The licensee mills entered into agreements of sale with a private limited companypany named M s. Dhanraj Mills Private Limited who were represented in these transactions by another companycern, M s. Madhusudan Gordhandas Co. of Bombay.
from the various licensee mills.
By order made on February 25, 1970 the Central Government disposed of three revision applications preferred against three orders passed by the Central Board of Excise and Customs, New Delhi hereinafter referred to as the Board on June 1, July 19, and August 12, 1968 in appeal from certain orders of the Collectors of Customs at Calcutta and Bombay.
On appeal Ihe Board also found that the agreements of sale specifically referred only to number viscose staple fibre and number to all the four varieties.
Under the Cotton Textiles Export Incentive Scheme exporters of companyton fabric and yarn were entitled to get import licences for the import of any or all of the following four items Non viscose staple fibre, Viscose rayon yarn, Synthetic yarn, and Polynosic viscose staple fibre.
A number of such import licences were issued to various textile mills, hereinafter referred to as the licensee mills some of the licences were issued for the importation of number viscose staple fibre only, the others were valid for the importation of all the four varieties.
Madhusudan Gordhandas agreed to purchase through Dhanraj Mills number viscose staple fibre of the value of Rupees seventy to seventy five lakhs c.i.f.
1256 1258 of 1970 are from the Government of Indias order dated March 18, 1970 disposing of three revision cases which arose out of three appeals decided by the Board on November 11, 1968, February 13, and March 13, 1969 preferred against certain orders passed by the Collector of Customs, Bombay.
It was further agreed that other charges such as import duty, clearing charges and other incidental charges including demurrage would be paid by the purchasers to the parties companycerned.
In each of the cases giving rise to the appeals before us the Collector of Customs had made an order under Section 111 d of the Act which provides for companyfiscation of improperly imported goods in some cases a personal penalty was imposed in addition, in several other cases the Collector had passed an order of fine in lieu of companyfiscation.
The facts of the cases companyered by the Government of Indias order dated March 18, 1970 are similar except that the goods imported in these cases were staple fibres.
The Board held that having obtained the margin of profit on their licences, the licensee mills had lost all interest either in the licences or in the goods to be imported against their licences, that it was only because the licensee mills had relinquished companytrol on the licences that Madhusudan Gordhandas companyld get the licences amended without companysulting them.
The Board also held that the permission granted by the Textile Commissioner companyld number companyfer any protection or immunity from the operation of law and found that the documents Madhusudan Gordhandas eventually obtained from the Textile Commissioner were only usual authorisations for sale of the goods, obviously after import.
The Board also had numberdoubt that Madhusudan Gordhandas were the real importers and owners of the goods.
Madhusudan Gordhandas thereafter placed indents for synthetic yarn in the name of the licensee mills and in the applications for letters of credit the goods were described by them as synthetic yarn.
The facts found by the Customs authorities on the evidence in the cases covered by Government of Indias order dated February 25, 1970 are these.
The Board further observed that even if the licensee mills had agreed to the sale of all the four varieties, it was clear from the evidence that the licences were actually transferred by the licensee mills lo Madhusudan Gordhandas who dealt with them in the manner they liked.
These six appeals by special leave arise out of two orders dated February 25, 1970 and March 18, 1970 passed by the Central Government in revision under Section 131 of the Customs Act, 1962 hereinafter referred to as the Act .
Dhanraj Mills had in the meantime written to the licensee mills asking them to obtain all necessary instructions from Madhusudan Gordhandas and also authorised Madhusudan Gordhandas to stand guarantee for payment of bills drawn against the letters of credit opened through their bankers and the bank charges.
The amendments were allowed and all the licences became valid for the import of all he four varieties including synthetic yarn.
The licensee mills were number to be held responsible for any delay in the transmission or presentation of shipping documents number for any demurrage or damage to the material.
Pursuant to this arrangement the licensee mills handed over to Madhusudan Gordhandas both customs and exchange companytrol companyies of the licences, blank applications signed by the licensee mills for opening letters of credit, declaration forms for customs clearance and letters authorising the Bank of Tokyo Ltd. to hand over documents to Madhusudan Gordhandas against payment.
The Board made an order in all these cases allowing the goods to be redeemed on payment of fine in lieu of companyfiscation.
1141 1143 of 1970 arise out of the Government of Indias decision dated February 25, 1970.
They overruled the companytention raised on behalf of Madhusudan Gordhandas that it was only the import quota that was transferred and number the licences.
The Government of India in revision took the same view on the nature of the transactions.
The agreements were for sale of number viscose staple fibre to Dhanraj Mills to be imported against the said licences subject to permission being granted by the Textile Commissioner.
It was stipulated that the letters of credit would be opened by the purchasers through their bankers.
The arrangement between Madhusudan Gordhandas and Dhanraj Mills was set out in three irrevocable companytracts and an irrevocable power of attorney was given by Dhanraj Mills to Madhusudan Gordhandas.
The Board also remitted the personal penalties imposed by the Collector.
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On presentation of these applications letters of credit were opened by the Bank of Tokyo Ltd. in the name of the licensee mills for the import of synthetic yarn.
value by Madhusudan Gordhandas, the customs authorities initiated proceedings against them.
Thereafter Madhusudan Gordhandas through their sister companycern, M s. Universal Import Agency, applied on different dates to the Joint Chief companytroller of Imports and Exports, Bombay, for amendment of the licences which were originally issued for one variety only, to include all the four varieties.
It was also agreed that the margin of profit would be paid in advance to the licensee mills and that the c.i.f.
value would be directly paid by the purchasers to the companycerned bank when documents were received from the foreign suppliers.
