Bimal Chandra Basak, J.
1. This appeal is directed against a judgment and order passed on 19th April, 1988 whereby the learned Trial Judge allowed the Writ Petition and made the Rule absolute. The learned Judge directed as follows: -
'In the result, the rule is made absolute. The Writ in the nature of Mandamus do issue directing the respondents to treat the palm kernel is an item different and distinct from palm seed and the same should be treated under O.G.L. and is covered under Item No. 1, Appendix 6 of the Import Policy of 1985-88 and could import the same under O.G.L. subject to condition of Item 1 of Appendix 6. Further the respondents are directed to clear the goods immediately which was imported pursuant to the contract dated 10-6-1987 and further the respondents are directed to allow the petitioner to import the goods already arrive or is likely to be arrived pursuant to the contract dated 10-6-1987. The goods should be allowed to be cleared on payment of such duties as so leviable as on 28-1-1988. The writ in the nature of certiorari do issue quashing the order of adjudication being No. 1/87, dated 7th December, 1987 passed by the Collector of Customs, Guntur including the show cause notice issued in this behalf. The writ in the nature of prohibition to be issued prohibiting the respondents from giving effect or taking any steps pursuant to the adjudicating proceeding and the show cause notice issued in this behalf and/or from taking any action against the petitioner or putting any impediment and/or obstruction in the matter of release of the pain) kernel imported on the basis of the said agreement dated 10-6-1987. There wi be no order as to costs.'
2. This writ petition was moved by making the following prayers: -
'It is, therefore, respectfully prayed as under:
(a) that this Hon'ble Court may be pleased on direction the respondents to produce all the relevant records concerning and/or relating to the matters referred to above the other relevant records.
(b) that this Hon'ble Court may be pleased to issue a declaration that palm kernel is a different and distinct commodity from palm seeds and can be imported by petitioners under OGL falling under Entry 1 of Appendix 6 of the Import Policy for the years 1985-86.
(c) that this Hon'ble Court may be pleased to issue a writ of Mandamus and/or direction commanding the respondents, their Officers, servants and/or agents to permit the petitioners to import 35000 MT of palm kernels in terms of its contract dated 10th June, 1987.
(d) that this Hon'ble Court may be pleased to issue a writ of Mandamus and/or any other appropriate writ, order and/or directions commanding the respondents Nos. 3 and 4 and their officers, servants and/or agents to permit clearance of 35000 MT of Palm Kernels which may be imported by the petitioner in terms of the said contract dated 10th June, 1987.
(e) that this Hon'ble Court may be pleased to issue an appropriate writ, order andfor direction while injuncting and prohibiting the respondent No. 2 by itself, its officers, employees, servants, from taking any action causing hindrance in the release of the goods by respondent No. 2 or issuing instructions for initiating any action under Clause 10 for action under Clause 8 and 10-C of the Imports (Control) Order, 1955.
(f) An interim order directing respondents Nos. 3 and 4 by themselves, through their employees, officials, servants to clear the petitioner's goods forthwith on its arrival at Port shipped pursuant to the contract dated 10-6-1987.
(g) an interim order restraining the respondent No. 2 from issuing any direction to respondent Nos. 3 and 4 not to release the goods or initiating any action under Clause 10 for action under Clauses 8 and 10C of the Imports (Control) Order, 1955.
(h) Ad-interim order in terms of prayers (f) and (g).'
3. The facts of this case are as follows:
The latest Import and Export Policy was issued for the period from April, 1985 to March, 1988. The preface to the said book states. 'This is in pursuance of the Government's objective of bringing in continuity and stability of import and export policy'.
4. Clauses 1 of the said Import and Export Policy is set out hereinbelow: -
'1(1) The Import and Export Policy for the period April, 1985 - March, 1988 is being published in two volumes. Vol. I contains the Imports and Exports Promotion Policy, and Vol. II contains the Policy in respect of items under Export Licensing. The policy in this Book has been brought into effect under the Gazette of India Extraordinary dated the 12th April, 1985.
(2) The Import and Export Policy is being announced this time for the three years' period from the date of announcement till 31st March, 1988 in consonance with the Government's objection of bringing in continuity and stability of Import and Export Promotion policies. However, the Government reserves the right to make amendments/changes in this policy which may become necessary in public interest from time to time during the above period. Amendments etc., if any, will be notified, as usual, by means of public notices/amendment orders etc. issued by the Chief Controller of Imports and Exports from time to time. Provisions of this Policy Book are subject to such amendments or changes as and when notified.
(3) Instructions and guidelines contained in this Book are applicable subject to such amendments/changes as may be made from time to time.
(4) Although this policy is for three years' period, the licensing will continue to be on annual basis and all entitlements worked out accordingly, as hitherto.
(5) Wherever the word 'year' or 'licensing year' appears in this policy, they should be construed to mean 'financial year' beginning from 1st April to 31st March.'
5. The Imports and Exports (Control) Act, 1917 empowers the Central Government to prohibit, restrict or otherwise control imports and exports. In exercise of the power conferred by this Act, the Imports (Control) Order, 1955 has been issued. Schedule-I to the said order contains the list of articles of which imports are controlled. The import of such items is prohibited except (i) under and in accordance with a licence or a customs clearance permit issued under the said order, or (ii) if they are covered by an Open General Licence (Subject to such conditions as may be stipulated), or (iii) if they are covered by the Savings Clause 11 of the Imports (Control) Order.
6. The petitioners are supposed to have entered into a contract with a London seller on 10th June, 1987 for import of 'Palm Kernel'. The main dispute sought to be raised was as to whether 'Palm Kernels' are 'Palm seeds'. If 'palm kernels' are 'palm seeds', then it is a canalised item falling under Appendix V, Part B, paragraph 5, of the said policy, before its amendment. If it is so, then such import can only be allowed by State Trading Corporation/Hindustan Vegetable Oil Corporation, New Delhi, a Government of India Undertaking, under Open General Licence. We set out herein-below Appendix 5, Part B, Para 5 : -
'Oils/Seeds:
5. In the case of the following items whether edible, or non-edible, import will be made by the State Trading Corporation of India (STC)/Hindustan Vegetable Oils Corporation, New Delhi (A Government of India Undertaking) under Open General Licence on the basis of foreign exchange released by the Government in its favour. Imports, distribution and their pricing will be made by the STC/Hindustan Vegetable Oils Corporation, New Delhi as per the connected policy of the Government, in the Ministry of Food and Civil Supplies, Department of Civil supplies: -(1) Coconut Oil 424.3000 15.07(2) Copra 223.1000 12.01(3) Groundnut oil 423.4/22.1 15.07/12.01(4) Palm oil (all types, including palm 223.2000/424.2000 12.01/15.07olein and other fractions)/Palm Seeds.(5) Rapeseed Oil/Seeds 222.6000/423.9100 12.01/15.07(6) Safflowers oil/Seeds 223.8008/424.9008 12.01/15.07(7) Soyabean oil/Seeds 222.2000/423.2000 12.01/15.07(8) Sunflower oil; and 222.4000/423.6000 12.01/15.07(9) Cotton Seed Oils 222.3000/423.3000 12.01/15.07
All other oils/iteeds, whether edible or non-edible including vegetable fats, not specifically mentioned above or elsewhere in this policy, (but excluding Tung oil/China Wood oil and natural essential oils) will also be imported only by STC/Hindustan Vegetable Oils Corporation, New Delhi under these provisions.'
Item 1 of Appendix 6 is set out hereinbelow:
'Raw materials, components and consumables (non-iron and steel items) other than those included in the Appendix 2,3 Part-A, 5 and 8.'
7. Various other questions also arose in view of the subsequent event which we shall consider later on. The; contention of the petitioners is that they are entitled to import the same as raw materials in view of the Import Trade Control Order No. 68/85-88, Open General Licence No. 1/87 dated 1st April, 1987 which provided as follows :-
'Import Trade Control Orders:
Import Trade Control Order No. 68/85-88 Open General Licence No. 1/87 dt. 1st April, 1987.
In exercise of the powers conferred by Section 3 of the Import and Export (Control) Act, 1947 (18 of 1947), the Central Government hereby gives general permission to import into India from any country, except the Union of South Africa/South-West Africa, raw materials, components and consumables by Actual Users (Industrial), subject to the following condition:-
The items to be imported are not covered by Appendices 2,3,5 and 8 of Import and Export Policy for 1985-88 (Vol. 1) as amended from time to time by issue of a Public Notice in the Official Gazette.'
'Clause 32- Such goods are shipped on through consignment to India on or before 31st March on the licensing year or, in the case of Actual User (Industrial), on or before 30th Jurle of the following licensing year against firm orders for which irrevocable letters oF credit are opened and established on or before last date of February of the licensing year, without any grace period whatsoever;
Clause 33- Notwithstanding what has been provided in condition No.(32) above, in case any item is taken out of Open General Licence in the public interest by issue of a Public Notice in the Official Gazette, the Government reserves the right to stipulate 3 time limit by which shipment should be made against firm orders backed by irrevocable Letters of Credit opened and established by eligible importers before the date of issue of the public Notice.
Clause 34- Nothing in this licence shall affect the application to any goods of any other prohibition or regulation affecting the import thereof, in force at the time when such goods are imported.'
8. The respondents entered into the said contract for importation of 35,000 M.T. of 'Palm Kernel'.
9. By a letter dated 21st January, 1987 the Central Plantation Crops Research Institute informed a trader as follows:
'Palm Oil: Extracted from the mesocarp.
Palm Kernel oil: After mesocarp oil extraction the kernels are separated by a process called depericarping, shelled in rotary crackers and oil is extracted from the endosper.
Palm seed: The fruits are separated from bunch and seeds are extracted by scrapping off the exocarp and mesocarp with a knife or by retting in water or by other mechanical means. For retting the fruits are immersed in either running or still water for 10 days. The process is completed by pounding the fruits mixed in a wooden morter to remove adhering mesocarp. The seeds are then dried by spreading them on concrete or wooden floors under shade for 2 days. Such seeds can be stored for 3-9 months at about 27C without much reduction in validity.
Palm Kernel: The FFB (Fresh Fruit Bunch) is brought to the factory sterilised by heating with steam for about 20 minutes and this helps in softening. Then fruits are separated using slotted steel drum and digested at 95C and then passed through press to separate liquid component. The figre and nut pass to the depericarpet and separated. The nuts are shelled and kernel is obtained.
Difference between palm kernel and palm Seed:
Palm seed is specially extracted from fruits as indicated under palm seed. Kernel is a product obtained after sterilisation, digestion at 95C, pressing, decarping, shelling etc. The palm kernel will lose its viability due to above processes and cannot be used for germination'.10. On the 3rd February, 1987, one trader wrote a letter to the Chief Public Relations Officer, Customs House, Central Revenues Building, New Delhi, stating that they wanted to import 'palm kernel'. They wanted to know whether 'Palm kernel' would be assessed as 'Palm seeds' and exempted from basic customs duty under the notification dated 1.7.7.7. They also wanted to know whether the notification of the said exemption is not available to 'Palm kernel' and how 'Palm kernel' would be assessed and the rate of duty applicable to it. In reply thereto, the office of the Collector of Customs informed the trader concerned that the import of palm kernel may not be covered under Notification dated 1.7.77 and that it may be classified under Customs Tariff Heading No. 1207.10 and the rate of duty would be as under:
i) Basic Duty 60% adv.ii) Aux. Duty 40% adv.11. By a letter dated 12th June, 1987 addressed to one Ganeshdas Bhojraj, the Deputy Chief Controller of Imports and Exports clarified that the item 'palm kernel' is a part of the palm seeds and therefore, the policy applicable to the main item, i.e. palm seed is applicable to its part as well, It is further stated that accordingly import of palm kernel is covered under item No. 4 of Serial No. 5 of Appendix 5 Part B of Import and Export Policy, 1985-88 (Volume-I) and as such its import is canalised through S.T.C.
12. By a letter dated 27th July, 1987 Oil Palm India Limited which is a Joint Venture of the Government of Kerala and the Government of India, informed the writ petitioner that 'in trade parlance if you ask for palm seed we cannot supply palm kernel and vice verse as they are completely two different items'. It was stated that the seed by definition should be capable of germination while kernel is not, as it is extracted out of palm nut after sterilisation of fruits. Palm nuts includes kernel and shell.
13. By a letter dated 13th August, 1987, the Ministry of Agriculture, Department of Agriculture and Co-operation of the Government of India, informed a trader that though palm kernel is different from palm seed, palm kernel is taken out of the palm seed only. Both yield palm kernel oil on extraction.
14. Previously, there was a notification dated 1.7.77 in exercise of the power conferred by Sub-section (1) of Section 25 of the Customs Act, 1962 which provides as follows : ,
'Notification No. 127/77-Cus. dt. 1.7.1977.
In exercise of the powers conferred by Sub-section (1) of Section 25 of the Customs Act, 19621 (52 of 1962), and in supersession of the Notification of the Government of India in the Department of Revenue and Banking (Revenue Wing), No. 14-Customs, dated the 22nd January, 1977, the Central Government being satisfied that; it is necessary in the public interest so to do, hereby exempt palm seeds, rapeseeds, soyabean seeds, sun-flower seeds and ground-nut seeds, falling within Chapter 12 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when imported into India, from the whole of the duty of customs leviable thereon which is specified in the said First Schedule.'
15. On 27th July, 1987, a public notice was published by the Chief Controller of Imports and Exports to the following effect :-
'Government of India
Ministry of Commerce
Import Trade Comtrol
Public Notice No. :205-IIC(PN)/85-88
New Delhi, Dated the 27th July, 1987
Subject: Import and Export Policy for April, 1985 - March, 1988.
Attention is invited to the Import & Export Policy for April, 1985 - March 1988, published under the Ministry of Commerce Public Notice No. I-IIC (PN)/85-88 dated the 12th April, 1985 as amended.
The following amendment shall be made in the policy at appropriate places indicated below :-
----------------------------------------------------------------------Sl.No. Page No. Reference Amendmentof Import& ExportPolicy1985-88Vol. I)----------------------------------------------------------------------(1) (2) (3) (4)------------------------------------------------------------------------1 157-158 Appendix The second paragraph under this item shall be5 part B substituted by the following :-Item Nb.5Oils/Seeds All other oils/seeds any other material fromwhich oil can be extracted, whether edible ornon-edible including vegetable fats, notspecifically mentioned above or elsewhere in thispolicy, (but excluding Tung Oil/China Wood Oil andnatural essential oils) will also be imported onlyby STC/Hindustan Vegetable Oils Corporation, NewDelhi under these provisions.-------------------------------------------------------------------------------2. The above amendment in the Import and Export Policy has been issued in the public interest.
Sd/-R.L. Misra(R.L. MISRA) ChiefController of Imports & Export;16. On the 28th July, 1987, the trial Court issued a Rule and interim order in terms of prayers (e) and (f) of the petition on condition that the petitioner shall furnish a Bank Guarantee for l/4th of the value of the goods and secure 3/4th by furnishing a Bond whereupon the respondent was to release the goods.
17. On 3rd August, 1987, the writ petitioner mentioned the matter before the learned Judge. The earlier order was recalled and it was directed that the full amount of the Customs duty in Cash to be determined and assessed by the Customs Authorities is to be paid and further order was made - for furnishing a Bond for the entire value of the goods on such payment and furnishing Bond the appellants were directed to release the goods.
18. On 18th September, 1987, the appellants being aggrieved by the interim order dated 27th July and 3rd August, 1987, preferred an appeal before a Division Bench of this Court whereupon the Division Bench directed that in case the Writ petitioner respondent chooses to import the palm kernel pursuant to the order of the learned trial Judge under appeal, the imported goods will be kept in a bonded warehouse or in any other warehouse approved by the Customs Authorities and until further order the respondent being the writ petitioner would not take delivery of the same.
19. On 2nd/3rd October, 1987, the imported goods entered into the territorial waters of India and arrived at the Port of Kakinada.
20. On an application being made by the Writ petitioner on 15th October, 1987, to the Assistant Collector of Customs, Kakinada for allowing the authorities to keep the palm kernel cargo in a bonded warehouse or in any other warehouse approved by the Customs Authorities till the final disposal of the case before the High Court, the said Assistant Collector passed an order on 18-10-1987 for allowing warehousing of the goods under Section 80 of the Customs Act on the writ petitioner/executing a general bond to that effect. The writ petitioner accordingly executed the bond.
21. The appeal court passed an order on the 2nd December, 1987 in the appeal referred to hereinabove preferred by the appellant herein. The appeal and the application were heard together and the records of proceedings before the first Trial Court were produced and considered. After hearing the respective submissions the appeal and the application were disposed of by the following order:
'This appeal is against interim orders passed in the pending writ petition on the 28th July and the 3rd August, 1987. The learned Judge in the first court gave to liberty the petitioner to pay the full amount of Customs duty in cash, a fresh Bond for the entire value of the goods detained and thereafter to release the goods.
It is stated on behalf of the respondents that the Collector of Customs has already issued a notice under Section 124 of the Customs Act, 1963 initiating proceedings for confiscation of the goods. The Respondents have appeared before the Collector and filed their representation against the proposed confiscation.
In the view, learned Advocate for the appearing respondents submitted that the orders under appeal may be set aside and the proceedings before the Collector expedited. Accordingly, the said two orders under appeal are set aside. The appellants are directed to expedite the proceedings initiated under Section 124 of the Customs Act, 1963 and dispose of the same within ten days from the date of communication of this order. Liberty is given to the parties and each of them to communicate this order to the Collector of Customs. It is stated on behalf of the appearing respondents that they will not obtain unnecessary adjournments of the proceedings before the Collector of Customs so that the same can be disposed of within the specified time.
This order is passed without prejudice to the rights and contentions of the parties in the pending writ petition, for the expeditious disposal of which the following directions are given at the instance of the parties.
Affidavit in opposition to the Writ petition to be filed by the 22nd December, 1987, affidavit-in-reply if any to be filed by the 10th January, 1988. Liberty is given to the parties to apply before the first Court for early disposal of the writ petition. It is expected that the matter will be disposed of expeditiously by the first Court. We make it clear that we have not adjudicated on the merits of the disputes and the parties will be at liberty to agitate all their claims and contentions before the Collector of Customs and in the pending writ petition.
There will be no order as to costs.
All parties to act on a signed copy of the dictated order on the usual undertaking.'
22. The Collector of Customs by adjudication order dated 7-12-1987 held that the item 'Palm Kernel' is prohibited for import except by the S.T.C. in terms of the I.T.C. Policy for 1985-86 and consequently the importation of 11,570.570 MT of Palm Kernel of Nigerian origin, valued at Rs. 2,88,88,414/- CIF value without a valid licence by the writ petitioner through Kakinada Port is in contravention of the provisions of Section 111(d) of the Customs Act, 1962 read with Section 3(2) of the Imports and Exports (Control) Act, 1947. Accordingly, the following order was passed.
'(i) I confiscate to Government the quantity of 11,570.570 MT of palm kernel, valued at U.S. $ 21,98,408.30 (Rs. 2,88,88,414/-) under Section 111(d) of the Customs Act, 1962 read with Section 3 (2) of the Import and Export Control Act, 1947 as amended. However, in terms of Section 125 of the Customs Act, 1962, I give the Importers an option to redeem the goods on payment of a fine of Rs. 90,00,000/- (Rupees Ninety lakhs only). The option should be exercised within one month of the date of this order.
(ii) I also impose on the Importers, namely, M/s. Priyanka Overseas Pvt. Ltd., New Delhi, a personal penalty of Rs. 10,00,000/- (Rupees Ten Lakhs only) in terms of Section 112(a) of the Customs Act, 1962.'
On 17-12-1987 the petitioners exercised their option within the period specified by the Adjudicating Officer partly by taking delivery of 3935.364 MT valued at Rs. 10 crores on payment of personal penalty of Rs. 10 lakhs and on part payment of the redemption fine to the tune of Rs. 35 lakhs. It is to be pointed out that the balance amount of Rs. 55 lakhs roughly was paid by them later. It is to be pointed out that the writ petitioners already filed a statutory appeal against the adjudication order dated 4-12-1987. On 28-1-1988 the Bill of Entries were filed before the authority concerned. In exercise of the powers conferred by Sub-section (1) of Section 25 of the Customs Act, 1962, the Central Government by a notification dated 29-1-1988 rescinded the Notification of the Government of India No. 127/77-Customs, dated 1-7-1977. The explanatory note pointed out that this notification has the effect of withdrawing the exemption from basic customs duty on soyabean seeds, rapeseeds etc. which are covered by Notification No. 127/77-Customs, dated 1-7-1977. The admitted position is that by notification dated 29-2-1988 customs duty was increased to 200% ad valorem and surcharge 5% under the Finance Act, 1988 was imposed. The original writ petition challenging and/or contending that the duty is not payable by the applicants and challenging the said Adjudication order dated 4-12-1987 came up for hearing before the learned Trial Judge. By a judgment and order dated 19-4-1988, as already stated, the application was allowed and the rule was made absolute and certain orders were passed and directions given.
23. The learned Judge held that in view of the proposition laid down by the Supreme Court that meaning of an article should be ascertained not on the basis of scientific or technical meaning but on the basis of common parlance meaning, it must be held that 'palm kernel' is a different commercial commodity to that of palm seed. The learned Judge was inclined to accept that view particularly in view of the fact that from 'Palm kernel' no germination is possible whereas from 'palm seed' germination takes place and it is possible. The learned Judge further held that merely because palm kernel comes out of palm seed, palm kernel cannot be equated with the palm seed as some of the characteristics of palm seed is lost. According to the learned Judge the simple test in that behalf is whether in commercial world a person goes to purchase palm kernel whether he will be offered palm seed and vice versa. The learned Judge held that Public Notice dated 27-7-1987 is administrative in character and by means of the said Public Notice amendment was brought into Appendix 5.
24. Being aggrieved by the said Judgment and order, this appeal has been preferred by the Collector of Customs.
25. The question before us is whether 'Palm Kernel' comes under the expression 'palm seeds', that is, whether it comes under Appendix 5 or Appendix 6. The contentions of the writ petitioners are that the 'palm kernels' are not 'palm seeds' and accordingly it is not a canalised article. According to the department 'palm kernels' will come under 'Palm Seeds' and it is a canalised article and no one except the authority referred to in the Appendix 5, can import the same. Alternatively, it is argued on behalf of the Writ Petition that in view of Import Control Order passed under Section 3 of the Imports and Exports (Control) Act, 1947 this being 'raw material' it is allowed to be imported by the writ petitioner. On the other hand, according to the department, in any. event, in view of the notification dated 27-7-1987 Item 5 of Appendix 5 Part B stands amended and the position is that any material from which oil can be extracted comes within Appendix 5 and therefore not allowed to be imported as raw material within the meaning of 1-4-1987 order. The amendment was to the following effect:
-----------------------------------------------------------------------------------57-158 Appendix 5 The second paragraph under this item shall be substitutedPart B Item by the following:No. 5 All other oils/seeds/any other material from which oilOils/Seeds can be extracted, whether edible or non-edible includingvegetable fats, not specifically mentioned above or elsewhere in this policy, (but excluding Tung oil/China seedoil and natural essential oils) will also be imported onlyby STC/Hindustan Vegetable Oils Corporation, New Delhi underthese provisions.----------------------------------------------------------------------------------------26. The second question is what duty is to be paid if it is held that it was not a canalised item and that the importation of the item by the writ petitioner was not unauthorised. On behalf of the writ petitioners it is said that though admittedly the goods landed in October 1987 but the goods were shipped between May and June 1987 and that the date of shipping is the relevant date.
27. The third question is even if palm kernels are not palm seeds and therefore not a canalised item and whether the rate of duty shall be on the date of filing the Bills of Return that is, whether the duty to be paid is the duty on 28th January or on the basis of 29th January order.
28. The last contention is, in respect of the goods which have not yet been imported or shipped but under contract - whether they can be imported now on by the Writ petitioners or if imported what will be the rate of duty.
29. On behalf of the writ petitioners it is contended as follows :-
Our attention was drawn to entry 1 of Appendix 6 and entries 5 and 6 of Appendix 5. It was contended that 'Palm Kernel' and 'palm seed' are two different things in the commercial field and palm kernel cannot be treated as palm seed to bring it under Appendix 5 to make it canalised item but it comes under Appendix 6 which is covered by open general licence. In this connection our attention was also drawn to different letters and communication which we have referred to above. It is admitted that if this question goes against the writ petitioners then the other questions will not arise. 30. If we hold that the palm kernels are not canalised item but that they can be imported under the 'open general licence' then the next question is what would be the rate of duty. In this connection our attention was drawn to the 1-7-1977 notification issued under Section 25(1) of the Customs Act, 1962. Which exempted palm seeds, rapeseeds, soyabean seeds, sun-flower seed from the whole of duty of customs therefrom which is specified in the first schedule. By notification dated 4-12-1987 the Customs Notification dated l-7rl977 was amended and the benefit of exemption from the whole of the basic duty of customs was extended to 'palm kernel' also. By notification dated 29-1-1988 the notification dated 1.7.1977 was rescinded The result is that with effect from 29-1-1988 the exemption regarding basic customs duties in respect of the articles covered by the notification dated 1-7-1977 (as amended) the exemption was withdrawn.
31. Regarding the public notice dated 27-7-1987 it was submitted that the date of contract was 10-6-1987 regarding 35000 MT. The date of shipment was between 26th June and 25th July, 1987. The Shipment was made before. Under paragraph 79 of the Hand Book the date of importation is to be considered on the date of actual shipment and despatch of goods from supplying country and not the date of arrival of the goods at an Indian Port.
32. It was next submitted that the statutory notice cannot be amended by the public notice and accordingly the 1-4-1987 order, that is, the order passed under Section 3 of the Import Control Act cannot be changed by the public notice which is merely administrative in nature. In this context our attention was also drawn to Clauses 32,33 and 34 and it was stated that in view of Clause 32 the condition has been fulfilled that such goods are shipped on two consignment to India on or before 31st March of the licensing year. It is submitted that only the first part of Clause 32 is applicable in this case and under these circumstances the other Clauses, viz. 33 and 34 do not apply.
33. In support of his contentions on behalf of the writ petitioners the following decisions were relied upon: Ganesh Traders v. State of Haryana - 32 ST.G 623 which is followed in 47 S.T.C. State of Karnataka v. B. Rachman, State of Madras v. V. Bell Mark Tobacco - (1967) 19 S.T.C. 129, State of Madras v. Swastic Tobacco - 17 S.T.C. 316, State of Punjab v. Chandu Lal 45 S.T.C. 52, A. Haja Abdul v. State of Madras - A.I.R. 1964 S.C. 1929, Uma Subharow v. State of Orissa : 1987(30)ELT105(Ori) , Deputy Commissioner of Sales Tax .A.B. Ismaiel - : [1986]2SCR522 , in C.A. No. 2705 (Jain Exports Pvt. Ltd. v. Union of India) the judgment was delivered on 5-5-1988 reported in : AIR1986Delhi221 .
34. On behalf of the department the learned advocate has, inter alia, submitted as follows:
It was firstly submitted that palm seed and palm kernels are not different articles. Nextly, it was submitted that whether they are different articles or not and whether in the commercial field they are different articles or not, even so, for the purpose of importation and import policy entries in the policy would prevail irrespective of the question of whether 'palm kernels', are different from the palm seeds or not. According to the learned advocate for the Revenue, 'palm kernels' are derived from 'palm seeds'. Palm seeds are the genus and 'palm kernels' are the species. In this connection he has drawn our attention to paragraph 21(f) of the Import Policy which provides as follows:
'(21) The following principles will apply to the inter-se interpretation of the entries in the various appendices as well as imports under Open General Licence.' (f) 'Any item in Appendices 2, 5, 6 and 8 with a specific or generic description, will preclude the eligibility to its imports under Open General Licence except where the policy allows this clearly.' 35. He has submitted that import policy sets out complete different procedure including the question as to how it is to be categorised. He has drawn our attention to ' the entries 5 and 6 of Appendix 5 and submitted that the oil seeds specified therein are for extracting oil. Item 4 of it says 'palm oil (all types, including palm ole in and other fractions)/palm seeds'. Therefore, palm kernels which are also used for the purpose of extracting oil comes under entries 5 and 6 of Appendix 5. He has also drawn our attention to Clause 25 of the Import Policy and submitted that the petitioner should have asked for clarification. Clause 25 of the Policy provides as follows :-
'25.(1) In all other matters relating to Actual Users, and enquiries emanating front other persons, i.e. Export Houses, selling agents, traders, etc., as well as the interpretation of the policy proper and the procedure, the persons concerned may address the Chief Controller of Imports and Exports, New Delhi for necessary advice. Normally, clarification should be issued within a period of 15 days by the CCI & E, New Delhi and Jt. CCI & E at Bombay, Calcutta and Madras, where no inter-departmental consultation is required. D.G.T.D. and Department of Steel should also issue clarification normally within a period of 15 days. Where complete details are not furnished in the prescribed proforma, request for clarification will be rejected. Any interpretation of the Import Policy given in any other manner or by any other person will not be binding on the CCI & E, or in law. In the case of Actual Users also, if a clarification issued by any other authority is different from that issued by the CCI & E, the latter will prevail.
(2) Notwithstanding what has been stated in sub-para (1) above, any interpretation of Import-Export Policy or procedure given by the Chief Controller of Imports and Exports, New Delhi will prevail over any other clarification in the same matter given by any other authority or person.'
36. In any event, it is submitted on behalf of the Revenue that in view of the public notice dated 27th July, 1987, the 1st April, 1987 order stood modified and now it is clear that any other materials from which oil can be extracted comes under Clause 5. The goods were imported after July, 1987 and accordingly, they are canalised item and not allowed to be imported by any private individual or organisation.
37. On the second question that is, the rate of duty it was submitted that in view of Section 15, the rate of duty would be as provided by 29th January, 1988 Circular, because in the present case, the date of importation is after that date and not any previous date.
38. Regarding the balance of quantities which have not been shipped, it is submitted by the department that even if the date of shipping may be the material date, the date of contract can never be the material date.
Cases cited:
39. Before we deal with the respective arguments made, we deal with the cases cited before us.
40. ln the case of . Jain Exports (P) Ltd. and Anr. v. Union of India and Ors. reported in : AIR1986Delhi221 , one of the contentions advanced by the learned Counsel for the appellant was the import policy of which year would be applicable to the facts of the case - the period during which the licences were issued or the time when the import actually took place. The Supreme Court observed that the relevant import policy to be referred to is of the year 1980-81 as all the licences were issued during that period.
41. In the case of . Healthways Dairy Products v.The Union of India reported in AIR 1976 2221 -1978 ELT (J 457) the Supreme Court held that for the purpose of levy of excise duty or any other similar tax, the description of goods is popularly and commonly understood is to be taken as the description of the same goods in the relevant provisions of the statute or the Rules. The Supreme Court held that condensed milk and condensed skimmed milk are two different items of milk preparation. In common parlance milk means the full cream milk as milched from the cattle. It becomes skimmed milk when cream i.e. fat is extracted from Milk. Thereafter the skimmed milk can be called a form of preparation of milk as such. It was held that the Central Government when it mentioned condensed milk in the notification dated 1-3-70 it meant to exclude from exemption only condensed milk of full cream milk and not the condensed skimmed milk prepared from the skimmed milk for the purpose of levy of excise duty. Accordingly, it has held that the condensed skimmed milk was not excluded from exemption under the said notification.
42. In the case of Una Subrarao v. State of Orissa reported in : 1987(30)ELT105(Ori) , the question before the Division Bench of the Orissa High Court was whether sugar candy is sugar and therefore liable to sales tax under the Orissa Sales Tax Act. The Court held that it is common knowledge that though sugar candy (misri) is made out of sugar, it is the result of different process other than one involved in the manufacturing of sugar. It was further held that as long as sugar candy is sold in the market as a separate commodity apart from sugar it cannot be treated as the same for the purpose of levy of tax. Normally, sugar candy (misri) is not treated as 'sugar' and a customer who comes to a shop and asks for sugar will not accept if he is supplied with sugar candy. It was pointed out that it is true that the question whether the goods to be taxed have been subjected to manufacturing process so as to produce a new marketable commodity is the decisive test in determining whether an excise duty is leviable or not on certain goods, but dealing with the sales tax, the taxable event is the sale and not the manufacturing of goods. Nevertheless, it was pointed out, if the question is whether a new commercial commodity has come into existence, or not so that its sale is a new taxable event, in the sales tax law, it may also be necessary to consider whether the manufacturing process which has altered the identity of the commercial commodity has taken place. Therefore, it becomes necessary to determine when they ceased to be goods of one taxable description and became those of commercially different category and description.
43. In the case of AH. Abdul v. State of Madras reported in A.I.R. 1964 S.C. 1729, the question was whether new hides and skins and dressed hides and skins constitute different commodities of merchandise and they can, therefore, be treated as different goods for the purpose of taxation under the Act.
44. In the case of State of Punjab & Ors. v. Chandu Lal Kishore Lal reported in 25 Sales Tax Cases 52, the question was whether cotton seeds were the goods in respect of which purchase tax has been levied. The Supreme Court held that though cotton in its unginned state contained cotton seeds, the cotton and the seeds were separated by the manufacturing process of ginning and the seeds so separated could not be said to be cotton itself or part of the cotton. The Supreme Court held that it is true that cotton in its unginned state contains cotton seeds. But it is by a manufacturing process that the cotton and the seed are separated and it is not correct to say that the seeds so separated is cotton itself or part of the cotton. They are two distinct commercial goods, though before a manufacturing process the seeds might have been a part of the cotton itself. It was held that accordingly there was no warrant for the contention that cotton seed is not different from the cotton.
45. In the case of State of Madras v. Swastic Tobacco Factory reported in 17 Sales Tax Cases 306, it was held that raw tobacco and the chewing tobacco, which was by manufacturing process converted from raw tobacco, were not the same goods. The Supreme Court held that raw tobacco when converted by a process of manufacturing into chewing tobacco becomes different marketable product. There will be no com-jarison between the raw tobacco and the chewing tobacco in the matter of demand or ven price.
46. In the case of State of Madras v. Bell Marie Tobacco Co. reported in (1967) 19 S.T.C. 129, it was held that the process of preparation of 'Chewing tobacco' was as follows :-
The respondents purchased raw tobacco and after sprinkling Jaggery or plain water on the bundles of tobacco, allowed the tobacco to ferment for some days. Heat was thereby generated and the tobacco was well processed. Stalks of tobacco were broken and removed, and sand and dust were also removed. After paying excise duty the bundles of tobacco were brought to the premises of the factory. Jaggery juice was sprinkled on the tobacco and it was then cut into thin strips by shearing machines. This tobacco was allowed to dry for some days and flavouring essences were then sprinkled on it. It was then packed in special wrappers and these packets were known as 'chewing tobacco' packets. It was held by the Supreme Court that various process to which the raw tobacco was subjected amounted to a manufacturing process, and therefore the chewing tobacco sold by the respondents was not the same commodity as raw tobacco, ' but was a manufactured product from raw tobacco purchased by the respondents. This was followed in the case of State of Madras v. M.N.A. Abdul Rahaman reported in (1967) 19S.T.C.134.
47. In the case of State of Kamataka v. B. Raghuram reported in (1980) 47 S.T.C. 369, the Supreme Court held that paddy and rice are two distinct commodities and the milling of paddy involves a manufacturing process. The Supreme Court held that the as-sessees had consumed the paddy purchased by them when they converted it into rice which is commercially a different commodity.
48. In the case of Ganesh Trading Co. v. State of Haryana reported in (1973) 32 S.T.C. 623, it was held that although rice is produced out of paddy, it is not true to say that paddy continued to be paddy even after dehusking. Rice and paddy are two different things in ordinary parlance. Therefore, when paddy is dehusked and rice produced, there has been a change in the identity of the goods.
49. In the case of Union of India v. Godrej Soaps Private Ltd. reported in : 1986ECR1(SC) , the passage relied on by the Counsel for the department is for the purpose that the items in the policy had to pass through two tests. These should have been importable under the Import Policy of 1978-79 and these should have been importable under the Import Policy of 1985-88 in terms of the order dated April 18, 1985. In our opinion, this case has no application in the facts of the case before us. There, the facts are completely different. No date of shipment is given there. The question was: When the importation of canalised items directly by the holder of additional licences is barred, it should not have been construed to have been permitted by virtue of the order of this Court that the items sought to be imported, do not come within the items relied upon against the additional licences. In that case, it was held that there would be no question of injustice by the final order. The goods were purchased by the petitioners after they were aware of the order and the judgment of the Supreme Court in the case of Raj Prakash Chemicals Ltd. as well as in the case of Indo Afghan Chamber of Commerce. Accordingly, the question of restitution did not arise.
50. The decision of the Supreme Court in the case of Prakash Cotton Mills Private Ltd. v. B. Sen and Ors., reported in : 1979(4)ELT241(SC) , was cited on behalf of the department on the question of interpretation of Section 15 of the Act. In that case, it was decided that it was the clear requirement of Clause (b) of Sub-section (1) of Section 15 of the Act that the rate of duty, rate of exchange and tariff valuation applicable to any imported goods should be the rate and valuation in force on the date on which the warehouse goods were actually removed from the warehouse. The other relevant provision is that contained in Section 68 of the Act which provides that the importer of any warehoused goods may clear them for 'home consumption', if, inter alia, the import duty leviable on them has been paid. The Court held that the requirement of the amended Section 15 could not be ignored simply because the goods were imported before the amended Sections 15 and 15 of the Act came into force, or that their bills of lading or bills of entry were lodged before that date.
51. The decision in the case of Kaptan 's Enterprises and Anr. v. Union of India, reported in : AIR1986Delhi221 , was relied upon on behalf of the petitioners. In that case, the petitioner entered into a firm contract for import of Stearin Fatty Acid with a Foreign Company under the assumption that he could import the item under OGL1/83. In the meanwhile, on 11.11.83, the Government of India issued a public notice bearing No. 47 ITC (PN)/83. The effect of this public notice was that, except for goods already shipped before 11.11.1983, no commodity of this description could be imported into India except through the STC. The public notice did not ban the import of fatty acids and oils even after its date, it only 'Canalised' the imports through the STC. In that case, it was held by the Delhi High Court that Stearin Fatty Acid could have been imported by the petitioner under OGL 1/83 as it stood before the public notice dated 11.11.1983. In this context, the Delhi High Court stated that it could not express in that writ petition any conclusion as to whether the petitioner-firm had or had not entered into a firm contract for the import of the goods-in-question before the date of the second public notice, viz., 11.11.83, and that this was a question which had to be determined by the appropriate authorities and not by the Delhi High Court. The decision on the writ petition proceeded on the assumption that the petitioner's allegation were correct, leaving it open to the respondents to examine the documents as and when they were presented to them and arrive at their own findings. In other words, for the purpose of the writ petition, the Delhi High Court assumed, but did not decide, that the petitioner had entered into a firm contract for import of the goods-in-question before 11.11.1983. The second clarification to be given pertained to the commodity that was to be imported by the petitioner. The Delhi High Court stated that the goods sought to be imported would be subject to inspection by the respondents who would be entitled to satisfy themselves whether they corresponded to the description of goods contained in the contract on which the writ petition was based and whether, if not, the petitioner-firm could be permitted to import, under OGL, the actual goods sought to be imported. With these preliminary clarifications, the Delhi High Court proceeded to discuss the three main questions posed before it.
52. The Delhi High Court accepted the petitioner's contention that the import of Stearin Fatty Acid under OGL was permissible prior to 11.11.1983. Various decisions were relied on the question of the principles of interpretation of entries and terms, such as, the one under consideration employed for description of goods commodities in taxing statutes. The Delhi High Court also referred to the decision in the case of Dunlop India Ltd. v. Union of India, reported in AIR 1977 SC 597, wherein it was held as follows:-
'I t is clear that meanings given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally treat and understand them in the usual course. But once an article is classified and put under a distinct entry, the basis of the classification is not open to question. Technical and scientific tests offer guidance only within limits. Once the articles are in circulation and come to be described and known in common parlance, we then see no difficulty for statutory classification under a particular entry.' Applying the above principle, the Delhi High Court observed that what was to be ascertained was what the expression 'Stearin Fatty Acids' did connote in trade circles and whether this item as an identifiable commercial commodity was different from others known by the other names. Upon consideration of the same, the Delhi High Court accepted the contention of the petitioner that Stearin Fatty Acid could have been imported by the petitioner under OGL/83 as it stood before the public notice dated 11.11.1983.
53. On the second question that arose regarding the effect of the public notice-ated 11.11.1983, two contentions were raised before the Delhi High Court on behalf of Je petitioner that the public notice of 11.11.1983 being only an administrative circular or instruction had no statutory force and could not override or obliterate the right of import available to traders under OGL1/83 and that even if it had the same effect as a law or statutory notification it would be applicable only respect of imports made into India after 11.11.1983 otherwise than in pursuance of a firm commitment or contract entered into by the importer before that date. It was submitted that the announcement of the import policy coupled with OGL No.1/83 in respect of the financial year 1983-84 amounted to a promise or representation to the public in general that imports would be permitted subject only to the terms, restrictions and conditions thus announced; and, though these terms, restrictions and conditions could be changed by the Government, that could be done only with prospective effect and without affecting any previously acquired right. It could not deprive an importer of the valuable right of importing certain goods under OGL that was available to him till then and in exercise of which he had, before the date of the change of Policy, entered into contracts or other commitments which he could avoid only at great peril, risk or loss. In other words, the petitioner sought to invoke the doctrine of promissory estoppel enunciated by the Supreme Court in the Indo-Afghan case (AIR 1968 SC 718) and elaborated in the M.P. Sugar Mills' case : [1979]118ITR326(SC) . In addition, a decision of the Full Bench of the Delhi High Court in the case of Bansal Exports P. Ltd. v. Union of India, reported in : [1984]145ITR642(Delhi) , was also relied on. In that context, the Delhi High Court held as follows:
'15. We are of opinion that the petitioner's right to import the goods in question under OGL did not cease on 11.11.1983. If, as we have held the original import policy announced for 1983-84 coupled with OGL 1/83 entitled the petitioner to import 'Stearin Fatty Acid' under OGL and, again, as we assume, if the petitioner firm had placed firm contracts with the third respondent for the import of these goods on 7.10.83 itself that right of import is no doubt liable to statutory changes but cannot be taken away to the petitioner's detriment except by another statutory instrument. In this case that has not been done, for on 11.11.1983 only a public notice has been issued. We do not see how a public notice such as one issued on 11.11.1983 which has not statutory force by itself and which is inconsistent with OGL 1/83 which has been issued under Section 3 of the Act can be given effect to. It is suggested that the change is sought to be effected only as a modification of the earlier policy and nothing more, such change, unwarranted by a statutory, instrument unless justified on grounds of public interest will be hit by the doctrine of promissory estoppel. No doubt the public notice seeks to prevent hardship by exempting shipments actually made before 11.11.1983. But as we shall see later the original notification permitted shipments upto 31.3.1984 in pursuance of letters of credit opened upto 282.1984 and so the new policy, in so far as it gives no relief to what may be described as 'firm commitments' prior to 11.11.1983 can be impugned on the ground of promissory estoppel. We have, therefore, come to the conclusion that, if the petitioner had entered into a firm contract on 7.10.1983 as alleged, it should be permitted to import the 'Stearin Fatty Acid' contracted for, under OGL but subject to the other terms and conditions of the said notification'.54. Therefore, the Delhi High Court held that if the original import policy announced for 1983-84 coupled with OGL 1/83 entitled the petitioner to import Stearin Fatty Add under OGL and again, if the petitioner-firm had placed firm contracts with the third respondent therein for the import of those goods on 7.10.1983 itself, that right of import was no doubt liable to statutory changes but could not be taken away to the petitioner's detriment, except by another statutory instrument. It was further held in that case that that had not been done, for 11.11.1983 was merely a public notice and such public notice which had no statutory force in itself and which was inconsistent with the OGL 1/83 issued under Section 3 of the Act could not be given effect to.
55. On the third question, as to the relief which the petitioners were entitled to in that writ petition, it was the contention of the revenue that both the policy and the OGL permitted open imports of goods only subject to certain terms and conditions which are not complied with in the present case. This contention of the respondent was accepted by the Delhi High Court.
56. In the case of Geep Flashlight Industries Ltd. v. Union of India and Ors., 1985 (22) E.L.T. 3 (S.C.) the Supreme Court held that a plastic torch cannot be read in conjunction with plastic tubes, rods, sheets, foils etc. made of plastics and that plastic torch is a distinct and different commodity commonly known in the market as torch. The Supreme Court referred to its followed earlier decisions and held as follows :-
'By a catena of decisions it is settled law that an expression used in a taxing statute for describing a commodity must be given the meaning which is generally given to it by a person in the trade or in the market of commodities and should tie interpreted in the sense the person conversant with the subject-matter of statute and dealing with it would attributed to it.' 57. In the case of Deputy Commissioner of Sales-tax v. A.B. Ismail, reported in : [1986]2SCR522 the facts of the case were as follows :-
The goats and sheep underwent a process, namely, slaughtering and then came into existence as meat, hides and skin. The question was whether any manufacturing process was involved, the Court pointed out that - question whether 'goats and sheep' and 'mutton' are the same goods known to commercial circles and in common parlance. In this context it was observed that if a person goes to a butcher's shop and asks for mutton, he will not be given goats nor he will be satisfied with goats. Equally so when he intends to purchase goats, he will not be satisfied if mutton is supplied to him. This is because the two, both in commercial circles and in common parlance, are two different things having a distinct individuality of their own one different from the other. It was held that it would, therefore, be wrong to assume, as the High Court had done, that these two goods are the same. The court referred to various decisions including its own decision in the case of Deputy Commissioner, Sales Tax (Law), Board of Revenue (Taxes), Er-nakulam v. Pio Food Packers, : 1980(6)ELT343(SC) where the following observations were made :-
'The generally prevalent test is whether the article produced is regarded in the trade, by those who deal in it, as distinct in identity from the commodity involved in its manufacture. Commonly, manufacture is the end result of one or more processes through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another and indeed there may be several stages of proceeding and perhaps a different kind of processing at each stage. With each process suffered, the Original commodity experiences a change. But it is only when the change, or a series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place. Where there is no essential difference in identity between the original commodity and the processed article it is not possible to say that one commodity has been consumed in the manufacture of another. Although it has undergone a degree of processing, it must be regarded as still retaining its original identity. A large number of cases has been placed before us by the parties, and in each of them the same principle has been applied; Does the processing of the original commodity bring into existence a commercially different and distinct article? Some of the cases where it was held by this Court that a different commercial article had come into existence include An-warkhan Mehboob Co. v. State of Bombay, : [1961]1SCR709 (where raw tobacco was manufactured into bidi patti), A. Hajee Abdul Shaukoor and Co. v. State of Madras (AIR 1964 S.C. 1729) (raw hides and skin constituted a different commodity from dressed hides and skins with different physical properties), State of Madras v. Swastik Tobacco Factory : [1966]3SCR79 (raw tobacco manufactured into chewing tobacco) and Ganesh Trading Co., Kamal v. State of Haryana : AIR1974SC1362 (paddy dehusked into rice)....'It cannot be doubted that pineapple fruit when converted into slices does not lose its identity or becomes a new product. Both of them are known as Pineapple in the commercial circle as also in common parlance. That is not the case here.'
58. Decision: The first question to be considered is whether 'palm kernels' are 'palm seeds'. The principles of construction are settled. This shall be decided by ascertaining what is meant by these expressions by the people who deal with the same. We have quoted the relevant letters in this connection. From the letter of the Central Plantation Crops Research Institute dated 21st January 1987, it will be seen that two different processes have to be followed to obtain the 'palm seeds' and 'palm kernels'. After specifying the same, they have pointed out the difference between the two. According to them, 'palm seeds' are specially extracted from fruits as indicated therein and that Kernel is a product obtained after sterilization, digestion at 95C pressing, decarping, shelling etc. According to them, 'palm kernel' will loss its viability due to the above process and cannot be used for germination. Oil Palm India Ltd. which is a joint venture of the Government of Kerala and the Government of India by its letter dated 27th July 1987 stated that in trade parlance if one asks for palm seeds, they cannot be supplied with palm kernel and vice versa as they are completely two different items. It is made clear that 'seed' by definition should be capable of germination while kernel is not as it is extracted out of palm nut after sterilization of fruits. Ministry of Agriculture (Department of Agriculture and Co-operation) of the Government of India by its letter dated 13th August 1987, clarified that though palm kernel is different from palm seed, palm kernel is taken out of palm seed only. Both yield palm kernel oil on extraction.
59. Apart from other materials from the aforesaid it is clear that palm seeds are not palm kernels. Even if it may be contended that from 'palm seed'''Palm Kernel' is obtained, there is a manufacturing process involved by which palm kernels come into existence. Therefore, they are no longer 'Palm Seeds'. Further the test is that when someone goes to the market and asks for one thing, whether he can be supplied with the other. We are of the opinion that if a palm seed is asked for, palm kernel cannot be supplied and vice versa.
60. We are also unable to accept the contention that this is covered by Clause 21(f) of the Import Policy. The question of generic or specific is not concerned. From rubber products, various things are produced but they are not rubber. From goats, meats are produced but meats are not goats. Similarly, even if it is assumed that from 'Palm Seeds' 'Palm kernels' are obtained after certain manufacturing process, the result is that the finished articles is not the same as material from which it is manufactured.
61. Our findings as aforesaid would also be supported by the Notification itself. In July 1977, there was a Notification under Section 25(1) of the Customs Act whereby palm seeds, rapeseeds, soyabean seeds, sun-flower seeds and ground-nut seeds were exempted from payment of customs duties. No specific reference was made to 'Palm Kernels' in the said notification. By another Notification dated 4th December 1987, such benefit was extended to the case of palm kernel also. From this it is quite clear that the department itself has treated palm kernel as different from palm seed.
62. Therefore, we are of the opinion that at the relevant time palm kernel was not a canalised item but that the same could be imported under Open General Licence
63. The next point arises out of 27.7.87 Notification referred to above. By the notification 'any other material from which oil can be extracted' has been included item 5 of Appendix 5 Part-B, i.e. it is made a 'canalised' article. Therefore, no one a import any such article under open general licence from the date of the said notification coming into force. Admittedly, the goods were imported in October 1987, but it was in fact shipped before this notification came into force. It is to be remembered that by 1.4.87 notification, raw materials were allowed to be brought under Open General Licence as long as they were not covered by Appendices 2,3,5 and 8 of Import and Export Policy of 1985-86 as amended from time to time by issue of a public notice in the Official Gazette. We are unable to accept the contention that this amendment made on 21.7.87 being a public notice cannot override the provisions of its statutory order like the order dated 1.4.87. It is not a question of an administrative order overriding a statutory order. The statutory order itself by reference incorporates the public notice and administrative order. This import of raw materials under Open General Licence are made subject to the conditions specified therein. One of the condition is that the items to be imported are not covered by Appendix 5, with amongst others, as amended from time to time by issue of a public notice. The expression 'amended from time to time' does not mean only the amendments made upto 1.4.87 but the amendments which are made even after 1.4.87. We are unable to follow the observations of the Delhi High Court on this point.
64. However, we shall have to take into consideration the fact that the goods, though not landed in this country before 27.7.87 notification, admittedly they were shipped before that. We have specified hereinabove the Clause 32 which provides that the goods must be shipped on through consignment to India on or before 31st March of Licensing year. The admitted position is that the said goods were shipped to India on or before the 31st March of the Licensing year. Accordingly, in our opinion the date of shipping is relevant and not the date of actual importation as it is made clear by the statutory order. The other parts of the said provision does not apply as it provides for extension of such period under certain circumstances with which we are not concerned in the present case. Clauses 33 and 34 apply when apart from these provisions, any other Act prohibits the importation of such goods. Take the case of drugs. If a specific provision is made and a special Act is made for prohibiting importation of the same even if it may be assumed that they could be brought under Open General Licence but in view of Clause 34 they cannot be so imported.
65. It is clear from the paragraph 79 of the Hand Book also, which we have quoted above, that the validity of an import licence is decided with reference to the date of actual shipment/despatch of the goods from the supplying country and not the date of arrival of the goods at an Indian Port. In this case the goods were shipped before 27.7.87 notification came into force. Accordingly, in our opinion the importation of those goods do not fall within the mischief of 27.7.87 notification. In view of the import policy and the 1.4.87 notification, the Writ petitioners were entitled to import the same under Open General Licence and the position was not changed by the subsequent notification dated 27.7.87 because the goods were shipped before that though in fact brought into this country after such date.
66. The next question is what would be the rate of customs duty, if any, which shall be levied in respect of such importation which we have held to be valid and not being prohibited to be imported by any individual. In this case because of the strong stand taken by the Customs Authority that these were canalised goods, writ petitioners were not in a position to take delivery of the goods. They took delivery of a part, that is, 3000 M.T. by virtue of order of this Court only. The rest of the quantity imported is in bonded warehouse pursuant to the direction of the Court. It has been pointed out that the 1977 notification which grants exemption from customs duty in respect of certain articles, did not include 'palm kernels'. Until 3-12-87 notification, which amended the 1977 ratification 'palm kernel' was not entitled to exemption. This 1977 notification as intended was withdrawn by notification dated 29th of January, 1988. Accordingly, this exemption from customs duty, so far as 'palm kernel' concerned, was in force for a limited period only, that is, from 3rd December 1987 till 28th of January, 1988.
67. We are unable to accept the contention of the Writ petitioner that the goods would be deemed to have been cleared on 28th January, 1988 when they submitted the Bill of Entry. Under Section 15 read with other relevant provisions it is the date of the actual clearance upon payment of the relevant charges and expenses which determines the rate of duty. From that point of view, the relevant date for the purpose of rate of duty would be the date of actual clearance. However, the present situation has been created in view of the wrongful stand taken by the appellants that the writ petitioners were not entitled to import the said goods because they were canalised items. We have held that this stand of the respondents is wrong. Therefore, in our opinion, Customs authorities are not entitled to contend that though by their action and conduct, the goods could not be cleared early, the importers shall not only pay duty, but pay duty at the enhanced rate which will be prevailing at the time when the goods are actually cleared. If the wrongful stand viz. it being a canalised item had not been taken by the Customs, then the petitioner would have been entitled to clear the goods at or about the time of arrival of the goods. The goods were admittedly imported in October, 1987 and the goods should have been allowed to be cleared in or about October, 1987. Therefore, on the ground of equity, as the writ petitioner succeeds in the main point, they should be restored to the same position as if they had not been prevented from clearing the goods when the goods had arrived. Therefore, such goods can be imported at the rate prevalent at the time of arrival of the goods, that is, in October, 1987. This will be equitable and this will amount to restitution, i.e. putting the petitioners in a position they would have been, if no impediment was put forward by the Customs Department to their removal of the goods under O.G.L. Therefore, in our opinion, the rate of duty to be paid will be the rate of duty, if any, in the month of October, 1987. The writ petitioners are not entitled to the exemption granted by a circular subsequent thereto, that is, December, 1987 Circular. We have relied on the basis of December, 1987 Circular to show that the Department has treated 'palm kernel' different from palm seeds. On the same basis, the petitioners cannot be allowed to obtain any benefit which has been granted a long time after the date of actual importation. Accordingly, we hold that the writ petitioners shall pay such amount of duty at such rate as it prevailed in October, 1987.
68. The. next question is with regard to the goods which have not yet been shipped, but which are the subject matter of the contract. It will be recalled that about 35,000 tonnes were sought to be imported under the contract.
69. In our opinion, it cannot be said that there was a valid O.G.L. in respect of the balance goods also. There was no shipping of any such articles before it was made a canalised item. It would be remembered that 1985-88 import policy expired on 31st March 1988. Therefore, if any shipping of palm kernel is made on any date thereafter that cannot be governed by O.G.L. of 1985-88. It cannot be said that O.G.L. would extend to the goods contracted for but not shipped within that date. Accordingly, in respect of the same, it would be governed by the position as it would be at the time of shipping. At present it is a canalised item.
70. In that event of the matter, we hold as follows:
(1) (a) 11,000 tonnes (approx.) of palm kernel already imported are not palm seeds. They do not come under Appendix 5 but comes under Appendix 6. They are not canalised articles.
(b) Further under 1st April, 1987 order under Section 3, the relevant date is the date of shipping and on that date in respect of the said goods all the conditions had been fulfilled, though the goods were actually brought in th country in October, 1987 that is, after 27th July, 1987 notification. The petitioners will be entitled to the benefit of 1st of April, 1987 order because the shipping was made after this and before 27th July, 1987-In our opinioin for this purpose, the date of shipping is the relevant date and not the date of actual arrival of the goods in this country.
(2) On the question of rate of duty, we hold that it is to be ascertained not at the date of actual delivery from the bonded warehouse and not as on 28th January, 1988 when the Bills of Entry were filed, but it will be determined in accordance with the rate of duty as prevailing in October, 1987 i.e., when the goods actually arrived and when the writ petitioner would have been entitled to take delivery had it not been for the wrongful detention by the authorised concerned.
(3) O.G.L. under Import Policies 1985-88 would cover only the goods shipped upto 31st March, 1988 i.e. 11,000 tonnes (approx.) already shipped but it will not cover any goods which might be shipped later under the said contract. Regarding the balance of the goods under the contract, if shipped under this contract will depend on the import policy on the date of actual shipping or on the basis of any relevant order under Section 3 of the Import and Export (Control) Order.
71. Accordingly, we direct as follows :-
The order of the learned trial Judge setting aside the adjudication order is hereby confirmed. A sum of Rs. 90,00,000/- and Rs. 10,00,000/- respectively has been deposited in view of the said adjudication order. This amount is to be refunded back to the Writ petitioner subject to the following :-
They have already cleared 3,000 tonnes approx. without payment of duty. We have held that they are liable to pay duty. This amount of duty to be paid is to be ascertained and the said sum is to be adjusted against Rs. 90,00,000/- and Rs. 10,00,000/-respectively. The balance amount shall be held by them for a period of two months from this date. The writ petitioner shall be entitled to get delivery of the balance goods on payment of duty at the rate prevailing in October, 1987 or upon adjustment with the balance of the aforesaid month. But if they do not do so within a period of two months, then the respondents shall be entitled to proceed in accordance with law.
We make it clear that the goods must be cleared by the Customs Authorities and allowed to be taken delivery of, within 72 hours from the time of depositing of the amount of duty in respect of the goods to be cleared alongwith payment of charges and expenses in accordance with law.
72. So far as the question of interest is concerned, in the facts and circumstances of this case, we are not inclined to grant any interest.
73. We also make it clear that in respect of the balance goods lying, the writ petitioner shall be entitled to clear the same at one time or from time to time.
74. Liberty to apply.
75. Let a signed copy of the operative portion of this judgment be given to all the parties concerned.
Satyabrata Mitra, JJ.
76. I agree.