K.G. Hegde, Member (J)

1. This appeal arises under the following circumstances. The Respondent M/s. K. Hargovindas Co. Exports Pvt. Ltd. imported 995 bags of Skim Milk Powder valued at Rs. 1,07,3147- c.i.f. and sought clearance against Licence No. 2796882 dated 11-8-77. The licence in question was an 'INITIAL LICENCE' issued to the manufacturing exporters for raw materials, components, consumer stores, in accordance with para 106(1) of Part C, Section 1 of Red Book, Volume 2 for 1977-78. The said licence was issued to build up stock. The licence did not indicate the export product. The Customs authorities objected for the clearance on the ground that as per paragraph 106(1) (C) the import is permissible only against exports of specified product but the goods imported, viz., skim milk powder was listed at serial No. 47 of the List at Annexure II to Part B of the Policy Book, Vol.11, A.M. 1978 and the licence produced was not valid against clearance of the goods in question. The respondent sent a reply inter alia contending that the interpretation placed by the Customs authorities was erroneous. The Collector of Customs, Bombay who held the enquiry did not accept the contentions of the respondent herein and he ordered confiscation of the imported goods but allowed redemption on payment of a fine of Rs. 1,50,000/-. He also imposed a personal penalty of Rs. 15,000/-.

2. It appears the respondent herein also imported another consignment of Spray skim milk powder which were also ordered to be confiscated. The redemption on payment of fine was allowed besides the Collector imposed a penalty of Rs. 10,000/-. Being aggrieved by the orders of the Collector, the Respondent herein preferred two appeal before the Central Board of Excise Customs. The Board combined the two appeals and by its Order bearing Nos. 999 and 1000 of 1980 dated 29-11-1980. The Board allowed both the appeals and set aside the orders of confiscation as well as the penalties imposed.

3. The Central Government in exercise of its powers vested in it Under Section 131(3) of the Customs Act (as it then stood) issue a show cause notice to the respondent herein stating among other things, that the Central Government was tentatively of the view the decision of the Board was not proper, legal and correct. It was further stated that the Board fell in error in applying the ratio the Supreme Court decision in MANU/SC/0323/1975 : AIR 1976 S.C. 2221-1978 ELT (J 457) (S.C.) to the facts of this case. It was also stated that the relevant policy applicable to the goods is A.M. 1978 the Schedule appended to the Imports and Exports (Control) Act, 1947 as amended upto 31-3-1978 has been designed on the basis of the First Schedule to the Customs Tariff Act, 1975 and the Brussels Tariff Nomenclature now known as "CCCN". In Appendix 57 of Volume I of the Policy A.M. 1978, it has been clearly provided that the revised ITC Schedule has been based on Brussels Tariff Nomenclature heading. In the same Appendix Brussels Tariff Nomenclature heading has been given which are in fact the revised heading of the ITC Schedule as well. Under Chapter 4 dairy product etc. are included. The product 'milk powder' falls under heading 04.0 in the Notes to the Chapter, it is provided that the expression "Milk" means full cream or skimmed milk, butter milk, whey, kefir, yoghourt and similar fermented milk. Accordingly, wherever the expression "milk" has been used in the Schedule in the Policy Book whether it is Volume I or Volume II it will have to be construed as defined in the notes to the Chapter. In other words, the expression "milk" becomes in generic term and all other species of milk would fall within its ambit. Obviously it appears that the skimmed milk powder would fall within the scope of milk powder as a generic-expression.

4. The Respondent, herein was called upon to show cause within thirty days of the receipt of the notice as to why the Board's order in appeal should not be set aside and Coll