M/S.
Jain Exports Pvt. Ltd. & Anr Vs. Union
of India & Ors [1996] INSC 955 (14 August 1996)
Bharucha
S.P. (J) Bharucha S.P. (J) Majmudar S.B. (J) Bharucha, J.
CITATION:
1996 SCALE (5)839
ACT:
HEAD NOTE:
The
correctness of the order of the High Court of Delhi dismissing the writ
petition filed by the appellants before it is under challenge.
The
appellants imported liquid caustic soda in bulk, on which Customs, auxiliary
and countervailing duty was payable at the aggregate rate of 98.5 per cent. The
State Chemicals and Pharmaceuticals Corporation of India Ltd. (the 3rd
respondents) also imported caustic soda but were required to pay duty thereon
only at the rate of 10 per cent because of an exemption granted to the public
interest under the terms of Section by the appellants on the ground that there
was discrimination; the appellants were also entitled to the exemption granted
to the 3rd respondents. The writ petition prayed for the grant of such
exemption; and, in the alternative, that the exemption in favour of the 3rd
respondents should he declared null and void.
It is
not now in dispute that the case would stand covered by the judgment of this
court in M.Jhangir Bhatusha and Ors. vs. Union
of India & Others, 1989 Supp. (2)
S.C.C.201, but for the appellant's argument that there were special or peculiar
circumstances which created an equity in its favour.
Learned
counsel for the appellants relied upon the following passage in Jhangir Bhatusha's
case:
"13.
First, as to the contention that both the reasons set forth in the exemption
notifications under Section 25(2) of the Act are without foundation. It seems
to us that the two reasons set forth in the exemption notifications can
constitute a reasonable basis for those notifications. It does appear from the
material before us that international prices were fluctuating, and although
they may have shown a perceptible fall there was the apprehension that because
of the history of fluctuations there was a possibility of their rising in the
future. The need to protect the domestic market is always present, and
therefore encouragement had to be given to the imports effected by the State
Trading Corporation by reducing the rate of customs duty levied on them. This
involved a long term perspective, since the exclusive monopoly to import these
edible oils was now entrusted to the State Trading Corporation. What appears to
have dominated the policy of the government in issuing the exemption
notifications was the consideration that the domestic prices of vanaspati
should be maintained at reasonable levels. It cannot be doubted that the entire
edible oil market is an integrated one, and that it is not reasonable to treat
any one of the edible or vanaspati in isolation. It is a well accepted fact
that vanaspati manufacturers constitute a powerful organised sector in the
edible oil market, and a high vanaspati prices would encourage an unauthorised
diversion of the edible oils to vanaspati manufacturing units, resulting in a
scarcity in the edible oil market, giving rise to arratic prices and depriving
consumers of access to edible oils. The need for preventing vanaspati prices
ruling high was also to prevent people normally using vanaspati rom switching
over to other edible oils, thus leading to an imbalance in the oil market. An overall
view made it necessary to ensure that domestic prices of vanaspati remained at
reasonable levels. To all these considerations the learned Attorney General has
drawn our attention, and we cannot say that they are not reasonably related to
the policy underlying the exemption orders. So that the government would have
sufficient supplies of edible at hand in order to feed the market, the learned
Attorney General says, it was considered desirable and in the public interest
to reduce the rate of customs duty to 5 per cent on the imports made by the
State Trading Corporation. Now it is the Central Government which has to be
satisfied, as the authority appointed by Parliament under Section 25(2), that
it is necessary in the public interest to make the special orders of exemption.
It has set out the reasons which prompted it to pass the orders. In our
opinion, the circumstances mentioned in those notifications cannot be said to
be irrelevant or unreasonable. It is not for this Court to sit in judgment on
the sufficiency of those reasons. The limitations the jurisdiction of the court
in cases where the satisfaction has been entrusted to executive authority to
judge the necessity for passing orders is well defined and has been long
accepted.
14. It
is true that the State dons the robes of a trader when it enters the field of
commercial activity, and ordinarily it can claim no favoured treatment. But
there may be clear and good reason for making a departure. Viewed in the
background of the reasons for granting a monopoly to the State Trading
Corporation, acting as an agent or nominee of the Central Government in
importing the specified oils, it will be evident that policy considerations
rendered it necessary to make consummation of that policy effective imposing a concessional
levy on the imports.
No
such concession is called for in the case of the private importers who, in any
event, are merely working out contracts entered into by them with foreign
sellers before December
2, 1978." Learned
counsel for the appellants submitted that special circumstances favoured the
appellants in that the interio order passed by this Court on 23rd April, 1980, obliged the appellants to sell its
caustic soda at a price that did not take duty at the rate of 92.5 per cent
into account.
By the
said interim order on the appellant's application for stay of recovery of the
difference in duty, the appellants were permitted to clear the quantity of
caustic soda stated therein on the condition that they furnished security to
the satisfaction of the Collector of Customs, Bombay, for the difference in
duty between 10 per cent and 92.5 per cent, and, in the event that the
Collector was not satisfied with such security, the appellants furnished a bank
guarantee for the said difference. The interim order recorded that the
appellants undertook "not to sell caustic soda imported under the
aforesaid licence at a rate higher than Rs.5132 only per M.T. Ex-godown, which
is represented by the counsel for State Chemicals and Pharmaceuticals
Corporation of India Limited as one price at which they have sold the quantity
of caustic soda imported by them." According to learned counsel for the
appellants, an obligation had been imposed by this Court upon the appellants
not to sell the caustic soda at more than Rs.5132 per metric tonne. The
appellants mad complied with that obligation. Consequently, they had been
unable to realise from the purchasers of the caustic soda a price sufficient to
cover the balance 82.5 per cent of duty. An equity arose in favour of the appellants
by reason of the interim order and they should be permitted to pay as duty only
10 per cent as provided under its terms.
In the
first place, the interim order was passed upon the application for stay of
recovery of the difference in duty made by the appellants. If the appellants
found the conditions imposed by the order unacceptable, they could have sold
the caustic soda at a price higher than Rs. 5132 per metric tonne and paid duty
thereon at the rate of 92.5 per cent after applying to this Court to relieve
them of their undertaking. The appellants acted upon the interim order knowing
full well that if the appeal was decided against them they would be required to
pay duty at the rate of 92.5 per cent. Acting upon the interim order created no
equity in favour of the appellants, nor are these any or peculiar
circumstances.
In the
second place, an undertaking given to Court is not an obligation imposed by the
Court. It as a promise voluntarily made to the Court. Acting upon its own
undertaking to court creates no equity in favour of the party giving it, nor is
it a special or peculiar circumstance.
In the
third place, the passage from the decision in Jhangir Bhatusha's case does not
assist the appellants.
In the
fourth place, should a court come to the conclusion that an exemption is
arbitrary or discriminatory or violative of Article 14, it may strike the
exemption down but it cannot widen its scope so as to cover those it finds have
been discriminated against. Reference in this behalf may be made to the
judgment in State of M.P. vs. Mohan Singh, (1995) 6 S.C.C.
321, to which one of us (S.P. Bharucha, J.) was a party. Paragraph 6 is self-explanatory
:
"6.
Here we part company with the High Court. Having come to the conclusion that
the grant of special remission to Scheduled Caste and Scheduled Tribe prisoners
was unlawful, the proper course to about should have been to strike it down. It
was beyond the High Court's power to expand the reach of the remission so as to
give the benefit of it to the writ petitioner, who did not belong to the
Scheduled Castes or Scheduled Tribes. The power to grant the remission lay with
the State. If the power was improperly exercised, the High Court could quash
the exercise. The High Court could not, in effect, grant a general remission
where the State had intended it to be restricted." Before we part with the
appeal we should mention that it had once been allowed and that judgment and
order was set aside on a review petition filed by the 1st. respondents.
The
appeal is dismissed, with costs. The costs payable by the appellants to the 1st
and 2nd respondents are quantified at Rs.25,000/- and to the 3rd respondent at
Rs.5,000/-.
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