TARUN CHATTERJEE, J.
(1) THE Court :. Navneet Spinning Mills of Amritsar imported certain rags from. H. B. Textiles, Modern Business Park, Mytholurody Hebdex Bridge, West Yorkshire, U. K. who are suppliers of mutilated woollen rags. If the goods are mutilated woollen rags then they are permissible to be imported as free importable foods and do not figure in the negative list nor it is hit by Paragraph 156 of Import Export Policy, 1992-97. The aforesaid. H. B. Textiles shipped the consignment in 56 bales of total weight 24078 kg. as per Bill of Lading dated 25th September, 1995. The aforesaid goods were discharged at Calcutta Port in the first week of November, 1995.
(2) ACCORDING to the writ petitioner , although the writ petitioners were entitled to keep the goods in a bonded warehouse without any payment they had to pay such charges to the Calcutta Port Trust Authorities. This order of warehousing the goods was passed in the middle of January, 1996 and according to the writ petitioners a sum of Rs. 1,05,759 was deposited by them on 17th January, 1996. It is not in dispute that over and above the same, the writ petitioners had also paid a sum of Rs. 1,63,033 towards demurrage charges to Calcutta Port Trust Authorities and a further sum of Rs. 1,09,304/- to the steamer towards container charges for destuffing the goods in question. It is also not in dispute that since then the subject goods have not yet been released by the Customs Authorities. On 8th of June, 1996 the writ petitioner made a prayer before the Commissioner of Customs, Calcutta and others for taking steps to release the goods in terms of an order passed by the CEGAT which was delivered by it in the case of Hardik Industrial Corporation v. Collector of Customs, Bombay, reported in and also in terms of the judgment of the Hon'ble Supreme Court of India in the case of Union of Indian and Ors. v. Shine Woollen Mill (P) Ltd. delivered on 23rd of May, 1991 in Special Leave petition (C) No. 9939-40 of 1990. In this writ application, the writ petitioners have come to this Court inter alia for a direction upon the respondents to release the subject goods on mutilation by mutilating them for not more than 4 pieces. Alteratively, it has been prayed in the writ application that the respondent No. 2 be directed to act in accordance with the decision of the Tribunal in the case of Hardik Industrial Corporation v. Collector of Customs, Bombay (supra).
(3) BEFORE I proceed further it appears that on 8th of June, 1996 a prayer had been made by the writ petitioners to mutilate the subject goods and then to release the goods in terms of the directions made in the case of Hardik Industrial Corporation v. Collector of Customs, Bombay (supra). This application is at page 32 of this writ application. It is not in dispute that such a prayer has not yet been considered and disposed of in accordance with law by the Customs Authority.
(4) MR. Das appearing for the Customs Authority submits that the question of mutilation on the prayer of the writ petitioners cannot arise at all before the Authorities are permitted to inspect the goods in question. In support of this contention Mr. Das has drawn my attention to certain standing orders of the Central Government from which it would be evident that if a prayer is only made by the importers to hold an inspection in respect of the goods imported only then the question of inspection by Authorities shall arise. Since in this case Mr. Das adds that no such prayer has yet been made and no inspection could be held by the authorities, the question of release of the subject goods shall not arise, nor inspection can be made by them independently to open the goods without any prayer of the writ petitioners. In this connection Mr. Das mainly relied on a decision of the Gujarat High Court reported in. Mr. Das, therefore, on reliance of this judgment, contended that since the goods in that case were brought on mutilated form but further mutilation was required to be done, the Division Bench of the Gujarat High Court permitted release of goods on further mutilation, Mr. Das relied on the word 'further mutilation' and submits that as in this case it is not known to the Authorities as to whether the goods have been sent on mutilation or not, question of release on mutilation of the goods in question cannot arise at all. Therefore, according to Mr. Das, Equity committee has been termed on the basis of the standing order passed by the Central Government and such committee shall inspect the subject goods and after submitting a report by them to the Authorities as to whether the goods were sent on mutilation or not and if it is found that the goods have been sent on mutilation the question of further mutilation shall arise only thereafter. I have considered this submission of Mr. Das. In my view, this decision of the Gujarat High Court supports the writ petitioners. In the said judgment it has been observed as follows :
"we have carefully considered the rival points of view and we are of the opinion that the procedure followed by the Bombay Authorities in just and equitable and in keeping with a spirit of Section 24 of the Customs Act. Under the import policy import of woollen rags and synthetic rags is permissible under an Open General Licence when the rags are incompletely pre-mutilated condition. Question then is which consignment of such rags is said to be completely pre-mutilated for import purpose. The principal Collector of Customs, Bombay issued guidelines in this behalf by a notice, dated 13th December, 1985 whereby he stipulated the extent of mutilation required for import of such rags. By a subsequent amendment dated 14th February, 1986 he modified the requirements set out in paragraph 4 (a) of the Public Notice. New paragraph 4 of the Public Notes concerns cutting garments manually and provides that costs, frocks and other body garments should be cut in six pieces. By the subsequent amendment it is provided that if the cutting results in four pieces the garments will be accepted as properly pre-mutilated provided they are rendered totally unserviceable. It is presumably for this reason that the Bombay High Court is permitting clearance of garments by interim order if they are cut in four pieces. That seems to be in keeping with the amendment of the public notice. We are, therefore, of the opinion that if a garment is cut into four pieces so as to render it totally unserviceable it would suffice to bring it within the notice of completely mutilated garments. Whether the garments are rendered wholly unserviceable would depend on the manner in which cuts are effected. This would have to depend on the judgment or satisfaction of the Customs Officer on the spot. "
From the aforesaid observations of the Gujarat High Court can I not draw an inspiration to say that consideration for releasing the goods on mutilated form would really depend on the question that the goods have become unserviceable, if the goods are made unserviceable on mutilation, in my view, the goods can be released also on the basis of the principle laid down in the decision of the Gujarat High Court. There is another aspect of the matter. This particular question was also raised in the decision of Hardik Industrial Corporation v. Collector of Customs Bombay - of the Tribunal in which one of the Member of the Tribunal was a retired Chief Justice of a High Court. In dealing with the provisions of Section 24 of the Customs Act it was observed as follows :"section 24 enables Central Government to make rules for permitting at the request of the owner, the denaturing or mutilation of imported goods which are ordinarily used for more than one purpose so as to render them unfit for one or more of such purposes. It declares that any goods so denature or mutilated shall be chargeable to duty at such rate as would be applicable if the goods had been imported in the denatured or mutilated form. It is brought to our attention that the Central Government has not made rules. The statutory purpose is to ensure that where the goods have been imported for more than one purpose, they are rendered unfit for use of one or more of the purposes. In other words, while goods imported can be used as scrap or as serviceable material, it should be open to the assessee who contends that the import was only for use as scrap to seek mutilation so that it can be used to seek mutilation so that it can be used only as scrap and not as serviceable material. We take notice of the prevalent practice available in the department of permitting the mutilation of serviceable garments which are claimed to have been imported as rags. The Tribunal has also permitted such mutilation in the case of metal sheets where the dispute was whether there were mutilation in the case of metal sheets where the dispute as that they were imported as scrap or for use as serviceable materials. "
(5) FROM the aforesaid observation of the Tribunal which is also, in my view, in line with the observation of the Gujarat High Court, is indicated above. It is therefore, clear that the main consideration, while dealing with the problem for release of goods on mutilation under Section 24 of the Customs Act is to consider whether the particular goods after cutting into pieces still remain as a serviceable material. If it remains as a serviceable material the question of releasing the goods under Section 24 of the Act that is to say the goods are no longer serviceable in nature cannot arise at all. If the Customs Authorities are satisfied that the goods are after mutilation have become unserviceable material in nature, there cannot be any difficulty for the Customs Authority to release the goods in terms of the order passed by the Tribunal in the case of Hardik Industrial Corporation v. Collector of Customs, Bombay reported in. As noted herein earlier a prayer has already been made before the Customs Authorities to mutilate the service goods into four pieces and/or to act in terms of the order and thereafter release the goods in terms of the directions made in the said decision. It appears that the said prayer has not yet been considered or disposed by the Authorities in accordance with law. Therefore, I am of the view that a direction should be made to the Commissioner of Customs Calcutta, before whom the prayer for mutilation of service goods has been made by the writ petitioners to consider and dispose of the said application for mutilation in accordance with law and in the light of the observations made hereinabove. I however, make it clear that although I have made certain observations relating to the merits for grant of such prayer to the writ petitioners on the question of release of goods on mutilation still then it will b
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e open to the Customs Authority to consider the said prayer for release of the goods on mutilation in accordance with law after hearing the parties and after passing a reasoned order. (6) ACCORDINGLY, I dispose of this writ application with the following directions :- (7) THE Commissioner of Calcutta Customs is directed to dispose of the application filed by the writ petitioners for release of the goods on mutilation within a month from the date of communication of this order after giving hearing to the writ petitioners and after passing a reasoned order in accordance with law. At the time of hearing of this application the Commissioner shall consider the decision of the Tribunal which is binding on him in the case of Hardik Industrial Corporation v. Collector of Customs, Bombay (supra) and also the decisions referred to by me in this judgment. The Supreme Court in the judgment referred to in this judgment has also made it clear that the goods imported as mutilated goods can be released on mutilation after cutting them into 4 or 5 pieces. The Commissioner of Customs is also directed to consider such prayer also in the light of the observations made hereinabove.