# Noble Resources and Trading India Private Limited (Earlier Known as Andagro Services Pvt. Ltd.) v. Union of India & Ors

- **Citation:** 2025 INSC 684
- **Court:** Supreme Court of India
- **Decided:** 2025-05-14
- **Case number:** Civil Appeal No. 2572 of 2025
- **Bench:** Abhay S. Oka, Ujjal Bhuyan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/noble-resources-and-trading-india-private-limited-earlier-known-as-andagro-38706
- **Pages:** 31

## Headnote

Whether by way of the circular dated 30.01.2004 the benefits
granted under the statutory notification dated 01.04.2003 could
have been curtailed by expanding the exclusionary clause; whether
crude degummed soyabean oil imported by the appellant is an
agricultural product; what is an agricultural product.
Headnotes†
Customs Act, 1962 - s.25 - Foreign Trade (Development and
Regulation) Act, 1992 - s.5 - Export-Import (EXIM) Policy of
2002-2007 - Show-cause notice was issued to the appellant
stating that under the duty free credit entitlement scheme
vide notification dtd. 01.04.2003, the appellant was not eligible
for benefits on the import of crude degummed soyabean oil
as it was an agricultural product, since goods in the nature
of agricultural and dairy products were excluded under the
said notification - Demand of duty confirmed by Assistant
Commissioner - High Court upheld the levy of demand -
Plea of the appellant that the benefit given by the statutory
notification dtd. 01.04.2003 could not have been whittled down
by the departmental circular dtd. 30.01.2004:
Held: 1.1 The department could not, by issuing a circular
subsequent to the notification, add a new condition to the notification
thereby either restricting the scope of the exemption notification
or whittle it down - By way of the circular dtd. 30.01.2004, Board
could not have curtailed the benefits granted to the appellant
under the statutory notification dtd. 01.04.2003 by expanding the
scope of the exclusionary clause 'other than agricultural and dairy
products'. [Paras 33, 36]
* Author
1984
[2025] 5 S.C.R.
Supreme Court Reports
1.2 Under the notification dtd. 01.04.2003, exemption is granted
when certain goods are imported into India against a duty free
entitlement credit certificate issued under paragraph 3.7.2.1(vi) of
the EXIM policy - The goods which are exempted from payment
of customs duty etc. means capital goods, office equipments
(including computer system, software, fax/machine, telephone)
and raw materials, components, intermediates, consumables and
parts other than agricultural and dairy - Thus, agricultural and dairy
products are excluded from exempted goods - Agricultural and dairy
products would not be covered by the notification dtd. 01.04.2003
and would be liable to pay customs duty, etc. on merit. [Para 29]
1.3 On the other hand, circular dtd. 30.01.2004 was issued by the
Board following a clarification sought by DGFT from the Department
of Revenue as to whether the restriction regarding agriculture and
dairy products would apply to all products derived from agriculture/
dairy origin - Board clarified that the restriction regarding agriculture
and dairy products as specified in the scheme for status holders
and service providers shall mean that import of all types of products
derived from agriculture/dairy origin including crude edible oil shall
not be permitted - Hence, by way of the subsequent administrative
circular dtd. 30.01.2004, the excluded goods of agricultural and
dairy products as per the statutory notification dtd. 01.04.2003
has been enlarged to include all types of products derived from
agriculture/dairy origin including crude edible oil. [Paras 29, 30]
1.4 A circular cannot take away the effect of a notification statutorily
issued - Thus, the Board could not have expanded the scope
of the expression 'other than agricultural and dairy products' as
stipulated in the statutory notification dtd. 01.04.2003 to mean and
include all types of products derived from agriculture/dairy origin
including crude edible oil by way of the administrative circular dtd.
30.01.2004 - If this is accepted, it would amount to rewriting the
conditions of exclusion from exempted goods statutorily provided
in the notification dtd. 01.04.2003 which is impermissible - Thus,
circular dtd. 30.01.2004 insofar it expands the exclusionary clause in
the statutory notification dtd. 01.04.2003 has no legal consequence -
The process carried out by the appellant using

## Text

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[2025] 5 S.C.R. 1983 : 2025 INSC 684
Noble Resources and Trading India Private Limited
(Earlier Known as Andagro Services Pvt. Ltd.)
v.
Union of India & Ors.
(Civil Appeal No. 2572 of 2025)
14 May 2025
[Abhay S. Oka and Ujjal Bhuyan,* JJ.]
Issue for Consideration
Whether by way of the circular dated 30.01.2004 the benefits
granted under the statutory notification dated 01.04.2003 could
have been curtailed by expanding the exclusionary clause; whether
crude degummed soyabean oil imported by the appellant is an
agricultural product; what is an agricultural product.
Headnotes†
Customs Act, 1962 - s.25 - Foreign Trade (Development and
Regulation) Act, 1992 - s.5 - Export-Import (EXIM) Policy of
2002-2007 - Show-cause notice was issued to the appellant
stating that under the duty free credit entitlement scheme
vide notification dtd. 01.04.2003, the appellant was not eligible
for benefits on the import of crude degummed soyabean oil
as it was an agricultural product, since goods in the nature
of agricultural and dairy products were excluded under the
said notification - Demand of duty confirmed by Assistant
Commissioner - High Court upheld the levy of demand -
Plea of the appellant that the benefit given by the statutory
notification dtd. 01.04.2003 could not have been whittled down
by the departmental circular dtd. 30.01.2004:
Held: 1.1 The department could not, by issuing a circular
subsequent to the notification, add a new condition to the notification
thereby either restricting the scope of the exemption notification
or whittle it down - By way of the circular dtd. 30.01.2004, Board
could not have curtailed the benefits granted to the appellant
under the statutory notification dtd. 01.04.2003 by expanding the
scope of the exclusionary clause 'other than agricultural and dairy
products'. [Paras 33, 36]
* Author
1984
[2025] 5 S.C.R.
Supreme Court Reports
1.2 Under the notification dtd. 01.04.2003, exemption is granted
when certain goods are imported into India against a duty free
entitlement credit certificate issued under paragraph 3.7.2.1(vi) of
the EXIM policy - The goods which are exempted from payment
of customs duty etc. means capital goods, office equipments
(including computer system, software, fax/machine, telephone)
and raw materials, components, intermediates, consumables and
parts other than agricultural and dairy - Thus, agricultural and dairy
products are excluded from exempted goods - Agricultural and dairy
products would not be covered by the notification dtd. 01.04.2003
and would be liable to pay customs duty, etc. on merit. [Para 29]
1.3 On the other hand, circular dtd. 30.01.2004 was issued by the
Board following a clarification sought by DGFT from the Department
of Revenue as to whether the restriction regarding agriculture and
dairy products would apply to all products derived from agriculture/
dairy origin - Board clarified that the restriction regarding agriculture
and dairy products as specified in the scheme for status holders
and service providers shall mean that import of all types of products
derived from agriculture/dairy origin including crude edible oil shall
not be permitted - Hence, by way of the subsequent administrative
circular dtd. 30.01.2004, the excluded goods of agricultural and
dairy products as per the statutory notification dtd. 01.04.2003
has been enlarged to include all types of products derived from
agriculture/dairy origin including crude edible oil. [Paras 29, 30]
1.4 A circular cannot take away the effect of a notification statutorily
issued - Thus, the Board could not have expanded the scope
of the expression 'other than agricultural and dairy products' as
stipulated in the statutory notification dtd. 01.04.2003 to mean and
include all types of products derived from agriculture/dairy origin
including crude edible oil by way of the administrative circular dtd.
30.01.2004 - If this is accepted, it would amount to rewriting the
conditions of exclusion from exempted goods statutorily provided
in the notification dtd. 01.04.2003 which is impermissible - Thus,
circular dtd. 30.01.2004 insofar it expands the exclusionary clause in
the statutory notification dtd. 01.04.2003 has no legal consequence -
The process carried out by the appellant using soyabean as raw
material and ending in the product crude degummed soyabean
oil is manufacturing - Crude degummed soyabean oil is not an
agricultural product - Therefore, the appellant is entitled to the
benefits under notification dtd. 01.04.2003 - Impugned judgment
of the High Court and the order of the Assistant Commissioner
are set aside. [Paras 34, 35, 58, 60]
[2025] 5 S.C.R.
1985
Noble Resources and Trading India Private Limited
(Earlier Known as Andagro Services Pvt. Ltd.) v. Union of India & Ors.
'Manufacture'; 'manufacturing process' - Test of manufacture -
Essential features to constitute manufacture - The process
of conversion of soyabean into crude degummed soyabean
oil, if amounts to manufacture:
Held: To constitute manufacture, the essential features are: i. There
must be a process or series of process; ii. The original commodity
or raw material undergoes a transformation through the process or
series of process; iii. At the end of the process or series of process,
a new commodity emerges; iv. The new commodity should have a
distinct name, character or use and can no longer be regarded as
the original commodity; v. It should be regarded as distinct from
the original commodity and recognized as so in the trade - The
test is not whether the end product is a consumable product or
not - Therefore, the High Court erred in holding that because crude
degummed soyabean oil was not further refined and thus, it is not
a consumable item; it did not have a distinct identity - This is not
the test of manufacture - While there is no dispute that soyabean
is an agricultural product, the High Court while endorsing the
view of the Assistant Commissioner held that crude degummed
soyabean oil is also an agricultural product - Crude degummed
soyabean oil is a product different and distinct in character and
identity from soyabean, it is not the same thing as soyabean -
The process carried out by the appellant using soyabean as raw
material and ending in the product crude degummed soyabean
oil is manufacturing. [Paras 51, 52, 58]
Words and Phrases - 'Agricultural product' - Meaning:
Held: Things which have a situs of their production upon the farm
and which are brought into condition for uses of society by labour
of those engaged in agricultural pursuits as contra-distinguished
from manufacturing or other industrial pursuits; that which is the
direct result of husbandry and the cultivation of the soil; the product
is in its natural unmanufactured condition - Applying the aforesaid
test, the view of the High Court that crude degummed soyabean oil
is an agricultural product, not concurred with - Crude degummed
soyabean oil is not an agricultural product - Therefore, appellant
is entitled to the benefits under notification dtd. 01.04.2003.
[Paras 56-58]
Foreign Trade (Development and Regulation) Act, 1992 -
Purpose, stated. [Paras 21, 22]
1986
[2025] 5 S.C.R.
Supreme Court Reports
Case Law Cited
Union of India v. Delhi Cloth and General Mills Co. Ltd. [1963]
Supp. 1 SCR 586 : AIR 1963 SC 791 - followed.
Tata Teleservices Ltd. v. Commissioner of Customs (2006) 1 SCC
746; Union of India v. Inter Continental, 2008 SCC OnLine SC
22; Deputy CST v. Pio Food Packers [1980] 3 SCR 1271 : (1980)
Supp. SCC 174; Sandur Micro Circuits Limited v. Commissioner of
Central Excise, Belgaum [2008] 12 SCR 76 : (2008) 14 SCC 336;
Commissioner of Income Tax, Orissa v. M/s N.C. Budharaja and
Company [1993] Supp. 2 SCR 185 : (1994) Supp. 1 SCC 280;
Jai Bhagwan Oil and Flour Mills v. Union of India [2009] 7 SCR
409 : (2009) 14 SCC 63; Collector of Central Excise, Kanpur v.
Mineral Oil Corporation (2015) 14 SCC 64 - relied on.
Commissioner of Income Tax v. Cynamid India Limited [1999] 2
SCR 601 : (1999) 3 SCC 727 - referred to.
P. Narayanan Nair v. Dr. Lokeshan Nair, AIR 2014 Ker
141 - referred to.
Commissioner of Income Tax v. Stanes Amalgamated Estates Ltd.
(1998) 232 ITR 443; Essel Mining and Industries Limited v. Union
of India (2011) 270 ELT 306 - referred to.
Books and Periodicals Cited
Black's Law Dictionary, Ninth Edition; Supreme Court Words and
Phrases, Fourth Edition; P. Ramanatha Aiyar's Advanced Law
Lexicon, Seventh Edition - referred to.
List of Acts
Foreign Trade (Development and Regulation) Act, 1992; Customs
Act, 1962.
List of Keywords
Export-Import (EXIM) Policy of 2002-2007; EXIM Policy; Soyabean;
Crude degummed soyabean oil; Conversion of soyabean into crude
degummed soyabean oil; Crude degummed soyabean oil not an
agricultural product; Distinct identity; New commodity; Manufacture;
Manufacturing process; Agricultural product; Agricultural purpose;
Raw material; Statutory notification; Departmental circular;
Exemption notification; Scope of exclusionary clause expanded;
[2025] 5 S.C.R.
1987
Noble Resources and Trading India Private Limited
(Earlier Known as Andagro Services Pvt. Ltd.) v. Union of India & Ors.
Other than agricultural and dairy products; Crude edible oil; End
product; Processing; Export-import; Foreign trade policy; All types
of products derived from agriculture/dairy origin; Duty free credit
entitlement (DFCE) certificate.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2572 of 2025
From the Judgment and Order dated 05.08.2019 of the High Court
of Gujarat at Ahmedabad in SPLCA No. 8596 of 2007
Appearances for Parties
Advs. for the Appellant:
Vikram S. Nankani, Sr. Adv., Kumar Visalaksh, Hardik Modh, Udit
Jain, Mahfooz Ahsan Nazki.
Advs. for the Respondents:
S. Dwarakanath, Mrs. Archana Pathak Dave, A.S.Gs., Rupesh
Kumar, Sr. Adv., Ms. Priyanka Terdal, Siddharth Sinha, Kartikeya
Asthana, Rajat Vaishnaw, Gurmeet Singh Makker, Raj Bahadur
Yadav, Ashok Panigrahi, Shashank Bajpai, Raghav Sharma.
Judgment / Order of the Supreme Court
Judgment
Ujjal Bhuyan, J.
This appeal by special leave has been preferred against the judgment
and order dated 05.08.2019 passed by the High Court of Gujarat at
Ahmedabad (briefly 'the High Court' hereinafter) in R/Special Civil
Application No.8596 of 2007.
2.
On 06.12.2019, this Court had condoned the delay in filing the special
leave petition and issued notice. An interim order was passed to the
effect that the ad interim protection which was granted by the High
Court shall continue to operate. By order dated 12.02.2025, leave
has been granted.
3.
Relevant facts may be briefly noted.
4.
Appellant is a government recognized two star export house and
a trading company engaged in the export of rice, sesame seeds,
1988
[2025] 5 S.C.R.
Supreme Court Reports
soyabean meal extracts, etc. Earlier name of the appellant was M/s
Andagro Services Private Limited but has since been renamed as
Noble Resources and Trading India Private Limited.
5.
Under the Export-Import (EXIM) policy of 2002-2007, which provided
for exempting goods when imported into India under a duty free
credit entitlement (DFCE) certificate, appellant was granted such
a certificate for import of goods having a nexus with the products
exported by it under the category '67/food products'. Under this duty
free credit entitlement certificate (briefly 'the certificate' hereinafter),
appellant imported crude degummed soyabean oil vide two Bills of
Entry dated 26.07.2006 and 27.07.2006 claiming duty exemption on
the basis of such certificate. The exemption claimed was in terms
of para 3.7.2.1(vi) of the EXIM policy.
6.
A show-cause notice dated 30.08.2006 was issued to the
appellant by the Office of the Commissioner of Customs, Kachchh
Commissionerate stating that under the duty free credit entitlement
scheme (briefly 'the scheme' hereinafter) vide notification No.53/2003Cus. dated 01.04.2003, appellant was not eligible for benefits on the
import of crude degummed soyabean oil as it was an agricultural
product. Since goods in the nature of agricultural and dairy products
were excluded under the said notification, appellant was liable to
discharge the duties as applicable. Revenue was of the further view
that the import made by the appellant should have a nexus with the
product group exported. One of the goods exported by the appellant
was soyabean meal extract while the product imported was crude
degummed soyabean oil; there was no nexus between the two.
The notice therefore called upon the appellant to pay all the duties
chargeable with interest.
7.
Appellant responded to the show-cause notice by filing a reply dated
14.09.2006. Appellant contended that the product imported by it i.e.
crude degummed soyabean oil, was not an agricultural and dairy
product so as to be excluded from the notification No.53/2003.
It was further contended that both the products imported and
exported i.e. crude degummed soyabean oil and soyabean meal
extract respectively are classified as food products. Therefore, the
product imported clearly has a nexus with the product exported by
the appellant. Appellant relied upon amended notifications dated
28.01.2004 and 21.04.2004 as well as para 3.2.5 of the Handbook
[2025] 5 S.C.R.
1989
Noble Resources and Trading India Private Limited
(Earlier Known as Andagro Services Pvt. Ltd.) v. Union of India & Ors.
of Procedures. Appellant explained that through a process of
manufacture, the agricultural product soyabean loses its identity
and becomes another product called crude degummed soyabean
oil which is a distinctly marketable commodity. That apart, appellant
contended that it was imported through the Metals and Minerals
Trading Corporation (MMTC). Therefore, it was entitled to exemption
from duty under the scheme on this score as well.
8.
Appellant was granted a personal hearing on 08.12.2006.
9.
Thereafter, order-in-original dated 09.01.2007 was passed by the
Assistant Commissioner (Gr.-VII), Customs House, Kandla (briefly
'Assistant Commissioner' hereinafter) whereby the demand of duty
to the tune of Rs.1,00,38,321.00 raised in the show-cause notice
was confirmed. In the process appellant has been denied the benefit
of duty free credit entitlement.
10. This came to be assailed by the appellant before the High Court by
filing a petition under Article 226 of the Constitution of India which
was registered as R/Special Civil Application No.8596 of 2007.
11. A Division Bench of the High Court vide judgment and order dated
05.08.2019 (impugned judgment) dismissed the writ petition by
upholding the levy of demand. After pronouncement of the judgment,
on the prayer made on behalf of the appellant, the Division Bench of
the High Court extended the interim relief which was granted earlier
in the writ proceeding for a period of four weeks.
12. As noted above, this Court while issuing notice had granted interim
relief extending the interim protection granted by the High Court.
13. Learned senior counsel for the appellant at the outset submits that
the benefit given by the statutory notification bearing No. 53/2003Cus. dated 01.04.2003 could not have been whittled down by the
departmental circular No. 10/2004-Cus. dated 30.01.2004. He submits
that in terms of the notification, the goods imported into India by
importers covered by the duty free credit entitlement certificate were
exempted from payment of whole of the customs duty and additional
duty. As per definition of the word 'goods' in the said notification, only
agricultural and dairy products were excluded. Crude degummed
soyabean oil imported by the appellant is not an agricultural product.
However, the department relied upon the circular to contend that
any product derived from agriculture or having dairy origin would
1990
[2025] 5 S.C.R.
Supreme Court Reports
not be permitted to avail the benefit under the duty free entitlement
scheme. High Court committed a manifest error in placing reliance
on the circular. The circular could not have narrowed down the scope
of the exemption by enlarging the exclusionary clause.
13.1. Learned senior counsel submits that since the expression
'agricultural product' has not been defined in the notification
No. 53/2003, its meaning has to be ascribed in terms of
commercial parlance. In the said notification, agriculture and
dairy products were excluded from the exemption to payment
of customs duty and additional duty. However, the circular
expanded the exclusion by adding the words 'any product
derived from agricultural origin'. Thus, the circular had gone
beyond the scope of the statutory notification which is not
permissible.
13.2. Learned senior counsel has pointed out that Director General
of Foreign Trade (DGFT) subsequently issued public notice
No. 42/2004-2009 dated 06.01.2025 permitting importers to
import all types of edible oil classifiable under Chapter Heading
No. 15 through the State Trading Corporations (STC) and MMTC.
13.3. Assailing the impugned judgment, learned senior counsel
submits that High Court fell in error in holding that crude
degummed soyabean oil imported by the appellant is an
agricultural product since it is derived from soyabean which
is admittedly an agricultural product. He has painstakingly
explained the process of manufacture of crude degummed
soyabean oil from soyabean and submits that by no stretch
of imagination, the same can be said to be an agricultural
product. Through a manufacturing process, a distinct
commodity or product is manufactured i.e. crude degummed
soyabean oil which is clearly a distinct commodity. This aspect
was overlooked by the High Court. He also adverted to the
expression 'agricultural product' and submits that since it has
not been defined in the EXIM policy, the common parlance
test should be applied and the dictionary definition should be
referred to. He submits that agriculture has been defined to
mean the science and art of cultivating the soil, harvesting
crop and raising livestock. While soyabean is certainly an
agricultural product, crude degummed soyabean oil, even
[2025] 5 S.C.R.
1991
Noble Resources and Trading India Private Limited
(Earlier Known as Andagro Services Pvt. Ltd.) v. Union of India & Ors.
if not refined and not fit for human consumption, cannot be
termed as an agricultural product.
13.4. Learned senior counsel asserts that the process of extraction
of crude degummed soyabean oil from soyabean amounts to
manufacture. In this connection, he has placed reliance on
the Central Excise Act, 1944.
13.5. Even otherwise, it is submitted that the Handbook of Procedures
(Vol. I) was amended by the DGFT through public notice No.
40/2002-07 dated 28.01.2004 in terms of the powers conferred
on him under the EXIM policy of 2002-2007. By the said notice,
para 3.2.5 was inserted which clearly stated that agricultural
products under Chapters 1-24 of ITC (HS) were not allowed
to be taken into consideration for computation of entitlement
under the duty free credit entitlement scheme. Thereafter,
DGFT further amended para 3.2.5 by way of public notice
No. 42/2004-2009 dated 06.01.2005 whereby DGFT allowed
import of items to be covered under the scheme except the
items specifically excluded. By way of the said public notice,
DGFT allowed the import of all types of edible oil classifiable
under Chapter Heading 15 of ITC (HS) classification of export
and import items but only through STC and MMTC. In the
instant case, appellant had imported the crude degummed
soyabean oil on 26.07.2006 through the MMTC. Therefore,
on this ground also appellant is entitled to the benefit of the
scheme.
13.6. Learned senior counsel also submits that the imported good
i.e. crude degummed soyabean oil has clear nexus with the
product group exported by the appellant. As per the license
under the scheme, the import should have nexus with the
product exported. Appellant exported food products like nonbasmati rice, sesame seeds, white sugar and soyabean milk
extract which are clearly food products having been allotted
respective numbers under the Standard Input Output Norms
(SION). The good imported is crude degummed soyabean
oil which is also a food product and clearly has a nexus with
the exported product. This aspect has been dealt with by the
Bombay High Court in Essel Mining and Industries Limited Vs.
Union of India. However, learned senior counsel pointed out
1992
[2025] 5 S.C.R.
Supreme Court Reports
that this decision is subject matter of a pending special leave
petition before this Court. In fact, this Court vide order dated
08.01.2025 declined the request for tagging of the present
appeal with the special leave petition assailing the Bombay
High Court judgment in Essel Mining and Industries Limited
(supra) as the High Court has held that the same would have
no application.
13.7. In any view of the matter, learned senior counsel submits that
the order of the Assistant Commissioner dated 09.01.2007 and
the impugned judgment are wholly unsustainable in law. Those
are liable to be appropriately interfered with by this Court.
14. Per contra, learned Additional Solicitor General appearing for the
respondents submits that the precise question involved in the
present appeal is whether appellant was entitled to exemption from
customs duty, additional duty and special additional duty in terms
of the notification No. 53/2003-Cus. dated 01.04.2003. He submits
that while dealing with this issue, the condition mentioned in the
notification would have to be read in terms of the EXIM policy
2002-2007, as amended from time to time. He has referred to a
subsequent notification bearing No. 38 dated 21.04.2004 whereby
the EXIM policy was amended by insertion of Note 7 which clearly
stated that agricultural products falling under item 1-24 of ITC (HS)
will not be allowed for import under the scheme.
14.1. It is submitted that import of crude degummed soyabean oil is in
the nature of an agricultural product or a product of agricultural
origin. It is not eligible for benefits under the scheme in terms
of notification No. 53/2003. He asserts that permitting import
of such a product which is otherwise an agriculture product
would amount to subverting the tariff barrier.
14.2. Controverting the contention of the appellant that the product
imported is not agricultural in nature, learned Additional Solicitor
General has referred to the impugned judgment of the High
Court which held that extraction of oil from soyabean does
not strip it of its agricultural identity.
14.3. Referring to the two Bills of Entry, learned Additional Solicitor
General submits that appellant itself classified the imported
product under Custom Tariff Heading (CTH) 15071000 which
falls under Chapter 15 of the Indian Trade Classification
[2025] 5 S.C.R.
1993
Noble Resources and Trading India Private Limited
(Earlier Known as Andagro Services Pvt. Ltd.) v. Union of India & Ors.
(Harmonized System) (already referred to as ITC (HS)). This
chapter specially covers animal or vegetable fats and oils,
prepared edible fats and animal or vegetable waxes. This
clearly shows that the product imported falls under Chapter
15 of ITC (HS) and, therefore, not allowed for import under
the scheme.
14.4. Learned Additional Solicitor General submitted that appellant
was exporting non-basmati rice (E/38), sesame seeds (E/93),
white sugar (E/52/79) and soyabean meal extract (E/42) as
food products. Such goods exported by the appellant did
not have any broad nexus with the imported product i.e.
crude degummed soyabean oil. Therefore, the benefit under
notification No.53/2003 was rightly denied to the appellant.
14.5. He has also referred to the impugned judgment where the High
Court has held that the test report clearly demonstrated that
crude degummed soyabean oil was not fit for direct human
consumption unless refined. Hence, benefit of public notice
No. 42/2004-2009 dated 06.01.2005 through which import of
edible oil was expressly permitted would not be available to
the appellant.
14.6. Referring to the submissions of the appellant that the circular
No. 10/2004-Cus. dated 30.01.2004 could not have exceeded
the statutory notification, he submits that notification No.
53/2003 excluded agricultural products. The specific exclusion
of all agricultural and dairy products was explained by the
circular No. 10/2004-Cus. dated 30.01.2004. The circular did
not add anything new but merely clarified and articulated what
was implicit in the notification.
14.7. He, therefore, submits that there is no merit in the appeal
which is liable to be dismissed.
15. Submissions made by learned counsel for the parties have received
the due consideration of the Court.
16. Since the genesis of the present lis is the show-cause notice dated
30.08.2006 issued by the Assistant Commissioner, Kandla, it would
be appropriate to initiate the analysis therefrom. The show-cause
notice referred to the factum of importation of crude degummed
soyabean oil falling under CTH 15071000 chargeable to appropriate
1994
[2025] 5 S.C.R.
Supreme Court Reports
tariff duty by the appellant. However, the appellant filed two Bills
of Entry dated 26.07.2006 and 27.07.2006 claiming benefit of the
notification bearing No.53/2003-Cus. dated 01.04.2003 i.e. exemption
from payment of various customs duties on the basis of the license
issued by the DGFT for duty free import of goods specified in the
license. After referring to the said notification and the amendments
carried out thereto, the Assistant Commissioner observed that in
view of exclusion of agricultural and dairy products from the ambit of
'goods' covered by the said notification, the import did not appear to
be eligible for the benefits under the scheme since the imported good
i.e. crude degummed soyabean oil was in the nature of agricultural
product. The Assistant Commissioner further observed that as per the
pre-condition sheet attached to the license issued by the DGFT, the
imported product must have a nexus with the product group exported.
The export group name indicates 67/food products. Included in the
said group of export was soyabean meal extract, whereas the product
imported was crude degummed soyabean oil which did not appear
to have a nexus with the exported product. Therefore, appellant was
called upon to show-cause as to why the duties chargeable/leviable
for imported goods should not be charged under Section 28 of the
Customs Act, 1962 ('the Customs Act' hereinafter) on the goods
imported duty free and hit by the exclusion clause of the notification
bearing No.53/2003. Appellant was also called upon to show cause
as to why interest at appropriate rate on the aforesaid duties should
not be charged under Section 28AB of the Customs Act.
17. Appellant responded to the aforesaid show-cause notice by way of
reply dated 14.09.2006. Appellant submitted that the product imported
by it clearly did not fall within the scope of the term 'agricultural
and dairy product' and cannot be excluded from the benefits of
the notification bearing No. 53/2003. The exclusion was only with
respect to agricultural products falling under Chapter Heading
1 to 24 of ITC (HS). Crude degummed soyabean oil imported by
the appellant can by no means be said to be an agricultural product.
Thereafter, appellant explained the various stages in the process of
manufacturing of crude degummed soyabean oil. It was submitted
that crude degummed soyabean oil was a completely different
marketable commodity having an identity distinct from soyabean.
While soyabean is an agricultural product, crude degummed soyabean
oil manufactured therefrom cannot be called an agricultural product.
[2025] 5 S.C.R.
1995
Noble Resources and Trading India Private Limited
(Earlier Known as Andagro Services Pvt. Ltd.) v. Union of India & Ors.
Therefore, the exclusion of agricultural product vide the notification
bearing No.53/2003 would not apply to crude degummed soyabean
oil. The process of extraction of crude degummed soyabean oil from
soyabean amounts to manufacture. Crude degummed soyabean oil is
clearly a commodity distinct from soyabean. Hence, crude degummed
soyabean oil cannot be classified as an agricultural product and
therefore the exclusion of agricultural product would not apply to
crude degummed soyabean oil. Appellant also asserted that the
imported product i.e. crude degummed soyabean oil is classified as
a food product under SION; so also one of the exported products i.e.
soyabean meal extract. In view of clarifications issued by the DGFT
from time to time, the product imported clearly has a nexus with the
product exported by the appellant. In the circumstances, appellant
contended that there was no basis whatsoever for demanding any
duty from it. Appellant had rightly claimed the benefit of notification
bearing No.53/2003. Therefore, the Assistant Commissioner was
requested to drop the show-cause notice.
18. After considering the reply of the appellant to the show-cause notice
and upon hearing the appellant, order-in-original dated 09.01.2007 was
passed by the Assistant Commissioner. After analyzing the notification
No.53/2003, Assistant Commissioner held that in view of exclusion
of agricultural and dairy products from the scope of 'goods' covered
by the said notification, appellant was not eligible for the benefits
under the scheme on the import of crude degummed soyabean oil
which is in the nature of agricultural product arising out of a product
of agricultural origin. The importer has therefore to discharge the
duties as applicable. The Assistant Commissioner referred to para
3.7.5 of the EXIM policy and also observed that goods allowed to
be imported under the scheme should have a broad nexus with the
product group exported. For the purpose of import entitlement under
the scheme 'broad nexus' would mean goods imported with reference
to any of the products in the product group exported within the overall
value of the entitlement certificate. The name of the export group
indicates 67/food products. Goods exported by the appellant included
non-basmati rice (E/38), sesame seeds (E/93), white sugar (E/52/79)
and soyabean meal extract (E/42) while the product imported was
crude degummed soyabean oil. Hence the imported good did not
appear to have any broad nexus with the product group exported.
Therefore, the Assistant Commissioner concluded that appellant did
1996
[2025] 5 S.C.R.
Supreme Court Reports
not appear to be eligible for the benefits under the scheme on the
import of crude degummed soyabean oil. The said good is excluded
from the purview of the notification bearing No.53/2003. Therefore,
it was declared that appellant would have to discharge the duties as
applicable on merit. Consequently, a demand of duty to the tune of
Rs.1,00,38,321.00 was raised against the appellant further ordering
that interest at the appropriate rates on the aforesaid demand of duty
would also be recoverable under Section 28AB of the Customs Act.
19. Though the order-in-original dated 09.01.2007 was an appealable
order under Section 128 of the Customs Act, appellant assailed the
same before the High Court by filing a petition under Article 226 of
the Constitution of India. The challenge made in the writ proceedings
was to the order-in-original dated 09.01.2007 as well as to the circular
bearing No.10/2004-Cus. dated 30.01.2004 whereby the exclusionary
clause in the notification bearing No.53/2003 was expanded to include
all types of products derived from agriculture/dairy origin within the
term 'agriculture and dairy products'.
19.1. High Court did not non-suit the appellant on the ground of
alternative remedy but proceeded to hear the challenge on
merit. By the impugned judgment and order dated 05.08.2019,
High Court held that the basic ingredient of crude degummed
soyabean oil is soyabean which is admittedly an agricultural
product. According to the High Court, the process which
is undertaken to convert soyabean into crude degummed
soyabean oil though may be termed as a manufacturing process
but what is to be seen is that soyabean as an agricultural product
is a primary product which undergoes a simple operation so as
to make it more usable or saleable. It can in no way be said to
acquire a distinct identity. Soyabean on extraction of oil does
not lose its identity. According to the test report, unless the
crude degummed soyabean oil is refined, it cannot be used
for human consumption. Therefore, the High Court rejected the
contention that in view of the process undertaken soyabean
acquires a distinct marketable identity is without any merit.
Finding of the Assistant Commissioner that crude degummed
soyabean oil is an agricultural product cannot be faulted.
19.2. Insofar the challenge to circular No.10/2004-Cus. dated
30.01.2004 is concerned, High Court observed that the EXIM
[2025] 5 S.C.R.
1997
Noble Resources and Trading India Private Limited
(Earlier Known as Andagro Services Pvt. Ltd.) v. Union of India & Ors.
policy stated that agricultural products would not be allowed
for imports. When a clarification was sought for by the DGFT,
the said circular was issued clarifying that all products derived
from agriculture/dairy origin are not permitted to be imported.
19.3. High Court also did not find fault with the view taken by the
primary authority that the imported goods i.e. crude degummed
soyabean oil had no nexus with the product group exported.
What was exported was not soyabean refined oil after
undergoing chemical modification but was only soyabean
meal extract which had no nexus with the imported product
i.e. crude degummed soyabean oil which is again not a refined
oil fit for human consumption. Therefore, even though crude
degummed soyabean oil might have been imported through
the MMTC, that would not be of any help to the appellant.
Therefore, High Court affirmed the order of the Assistant
Commissioner dated 09.01.2007 denying the benefit of the
scheme to the appellant under notification No. 53/2003-Cus.
dated 01.04.2003 in respect of the subject Bills of Entry.
20. Before we examine the correctness or otherwise of the view taken
by the High Court, it would be apposite to have an overview of the
relevant legal provisions, statutory or otherwise.
21. To provide for the development and regulation of foreign trade by
facilitating imports into and augmenting exports from India and
for matters connected therewith or incidental thereto, the Foreign
Trade (Development and Regulation) Act, 1992 (briefly 'the 1992
Act' hereinafter) came to be enacted. Section 5 provides for framing
of foreign trade policy. It says that the central government may,
from time to time, formulate and announce by notification in the
official gazette the foreign trade policy and may also, in like manner
amend such policy. Under Section 6(1) of the 1992 Act, the central
government may appoint any person to be the Director General
of Foreign Trade (DGFT) for the purposes of the 1992 Act. It shall
be the duty of the DGFT to advise the central government in the
formulation of the foreign trade policy and shall be responsible for
carrying out that policy.
22. In exercise of the powers conferred by Section 5 of the 1992 Act,
the central government notified the export and import (EXIM) policy
for the period 2002-2007 coming into force w.e.f. 01.04.2002.
1998
[2025] 5 S.C.R.
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Paragraph 1.1 clarified that the central government reserved the
right in public interest to carry out any amendment in the EXIM
policy, 2002-2007. Such amendment would be made by means of
a notification published in the Gazette of India.
22.1. Under paragraph 2.4, DGFT may, in any case or class of
cases, specify the procedure to be followed by an exporter or
importer or by any licensing or any other competent authority
for the purposes of implementing amongst others the EXIM
policy, 2002-2007. Such procedures shall be included in
the Handbook of Procedures (Vol.-1) etc. and published by
means of a public notice. The Handbook of Procedures (Vol.-
1) is a supplement to the EXIM policy and contains relevant
procedures and other details including the procedure for
availing benefits under various schemes of the EXIM policy.
22.2. In exercise of the powers conferred under paragraph 2.4 of
the EXIM policy 2002-2007, DGFT notified the Handbook of
Procedures (Vol.-1) vide the public notice No. 1/2002-2007
dated 31.03.2002 which came into force from 01.04.2002.
Paragraph 3.2 provides for duty free credit entitlement for
status holders. Paragraph 3.2.5 reads as under:
3.2.5 The status holders having an annual incremental growth
of more than 25% in the FOB value of exports (in free
foreign exchange) shall be entitled to the facility of duty
free credit entitlement subject to achieving a minimum
annual export turnover of Rs. 25 crore (in free foreign
exchange). Such status holders shall be entitled to duty
free credit entitlement certificate to the extent of 10%
of the incremental growth in exports.
Accordingly, status holders who will achieve more than
25% growth in exports in the year 2003-04 (in free
foreign exchange) as compared to the exports made in
2002-03 (in free foreign exchange) subject to a minimum
export of Rs. 25 crore (in free foreign exchange) shall
be entitled for duty free credit entitlement certificate @
10% of the incremental growth in exports.
The duty free credit entitlement can be used for import of
capital goods, office equipment and inputs provided the
same is freely importable under ITC(HS). Such goods
[2025] 5 S.C.R.
1999
Noble Resources and Trading India Private Limited
(Earlier Known as Andagro Services Pvt. Ltd.) v. Union of India & Ors.
shall be non-transferable. Goods imported against such
entitlement certificate shall be used by status holder or
his supporting manufacturer/job worker provided the
name and address of the supporting manufacturer/job
worker is endorsed on the certificate issued by RLA.
22.3. Chapter 3 of the EXIM policy 2002-2007 deals with promotional
measures. Paragraph 3.7.2.1 provides for special strategic
package for status holders. In paragraph 3.7.1, it is stated that
merchant as well as manufacturer exporters, service providers,
export oriented units or units located in special economic zones
or agri export zones or electronic hardware technology parks
or software technology parks shall be eligible for such status
certificate. Paragraph 3.7.2.1 says that the status holders shall
be eligible for the new/special facilities mentioned therein. In
this case, we are concerned with clause (vi) which reads thus:
vi) Duty free import entitlement for status holders having
incremental growth of more than 25% in FOB value of
exports (in free foreign exchange) subject to a minimum
export turnover of Rs. 25 crore (in free foreign exchange).
The duty free entitlement shall be 10% of the incremental
growth in exports. Such entitlement can be used for import
of capital goods, office equipment and inputs for their
own factory or the factory of the associate/supporting
manufacturer/job worker. The entitlement/goods shall
not be transferable.
23. Let us now come to the Customs Act, 1962 (already referred to as
'the Customs Act' hereinabove). Sub-section (1) of Section 25 is
relevant and reads thus:
25.