COLLECTOR OF CUSTOMS, BOMBAYversusSWASTIC WOOLLEN (P) LTD. & ORS.

A                COLLECTOR OF CUSTOMS, BOMBAY
                                          v.
                 SWASTICWOOLLEN (P) LTD. & ORS.

                             AUGUST 10, 1988
B
     [SABYASACHI MUKHARJI AND S. RANGANATHAN, JJ.]

         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
c   Court in appeals from Customs, Excise and Gold (Control) Appellate
    Tribunal.

         Statutory Interpretation: Customs/Central Excise Act-No/statu-
  tory definition provided in respect of an Item-Trade understanding the
D safest guide.

         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
    opined that the goods were other than wool waste. Based on the Com-
E   mittee's opinion, the Additional Collector or Customs, &fter 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.
F
          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
  undel"Staodiog,~ meaoiog_thereby the understanding In the opinion of
G those who deal with the goods in question, is the safest guide. [374B]

        Union of India v. Delhi Cloth & General Mills, (1963] Supp l
  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., (1979] ELT 567; Commissioner of
H Sales-tax, U.P. v. M/s. S.N. Bros, Kanpur, [1973] 2 SCR 852 and His


                                      370
           COLLECTOR OF CUSTOMS v. SWASTIC WOOLLEN                     371

Majesty The King v. Planters Nut and Chocolate Co. Ltd., [1951) CLR           A
(Ex) 122, referred to.

      (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 he understood, as in most of financial measures where the expres-
sions are not defined, not in a technical or on any preconceived basis        B
but on the basis of trade understanding of those who deal with those
goods. [3760-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 he arrived at without      C
ignoring the material and relevant facts and bearing in mind the correct
legal principles. Judge by these yardsticks, the fmding 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 he        D
It the Supreme Court or the High Court may have a different perspec-
tive of that question is no ground to ini.erfere with that finding in an
appeal from such a finding under Section BOE of the Act though in
relation to the rate of duty of customs or to the value 11f goods for
purposes of assessment, the amplitude of appeal is unlimited. But
because the jurisdiction is unlimited, there is Inherent limitation           E
imposed in such appeals. [376G-H; 377B)

     CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
1016-25 of 1988.

     From the Judgment and Order dated 19.1.1987 of the Customs               F
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 Swamp
and Mrs. Sushma Suri for the Appellant.                                       G

     V. Lakshmi Kumaran, Madhava Rao, V. Krishnamurthy, R.
Karanjawala, Mrs. M. Karanjawala and· Ms. lndu Malhotra for the
Respondents.

      The Judgment of the Court was delivered by                              H
    372         SUPREME COURT REPORTS               (1988] Supp. 2 S.C.R.

          SABYASACHI MUKHARJI, J. These appeals under section
A
    BOE of the Customs Act, 1962 (hereinafter called 'the Act') arise
    from the decision. of the Customs, Excise and Gold (Control) Appel-
    late 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 determination 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. I/importer is a company of small scale sector in
    Punjab and manufactures various kinds of yams. It is stated that on
    19th May, 1984, the respondent No. 1 imported consignment of wool
C   materials valued at Rs.3,75,079 and claimed the benefits under Notifi-
    cation 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, !984, an
    Expert Committee, comprised of Deputy Chief Chemist, Assistant
    Collector and Senior Scientific Officer was set up for the examination
D   of the goods in question. The Expert Committe" 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 lll(d) & (m) and section
     112 of the Customs Act and section 3 of the Import and Export
E   (Central) Act, 1942 should not be taken against them. The respon-
    dents 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
F   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 ofRs.90,000 as fine. The
    respondent No. 1/importer preferred an appeal to the Appellate
    Tribucal, New Delhi, against the order of the Assistant Collector,
    Bombay, and the Appellate Tribunal, New Delhi, after going through
G   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
H under the aforesaid notification. As it is apparent from the Tribunal's
COLLECTOR OF CUSTOMS v. SWASTIC WOOLLEN IMUKHARJI, J.)                 373

order, the assessee or the dealer contends that these are wool wastes.
The -consignments were examined on percentage basis. On examina- A
tion, 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 B
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 Jong 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 c
action should not be taken under sections lll(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 D
per kg. under Item No. 43 of the Central Excise Tariff Schedule read
with the relevant notification. As mentioned hereinbefore adjudica-
tion proceedings were held by the Additional Collector of Customs,
Bombay. In the said adjudication proceedings the members of the
technical panel were cross-examined by counsel. The Additional Col-
lector held that the goods were not wool waste but processed woollen E
products other than wool tops/raw wool and were classifiable under
heading 53.01/05(1). In ot_her words, he found that since the goods
were found to be not wool wastes, the licences produced for wool
waste were not acceptable and, therefore, the imports were
unauthorised. Accordingly, the confiscation of the goods were ordered
but option to redeem the goods on payment of fine was permitted. F
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         G
1
 tops/raw wool. The revenue's case was that the goods could not be
  treated as wool wastes. It may be reiterated that the goods were held
 to be not.entitled to duty exemption under the relevant customs notifi-
 cation in issue. The Tribunal went into the details of the report of ihe
 export panel. That report recognised that it was not possible to give
 opinion by visual observations of the material and that there was no         H
    374         SUPREME COURT REPORTS               (1988] Supp. 2 S.C.R.

    specification laid down for the same by the LS.I. or International
A   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 pro-
    vided in respect of an item in the Customs Act or the Central Excises
B   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
    1SCR586; South Bihar Sugar Mills Ltd. etc. v. Union of India & Ors.,
    (1968] 3 SCR 21; Dunlop India Ltd. v. Union of India & Ors., [1976] 2
    SCR 98; in re: Colgate Palmolive (India) Pvt. Ltd., [1979] ELT 567;
    Commissioner of Sales-tax, U.P. v. Mis. S.N. Bros, Kanpur, (1973] 2
C   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
D that the goods in the present case, had been indented and supplied as
  wool wastes. Attention of the Tribunal was also drawn to the explana-
  tory 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 lap and silver ends could comprise wool waste,
E 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 Jetter
  dated 5th July, 1981 from S.C.S. India Pvt. Ltd. to Deluxe Spinning
p 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 present case, the material was ~bout 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
G 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. It is true that
H the Additional Collector of Customs, Bombay by his order dated 19th
COLLECTOR OF CUSTOMS v. SWASTIC WOOLLEN [MUKHARJI, J.[                  375

March, 1986 had rejected the defence put forth by the dealer and held
                                                                                A
that the goods were not wool wastes but were "Processed woo.lien
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         B
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 !hat wool wastes may consist of free fibres and clippings,
cuttings etc. These should not consist of long lengths of yarn or of            C
rovings or slivers. The Tribunal was of ihe 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          D
30 meters or even more. It 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       E
  any technical literature has been produced. The experts had no occa-
  sion to see the goods in dispute. It appeared before the Tribunal when
  the consignment was examined for the first time, the customs staff
  reported that the goods 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. It said   F
  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 15 meters in             G
  length could be considered as wastes was, without justification,
  ignored. The Tribunal noted all these. It is clear that the goods com-
  prised 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 all these factors and sub-
. missions into consideration, the Tribunal came to the conclusion that         H _
    376         SUPREME COURT REPORTS               [1988] Supp. 2 S.C.R.

    these are classed as "wool waste.,. The propriety and the validity of
A
    this finding are under challenge.

          Learned Additional Solicitor General appearing for the appel-
    lant contended that the Tribunal has ignored vital material and rele-
    vant factors. He submitted that Technical Committee"s report about
B   the expression .. wool waste .. , CCCN's observations and the Board's
    Tariff Advice had been ignorned. We are unable to accept this criti-
    cism 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
c   exemption under the 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
D may be understood as in most of financial measures where the expres-
  sion 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 Tri-
E bunal has neither ignored the observations 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 dis-
  putes 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
F considered 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. 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
G honestly and bona fide, the fact that another authority be it the
  Supreme Court or the High Court may h~ve a different perspective of
  that question, in our opinion, is no groul)d to interfere with that find-
  ing in an appeal from such a finding. Jn 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 lluty of
H excise or of the value of goods for purposes of assessment. An appeal
COLLECTOR OF CUSTOMS v. SWASTJC WOOLLEN [MUKHARJI, J.]               377

  has been provided to this Court to over-see: that the subordinate Tri'. ·. A
  bunals act within thdaw. Merely because another view might be possi-
  ble by a competent Court of law is no ground for inteiference under
  section 130E 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. The B
  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 BOE of the Act.                                                    c
      In the facts and in the circumstances, in our opinion, the Tri'
 bunal 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        D
 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.