MANU/CC/0053/1988

Equivalent Citation: 1989(22)ECR67(Tri.-Chennai), 1989(42)ELT308(Tri - Chennai)

IN THE CUSTOMS, EXCISE AND GOLD (CONTROL) APPELLATE TRIBUNAL

SOUTH REGIONAL BENCH AT MADRAS
Order No. 606/88 in Appeal Nos. C/368 to 383, 385 to 396, 397 to 408 and 409 to
416/88 (MAS)
Decided On: 02.12.1988
Appellants: Sun Export Corporation
Vs.
Respondent: Collector of Customs
Hon'ble Judges/Coram:
S. Kalyanam (J) and K.S. Venkataramani (T), Members
Counsels:
For Appellant/Petitioner/Plaintiff: Shankar D. Nankani and Habibulla Badsha, Advs.
For Respondents/Defendant: K.K. Bhatia, SDR
Case Note:
Review - non-application of mind is not proved if there is proper narration
of facts in sanction for review. Order can be reviewed even if only the
operative part has been communicated. Procedural Technicalities: Appeal
admissible even if copy of order not enclosed with it. Review--any officer,
not necessarily the adjudicating officer, can be authorised to file review.
Customs Act, 1962: S. 129D(4). Redemption fine computed without basis
requires review. Valuation prices reported in recognised papers acceptable.
Orders of higher authorities (Cegat) binding on Appellate Collectors.
Classification--Almonds may be seeds, yet are consumer items (dry fruits).
Penalty levied for manipulation by design can be enhanced in review.
Facts: The appellants imported in shell almonds and sought clearance
thereof under REP Licence as 'seeds'. The Deputy Collector adjudicating the
matter held that the goods were dry fruits as known in the trade and being
consumer items of agricultural origin were not covered under the licence
produced. Goods were confiscated and fine @ 60% C.I.F. Imposed with no
penalty. The Collector appeals observed that the order of the lower
authority needed review as in view of the high margin of profit the fine
required enhancement and a penalty was required to be imposed for mis-
declaration. The order of the reviewing authority has been appealed against
inter alia on the plea that the latter failed to follow the prescribed
procedure for review and that there being no mala fide involved the penalty
was improper.
Held: Plea of non-application of mind not acceptable if the narration in the
order is by way of summation. "We found that the Collector had called for
and had examined the relevant files leading to the passing of the
adjudication order, and the Collector has observed that though in all these
cases the Deputy Collector had held that the import licences produced were

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 not valid for the goods, imported, he had omitted to consider the high
margin of profit enjoyed by the goods and had misdirected himself on the
basis of certain cash bills of goods not identical with the imported
consignments and ignoring published prices of comparable goods in dailies
like Economic Times, to fix a low redemption fine, which, in the Collector's
opinion, was an impropriety.....The Collector has in result directed the filing
of the appeal before Collector (Appeals) for enhancing redemption fine and
for imposing penalty. We find that the appeal filed before the Collector
(Appeals) is also only on the above points. Therefore there has been
undoubtedly application of mind by the Collector before he issued the
direction for review under Sec. 129D(2). The plea that order of the
Collector dt. 18.11.1987 itself speaks of only public interest and
government revenue as the basis, when considered in the above context,
has to fail as it then becomes clear that the narration in the order is by way
of a summation."
2. Review of an order admissible even if only the verbatim reproduction of
operational portion of the said order has been communicated to the
assessee. "The order of the Deputy Collector was very much in existence
and in exercise of the power of review, a statutory direction has been given
by the Collector for preferring an appeal before the competent authority
and the respondent had participated in the appeal proceedings after having
received the order of Adjudication and therefore, cannot claim to have
suffered any prejudice merely because the order of adjudication was not
made available to them as and when the same was being reviewed by the
Collector. The contention that the whole exercise had been on the basis of
the gist of Deputy Collector's order communicated, has to fail when it is
seen from the records that what has been communicated is a verbatim
reproduction of the operational portion of the Deputy Collector's order
though the Custom House chose to call it a gist."
3. Appeal maintainable even if not accompanied by copies of order-in-
appeal. It is a procedural formality. "It has further been argued that Rule 4
of Customs (Appeals) Rules clearly requires that the application to Collector
(Appeals) under Sec. 129D(2) should be accompanied by two copies of the
decision or order of the adjudicating authority which has not been complied
with. However, this is a procedural formality the non-compliance of which
should not be fatal to the appeal itself."
4. Review--Direction U/S. 129D(4) need not necessarily be to the
adjudicating officer. Any authorised officer of the Customs can be asked to
file application review. "A further contention has been that the direction
under Section 129D(2) by the Collector has to be to the adjudicating
authority who in this case is the Deputy Collector and no such direction has
been given. This in our opinion is too narrow a view and arises out of a
consideration of the provisions of Sec. 129D(2) in isolation. For, Sec.
129D(4) clearly lays down that an officer of Customs authorised in this
behalf by the Collector of Customs is also competent to file the application
before the Collector (Appeals). A harmonious construction of the provisions
of the two sub-sections 129D(2) and 129D(4) would indicate that in cases
where the adjudicating authority is for any reason unavailable for being
directed, it is reasonable to conclude that the directive can be fulfilled by

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 any Customs Officer authorised by the Collector although he may not be the
officer who had adjudicated the case."
5. Redemption fine, if computed without any basis, requires review."......it
is seen that the Collector while examining the records of the case leading
to the adjudication order as required under Section 129D(2) had found that
the Deputy Collector had considered and relied upon certain cash bills
which were not relevant in arriving at the margin of profit and had ignored
other sources, and the Collector has then validly referred to it in the
Department's appeal. Even otherwise if the adjudicating authority fixes a
redemption fine based on certain data and passes an order without
indicating any basis at all therefor, then, that itself could be a ground for
review. Further, when the clearance of a consignment of one and the same
importer is sought by splitting it up and filing several Bills of Entry, a probe
into the reason therefor would prima facie be called for in the light of
administrative instructions delimiting powers of adjudication."
6. Price data published in recognised commercial newspapers held more
acceptable than price-realisation by the assessee. "Another argument put
forth is that the price data in Economic Times should not have been relied
upon to arrive at the margin of profit and that the appellants have shown
with reference to their own transaction in Almonds that the margin of profit
would be only about 83%. As against this it is seen that publications like
Economic Times are recognised commercial newspapers and give reliable
data regarding commodity prices in important Markets in the country and in
this case the prices prevailing in Delhi, a major market far dry fruits,
published in Economic Times had been considered, rightly, in our view as
Madras is not a major market for dry fruits. As for the calculation of margin
of profit on the basis of their own realisation it is observed such calculation
may not be an acceptable basis as it is seen that while one set of
appellants have shown 83% profit, another group of appellants, Sun Export
Corporation, have shown loss for the same almonds."
7. Decisions of higher authorities are binding even on quasi-judicial
authorities. "We are also unable to agree with the further contention that
the Collector (Appeals) ought not to have relied upon the decision of SRB
CEGAT Order No. 196/88 dt. 21.4.1988 in the case of M/s. M.M. Exports,
because the case decided by the Tribunal is on all fours with the facts of
the appellant's case. Also that decision was available before the Collector
(Appeals) when he decided the present appeals and his reliance thereon is
in consonance with the principle that in a tier system decisions of higher
authorities are binding on lower authorities and quasi-judicial Tribunals are
also bound by this discipline."
8. Classification--Almonds, even though seeds capable of germination, are
dry fruits as known in trade parlance and hence consumer items. ".....it has
been urged that they were adopting the same arguments as in M.M. Exports
case and the Horticulturist Certificate obtained by the Custom House
confirmed that goods imported by them are only seeds capable of
germination and that their case should not be decided merely on the basis
of Chief Controller of Imports & Exports clarification. However, even
without considering the clarification of the Chief Controller of Imports &

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 Exports, it is seen that in commercial parlance almonds is considered as dry
fruits and traded as such and even under ITC 1985-88 policy in Chapter
XIII refers to almonds as dry fruits. It is also seen that in the same
Appendix 17 of ITC Policy against which the appellants hold licence, there
is a separate export products viz 'dry fruits' at G. 15 and against the export
of dry fruits the policy allows import only of packing materials and does not
allow import of seeds of dry fruits. As such the goods are consumer items
which is banned for import under Appendix 2 Part B of the Import Policy."
9. Penalty justified if the circumstances reveal irregularity due to design
rather than accident. "In this context the import of admittedly large
quantity of almonds into India where there is no large scale commercial
cultivation and where the goods as dry fruits enjoy high margin of profit,
and seeking clearance thereof against import licence for 'seeds' coupled
with the strategy adopted by the appellants (till now unexplained) of
splitting up the consignments of one and the same Importer, filing separate
Bills of Entry inviting adjudication at the hands of authorities lower than
the Collector having lesser powers of confiscation and for imposing penalty,
would all go to indicate that the import in this manner was more by design
than by accident. ...The lower authorities would in such a situation be
justified in imposing penalty on the importers."
10. Reviewing authority can not only enhance but also impose penalty if no
penalty has been imposed by the adjudicating authority. "We also do not
find any merit in the plea put forth that Sec. 128A(3) of the Customs Act
only empowers the Collector (Appeals) to enhance penalty, and not to
impose penalty where there was originally no penalty at all. This is because
of the wide amplitude of Sec. 128A(3) which empowers Collector (Appeals)
to "pass such order as he thinks fit confirming, modifying or annulling the
decision or order appealed against." and in such a context the plea put
forth has to be rejected as untenable."
ORDER
K.S. Venkataramani, Member (T)
1 . The above appeals arise out of a common appellate order dated 16-5-88 passed
by the Collector of Customs (Appeals), Madras whereby he had admitted the appeals
filed by the Department for enhancement of redemption fine on the consignment of
In shell almonds imported by the appellants herein and also for imposing penalty on
the appellants by modifying the order-in-original passed by the Deputy Collector of
Customs (Appraising) dated 9-11-81. The Deputy Collector in his order had levied a
fine in lieu of confiscation of 60% approximately of the c.i.f. value of the imported
goods and had not levied any penalty. The Collector (Appeals) found that this order
of the Deputy Collector needed modification as prayed for by the Department in their
appeals and enhanced the redemption fine to 200% of the c.i.f. value and also
imposed a personal penalty of Rs. 10,000/- under Section 112 of the Customs Act,
1962. The appeals filed against the Deputy Collector's order ordering confiscation of
the goods by the appellants herein were also heard together by the Collector
(Appeals) who rejected their appeals.
2. The facts in brief are that the appellants herein imported Inshell almond seeds and
sought clearance under REP licence issued against Export Product G.2(i)(a) of

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 Appendix 17 of Import Trade Control Policy in force at the relevant time. They
claimed that the goods as 'seeds' fall under the category of item indicated against S.
No. (d) of the said export product in the Policy. A sample of the consignment was
drawn and forwarded to the Horticulturist, Tamilnadu, for his opinion who opined
that the seeds are fit for germination and viable for sowing. As almonds are dry fruits
as known in the trade and are also consumer item of agricultural origin falling under
S. No. 121 of Appendix 2(b) of the ITC Policy, the Custom House issued a query
Memo, while processing the Bills of Entry filed for the clearance of the goods
pointing out the above objection and questioning the validity of the licence produced.
While maintaining in their reply to the query that the goods are only almond seeds
and not dry fruit, the appellants asked for the adjudication of the case without the
issue of a formal Show Cause Notice but on granting them personal hearing. The
Deputy Collector heard the appeals and held that the goods imported cannot be held
to be covered by the REP licence produced by the appellants, and treating the import
as unauthorised, ordered the confiscation of the consignment under Section 111(d)
of the Customs Act, 1962 levying a redemption fine amounting to 60% of the c.i.f.
value in each case. He did not impose any personal penalty on the appellants. The
Collector of Customs, Madras, meanwhile, exercising his powers of review under
Section 129-D(2) of the Customs Act called for the records of the proceedings before
the Deputy Collector and found that the Deputy Collector's order needed review, for
the reason that the Deputy Collector, while holding that the imports are not covered
by valid licence, had not taken into account the high margin of profit commanded by
almonds in the market while levying the redemption fine, and that he had based the
quantum of redemption fine on certain Cash Bills of retail sales relating to different
kinds of almonds. It was also found that the Deputy Collector's order was improper
inasmuch as he had refrained from imposing any personal penalty although,
according to the Custom House, there was sufficient grounds to hold that there had
been a deliberate attempt as mis-declaration by the appellants herein. On the basis of
this examination of the records by the Collector of Customs, a direction was given
under Section 129-D(4) of the Customs Act by the Collector to the Assistant Collector
of Customs (Group I) to file an appeal before the Collector (Appeals) for
determination about the legality and propriety of the Deputy Collector's order. The
Custom House also on 18-11-87 furnished to the appellants the gist of the
adjudication order dated 9-11-87 passed by the Deputy Collector and in the
communication the appellants were also told by the Custom House that the Collector
in exercise of his powers under Section 129-D(2) had directed the filing of an appeal
against the Deputy Collector's order before the Collector (Appeals). The grounds of
the Department's appeal was also enclosed to this communication. The appellants
were also given notice of the Department's appeal by the Collector (Appeals) in his
letter dated 28-11-87. The appellants also filed appeals on their own against the
Deputy Collector's order, after receipt of the copy thereof, questioning the
confiscation of the goods. They also put forth their objection to the Department's
appeal. The Collector (Appeals) on consideration of the appeals by the appellants as
well as by the Department, rejected the appellants appeals and held that a higher fine
in lieu of confiscation was leviable and fixed it at 200% of the c.i.f. value, and he
also gave a finding that a penalty was imposable in the facts and circumstances of
the case on the appellants, and imposed a penalty of Rs. 10,000/- on each of the
appellants under Section 112(a) of the Customs Act, 1962. It is against this order
that the present appeals have been filed.
3. Shri Nankani, the learned Counsel represented appellants Sun Export Corporation.
Shri Habibulla Badsha, the learned Counsel represented appellants A.K. Exports and
others. The case was argued by the learned Counsel Shri Habibulla Badsha while the

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 learned Counsel Shri Nankani submitted that he would adopt the same arguments for
the appellants represented by him. Shri Badsha contended that the appeal filed by the
Department before the Collector (Appeals) was not maintainable at all. He drew our
attention to the provisions of Section 129-D(2) of the Customs Act which lays down
that the Collector should call for and examine the records of any proceedings by a
lower adjudicating authority for satisfying himself about the legality or propriety of
the decision or order and the learned Counsel pointed out that in this case there was
no order before the Collector at the time when he gave the direction 'or review. The
gist of the order which was communicated to the appellants by the Collector cannot
form the basis of an appeal because for filing an appeal, the learned Counsel
submitted, the existence of a speaking order in writing is essential. Moreover the
requirement is further emphasised by the provisions of Rule 4 of the Customs
(Appeals) Rules, 1982 which inter alia requires that an application under Section
129-D(2) before Collector (Appeals) shall be accompanied by two copies of the
decision or order passe by the adjudicating authority. There was clearly no such
order except the gist thereof Further it should be against an order that has been
communicated to the appellants as per the procedure for such communication
contained in Section 153 of the Customs Act 1962. No such order was communicated
to the appellants before the departmental appeal was filed. In this context the learned
Counsel cited the decision in the case of Collector of Customs v. Metro Exporters Pvt.
Ltd. of the East Regional Bench of the Tribunal reported in MANU/CK/0013/1988 :
1988 (37) E.L.T. 610 where the Tribunal held that a file order which has lever been
communicated to the respondents in terms of the provisions of Section 152 of the
Customs Act, 1962 is not binding on the respondents in any way. The Tribunal in that
case followed the ratio of the Supreme Court in the case of Bachhitar Singh v. State
of Punjab reported in MANU/SC/0366/1962 : AIR 1963 (SC) 395. The learned
Counsel further urged that the order issued by the Collector dated 18-11-87 was also
not given to the appellants and became available to them only through the learned
S.D.R. during the hearing. Referring to that order the learned Counsel pointed out
that it is not in consonance with the provisions of Section 129-D(2) which requires
the Collector to direct the lower adjudicating authority to apply to the Collector
(Appeals) for determination of the points arising out of the decision or order under
review. The Collector's order in this case contains no such direction to the
adjudicating authority viz. the Deputy Collector and was, therefore, ab-initio void.
The learned Counsel further argued that another feature which shows that the
Collector's direction under Section 129-D(2) is defective is that in that direction the
points arising for determination out of the Deputy Collector's order have not at all
been specified which is again a requirement under Sec. 129-D(2), and instead the
Collector in the order is merely adopting the brief facts of the case and the grounds
of appeal which is an enclosure to the order signed by Assistant Collector. Therefore,
there has been no application of mind by the Collector for determining the issues
arising out of the Deputy Collector's order, and apart from this, the learned Counsel
urged that the appeal filed by the Department is not in accordance with Form C.A. 2
prescribed under the Customs (Appeals) Rules, 1982. For the above reasons, it was
contended that the appeal filed by the Department itself was not maintainable. The
appellants had taken the same ground before the Collector (Appeals) in response to
the notice to them about the Department's appeal, and there is no finding thereon by
the Collector (Appeals).
4 . As regards the points in the Department's appeal, the learned Counsel submitted
that the infirmity pointed out relating to the redemption fine that it was based on
certain cash bills relating to peeled almonds is a factor not contained in the Deputy
Collector's adjudication order at all. There is no reference in that order to Cash Bills

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 as the basis of the quantum of redemption fine. Shri Badsha further referred to and
relied upon Order No. 869/874/87 WRB of the CEGAT in the case of Vijayakumar &
Co. and Ors. v. C.C.E., Rajkot, to urge that the quantum of redemption fine fixed
under Section 125 of the Customs Act should not be made the ground for review. The
Tribunal held in that case since Section 125 itself confers discretion the order passed
by the adjudicating authority cannot be reviewed as improper unless there is ground
for attributing bad faith or mala fide, whereas in this case the very fact that the
Deputy Collector who adjudicated the case himself had doubts about the legality of
the import is reflected in his drawing samples from the consignment and obtaining
the expert opinion of the Horticulturist, and this factor could have weighed in his
mind for not imposing any penalty. Therefore no mala fides could be attributed and
hence the quantum of redemption fine and non-imposition of penalty cannot be said
to be an impropriety in the Deputy Collector's order. The learned Counsel further
urged that the West Regional Bench of the CEGAT had in the case reported in
MANU/CM/0032/1984 : 1985 (20) ELT 107 held that the application for review under
Section 129-D(4) has to be within the directions contained in Section 129-D(2) and
that subsequent event cannot be brought in, and the case reported in
MANU/CE/0314/1983 : 1984 (15) ELT 428 was also cited to emphasise that the
provisions regarding review under that Section are mandatory. The learned Counsel
urged that it is essential that procedure laid down for review should be followed
strictly in the manner prescribed or not at all, and it is important because it affects
the mandatory right of appeal of the appellants. As regards the order on their appeal
by the Collector (Appeals), the learned Counsel pointed out that the very issue had
come up before this Bench of the Tribunal in the case of MM Exports v. C.C.E.,
Madras, 1988 (18) E.C.R. 283 which was also relating to import of almonds inshell
being sought to be cleared against REP licence against the same commodity group G.
2 of Appendix 17 of ITC Policy 1985-88. The learned Counsel submitted that he
would adopt the same arguments here too and would contend that the goods
imported are seeds and not consumer goods. As regards the margin of profit on the
goods the learned Counsel contended that reliance placed on Economic Times is
erroneous as what appeared in that Newspaper was only a quotation whereas the
margin of profit for the consignment imported at Madras ought to have been made on
the basis of enquiries in the local market. Further, the quotation in the newspaper of
31-10-87 which have been taken by the Department are not relevant for the import at
Madras which took place earlier on 14-10-87. He further pointed out that he
understood that in an auction sale of the goods the Custom House itself could sell it
only for a much lower margin. The Collector's order also does not indicate how the
margin of profit adopted by that authority at 236% was worked out. According to the
appellants, the margin of profit on the basis of their own sales of the goods works
out to only 83% as per the worksheet submitted, and in this context levy of
redemption at 60% by the Deputy Collector cannot be said to be inadequate. Further
the Collector (Appeals) has in this case relied upon the clarification given by the
Chief Controller of Imports and Exports which was obtained by the Custom House.
This is a ground not at all adduced in the Department's appeal before the Collector
(Appeals). Therefore, it was erroneous on the part of the Collector to have relied
upon the clarification of the Chief Controller of Imports and Exports to the Custom
House. The learned Counsel further contended that the Collector (Appeals) ought not
to have relied upon and followed the decision of the South Regional Bench of the
CEGAT in its Order No. 196/88, dated 21-4-88 in the case of M.M. Exports v.
Collector of Customs, Madras, MANU/CC/0040/1988 : 1989 (39) E.L.T. 482 (Tri.).
Since the facts in that case is not comparable with the appellant's case, because in
that case decided by the Tribunal, the opinion of the Chief Controller of Imports and

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 Exports was available. No such opinion was there before the authorities in the
appellants case. The CEGAT decision is also under Reference Application before the
Hon'ble High Court of Madras. The Horticulturist's opinion was clearly in favour of the
appellants and in any case there is nothing to indicate mala fide, mis-declaration as
the Department itself had doubts about the coverage of the entry in the ITC Policy,
and as such, no penalty ought to have been imposed at all in this case. Therefore,
the learned Counsel concluded that in the first instance, the appeal filed by the
Department before the Collector (Appeals) was itself defective and therefore, not
maintainable and even on merits, no penalty was deserved and the quantum of
redemption fine was adequate.
5 . Shri Nankani, the learned Counsel appearing for the appellants Sun Export
Corporation, apart from adopting the arguments of the learned Counsel Shri
Habibulla Badsha, made a further submission that the provisions of Section 129-A(2)
provides for an appeal by the Collector against the order by Collector (Appeals) by
directing the Proper Officer to file an appeal at his discretion. The provisions of
Section 129-D(2) is different which requires the Collector to satisfy himself after
examining the records of an adjudication proceedings by a lower authority and then
directing the adjudicating authority to apply to the Collector (Appeals) for
determination of the points arising out of the order. The filing of the appeal then can
be by another officer authorised by the Collector under Section 129-D(4). Therefore,
these two Sections have, according to the Counsel, different object and have laid
down different procedures. The learned Counsel further urged that under Section
128-A(3) the Collector (Appeals) is empowered only for enhancing the penalty or
redemption fine-after giving reasonable opportunity to the party concerned. From
this, it follows, according to the learned Counsel, that where no penalty at all has
been imposed there will be no question of an enhancement of a penalty and
therefore, the Collector (Appeals) at appeal stage cannot impose penalty for the first
instance in exercise of powers under Section 128-A(3). The other point made by the
learned Counsel Shri Nankani, was with reference to the details of the sales of the
goods by his clients to point out that in the process, they had actually made no
profit, but suffered a loss.
6. Shri K.K. Bhatia, the learned S.D.R. appearing for the DC Department, contended
that it is well settled that an order passed under Section 47 of the Customs Act
relating to clearance of goods for home consumption and correspondingly under
Section 51 for export goods is a quasi-judiciary order which could be reviewed. He
further contended that the provisions of Section 129-D(2) has to be read with Section
129-D(4); the former Section is for an examination of the records by the Collector
during the review exercise and directing the adjudicating authority to file an appeal
before the Collector (Appeals), and the latter Section is the implementation of this
direction by the Collector which should be by an officer authorised by the Collector.
If it is insisted that only the very same adjudicating authority should file the appeal,
then it may be impossible to review certain adjudication orders on the retirement of
the adjudicating officer, or if he is not for other reasons available for being directed
in this regard. This would lead to a situation where the provisions would become
unworkable, and certainly then such an interpretation may not be in furtherance of
the provisions of the Act, and should be avoided. He further pointed out from his
record that it is incorrect to say that the Department had not filed the appeal as per
C.A. 2 form prescribed and produced the C.A 2 form of the appeal filed by the
Department. He further contended that if the appeal was in any way defective in the
format used, or for any other inadequacy or irregularity, it was for the Collector
(Appeals) to have pointed out to the Department who are the appellants before him,

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 and he has raised no such objection, and the defects pointed out by the appellants
are such as are remediable, and should not, therefore, be fatal to the appeal itself. As
for the contention that there was no order at all for review, the learned S D.R.
pointed out that Section 129-D(2) requires the Collector to call for and examine the
records of any proceedings in which a subordinate adjudicating authority had passed
any order and to satisfy himself as to the legality or propriety of such order.
Therefore, this Section envisages the Collector to call for and peruse the whole of the
records of the proceedings and not merely the order. On 9-11-87 the Deputy
Collector's order was very much on record although due to administrative reasons its
actual communication to the appellants was made subsequently. Since Collector had
this order before him and the records relating to the issue of that order, he has
applied his mind and given the direction for its review before the Collector (Appeals).
The Deputy Collector's order was already signed, and on record, and that authority
had, therefore, become functus officio and could not have changed the order by
itself. Again whatever communicated to the appellants on 18-11-87 was not actually
the gist of the order, but an extract of the operative portion of the Deputy Collector's
order dated 9-11-87. In this connection he referred to the Section 8 files containing
the Deputy Collector's order which was perused by the learned Counsels and by the
Bench. The learned S.D.R. further contended that in deciding the case, the Collector
(Appeals) has rightly relied upon CEGAT decision, which is quite appropriate in
hierarchical system of quasi-judicial Tribunals, and referred in this connection to the
Supreme Court's observation in the case of Jain Exports v. Union of India reported in
MANU/SC/0301/1988 : 1988 (3) SCC 579. The Supreme Court in that case observed
that in the hierarchical system of Courts, it is necessary for each lower tier including
the Court of Appeal to accept loyally the decisions of the higher tiers. The learned
S.D.R. further pointed out that in a previous case dealt with by the Tribunal in the
case of Rajnikanth Brothers the import was from the same suppliers as in the present
case, wherein the goods had been described as almonds inshell, whereas now for the
consignment from the same suppliers, the appellants are insisting that they are
almonds seeds. He also contended that the records clearly indicate that the Collector
had actually applied his mind to the proceedings before the Deputy Collector and had
simultaneously prepared the grounds for points for determination by the Collector
(Appeals). He produced before the Bench the records to show that the Collector had
examined the consignments covered by the Deputy Collector's order and had given
his observations therein, indicating the points on which the Custom House should
take up the matter before the Collector (Appeals). This was also perused by the
learned Counsels for the appellants. These records do show further that the
adjudicating authority viz. the Deputy Collector had before him, while adjudicating
the cases, the worksheet relating to the margin of profit at around 236%, and also
that the Deputy Collector had recorded his perusal and reliance on cash bills relating
to sale of almonds. As for the reliance placed on Economic Times for giving the
market price, the learned S.D.R. argued that it was a well recognised commercial
newspaper, and the price data given therein is reliable, and in any case the
appellants have themselves not put forth any data for determining the market value
in Madras except to giving details of their own transactions and the margin of profit
resulting therefrom. This by itself is unreliable, and as it is clearly seen that some of
the appellants are claiming 83% margin of profit, the other group is said to have
suffered loss by the sales. The reliance placed by the Collector (Appeals) on the
clarification of the Chief Controller of Imports and Exports (CCIE) was justified as
according to the Policy itself, CCIE is the final authority for interpretation in matters
relating to the Import-Export Policy and Procedures. The CCIE's clarification was
already contained in the CEGAT SRB decision followed by the Collector (Appeals).

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 Even without the CCIE's clarification the Collector (Appeals) had shown that by
commercial parlance the goods are known as dry fruits, and also the significant
absence of any large scale cultivation of almonds in India which is also a surrounding
circumstance. The learned S.D.R. also submitted that the ERB decision in Metro
Exporters case relied upon by the appellants was not on all fours with the present
case where there was a formal order passed by the Deputy Collector duly approved
by him on records and the full extract thereof had in fact been communicated to the
appellants. The further point made that the Collector (Appeals) has no power to
impose penalty for the first instance also is not valid as according to the learned
S.D.R. when the statute confers powers or the Collector (Appeals) for enhancing a
penalty, it logically follows that the power to impose it in the. first instance goes with
it.
7. We have carefully considered the submissions made by the learned Counsels and
the learned S.D.R. It has been urged on behalf of the appellants that the
departmental appeals before the Collector (Appeals) are themselves not maintainable
as the Collector had not complied with the provisions for exercising the power under
Section 129-D(2) in the manner laid down in that Section, and also that :here was
non-compliance with the procedure for filing the appeals as given in the Customs
(Appeals) Rules, 1982. Several arguments have been put forth in this respect. To
examine these contentions, we have perused the order dated 18-11-87 passed by the
Collector under Section 129-D(2) which clearly says that the Collector had called for
and examined the records of the adjudication proceedings leading to the Deputy
Collector's order as contained in the relevant adjudication files. The order specifies
the number of the adjudication file in each case. The Custom House records were
also looked into during the hearing along with learned Counsel to ascertain whether
the order of the Collector had been passed after application of mind by the Collector
himself as it has been argued that the Collector's order under Section 129-D(2) is
cryptic, based on criteria irrelevant for the purpose of Section 129-D(2), and also
because of the stipulation, in Section 129-D(2) itself that the Collector should call for
and examine the records o" the proceedings in which a subordinate adjudicating
authority has passed any decision or order for satisfying himself about the legality
and propriety thereof. We found that the Collector had called for and had examined
the relevant files leading to the passing of the adjudication order, and the Collector
has observed that though in all these cases the Deputy Collector had held that the
import licences produced were not valid for he goods imported, he had omitted to
consider the high margin of profit enjoyed by the goods and had misdirected himself
on the basis of certain cash bills of goods not identical with the imported
consignments and ignoring published prices of comparable goods in dailies like
Economic Tunes, to fix a low redemption fine, which, in the Collector's opinion, was
an impropriety. The Collector had further observed that the Deputy Collector ought to
have imposed penalty also as there had been deliberate attempt to mis-interpret ITC
Policy to import goods having a high margin of profit. He also found that the
consignment of a single importer had been split up to have the cases adjudicated by
lower authorities. The Collector has in result directed the filing of the appeal before
Collector (Appeals) for enhancing redemption fine and for imposing penalty. We find
that the appeal filed before the Collector (Appeals) is also only on the above points.
Therefore there has been undoubtedly application of mind by the Collector before he
issued the direction for review under Section 129-D(2) . The plea that order of the
Collector dated 13-11-87 itself speaks of only public interest and Government
revenue as the basis, when considered in the above context, has to fail as it then
becomes clear that the narration in the order is by way of a summation. It has further
been urged that at the time the Collector passed the order no order of the Deputy

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 Collector existed and none had been communicated and tendered to the appellants
and the Deputy Collector's order communicated did not have any reference to cash
bills at all for determining margin of profit and. redemption fine. However, we find
that it is evident from the copy of Deputy Collector's order that it had been passed on
9-11-87 and despatched on 11-12-87. Therefore when the Collector called for the
records under Section 129-D(2) and issued the direction on 18-11-87 under that
Section, there was in existence an order of adjudication already passed by the Deputy
Collector on record dated 9-11-87 which was despatched subsequently in December
1987. It is also noted that Section 129-D(2) also refers only that the Collector could
call for and examine the record of any proceedings in which a subordinate
adjudicating authority has passed any order. This position has also to be seen in the
context that so far as the affected party is concerned their right of appeal is
statutorily provided for only from the date of communication of the order to them,
whereas under Section 129-D what is provided is corrective machinery for checking
the legality and propriety of the orders passed by subordinate authority. The reliance
placed by the appellants in this context in the case of Metro Exports decided by the
Eastern Regional Bench of CEGAT is also not well-founded. The Supreme Court
decision in Bachhitar Singh case MANU/SC/0366/1962 : AIR 1963 SC 395 relied upon
by the Eastern Regional Bench in its order was one where the Supreme Court was
concerned with the scope of Article 166 of the Constitution of India in the context of
the order of the State Govt. in disciplinary proceedings. The Supreme Court held that
under the Constitution action against a Government servant found guilty of mis-
conduct is a judicial proceeding and under Article 166 of the Constitution any action
taken by the Council of Ministers would become action of the State Government only
when the order is expressed in the name of the Government as required by Article
166 Cl. (1) of the Constitution and communicated to the aggrieved party. It was held
that the Minister is no more than an adviser and that the Governor is to act with the
aid and advice of his Council of Ministers and therefore, until such advice is accepted,
by the Government whatever the Minister or the Council of Ministers may say in
regard to a particular matter, does not become the action of the State until the advice
of the Council of Ministers is accepted or deemed to be accepted by the Head of the
State. The Supreme Court held that it is possible that after expressing one opinion
about a particular matter at a particular stage a Minister of the Council of Ministers
may express quite a different opinion, one which may be completely opposed to the
earlier opinion. It was further held that in order that such opinion of the Ministers
may amount the decision of the Government it must be communicated to the person
concerned and until the order is communicated to the person affected by it, it would
be open to the Council of Ministers to consider the matter over and over again and
therefore, till such communication of the order by the State, the order cannot be
regarded as anything more than provisional in character. We do not find any
relevance at all to the ratio of the decision to the facts and circumstances of this
case. This is a case where the adjudicating authority viz. the Deputy Collector has
indisputably passed an order and review of the same under Section 129-D(2) of the
Act by the Collector does not depend upon communication of the same to the
respondent herein, The order of the Deputy Collector was very much in existence and
in exercise of the power of review, a statutory direction has been given by the
Collector for preferring an appeal before the competent authority and the respondent
had participated in the appeal proceedings after having received the Order of
Adjudication and therefore, cannot claim to have suffered any prejudice merely
because the order of adjudication was not made available to them as and when the
same was being reviewed by the Collector. The contention that the whole exercise
had been on the basis of the gist of Deputy Collector's order communicated, has to

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 fail when it is seen from the records that what has been communicated is a verbatim
reproduction of the operational portion of the Deputy Collector's order though the
Custom House chose to call it a gist. It has further been argued that Rule 4 of
Customs (Appeals) Rules clearly requires that the application to Collector (Appeals)
under Section 129-D(2) should be accompanied by two copies of the decision or
order of the adjudicating authority which has not been complied with. However this is
a procedural formality the non-compliance of which should not be fatal to the appeal
itself. For example, if an appeal were to be filed within statutory time limit with
grounds of appeal complete, but if the copy of the order were to be filed
subsequently but beyond the time limit for filing the appeal, could it be held for that
reason that the appeal itself is time-barred? Undoubtedly, it would be an irregularity,
but a remediable one, being but procedural. In the present case, the Collector
(Appeals) had decided the appeals only after appellants had also filed their appeals
against the Deputy Collector's order after obtaining copy thereof. In this context it
may also be relevant to observe that essentially an appeal is against the operative
portion of an order or decision, and in this case the appellants had been furnished
with it. A further contention has been that the direction under Section 129-D(2) by
the Collector has to be to the adjudicating authority who in this case is the Deputy
Collector and no such direction has been given. This in our opinion is too narrow a
view and arises out of a consideration of the provisions of Section 129-D(2) in
isolation. For, Section 129-D(4) clearly lays down that an officer of Customs
authorised in this behalf by the Collector of Customs is also competent to file the
application before the Collector (Appeals). A harmonious construction of the
provisions of the two Sub-sections 129-D(2) and 129-D(4) would indicate that in
cases where the adjudicating authority is for any reason unavailable for being
directed, it is reasonable to conclude that the directive can be fulfilled by any
Customs Officer authorised by the Collector although he may not be the officer who
had adjudicated the case. In this case the learned SDR informed us that the
adjudicating officer was not available at the time Collector passed the order under
Section 129-D(2) , being away on leave.
8. As regards the grounds in the Departmental appeal, it has been urged that reliance
has been placed on certain cash bills which are not referred to at all in the Deputy
Collector's order and that review cannot take place on fresh material. However, it is
seen that the Collector while examining the records of the case leading to the
adjudication order as required under Section 129-D(2) had found that the Deputy
Collector had considered and relied upon certain cash bills which were not relevant in
arriving at the margin of profit and had ignored other sources, and the Collector had
then validly referred to it in the Department's appeal. Even otherwise if the
adjudicating authority fixes a redemption fine based on certain data and passes an
order without indicating any basis at all therefor, then, that itself could be a ground
for review. Further, when the clearance of a consignment of one and the same
importer is sought by splitting it up and filing several Bills of Entry, a probe into the
reason therefore would prima facie be called for in the light of administrative
instructions delimiting powers of adjudication.
9. The order of the Collector (Appeals) has been assailed] on the ground that he has
placed reliance on the clarification given by the Chief Controller of Imports and
Exports which is not contained in the Department's appeal and which had not been
put to the appellants. However, even without reference to the CCIE's clarification the
Collector (Appeals) in his order has considered the fact that almond is a consumer
item as dry fruit covered by Appendix 2 Part B of the ITC Policy; that there is no
significant commercial cultivation thereof in India; that in commercial parlance it is

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 known as dry fruit and that there is a separate import policy for it as dry fruit.
Another argument put forth is that the price data in Economic Times should not have
been relied upon to arrive at the margin of profit and that the appellants have shown
with reference to their own transaction in almonds that the margin of profit would be
only about 83%. As against this it is seen that publications like Economic Times are
recognised commercial newspapers and give reliable data regarding commodity
prices in important markets in the country and in this case the prices prevailing in
Delhi, a major market for dry fruits, published in Economic Times had been
considered, rightly, in our view as Madras is not a major market for dry fruits. As for
the calculation of margin of profit on the basis of their own realisation it is observed
such calculation may not be an accepteable basis as it is seen that while one set of
appellants have shown 83% profit, another group of appellants, Sun Export
Corporation, have shown loss for the same almonds. We are also unable to agree
with the further contention that the Collector (Appeals) ought not to have relied upon
the decision of SRB CEGAT Order No. 196/88, dated 21-4-88 in the case of M.M.
Exports, because the case decided by the Tribunal is on all fours with the facts of the
appellant's case. Also that decision was available before the Collector (Appeals) when
he decided the present appeals and his reliance thereon is in consonance with the
principle that in a tier system decisions of higher authorities are binding on lower
authorities and quasi-judicial Tribunals are also bound by this discipline. The Hon'ble
Supreme Court had emphasised this principle in the case of Jain Export v. Union of
India - MANU/SC/0301/1988 : (1988) 3 SCC 579, as follows:
"In Cassell and Co. v. Broome, the Lord Chancellor delivering the opinion of
the House observed : ...I hope it will never be necessary to say so again,
that, in the hierarchical system of courts which exists in this country, it is
necessary for each lower tier, including the Court of Appeal, to accept loyally
the decisions of the higher tiers.
This Court in Kaushalya Devi Bogra v. Land Acquisition Officer has clearly
approved this position. There is abundance of authority that quasi-judicial
tribunals too are bound by this rule."
1 0 . As regards the merits of the appellants, it has been urged that they were
adopting the same arguments as in M.M. Exports case and the Horticulturist
Certificate obtained by the Custom House confirmed that goods imported by them are
only seeds capable of germination and that their case should not be decided merely
on the basis of Chief Controller of Imports and Exports clarification. However, even
without considering the clarification of the Chief Controller of Imports and Exports, it
is seen that in commercial parlance almonds is considered as dry fruits and traded as
such and even under ITC 1985-88 Policy in Chapter XIII refers to almonds as dry
fruits. It is also seen that in the same Appendix 17 of ITC Policy, against which the
appellants hold licence, there is a separate export product viz. 'dry fruits' at G.15 and
against the export of dry fruits the policy allows import only of packing materials and
does not allow import of seeds of dry fruits. As such, the goods are consumer items
which is banned for import under Appendix 2 Part B of the Import Policy. In the M.M.
Exports decision of the SRB, CEGAT, there is a reference to the appellants admitting
the goods to be consumer goods during the adjudication proceedings. In this context
therefore, the clarification of the Chief Controller of Imports and Exports would only
lends reassurance to the conclusion reached, and in such a context the Horticulturist
certificate would be of no avail to the appellants. In this context the import of
admittedly large quantity of almonds into India, where there is no large scale
commercial cultivation and where the goods as dry fruits, enjoy high margin of

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 profit, and seeking clearance thereof against import licence for 'seeds', coupled with
the strategy adopted by the appellants (till now unexplained) of splitting up the
consignments of one and the same importer, filing separate Bills of Entry inviting
adjudication at the hands of authorities lower than the Collector having lesser powers
of confiscation and for imposing penalty, would all go to indicate that the import in
this manner was more by design than by accident. It would be relevant to observe in
this context that in a previous case dealt with by the Tribunal in the case of
Rajnikanth Brothers, the import was from the same suppliers as in the present case
and the same suppliers had described the goods as "almonds inshell" whereas for the
same goods by the same suppliers, the appellants contend that they are almonds
seeds. The lower authorities would in such a situation be justified in imposing
penalty on the importers. We also do not find any merit in the plea put forth that
Section 128-A(3) of the Customs Act only empowers the Collector (Appeals) to
enhance penalty, and not to impose penalty where there was originally no penalty at
all. This is because of the wide amplitude of Section 128-A(3) which empowers
Collector (Appeals) to "pass such order as he thinks fit confirming, modifying or
annulling the decision or order appealed against", and in such a context the plea put
forth has to be rejected as untenable.
In the result, we see no reason to interfere with the order passed by the Collector
(Appeals) and appeals are therefore rejected.

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