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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

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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 The said  customs duty was withdrawn on 4.12.87 and as such there was nil duty on palm Kernel, and this position remained upto 28.1.88.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

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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

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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: