ORDER 1. HEARD THE LEARNED COUNSEL FOR THE PARTIES. 2. THE APPELLANTS IMPORTED OLD, USED AND PREMUTILATED SYNTHETIC RAGS. ON THE BASIS OF IMPORT EXPORT POLICY OF 1988-91 WHICH INTER ALIA PERMITTED THE IMPORT OF WOOLLEN RAGS/SYNTHETIC RAGS/SHODDY WOOL IN COMPLETELY PREMUTILATED CONDITION UNDER OGL. THESE GOODS WERE EXAMINED IN THE PRESENCE OF APPRAISER, AC (DCP), DC (CUSTOMS), TEXTILE PRODUCTION REPRESENTATIVE, CUSTOMS HOUSE AGENT AND THE IMPORTER. IT IS THE CASE OF THE APPELLANTS THAT THE IMPORTED GOODS WERE AS A MATTER OF FACT USED FOR CONVERTING INTO SHODDY YAM. 3. THE RESPONDENT DECIDED TO LEVY 10% PENALTY ON THE CONSIGNMENT IMPORTED BY THE APPELLANTS AS A CONDITION PRECEDENT FOR ALLOWING THE IMPORT. THE LEARNED COUNSEL FOR THE APPELLANTS CONTENDED THAT IN VIEW OF THE DEFINITE FINDING RECORDED IN THE NOTES PREPARED BY THE EXAMINATION COMMITTEE, THERE IS NO QUESTION OF LEVYING ANY PENALTY. THE LEVY OF PENALTY WAS UPHELD BY THE DIVISION BENCH OF THE RAJASTHAN HIGH COURT IN DB CIVIL SPECIAL APPEAL (WRIT) NO. 436 OF 1992 BY ITS ORDER DATED 6-8-1992. THE PRESENT APPEAL IS DIRECTED AGAINST THE SAID ORDER. 4. MR. RAJU RAMACHANDRAN, THE LEARNED ADDITIONAL SOLICITOR GENERAL APPEARING ON BEHALF OF THE RESPONDENTS SUBMITTED THAT THE DIVISION BENCH HAS UPHELD THE LEVY OF PENALTY IN VIEW OF THE DO LETTER DATED 26-9-1988, WRITTEN BY THE DIRECTOR (CUSTOMS) TO THE COLLECTOR OF CUSTOMS, BOMBAY. THE RELEVANT PART OF THE SAID DO LETTER IS REPRODUCED AS UNDER: "(V) THE IMPORT OF GARMENTS OF INSUFFICIENTLY MUTILATED RAGS BY SHODDY SPINNERS, WHO ARE ACTUAL USERS OF SUCH GOODS, WOULD INVOLVE TECHNICAL VIOLATION IN THAT GOODS, THOUGH IMPORTED BY AND MEANT FOR ACTUAL USERS, WOULD NOT SATISFY THE TERMS OF OGL. IN THESE CASES THE GOODS COULD BE RELEASED AFTER ADJUDICATION ON IMPOSITION OF A NOMINAL FINE OF 10% OF THE VALUE OF GOODS AND ON PROPER MUTILATION TO THE SATISFACTION OF THE MUTILATION COMMITTEE." 5. THE LEARNED COUNSEL FOR THE APPELLANTS ARGUED THAT A PENALTY CANNOT BE LEVIED ON THE BASIS OF A DO LETTER. SECONDLY, IT WAS SUBMITTED THAT A REFERENCE TO THE DO LETTER IN QUESTION SHOWS THAT PENALTY CAN BE LEVIED ONLY IN CASES WHERE THE IMPORTED GARMENTS ARE INSUFFICIENTLY MUTILATED RAGS. IN THE CASE IN HAND THE CONSIGNMENT IN QUESTION WAS EXAMINED BY THE OFFICERS OF THE DEPARTMENT WHO FOUND THAT THE GOODS ARE OLD, USED AND PREMUTILATED SYNTHETIC RAGS. SECONDLY, IT WAS SUBMITTED THAT A REFERENCE TO THE DO LETTER IN QUESTION SHOWS THAT PENALTY CAN BE LEVIED ONLY IN CASES WHERE THE IMPORTED GARMENTS ARE INSUFFICIENTLY MUTILATED RAGS. IN THE CASE IN HAND THE CONSIGNMENT IN QUESTION WAS EXAMINED BY THE OFFICERS OF THE DEPARTMENT WHO FOUND THAT THE GOODS ARE OLD, USED AND PREMUTILATED SYNTHETIC RAGS. THE DEPARTMENT NEVER TOOK THE STAND THAT THE IMPORTED GOODS WERE INSUFFICIENTLY MUTILATED. THEREFORE, IN THE FACTS OF THE CASE THE CIRCULAR IS NOT ATTRACTED AT ALL. WE FIND FORCE IN THIS SUBMISSION MADE ON BEHALF OF THE APPELLANTS PARTICULARLY AS IT IS NOT THE CASE OF THE RESPONDENTS THAT THE IMPORTED GOODS WERE INSUFFICIENTLY MUTILATED. THE DO LETTER IS NOT ATTRACTED IN THE FACTS OF THE CASE AND THERE COULD BE NO OCCASION FOR LEVY OF 10% PENALTY. 6. THE LEARNED COUNSEL APPEARING FOR THE APPELLANTS RELIED UPON THE DECISION RENDERED BY THIS COURT IN COLLECTOR OF CUSTOMS V. SWASTIKA WOOLLEN INDUSTRIES1 WHEREBY IN SIMILAR FACTS, IN THE APPELLANTS OWN CASE, THIS COURT APPROVED THE DECISION RENDERED BY THE TRIBUNAL BY OBSERVING THAT THE TRIBUNAL HAD ARRIVED AT THE CORRECT CONCLUSION AND THEREFORE, NO INTERFERENCE WAS CALLED FOR. 7. THIS APPEAL IS ACCORDINGLY ALLOWED AND THE IMPUGNED ORDER PASSED BY THE DIVISION BENCH OF THE HIGH COURT OF RAJASTHAN IN DB CIVIL SPECIAL A APPEAL (WRIT) NO. 436 OF 1992 IS SET ASIDE. THE JUDGMENT RENDERED BY THE LEARNED SINGLE JUDGE IN SB CIVIL WRIT PETITION NO. 5125 OF 1990 IS RESTORED. THERE SHALL BE NO ORDER AS TO COSTS.