AKBAR BADRUDIN JIWANI vs. COLLECTOR OF CUSTOMS, BOMBAY

CIVIL APPEAL No. 3655/1989Supreme Court[1990] 1 S.C.R. 36914 February 1990Bench: 2 JudgesAuthor: B.C. RAY, S. RATNAVEL PANDIAN33 pages
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What were the facts?

The appellant imported calcareous stone, asserting it was not marble, and obtained a geologist's certificate to this effect. The goods were imported under the Open General Licence (OGL). The Customs Department, based on some test reports and visual observations, issued a show cause notice alleging the imported stone was marble, thus requiring a specific import license as per Entry 62, Appendix 2, Part B of the Import & Export Policy (April 1988-March 1991). The Collector of Customs ordered confiscation of the goods and imposed a fine and penalty. The Customs, Excise and Gold (Control) Appellate Tribunal dismissed the appellant's appeal but reduced the penalty. The Supreme Court is hearing the appeal against the Tribunal's order.

What did the Supreme Court hold?

The Supreme Court held that the imported calcareous stone slabs were not 'marble' in the scientific and technical sense. The Court reasoned that calcareous stone in the ITC Schedule, described with a specific gravity of 2.5 or more, must be interpreted in its scientific and technical sense. The general principle of interpreting tariff entries by commercial nomenclature can be departed from when the statutory context requires it, especially when applying the commercial meaning would render other items in the entry redundant. The Court found that the end-use of the product is irrelevant for classification. Considering all reports and the context, the imported goods were covered by OGL. Consequently, confiscation under Section 111(d) of the Customs Act, 1962, and the option to clear goods on payment of fine under Section 125 were unwarranted. The penalty under Section 112 was also not sustainable. Even if the goods were considered marble, the imposition of a heavy fine was not justifiable given the appellant's bona fide belief, as found by the Appellate Tribunal, and the requirement of mens rea for imposing penalties. The Court allowed the appeal, set aside the Tribunal's order, and directed the release of the goods and the personal bond.

What were the issues?

1. Whether the imported calcareous stone should be classified as 'marble' under Entry 62, Appendix 2, Part B of the Import & Export Policy (April 1988-March 1991), or as 'other calcareous stone' under Tariff Entry 25.15 of Schedule I, Appendix 1-B of the Customs Tariff Amendment Act, 1985, requiring interpretation in a technical/scientific sense or commercial parlance. Assessee's arguments: The term 'marble' in the tariff entry should be interpreted in its statutory context, distinguishing it from other calcareous stones listed. The commercial nomenclature doctrine should be departed from when the statutory context requires it, and the term should be understood in a technical/scientific sense, as the tariff entry refers to specific gravity. Applying commercial meaning would render other items in the entry otiose. Revenue's arguments: The word 'marble' has not been defined in the Tariff Act, so the test of commercial and trade parlance should be applied. It is not a scientific or technical word. Marble is the genus, and other listed stones with a specific gravity of 2.5 are commercially known as marble. The end-use of the product should be considered.

Which sections of the Income-tax Act were involved?

Section 111(d),Section 112,Section 125

AI-generated summary — verify with the full judgment below

AKBAR BADRUDIN JIWANI A v. COLLECTOR OF CUSTOMS, BOMBAY FEBRUARY 14, 1990. [B.C. RAY AND S. RATNAVEL PANDIAN, JJ.] B Customs Act, 1962: Sections lll(d), 112 and 125-Calcareous stone imported by appellant-Whether 'marble' under Import & Export Policy April 1988-March 1991 Entry 62, Appendix 2, Part B- Whether can be confiscated on that ground-Whether option to clear goods for home consumption on payment of fine valid: the term .'mar- C ble' to be interpreted in a manner which is in consonance with the statutory context and not as u.•derstood in commercial parlance.

The appellant on behalf of his firm, which is engaged in proces- sing of stone slabs, placed an order for calcareous stone (other than marble) with the exporter in Italy, and asked the exporter to certify that D the said goods were not marble. The appellant further obtained from the foreign exporter a sample tile and had the same tested by a reputed geologist who confirmed that the sample was not marble. The goods were imported under OGL Appendix 6, Item I of Import and Export Policy for April 1988-March 1991. E The Customs Department sent sealed samples of the imported goods for testing to various t

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