Per Shri T.P. Nambiar :

This appeal is directed against the orders passed by the adjudicating authority in terms of which he confiscated 50,088.18 metres of the fabrics allowing the appellant to redeem the same on payment of a redemption fine of Rs. 2.00 lacs. He ordered release of 1,16,800 metres of the said fabrics valued at Rs. 28,03,200 to the appellant on payment of appropriate duties of customs and a penalty of Rs. 20 lacs was imposed on the appellant u/s 112 of the Customs Act.

2. In this case, the facts are that M/s. Praga Tools Ltd. (PTL), a state govt. undertaking imported 100% polyester fabrics through Hyderabad and clearances of the said fabrics was sought by them with the benefits of notification no. 159/90-Cus. dated 30.3.90. During the course of the investigation with respect to licensing angle and the valuation angle, it was found out that a commercial quantity of 50,088.18 was imported by the above said firm. It is this quantity which was confiscated in the impugned order and the confiscability of the same quantity is not seriously contested before us. Only the quantum of redemption fine of Rs. 2.00 lacs and the penalty of Rs. 20 lacs is challenged before us. The appellant who is a supporting manufacturer has sought the benefit of notification no. 159/90 as well as notification no. 204/92 dated 19.5.92. The lower authorities have treated the appellant as the importer.

3. The learned authorised representative contended before us that the licence was accepted by the adjudicating officer and he held that the import is covered by the licence which is granted in this case. He also pointed out that the declared value of the goods in question was also accepted by the lower authority. He further pointed out that M/s. PTL and M/s. KK Harjani & Co. (KKH) against whom also show cause notice was issued was exonerated. He pointed out that in this case the adjudicating authority has dealt with the case in para 38.7.2 and the relevant observations of the adjudicating authority is read before us.

4. He pointed out that what was imported was 100% polyester fabrics. The licence also mentions 100% polyester fabrics. It was also pointed out that under the DEEC scheme the goods have already been exported and the replenishment is sought for these imported goods. In this connection, he drew our attention to the fact that the adjudicating authority erred in holding that it is unnecessary to examine whether the goods in question are suitable or capable of being used in the ladies dresses worn by the womenfolk abroad. He stated that the observations of the adjudicating authority that even if it is so, the appellant is not entitled for the benefit is not correct. He further pointed out that the only basis in the show cause notice is that the goods imported with 100% polyester are not at all suitable for ladies dresses. On the other hand, they are in the nature of suitings of much heavier weight and sturdier construction. It is further supported by the trade panel/panchanama drawn on 18.11.92. He drew our attention to these allegations as mentioned in para 31 of the show cause notice. Therefore, he stated that according to the adjudicating officer if these are all relevant consideration then there is no basis for the impugned order. Even otherwise, he stated that there was a trade panelist and its observation which is mentioned in the panchanama dated 18.11.92. The appellant sought for the cross-examination of all these persons who signed the panchanama. But only one Sri M. Venkateswara Rao was produced for the cross-examination of the appellant. In fact, Sri Venkateswara Rao in his cross-examination has stated as follows :-

"100% polyester fabrics were being used in the manufacturing of coats, skirts and ladies dresses etc. and he had agreed that 100% wool was thicker than 100% polyester fabrics. He had also agreed that 100% woollen fabrics were being used as dress materials in the western countries."

He, therefore, stated that the only