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Indian Dyestuff Industries Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Tamil Nadu
Decided On
Reported in(1983)LC1255DTri(Chennai)
AppellantIndian Dyestuff Industries
RespondentCollector of Customs
Excerpt:
.....1979, cannot be allowed under rep licence, as per para 210 of that policy book, if an irrevocable letter of credit is not opened on or before 3r4-78. in the present case, though an irrevocable letter of credit has been opened on 3-4-78, it had been amended on three occasions-on 30-5-78, 29-6-78 and 15-7-78, extending the period of shipment upto 30th june 1978, 15th july 1978 and 31st july 1978 respectively, as against the original period of shipment of 31st may, 1978. the appellant-firm had contended before the deputy collector that in a record note of a meeting of 5-5-78 with the chief controller of imports and exports with the indian exports organisation (western range), the chief controller had clarified that "letter of credit extensions/amendments which do not alter contractual.....
Judgment:
1. Appeal under Section 129 of the Customs Act, 1962 praying that in the circumstances stated therein, the Tribunal will be pleased to set aside the order of the Appellate Collector of Customs, Madras, contained in No. C. 3/739/1979 dated 10-4-80 with consequential refund of redemption fine levied.

2. This appeal coming up for orders upon perusing the records and upon hearing the arguments of Shri Rama Subramaniam, Advocate for the appellants and upon hearing the arguments of Shri A. Vijayaraghavan, Departmental Representative for the respondent, the Tribunal makes the following order.

3. Aggrieved against the order of the Appellate Collector referred to in para 1, the appellants preferred a revision application to the Government of India. By virtue of Section 131-B of the Customs Act,' 62, the same has been transferred to the Tribunal to be heard as an appeal.

4. The appellant firm had imported 263 cartons of synthetic camphor powder (Technical) valued at Rs. 96,213.38 in terms of a telegraphic release advice from Bombay Custom House. The Deputy Collector of Customs, Madras, found that the importation of camphor, as entered in Appendix 26 of the Import Policy for April 1978-March 1979, cannot be allowed under REP licence, as per para 210 of that Policy Book, if an irrevocable letter of credit is not opened on or before 3r4-78. In the present case, though an irrevocable letter of credit has been opened on 3-4-78, it had been amended on three occasions-on 30-5-78, 29-6-78 and 15-7-78, extending the period of shipment upto 30th June 1978, 15th July 1978 and 31st July 1978 respectively, as against the original period of shipment of 31st May, 1978. The appellant-firm had contended before the Deputy Collector that in a record note of a meeting of 5-5-78 with the Chief Controller of Imports and Exports with the Indian Exports Organisation (Western Range), the Chief Controller had clarified that "letter of credit extensions/amendments which do not alter contractual obligations in any fundamental manner would not constitute fresh commitments, debarring clearance of imports against letters of credit established prior to 3-4-78". He did not accept this argument as amendment of the date of shipment in the letter of credit was an amendment of a fundamental nature. By his Order No. S. 8/380/78 Ap. Gr. dated 2-12-78, he (the Deputy Collector) confiscated the goods under Section 111(d) of the Customs Act, 1962, and fixed a fine in lieu of confiscation of Rs. 25,000/-. When the matter was taken in appeal before the Appellate Collector of Customs, Madras, it was inter alia pleaded that the suppliers had directed the appellant-firm to open a letter of credit by cable but the appellants opened it by air mail which resulted in delay. The suppliers had only 12 days for supply of the goods. This necessitated the extension of the period of shipment.

They had no particular reason to offer as to why the letter of credit was opened by air mail despite clear instructions from the supplier otherwise, He also found that because of the amendment in the letter of credit the saying contained in para 210 of the Policy Book April 1978-March 1979 was not applicable to the licence produced by the appellant-firm. He accordingly rejected the appeal.

5. Before us the learned Advocate for the appellant-firm refers to the clarification said to have been given by the Chief Controller of Imports and Exports to the Indian Exports Organisation on 5-5-1978 and urged that amendment in the date of shipment as provided in the original letter of credit is not one in any fundamental manner. He drew our attention to Section 55 of the Indian Contracts Act, 1872 according to which if the intention of the parties to a contract was that time should be the essence of the contract and there is failure to perform before the time fixed in the contract, the contract becomes voidable at the option of the promisee; if not the contract is not voidable but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure. He claimed that in the present instance contract is not voidable at the option of the promisee. The learned Departmental Representative maintained that the amendment in the date of shipment in the letter of credit is an amendment in fundamental manner. He referre tdo Chapter XVI of the Handbook of Import-Export Procedures 1978-79 dealing with unauthorised imports. In particular para 398 of the Handbook provides that "import is validly covered by a licence When the shipment/despatch of the goods from, the supplying country takes place within the period of validity of the licence". Again, dealing with requests for amendments of a licence it is stated that "the request for such anamendment should in any case be made before the goods had been shipped/despatched from the supplying countries, so that if, for any reason the change or amendment is not permitted, the importer may be able to advise his suppliers to make the necessary adjustment". Every licence carries an entry regarding period of shipment upto which it is valid. Thus the period of shipment is an important consideration in any licence. In opening a letter of credit against an import licence, its details and the period of shipment has to be indicated; any amendment thereof cannot, therefore, be considered as one of little consequncee.

6. During the hearing we had occasion to see the original order placed by the appellant-firm on Trinity Agencies, the agents of the supplier in West Germany. The indent, among other things, provides, The Letter of Credit when opened on 3-4-1978, the date on which the Licensing Policy got amended arid by which the importation of camphor was prohibited under an REP licence, specifically provides- In the context of the stress on period of shipment against any licence and the change in the Licensing Policy w.e.f. 3-4-1978, it is difficult to accept the contention of the appellant-firm that an amendment in the period of shipment is not one of substance. The remarks of the Chief Controller, of Imports and Exports only clarifies whether there is a firm commitment which cannot be altered, it would be accepted for purpose of import licensing, as already provided in the Policy Book itself. In the light of the conditions of licensing which have existed in this country for over 30 years by now, the reference to date of shipment, whether the goods are imported under a specific licence or an O.G.L., is a fundamental one. In the light of Sec. 55 of the Indian Contracts Act, 1872, in the conditions existing in the country regarding licensing we feel that the contract is a voidable one. In any case, even if it is not a voidable one, it is open to the appellant-firm to seek compensation from the exporter for any loss including fines in lieu of confiscation suffered by him.

We accordingly find that the importation was not covered by the licence produced by the appellant-firm for clearance of the imported synthetic camphor powder. The appeal is dismissed.


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