S.L. Peeran, Member (J)

1. The appellants are importers of woollen rags. They had imported 50 bales containing 18,988 Kgs. of woollen rags per s.s.v/Bhakti valued at Rs. 1,25,168 CIF for bill of entry No. 500/80. The importers claimed clearance of the imported goods under OGL. The Customs House did not consider the goods to be falling under OGL for the following reasons-

(i) The goods had been declared as woollen rags. On examination of the goods, it was found that 60% of this consignment is synthetic rags and balance 40% as woollen rags. The department contended that the effective rate of duty on synthetic rags is 80% as against 20% on woollen rags. Hence, the importers were charged for misdeclaration of description of goods and held the same to be confiscable under Section 111(m) of the Customs Act, 1962;

(ii) The rags were not in completely pre-mutilated condition as required under para 37 in Appendix 6 AM/85-88 Policy. It was alleged by the department that the goods were cut into two pieces which could be economically restitched and hence, the goods could not be treated as pre-mutilated goods. Therefore, these goods were held to be liable for confiscation under Section 111(d) of Customs Act, 1962 for ITC violation;

(iii) The department also alleged that the goods had been imported in contravention of the provisions of Sub-section (1) of Section 3 of the Imports & Exports (Control) Act, 1947 read with Clause 3 of the Imports (Control) Order, 1955. They were also charged for contravention of Section 11 of the Customs Act, 1962.

2. The importers had contended before the customs authorities that only a portion of the consignment is synthetic rags and not 100% synthetic rags. They had further contended that the goods had not been properly mutilated as their supplier was not aware of the mutilation requirement. They requested the Customs authorities for clearing the goods after mutilation of goods.

3. The Deputy Collector of Customs, after adjudication, held that 60% of the goods were synthetic rags as against the declared description. She has further held that mis-declaration had not been detected, then it would have caused considerable loss to the Revenue and therefore, she had held that the goods had been imported in violation of ITC Policy as they had not been properly pre-mutilated. On these two grounds, she passed an order of confiscation under Section 111(d) and (m) of Customs Act, 1962. However, the importers were given an option on payment of redemption fine of Rs. 22,000/- under Section 125 of the Customs Act. The importers went in appeal before the Collector (Appeals) who did not consider their appeal.

4. I have heard Shri Hari Om Arora, learned Advocate for the appellants and Shri Rakesh Bhatia, learned SDR for the Revenue. Shri Arora submitted that the importer had filed a revised bill of entry declaring the correct percentage of synthetic woollen being 60% and balance 40% as woollen rags. This revised bill of entry was accepted by the Customs house and, therefore, the question of misdeclaration does not arise once the bill of entry is accepted under Section 46 of the Customs Act. He relied on Sub-section (5) of Section 46 of the Customs Act and submitted that once the proper officer is satisfied that the interest of Revenue are not affected and that there was no fraudulent intention, the proper officer may permit substitution of bill of entry for home consumption for a bill of entry for warehousing or vice-versa. Shri Arora pointing to this Sub-section (5) of Section 46 of the Customs Act, submitted that the proper officer had accepted the revised bill of entry and it implies that there was no fraudulent intention on the part of the importers in submitting the earlier bill of entry showing synthetic woollen containing 100%. He submitted that the importer was not aware regarding the percentage of the content of the woollen rags as the invoice had not disclosed about the same. As the proper officer after scrutiny