S.L. Peeran, Member (J)

1. In this appeal, the appellants have sought for setting aside the order-in-original No. 25-C/86 dated 5-11-1986 passed by the Collector of Customs, New Delhi, by which, the Collector of Customs had confiscated the impugned goods Sufeed Sarah (Poppy Seeds - Khaskhas) under Section 111(d) of the Customs Act, 1962 (hereinafter referred to as Act) imposition of Rs. 2.5 lakhs of Redemption fine and Rs. 10,000/- personal penalty under Section 112 of the Act.

2. The facts of the case as set out in the order-in-original are that the appellants filed Bill of Entry No. 1168 dated 29-9-1986 for the clearance of Sufeed Sarah (Poppy Seeds - Khaskhas) of declared value of Rs. 1,23,615/- CIF covered under Invoice No. 6/62/E/SCL/86-87 dated 21-8-1986 of M/s. Saeed & Co., Lahore. The appellants claimed the clearance of the goods under import under O.G.L. Appendix 6(1) of AM 85-88 Policy. The Customs covered the impugned goods under Entry No. 121 of Appendix 2 Part B of AM 85-88 Policy and for the clearance of which sought specific licence/CCP.

3. The Collector of Customs relied upon the letter No. 50/1/84-85/PC dated 25-6-1986 issued by C.C.I. & E., New Delhi, by which they had clarified that the khaskhas is a consumer item of agricultural origin and such import is not allowed in terms of SI. No. 121 of Appendix 2 Part B of Import & Export Policy AM 85-88.

4. The appellants submitted before the Collector of Customs that they were actual users having Drug licence for the manufacture of Ayurvedic medicines in which the imported goods Khaskhas was used and hence claimed clearance under O.G.L. They have further submitted that they had obtained no objection on the Bill of Entry from the Ministry of Health, New Delhi. The item is not specifically mentioned anywhere in Appendices No. 2, 3 Part A, 5 & 8, hence import allowed vide Appendix 6, Sl.No. 1 (OGL for A.U.). It is not a consumer item and does not satisfy needs without further processing. They had imported previously and the same was released on 6-8-1986. They did not have any mala fide intention or mens rea. There was no public notice to restrict or ban this item so they could not know that this item is not allowed to actual users industrial.

5. The Collector of Customs rejected the plea of the appellants that the imported goods were not consumer item and held that the goods fell within Entry No. 121 Appendix 2 Part B and the same having been imported without Import licence, hence being liable for confiscation under Section 111(d) and for penalty under Section, 112 of the Act. He further observed in his order that the goods had been brought from a country where it is an illicit cultivation. India being the world's largest producer of opium and poppy seeds and in view of the matter, the Collector observed that he did not find it necessary to take a lenient view and hence passed the impugned order.

6. Shri A.R. Madhav Rao, Advocate for the appellants, submitted that the goods were not cultivated illicitly as the export had been done through Pakistan Trading Corporation a Government unit. He further submitted that the imported goods poppy seeds were in crude form and it was required by importer-appellant for use in the manufacture of Ayurvedic drugs and hence it was entitled for being cleared under OGL as it was not a Consumer item. He also referred to two other orders Nos. 44/86 and 45/86 dated 28-10-1986 passed by the Collector of Customs, New Delhi in which for import of the same product of same quantity, penalty had not been imposed but only redemption fine of Rs. 15,000/- had been imposed.

7. Shri R.M. Ramchandani, Departmental Representative for the Department in his reply submitted that the imported item being a crude drug, had not been listed in appendix 6 of ITC Policy. It was freely available in India and consumer goods of agricultural origin, hence required import licence. The importer had also shown the invoice as crude drug as it did not correlate to the ITC P