioner under the two orders dated 17th March 1973 within four weeks from today. The respondents shall also pay to the petitioner the costs of the petition. Rule is made absolute accordingly.