Judgment

SHAH, C.J.I. :- These six appeals arise out of orders passed by the Central Government in a group of revision applications against the orders passed by the Collector of Customs, Bombay, and confirmed by the Central Board of Excise and Customs subject to certain modifications.

2. The appellant is a private limited company which carries on the business of manufacturing drums and barrels. For its manufacturing programme the appellant obtained in June, l962 two licences for importing steel sheets. Under the first licence the appellant was authorised to import "Mild Steel Item - 18G Black Plain Sheets Drum Quality for manufacturing drums and containers," subject to the terms and conditions detailed in the annexures thereto. The total C. I. F. value of the licence was Rs. 40,00,000/-. The second licence was for "Steel Drum Sheets for Lubricating Oil Packing" of the total C. I. F. value of Rs. 50.30.000/-.

3. The appellant placed orders for import of steel sheets with a firm of manufacturers in the United States of America. The goods under the two licences reached the Bombay Port in twelve separate consignments. On arrival of the consignments, the appellant filed Bills of Entry for consumption of the goods. The Chief Customs Appraiser at Bombay did not allow clearance of the goods for the following reasons recorded by him:

(a) That under the Import Licence the appellants were entitled to import only prime quality sheets and no other sheets,

(b) that the quality of the sheets Imported by the appellants appeared to be industrial scrap (sheet cuttings)

(c) that the sizes of the Steel Sheets appeared to be odd and not regular; and

(d) that the value of the invoices was not according to the prevailing prices for steel sheets in prime quality.

To avoid liability for heavy demurrage the appellant Company applied for and obtained an order for clearance of the goods lying in dock. A show cause notice was issued by the Collector of Customs requiring the appellant to show cause why the sheets imported be not forfeited. The appellant Company represented that it was engaged in the manufacture of drums and containers of various sizes and that although the sizes of steel sheets appeared to be odd, these were suitable for its manufacturing purposes. The Company also pleaded that the sizes of sheets imported were not Industrial Scrap (sheet cutting) in terms of the definition of Industrial Scrap in the Iron and Steel Controller s Circular No. SIB/l/67/AS/60 dated July 15, 1963, and that in any event the licence did not lay down any definite quality of steel sheets to be imported.

4. The Collector rejected the representation made by the appellants. In his view the licence issued in the case was for "Prime Quality" sheets and the term "Prime Quality meant that the sheets were of standard sizes and lengths, with uniform dimensions and without surface defects, but in the sheets imported there was "a percentage of defective sheets with clipped edges, surface grooves, sheering imperfections, etc. and the bulk of the sheets were of varying, sizes and dimensions". On that account the sheets were not of "Prime quality" that the explanation of the Company was not satisfactory, and since the importers had no valid licence for importing the sheets actually imported, the importation was in contravention of the Import Control Order No. 17/55 of December 7, 1955 issued under Section 3 of the Imports and Exports (Control) Act, 1947, and punishable under Section 112 of the Customs Act. 1962. The Collector on that view passed an order imposing penalties for different amounts in respect of each of the consignments. The Company preferred appeals to the Central Board of Excise and Customs against the order passed by the Collector imposing penalties for importing twelve consignments. The Board held that only those sheets could be imported against the licences which fulfilled two conditions - (1) the sheets were suitable {or manufacturing drums and (2) they were of "pri