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PETITIONER: COLLECTOR OF CUSTOMS. CALCUTTA

       Vs.

RESPONDENT: M. SHASHIKANT AND CO.

DATE OF JUDGMENT08/01/1992

BENCH: KULDIP SINGH (J) BENCH: KULDIP SINGH (J) RANGNATHAN, S. KASLIWAL, N.M. (J)

CITATION:  1992 AIR  696            1992 SCR  (1)   7  1992 SCC  Supl.  (2) 306 JT 1992 (1)   129  1992 SCALE  (1)1

ACT:      Import-Export Policy 1978-79. Export  House-Grant    of additional  Import Licence to import goods  permitted  under the Import policy or those permitted at the time of  import- Import  of canalised item, Palm acid oil-Order  confiscating the  goods-Validity of-Held import was unauthorised  because the goods imported were banned under the import policy.

HEADNOTE:       The respondent-company applied for the grant of Export House Certificate under the Import Policy 1978-79 which  was denied  on  the  ground  that it  had  not  diversified  its exports.  The writ petition filed by the respondent  in  the Bombay  High  Court was allowed against which the  Union  of India  filed a Special Leave petition in this Court. By  its order  dated  April  18, 1985 (Union of  India  v  Rajniknat Bros.)  this Court dismissed the petition and  directed  the Union   of  India  to  issue  the  necessary  Export   House Certificate  to the respondent. The said order  stated  that "save  and except items which are specifically banned  under the  prevalent  import  policy at the time  of  import;  the respondent  shall  be  entitled to import  all  other  items whether  canalised  or  otherwise  in  accordance  with  the relevant rules."      By  its judgment dated 5th March, 1986 in  Raj  Prakash Chemicals v. Union of India. [1986] 1 S.C.R. 448 this  Court clarified its order dated 18th April, 1985 stating that only such items could be imported under the additional licence as were  permitted  under  the Import Policy  at  the  time  of import.  However, those additional licence holders  who  had opened and established irrevocable letters of Credit  before 18th October, 1985 should be permitted to clear the imported goods  notwithstanding  the clarification of  courts,  order dated  18th April, 1985. This judgment was approved by  this Court in its subsequent decisions.      Pursuant  to this court’s directions dated 18th  April, 1985  the respondent was granted Additional Licence for  the import  of Palm acid oil-a canalised item under  the  Import Policy  1985-88. On 5th May 1986 it entered into a  contract with  a Singapore firm and imported 4000 M.T. of  Palm  acid

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oil, The Collector of Customs confiscated the goods on the                                                   8 ground  that  import  was  unauthorised  because  it  was  a canalised item but gave the respondent an option to get  the goods released on payment of a fine of Rs. 58,00,000      The  respondent preferred an appeal before the  Customs Excise  and Gold (Control) Appellate Tribunal which  allowed the  appeal  and  set aside the  Collector’s  order  on  the grounds  that  :  (i) the Additional  Licence  Holders  were permitted  to  import canalised items; (ii)  the  import  by respondent  was bona fide; and (iii) the  respondent’s  case was covered by a judgment of this court in B. Vijay Kumar v. Collector of Customs,  Civil Appeal Nos. 4445 & 4446 of 1988 decided on December 16, 1988.      Against  the judgment of the Tribunal, Union  of  India filed an appeal before this Court.      Allowing th appeal, this Court,      HELD : 1. This court in its order dated April 18,  1985 categorically  stated that "save and except items which  are specifically banned under the prevalent import policy at the time of import, the respondents shall be entitled to  import all other items whether canalised or otherwise in accordance with  the  relevant rules."  There is no  ambiguity  in  the order  which  makes  it clear that  the  additional  licence holders would not be entitled to import the items which  are specifically  banned  under the import policy  1985-88.   No other interpretation is possible.  The item imported by  the respondent  was a banned item under the import policy  1985- 88.   The import was, thus, on the face of it  unauthorised. [11D-E,12-B]      2.  In the face of clear and unambiguous  judgments  of this Court it was not open for the departmental  authorities to entertain a contrary opinion.  The Departmental  officers were  not  justified  in  taking the  view  that  the  order permitted  the  import of canalised items.   Therefore,  the Tribunal fell into grave error in accepting the plea of bona fide raised by the respondent and setting aside the order of the Collector.  Accordingly the judgment of the Tribunal  is set  aside  and  the order of the Collector  of  Customs  is restored. [14-B 11E, 14-A, G]      Union  of  India  v. M/s Godrej Soaps  Ltd.,  [1986]  3 S.C.R. 771; Raj Prakash Chemicals v. Union of India,  [1986] 1  S.C.R.  448; Indo-Afgan Chambers of Commerce  &  Anr.  v. Union of India & Ors. etc., [1986] 3 S.C.R. 88; relied on.                                                         9      B. Vijay Kumar v. Collector of Customs., Civil  Appeals Nos.  4445  & 4446 of 1988 decided  on 16.12.1988,  held  no longer good law.      3.  The  respondent  entered  into  contract  with  the foreign exporter on May 5, 1986 much after OCTOBER 18,  1985 and  as  such  is  also not entitled  to  relief  under  the judgment dated 5th march, 1986. [12-F]

JUDGMENT:      CIVIL APPELLATE JURISDICTION :   Civil appeal No.  5148 (NM) of 1990.      From  the Order dated 26.3.1990 of the Customs,  Excise and Gold (Control), Appellate Tribunal, New Delhi in  Appeal No. 3773/87 CA. Order NO. 773/90-A.      A. Subba Rao and P. Parmeshwaran for the Appellant.      Anil  B.  Divan  C.S.  Lodha,  Sumeet  Kachwaha,   R.P. Wadhwani and Abbas Naqvi for the Respondent.      The Judgment of the Court was delivered by

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    KULDIP SINGH, J. The respondent, Shashikant &  Company, had applied for the grant of Export House Certificate  under the  Import Policy 1978-79.  The Certificate was  denied  on the  ground  that  the respondent had  not  diversified  its exports,  Against the said order the writ petition filed  by the respondent was allowed by the Bombay High Court and  the respondent   was   held  entitled  to   the   Export   House Certificate.   Special leave petition filed by the Union  of India against the said order was heard along with a bunch of similar  petitions  under  the  title  Union  of  India   v. Rajnikant  Brothers.  The petitions were dismissed on  April 18, 1985 by an order in the following terms :           "We  have heard counsel for the parties  and  have          gone  through  the  judgement of  the  High  Courts          of  Bombay  and Delhi.  We are unable to  find,  in          the  facts  and   circumstances of  the  case,  any          requirement  of  diversification of  exports  as  a          condition   for   the   grant   of   Export   House          Certificates  in  the Import Policy  for  the  year          1978-79.    While  confirming  the   High   Court’s          Judgment  quashing the order impugned in  the  Writ          Petition   in   the  High  Court  we   direct   the          appellants  to  issue the  necessary  Export  House          Certificates  for  the year  1978-79.   The  Export          House  Certificates  shall  be  granted  within   3          months from this date. Save                                                        10           and  except  items which are  specifically  banned          under  the prevalent import policy at the  time  of          import,  the  respondents  shall  be  entitled   to          import   all  other  items  whether  canalised   or          otherwise  in accordance with the  relevant  rules.          The  appeals  are disposed of accordingly  with  no          order as to costs.      Pursuant  to the above quoted directions of this  Court the respondent   was   granted  additional   licence   dated September 4, 1985 for the import of Palm acid oil which  was a  canalised  item  under the Import  Policy  1985-88.   The respondent entered into a contract dated May 5, 1986 with  a Singapore  firm  for supply of 4000 M.T. of Palm  acid  oil. The  invoice  in  respect of the  said  contract  was  dated september 1, 1986 and the respondent filed the Bill of Entry on September 11, 1986.      The  Collector  Customs Calcutta by  his  order  dated, October  31, 1986, confiscated the goods on the ground  that the   import   of  Palm  Acid   Oil-a   canalised   item-was unauthorised.  The respondent was, however, given the option to  get  the  goods released on payment of  a  fine  of  Rs. 58,00,000/- in lieu of confiscation.      The appeal filed by the respondent before the  Customs, Excise  &  Gold (Control)  Appellate  Tribunal  (hereinafter called  ‘the  Tribunal’)  was  allowed  and  the  order   of Collector  confiscating  the  goods  was  set  aside.    The Tribunal  directed  the refund of the redemption fee to  the respondent.      The  tribunal  decided  in  favour  of  the  respondent broadly  on  three grounds, It came to the  conclusion  that till  September 12,1986, when this Court delivered  judgment in Union of India v. M/s Godrej Soaps Ltd. [1986] 3 SCR 771, the customs authorities were interpreting the order of  this Court dated April 18, 1985 (Rajnikant Case) to mean that the additional licence holders were permitted to import even the canalised items.  Secondly the import by the respondent  was bona fide because of the following factors :           (a)  On April 3, 1986 in a meeting attended by  Mr.

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        Swaminathan,  Member, Central Board of  Excise  and          Customs,  Mr  R.M. Singh,  Principal  collector  of          Customs  and the representatives of the  Federation          of  India Export Organisation, it was decided  that          the import of items, which were under Open  General          Licence  during  1978-79 and  were  categorised  as          canalised under the Import Policy 1985-88, would be          allowed to the additional licence holders.          (b)  The  Government of India in its  letter  dated          April 23, 1986 stated                                                   11          that  the  Chief  Controller  Imports/exports,   in          consultation with the Additional Solicitor General,          has  permitted  the additional licence  holders  to          import canalised items against their licences.          (c) The Collector in his letter dated May 14,  1986          observed that clearance of canalised items  against          the  additional licences was being  unconditionally          allowed.      The  Tribunal,  therefore, found that  the  respondent, having  acted  on  the representation  of  the  Departmental authorities, was justified in importing the canalised  item. Thirdly the Tribunal relied on the judgment of this Court in B.  Vijay Kumar v. Collector of Customs, Civil Appeals  Nos. 4445 & 4446 of 1988 decided on December 16, 1988 and granted relief to the respondent in similar terms.                                                   11 that  the Chief Controller Imports/exports, in  consultation with the Additional Solicitor, has permitted the  additional licence  holders  to import canalised  items  against  their licences.      (c)  The  Collector in his letter dated  May  14,  1986 observed  that  clearance  of canalised  items  against  the additional licences was being unconditionally allowed.      The  Tribunal,  therefore, found that  the  respondent, having  acted  on  the representation  of  the  Departmental authorities,  was justified in importing the canalised item. Thirdly the Tribunal relied on the judgment of this Court in B. Vijay Kumar v. Collector of Customs, Civil a Appeals Nos. 4445 & 4446 of 1988 decided on December 16, 1988 and granted relief to the respondent in similar terms.      This appeal before us if by the Union of India  through Collector  Customs  Calcutta  against the  judgment  of  the Tribunal.      We have heard Mr. A. Subba Rao, learned counsel for the appellant  and Mr. Anil Divan, Senior Advocate on behalf  of the  respondent.   This Court in its order dated  April  18, 1985  (Rajnikant case) categorically stated that  "save  and except  items  which  are  specifically  banned  under   the prevalent   import  policy  at  the  time  of  import,   the respondents  shall  be entitled to import  all  other  items whether  canalised  or  otherwise  in  accordance  with  the relevant  rules."  There is no ambiguity in the order  which makes it clear that the additional licence holders would not be  entitled  to  import the items  which  are  specifically banned  under  the  import   policy   1985-88.    No   other interpretation  is  possible.   Some  of  the   Departmental officers  were  not justified in taking the  view  that  the order permitted the import of canalised items.  In any  case this  Court  in  Raj Prakash Chemicals v.  Union  of  India, [1986]  1 SCR 448 decided on March 5,  1986  authoritatively interpreted the order dated April 18, 1985 (Rajnikant  case) as under :           "the  Additional Licences to be issued to  diamond          exporters entitled them to items import permissible

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        to Export           House under such Licence  under          the Import Policy           1978-79 excluding those          items which fell within           Appendices 3  and          4  of the Import Policy 1978-79 and            also          excluding  items  which  fell in   Appendix  3  and          Appendix  2 Part A of the  Import            Policy          1984-   85.  Upon  what  we  have   said   earlier,          that  is  the meaning which we think must  also  be          given  to  the terms of the order dated  April  18,          1985  of  this   Court.  Where  the  Import  Policy          prevailing at the time of import                                                   12           is  the Import Policy 1985-88, the items  excluded           are those enumerated in the corresponding Appendix           3  and  Appendix 2 Part A of that  Import  Policy.           That   conclusion  follows  irresistibly  on   the           analysis  attempted  by us and in the  context  in           which the order was made."      This Court thus clarified that only such items could be imported  under  the additional licence  as  were  permitted under  the  import policy 1978-79 and also at  the  time  of import,  which  in the present case was  the  import  policy 1985-88.   Admittedly, the item imported by  the  respondent was  a  banned item under the import  policy  1985-88.   The import  was,  thus, on the face of  it  unauthorised.   This Court in Raj Prakash’s case, however, granted relief in  the following   terms,  to  those  importers  who   had   opened irrevocable Letters of Credit before october 18, 1985 :           "We think appropriate that those diamond exporters          who  were  granted additional  Licences  under  the          Import   Policy   1978-79  and   had   opened   and          established  irrevocable letters of  Credit  before          October    18,    1985   should    be    permitted,          notwithstanding the construction we have placed  on          the  order dated April 18, 1985 of this  Court,  to          clear  the  goods imported, or to be  imported,  by          them  pursuant  to  such  irrevocable  Letters   of          Credit.   In  other  words,  all  imports  effected          perusant  to  such  Letters  of  Credit  should  be          deemed to have been legally and properly made,  and          should  entail no adverse  consequences  whatsoever          .........At  the  same time we make it  clear  that          diamond  exporters  who pursuant to  the  issue  of          Additional  Licences under the Import Policy  1978-          79 have opened and established irrevocable  Letters          of Credit on or after October 18, 1985 will not  be          entitled to the benefit of this order.      The respondent in this case entered into contract  with the  foreign exporter on May 5, 1986 much after October  18, 1985  and as such is not entitled to relief under the  above judgment.      The  order  dated April 18, 1985 (Rajnikant  case)  and also the judgment dated March 3, 1986 in Raj Prakash’s  case were  considered by this Court in Indo-Afghan   Chambers  of Commerce  & Anr. v. Union of India & Ors. etc. [1986] 3  SCR 88.  Pathak,  J.  (as he then was) speaking  for  the  Court summed up the legal position as under :           "only   such  items could be imported  by  diamond            exporters under                                                   13           the Additional granted to them as could have  been          imported  under  the  Import  Policy  1978-79,  the          period  during  which  the  diamond  exporters  had          applied for Export House Certificates and had  been          wrongfully refused, and were also importable  under

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        the  Import  Policy  prevailing  at  the  time   of          import,  which  in the present case is  the  Import          Policy  1985-88.   These were the items  which  had          not been "specifically banned" under the  prevalent          Import  Policy.  The items had to pass through  two          tests.  They should have been importable under  the          Import Policy 1978-79.  They should also have  been          importable  under  the  Import  Policy  1985-88  in          terms    of    the   order    dated    April    18,          1985..........In   our  opinion   the   respondents          diamond  exporters are not entitled to  import  dry          fruits  under the Import Policy 1985-88  under  the          Additional  Licences possessed by them.   They  are          also  not entitled to the benefit extended  by  the          judgment  of  this  Court dated March  5,  1986  to          those  diamond  exporters who  had  imported  items          under  irrevocable  Letters of  Credit  opened  and          established  before October 18, 1985.   It  appears          from  the  record before us  that  the  respondents          diamond   exporters  opened  and  established   the          irrevocable Letters of Credit after that date."      In Union of India v. M/S Godrej Soaps Pvt. Ltd. [1986] 3  SCR 771 decided on September 12, 1986 this Court  finally considered the judgments in Raj Prakash and Afghan  Chambers cases and approved the ratio therein in the following words:           "In  respect of Palm Kernel Fatty Acid which is  a          canalised   item listed as item 9(v) in Appendix  V          Part  B of the Import Policy 1985-88, there  is  no          provision  in that policy which permits the  import          of  such  item  by  an  Export  House  holding   an          Additional  licence.  Therefore, the claim  of  the          diamond exporters, or, as in this case a  purchaser          from the diamond exporter, must fail because it  is          not  open to import by the diamond exporter,  under          any   provision   of  the   Import   Policy   1985-          88......In  this  case no injustice would  be  done          by  this  order.  The goods were purchased  by  the          present petitioners only on 27th  June, 1986  after          they  were aware of the judgment of this  Court  in          Raj  Prakash’s case (supra) as well as  Indo-Afghan          Chambers  of Commerce’s case (supra).  No  question          of any restitution of rights arises."      There  was  no ambiguity in the order dated  April  18, 1985  (Rajnikant’s case). Assuming it needed  clarification, the same was done by this Court on                                                   14 March 5, 1986 in Raj Prakash’s case.  The respondent entered into contract for the import of the item on May 5, 1986 much after  the judgment in Raj Prakash case. We are of the  view that  the  Tribunal fell into grave error in  accepting  the plea of bona fide raised by the respondent and setting aside the  order  of  Collector.  The opinions  expressed  by  the officers  in  interdepartmental  communications  is  of   no consequence.  In the face of clear and unambiguous judgments of this Court it was not open for the department authorities to entertain a contrary opinion      It  is  no  doubt correct that the  facts  in  B  Vijay Kumar’s  case  relied  upon by  the  Tribunal  are  somewhat similar to the facts in this case. This Court decided  Vijay Kumar’s  case on the special facts and circumstances of  the said  case.   This Court while deciding Vijay  Kumar’s  case observed as under :           "We  do  not consider it necessary  to  deal  with           these  submissions  in  detail as we  are  of  the           opinion  that  in view of the  special  facts  and

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         circumstances of the case specially having  regard           to   the  findings  of  the  Tribunal   that   the           appellants  imported the canalised items of  goods           bonafide  under  the  additional  import   licence           granted  to  them  in  pursuance  of  the  express           conditions contained in the orders of this  Court,           which  finding has not been challenged  before  us           rather the Additional Solicitor General has fairly           conceded the  correctness of the findings  of  the           Tribunal   relating   to  the  bonafide   of   the           appellants in importing the disputed goods, we are           of  the view that the Collector and  the  Tribunal           both were not justified in confiscating the  goods           or  in imposing redemption fine..........We  would           like  to emphasise that since we have decided  the           matter   in   view  of  the  special   facts   and           circumstances available in these cases this  order           will not be treated as a precedent."      Even otherwise, in view of the judgments of this  Court discussed above, we hold that  B Vijay Kumar’s case does not lay-down correct law.      We,  therefore, allow the appeal with costs, set  aside the  judgment of the tribunal and restore the order  of  the Collector Customs Calcutta confiscating the goods and giving an  option  to the respondent to get the goods  released  on payment  of  fine of Rs. 58,00,000 (fifty eight  lacs).   We quantify the costs as Rs. 11,000 T.N.A.                                       Appeal Allowed.                                                   15