Supreme Court of India
Priyanka Overseas Pvt. Ltd. And Anr vs Union Of India And Ors on 15 November, 1990
Equivalent citations: 1991 AIR 583, 1990 SCR SUPL. (3) 138, AIR 1991 SUPREME COURT 583, 1991 AIR SCW 150, 1991 (1) SCC(SUPP) 102, (1990) 3 COMLJ 362, 1991 SCC (SUPP) 1 102, (1992) 64 FACLR 532, (1990) 4 JT 490 (SC), (1991) 51 ELT 185, (1991) 32 ECC 189, (1991) 5 CORLA 6, (1992) 1 CALLT 1
PETITIONER:
PRIYANKA OVERSEAS PVT. LTD. AND ANR.
Vs.
RESPONDENT:
UNION OF INDIA AND ORS.
DATE OF JUDGMENT15/11/1990
BENCH:
KASLIWAL, N.M. (J)
BENCH:
KASLIWAL, N.M. (J)
SINGH, K.N. (J)
CITATION:
1991 AIR 583 1990 SCR Supl. (3) 138
1991 SCC Supl. (1) 102 JT 1990 (4) 490
1990 SCALE (2)1028
ACT:
Customs Act, 1962--Sections 26, 60, 68, 112(a)--Palm
Kernel-Import of--Whether permissible--Duty payable--What
is.
HEADNOTE:
The appellant company made a contract on 10.6.87 with
the foreign suppliers to import under Open General Licence
35,000 MT of "Palm Kernel". Under the above contract
10681.832 MT of palm kernel was shipped from Nigeria on
26.6.87 and 25.7.87 under different bills of lading. The
goods arrived in the territorial waters of India on 2/3rd
October, 1987.
Prior to 27.7.1987 import of palm seeds was canalised
under the Import Policy for the years 1985-88. On 27.7.1987
the Chief Controller of Imports & Exports issued a Public
Notice canalising import of "any other material from which
oil can be extracted" also.
As the appellant was apprehending some dispute on the import
of palm kernel, it filed a writ petition in the High Court
on 28.7.87, and the learned Single Judge passed two interim
orders. On appeal against these orders, the Division Bench
on 2.12.87 set aside the interim orders with the consent of
the parties and expedited the proceedings already initiated
under section 124 of the Customs Act, 1962 for confiscation
of the goods.
The Collector of Customs by adjudication order passed
on 7.12.1987 held that the item "Palm Kernel" was a prohib-
ited item for import except through canalisation by the
State Trading Corporation in terms of the Import Policy and,
consequently its import without a valid licence was in
contravention of the provisions of the Customs Act, 1962
read with the Imports and Exports (Control) Act, 1947. The
Collector in these circumstances directed-the confiscation
of the entire goods but gave an option to the appellant
company to redeem the goods on payment of fine of Rs.90
lacs. The Collector also imposed a personal penalty on the
appellant.
The customs duty as applicable on the date of the arrival of
the
139
ships, i.e. 2/3rd October, 1987 was 105%. The said customs
duty was withdrawn on 4.12.87 and as such there was nil duty
on palm Kernel, and this position remained upto 28.1.88. The
exemption from customs duty was however withdrawn from
29.1.88 as a result of which the earlier duty of 105% came
into effect. The customs duty was further increased from
1.3.88 and the new customs duty was at 245%.
The appellant company removed 3935.364 MT of Palm Kernel
on 17.12.87 by paying proportionate amount of penalty and
nil customs duty. The appellant then filed bills of entry
for the remaining 6746.468 MT of Palm Kernel on 28.1.88 but
did not depoit the redemption fine.
On merits, the learned Single Judge by his order dated
19.4.88 held that the Palm Kernel was an item different and
distinguished from Palm seeds, and the same could be import-
ed under OGL as R was covered under item no. 1, Appendix 4
of the Import Policy. Accordingly, the learned Judge ordered
the goods to be cleared on payment of such duties as were
leviable on 28.1.88, when the appellant had entered the bill
of entry seeking clearance of the goods.
The Division Bench on. appeal affirmed the order of the
Trial Court in so far as the setting aside of the adjudica-
tion order was concerned. The Division Bench however held
that the appellant shall be entitled to get delivery of the
balance goods on payment of duty at the rate prevailing in
October, 1987.
Both the parties preferred appeal before the Court by spe-
cial
leave,
Before the Court it was inter alia contended on behalf
of the appellant company that (i) Palm seed and Palm Kernel
were two different items as shown in the commercial transac-
tions in the trading community and Palm seeds alone was a
canalised item; (ii) a fiscal statute had to be construed
strictly and in favour of a citizen especially when the
question of imposing fine and penalties was involved, and
(iii) the Palm Kernel having been shipped by the foreign
seller from Nigeria on or before 27.7.87 the appellant was
legally entitled to import the same under the OGL.
It was further contended that the rate of duty of the
imported goods, as provided in section 15 of the Customs
Act, 1962 shall be the rate and valuation in force, in the
case of goods cleared from a warehouse under section 68, on
the date on which the goods were actu-
140
ally removed from the warehouse, and the Division Bench
committed error in holding that the date for actual removal
of the goods in the present case shah be considered as 2/3rd
October, 1987 when the goods entered the territorial waters
of India; that irrespective of the physical removal of the
goods from the warehouse, the goods would be deemed to have
been actually removed in law on 28.1.88 when the petitioner
had filed ex-bond bills of entry seeking clearance of the
goods; in the facts and circumstances of this case the term
'actual removal' used in section 15(1)(b) could not mean
physical removal as the same was made impossible by the
wrongful act of the respondents; and it should be given a
meaning in the juristic sense as deemed removal.
On behalf of the Revenue, it was contended that (i) the
distinction sought to be made between 'Palm Kernel' and
'Palm Seed' was artificial; (ii) the appellant had clearly
understood the Import Policy and was fully aware of the fact
that Palm Kernel was a canalised item and still it imported
the same under the OGL; (iii) the appellant had let no
evidence to show that the 'Palm Kernel' and 'Palm seed' were
considered as two different commodities in the popular sense
in commerce or trade. As regards the question of levy of
duty, it was contended that in the matter of taxation there
was no question of applying any principles of equity or the
deeming fiction in construing the provisions of section
15(1)(b) of the Customs Act; even if the appellant had
entered the bill of entry on 28.1.88, admittedly the goods
were not actually removed on that date and the hiatus if any
in actual removal, could not be extended to an artificial
date.
In the alternative it was contended that the appellant
fully knowing that the rate of duty in October, 1987 when
the goods had arrived in India was 105% and even if the
deeming provision for removal of the goods was applied for
the purpose of section 15(1)(b) of the Customs Act, then the
date of actual removal should be 2/3rd October, 1987.
Dismissing the appeal filed by the Revenue and allowing
the appeal filed by the appellant company the Court,
HELD: (1) "Palm Kernel" is not included in the item
"Palm Seeds", and the two commodities are different as
understood in commerce or trade. [155H-156A]
(2) Prior to 27.7.87 'Palm Kernel' was not a canalised
item, the High Court rightly held that 'Palm Kernel' was not
included within the entry of 'Palm seed'. The Government of
India itself realised the dif-
141
ference in the two commodities, therefore it amended its
previous policy.[156D]
(3) As the Palm Kernel was not a canalised item before
27.7.87, it could have been imported under the OGL before
that date. The crucial dates in this regard are 26.6.87 and
25.7.87 when the goods were actually loaded in the Ship and
not the date of arrival of the ship in the territorial
waters of India. [156F]
(4) Since 'Palm Kernel' was not included within 'Palm
seed' the Customs authorities had no legal justification to
confiscate or impose redemption fine or penalty. [156E]
(5) Section 15 of the Customs Act provides for determi-
nation of rate of duty on imported goods. The rate of duty
and tariff valuation, if any, applicable to any imported
goods, shall be the rate and valuation in force in the case
of goods cleared from a warehouse under section 68, the date
on which the goods are actually removed from the warehouse.
[158C-D]
(6) One cannot introduce the concept of deeming provi-
sion while determining the question of actual removal of the
goods from the warehouse. The rate has to be determined on
the basis of the date on which goods are actually removed
from the warehouse and thereafter the question would be
examined as to how the relief is to be moulded in case it is
found that the Customs authorities were themselves responsi-
ble in preventing the importer of goods from actually remov-
ing the goods from the warehouse. [158E-F]
Duni Chand Rataria v. Bhuwalka Brothers, [1955] 1 S.C.R.
1071; M/s. Bharat Surfactants Pvt. Ltd. v. Union of India,
[1989] 4 S.C.C. 21; distinguished.
Commissioner of Sales Tax, Madhya Pradesh v. Jaswant
Singh Charan Singh, [1967] 2 S.C.R. 720 referred to.
(7) The statutory principle is that if a party dis-
charges its liability by complying with the requirement of
law, and presents papers for clearance of goods, it is
obligatory on the Revenue authorities to pass the order
immediately thereon. If the Revenue authorities either
refuse to pass the order on some erroneous or imaginary
grounds or on account of any misconception of law, the
Department cannot take advantage of its own wrong in demand-
ing higher rate of duty from the importer. [162D-E]
142
(8) Admittedly, the appellant had done its part of legal
duty by presenting bills of entry and complying with section
68(a) of the Act on 28.1.88. But the Customs Officer refused
to release the goods on erroneous assumption that the appel-
lant was liable to pay redemption fine and since it had not
paid the said amount, the goods were not liable to be re-
leased. In the circumstances, the Department cannot be
allowed to take advantage of its own wrongful act. [162F-G]
(9) In moulding relief, the Court has always applied
principles of equity in order to do complete justice between
the parties. The appellant is therefore entitled to the
delivery of goods without paying any duty as on 28.1.88 no
duty was payable on the goods. [162H, 164E]
JUDGMENT:
