TMI Blog1996 (4) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... l amount payable by Oswal Agro would come to US $ 24,54,644 at the current foreign exchange rate. We, accordingly, direct this amount to be paid by Oswal Agro to the appellant within a period of four weeks from the date of this judgment. The perusal of the Notification in question indicates that the effective rate of excise duty on clearance of goods from 100% export oriented unit to domestic tariff area would stand reduced if the goods so manufactured are "allowed to be sold in India". Oswal Agro never took permission of the authorities concerned to sell the rice bran oil in India. It is only by virtue of interim orders which were passed by the Punjab & Haryana High Court in 1991, after being opposed by the authorities, that the oil was removed from the bonded warehouse and sold in the domestic tariff area. The conditional order passed by the High Court permitting the sale of the oil in the domestic tariff area cannot be regarded as Oswal Agro having been allowed to sell goods in the domestic tariff area as contemplated by the said Notification dated 7-10-1991. In that view of the matter, full amount of basic duty and auxiliary duty was payable by it. Taking into consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also further stated that after shelling the rice, the rice produced on custom basis would be returned back to the paddy suppliers; the residual rice husk would be subjected to Furfural extraction and edible oil would be extracted from the rice bran obtained as a bye-product. It was stated that the edible rice bran oil so produced would be 100% import substitution because the country was importing edible oil. On 19th May, 1986, industrial licence was granted to M/s. Punjab Agro Furane Ltd., Chandigarh, which was set up by the Punjab State Industrial Corporation. The new industrial undertaking was to have an installed capacity of manufacturing 3000 tonnes of Furfural and 3000 tonnes of Edible Rice Bran Oil, as a bye-product. This licence was issued subject to various conditions one of which was that "the entire ₹ 100 per cent' production shall be exported." 4. Oswal Agro entered into an agreement with the Punjab State Industrial Corporation for establishing the unit for manufacturing Furfural and as a result thereof the name of the Punjab Agro Furane Ltd. was changed to Oswal Agro Furane Ltd. On 18th May, 1987, the Government of India issued a letter by which the industrial l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inserted in Clause 15. In the present appeals we are concerned with the construction of Clause 15(j) of the said order, which reads as follows : Saving - Nothing in this Order shall apply to -"15. products manufactured in and exported from the respective(j) Free Trade Zones and approved 100 per cent Export Oriented Units except textile items covered by bilateral arrangements;" 7. The aforesaid Export (Control) Order, 1988 was amended by an order dated 14th October, 1991 so as to include in Part-C in Schedule I in List II a number of items including non-basmati rice. As a result of this amendment non-basmati rice was allowed to be exported subject to the following conditions "exports shall be allowed against registration-cum-allocation certificate issued by the Agricultural and `Processed Food Product Export Development Authority (hereinafter referred to `APEDA') - appellant herein". This amendment was followed by a Trade Notice dated 15th October, 1991, issued by the Appellant by which procedure was laid down for allotment of quota which envisaged that the minimum export price of non-basmati rice, which was fixed, was US $ 231 FOB per MT. This was followed by a letter date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exporting rice. In the writ petition filed by the respondents in the Delhi High Court it was contended that being a 100 per cent export oriented unit, it was exempted from any trade restriction, inter alia, by virtue of the saving Clause 15(j) of the Export (Control) Order 1988. Another contention which was raised was that the fixation of minimum price by the appellant herein was without any power and authority. Further contending that Oswal Agro had entered into a number of contracts for the export of rice, it was submitted that the appellants herein were stopped from stopping the said export. According to Oswal Agro it had entered into contracts dated 16th October, 1991, 18th October, 1991 and 21st October, 1991, whereby it was under a contractual obligation to supply 1,07,000 M.T. of non- basmati rice to M/s. Continental Grain Company, New York. It is an admitted case that the price at which Oswal Agro wanted to export the non-basmati rice, without any registration or authorisation from the appellant was US $ 213 per M.T., i.e., below the minimum price fixed by the appellant herein. 11. On 15th January, 1992, the Delhi High Court issued rule nisi and by an interim order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the undertaking that in the event of the Court holding that the item was a canalised item and Oswal Agro was not entitled to export the same, then it would make good the difference, as determined, in dollars. 14. Notwithstanding the fact that the aforesaid special leave petition was pending in this Court, Oswal Agro moved another miscellaneous application before the Delhi High Court in which it was stated that by the end of June, 1992, 66,099.680 M.T. of non-basmati rice would be exported and that for exporting the remaining quantity in question time may be extended upto 31st August, 1992 and it be also permitted to export the same to buyers other than with whom the earlier contracts were alleged to have been entered. On 9th July, 1992, the High Court allowed this application and extended the time till 8th September, 1992, to export the balance quantity of rice but with the observation that the same was "subject to the conditions laid down by the Supreme Court in their order dated 15th May, 1992." Thereupon, this Court on 8th September, 1992 granted leave to appeal and stayed the operation of the High Court judgment. 15. On behalf of the appellant it is contended by Mr. R.F. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export oriented unit, by virtue of Clause 15(j) was entitled to export not merely the goods mentioned in the industrial Unit but also other products manufactured in that factory. He submitted that with respect to the licensed product the Oswal Agro was under an obligation to export but because of Clause 15(j) the Oswal Agro, on its own volition, the export oriented unit could export other items which are also manufactured in that factory. It was contended that what was sanctioned in the case of the respondent was a project which started from the stage of dehusking of paddy and, therefore, whatever was covered by the scheme would be covered by Clause 15(j). While referring to Clause 15(j), it was contended that it was not intended for exemption for those items which a unit was obliged to export and, therefore, a different meaning or purpose should be assigned to Clause 15(j) By giving the construction to the said clause as canvassed by the appellant, Mr Jethamalani contended that it would result in changing the language of the said clause. Clause 15(j) it was also submitted, brought in the geographical or topographical concepts thereby meaning that whatever was manufactured in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acture of Furfural was paddy. In fact the raw material was rice husk, though, no doubt the same is obtained after shelling of paddy. Therefore, the process of shelling of paddy by the respondent which results in the Production of non-basmati rice as well as rice husk, is not an essential requirement for the manufacture of Furfural. 19. Clause 15 is a saving provision and not an exemption clause. A saving provision or clause merely preserves what exists. In statutory Interpretation by F.A.R. Bennion, Second Edition, at page 494 and 495 the learned author with regard to the saving clause has said that "A saving is a provision the intention of which is to narrow the effect of the enactment to which it refers so as to preserve some existing legal rule or right from its operation. A saving resembles a proviso except that it has no particular form. furthermore it relates to an existing legal rule or right, whereas a proviso is usually concerned with limiting the new provisions made by the section to which it is attached." Again at page 494 and 495 it is stated "A saving is taken not to be intended to confer any right which did not exist already." To the same effect is a decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e it obligatory to export its entire production of Furfural. It was this right to export furfural which was preserved by Clause 15(j) and Oswal Agro could make its exports without following the provisions of the said Order. 22. It is true that a unit which sets up a rice mill for the purpose of producing non-basmati rice is not required to obtain a licence under the I.D.R. Act but under the scheme of 31st December, 1980 even those units or industries which were not covered by the I.D.R. Act could be registered by making an application under Clause 6 of the said scheme. If there was such a unit producing non-basmati rice, then the export by such a unit would be saved by virtue of Clause 15(j). 23. Keeping in view the nature of a saving provision it is not possible to accept the contention of Mr. Jethmalani that on the plain reading of the said sub-clause every product manufactured in a 100% export oriented unit was exempt from the applicability of the provisions of the said Order. Clause 15 clearly provides that what is saved are the products for which the export oriented unit is approved and not any other product manufactured by it. The word `approved' in sub-clause (j) of clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or commitment for the export of the products was not in any way curtailed or taken away by the promulgation of the said Order. No extra right or licence to export an item, which the unit could not previously export, was sought to be conferred by Clause 15(j). 25.The use of the word " products" in plural, does not mean that every product made or produced in the unit could be exported. The said word "products" signifies that there may be more than one produce which may be required to be exported in terms of the industrial licence or registration of the export oriented unit and clause 15(j) would save the export of all such items. 26. There is also no merit in the contention that the appellant could not fix the minimum price at which the non-basmati rice could be exported. According to Clause 3 of the Order, no person can export any goods of the description specified in Schedule I except and in accordance with the licence granted by the Central Government or an officer specified in the Second Schedule. Clause 4 of the said Order provides that a licence which is granted under the Order may contain such conditions which are not inconsistent with the Act or the Order, as the licensi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve, on the other hand, show that the High Court ought not to have exercised its jurisdiction under Article 226 of the Constitution, for more than one reason, and, therefore, it would be incumbent upon this Court to interfere under Article 136 of the Constitution and not to allow Oswal Agro to take advantage of an obviously wrong decision of the High Court. Firstly, the High Court misconstrued Clause 15(j) of the Order and held that because Oswal Agro was an export oriented unit, therefore, it could export any item manufactured by it, which conclusion is wholly incorrect. Secondly, the High Court ought not to have entertained the writ petition because of Oswal Agro's conduct. It had filed an earlier writ petition in the Punjab and Haryana High Court dealing with the same issue, namely its obligation and right to export its products under the licence and in terms of the Export (Control) Order. It is possible that the Delhi High Court may not be aware of the pendency of the writ petition in the Punjab and Haryana High Court, regarding the export of edible rice bran oil, because there is no reference to the filing of the said case in the writ petition filed in the Delhi High Court. Osw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price and the minimum price fixed was not payable by Oswal Agro to the appellant. 33.We are unable to agree with the aforesaid submission. It is clear that Oswal Agro had exported non-basmati rice which, in law, it was not entitled to export without getting the permission from the appellant and at a price less than what was fixed by it. The export was possible only because of the interim orders which were passed first by the Delhi High Court and thereafter by this Court. To recapitulate, the first interim order was passed on 15-1-1992 by the Delhi High Court permitting the export of the said rice on the condition that Oswal Agro would furnish a security of the amount of difference between the minimum price fixed by the appellant herein and the price at which the said quantity of rice was exported by Oswal Agro. Thereafter, this Court on 15-5-1992, when Oswal Agro wanted to export more non-basmati rice, passed order to the effect that "in the meantime the respondents will be at liberty to export the rice in question on the undertaking that in the event of the Court holding that the item was a canalised item and the respondents were not entitled to export the same, the respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grant of the industrial licence and more than four and a half year after the issuance of a letter of intent. The very insertion of this clause shows that, prior thereto, Oswal Agro was probably under no obligation to export edible rice bran oil. In the industrial licence originally issued it is not mentioned that edible rice bran oil had to be exported. On 13th June, 1986, an agreement was entered into between Oswal Agro and the Government in which it was specifically stated that "the unit shall earn foreign exchange by exporting 100% of their products of furfural for a period of ten years, counting from the prescribed dates after allowing rejects up to 5 per cent of production as aforesaid." This agreement makes specific no mention of Oswal Agro being under an obligation to export edible rice bran oil. 36. The question which arises is whether the industrial licence could be amended so as to incorporate a specific condition requiring the export of edible rice bran oil. 37. The Government had framed "The Registration and Licensing of Industrial Undertakings Rules, 1952" under which applications had to be filed for grant of an industrial licence under the Industries (Development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny; change of financing pattern for the project as approved by the term lending institutions; and revalidation of capital goods import beyond two years as the letter of intent was issued on 25-10-1982. This letter also replied to some querries which appeared to have been raised by the of officers of the Ministry of Industries and in response to one of the querries, it was, inter alia, stated as follows : "The rice bran, so obtained, would be processed for production of edible grade rice bran oil and de-oiled cake. The company would export de-oiled cake. It has given an undertaking to export edible rice bran oil also, as and when permitted by Government of India. Presently, large quantities of edible oil are being imported and export of edible oil is not permitted. Till export of edible rice bran oil is permitted, this oil can be sold to the domestic market directly or through a State designated agency and has to be treated as a deemed export." It was also mentioned in this letter that they were prepared to export rice 'if so permitted by Government of India'. This letter also contained the amount of foreign exchange which could be earned by exporting furfural, rice bran cake, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gated with a view to encourage export oriented units so as to earn more foreign exchange, it is not surprising that, viewed in that context, the Government of India accepted the request for permission to export edible rice bran oil and a specific condition to that extent was incorporated in the industrial licence by the amendment letter dated 18th May, 1987. It is interesting to note that though the amendment in the industrial licence was made on 18th May, 1987, no protest against the said amendment appears to have lodged by Oswal Agro. The reason obviously must have been that this amendment was sought for, and in fact as far back as 1982 an undertaking to export edible rice bran oil had been given and even in the letter dated 30th July, 1986, the respondent had categorically stated that it was willing to export edible oil, if permitted. Oswal Agro did not readily protest and, on the contrary, commenced the production of the rice bran oil. It also accepted the other amendments made in the licence, which had been sought by it. Under these circumstances, and seeing the conduct of Oswal Agro, it is not entitled to any relief under Article 226 of the Constitution as it was obliged to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the undertaking that if the Writ Petition was dismissed, then Oswal Agro would be liable to pay an amount equal to the custom duty leviable as if the edible bran oil was deemed to have been imported. This was followed by another interim order dated 4-2-1991, after notice to the opposite party, whereby Oswal Agro was granted permission to sell the rice bran oil in the domestic tariff area. The oil which had been produced so far had been stored in the custom bonded area and by this order of 4-2-1991, it was further directed that the said oil would be released under the supervision of the concerned Revenue Officer. The interest of the revenue was sought to be safeguarded by the Court directing that an undertaking should be filed by Oswal Agro that in the eventuality of the dismissal of the Writ Petition, they will pay the customs duty along with interest treating the oil to have been imported. 46. Apart from the fact that by virtue of the interim order of the High Court, Oswal Agro has to pay duty, inasmuch as it has now been held by us that the respondent was not entitled to sell the rice bran edible oil in the domestic market and he was under an obligation to export the same, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the oil from the bonded warehouse for sale in the domestic market, excise duty in any case was payable. Under no circumstances, was Oswal Agro entitled to any order, interim or final, which could have allowed it to clear the goods without payment of excise duty. The High Court clearly overlooked the statutory provisions of Sections 3 and 5A of the Act and Oswal Agro got an unfair and undue advantage as a reason thereof. It is, therefore, not only liable to pay the amount of excise duty which was due and payable but it also has to pay interest thereon. 50. What is the rate of interest which should be paid on the amount of excise duty payable is the next question. In a case like the present, Oswal Agro has clearly gained a undue advantage by obtaining an order which it was not entitled to get in accordance with law. Oswal Agro, which is a commercial organisation, had approached the High Court in exercise of its discretionary jurisdiction under Article 226 of the Constitution of India purportedly to get justice. In actual fact it sought and obtained interim orders which resulted in its not becoming liable to pay excise duty which, under no circumstances, could have been a matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant within a period of four weeks from the date of this judgment. 52. With regard to payment of duty regarding rice bran oil, counsel for both the parties have placed their respective charts on the record showing the amount which is payable. Whereas, according to Oswal Agro the total duty payable is only Rs. 6,88,59,894.00/- which includes basic duty and auxiliary duty, according to the appellant the total duty payable is Rs. 19,75,55,192.97/- and, in addition thereto interest of Rs. 12,55,09,088.40/- as interest @ 18% P.A. is payable. There is no dispute, as the charts show, with regard to the quantity of rice bran oil which has been cleared by Oswal Agro from 1990-91 to 1995-96. There is also no dispute with regard to the sale price received. The difference in the final figure arises because Oswal Agro have claimed deduction by way of expenses towards freight, octroi, rebate and discount. In addition thereto, it has claimed that duty is payable at a lower rate in view of the Notification dated 17-10-1991 which had the effect of reducing the effective rate of duty. The appellants, on the other hand, have contended that the benefit of Notification like that of 7-10-1991 i ..... 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