Overseas Pvt. Ltd. & Anr Vs. Union
of India & Ors  INSC 354 (15 November 1990)
Kasliwal, N.M. (J) Kasliwal, N.M. (J) Singh, K.N. (J)
1991 AIR 583 1990 SCR Supl. (3) 138 1991 SCC Supl. (1) 102 JT 1990 (4) 490 1990
Act, 1962--Sections 26, 60, 68, 112(a)--Palm Kernel-Import of--Whether
permissible--Duty payable--What is.
appellant company made a contract on 10.6.87 with the foreign suppliers to
import under Open General Licence 35,000 MT of "Palm Kernel". Under
the above contract 10681.832 MT of palm kernel was shipped from Nigeria on 26.6.87 and 25.7.87 under
different bills of lading. The goods arrived in the territorial waters of India on 2/3rd October, 1987.
to 27.7.1987 import of palm seeds was canalised under the Import Policy for the
years 1985-88. On 27.7.1987 the Chief Controller of Imports & Exports
issued a Public Notice canalising import of "any other material from which
oil can be extracted" also.
appellant was apprehending some dispute on the import of palm kernel, it filed
a writ petition in the High Court on 28.7.87, and the learned Single Judge
passed two interim orders. On appeal against these orders, the Division Bench
on 2.12.87 set aside the interim orders with the consent of the parties and
expedited the proceedings already initiated under section 124 of the Customs
Act, 1962 for confiscation of the goods.
Collector of Customs by adjudication order passed on 7.12.1987 held that the
item "Palm Kernel" was a prohib- ited item for import except through canalisation
by the State Trading Corporation in terms of the Import Policy and,
consequently its import without a valid licence was in contravention of the
provisions of the Customs Act, 1962 read with the Imports and Exports (Control)
Act, 1947. The Collector in these circumstances directed-the confiscation of
the entire goods but gave an option to the appellant company to redeem the
goods on payment of fine of Rs.90 lacs. The Collector also imposed a personal
penalty on the appellant.
customs duty as applicable on the date of the arrival of the 139 ships, i.e.
2/3rd October, 1987 was 105%. The said customs duty was withdrawn on 4.12.87
and as such there was nil duty on palm Kernel, and this position remained upto
28.1.88. The exemption from customs duty was however withdrawn from 29.1.88 as
a result of which the earlier duty of 105% came into effect. The customs duty
was further increased from 1.3.88 and the new customs duty was at 245%.
appellant company removed 3935.364 MT of Palm Kernel on 17.12.87 by paying
proportionate amount of penalty and nil customs duty. The appellant then filed
bills of entry for the remaining 6746.468 MT of Palm Kernel on 28.1.88 but did
not depoit the redemption fine.
merits, the learned Single Judge by his order dated 19.4.88 held that the Palm
Kernel was an item different and distinguished from Palm seeds, and the same
could be import- ed under OGL as R was covered under item no. 1, Appendix 4 of
the Import Policy. Accordingly, the learned Judge ordered the goods to be
cleared on payment of such duties as were leviable on 28.1.88, when the
appellant had entered the bill of entry seeking clearance of the goods.
Division Bench on. appeal affirmed the order of the Trial Court in so far as
the setting aside of the adjudica- tion order was concerned. The Division Bench
however held that the appellant shall be entitled to get delivery of the
balance goods on payment of duty at the rate prevailing in October, 1987.
the parties preferred appeal before the Court by spe- cial leave, Before the
Court it was inter alia contended on behalf of the appellant company that
Palm seed and Palm Kernel were two different items as shown in the commercial transac-
tions in the trading community and Palm seeds alone was a canalised item;
fiscal statute had to be construed strictly and in favour of a citizen
especially when the question of imposing fine and penalties was involved, and
Palm Kernel having been shipped by the foreign seller from Nigeria on or before 27.7.87 the appellant
was legally entitled to import the same under the OGL.
further contended that the rate of duty of the imported goods, as provided in
section 15 of the Customs Act, 1962 shall be the rate and valuation in force,
in the case of goods cleared from a warehouse under section 68, on the date on
which the goods were actu- 140 ally removed from the warehouse, and the
Division Bench committed error in holding that the date for actual removal of
the goods in the present case shah be considered as 2/3rd October, 1987 when
the goods entered the territorial waters of India; that irrespective of the
physical removal of the goods from the warehouse, the goods would be deemed to
have been actually removed in law on 28.1.88 when the petitioner had filed
ex-bond bills of entry seeking clearance of the goods; in the facts and
circumstances of this case the term 'actual removal' used in section 15(1)(b)
could not mean physical removal as the same was made impossible by the wrongful
act of the respondents; and it should be given a meaning in the juristic sense
as deemed removal.
behalf of the Revenue, it was contended that
distinction sought to be made between 'Palm Kernel' and 'Palm Seed' was
appellant had clearly understood the Import Policy and was fully aware of the
fact that Palm Kernel was a canalised item and still it imported the same under
appellant had let no evidence to show that the 'Palm Kernel' and 'Palm seed'
were considered as two different commodities in the popular sense in commerce
regards the question of levy of duty, it was contended that in the matter of
taxation there was no question of applying any principles of equity or the
deeming fiction in construing the provisions of section 15(1)(b) of the Customs
Act; even if the appellant had entered the bill of entry on 28.1.88, admittedly
the goods were not actually removed on that date and the hiatus if any in actual
removal, could not be extended to an artificial date.
alternative it was contended that the appellant fully knowing that the rate of
duty in October, 1987 when the goods had arrived in India was 105% and even if
the deeming provision for removal of the goods was applied for the purpose of
section 15(1)(b) of the Customs Act, then the date of actual removal should be
2/3rd October, 1987.
the appeal filed by the Revenue and allowing the appeal filed by the appellant
company the Court,
"Palm Kernel" is not included in the item "Palm Seeds", and
the two commodities are different as understood in commerce or trade.
Prior to 27.7.87 'Palm Kernel' was not a canalised item, the High Court rightly
held that 'Palm Kernel' was not included within the entry of 'Palm seed'. The
Government of India itself realised the dif- 141 ference in the two
commodities, therefore it amended its previous policy.[156D]
the Palm Kernel was not a canalised item before 27.7.87, it could have been
imported under the OGL before that date. The crucial dates in this regard are
26.6.87 and 25.7.87 when the goods were actually loaded in the Ship and not the
date of arrival of the ship in the territorial waters of India. [156F]
'Palm Kernel' was not included within 'Palm seed' the Customs authorities had
no legal justification to confiscate or impose redemption fine or penalty.
Section 15 of the Customs Act provides for determi- nation of rate of duty on
imported goods. The rate of duty and tariff valuation, if any, applicable to
any imported goods, shall be the rate and valuation in force in the case of
goods cleared from a warehouse under section 68, the date on which the goods
are actually removed from the warehouse. [158C-D]
One cannot introduce the concept of deeming provi- sion while determining the
question of actual removal of the goods from the warehouse. The rate has to be
determined on the basis of the date on which goods are actually removed from the
warehouse and thereafter the question would be examined as to how the relief is
to be moulded in case it is found that the Customs authorities were themselves responsi-
ble in preventing the importer of goods from actually remov- ing the goods from
the warehouse. [158E-F] Duni Chand Rataria v. Bhuwalka Brothers,  1
S.C.R. 1071; M/s. Bharat Surfactants Pvt. Ltd. v. Union of India,  4
S.C.C. 21; distinguished.
of Sales Tax, Madhya Pradesh v. Jaswant Singh Charan Singh,  2 S.C.R. 720
The statutory principle is that if a party dis- charges its liability by
complying with the requirement of law, and presents papers for clearance of
goods, it is obligatory on the Revenue authorities to pass the order
immediately thereon. If the Revenue authorities either refuse to pass the order
on some erroneous or imaginary grounds or on account of any misconception of
law, the Department cannot take advantage of its own wrong in demand- ing
higher rate of duty from the importer. [162D-E] 142
Admittedly, the appellant had done its part of legal duty by presenting bills
of entry and complying with section 68(a) of the Act on 28.1.88. But the
Customs Officer refused to release the goods on erroneous assumption that the appel-
lant was liable to pay redemption fine and since it had not paid the said
amount, the goods were not liable to be re- leased. In the circumstances, the
Department cannot be allowed to take advantage of its own wrongful act.
moulding relief, the Court has always applied principles of equity in order to
do complete justice between the parties. The appellant is therefore entitled to
the delivery of goods without paying any duty as on 28.1.88 no duty was payable
on the goods. [162H, 164E]