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CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2705 & 5383 of 1985.

From the Judgment and Order dated 20.12.1984 of the Delhi High Court in Writ Petition No 4037 and 4038 of 1982.

L.M. Singhvi, Kailash Vasdev, G.L. Rawal, Ms. Neerja, Sandeep Narain, R. Narsimha. Abhishek Manu Singhvi and C. Mukhopadhya for the Appellants.

T.S.K.M. Iyer, R.P. Srivastava and C.V.S. Rao for the Respondents.

The Judgment of the Court was delivered by RANGANATH MISRA, J. These appeals by certificate are directed against the common judgment of a full Bench of the Delhi High Court dated December 20, 1984, in two writ petitions under Article 226 of the Constitution. The appellants are respectively a Company and its Managing Director. The Company was the holder of Letter of Authority in respect of three licences for import of coconut oil in one case and of two licences in the other and was appointed Letter of Authority Holder in respect of the said licences. It imported two consignments of 5342.369 Mts. and 3002.557 Mts. of refined industrial coconut oil from Sri Lanka and the delivery port was Kandla. The respective ships carrying the aforesaid cargo arrived at the port of destination on 22nd September, 1982, and 10th September, 1982, and appellant No. 1 filed the bills of entry for release of the said cargo in the office of the Assistant Collector of Customs at Kandla. Instead of release of the cargo on the basis of steps taken by appellant No. 1, notices to show cause were received by appellant No. 1 on the allegation that import of industrial coconut oil was not legal as it was a canalised item. The appellant No. 1 was called upon to show cause as to why the cargo may not be confiscated under section 111(d) of the Customs Act as also why the appellants may not be penalised under section 112 thereof. The appellants showed cause and took the stand that import of industrial coconut oil was not banned under the Import Policy of the Government for the relevant period and the premises upon which the authorities had proceeded to direct issue of show cause was factually untenable. When personal hearing was afforded, on behalf of the appellant No. 1 it was pointed out that the notices by respondent No. 3 were the outcome of bias and the said statutory authority had not applied his own mind to the matter in controversy. It was also pointed out that Shri Takhat Ram, Joint Chief Controller of Imports and Exports had taken undue interest in the matter to the prejudice of the appellants and had brought to bear upon the statutory authority pressure to act against the interests of the appellants. By the adjudication orders dated 17th December, 1982 and 20th December, 1982, the respondent No. 3 came to the conclusion that "coconut oil, whether edible or not, were canalised items and fell within the ambit of Appendix 9 para 5(1) of the Import Policy of 1980-81. It was not an item under the O.G.L. of 1980-81 Policy". Respondent No. 3 further held that either of the consignments was covered by the import licences produced by the appellants and was, therefore, liable to be confiscated under section 111(d) of the Act but gave an option to appellant No. 1 to redeem the goods on payment of Rs.3 crores and Rs.2 crores respectively as redemption fines. On 27.12.1982 two writ petitions were filed in the High Court of Delhi challenging the action of the Collector. The said writ petitions were finally placed before a Bench of three-Judges of the High Court; two of them being Sachar and Khanna, JJ., came to hold that the writ petitions were liable to be dismissed while the other Judge being Wad, J. took the view that the action of the Collector was totally untenable and that the writ petition should be allowed and the order of the Collector should be set aside. The majority of the learned Judges were of the further view that the quantum of redemption fine should be considered by the Appellate Tribunal. Sachar, J. with whom Khanna J. concurred, directed:

In Appendix 9, no classification of coconut oil is given and; therefore, all varieties of coconut oil should be taken as covered by the term. There is no warrant for the assumptions that item 1 of paragraph 5 of Appendix 9 covered only the edible variety when 'coconut oil' as such has been mentioned. It is not disputed that 'coconut oil' without anything more could cover both the edible as also the non- edible (commercial or industrial) varieties. When a customer goes to the market and asks for coconut oil to buy, he is not necessarily supplied the edible variety. Coconut oil is put to less of edible use than non-edible. Reliance has been placed on the entry in the Import Policy of 1981-82 where in paragraph 5 of Appendix 9 it has been said thus:

"In the case of the following items, whether edible of non-edible, import will be made only by the S.T.C. ...........

(1) Coconut oil............................."

"All other oils/seeds, whether edible or non- edible, not specifically mentioned above or elsewhere in this policy, will also be imported only by S.T.C. under these provisions."

In our view no support can be had for the contention advanced by appellants' learned counsel from the change in the language of paragraph 5 in the Import Policy of the subsequent year. Whatever may have been the reason for specifying 'edible and non-edible' classification in 1981- 82, if 'coconut oil' takes within its fold all varieties of it, it must follow that in 1980-81, all varieties of coconut oil were included in paragraph 5 of Appendix 9. It is, in our opinion, unnecessary to refer to authorities and precedents to support such an obvious conclusion.

Similarly no support is available from the communication by way of reply received by the appellants from the S.T.C. to the effect that import of edible coconut oil alone was canalised through it. When the question before us is as to what exactly was the ambit of the entry No. 1 in paragraph 5 of appendix 9, the letter of the S.T.C. has no light to throw and the matter has to be ressolved with reference to broader aspects than the letter of the Corporation. Nor can that letter or the representation contained therein be used to build up a plea of estoppel. The S.T.C. was not competent to bind the customs authorities in respect of their statutory functioning and if on actual interpretation it turns out that 'coconut oil' covered what the appellants have imported, the fact situation cannot take a different turn on account of the letter of the S.T.C. At the most, it may have some relevant when the quantum of redemption fine is considered by the Tribunal in terms of the direction of the High Court.