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PETITIONER: COLLECTOR OF CUSTOMS, BOMBAY

       Vs.

RESPONDENT: SWASTIC WOOLLEN (p) LTD. & ORS.

DATE OF JUDGMENT10/08/1988

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) RANGNATHAN, S.

CITATION:  1988 AIR 2176            1988 SCR  Supl. (2) 370  1988 SCC  Supl.  796     JT 1988 (3)   558  1988 SCALE  (2)479  CITATOR INFO :  F          1989 SC 627  (8)  RF         1989 SC 644  (13)  RF         1990 SC1579  (46)

ACT:     Customs Act, 1962: Sections lll(d), (m), 112 and 130  E. ’Wool Waste’_DUty-Levy of-Whether particular goods is  ’wool waste Primarily and essentially a question of fact- decision based   on  relevant  material  facts  and   correct   legal principle-Jurisdiction   of  Supreme Court in  appeals  from Customs, Excise and Gold (Control] Appellate Tribunal. %     Statutory  Interpretation: Customs/Central  Excise  Act- No/statutory definition provided in respect of an  Item-Trade understanding the safest guide.

HEADNOTE:     Respondent No. 1 imported consignments of wool  material and  claimed  that the imported goods were  wool  waste  and hence not liable to customs duty. The goods were examined by an Expert Committee, who appalled that the goods were  other than  wool  waste.  Based on the  Committee’s  opinion,  the Additional Collector or Customs, after notice, examined  the whole case, charged the respondent with the violation of the Import Control Regulations and held that the goods were  not wool  waste but processed woollen products other  than  wool tops/raw wool.     The Appellate Tribunal allowed the respondent’s appeal.     Dismissing the appeal it was,     HELD:  (1) When no statutory definition is  provided  in respect of an item in the Customs Act or the Central Excises Act.   the   trade  understanding,   meaning   thereby   the understanding  in  the opinion of those who  deal  with  the goods in question, is the safest guide. [374B]     Union  of India v. Delhi Cloth & General  Mills,  [I963] Supp  1  SCR 586; South Bihar Sugar Mills Ltd. v.  Union  of India, [1968] 3 SCR 21; Dunlop India Ltd. v. Union of India, [1976] 2 SCR 98; In re, Colgate Palmolive (India) Pvt. Ltd., [l979]  ELT  567; Commissioner of sales-tax,  U.P.  v.  S.N. Bros,  Kanpur, [1973] 2 SCR 852 and His Majesty The King  v. Planters  Nut and Chocolate Co. Ltd.  [1951] CLR  (Ex)  122,

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referred to.                                                   PG NO 370                                                   PG NO 371     [2]  The expression "wool waste" is not defined  in  the relevant Act or in the notification. This expression is  not an  expression  of art. It may be understood, as in  not  of financial  measures where the expressions are  not  defined, not  in a technical or on any preconceived basis but on  the basis  of trade understanding of those who deal  with  those goods. [376D-E]     [3]  Whether a particular item and the particular  goods in  this  case  are  wool wastes or  not  is  primarily  and essentially  a  question  of fact The  decision  on  such  a question  of  fact must be arrived at without  ignoring  the material and relevant facts and bearing in mind the  correct legal principles. Judge by these yardsticks, the finding  of the Tribunal in this case is unassailable. [376F]     {4)  If a fact-finding authority comes to  a  conclusion within the parameters, honestly and bona fide, the fact that another authority be it the Supreme Court or the High  Court may  have  a different perspective of that  question  is  no ground to interfere with that finding in an appeal from such a finding under Section l30E of the Act though in   relation to the rate of duty of customs or to the value of goods  for purposes   of  assessment,  the  amplitude  of   appeal   is unlimited. But because the jurisdiction is unlimited,  there is  inherent  limitation imposed in such  appeals.  [376G-H; 377B]

JUDGMENT:     CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.  1016-25 of 1988.     From  the  Judgment and Order dated 19. 1. 1987  of  the Customs  Excise and Gold (Control) Appellate  Tribunal,  New Delhi  in Appeal Nos. CD(SB) (T) 1776, 1777, 1797  to  1799, 1800, -1911, 2263, 2264 and 2265 of 1986-D in Order Nos.  68 to 77 of 1987-D.     Kuldip  Singh,  Additional  Solicitor  General,   Pramod Swarup and Mrs. Sushma Suri for the Appellant.     V  Lakshmi Kumaran, Madhava Rao, V.  Krishnamurthy,  K. Karanjawala,  Mrs. M. Karanjawala and Ms. Indu Malhotra  for the Respondents.     The Judgment of the Court was delivered by                                                   PG NO 372     SABYASACHI MUKHARJI, J. These appeals under section 130E of  the  Customs Act, 1962 (hereinafter  called  ’the  Act’) arise  from  the decision of the Customs,  Excise  and  Gold (Control) Appellate Tribunal, New Delhi [hereinafter  called ’CEGAT’). Section 130E(b) permits appeal to this Court  from any order of the said Tribunal relating, among other things, to the date mansion of any question having a relation to the rate  of  duty  of  customs or to the  value  of  goods  for purposes  of assessment. The appeals are at the instance  of the  revenue authorities, namely, the Collector of  Customs, Bombay. The respondent No. l/importer is a company of  small scale  sector  in Punjab and manufactures various  kinds  of yarns.  It is stated that on 19th May, 1984, the  respondent No.  1  imported  consignment of wool  materials  valued  at Rs.3,75,079 and claimed the benefits under Notification  No. 240/76-cus.  The  respondent  also  claimed  that  the  wool materials were wool waste, hence, the goods in question were not  liable  to  customs  duty. It is  stated  that  on  6th November,  1984, an Expert Committees, comprised  of  Deputy

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Chief  Chemist,  AssisTant Collector and  Senior  Scientific Officer  was  set  up for the examination of  the  goods  in question.  The Expert Committee,: after  examination  opined that  the wool goods were other than wool waste, hence,  the goods  were  liable  to duty of customs.  On  or  about  2nd January,  1985,  the  department  issued  a  notice  to  the respondents calling upon them to show cause as to why action under  section Ill(d) & {m) and section 112 of  the  Customs Act  and  section 3 of the import and Export  Central)  Act, 1942  should  not  be taken against  them.  The  respondents submitted the reply to the notice. The Additional  Collector of  Customs examined the whole case and adjudicated on  19th March,  1986  and  the respondents  were  charged  with  the violation of the import Control Regulations. The  Additional Collector  of  Customs held that the classification  of  the goods  should be under the heading 53.01/05 and  also  found the  import  to be unauthorised. Accordingly, the  goods  in question  were  confiscated  but  he  gave  option  to   the respondents  to redeem the goods on payment of Rs.90,000  as fine. The respondent No.  l/importer preferred an appeal  to the Appellate Tribunal, New Delhi, against the order of  the Assistant Collector. Bombay, and the Appellate Tribunal, New Delhi, after going through the provisions of the Act and the notification  allowed the appeal and set aside the order  of the Additional Collector on 19th January 1987.     The question involved in these appeals before the  CEGAT and  the  question  involved herein  in  these  appeals  is, whether  these goods are wool wastes and, as such,  entitled to   the   benefit   of  exemption   under   the   aforesaid notification.  As it is apparent from the Tribunal’s  order,                                                   PG NO 373 the  assessee  or the dealer contends that  these  are  wool wastes. The consignments were examined on percentage  basis. On  examination,  it was found, however,  that  these  items contained  long  length  of  slivers/tops  etc.  A  thorough examination of these consignments was, therefore, ordered to verify  the  actual description of the  goods.  A  technical panel  was  constituted for the purpose  consisting  of  the Deputy  Chief  Chemist, Bombay, as Chairman,  the  Assistant Collector of Customs and a Senior Scientific Officer of  the Office of the Textile Committee as the members. Based on the panel’s  findings,  show cause notices were  issued  to  the importers  that  the goods appeared to be  other  than  wool wastes,   there  were  long  lengths  of   slivers/tops   or deliberately broken tops which could be easily joined at the end  to prepare them ready for spinning. The importers  were charged with the violation of the Import Control Regulations and  asked to explain why action should not be  taken  under sections  111(d) and (m) of the Act. and also why the  goods should  not be charged to duty under heading 53.01  and  now 53.01/05(1) of the Customs Tariff Schedule read with Customs Notification No. 154-Cus dated 4th July, 1979 at the rate of 40% + auxiliary duty at 10% + additional duty of customs  at Rs.9.375  per  kg. under item No. 43 of the  Central  Excise Tariff  Schedule  read with the  relevant  notification.  As mentioned  hereinbefore: adjudication proceedings were  held by the Additional Collector of Customs. Bombay. In the  said adjudication  proceeding the members of the technical  panel were  cross-examined  by counsel. The  Additional  Collector held  that  the  goods were not  wool  waste  but  processed woollen  products  other than Wool tops/raw  wool  and  were classifiable under heading 53.01/05 [1]. In other words,  he found that since the goods were found to be not wool wastes, the  licenses  produced for wool waste were  not  acceptable and, therefore. the imports were unauthorised.  Accordingly,

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the  confiscation  of the goods were ordered but  option  to redeem  the  goods on payment of fine was  permitted.   This order  as mentioned hereinbefore was challenged  before  the CEGAT.     The Tribunal noted the history of the case and addressed itself  to  the points at issue. ’the  question  before  the Tribunal was whether the goods were wool waste or  processed woollen   products  other  than  wool  tops/raw  wool.   The revenue’s  case was that the goods could not be  treated  as wool  wastes. lt may be reiterated that the goads were  held to  be  not entitled to duty exemption  under  the  relevant customs  notificAtion in issue. The Tribunal went  into  the details  of  the  report of the export  panel.  That  report recognised  that  it  was not possible to  give  opinion  by visual  observations of the material and that there  was  no                                                   PG NO 374 specification  laid  down  for the same  by  the  I.S.I.  or International  Standard  Organisations. The  Tribunal  noted that  the question would have to be understood on the  basis of trade understanding.     We are of the opinion that when no statutory  definition is provided in respect of an item in the Customs Act or  the Central  Excises  Act,  the  trade  understanding,   meaning thereby  the understanding in the opinion of those who  deal with the goods in question is the safest guide. See Union of India  v. Delhi Cloth & General Mills, [ 1963] Suppl  1  SCR 586;  South Bihar Sugar Mills Ltd. etc. v. Union of lndia  & Ors.,  [1968} 3 SCR 21; Dunlop lndia Ltd. v. Union of  lndia and  Ors., [l976} 2 SCR 98; in re: Colgate Palmolive (India) Pvt.  Ltd., [l979} ELT 567; Commissioner of Sales-tax,  U.P. v.  M/s.  S.N. Bros, Kanpur, [1973} 2 SCR 852 and  also  the famous  observations of Justice Cameron in His  Majesty  The King v. Planters Nut and Chocolate Co. Ltd., {1951} CLR (Ex) 122.     Dealing with the transactions in question, the  Tribunal noted that the goods in the present case, had been  indented and  supplied as wool wastes. Attention of the Tribunal  was also   drawn  to  the  explanatory  notes  to  the   Customs Cooperative Counsel Nomenclature (for short C.C.C.N.)  which stated  at  page 738 that wool waste could be  of  different types arising at different stages on processing of wool  and in  spinning  of  wool,  that Iap  .and  silver  ends  could comprise  wool waste, that these could be carded  or  combed wool waste and that wool wastes might be used for  spinning. The  Tribunal noted that nowhere had it been laid down  that wool wastes comprising of pieces of sliver should not exceed 3 meters in length or that it should be packed in gunny bags and  not in machine pressed bales. Some reliance was  placed on a letter dated 5th July, 1981 from S.C.S. India Pvt. Ltd. to  Deluxe  Spinning  Agency, Bombay  that  lap  and  sliver (broken  pieces) could comprise wool waste. Wool tops  would have  lengths  ranging from 250 to 1166 meters. But  in  the peasant  case,  the material was about 4 meters  only.  Some reliance  was also placed on two letters to L.W.S. from  the Principal  Scientific Officer, Punjab Test House,  Ludhiana, regarding  the definition of wool tops and soft waste  which was  set  out  in  the order of  the  Tribunal.  It  is  not necessary for our present purpose to set out the  definition in extenso. But this definition of materials disproved  the revenue’s contention that pieces of sliver, as in this case, of 4 or 5 meters length were directly spinnable and were not wool wastes. There was cross-examination of the Deputy Chief Chemist  and that cross- examination also does  not  support the revenue’s case. lt is true that the Additional Collector of  Customs, Bombay by his order dated 19th March, 1986  had

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                                                 PG NO 375 rejected  the defence put forth by the dealer and held  that the  goods were not wool wastes but were "processed  woollen products   other   than  wool  tops/raw   wool"   and   were classifiable under heading 53.01/05(1) of the Customs Tariff Schedule.  But  the question is whether he was right  in  so doing.  It  appears that the goods varied in length  from  4 meters and above. It also appears that the goods were  found by  the  Committee to be cut pieces of  slivers  which  were parallely  laid, homogeneous and of even thickness and  that these were nothing but cut pieces of wool tops, which  could be   considered  to  have  arisen  during  the  process   of manufacture  of yarn from wool tops in order to  quality  as soft waste viz. small cut ends of wool tops/slivers. It  may be  relevant  in  this connection to refer  to  the  Board’s Tariff  Advice which suggested that wool wastes may  consist of  free fibres and clippings, cuttings etc. These  should˜d not  consist  of  long  lengths of yarn  or  of  rovings  or slivers.  The  Tribunal  was  of  the  view  that   rovings, slivers/tops  of  short  lengths  or  ends  alone  could  be considered as wool wastes. The wool contents of the  present disputed  consignments are more than 98% or completely  wool and  it is not mixed with any other wastes. The  lengths  of samples were not less than 3 meters but ranged between 3  to 30 meters or even more. lt was, therefore, urged that  these could not be treated appropriately as wool wastes.     The  Tribunal, however, noted that the experts  produced by the importers are said to have based their views on their experience,  no  literature or evidence  regarding  accepted trade  practice with regard to any technical literature  has been produced. The experts had no occasion to see the  goods in  dispute.  lt  appeared  before  the  Tribunal  when  the consignment  was  examined for the first time,  the  customs staff  reported that the goads could be considered  as  wool wastes.  The expert panel’s report was not  unanimous.  ’The report did not say that the subject goods were the result of deliberate cutting of slivers. lt said that the fibres  were of  varying,  different  lengths. But  the  majority  report considered that the goods were not wastes apparently on  the basis of the length of the fibres being above 3 meters.  The term  "wool waste" could cover slivers provided  these  were not  deliberately  cut and were not of uniform  length.  The evidence produced in support of the contention that  slivers upto,  and  even  more than ˜5 meters  in  length  could  be considered  as wastes was, without  justification,  ignored. The  Tribunal  noted all these. lt is clear that  the  goods comprised   fibres  of  uniform˜  length,  the   result   of deliberate  cutting.  That  was  the  basis  on  which   the Additional Collector proceeded but there was no evidence  to that effect. After taking ail these factors and  sub-mission into consideration, the Tribunal came to the conclusion that                                                   PG NO 376 these  are  classed as "wool waste". The propriety  and  the validity of this finding are under challenge.     Learned  Additional Solicitor General appearing for  the appellant  contended  that the Tribunal  has  ignored  vital material  and relevant factors. He submitted that  Technical Committee’s report about the expression wool waste",  CCCN’s observations and the Board’s Tariff Advice had been ignored. We are unable to accept this criticism advanced on behalf of the revenue.     The short question involved before the Tribunal and  the validity  of which is under challenge in these  appeals  is, whether  the goods in question are wool wastes or  not.   If these  are  then these are entitled to exemption  under  the

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relevant  notification  and if these are  not  wool  wastes, these are not entitled to exemption.     The  expression  "wool  wastes" is not  defined  in  the relevant Act or in the notification. This expression is  not an  expression of art.  It may be understood as in  most  of financial measures where the expression are not defined  not in a technical or any preconceived basis but on the basis of trade  understanding of those who deal with these  goods  as mentioned  hereinbefore.  The  Tribunal  proceeded  on  that basis.   The   Tribunal  has  not  ignored   the   Technical Committee’s  observations.  We  have  noted  in  brief   the Tribunal’s  handling  of  that  report.   The  tribunal  has neither  ignored  the observation of CCCN  nor  the  Board’s Tariff Advice. These observations have been examined in  the light  of the facts and circumstances of the case.   One  of the  basic factual disputes was long length of sliver  tops. Having regard to the long length, we find that the  Tribunal was  not  in  error.  Whether  a  particular  item  and  the particular goods in this case are wool wastes. should be  so considered or not is primarily and essentially a essentially a question of fact  The decision on such a question of  fact must  be  arrived  at  without  ignoring  the  material  and relevant  facts  and  bearing  in  mind  the  correct  legal principles.  Judged by these yardsticks the finding  of  the Tribunal in this case is unassailable.  We are, however,  of the  view  that  if  a fact finding  authority  comes  to  a conclusion  within  the above parameters honestly  and  bona fide,  the  fact that another authority be  it  the  Supreme Court or the High Court may have a different perspective  of that  question, in our opinion, is no ground  to,  interfere with  that finding in an appeal from such a finding. In  the new scheme of things, the Tribunals have been entrusted with the  authority and the jurisdiction to decide the  questions involving determination of the rate of duty of excise or  of the value of goods for purposes of assessment. An appeal has                                                   PG NO 377 been provided to this Court to over-see that the subordinate Tribunals  act within the law. Merely because  another  view might  be possible by a competent Court of law is no  ground for  interference  under section l30E of the Act  though  in relation  to the rate of duty of customs or to the value  ot goods for purposes of assessment, the amplitude of appeal is unlimited. But because the jurisdiction is unlimited,  there is inherent limitation imposed in such appeals. The Tribunal has not deviated from the path of correct principle and  has considered  all  the relevant factors. If the  Tribunal  has acted  bona  fide  with the natural justice  by  a  speaking order,  in  our opinion, even if superior Court  feels  that another view is possible, that is no ground for substitution of  that view in exercise of power under the clause  (b)  of section l30E of the Act.     In  the facts and in the circumstances, in our  opinion, the Tribunal has acted within jurisdiction. The Tribunal has taken  all relevant and material facts  into  consideration. The  Tribunal  has  not ignored any  relevant  and  material facts. The Tribunal has not applied any wrong principles  of law. Therefore, the decision of the Tribunal is unassailable even in the appeal before this Court.     In  the  premises,  the  appeals  preferred  herein  are rejected. No order as to costs. R.S.S.                                  Appeals dismissed.