TMI Blog1990 (11) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... had only applied for warehousing of the goods on the direction of Division Bench of High Court. The Single Judge had passed an interim order for clearing the goods after payment of customs duty, but the department went in appeal and the Division Bench by its order dated 18-9-1987 directed the imported goods to be kept in a bonded warehouse or any other warehouse approved by the Customs authorities and until further orders the appellant was directed not to take delivery of the same. The appellant submitted the bills of entry on 28-1-1988 and admittedly no duty was payable on that date. Moreover where goods imported are kept in a warehouse under a bond, the date of arrival of such goods in India is not relevant for determining the duty, therefore the High Court committed error in holding the appellant was liable to pay duty as in force on the date of arrival of goods. There is no dispute that the remaining goods were also stored in a private warehouse and the appellant had filed the bills of entry and complied with all the required formalities for debonding and clearance of the goods on 28-1-1988, therefore the appellant was entitled to an order cancelling the licence of the priv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment to prohibit, restrict or otherwise control imports and exports. In exercise of the powers conferred in the above Act, the Imports (Control) Order, 1955 has been issued. Schedule I(1) 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 OGL (subject to such conditions as may be stipulated), or (iii) if they are covered by the semi-clause (ii) of the Imports (Control) Order. 3.Open General Licence No. 1/87 dated 1-4-1987 provided as follows :- "Import Trade Control Orders Nos. 68/85-88, OGL No. 1/87 dated 1-4-1987 in exercise of the powers conferred by Section 3 of the Import Export (Control) Act, 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 conditions :- The items to be imported are not covered by Appendices 2, 3, 5 8 of Import Export Policy for the year 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority shall not release the goods unless the entire customs duty as may be determined and demanded by them was fully paid by the appellant in cash. The Collector of Customs filed an appeal before the Division Bench against the aforesaid order. 6. The Division Bench of the Calcutta High Court on 18-9-1987 passed the following order :- "We direct 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 any other warehouses availed by the Customs authorities and until further orders the respondent being the writ petitioner in the above matter, would not take delivery of the same." On 2nd/3rd October, 1987 the imported goods entered into the territorial waters of India and arrived at the port of Kakinada. On the application moved by the appellant on 15th October, 1987, to the Assistant Collector of Customs, Kakinada for allowing it to keep the Palm Kernel cargo in a bonded warehouse or any other warehouse approved by the Customs authorities till the final disposal of the case before the High Court, the Assistant Collector passed an orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant a personal penalty of Rs. 10 lacs in terms of Section 112(a) of the Customs Act. On 17-12-1987 the appellant exercised its option within the aforesaid period of one month and took delivery of part of the goods of 3935.360 MT on payment of personal penalty of Rs. 10 lacs and also part payment of the redemption fine to the tune of Rs. 35 lacs. On 28-1-1988 the appellant filed the bills of entries before the authority concerned. It may also be mentioned that the customs duty as applicable on the date of the arrival of the ships i.e. 2nd/3rd October, 1987 was 105%. The said customs duty was withdrawn by a notification dated 4-12-1987 and as such there was nil duty on Palm Kernel and this position remained upto 28-1-1988. By a notification dated 29-1-1988, the exemption from customs duty was withdrawn and as a result of which the earlier duty of 105% came into operation. The customs duty was further increased in the Budget submitted on 29-2-1988 and as such from 1-3-1988 the new customs duty was levied at 245%. The appellant removed the balance of the goods also on 17-6-1988 under the orders of this Court dated 2-6-1988. 9.Learned Single Judge by order dated 19-4-1988 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cleared alongwith payment of charges and expenses in accordance with law. So far as the question of interest is concerned, in the facts and circumstances of the case we are not inclined to grant any interest. We also make it clear that in respect of the balance goods allowing, the writ petitioner shall be entitled to clear the same at one time or from time to time." 11.The above judgment was given on May 17, 19 20, 1988 and as already mentioned above the petitioner removed the remaining goods also on 17-6-1988 by paying nil duty. Both the parties have come in appeal before this Court by Special leave, aggrieved against the order of the High Court. 12.The first question to be considered is as to whether Palm Kernel at the relevant time could be imported under OGL as done by the appellant or it could not be done as the same was canalised item which could have been imported through STC or Hindustan Vegetables Oil Corp., New Delhi (A Govt. of India Undertaking). The contention in this regard by Mr. Ashok Sen on behalf of the appellant company is that Palm seeds and Palm Kernel were two different items as shown in the commercial transactions in the trading community in suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds entered for home consumption under(a) Section 46, on the date on which a bill of entry in respect of such goods is presented under that section; in the case of goods cleared from a warehouse under Section(b) 68, on the date on which the goods are actually removed from the warehouse; in the case of any other goods, on the date of payment of(c) duty: Provided that if a bill of entry has been presented before the date of entry inwards of the vessel by which the goods are imported, the bill of entry shall be deemed to have been presented on the date of such entry inwards. The provisions of this section shall not apply to baggage and(2) goods imported by post. 15.On the basis of the above provision it is contended that the rate of duty of the imported goods 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 are actually removed from the warehouse. It has been submitted that the High Court committed error in holding that the date for actual removal of the goods in the present case shall be considered as 2nd/3rd October, 1987 when the goods entered in the territorial waters of India. On the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. It has been submitted that the redemption fine does not come within the meaning of penalties, rent, interest and other charges mentioned in Clause (b) of Section 68. The appellant being an importer of the warehoused goods was thus entitled to clear them without any payment of redemption fine or penalty as neither any rent nor interest or any other charges were payable and in this view of the matter, such goods should have been allowed to be taken away by the appellant on 28-1-1988 itself when he had filed the ex-bond bills of entry. 19.It has been further submitted by Mr. Sen that in the facts and circumstances of this case the term actual removal used in Section 15(1)(b) cannot mean physical removal as the same was made impossible by the wrongful act of the respondents, it should be given a meaning in the juristic sense as deemed removal. Reliance was placed on the following passage in Volume 35 Para 1154 and Volume 41 Para 757 of Halsbury's Laws of England, Fourth Edition. Para 1154.Methods of Delivery : "Possession of ponderous goods and chattels in large quantities which cannot readily be transferred from hand to hand may be transferred by any transaction which effectu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el' and `Palm seed' was artificial. The term `Palm seed' includes `Palm Kernel' within the Import Policy of the Government. It was contended that `Kernel' means the seed of a fruit enclosed within a hard shell as defined in the dictionary. The Import Policy applicable to seed would apply to Kernel also, and the import of Palm Kernel by the appellant under the OGL was illegal. The importation of the Palm Kernel by taking out the outer shell must be considered only as an ingenuous act on the part of the importers to take she.l.t.er under the plea that what has been imported was different than seed as it did not have the capacity to germinate. The appellant had clearly understood the Import Policy and was fully aware of the fact that Palm Kernel was a canalised item and still it imported the same illegally under the OGL. He drew our attention to the definition of the word `Kernel' in the Shorter Oxford English Dictionary 3rd Edn., Vol. I page 1081 which is as under :- Kernel : (1) A seed; especially the seed contained within any fruit (2) The softer part within the hard shell of a nut or stone-fruit (3) The body of a seed within its husk 23.He pointed out that Brussel Tariff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upees. Seeking clarification from other agencies as to justify distinction between `Palm Kernel' and `palm seed' was of no consequence under Section 24 of the Import Policy. The clarification could have been sought from the Regional Licensing Authorities at Bombay, Madras and Calcutta who could have given technical advice in the matter. He thus contended that Palm Kernel was a canalised item and the appellant had no right to import Palm Kernel under the OGL and as such the Customs authorities were perfectly justified in confiscating the goods and imposing the penalty as well as redemption fine. 27. As regards the question of levy of duty it was contended by the learned Solicitor General that 6746.472 MT of goods were actually removed on 17-6-1988 and on that date the duty was 245% and the petitioners are liable to pay difference in duty on the aforesaid quantity of the goods. He urged that in the matter of taxation there was no question of applying any principles of equity and there was no question of applying the deeming fiction in construing the provisions of Sec. 15(1)(b) of the Customs Act. Even if the appellant had entered the bill of entry on 28-1-1988, admittedly the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seeds only Palm oil/Palm seeds have been mentioned. We agree with the view taken by the High Court in this regard that Palm Kernel cannot be included under the Item Palm seeds and the two commodities were different as understood in commerce or trade. We do not want to burden this judgment by citing those authorities which have already been considered for deciding this controversy by the High Court. We do not see any force in the contention of the learned Solicitor General in this regard that the Government had only made a clarification vide notification dated 27-7-1987 by introducing in Appendix 5 Para (b) Item No. 5 "all other oils/seeds/any other material from which oil can be extracted." It is significant that in the aforesaid notification published in the Gazette of India Extraordinary para (1) Sec. 121, it was clearly mentioned that the same was issued as an amendment to the earlier notice No. 1-ITC(PN)/85-88 dated the 12-4-1985. The notification stated that the following amendment shall be made in the Policy at proper places indicated below and then under the head `amendment' the new provision which included "all other seeds from which oil can be extracted" was mentioned. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and until further orders M/s. Priyanka Overseas Pvt. Ltd. will not take delivery of the same. In the light of the directions of the Court the petitioners filed 16 bills of lading for bonding the entire cargo of Palm Kernel and the goods were allowed to be bonded in terms of the Court's order in a private warehouse. Meanwhile proceedings were continuing for adjudication before the Customs authorities. The Division Bench of the High Court on 2-12-1987 directed the Collector to adjudicate the matter within 10 days. The Collector by his order dated 7-12-1987 held that the Palm Kernel was a canalised item and as such he gave an order to confiscate the entire quantity of Palm Kernel but gave an option to the appellant to redeem the goods on payment of a fine of Rs. 90 lacs. The option was to be exercised within one month and the appellant was directed to pay penalty of Rs. 10 lacs. The appellant deposited the amount of Rs. 10 lacs imposed as penalty and a proportionate amount of Rs. 55 lacs for redeeming 3935.364 MT of Palm Kernel and removed the goods on 17-12-1987. The petitioners then filed bills of entry for the remaining 6746.468 MT of Palm Kernel on 28-1-1988 but did not deposit th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the warehouse. The rate has to be determined on the basis of the date on which the 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 responsible in preventing the importer of goods from actually removing the goods from the warehouse. In a case of the present kind where there is no ambiguity in the expressed intention of the Legislature in determining the date for applying the rate of duty, no juristic principle of deemed removal of the goods, can be applied as contended by Mr. Sen. Many contingencies may happen in between the filing of bill of entry and actual removal of the goods from the warehouse for which sometimes the importer of goods may himself be responsible, in some cases the responsibility may lie on the Customs authorities and there may also be contingencies beyond the control of both the parties. In any case the intention of the Legislature being clear, rate of duty is to be applied, as may be in force on the date of actual removal of goods from the warehouse under Section 15(1)(b) of the Customs Act. 33. Learned counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l delivery and possession thereof and were therefore void and unenforceable. In view of these findings the Appeal Court allowed the appeal and dismissed the suit. The Plaintiff Duni Chand then filed an appeal before this Court. This Court observed that the only point at issue was whether the respondent was a person who habitually dealt in the sale or purchase of jute goods involving the actual delivery and possession thereof and the contention which was vehemently urged on behalf of the respondents in the Courts below was that the transactions were purely speculative, that mere delivery orders did not represent the goods and the transfer thereof did not involve as between the intermediate parties actual delivery or possession of the goods but differences in rates were only paid or received by the parties. While dealing with the above question, it was held as under : "The learned Judges of the Appeal Court also laid unwarranted emphasis on the words "actual delivery or possession" and contrasted actual delivery with symbolical or constructive delivery and held that only actual delivery or possession meaning thereby physical or manual delivery was within the intendment of the Ordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above case dealt with the meaning of "actual delivery of possession" in the background and context of its meaning as laid down in the West Bengal Jute Goods Future Ordinance, 1949 and it can render no assistance in determining the question of actual removal of goods as mentioned in Section 15(1)(b) of the Customs Act. 35. M/s. Bharat Surfactants (Private) Ltd. Anr. v. Union of India and Anr. case (supra) relied by the learned Solicitor General was a case of Section 15(1)(a) of the Customs Act. Under the above provision the criteria for determining the rate of duty and tariff valuation is the rate in force in the case of goods entered for home consumption under Section 46, on the date on which a bill of entry in respect of such goods is presented. The section provides that if a bill of entry has been presented before the date of entry inwards of the vessel by which the goods are imported, the bill of entry shall be deemed to have been presented on the date of such entry inwards. While interpreting the words `date of entry inwards of the vessel' it was held that it would be the date of entry recorded in Customs register. Where vessel arrived and bill of entry was presented at a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act on 28-1-1988. But the Customs Officer refused to release the goods on an erroneous assumption that the appellant was liable to pay redemption fine and since it had not paid the said amount, the goods were not liable to be released. The High Court held that the imposition of redemption fine was non est and the petitioner was within its right to claim release of goods without paying any redemption fine, on the day it complied with the formalities under Sec. 68 of the Act. Section 68(c) of the Act prescribes an official function which was not performed by the Customs authorities due to entertainment of a wrong and illegal notion regarding the payment of redemption fine which resulted into a wrong order by the department. In the circumstances the department cannot be allowed to take advantage of its own wrongful and illegal act. In moulding relief, this Court has always applied principles of equity in order to do complete justice between the parties. 37. The High Court has overlooked that on 15-10-1987 the petitioner had only applied for warehousing of the goods on the direction of Division Bench of High Court. The Single Judge had passed an interim order for clearing the goods a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed formalities for debonding and clearance of the goods on 28-1-1988, therefore the appellant was entitled to an order cancelling the licence of the private warehouse enabling it to remove the goods. Had the Customs authorities passed order in accordance with law the same result would have followed as had been done on 17-12-1987. The Central Manual published by the Director of Publications, Customs and Central Excise contains direction for determining the actual date of removal of goods from warehouse in terms of Sec. 15(1)(b) of the Act. The functioning of private warehousing has been elaborated therein. Clause 10 of the Manual prescribes the type of buildings which can be approved as private warehouses under Sec. 58 of the Act. Para 15 of the Manual provides for purposes of Sec. 15(1)(b) of the Act, that if the goods are in private warehouse the date of cancellation of the licence of the private warehouse should be taken as the actual removal of the goods for the purposes of Sec. 15(1)(b) of the Act. Para 15 as already stated was followed in the appellant's own case on 17-12-1987 in releasing the goods. There is no valid reason as to why the same procedure should not have been fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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