Commissioner of Customs Vs. Tamil Nadu Electricity Board - Court Judgment

Excerpt:
1. final order nos. 1458-1462/2005 dt. 31/10/05 m/s. tamil nadu electricity board (tneb), the respondent herein, imported six consignments of "steaming coal" from indonesia and filed the below-mentioned 6 bills of entry covering the quantities mentioned there against, claiming the benefit of concessional rate of duty allowed by the central government in adhoc exemption order no. 172/92 dated 15th september, 1992 (f.no. 332/71/88-tru) issued under sub-section (2) of section 25 of the customs act 1962 read with sub-section (4) of section 111 of the finance act 1992: the above exemption order entitled tneb to clear at customs a total quantity of 2 million tons of coal falling under heading 27.01 of the first schedule to the customs tariff act 1975 on payment of basic customs duty at the concessional rate of 30 per cent ad valorem vis-is the then prevailing tariff rate of 85 per cent ad valorem. [a similar exemption order was simultaneously issued by the government in favour of karnataka power corporation ltd.]. the exemption order also exempted such import from payment of auxiliary duty of customs leviable thereon under sub-section (1) of section 111 of the finance act 1992. the exemption order was effective from 15th september, 1992 to 15th september, 1993. as the imported coal was urgently required by tneb, a request was made for release of the goods upon provisional assessment in terms of section 18 of the customs act, for page 380 which the requisite bonds were executed and bank guarantees furnished by tneb. after drawing representative samples of the six consignments in the presence of tneb officials and their cha, the proper officer of customs made provisional assessment of the goods. the samples from each consignment covered by a bill of entry were sent to (1) indian institute of technology (iit), madras, (2) the central fuel research institute, dhanbad and (3) m/s. italab private ltd., madras. in the case of the goods covered by bill of entry no. 29435, the samples were sent to (1) iit, madras (2) m/s. italab private ltd., madras (3) national metallurgical laboratory, madras and (4) neyveli lignite corporation, neyveli. the test reports received from the said laboratories indicated that the "gross calorific values" (gcv) in kilo calories per kg (k.cals/kg) of the coal covered under the above bills of entry were in the range of 5650-6235, 5593-6032, 5680-6037, 5633-6066, 5593-6032 and 5375-6062 respectively. the asst. collector of customs (groups i & ii) proceeded to finalise the assessments on the basis of these test results. he considered the "cost economics of import of coal" discussed at a meeting held in august 1992 of representatives of the ministry of power, ministry of coal and the ministry of finance (govt. of india), governments of karnataka & tamil nadu, karnataka power corporation ltd., tneb, central board of excise & customs etc. and interpreted the exemption order on that basis. accordingly, he took the view that the exemption order had been issued for facilitating import, by tneb, of coal of gcv of 6500 k.cals/kg at the concessional rate of duty. the asst. collector held that the imported coal, the gcv of which was below 6500 k.cals./kg. as per the test reports, was not of "good quality" and, therefore, the benefit of the exemption order was not admissible. accordingly, without extending the benefit of concessional rate of duty, the asst. collector finalised the assessments at the normal rate of duty. accordingly, in respect of each bill of entry, the differential duty was quantified and the same was recovered through enforcement of bank guarantee. aggrieved by the orders of the asst. collector, tneb filed appeals with the collector (appeals). subsequently, however, the appeal pertaining to bill of entry no. 33233 (6th above) was withdrawn by tneb after rejecting the goods and securing reimbursement of the duty paid thereon, from the supplier. the appellate authority dismissed that appeal as "withdrawn" and rejected the remaining appeals as "not tenable". the order of the collector (appeals) was set aside by this tribunal and the lower appellate authority was directed to dispose of, on merits, tneb's appeals pertaining to the first five bills of entry. pursuant to the tribunal's remand order, the commissioner (appeals) disposed of the five appeals of tneb by order in appeal no. 457 to 461/2002 dated 30th september, 2002, wherein it was held that the coal imported by tneb satisfied the conditions of the exemption order dated 15th september, 1992 of the central government and accordingly the orders of the asst. collector were set aside. thus tneb's appeals relating to the first five bills of entry were allowed with consequential relief. the present appeals of the revenue are against the order of the commissioner (appeals).2. heard both sides. a preliminary objection was raised by learned counsel for the respondent (tneb). it was submitted that, before the appeals were taken up for hearing, the impugned order of the lower appellate authority required to be complied with by revenue as the application filed by them for stay of operation of the said order was rejected by the tribunal. however, ld. counsel did not press the objection, upon being told by the bench that final disposal of the appeals would not require so much time as might be required by the department (in the event of the tribunal directing them to comply with the impugned order) for compliance.ld. counsel for the respondent raised another objection. he submitted that some of the additional documents filed by the appellant in november 2004 had nothing to do with the dispute involved in the appeals and hence should not be taken on record. countering this objection, ld. sr. advocate submitted that the additional documents would be useful in understanding the scope of the exemption order. we have perused these documents and have found that most of these are records of deliberations between the union ministries, govt. of tamil nadu, tneb and others on the subject of import of coal by tneb (respondent) for the thermal power stations in tamil nadu. avowedly, the appellant wants to rely on these documents to "unveil" the legislative intent behind the government's exemption order. most of these documents relate to the consultative process which preceded the exemption order. the quality of coal to be imported by tneb was one of the aspects discussed in this process. it cannot be said that these documents have nothing to do with the dispute which we are called upon to deal with. therefore, we have acceded to the appellant's request for receiving the additional documents filed by them. whether any of these documents is admissible as evidence in this case is a matter to be considered later.3. now to the merits of the case. ld. sr. advocate submitted that the lower appellate authority had reached a conclusion on the basis of a judgment passed by a criminal court in a different proceedings, without independent application of mind to the facts and evidence in the case on hand. ld. commissioner (appeals) had heavily relied on the findings recorded by the special court, chennai in its judgment dated 27th december, 2001 in special calendar case no. 10/97, which was a case booked against a former chief minister and a former pwd minister of tamil nadu, some of the top executives of the state govt. and the top brass of tneb under the indian penal code and the prevention of corruption act. such criminal proceedings were entirely different from the proceedings under the customs act. ld. commissioner (appeals), regardless of this distinction, chose to rely on the findings of the criminal court. according to ld. sr. advocate, the lower appellate authority ought to have taken a decision without reference to the criminal court's judgment. in this connection, reliance was placed on the following decisions: 1) macherlappa and sons v. govt. of andhra pradesh 1958 (9) stc 156 (andhra pradesh high court) 2) v. datchinamurthy and anr. v. asst. director of inspection (intelligence), i.t. dept. and anr. 4) sultanali a. lalani v. collector of customs ld. counsel for the respondent relied on the supreme court's judgment in kuldip singh v. state of punjab and ors. and argued that the lower appellate authority was entitled to rely on any evidence, no matter wherefrom it was obtained. the strict rules of evidence enacted in the evidence act were not applicable to the proceedings under the customs act. counsel pointed out that certain evidentiary aspects of the case dealt with by the criminal court were relevant to the proceedings before the commissioner (appeals) and, therefore, it was open to the latter to rely on such evidence. 4. we shall proceed to address the above arguments and ascertain whether it was necessary for the commissioner (appeals) to rely on the criminal court's judgment. both the counsel have read out portions of that judgment to us. learned special judge held, inter alia, that the test results reported by m/s. s.g.s. india ltd., who were engaged by the indonesian supplier of coal for monitoring the quality of the import consignments and were accepted by tneb, should be treated as final and binding and that it was not open to the customs authorities to draw samples of the goods and get them tested in any laboratory not authorized by tneb and their supplier. it was also found that the procedures prescribed for sampling and analysis had not been followed by the laboratories engaged by the department and consequently their test results were incorrect, misleading and unreliable. the asst. collectors of customs who passed the orders-in-original in this case were examined before the criminal court and their depositions were found to indicate that they had passed the orders as per the instructions of their superiors, without independent application of mind to the materials on record. the oral evidence of the asst. collectors and the cbec chairman (p.w. 10) became handy for the learned special judge to decry some of the findings recorded in the order-in-original. the criminal court was dealing with the charge that the accused had committed criminal breach of trust and criminal misconduct by entering into criminal conspiracy with five suppliers (indonesian and australian) of coal to misappropriate tneb's funds in connection with import of coal from those countries, for pecuniary advantage to the suppliers, thereby causing loss to tneb. in that process, the court examined, among others, the two asst. collectors and the cbec chairman as witnesses and recorded a finding, inter alia, thus: ministry of finance permits import of 2 million tons coal on one-time basis on a duty of 30 per cent as against 85 per cent, as an absolute page 383 order, without attracting conditions precedent" vide para (106) of the judgment. this finding relates to the ad hoc exemption order dated 15th september, 1992 which was issued by sh. pawan kumar jain, under secretary to govt. of india, who was not a witness in the case. in its trial of the charge against the accused relating to the import of coal by tneb, the court considered the exemption order as finance ministry's unconditional permission to import coal. after reading the text of the exemption order, it observed: this itself will eliminate the charge of conspiracy in toto" vide para (81) of the court's judgment. the learned special judge largely relied on the depositions of witnesses (including the two assistant collectors) to come to the conclusion that the exemption order was absolute and unconditional. the learned judge also found enough documentary evidence to hold that indonesian coal and australian coal were of good quality. the criminal court's interpretation of the exemption order was essentially based on evidence, documentary and oral. the court was working under the code of criminal procedure and assessing evidence in terms of the evidence act. it did not invoke the principles laid down by the supreme court as to interpretation of exemption notifications/orders. it is also debatable as to whether, in the criminal case, it was necessary for the learned special judge to step upon interpretation of the exemption order at all. the respondent's counsel has not established such necessity, nor could we find any. as found by the special judge himself, there was restriction on import of coal which was freely importable under ogl. its import did not require the permission of the ministry of finance (govt. of india). nevertheless, it appears, the exemption order was not only understood as an order granting customs duty concession to tneb in respect of coal but also misunderstood as a permission to import coal. consequently, any condition for duty concession was perceived as a condition for import permission, also. apparently this error of the criminal court, largely attributable to the depositions made before the court by the cbec chairman and the two assistant collectors, begot another error for the court, i.e., interpreting the exemption order to find out whether tneb was permitted to import coal conditionally or otherwise, overlooking the fact that section 25(2) of the customs act, whereunder the exemption order was issued, was not a provision for granting permission to import anything but one for allowing customs duty exemption or concession for specified goods when imported. it was not necessary for the special judge to interpret the exemption order in the process of trying the charges of criminal conspiracy and criminal misconduct levelled against the accused in relation to the purchase of coal by tneb from abroad. hence whatever observations or findings were made by the learned judge as to the scope of the exemption order would only, be obiter dicta, for a quasi-judicial authority assessing duty under the customs act. on the other hand, an assessing authority under the customs act is not required to gather evidence (other than what might be required under the said act or the customs tariff act or any other relevant fiscal law) for page 384 interpreting an exemption notification / order issued under section 25 of the said act. the fiscal statute expects it to ascertain the meaning and scope of the exemption notification/order from its plain language, following the relevant rulings of competent courts. for the above reasons, it would be inappropriate for the assessing authority to follow the criminal court's interpretation. hence we are of the view that the lower appellate authority should not have referred to the criminal court's judgment. we do not think that the apex court's judgment in kuldip singh's5 case cited by tneb's counsel is relevant to the present case. what was held in that case was that the strict rules of the evidence act were not applicable to departmental/disciplinary enquiries and that, in both civil and criminal cases, any evidence relevant to the matters in issue was admissible, no matter how it was obtained. we have already found that the evidence taken by the criminal court in the conspiracy case is not relevant to interpretation of the exemption order by the assessing authority. on the other hand, one of the judicial authorities cited by the revenue's counsel is worth mentioning in the present context. in datchinamurthy's6 case, the madras high court found consensus between indian, british and canadian courts on the relation between revenue proceedings and adjudication by courts of justice. that consensus is that the revenue has to perform its allotted task under the statute and it cannot be fettered in the discharge of its functions by any adjudication by courts of justice in private litigation even where that adjudication might impinge on the issue which the revenue has to face and determine. this judicial view, which has arisen from cases where civil or criminal action against tax-assessees, in courts of justice, yielded results which could have direct bearing on the tax assessment proceedings before revenue authorities, must apply a fortiori to the present proceedings inasmuch as the criminal court's judgment relied on by the respondent's counsel was not rendered in any action against the assessee (tneb). therefore, there is no question of the tribunal relying on the said judgment. learned commissioner (appeals) also should not have relied on it.5. ld. senior advocate, adverting to the merits of the case, submitted that there was a distinction between an exemption order issued under sub-section (2) of section 25 of the customs act and one issued under sub-section (1) of the said section. an exemption order issued under sub-section (2) was a "special order" intended to benefit a particular importer in exceptional circumstances. in the instant case, exceptional circumstances could be gathered from the background of the exemption order dated 15th september, 1992 issued by the central government. ld.sr. advocate narrated this background with reference to the agenda notes relating to the meeting, held in august 1992, of representatives of the ministries of power, coal and finance (govt. of india), representatives of the governments of tamil nadu & karnataka as also representatives page 385 of karnataka power corporation ltd. and tneb.according to ld. sr. counsel, it was discernible from these records that only high grade coal was intended to be imported by tneb.referring to the specifications of coal ordered by tneb for import from the indonesian supplier, ld. sr. counsel submitted that supply of coal of gcv below 6400 k.cals/kg. attracted a penalty and coal of gcv less than 6000 k.cals./kg was liable to be rejected by tneb. thus it was discernible from the terms of the contract between tneb and their supplier that coal with gcv less than 6400 k.cals./kg. was not rateable as "good quality coal" and, therefore, the coal imported by tneb did not qualify for concessional rate of duty under the exemption order.ld. sr. advocate also pointed out that as tneb, in their contract with supplier, were entitled to reject any coal supplied with gcv below 6000 k.cals./kg., they were not to be heard to say that such coal was of "good quality". he opined that, in the facts and circumstances of the case, the department's criterion for "good quality coal" was minimum gcv of 6400 k.cals./kg., while tneb's criterion for such coal was minimum gcv of 6000 k.cals./kg. since any of the consignments did not meet either of these criteria, none was eligible for the benefit of the exemption order.6. ld. advocate for the respondent submitted that the exemption order did not speak of "quality" and mentioned only "quantity" of coal. in this connection, he referred to note to the exemption order, which required the madras customs house to monitor the quantity of coal imported by tneb. counsel pointed out that there was no requirement under the exemption order to monitor the "quality" of coal and hence there was no scope for chemical test of samples of the goods imported.contextually, counsel also submitted that any show-cause notice was not issued to tneb and the test reports were not supplied to them. had the test reports been supplied, the respondent would have requested for an opportunity to cross-examine those who tested the samples. natural justice was denied to the respondent by the original authority. ld.counsel finally contended that, as the exemption order did not lay down specifications for "good quality coal", it was not permissible for the assessing authority to fix parameters like gcv for "quality" of coal and deny the benefit of exemption to the assessee in terms of such parameters. ld. counsel has taken the cue from one of the grounds of the appeal of the revenue, viz. ground (b) to make some of his points.7. in his rejoinder, ld. sr. advocate pointed out that, in terms of their contract with the supplier, tneb had rejected one consignment of coal (covered under the 6th bill of entry) as it was found to be of gcv below 6000 k.cals./kg. and hence it was tacitly admitted by them that only coal with gcv of 6000 or more k.cals/kg was rateable as "good quality coal".according to ld. sr. advocate, the expression "good quality coal" used in the exemption order was understood by the respondent in this sense and, therefore, in respect of coal which was found to have gcv below 6000 k.cals/kg., they were not entitled to claim the benefit of the exemption order. in this view of the matter, ld. sr. advocate suggested page 386 that the case could be remanded to the original authority with appropriate directions.8. the issue before us is whether the respondent is entitled to the benefit of concessional rate of duty under the adhoc exemption order of the central government. a decision on this question would rest on interpretation of the exemption order. in the case of patel aluminium pvt. ltd. v. uoi cited by ld. sr. advocate, a special order issued by the central government under section 25(2) of the customs act in favour of mmtc was under challenge. the high court held that it was obligatory for the central govt. to state circumstances of an exceptional nature in a special order of exemption issued under section 25(2). it was, further, observed that it was not for the court to sit in judgment on the sufficiency of reasons stated for the special exemption. we find that, in the special exemption order issued to tneb, certain exceptional circumstances were stated by the government. we reproduce herein the text of the exemption order (with the note thereto): subject: exemption from customs duty on coal to be imported by the tamil nadu electricity board for use in thermal power station, reg. i am directed to say that the state of tamil nadu has three coal based thermal power stations at ennore, mettur and tuticorin with a total installed capacity of 2340 mw and the requirement of coal for these three stations is about 12 million tonnes per annum. in order to ensure uninterrupted generation of power, adequate stock of good quality coal is required to be maintained. for this purpose, it has been decided to build up a reasonable buffer stock of good quality coal at a reasonable price to lake care of any emergent situation arising from non-availability of domestic coal. (2.) in view of the above, the government of tamil nadu have requested that the tamil nadu electricity board may be permitted to import coal as a one time measure at a concessional rate of import duty to provide for uninterrupted generation of power in thermal power stations in the state of tamil nadu (at ennore, mettur and tuticorin). the matter has page 387 been examined and considering the prevailing price in the international market, it has been found necessary to reduce the customs duly on such coal. (3.) having regard to the circumstances of exceptional nature as mentioned above and in exercise of the powers conferred by sub-section (2) of section 25 of the customs act 1962 (52 of 1962) read with sub-section (4) of section 111 of the finance act 1992 (18 of 1992), the central government being satisfied that it is necessary in the public interest so to do, hereby exempts a quantity of two million tonnes of coal falling under the heading 27.01 of the first schedule to the customs tariff act 1975 (51 of 1975), to be imported by the tamil nadu electricity board for supply to thermal power stations in tamil nadu from: (a) so much of that portion of duty of customs leviable thereon which is specified in the said first schedule as is in excess of 30 per cent ad valorem; and (b) the whole of the auxiliary duty of customs leviable thereon under sub-section (1) of section 111 of the said finance act 1992 (18 of 1992). 4. this order shall take effect from the 15th of september, 1992 and shall remain in force upto and inclusive of the 15th day of september, 1993.no. s/9/779-tru(cus.) dated the 17th march, 1979 should continue. the madras customs house shall monitor the quantity imported against the said exemption order.much of the arguments put forward by both sides revolve around the expression "good quality" used in the above exemption order. it is clearly noticeable from the above order that the central government while issuing the order kept in view the need of tneb to have a reasonable buffer stock of coal to take care of any emergent situation arising from non-availability of domestic coal. it was not the tneb's intent to reject the domestic coal on account of its poor quality and use imported coal of better quality while such domestic coal was available. both sides have agreed that the price of coal depends largely on its quality and that the quality of coal is measured principally in terms of gcv. the exemption order indicates that it took into account the prevailing price of coal in the international market and purported to reduce the financial burden on tneb (due to import of coal) by reducing customs duty on coal. obviously, price depending on quality and the latter depending on gcv, the central government was aware of the fact that foreign coal had higher gcv than domestic coal.nevertheless, they did not specify any gcv limit or other qualitative parameter for coal in their exemption order. at this juncture, we shall look at the tariff entry. page 388 the exemption was for coal falling under heading 27.01 in chapter 27 of the first schedule to the customs tariff act. the tariff entry reads as under:heading sub-heading description of article rate of duty (1) (2) (3) (4)27.01 coal; briquettes, ovoids and solid similar fuels manufactured2701.11 -- anthracite 85%2701.12 -- bituminous coal 85%2701.19 -- other coal 85% sub-heading notes (1) and (2) to chapter 27 of the cta schedule are also relevant and the same are reproduced below: (1.) for the purposes of sub-heading no. 2701.11 "anthracite" means coal having a volatile matter limit (on a dry mineral-matter-free basis) not exceeding 14 per cent. (2.) for the purposes of sub-heading no. 2701.12, "bituminous coal" means coal having a volatile matter limit (on a dry, mineral-matter-free basis) exceeding 14 per cent and a calorific value limit (on a moist, mineral-matter-free basis) equal to or greater than 5.833 kcal/kg.coal containing volatile matter upto 14 per cent (on dry, mineral- matter-free basis) was classified as anthracite under a sub-heading.coal having volatile matter above 14 per cent (on dry, mineral-matter-free basis) and calorific value of 5833 k.cal./kg or above (on moist, mineral-matter-free basis) was classified as bituminous coal under a separate sub-heading. residual coal (for instance, coal having volatile matter above 14 per cent and calorific value below 5833 k.cal./kg) was placed under a third sub-heading. thus the tariff classified different varieties of coal, under different sub-headings on the basis of qualitative differences in terms of volatile matter content and calorific value but prescribed the same rate of customs duty (85 per cent) for all the varieties.significantly, the government's exemption order also did not differentiate between the varieties of coal inasmuch as it extended the benefit of concessional rate of customs duty just to coal falling under heading 27.01. it can certainly be said that, in 1993-94 during which period the subject imports were made, qualitative differences between varieties of coal were not a factor in government's reckoning for the purpose of grant of exemption from payment of customs duty. in this context, it is noteworthy that "qualitative" expressions (such as "good quality") or parameters (such as "calorific value") are not to be seen in the operative part of the exemption order. later in this order, we will be dealing with the reference to "good quality coal" contained in the first para of the exemption order.9. it is common case of both sides that, for varieties of coal, the higher the calorific value, the better the quality. from this point of convergence, neither side can deny that bituminous coal (sub-heading 2701.12) having calorific value 5833 k.cals/kg or above is better in quality than the other two varieties of coal (sub-headings 2701.11/2701.19) and that, had it been the intention of government to grant quality-based exemption in a selective matter, they would have either specified bituminous coal or laid down parameters like gcv in the operative part of the exemption order.10. ld. senior advocate argued that/the meaning of "good quality coal" referred to in the exemption order should be understood in terms of gcv specified by tneb to the foreign parties for supply without attracting the penalty clause in the contract. he even suggested that appropriate words be added to the text of the exemption order to make it meaningful and harmonious. in this connection, he relied on the supreme court's judgment in m.j. exports ltd. v. cegat . ld. counsel for the respondent has countered these arguments by submitting that it is not possible for any court or tribunal to make up any deficiency in the language of an exemption notification. he has drawn support from the madras high court's decision in acce v. new horizon sugar mills (p) ltd. 1980 elt 10 (mad.). in our view, neither of the citations is apposite inasmuch as there is no deficiency or ambiguity in the language of the special exemption order under consideration. ld.counsel for the respondent has also argued that the exemption order should be interpreted in such manner that the beneficiary is not practically deprived of its benefit. in this connection, he has relied on the tribunal's decision in jaypee bela cement v. cce, raipur . the notification considered in the case of jaypee bela cement (supra) was one issued under section 5a(1) of the central excise act, corresponding to sub-section (1) of section 25 of the customs act. we are concerned with a special exemption order issued under sub-section (2) of section 25 of the customs act. we are of the view that, as a special exemption order is issued in circumstances of an exceptional nature [a phrase used in sub-section (2) and not in sub-section (1)], it should be given a stricter interpretation than to a general exemption issued under sub-section (1) of section 25. the first and second paragraphs of the exemption order stated the circumstances of exceptional nature considered by the central government for allowing concessions to tneb. the first para stated tneb's requirement and the second para reflected its consideration by central government. it was not necessary for the assessing authority to enter into this domain which belonged to the legislative authority (central government). the third and fourth paragraphs constituted the operative part of the exemption order and the same did not lay down any condition regarding "quality" of coal to be imported at concessional duty by tneb. the assessing authority is only concerned with the operative part of page 390 the exemption order, which allowed concessional rate of duty on coal to be imported by tneb. it was not at all necessary for the assessing authority to ask for test reports on quality of the coal, though it was required to ascertain whether the goods imported was "coal" or not. in this case, it appears, the assessing authority had no doubt regarding the identity of the goods.once the goods was found to be "coal", it attracted the operative part of the special exemption order. the note added to the exemption order required the customs house just to monitor the "quantity" of coal imported. it also referred to "arrangements contemplated in the ministry's letter dt. 17th march, 1979". neither side has claimed that this part of the note had anything to do with quality of coal.11. the orders passed by the assistant collectors were rightly set aside by the commissioner (appeals). those orders suffered from the vices of negation of natural justice and wrong interpretation of the exemption order. woefully enough, the authors of those orders virtually conceded before a criminal court that they were under oral instructions from their superiors to adjudicate the dispute that way. we feel that it is a charity for the appellate authority to have thrown away those orders. the officers who were required by law to discharge the quasi-judicial function of assessing bills of entry independently chose mindlessly to follow oral directives of their superiors thereby denying the assessee a benefit which the latter was entitled to in terms of the plain language of the exemption order. they were so keen to follow, or overawed by, such imprudent directives that they did not, or could not, follow even the principles of natural justice while finalising the provisional assessments against tneb. they along with the superiors whom they referred to, under oath, before the criminal court were turning the quasi-judicial process into a mockery. their depositions before the criminal court brought the episode to a disgraceful finale for quasi-judicial functionaries under the customs act.12. ld. commissioner (appeals) has adequately examined the scope of the exemption order and has reached a correct conclusion. her observation that the language of the exemption order is plain and offers no semantic challenge is eminently well-founded. it is true that she has also drawn support from the criminal court's judgment. but this aspect can be ignored inasmuch as ld. commissioner (appeals) has independently examined the scope of applicability of the exemption order to the facts of the case and has arrived at a correct finding. we do not find any reason to interfere with the impugned order. the revenue's appeals are dismissed.

Judgment:
1. Final Order Nos. 1458-1462/2005 dt. 31/10/05 M/s. Tamil Nadu Electricity Board (TNEB), the respondent herein, imported six consignments of "Steaming Coal" from Indonesia and filed the below-mentioned 6 Bills of Entry covering the quantities mentioned there against, claiming the benefit of concessional rate of duty allowed by the Central Government in Adhoc Exemption Order No. 172/92 dated 15th September, 1992 (F.No. 332/71/88-TRU) issued under Sub-section (2) of Section 25 of the Customs Act 1962 read with Sub-section (4) of Section 111 of the Finance Act 1992: The above exemption order entitled TNEB to clear at Customs a total quantity of 2 million tons of coal falling under Heading 27.01 of the First Schedule to the Customs Tariff Act 1975 on payment of Basic Customs Duty at the concessional rate of 30 per cent ad valorem vis-is the then prevailing tariff rate of 85 per cent ad valorem. [A similar exemption order was simultaneously issued by the Government in favour of Karnataka Power Corporation Ltd.]. The exemption order also exempted such import from payment of Auxiliary Duty of Customs leviable thereon under Sub-section (1) of Section 111 of the Finance Act 1992. The exemption order was effective from 15th September, 1992 to 15th September, 1993. As the imported coal was urgently required by TNEB, a request was made for release of the goods upon provisional assessment in terms of Section 18 of the Customs Act, for Page 380 which the requisite Bonds were executed and Bank Guarantees furnished by TNEB. After drawing representative samples of the six consignments in the presence of TNEB officials and their CHA, the proper officer of Customs made provisional assessment of the goods. The samples from each consignment covered by a Bill of Entry were sent to (1) Indian Institute of Technology (IIT), Madras, (2) The Central Fuel Research Institute, Dhanbad and (3) M/s. Italab Private Ltd., Madras. In the case of the goods covered by Bill of Entry No. 29435, the samples were sent to (1) IIT, Madras (2) M/s. Italab Private Ltd., Madras (3) National Metallurgical Laboratory, Madras and (4) Neyveli Lignite Corporation, Neyveli. The test reports received from the said laboratories indicated that the "Gross Calorific Values" (GCV) in Kilo Calories per Kg (K.Cals/kg) of the coal covered under the above Bills of Entry were in the range of 5650-6235, 5593-6032, 5680-6037, 5633-6066, 5593-6032 and 5375-6062 respectively. The Asst. Collector of Customs (Groups I & II) proceeded to finalise the assessments on the basis of these test results. He considered the "Cost Economics of Import of Coal" discussed at a meeting held in August 1992 of representatives of the Ministry of Power, Ministry of Coal and the Ministry of Finance (Govt. of India), Governments of Karnataka & Tamil Nadu, Karnataka Power Corporation Ltd., TNEB, Central Board of Excise & Customs etc. and interpreted the exemption order on that basis. Accordingly, he took the view that the exemption order had been issued for facilitating import, by TNEB, of coal of GCV of 6500 K.Cals/kg at the concessional rate of duty. The Asst. Collector held that the imported coal, the GCV of which was below 6500 K.Cals./kg.

as per the test reports, was not of "good quality" and, therefore, the benefit of the exemption order was not admissible. Accordingly, without extending the benefit of concessional rate of duty, the Asst. Collector finalised the assessments at the normal rate of duty. Accordingly, in respect of each Bill of Entry, the differential duty was quantified and the same was recovered through enforcement of bank guarantee. Aggrieved by the orders of the Asst.

Collector, TNEB filed appeals with the Collector (Appeals).

Subsequently, however, the appeal pertaining to Bill of Entry No. 33233 (6th above) was withdrawn by TNEB after rejecting the goods and securing reimbursement of the duty paid thereon, from the supplier. The appellate authority dismissed that appeal as "withdrawn" and rejected the remaining appeals as "not tenable". The order of the Collector (Appeals) was set aside by this Tribunal and the lower appellate authority was directed to dispose of, on merits, TNEB's appeals pertaining to the first five Bills of Entry. Pursuant to the Tribunal's remand order, the Commissioner (Appeals) disposed of the five appeals of TNEB by order in appeal No. 457 to 461/2002 dated 30th September, 2002, wherein it was held that the coal imported by TNEB satisfied the conditions of the exemption order dated 15th September, 1992 of the Central Government and accordingly the orders of the Asst. Collector were set aside. Thus TNEB's appeals relating to the first five Bills of Entry were allowed with consequential relief. The present appeals of the Revenue are against the order of the Commissioner (Appeals).

2. Heard both sides. A preliminary objection was raised by learned Counsel for the respondent (TNEB). It was submitted that, before the appeals were taken up for hearing, the impugned order of the lower appellate authority required to be complied with by Revenue as the application filed by them for stay of operation of the said order was rejected by the Tribunal. However, ld. counsel did not press the objection, upon being told by the Bench that final disposal of the appeals would not require so much time as might be required by the Department (in the event of the Tribunal directing them to comply with the impugned order) for compliance.

Ld. Counsel for the respondent raised another objection. He submitted that some of the additional documents filed by the appellant in November 2004 had nothing to do with the dispute involved in the appeals and hence should not be taken on record. Countering this objection, ld. Sr. Advocate submitted that the additional documents would be useful in understanding the scope of the exemption order. We have perused these documents and have found that most of these are records of deliberations between the Union Ministries, Govt. of Tamil Nadu, TNEB and others on the subject of import of coal by TNEB (respondent) for the Thermal Power Stations in Tamil Nadu. Avowedly, the appellant wants to rely on these documents to "unveil" the legislative intent behind the Government's exemption order. Most of these documents relate to the consultative process which preceded the exemption order. The quality of coal to be imported by TNEB was one of the aspects discussed in this process. It cannot be said that these documents have nothing to do with the dispute which we are called upon to deal with. Therefore, we have acceded to the appellant's request for receiving the additional documents filed by them. Whether any of these documents is admissible as evidence in this case is a matter to be considered later.

3. Now to the merits of the case. Ld. Sr. Advocate submitted that the lower appellate authority had reached a conclusion on the basis of a judgment passed by a Criminal Court in a different proceedings, without independent application of mind to the facts and evidence in the case on hand. Ld. Commissioner (Appeals) had heavily relied on the findings recorded by the Special Court, Chennai in its judgment dated 27th December, 2001 in Special Calendar Case No. 10/97, which was a case booked against a former Chief Minister and a former PWD Minister of Tamil Nadu, some of the top executives of the State Govt. and the top brass of TNEB under the Indian Penal Code and the Prevention of Corruption Act. Such criminal proceedings were entirely different from the proceedings under the Customs Act. Ld. Commissioner (Appeals), regardless of this distinction, chose to rely on the findings of the Criminal Court. According to ld. Sr. Advocate, the lower appellate authority ought to have taken a decision without reference to the Criminal Court's judgment. In this connection, reliance was placed on the following decisions: 1) Macherlappa and Sons v. Govt. of Andhra Pradesh 1958 (9) STC 156 (Andhra Pradesh High Court) 2) V. Datchinamurthy and Anr. v. Asst. Director of Inspection (Intelligence), I.T. Dept. and Anr.

4) Sultanali A. Lalani v. Collector of Customs Ld.

Counsel for the respondent relied on the Supreme Court's judgment in Kuldip Singh v. State of Punjab and Ors. and argued that the lower appellate authority was entitled to rely on any evidence, no matter wherefrom it was obtained. The strict rules of evidence enacted in the Evidence Act were not applicable to the proceedings under the Customs Act. Counsel pointed out that certain evidentiary aspects of the case dealt with by the Criminal Court were relevant to the proceedings before the Commissioner (Appeals) and, therefore, it was open to the latter to rely on such evidence.

4. We shall proceed to address the above arguments and ascertain whether it was necessary for the Commissioner (Appeals) to rely on the Criminal Court's judgment. Both the counsel have read out portions of that judgment to us. Learned Special Judge held, inter alia, that the test results reported by M/s. S.G.S. India Ltd., who were engaged by the Indonesian supplier of coal for monitoring the quality of the import consignments and were accepted by TNEB, should be treated as final and binding and that it was not open to the Customs authorities to draw samples of the goods and get them tested in any laboratory not authorized by TNEB and their supplier. It was also found that the procedures prescribed for sampling and analysis had not been followed by the laboratories engaged by the department and consequently their test results were incorrect, misleading and unreliable. The Asst. Collectors of Customs who passed the orders-in-original in this case were examined before the Criminal Court and their depositions were found to indicate that they had passed the orders as per the instructions of their superiors, without independent application of mind to the materials on record.

The oral evidence of the Asst. Collectors and the CBEC Chairman (P.W. 10) became handy for the learned Special Judge to decry some of the findings recorded in the order-in-original. The Criminal Court was dealing with the charge that the accused had committed criminal breach of trust and criminal misconduct by entering into criminal conspiracy with five suppliers (Indonesian and Australian) of coal to misappropriate TNEB's funds in connection with import of coal from those countries, for pecuniary advantage to the suppliers, thereby causing loss to TNEB. In that process, the court examined, among others, the two Asst. Collectors and the CBEC Chairman as witnesses and recorded a finding, inter alia, thus: Ministry of Finance permits import of 2 million tons coal on one-time basis on a duty of 30 per cent as against 85 per cent, as an absolute Page 383 order, without attracting conditions precedent" vide para (106) of the judgment. This finding relates to the ad hoc exemption order dated 15th September, 1992 which was issued by Sh.

Pawan Kumar Jain, Under Secretary to Govt. of India, who was not a witness in the case. In its trial of the charge against the accused relating to the import of coal by TNEB, the court considered the exemption order as Finance Ministry's unconditional permission to import coal. After reading the text of the exemption order, it observed: This itself will eliminate the charge of conspiracy in toto" vide para (81) of the court's judgment. The learned special Judge largely relied on the depositions of witnesses (including the two Assistant Collectors) to come to the conclusion that the exemption order was absolute and unconditional. The learned Judge also found enough documentary evidence to hold that Indonesian coal and Australian coal were of good quality. The criminal court's interpretation of the exemption order was essentially based on evidence, documentary and oral. The court was working under the Code of Criminal Procedure and assessing evidence in terms of the Evidence Act. It did not invoke the principles laid down by the Supreme Court as to interpretation of exemption notifications/orders. It is also debatable as to whether, in the criminal case, it was necessary for the learned special Judge to step upon interpretation of the exemption order at all. The respondent's counsel has not established such necessity, nor could we find any.

As found by the Special Judge himself, there was restriction on import of coal which was freely importable under OGL. Its import did not require the permission of the Ministry of Finance (Govt. of India). Nevertheless, it appears, the exemption order was not only understood as an order granting customs duty concession to TNEB in respect of coal but also misunderstood as a permission to import coal. Consequently, any condition for duty concession was perceived as a condition for import permission, also. Apparently this error of the criminal court, largely attributable to the depositions made before the court by the CBEC Chairman and the two Assistant Collectors, begot another error for the court, i.e., interpreting the exemption order to find out whether TNEB was permitted to import coal conditionally or otherwise, overlooking the fact that Section 25(2) of the Customs Act, whereunder the exemption order was issued, was not a provision for granting permission to import anything but one for allowing customs duty exemption or concession for specified goods when imported. It was not necessary for the special Judge to interpret the exemption order in the process of trying the charges of criminal conspiracy and criminal misconduct levelled against the accused in relation to the purchase of coal by TNEB from abroad.

Hence whatever observations or findings were made by the learned Judge as to the scope of the exemption order would only, be obiter dicta, for a quasi-judicial authority assessing duty under the Customs Act. On the other hand, an assessing authority under the Customs Act is not required to gather evidence (other than what might be required under the said Act or the Customs Tariff Act or any other relevant fiscal law) for Page 384 interpreting an exemption notification / order issued under Section 25 of the said Act. The fiscal statute expects it to ascertain the meaning and scope of the exemption notification/order from its plain language, following the relevant rulings of competent courts. For the above reasons, it would be inappropriate for the assessing authority to follow the criminal court's interpretation. Hence we are of the view that the lower appellate authority should not have referred to the criminal court's judgment. We do not think that the apex court's judgment in Kuldip Singh's5 case cited by TNEB's counsel is relevant to the present case. What was held in that case was that the strict rules of the Evidence Act were not applicable to departmental/disciplinary enquiries and that, in both civil and criminal cases, any evidence relevant to the matters in issue was admissible, no matter how it was obtained. We have already found that the evidence taken by the criminal court in the conspiracy case is not relevant to interpretation of the exemption order by the assessing authority. On the other hand, one of the judicial authorities cited by the Revenue's counsel is worth mentioning in the present context. In Datchinamurthy's6 case, the Madras High Court found consensus between Indian, British and Canadian courts on the relation between Revenue proceedings and adjudication by courts of justice. That consensus is that the Revenue has to perform its allotted task under the statute and it cannot be fettered in the discharge of its functions by any adjudication by courts of justice in private litigation even where that adjudication might impinge on the issue which the Revenue has to face and determine. This judicial view, which has arisen from cases where civil or criminal action against tax-assessees, in courts of justice, yielded results which could have direct bearing on the tax assessment proceedings before Revenue authorities, must apply a fortiori to the present proceedings inasmuch as the criminal court's judgment relied on by the respondent's counsel was not rendered in any action against the assessee (TNEB). Therefore, there is no question of the Tribunal relying on the said judgment. Learned Commissioner (Appeals) also should not have relied on it.

5. Ld. Senior Advocate, adverting to the merits of the case, submitted that there was a distinction between an exemption order issued under Sub-section (2) of Section 25 of the Customs Act and one issued under Sub-section (1) of the said Section. An exemption order issued under Sub-section (2) was a "special order" intended to benefit a particular importer in exceptional circumstances. In the instant case, exceptional circumstances could be gathered from the background of the exemption order dated 15th September, 1992 issued by the Central Government. Ld.

Sr. Advocate narrated this background with reference to the Agenda Notes relating to the meeting, held in August 1992, of representatives of the Ministries of Power, Coal and Finance (Govt. of India), representatives of the Governments of Tamil Nadu & Karnataka as also representatives Page 385 of Karnataka Power Corporation Ltd. and TNEB.According to ld. Sr. Counsel, it was discernible from these records that only high grade coal was intended to be imported by TNEB.Referring to the specifications of coal ordered by TNEB for import from the Indonesian supplier, ld. Sr. Counsel submitted that supply of coal of GCV below 6400 K.Cals/kg. attracted a penalty and coal of GCV less than 6000 K.Cals./kg was liable to be rejected by TNEB. Thus it was discernible from the terms of the contract between TNEB and their supplier that coal with GCV less than 6400 K.Cals./kg. was not rateable as "good quality coal" and, therefore, the coal imported by TNEB did not qualify for concessional rate of duty under the exemption order.

Ld. Sr. Advocate also pointed out that as TNEB, in their contract with supplier, were entitled to reject any coal supplied with GCV below 6000 K.Cals./kg., they were not to be heard to say that such coal was of "good quality". He opined that, in the facts and circumstances of the case, the department's criterion for "good quality coal" was minimum GCV of 6400 K.Cals./kg., while TNEB's criterion for such coal was minimum GCV of 6000 K.Cals./kg. Since any of the consignments did not meet either of these criteria, none was eligible for the benefit of the exemption order.

6. Ld. advocate for the respondent submitted that the exemption order did not speak of "quality" and mentioned only "quantity" of coal. In this connection, he referred to Note to the exemption order, which required the Madras Customs House to monitor the quantity of coal imported by TNEB. Counsel pointed out that there was no requirement under the exemption order to monitor the "quality" of coal and hence there was no scope for chemical test of samples of the goods imported.

Contextually, counsel also submitted that any show-cause notice was not issued to TNEB and the test reports were not supplied to them. Had the test reports been supplied, the respondent would have requested for an opportunity to cross-examine those who tested the samples. Natural justice was denied to the respondent by the original authority. Ld.

counsel finally contended that, as the exemption order did not lay down specifications for "good quality coal", it was not permissible for the assessing authority to fix parameters like GCV for "quality" of coal and deny the benefit of exemption to the assessee in terms of such parameters. Ld. counsel has taken the cue from one of the grounds of the appeal of the Revenue, viz. ground (b) to make some of his points.

7. In his rejoinder, ld. Sr. Advocate pointed out that, in terms of their contract with the supplier, TNEB had rejected one consignment of coal (covered under the 6th Bill of Entry) as it was found to be of GCV below 6000 K.Cals./kg. and hence it was tacitly admitted by them that only coal with GCV of 6000 or more K.Cals/kg was rateable as "good quality coal".

According to ld. Sr. Advocate, the expression "good quality coal" used in the exemption order was understood by the respondent in this sense and, therefore, in respect of coal which was found to have GCV below 6000 K.Cals/kg., they were not entitled to claim the benefit of the exemption order. In this view of the matter, ld. Sr. Advocate suggested Page 386 that the case could be remanded to the original authority with appropriate directions.

8. The issue before us is whether the respondent is entitled to the benefit of concessional rate of duty under the Adhoc Exemption Order of the Central Government. A decision on this question would rest on interpretation of the exemption order. In the case of Patel Aluminium Pvt. Ltd. v. UOI cited by ld. Sr. Advocate, a special order issued by the Central Government under Section 25(2) of the Customs Act in favour of MMTC was under challenge. The High Court held that it was obligatory for the Central Govt. to state circumstances of an exceptional nature in a special order of exemption issued under Section 25(2). It was, further, observed that it was not for the court to sit in judgment on the sufficiency of reasons stated for the special exemption. We find that, in the special exemption order issued to TNEB, certain exceptional circumstances were stated by the Government. We reproduce herein the text of the exemption order (with the note thereto): Subject: Exemption from Customs duty on coal to be imported by the Tamil Nadu Electricity Board for use in Thermal Power Station, Reg.

I am directed to say that the State of Tamil Nadu has three coal based thermal power stations at Ennore, Mettur and Tuticorin with a total installed capacity of 2340 MW and the requirement of coal for these three stations is about 12 million tonnes per annum. In order to ensure uninterrupted generation of power, adequate stock of good quality coal is required to be maintained. For this purpose, it has been decided to build up a reasonable buffer stock of good quality coal at a reasonable price to lake care of any emergent situation arising from non-availability of domestic coal.

(2.) In view of the above, the Government of Tamil Nadu have requested that the Tamil Nadu Electricity Board may be permitted to import coal as a one time measure at a concessional rate of import duty to provide for uninterrupted generation of power in thermal power stations in the State of Tamil Nadu (at Ennore, Mettur and Tuticorin). The matter has Page 387 been examined and considering the prevailing price in the international market, it has been found necessary to reduce the customs duly on such coal.

(3.) Having regard to the circumstances of exceptional nature as mentioned above and in exercise of the powers conferred by Sub-section (2) of Section 25 of the Customs Act 1962 (52 of 1962) read with Sub-section (4) of Section 111 of the Finance Act 1992 (18 of 1992), the Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts a quantity of two million tonnes of coal falling under the heading 27.01 of the First Schedule to the Customs Tariff Act 1975 (51 of 1975), to be imported by the Tamil Nadu Electricity Board for supply to thermal power stations in Tamil Nadu from: (a) so much of that portion of duty of customs leviable thereon which is specified in the said First Schedule as is in excess of 30 per cent ad valorem; and (b) the whole of the auxiliary duty of customs leviable thereon under Sub-section (1) of Section 111 of the said Finance Act 1992 (18 of 1992).

4. This order shall take effect from the 15th of September, 1992 and shall remain in force upto and inclusive of the 15th day of September, 1993.

No. S/9/779-TRU(Cus.) dated the 17th March, 1979 should continue. The Madras Customs House shall monitor the quantity imported against the said exemption order.

Much of the arguments put forward by both sides revolve around the expression "good quality" used in the above exemption order. It is clearly noticeable from the above order that the Central Government while issuing the order kept in view the need of TNEB to have a reasonable buffer stock of coal to take care of any emergent situation arising from non-availability of domestic coal. It was not the TNEB's intent to reject the domestic coal on account of its poor quality and use imported coal of better quality while such domestic coal was available. Both sides have agreed that the price of coal depends largely on its quality and that the quality of coal is measured principally in terms of GCV. The exemption order indicates that it took into account the prevailing price of coal in the international market and purported to reduce the financial burden on TNEB (due to import of coal) by reducing customs duty on coal. Obviously, price depending on quality and the latter depending on GCV, the Central Government was aware of the fact that foreign coal had higher GCV than domestic coal.

Nevertheless, they did not specify any GCV limit or other qualitative parameter for coal in their exemption order. At this juncture, we shall look at the Tariff entry. Page 388 The exemption was for coal falling under Heading 27.01 in Chapter 27 of the First Schedule to the Customs Tariff Act. The tariff entry reads as under:Heading Sub-heading Description of article Rate of duty (1) (2) (3) (4)27.01 Coal; briquettes, ovoids and solid similar fuels manufactured2701.11 -- Anthracite 85%2701.12 -- Bituminous coal 85%2701.19 -- Other coal 85% Sub-heading Notes (1) and (2) to Chapter 27 of the CTA Schedule are also relevant and the same are reproduced below: (1.) For the purposes of sub-heading No. 2701.11 "anthracite" means coal having a volatile matter limit (on a dry mineral-matter-free basis) not exceeding 14 per cent.

(2.) For the purposes of sub-heading No. 2701.12, "bituminous coal" means coal having a volatile matter limit (on a dry, mineral-matter-free basis) exceeding 14 per cent and a calorific value limit (on a moist, mineral-matter-free basis) equal to or greater than 5.833 kcal/kg.

Coal containing volatile matter upto 14 per cent (on dry, mineral- matter-free basis) was classified as anthracite under a sub-heading.

Coal having volatile matter above 14 per cent (on dry, mineral-matter-free basis) and calorific value of 5833 K.Cal./kg or above (on moist, mineral-matter-free basis) was classified as bituminous coal under a separate sub-heading. Residual coal (for instance, coal having volatile matter above 14 per cent and calorific value below 5833 K.Cal./kg) was placed under a third sub-heading. Thus the Tariff classified different varieties of coal, under different sub-headings on the basis of qualitative differences in terms of volatile matter content and calorific value but prescribed the same rate of customs duty (85 per cent) for all the varieties.

Significantly, the Government's exemption order also did not differentiate between the varieties of coal inasmuch as it extended the benefit of concessional rate of customs duty just to coal falling under Heading 27.01. It can certainly be said that, in 1993-94 during which period the subject imports were made, qualitative differences between varieties of coal were not a factor in Government's reckoning for the purpose of grant of exemption from payment of customs duty. In this context, it is noteworthy that "qualitative" expressions (such as "good quality") or parameters (such as "calorific value") are not to be seen in the operative part of the exemption order. Later in this order, we will be dealing with the reference to "good quality coal" contained in the first para of the exemption order.

9. It is common case of both sides that, for varieties of coal, the higher the calorific value, the better the quality. From this point of convergence, neither side can deny that bituminous coal (sub-heading 2701.12) having calorific value 5833 K.Cals/kg or above is better in quality than the other two varieties of coal (sub-headings 2701.11/2701.19) and that, had it been the intention of Government to grant quality-based exemption in a selective matter, they would have either specified bituminous coal or laid down parameters like GCV in the operative part of the exemption order.

10. Ld. Senior Advocate argued that/the meaning of "good quality coal" referred to in the exemption order should be understood in terms of GCV specified by TNEB to the foreign parties for supply without attracting the penalty clause in the contract. He even suggested that appropriate words be added to the text of the exemption order to make it meaningful and harmonious. In this connection, he relied on the Supreme Court's judgment in M.J. Exports Ltd. v. CEGAT . Ld. counsel for the respondent has countered these arguments by submitting that it is not possible for any court or Tribunal to make up any deficiency in the language of an Exemption Notification. He has drawn support from the Madras High Court's decision in ACCE v. New Horizon Sugar Mills (P) Ltd. 1980 ELT 10 (Mad.). In our view, neither of the citations is apposite inasmuch as there is no deficiency or ambiguity in the language of the special exemption order under consideration. Ld.

counsel for the respondent has also argued that the exemption order should be interpreted in such manner that the beneficiary is not practically deprived of its benefit. In this connection, he has relied on the Tribunal's decision in Jaypee Bela Cement v. CCE, Raipur . The Notification considered in the case of Jaypee Bela Cement (supra) was one issued under Section 5A(1) of the Central Excise Act, corresponding to Sub-section (1) of Section 25 of the Customs Act. We are concerned with a special exemption order issued under Sub-section (2) of Section 25 of the Customs Act. We are of the view that, as a special exemption order is issued in circumstances of an exceptional nature [a phrase used in Sub-section (2) and not in Sub-section (1)], it should be given a stricter interpretation than to a general exemption issued under Sub-section (1) of Section 25. The first and second paragraphs of the exemption order stated the circumstances of exceptional nature considered by the Central Government for allowing concessions to TNEB. The first para stated TNEB's requirement and the second para reflected its consideration by Central Government. It was not necessary for the assessing authority to enter into this domain which belonged to the legislative authority (Central Government). The third and fourth paragraphs constituted the operative part of the exemption order and the same did not lay down any condition regarding "quality" of coal to be imported at concessional duty by TNEB. The assessing authority is only concerned with the operative part of Page 390 the exemption order, which allowed concessional rate of duty on coal to be imported by TNEB. It was not at all necessary for the assessing authority to ask for test reports on quality of the coal, though it was required to ascertain whether the goods imported was "coal" or not. In this case, it appears, the assessing authority had no doubt regarding the identity of the goods.

Once the goods was found to be "coal", it attracted the operative part of the special exemption order. The Note added to the exemption order required the Customs House just to monitor the "quantity" of coal imported. It also referred to "arrangements contemplated in the Ministry's letter dt. 17th March, 1979". Neither side has claimed that this part of the Note had anything to do with quality of coal.

11. The orders passed by the Assistant Collectors were rightly set aside by the Commissioner (Appeals). Those orders suffered from the vices of negation of natural justice and wrong interpretation of the exemption order. Woefully enough, the authors of those orders virtually conceded before a criminal court that they were under oral instructions from their superiors to adjudicate the dispute that way. We feel that it is a charity for the appellate authority to have thrown away those orders. The officers who were required by law to discharge the quasi-judicial function of assessing Bills of Entry independently chose mindlessly to follow oral directives of their superiors thereby denying the assessee a benefit which the latter was entitled to in terms of the plain language of the exemption order. They were so keen to follow, or overawed by, such imprudent directives that they did not, or could not, follow even the principles of natural justice while finalising the provisional assessments against TNEB. They along with the superiors whom they referred to, under oath, before the criminal court were turning the quasi-judicial process into a mockery. Their depositions before the criminal court brought the episode to a disgraceful finale for quasi-judicial functionaries under the Customs Act.

12. Ld. Commissioner (Appeals) has adequately examined the scope of the exemption order and has reached a correct conclusion. Her observation that the language of the exemption order is plain and offers no semantic challenge is eminently well-founded. It is true that she has also drawn support from the Criminal Court's judgment. But this aspect can be ignored inasmuch as ld. Commissioner (Appeals) has independently examined the scope of applicability of the exemption order to the facts of the case and has arrived at a correct finding. We do not find any reason to interfere with the impugned order. The Revenue's appeals are dismissed.