ON Civil Appeal No 3655 of 1989
From the Judgment and Order dated 1481989 of the Customs Excise and Gold Control Appellate Tribunal West Regional Bench Bombay in Appeal No CDBOMA
No 322 of 1989 in Order No 704 of 1989
Anil B Diwan section Ganesh RK Krishnamurthy SR Narain and Sandeep Narain for the Appellant
374 AK Ganguli B Parthasarthy K Swami and P Parmesh waran for the Respondent
The Judgment of the Court was delivered by RAY J
This appeal under Section 130 Eb of the Cus toms Act 1962 is directed against the judgment and order dated August 14 1989 passed by the Customs Excise  Gold Control Appellate Tribunal
Bombay in CDBom A No 322 of 1989
The most vital question that comes up for consideration in this appeal is whether marble as mentioned in Tariff Item No 2515 in Appendix 1 B Schedule I to the Import Con trol Order 1955 mentioning Marble travertine ecaussine and other calcareous monumental or building stone of an apparent specific gravity of 25 or more and Alabaster whether or not roughly trimmed or merely cut by sawing or otherwise into blocks or slabs of a rectangular including square shape is genus within which a11 other kinds of calcareous stones are included or whether marble is a dis tinct or different item which is one of the restricted item in the List of Restricted Items described in Appendix 2 Part B of Import and Export Policy for April 1988 March 1991
The matrix of the case is that the Appellant has been carrying on business as sole proprietor under the name and style of Ms Interior Manufacturers at A 12 Yuwan Apart ments 413414 Mount Mary Road Bandra Bombay which is a small scale industry engaged in processing of stone slabs
In the course of his manufacturing activity the Appellant utilises and requires as raw material polishable calcareous stones viz marble travertine ecaussine alabaster and other calcareous stones
All these different types of stones are hard and capable of taking polish
Marble is distin guished from other calcareous rocks by the fact that it is a metamorphic rock formed from recrystallization of lime stones and has a visibly crystallined nature
In order to import calcareous stones covered by the Open General Licence and with a view to ensuring that the same was not marble the Appellant took the following precautions 1 The appellant referred to the Indian Standards Specifi cation for Marble viz
IS 1130 1969 which defines marble as follows 375 Para 02 Marbles are metamorphic rocks capable of taking polish formed from the re crystallization of limestones or dolomit ic limestones and are distinguised from limestone by even visibly crystallined nature and non flaggy stratification
Para 07 of the said Specification provides that The Sectional Committee responsible for the preparation of this standard has taken into consideration the views of producers consumers and technologists and has related the standard to the manufacturing and trade practices followed in the country in this field
 2 The Appellant obtained from the foreign exporters a sample tile of Botticino  the calcareous rock proposed to be imported and had the same tested by a reputed Geologist Dr SF Sethna who tested the sample and by his report dated October 13 1988 confirmed that the same was not marble
His letter dated October 14 1988 explains now the sample tested was limestone different from marble
The sample tile tested and attested by Dr Sethna was submitted to the Customs Department vide their letter dated February 20 1989
3 The appellant then referred to an Italian Book MARHI ITALTA wherein the index evidenced the fact that Botticino  varieties were covered under polishable calcareous rocks  and not under true marbles re crystallised calcareous rocks
4 The appellant specifically placed an order for calcare ous stones other than marble and asked the Exporter to certify that the said goods were not marble
The exporter Elle Marmi of Italy by a certificate dated December 6 1988 certified that all the goods were calcareous stone slabs other than marble
5 The appellant also obtained the certificate dated Decem ber 6 1988 from one Gianni C Baigini a Surveyor regis tered with the Chamber of Commerce Carrara and a Specialist for stones
Gianni C Baigini after checking the said con signment loaded in the containers for import by the Appel lant in Italy certified that the slabs loaded in Container Nos
LMCU 0513158 0500823 05 15 192 05 15206 were calcareous stones other than marble since the same were not re crystallised calcareous rocks
376 The appellant alter taking the aforesaid precautions placed an order with Elle Marmi of Italy for import of 312050 sq
of slabs of calcareous stones having a thickness of 2 cms
at a price of Italian Lira 42256000 ie Rs493000 approximateIy
The said Elle Marmi issued an invoice dated December 2 1988 for the said purpose
The goods arrived in Bombay by the vessel Orient Tri umph  on or about 19th January 1989
The appellant filed a Bill of Entry No 007569 dated 191
1989 for clearance of the goods for home consumption
The goods were declared as slabs of calcareous stones other than marble and were imported under OGL Appendix 6 Item 1 of Import and Export Policy for April 1988 March 1991
The goods were inspected by the Assistant Collector Docks who observed as follows These goods under import do not appear to be marble or granite and are not polished they are roughly squared and are having smooth edges on all four sides but are having smooth edges on 2 or 3 sides due to sawing
 The sample of the goods was sent by the Assistant Collector Docks to the Assistant Collector of Customs Group I
The Assistant Collector of Customs Group I issued a query memo dated February 6 1989 on the alleged basis that calcareous stones are nothing but marble only  and therefore governed by Entry 62 Appendix 2 Part B of Import and Export Policy for March 1988 to April 1991
The query was allegedly based upon explanatory notes contained in the Harmonised Commodi ty Description and Coding System HSN evolved by the International Customs Cooperation Council
The appellant set out the correct position and informed the Department by several letters dated 7th February 1989 13th February 1989 16th February 1989 and 20th February 1989 that the said goods could not be regarded as marble  in terms of the expression marble  appearing in heading 2515 in Schedule I Appendix I B Customs Tariff Amendment Act 1985
The appellant also requested for release of part of the goods pending the technical test of the sample from imported goods
Pending the technical test report by a letter dated February 17 1989 the appellant was permitted to clear 50 of the goods upon the appellant submitted 100 ITC bond for the whole backed by a bank 377 guarantee
The balance 50 of the imported consignment was detained
The appellant accordingly cleared 50 of the imported consignment
The appellant however paid import duty on the full consignment
The Assistant Collector of Customs Group 1 sent the sealed samples of the imported goods for testing to the Deputy Director General Petrology Department Geological Survey of India Central Region Nagpur
The sealed cover containing the samples was sent through the appellant s representative
The appellant also by a letter dated Febru ary 25 1989 sent a sample of the same consignment for testing to the Geological Survey of India
The appellant addressed further letters dated March 7 1989 March 8 1989 to the Customs Department
By a letter dated March 13 1989 the appellant forwarded to the Customs Department a sealed envelope containing a test report given by the Geological Survey of India Nagpur on the sample of tile imported goods
The appellant on March 17 1989 received a letter dated March 13 1989 from the Geological Survey of India enclosing the test report on the sample of the imported goods submit ted by the appellant to the Geological Survey of India
This test report categorically stated that the sample was allo chemic Pelmicritic limestone
It cannot be termed as a marble
 It is pertinent to mention that the Geological Survey of India had tested two samples from the materials imported by the appellant one sample forwarded by the Customs Department and the other by the appellant
The report of the Geological Survey of India on the sample forwarded by the Customs Department was set out earlier and sent in a sealed cover to the Customs Department
The Customs Department however did not release the goods inspite of the categorical report of the Geological Survey of India and instead issued a show cause notice dated March 17 1989
The Customs Department inter alia relied upon the opinion based on visual observation received from the Indian Bureau of Mines Government of India Udaipur and test reports based on technical test received from the Director of Mines  Geology Department Udaipur and Geologi cal Survey of India Nagpur
The test report received by the respondent from the Geological Survey of India Nagpur was kept back and not disclosed to the appellant
None of the three reportsopinions were disclosed to the appellant at the time of issue of show cause notice
On the basis of these reportsopinions it was alleged in the show cause 378 notice that the imported goods were marble allegedly as per the commercial definition of marble enunciated in the show cause notice
The Department threatened to confiscate the goods and initiate the penal action against the appellant pursuant to Section 112 of the 
The appellant by a letter dated March 20 1989 called upon the Customs De partment to set aside the show cause notice
The Collector of Customs New Customs House Ballard Estate Bombay passed an order that the goods imported are marble and thus require a specific import licence
He also held that these goods are liable for classification as marble and the import of these goods under OGL is not admis sible and therefore in exercise of the powers conferred under Section 111d of the  the Collector of Customs ordered the confiscation of the imported goods and further ordered that the Bond be enforced towards a fine of Rs493199 imposed on the said goods in lieu of confis cation
The Assistant Collector of Customs was directed to enforce the said Bond and the Bank Guarantee for realisation of this amount of fine
However the importer was given option to clear the said goods for home consumption on payment of fine of Rs500000 in lieu of confiscation under Section 125 of the  the option to be exercised within 60 days from the date of receipt of the said order
He further held that since the importer contra vened the provisions of section 111d of the read with Section 3 of the Import and Export Control Act 1947 rendering the said goods for confiscation the importer is liable for penal action under provisions of Section 112 of the 
Accordingly the penalty of Rs 1000000 under Section 112 of the said Act was directed to be paid forthwith
Against this order the appellant filed a writ petition being Writ Petition No 1398 of 1989 which was dismissed at the admission stage on the ground that it involves disputed questions of fact which were difficult to be decided in a writ jurisdiction
However the appellant was permitted to clear the goods on payment of redemption fine and furnishing full bank guarantee for the penalty amount
Aggrieved by this order an appeal being Appeal No 6 18 of 1989 was filed in the High Court of Bombay
The said appeal was dismissed with liberty to file a departmental appeal by Order dated June 15 1989
The appellant thereaf ter filed the said appeal before the Customs Excise and Gold Control Appellate Tribunal West Regional Bench Bombay
The said Appellate Tribunal after hearing the appel lant as well as the Revenue dismissed the appeal and con firmed the order of 379 the Collector of Customs but reduced the penalty amount from Rs 1000000 to Rs500000
Feeling aggrieved by the said order the appellant filed the instant appeal under Section 130 Eb of the 
The entire controversy relates to the question whether the calcareous stone which has been imported by the appellant falling within the Tariff Item No 2515 of Sched ule I Appendix I B commonly known as IT Schedule is marble as mentioned in Entry No 62 of the List of Restrict ed Items Annexure 2 Part B of the Import and Export Policy for April 1988 to March 1991 and as such the import of calcareous stone made by the appellant being not covered under OGL is liable for confiscation and penalty for ille gal import without the specific import licence obtained from the respondent
In Appendix I B Schedule 1 of ITC Schedule Entry No 2515 of Chapter 25 Mineral Products mentions Marble travertine ecaussine and any other calcareous monumental or building stone of an apparent specific gravity of 25 or more and Alabaster whether or not roughly trimmed or merely cut by sawing or otherwise into blocks of slabs of a rectangular including square shape
 In the said Appendix I B Schedule I states that each heading number in Column 1 corresponds to the respective Chapter and heading number of the first Schedule to the Customs Tariff Amendment Act 1985 as amended on 241
1986 and each entry in Column 2 has the same scope and meaning as the corresponding Chapter and heading of the said first Schedule
It is appropriate to refer to Appendix 6 of the Import and Export Policy for April 1988 to March 1991 which men tions import of items under Open General Licence
The cate gories of importers the items allowed to be imported by them under Open General Licence and the conditions governing their importation have been set out therein Items Category of eligible importers 1
Raw materials components and consumables Actual Users Non iron and steel items other than Industrial those included in the Appendices 2 3 Part A 5 and 8 380 In Appendix II B in the List of Restricted Items Entry 62 of Import and Export Policy for March 1988 to April 1991 refers to marblegraniteonyx
Mr Diwan learned counsel appearing on behalf of the appellant has submitted that for the purpose of understand ing the meaning of marble  occurring in Appendix I B Schedule I of the Imports Control Order 1955 it is neces sary to refer to Mineral Products in Chapter 25 Tariff Entry No 2515 which refers to Marble Travertine Ecaus sine and other calcareous monumental and building stone of an apparent specific gravity of 25 or more and Alabaster whether or not roughly trimmed or merely cut by sawing or otherwise into blocks or slabs of a rectangular including square shape
The term marble  does not occur by itself or in isolation but as a inseverable part of a Tariff Entry which deals with five items referred to hereinbelow a Marble b Travertine c Ecaussine d Other calcareous stone e Alabaster Each of these five items is a monumental or building stone which is hard and can be cut and sawed into the required sizes and can take polish
The Tariff Entry draws a clear line of distinction between each of these five items and regards them as five distinct products
The basic scheme of the Tariff Entry is important for the purposes of the present appeal
The term marble  has to be given a meaning which fits in and harmonises in the above mentioned statuto ry context so that marble  continues to remain distinct and different from the said other four items
Thus whatever principle of interpretation or canon of construction is applied it cannot be said that the term marble  include and takes within its fold any or more distinct items or goods mentioned in the said Tariff Entry thereby rendering a part of the said Entry meaningless
It has therefore been submitted on behalf of the appellant that the term marble  has to be interpreted in a manner which is in consonance with the context and which does not militate against it
It is appropriate to refer in this connection the following passage from Maxwell on Interpretation of Statutes 12th Edition
Page 294 set out hereunder The word land  is generally understood as including build ing
but if after imposing a rate on houses buildings 381 works tenements and hereditaments an Act exempted land  this word would be restricted to land unburdened with houses buildings or works which would otherwise have been unnecessarily enumerated
 It has been secondly submitted on behalf of the appel lant that the general principle of interpretation of tariff entries occurring in a tax statute is that of commercial nomenclature or understanding in the trade
It is also a settled legal position that the said doctrine of commercial nomenclature or trade understanding can and should be de parted from in a case where the statutory context in which the tariff item appears requires such a departure
If the application of the commercial meaning or trade nomenclature runs counter to the statutory context then the said princi ple of interpretation cannot and should not be applied
Commercial nomenclature or trade understanding is merely a general principle of interpretation It is well settled that the principles of interpretation are never embodied rules and the same must always yield to the context of the partic ular statute which comes up for interpretation
It has also been submitted in this connection that the trade meaning or commercial nomenclature would be applicable if a particular product description occurs by itself in a Tariff Entry and there is no competition between that Tariff Entry and any other tariff entry nor is there any need to reconcile and harmonise that tariff entry with any other
It has been submitted in this respect that the reading of the Tariff Entry No 2515 in Appendix I B of Imports Control Order 1955 which refers to Marble Ecaussine Travertine and other calcareous monumental or building stones as well as Entry No 62 in Appendix 2 B of Import and Export Policy April 1988 March 1991 refer only to marblegraniteonyx as re stricted items of import in such a way that such interpreta tion does not exclude or render redundant any of the items included in Tariff Entry No 2515
It has next been con tended that the end use of the particular product is irrele vant and of no consequence for determining its classifica tion
In support of this proposition several decisions have been cited
It has been further submitted that each of the five distinct items referred to in Chapter Heading 2515 of Appendix I B of Imports Control Order 1955 is a hard stone capable of being cut into the required size and of taking polish
If therefore the term marble is to be given the said commercial meaning as relied upon by the Customs Authorities then the inevitable consequence would be that the term marble  in Chapter Heading 2515 would automati cally include within it the other four items thereby render ing the rest of the Tariff Entry otiose redundant and meaningless
On this ground alone it has been submit 382 ted that the test of commercial meaning or trade understand ing necessarily has to be rejected and the same cannot be applied in the present case
It has also been contended on behalf of the appellant that from the language of the Tariff Entry itself it is only the technical meaning which can be applied for interpreting Chapter Heading 2515
The expres sions calcareous travertine ecaussine and alabaster are all technical expressions known to the science of Geology which are found defined in dictionaries of Geology
These are not terms of trade or expressions which businessmen use in the ordinary use to describe a product they deal in
Moreover the reference to the requirement of specific gravity of 25 or more is also more or less a technical requirement which evinces that the principle of trade nomen clature or commercial understanding is not applicable to the Tariff Item
Valuable guidance can also be obtained from the notes which are part of the Harmonised System of Nomencla ture HSN with which the present Customs Tariff as amended in 1986 has been fully aligned
The HSN Explanatory Notes specifically state that ecaussine on being fractured shows a granular surface similar to granite and is therefore known sometimes as Belgian granite Flanders Granite and Petiti granite
It needs to be understood that therefore even though ecaussine may be known in the market as a spe cies of granite and may be dealt with and treated as a type of granite the same is nevertheless not classified as granite under Chapter Heading 2516
This is only because the technical nature of ecaussine has been taken into con sideration and applied by HSN as opposed to the trade nomen clature or commercial understanding
It has also been submitted that the said HSN also con tains specific note regarding serpentine rocks to the effect that the same are sometimes called Marble  but the same is excluded from Chapter Heading 2515
This clearly shows that according to HSN Chapter Heading 2515 must be construed according to its technical meaning
Technically serpentine does not fall under Heading 2515 and the same is according ly excluded therefrom by the HSN
If on the other hand the commercial meaning is to be applied then serpentine would definitely have to be classified under Chapter Heading 2515 in as much as it is sometimes called marble
The HSN Explan atory notes therefore clearly and conclusively establish that Chapter Heading 2515 must necessarily be construed by its technical meaning and not by applying the commercial nomenclature test
If the commercial nomenclature test is applied then as explained hereinabove two fundamental principles of interpretation are infringed a the princi ple that no part of a statute may be construed as to render it redundant 383 and otiose and b that a tariff item is not to be classi fied on the basis end use in other words an item cannot be considered to be marble merely because it is a hard rock which is capable of being cut and polished and being put to same use as marble
It has therefore been submitted that the findings arrived at by the Customs Excise and Gold Control Appellate Tribunal that the calcareous stone slab imported by the appellant is marble as understood in the commercial or trade nomenclature and as such the import of the said slab being without a licence is subject to the liability of confiscation and imposition of penalty and wholly unwarranted
Mr Ganguli learned counsel appearing on behalf of the Revenue has submitted that in interpreting the word marble  as mentioned in Tariff Item No2515 in Appendix 1 B Sched ule 1 to the Import Control Order 1955 the test in commercial and trade parlance has to be applied ie how the said product came to be commercially known by the trading people
It is further submitted that it is not a scientific or technical word and as such it does not require to be interpreted in its scientific and technical sense
He fur ther submitted that the general principle of expression of Tariff Entries in a text statute is that of commercial nomenclature or understanding in the trade
The word mar ble  if so interpreted will include calcareous stone of 25 or more specific gravity
He has cited certain decisions in support of his above contention
Mr Ganguli also submitted referring to the said Tariff Entry 2515 that it includes calcareous stones of specific gravity of 25 or more which are capable of polish
Marble is the genus and all other four items of stone mentioned in the said Entry which are of apparent specific gravity of 25 are included within marble as they are commercially and in trade parlance known as marble
He further submitted that the ISI specification for marble as referred to in IS 1130 1969 item No 02 which defines marble as metamorphic rocks can not be applied in the instant case especially in view of the note to the said item that sometimes rocks such as serpentine are also polished and used in trade as marble
Mr Ganguli further submits that taking into consideration this note calcareous stone imported by the appellant falls within marble which is one of the restricted items in the list of restricted items as mentioned in Appendix 2 Part B of the Import and Export Policy April 1988 March 1991
Mr Ganguli further submitted that the word marble cannot be taken in its Geological or Petrological sense in as much as the whole purpose of put ting the marble stone slabs in the list of restricted items for import is to restrict the outflow of foreign exchange from the country
Mr Ganguli next submitted that the end use of the product ie marble and calcareous 384 stone mentioned in Item No 2515 of Appendix 1 B of the Import and Export Policy April 1988 March 1991 has to be taken into consideration in the determination of the other items of stones mentioned in that Entry
Viewed from this angle the said calcareous stone being capable of polish and used for monumental or building purposes has to be taken to be marble as has been done by the Revenue and it being one of the restricted items a licence for import of the same is mandatory
It has also been submitted in this connection by Mr Ganguli that the word marble  has not been defined in the Tariff Act and as such the meaning of the said word has to be given as understood by the trading communities as is known in trade parlance
Mr Ganguli therefore submitted that there is no infirmity in the findings and conclusions of the Appellate Tribunal and as such the calcareous stone slabs imported by the appellant being marble one of the restricted items the order of confiscation of the said stone slabs and in lieu thereof the imposition of the cus toms duty and the penalty is quite in accordance with law
The sole question to be considered in this appeal is whether the word calcareous monumental or building stones of more than 25 or more specific gravity as mentioned in Tariff Item No 2515 in Appendix 1 B Schedule 1 commonly known as ITC Schedule to the Imports Control Order 1955 comes within the purview of the restricted items mentioned in Item 62 Appendix 2 Part B of the Import and Export Policy April 1988 March 1991
In Entry No 62 the re stricted item is described as Marblegraniteonyx 
Marble has not been defined either in the ITC Schedule or in Appen dix 2 Part B of Import and Export Policy dealing with the list of restricted items
It is convenient to refer in this connection to para 64 of the Hand Book of Procedures April 1988 March 1991 which is in the following terms Classification of Items 64
1 The Schedule I to the Imports Control Order 1955 reproduced in Appendix 1 B to this Book commonly known as the ITC Schedule
contains the classification of all the articles that enter into the import trade
2 With effect from 1st April 1988 the Schedule 1 to the Imports Control Order 1955 reproduced in Appendix I B to this Book has been revised in alignment with the First Schedule of the Customs Tariff Amendment Act 1985
The Revised ITC Schedule contains 21 Sections subdivided into 99 Chapters
 385 It is also convenient to refer to the note
to the Appendix 1 B Schedule I to the Imports Control Order 1955 which is to the following effect Note Each heading number in Column 1 corresponds to the respective Chapter and heading number of this first Schedule to the Customs Tariff Amendment Act 1985 as amend ed on 2411986 and each entry in Column 2 has the same scope and meaning as the corresponding Chapter and heading of the said first Schedule
It is also appropriate to set out hereunder the relevant portion of Appendix 6 of the Import and Export Policy for April 1988 March 1991 Items Categories of eligible Importers Raw materials components and Actual Users consumables Non iron and steel items Industrial other than those included in the Appendices 2 3 Part A 5 and 8
Section 31 of the Imports and Exports Control Act 1947 as amended upto 30th April 1979 provides that The Central Government may by order published in the Official Gazette make provisions for prohibiting restrict ing or otherwise controlling in all cases or in specified classes of cases and subject to such exceptions if any as may be made by or under the order      Chapter 25 of Schedule I Appendix i B of the ITC Sched ule mentions mineral products which can be imported under OGL Entry No 2515 refers to marble which is as under Marble travertine ecaussine and other calcareous monumen tal or building stone of an apparent specific gravity of 25 or more and Alabaster whether or not roughly trimmed or merely cut by sawing or otherwise into blocks or slabs of a rectangular including square shape 386 Appendix 2 Part B of the Import and Export Policy for April 1988 March 1991 enumerates the restricted items
Item No 62 deals with marble which is to the following effect Marblegraniteonyx 
In the instant case admittedly the appellant on behalf of his firm which is a small scale industry engaged in processing of stone slabs placed an order for calcareous stone other than marble with the exporter Elle Marmi of Italy asking the exporter to certify that the said goods were not marble
The exporter Elle Marmi of Italy issued a certificate dated December 6 1988 certifying that all the goods in question were calcareous stone slabs other than marble
The appellant also obtained from the foreign export er a sample tile of Botticino  the calcareous rock proposed to be imported and had the same tested by a reputed Geolo gist Dr SF Sethna who submitted his report dated October 13 1988 confirming that the same sample was not marble
It has been stated in the said report that the sample is a limestone and thus differs from the marble in being of sedimentary origin and has not undergone any metamorphism to be considered under metamorphic rocks to be described as a marble
If the rock would have shown any slightest amount of metamorphism the recrystallization of carbonate crystals would make the individual crystals distinctly visible under the microscopic examination
The appellant also referred to an Italian Book MARMI ITALTA wherein the index evidenced the fact that Botticino varieties were covered under Polishable Calcareous Rocks and not under True Marbles  Re crystallised Calcareous Rocks
The appellant also while placing order asked the exporter to send a certificate about the calcareous stones for which order was placed for importation
The exporter Elle Marmi of Italy issued a certificate dated December 6 1988 certifying that all the rough slabs loaded are calcar eous stone slabs other than marble 
The appellant also obtained a certificate from one Gianni C Baigini a survey or registered with the Chamber of Commerce Carrara and a specialist for control of marble calcareous stones other than Marble and Granite
The said expert after checking the said consignment loaded in the containers for import by the appellant in Italy certified that all rough slabs are cal careous stone slabs of good quality
He also certified that these are calcareous stones other than marble because they are not recrystallized calcareous rocks and that the calcar eous stone slabs in the above consignment are not marble
In Indian Standard Specification for Marble IS 1130 1969 387 Entry No 02 marbles have been described as metamorphic rocks capable of taking polish formed from the re crystal lization of limestones or dolomitic limestones and are distinguished from limestone by even visible crystallined nature and non flaggy stratification
Note to the said Entry states that sometimes rocks such as serpentine are also polished and used in trade as marble
The Director Regional Petrology Laboratory where the appellant sent a sample of the rocks ordered of importation for examination has also forwarded a technical report on study of sample by Dr HM Ramachandra a Geologist which states The rock is an allochemic Pelmicritic limestone it cannot be termed as a marble
 The Indian Bureau of Mines in its letter dated March 3 1982 has mentioned that Technical Definition Geologically petrologically marble is recrystallised metamorphosed limestone
Ordinary limestone is a sedimen tary rock but once it is metamorphosed ie once it has undergone recrystallisation it is turned to marble
So marble is metamorphosed limestone which consist essentially the minerals calcite dolomite or a combination of the two  The specimen has been examined and it is observed that the rock is cryptocrystalline fine grained mildly metamor phosed with few bigger grains of calcite
The specimen is hard and compact and is capable of being cut into slabs blocks of desired size and can take a good polish Thus according to all these reports as well as the ISI specification the slabs of rocks that have been imported by the appellant and claimed to be calcareous stones are not marble  in the scientific and technical sense of the term marble
As we have already stated hereinbefore that Tariff Item No 2515 mentions five kinds of rocks such as Marble Travertine Ecaussine Alabaster and other calcareous monu mental or building stone of a specific gravity of 25 or more whereas in the List of Restricted Items Item No 62 only mentions Marble graniteonyx are mentioned
In the absence of any definition of the term marble  it is to be decided what is the scope and meaning of the word marble and whether it includes within it the other kinds of 388 calcareous stones such as travertine ecaussine alabaster and other calcareous monumental or building stone of a specific gravity of 25 or more in order to saddle the importer with the burden of obtaining a licence for import ing the said restricted item
It has been submitted on behalf of the appellant that as the word marble has not been defined and the tariff item refers to calcareous stone of an apparent specific gravity of 25 or more it has to be taken to be used in a technical and scientific sense and as such the same cannot be interpreted in the popular commercial sense or as understood in trade parlance by persons dealing with the  said stones
In deciding this question the first thing that requires to be noted is that Entry No 2515 refers specifically not only to marble but also to other calcareous stones whereas Entry No 62 refers to the restricted item marble only
It does not refer to any other stones such as ecaussine tra vertine or other calcareous monumental or building stone of a certain specific gravity
Therefore
on a plain reading of these two Entries it is apparent that travertine ecaussine and other calcareous monumental or building stones are not intended to be included in marble  as referred to in Entry No 62 of Appendix 2 as a restricted item
Moreover the calcareous stone as mentioned in ITC Schedule has to be taken in scientific and technical sense as therein the said stone has been described as of an apparent specific gravity of 25 or more
Therefore the word marble  has to be interpreted in our considered opinion in the scientific or technical sense and not in the sense as commercially under stood or as meant in the trade parlance
There is no doubt that the general principle of interpretation of Tariff Entries occurring in a text statute is of a commercial nomenclature and understanding between persons in the trade but it is also a settled legal position that the said doc trine of commercial nomenclature or trade understanding should be departed from in a case where the statutory con tent in which the Tariff Entry appears requires such a departure
In other words in cases where the application of commercial meaning or trade nomenclature runs counter to the statutory context in which the said word was used then the said principle of interpretation should not be applied
Trade meaning or commercial nomenclature would be applicable if a particular product description occurs by itself in a Tariff Entry and there is no conflict between the Tariff Entry and any other Entry requiring to reconcile and harmo nise that Tariff Entry with any other Entry
In Union of India vs Delhi Cloth  General Mills 1963 Supp
1 SCR 586 the question arose as to how the term refined oil 389 occurring in the Tariff was to be construed
There was no competition between that Tariff Entry with any other nor was there any need to reconcile and harmonise the said entry with any other provision of the tariff
This Court there fore considered the term refined oil by applying the commercial meaning or trade nomenclature test and held that only deodorised oil can be considered to be refined oil
This Court also referred to the specification of refined oil by the Indian Standards Institution and held that This specification bY the Indian Standards Institution furnishes very strong and indeed almost incontrovertible support for Dr Nanji s respondent s view and the respond ent s contention that without deodorisation the oil is not refined oil as is known to the consumers and the commer cial community In Dunlop India Ltd vs Union of India and Ors 1963 Supp 1 SCR 586 the question arose whether the product known as VP Latex which was imported by the appellant can be considered to be rubber raw  within the meaning of Tariff Entry No 87 of the Indian Tariff Act 1934
The choice was between classifying VP Latex as rubber raw  and the general residuary entry at the end of the Tariff a general catch all entry which was described as the orphanage of the residuary clause
In these circumstances this Court applied the commercial meaning or nomenclature test
In the case of Commissioner of Sales Tax MP vs Jas want Singh Charan Singh  the respondent was a dealer in firewood and charcoal
In a proceeding for assessment of sales tax under the MP General Sales Tax Act the respondent claimed that charcoal was coal  within the meaning of Entry 1 of Part III of the Schedule II to the Act and therefore was taxable at the rate of 2
The Sales Tax Authorities however held that charcoal was not coal  and was taxable at 4 as it fell under the residuary Entry 1 of Part VI of Schedule II
The Board of Revenue and the High Court held in favour of the respondent relying on the dic tionary meaning of the word coal 
The Commissioner of Sales tax appealed
It was held by this Court that in inter preting items in statutes like the Sales Tax Acts resort should be had not to the scientific or technical meaning of the terms used but to their popular meaning or the meaning attached to them by those dealing in them that is to say in their commercial sense
Viewed from this angle both a merchant dealing in coal and a consumer wanting to purchase it would regard coal not in its geological sense but in 390 these sense as ordinarily understood and would include charcoal  in the term coal  It may be pointed out that this Court has clearly and unequivocally laid down that it is not permissible but in fact it is absolutely necessary to depart from the trade meaning or commercial nomenclature test where the trade or commercial meaning does not fit into the scheme of the commercial statements
This Court referring to the observa tions of Pullock B in Grenfell vs Inland Revenue Commis sioner 248 observed that if a statute contains language which is capable of being construed in a popular sense such statute is not to be construed according to the strict or technical meaning of the language contained in it but is to be construed in its popular sense meaning of course by the words popular sense  that sense which people conversant with the subject matter with which the statute is dealing would attribute to it
 But if a word in its popular sense and read in an ordinary way is capable of two constructions it is wise to adopt such a construction as is based on the assumption that Parliament merely intended to give so much power as was necessary for carrying out the objects of the Act and not to give any unnecessary powers
In other words the construction of the words is to be adapted to the fit ness of the matter of the statute
 The Court has also referred to the observations of Fry J in Holt  Co vs Coilyet  720
The observation is If it is a word which is of a technical or scientic character then it must be construed according to that which is its primary meaning namely its technical or scientific meaning Referring to the above decisions this Court held that While construing the word coal  in Entry 1 of Part III of Schedule II the test that would be applied is what would be the meaning which persons dealing with coal and consumers purchasing it as fuel would give to that word
A sales tax statute is being one levying a tax on goods must in the absence of a technical term or a term of science or art be presumed to have used an ordinary term as coal according to the meaning ascribed to it in common parlance
 391 This Court in KV Varkey vs Agricultural Income Tax and Rural Sales Tax Officer 1954 5 STC 384 specifically declined to apply the popular or commercial meaning of Tea  occurring in the sales tax statute holding that the context of the statute required that the technical meaning of a product of plant life  required to be applied and therefore green tea leaves were tea even though they might not be tea was known in the market
In Cannanore Spinning and Weaving Mills Ltd vs Collec tor of Customs and Central Excise Cochin and Ors  this Court held that the word hank  occurring in a Central Excise Notification could not be interpreted accord ing to the well settled commercial meaning of that term which was accepted by all persons in the trade in as much as the said commercial meaning would militate against the statutory context of the said exemption Notification issued in June 1962
The word hank  as used in the Notification meant a coil of yarn  and nothing more
In Collector of Central Excise Kanpur vs Krishna Carbon Paper Co  it has been observed by this Court that it is a well settled principle of construction that where the word has a scientific or technical meaning and also in ordinary meaning according to common parlance it is in the latter sense that in a taxing statute the word must be held to have been used unless contrary intention is clearly expressed by the legislature
It has also been observed that whether the general principle of interpreta tion was applicable or not depended on the statutory con text
If special type of goods is subject matter of a fiscal entry then that entry must be understood in the context of that particular trade bearing in mind and particular word
The trade meaning is one which is prevalent in that particu lar trade where that goods is known or traded
Where howev er there is no evidence either way then the definition given and the meaning flowing from particular statute at particular time would be the decisive test
It has further been observed by this Court in this case that Where no definition is provided in the statute itself as in this case for ascertaining the correct mean ing of a fiscal entry reference to a dictionary is not always safe
The correct guide it appears in such a case is the context and the trade meaning
In this connection reference has been made to the observations of this Court in CST vs Ms
SN Brothers Kanpur  392 In Collector of Customs Bombay vs Hargovindas  Co the import policy restricted the import of milk powder
The importer had imported skimmed milk powder and relied upon the principle of commercial nomenclature or trade understanding in order to contend that there was a settled and accepted distinction between milk powder and skimmed milk powder which was specifically recognised and accepted by this Court in Healthways Dairy vs State of Haryana
The Special Bench of the Tribunal negatived that contention and held that unlike the central excise tariff the import schedule itself provided a statutory basis of interpretation
The controver sy before us relates to a period during which the Imports Control Order 1955 issued under the Imports and Exports Control Act 1947 had a separate import schedule annexed to it
This import schedule was aligned with the import schedule of the 
The import sched ule under the Import Control Order itself did not contain any rules of interpretation section notes and chapter notes
However a statutory Note at the beginning of the import schedule stated that the scope of various terms and headings in it was to be the same as in the import tariff schedule in the 
Thus the elaborate statutory scheme of the customs tariff import schedule got applied to the import schedule as well
It is by now well known that the customs tariff import schedule hardly left any scope to go in for trade parlance or common parlance because it statutorily defined almost everything with the help of rules of interpretation and explanatory notes
In such a scheme the statutory definitions must prevail over the trade parlance or any other aides to interpretation
 In Collector of Customs BOmbay vs Swastic Woollens P Ltd and Ors 1988 Supp
SCC 796 this Court has observed that the expression wool wastes  which has not been defined in the or in the relevant Notifica tion is not an expression of article It may be understood as in most of financial measures where the expressions are not defined not in a technical or pre conceived basis but on the basis of trade understanding of those who deal with these goods
When no statutory definition is provided in respect of an item in the or the Central Excises Act the trade understanding meaning thereby the understanding in the opinion of those who 393 deal with the goods in question is the safest guide
It has also been observed therein that the Tribunal has not ignored the Technical Committee s observation nor the Board s Tariff Advice
On a conspectus of all these decisions mentioned herein before the position thus emerges is that when the expression marble  has not been defined in the as well as in the or in the relevant Notification regarding the restriction on import of Marble in the List of Restricted Articles it is necessary to decide the signifi cance and true meaning of the word marble  as used in the ITC Schedule as well as in the List of Restricted Items and the not in its popular sense ie people who are dealing with this trade meant the same or what that term is commercially known in trade par lance but it has to be given a meaning in the context in which this word has been used in the ITC Schedule as well as in the List of Restricted items of Import
It is also neces sary to decide whether the word marble  as stated in the ITC Schedule refers to only marble or includes travertine ecaussine alabaster and other calcareous monumental or building stones and can be termed as marble in the commer cial sense or in trade nomenclature so as to bring the same within the restricted Item No 62 of Appendix 2 of the Import and Export Policy for April 1988 March 1991
We have already stated hereinbefore that in the List of Restricted Items under item No 62 only marble has been mentioned and not the other stones including calcareous stone used for building or monumental purposes which have been left out
Therefore per se it may be difficult to say that marble includes the other calcareous stones mentioned in the ITC Schedule
It is pertinent to mention in this connection to the Report of Dr SF Sethna of the Department of Geology St Xaviers College Bombay to whom a sample of the said calcareous slab of stone intended to be imported has been sent
Dr Sethna a noted Geologist after examination of the sample specifically stated that the sample under investiga tion is a sedimentary rock which does not show any sign of metamorphic recrystallization and thus cannot be considered as a marble
The report sent by the exporters of Italy Elle Marmi and Andree Muciani dated December 6 1988 also states that all the rough slabs loaded are calcareous stone slabs other than marble
Furthermore Gianni C Baigini a Survey or registered with the Chamber of Commerce of Carrara and a Specialist for control of Marble Calcareous Stones other than marble and Granite sent a certificate on inspection of the sample that all rough slabs stuffed are calcareous stone slabs of good quality
These are calcareous stones other than marble because they are not recrystallized calcareous rocks
He 394 further certified that the calcareous stone slabs in above consignment are not marble
One Shri SV Chaudhary Direc tor Regional Petrology Laboratory Geological Survey of India after examination of the sample sent a report dated March 13 1989 under the signatures of Dr HM Ramachandra Geologist to the appellant
The said report states that the rock is a allochemic Palmicritic limestone it cannot be termed as a marble 
In Invoice No 126 88 a certificate has been given by the exporter to the following effect We certify that merchandise is of Italian origin
Contents are true and authentic prices correct and current and that it is the only invoice for the goods described therein
 In the said invoice the goods has been described as slabs of calcareous stone of 2 Cms thick quantity
Thus it appears from all the aforesaid reports and certificates that the slabs of stone which have been imported from Italy are nothing but calcareous stones and the same cannot be termed as marble
Even according to item No 02 of Indian Standard Specification for Marble Blocks Slabs and Tiles the stone slabs imported by the appellant being not re crystallized and even being not metamorphosed cannot be considered as marble
Of course the Revenue has tried to contend relying on the Note to the same wherein it has been stated that sometimes rocks such as serpentine are also polished and used in trade as marble that the slabs of calcareous stone imported are used as marble in trade
In Harmonised System of Nomenclature HSN marble has been defined as a hard calcareous stone homogeneous and finegrained often crystallie and either opaque or translu cent Marble is usually variously tinted by the presence of mineral oxides coloured veined marble onyx marble etc but there are pure white varieties
The Revenue Authorities sent the sample of the calcareous stone imported by the appellant to the Department of Mines Indian Bureau Mines
A report has been sent by them to the Superintendent Central Excise and Customs Division Udaipur after testing of the sample of March 3 1989
The said report gives the  Technical and Commercial definition of marble as Technical definition Geologically Petrologically marble is recrystallised Metamorphosed limestone
Ordinary limestone is a sedi 395 mentary rock but once it is metamorphosed ie once it has undergone recrystallisation it is turned to marble
So marble is metamorphosed limestone which consist essentially the minerals calcite dolomite or a combination of the two
 Commercial Definition The usage of the term marble  has a much vider applica tion
In the commercial circle any limestone which is sufficiently hard and coherent to take a good polish and which can be cut into desired sizes into blocks free of cracks can be called marble
 It has also been stated therein that commercial marble refer to a crystalline rock composed of predominantly of one or more of following minerals calcite dolomite or serpentine and capable of taking a polish
It has been further stated under the said report that the specimen has been examined and it is observed that the rock is cryptocrystalline fine grained mildly metamorphosed with few bigger grains of calcite
The specimen is hard and compact and is capable of being cut into slabsblocks of desired size and can take a good polish
Keeping above visual observations into view it has been concluded that the specimen under reference is marble as per commercial definition
The Director of Mines and Geology Department Udaipur also sent a report to the Assistant Collector of Customs
It has been stated in the said report that the sample is of a fine grained off white rock
It gives very good effervescence with dilute hydro chloric acid and its hardness indicates that it is a fine grained carbonate rock
It takes good polish and can be used as marble
Regarding the microscopic characters it states that the rock is mainly composed of very fine grained cherty calcitic mass and iron oxides
No polygonal crystals are present
Recrystallization has not taken place
The rock sample has been identified as fine grained cherty lime stone 
It has also been stated that technically marble is a product of thermal metamorphism of limestone impure lime stone in which recrystallisation takes place and silicate minerals are also produced
Commercially the term marble  has been applied to any stone other than those known in trade as granite that has a pleasing appearance and will take a polish
Thus the term marble  adopted in the trade is based on the general properties and use of the stone
It has been further stated that the definition of marble given in IBM publication Marble in India  1983 Government of India is as under 396 Marble Petrologically marble is recrystallised Metamorphosed limestone
But in commercial parlance the term marble has a much wider application
Commercial marble is any crystalline rock composed predominantly of calcite dolomite or serpentine that is capable of taking polish
 In Webster Comprehensive Dictionary International Edition the word Marble  has been defined as A compact granular partly crystallized limestone occuring in many colours valuable for building or ornamental purposes
 In Shorter Oxford English Dictionary the word Marble  has been defined as Limestone in a crystalline or less strictly also a granular state and capable of taking a polish occurring in many Varieties much used in sculpture and architecture
 The Appellate Tribunal after considering various reports referred to hereinbefore observed that the term marble  cannot be construed on geological and petrological consider ation but has to be construed in commercial parlance
It has also been observed that the Tribunal is unable to place reliance on these reports
In Commercial circle any lime stone which is sufficiently hard and coherent to take good polish and which can be cut into desired sizes free of cracks can be called as marble as per the opinion given by the Indian Bureau of Mines
The Tribunal also observed that the Tribunal has found that the specimen could be termed as marble  as per the commercial definition but not technical ly referring to the report of the Director Mines and Geolo gy Department Udaipur
It has also been observed by the Tribunal that in the sample re crystallization has not taken place
The Tribunal has also held that it was not necessary to go into any other aspects in term s of the ISI or techni cal and scientific definition and held that the impugned goods do fall under marble in trade understanding and as such the same comes within the List of Restricted Items in Item No 62 of Appendix 2
This finding cannot be sustained in as much as all the above reports referred to hereinbefore clearly lay down that any stone to be termed as marble falling within Entry No 62 of the List of restricted Items in Appendix 2 has to be recrystallised
The Indian Stand ards Institution has also given a similar definition of marble as recrystallization of limestones or dolomitic limestones
Furthermore Petrologically and Geologically the slabs of stones which have been imported are allochemic pelmicritic limestone and it cannot be termed as marble
The Indian Bureau of Mines also observed 397 on testing the sample of rock that it is cryptocrystalline fine grained mildly metamorphosed with few bigger grains of calcite and identified the same as very fine grained cherry calcitic limestone
It is apparent from all these reports that the calcare ous stone of specific gravity of 25 is not marble techni cally and scientifically
The finding of the Appellate Tribunal is therefore not sustainable
it is of course well settled that in Taxing Statute the words used are to be understood in the common parlance or commercial parlance but such a trade understanding or commercial nomenclature can be given only in cases where the word in the Tariff Entry has not been used in a scientific or technical sense and where there is no conflict between the words used in the Tariff Entry and any other Entry in the Tariff Schedule
In the instant case in the Tariff Entry No 2515 in the ITC Schedule Appendix 1 B Marble Travertine Ecaussine Alabaster and other calcareous stones of an apparent specif ic gravity of 25 or more have been mentioned whereas in Entry No 62 only the word marble has been mentioned as a restricted item for import the other calcareous stones such as travertine ecaussine alabaster etc
have not been mentioned in Entry No 62
In these circumstances some significance has to be attached to the omission of the words travertine ecaussine and other calcareous monumental or building stones of an apparent specific gravity of 25 or more and Alabaster from the ITC Schedule in Entry No 62 of Part B Appendix 2 of Import and Export Policy for April 1988 March 1991
The only natural meaning that follows from this is that Entry 62 is confined only to marble as it is understood in a petrological or geological sense and as defined by the Indian Standard Institute and not as men tioned in the opinion given by the Indian Bureau of Mines on visual observation and it does not extend to or apply to other calcareous stones mentioned in the ITC Schedule
Moreover the commercial nomenclature or trade meaning cannot be given to marble in as much as such a meaning if given will render otiose redundant the terms travertine ecaussine alabaster and other calcareous monumental or building stone of an apparent specific gravity of 25 or more whether or not roughly trimmed or merely cut by sawing
Moreover in Appendix 6 ie Import of items under Open General Licence Item No t refers to Raw Materials compo nents and consumables Non iron and steel items other than those in Appendices 2 3 Part A 5 and so the other calcar eous stones excluding marble which is a restricted item of import fall within import items under Open General Licence
Although much stress has been laid on the note to Item No 02 of Indian Standards Specification for Marble Blocks Slabs and Tiles wherein it has been stated that some 398 times rocks such as serpentine are also polished and used in trade as marble but it cannot be taken into consideration in coming to the finding that marble is the genus and all the other calcareous stones referred to in Tariff Entry No 2515 in ITC Schedule Appendix I B are included in it
Moreover the onus heavily lays upon the Revenue Authorities to prove by adducing cogent evidence that limestone without Metamorphism and recrystallisation not being opaque or translucent will fall within the category of stone called marble  in Entry No 62 of Appendix 2 as one of the re stricted items
The appellant before placing the order took considerable precaution in ascertaining from the exporter that the calcareous stone to be imported from Italy is calcareous stone and not marble
Moreover he referred the sample of the calcareous stone to be imported to the Depart ment of Geology Bombay and to the Regional Petrology Labo ratory of the Geological Survey of India to ascertain wheth er calcareous stone in question is marble or not in order to enable him to import the same under open general licence
He also asked his exporter to send a certificate whether the calcareous stone for which order is placed is marble or not
The exporter sent a certificate alongwith the report of the expert stating that the slabs of calcareous stones contained in the containers sent by the exporter are calcareous stones and not marble
No tangible evidence has been produced nor even affidavits of persons attached to this trade to the effect that the slabs of calcareous stone imported by the appellant are marble as defined within Entry No 62 of the List of Restricted Items have been filed
The Revenue has not taken any steps to ascertain whether the calcareous stones imported are marble not by any scientific geological or petrological test
Considering all these reports we are of the opinion that since the term marble has not been defined in the Imports Control Order as well as in the ITC Schedule it has to be taken in a scientific and technical sense as well as in the context the word has been used and the slabs of calcareous stones imported by the appellant from Italy cannot be held to be marble as they have not been recrystallised and meta morphosed in the geological and petrological sense of the term
It is pertinent to refer in this connection the fol lowing passage of Maxwell on the Interpretation of Statutes Twelfth Edition by P St J Langan The word land is generally understood as including build ings but if after imposing a rate of houses buildings works tenements and hereditaments an Act exempted land this word would be restricted to land unburdened with houses buildings or works which would otherwise have been unnecessarily enumerated
 399 As regards the submission that the end use of a particu lar item has to be taken into consideration in interpreting a product is of no relevance in determining its classifica tion as we have stated hereinbefore that in interpreting a term appearing in the Tariff Item which has not been defined either in the Tariff Schedule or in the Import Control Order the same is to be interpreted in such a way which is in consonance with the Items specified in the ITC Schedule without leaving out any part of the Items mentioned therein
In other words a harmonised interpretation has to be given to each of the calcareous stones mentioned in the said Tariff Item in ITC Schedule and nothing should be left out or made redundant in giving the interpretation
The commer cial nomenclature or understanding in the trade which is generally given in tax statute can not be taken recourse to in the instant case in as much as the statutory context in which the Tariff Item appears requires departure in the instant case
In the Tariff
Item the calcareous stones used for monumental or building purposes and of a specific gravi ty of 25 or more is used in the scientific or technical sense and as such the commercial nomenclature or understand ing in the trade should not be taken recourse to in inter preting the word marble 
The reference to the requirement of gravity of 25 or more is also a purely technical crite ria or requirement which shows that the principle of trade nomenclature or commercial understanding is not applicable to that Tariff Item
Moreover the said Harmonised System of Nomenclature HSN contains a specific note regarding ser pentine rocks to the effect that the same are some times called marble but the same is excluded from Chapter Heading 2515
This again clearly shows that according to HSN Chapter Heading 2515 has to be construed according to its technical meaning
Technically serpentine does not fall under Heading 2515 and the same is accordingly excluded therefrom by the HSN
If commercial meaning is to be applied then serpentine would have to be classified under Item 2515 in as much as is sometimes called marble in the trade
The HSN Explanatory Notes therefore establish that Chapter Heading 2515 must be construed by its technical sense and not by applying a commercial nomenclature test
Considering all these aspects there is no other alter native but to conclude that the slabs of calcareous stone imported by the appellant are not marble as mentioned in Entry No 62 of Appendix 2 of the Import and Export Policy for April 1988 March 1991 and so it is covered by open general licence
The imported goods cannot be confiscated by the Government under section 111d of the Customs Act 1961 nor the appellant can be given the option to clear the said goods 400 for home consumption on payment of fine of Rs Five lakhs in lieu of confiscation under Section 125 of the 
The appellant cannot be said to have imported calcare ous stones without an import licence and as such there being no violation of the Import Control Policy the imposition of penalty of Rs
Ten lakhs under section of the is also unwarranted and not sustainable
Before we conclude it is relevant to mention in this connection that even if it is taken for arguments sake that the imported article is marble falling within Entry 62 of Appendix 2 the burden lies on the Customs Department to show that the appellant has acted dishonestly or contuma ciously or with the deliberate or distinct object of breach ing the law
In the present case the Tribunal has itself specifical ly stated that the appellant has acted on the basis of bona fide behalf that the goods were importable under OGL and that therefore the Appellant deserves lenient treatment
It is therefore to be considered whether in the light of this specific finding of the Customs Excise  Gold Con trol Appellate Tribunal the penalty and fine in lieu of confiscation require to be set aside and quashed
Moreover the quantum of penalty and fine in lieu of confiscation are extremely harsh excessive and unreasonable bearing in mind the bona fides of the Appellant as specifically found by the Appellate Tribunal
We refer in this connection the decision in Merck Spares vs Collector of Central Excise  Customs New Delhi  Shama Engine Valves Ltd Bombay vs Collector of Customs Bombay1984 and Madhusudan Gordhandas  Co vs Collector of Customs Bombay wherein it has been held that in imposing penalty the requi site mens rea has to be established
It has also been ob served in Hindustan Steel Ltd vs State of Orissa 19701 SCR 753 by this Court that The discretion to impose a penalty must be exercised judi cially
A penalty will ordinarily be imposed in cases where the party acts deliberately in defiance of law or is guilty of contumacious or dishonest conduct or acts in conscious disregard of its obligation but not in cases where there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute
 401 In the instant case even if it is assumed for arguments sake that the stone slabs imported for home consumption are marble still in view of the binding arrived at by the Appel late Tribunal that the said product was imported on a bona fide belief that it was not marble the imposition of such a heavy fine is not at all warranted and justifiable
In the premises aforesaid we allow the appeal and set aside the judgment and order passed by the Appellate Tribu nal and direct the Tribunal to release the goods to the appellant forthwith
We also direct the Tribunal to release the personal bond given by the Appellant for a sum of Rs250000 on the basis of which one container wasreleased as per order of this Court dated October 25 1989 and also to release the appellant from payment of detention charges and demurrage for retaining the goods
In the facts and circumstances of the case there will be no order as to costs
RSS Appeal allowed


Summary:
In a suit filed by the Respondent for recovery of a certain amount from the appellants and others on the basis of an agreement between the parties appellant entered appearance and prayed for the production of original docu ments since photostat copies were not clear so that writ ten statement may be filed
Thereafter the appellant moved the Court under Section 34 of the for stay of the suit on the ground that there was an arbitration clause in the suit agreement covering the matter in dispute
Though the Re spondent Corporation admitted the existence of such a clause it opposed the prayer for stay of the proceedings on the plea that the appellant had taken steps in the proceed ings of the suit in that an adjournment was taken for filing written statement
Staying the proceedings the trial court observed that there was no prayer for adjournment of the case for filing the written statement
On appeal by the Respondent Corporation the First Appellate Court vacated the stay order passed by the trial court
The Revision petition filed by the appellant was dismissed by the High Court
This appeal by special leave is against the High Court s order
Allowing the appeal this Court HELD 11 The expression a step in the proceeding which would disentitle the defendant from invoking section 34 of the is not every step taken by him in the suit
It should be a step to abandon the right to have the suit stayed
It should be a step in aid of the progress of the suit
The step must have been consciously taken with a view to submit to the jurisdiction of the Court for the purpose of adjudicating the controversy on merits
356C D 354 12 Before the trial court the defendants only sought a direction to the plaintiff to produce the original agreement and other documents so that they may file written statement
It was not stated that they would file the written state ment
They never took any other step submitting to the jurisdiction of the court to decide the case on merits
The right to have the dispute settled by arbitration has been conferred by agreement of parties and that right should not be deprived of by technical pleas
The Court must go into the circumstances and intention of the party in the step taken
The court must examine whether the party has aban doned his right under the agreement
In the light of these principles and looking to the substance of the application dated January 4 1985 one cannot form an opinion that the defendants have abandoned their right to have the suit stayed and took a step in the suit to file the written statement
357B D State of UP vs Janki Saran Kailash Chandra 1974 1 SCR 31 Food Corporation of India vs Yadav Engineer  and General Electric Co vs Renusagar Power Co   relied on