I.J. Rao, Member (T)

1. This appeal is against the impugned order of the Collector by which he allowed the Respondents clearance of an imported consignment of 59 rolls of what was described the Respondents as "Cinematographic Colour Films (unexposed) positive". The Respondents filed a Bill of Entry containing the said description of the goods and claimed clearance of the same under OGL, Appendix 6, List 8, Part 1, Item 186(I) of AM 85-88 Policy. The Respondents also claimed concessional rate of customs duty under Notification No. 52/86 read with Notification No. 157/88-Cus. They also claimed the benefit of Exemption Notification No. 50/88-C.E. in respect of Additional Duty of Customs (CVD).

2. When the goods were examined, they were found to be colour films - Jumbo Rolls. It was, therefore, considered by the Customs that the goods were deliberately misdeclared as "Cinematographic colour film" as, if assessed as such and not as Jumbo Rolls, the Respondents would have paid duty of Rs. 16,19,842 instead of Rs. 68,09,504. The Customs also felt that there was an attempt to camouflage the nature of the goods and to hoodwink the Customs as the labels pasted on the rolls also declared the goods to be "Colour Cine Positive Film". Suspicion arose that the declarations etc. were done in a pre-planned manner and documents were prepared to fit in the description given in Notification No. 52/86-Cus. under which the amount of duty payable would have been much less.

3. Customs started proceedings and according to the impugned order, the Respondents waived show cause notice and requested for personal hearing. The Collector, in his order (para 2.1) records as follows :

"Right at the beginning the Advocate and his clients were informed that at their request Show Cause Notice has been waived but the prima facie charge against them was (1) mis-declaration of description in the Bills of Entry for the purpose of classification/availing of exemption; (2) eligibility of the product imported by them for the exemptions and rates of duty claimed in the Bills of Entry; and (3) the eligibility of the import of the consignment in question under O.G.L."

4. The appellants' claim for OGL based on SSI Registration Certificate was also before the Collector. The pleas of the appellants in this regard recorded by the Collector in para 2.2 of his order are as follows:

"Regarding the eligibility for import under OGL the Advocate produced a copy of SSI Registration Certificate issued by the District Industries Centre, Ghaziabad wherein reference is made to registration for 'Cinematographic Colour Films (Unexposed) Positive' as ready for production for conversion/cutting of Jumbo Rolls and '...the date of production for additional items dated 22-5-1986 at Sr. No. 2 is 23-12-1986 i.e. Cinematographic Colour Films (Unexposed) Positive'. It was, therefore, pleaded that it is clear that as envisaged in the Import Policy under definition of actual users (Industrial), they have necessary evidence to prove that they are actual users (Industrial) for the said product. It involves manufacturing process also. They also filed a copy of Bill of Entry of Delhi Custom House under which Cinematographic Colour Films (Unexposed) Positive (as per invoice attached) had been permitted to be cleared as back as 1987 under OGL. It was pleaded that this Bill of Entry covered an identical import at Delhi. Accordingly, it was pleaded that the Importer was eligible for clearance under OGL."

5. In the personal hearing, the Respondents argued before the Collector that Exemption Notification Nos. 52/86-Cus. and 50/88-C.E. were available to them on the basis of the practice of the Delhi Custom House with reference to identical goods. It appears from the Collector's order that the Respondents filed a copy of the L.4 Licence (Licence to manufacture goods liable to Central Excise duty) which referred, inter alia, to Cinematographic Colour Films (Unexposed) Positive under sub-heading 3702.20. The Respond