# PRIYANKA OVERSEAS PVT. LTD. AND ANR v. UNION OF INDIA AND ORS

- **Citation:** [1990] Supp. 3 S.C.R. 138
- **Court:** Supreme Court of India
- **Decided:** 1990-11-15
- **Case number:** Civil Appeal Nos. 5333-34 of 1990
- **Bench:** K.N. Singh, N.M. Kasliwal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/priyanka-overseas-pvt-ltd-and-anr-v-union-of-india-and-ors-10912
- **Pages:** 27

## Headnote

Customs Act, 1962-Sections 26, 60, 68, 112(a)-Palm Kerne/-
Import of-Whether permissible-Duty payable-What is.
The appellant company made a contract on 10.6.87 with the
C
foreign suppliers to Import under Open General Licence 35 ,000 MT of
"Palm Kernel". Under the above contract 10681.832 MT of palm
kernel was shipped from Nigeria on 26.6.87 and 25. 7 .87 under different
bills of lading. The goods arrived in the territorial waters of India on
2 /3rd October, 1987.
D
Prior to 27. 7 .1987 Import of palm seeds was canalised under the
Import Policy for the years 1985-88. On 27.7.1987 the Chief Controller
of Imports & Exports issued a Public Notice Cl!Jlalising _import of "any
other material from which oil can be extracted" also.
As the appellant was apprehending some dispute on the import of
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palm kernel, it filed a writ petition in the High Court on 28.7.87, and
the learned Single Judge passed two interim orders. On BJ:lpeal 11gainst
these orders, the Division Bench on 2.12.87 set aside the interim orders
with the consent of the parties and expedited the proceedings already
initiated under section 124 of the Customs Act, 1962 for conf"iscation of
the goods.
F
The Collector of Customs by adjudication order passed on
7.12.1987 held that the item "Palm Kernel" was a prohibited item for
import except through canalisation by the State Trading Corporation in
terms of the Import Policy and, consequently its import without a valid
licence was in contravention of the provisions of the Customs Act, 1962
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read with the Imports and Exports (Control) Act, 1947. The Collector
in these circumstances directed· the confiscation of the entire goods but
gave an option to the appellant company to redeem the goods on
payment of f"me of Rs.90 lacs. The Collector also imposed a personal
penalty on the appellant.
H
The customs duty as applicable on the date of the arrival of the
138
PRIYANKA OVERSEAS v. U.0.1.
139
ships, i.e. 2/3rd October, 1987 was 105%. The said customs duty was
withdrawn on 4.12.87 and as such there was oil duty on palm Kernel,
and this position remained opto 28.1.88. The exemption from customs
duty was however withdrawn from 29.1.88 as a result of which the
earlier duty of 105% came into effect. The customs duty was further
increased from 1.3.88 and the new customs duty was at 245%.
The appellant company removed 3935.364 MT of Palm Kernel on
17.12.87 by paying proportionate amount of penalty and nil customs
duty. The appellant then f'I)ed bills of entry for the remaining1i746.468
MT of Palm Kernel on 28.1.88 but did not depoit the redemption fme.
On merits, the learned Single Judge by his order dated 19.4.88
held that the Palm Kernel was an item different and distinguished from
Palm seeds, and the same could be imported under OGL as it was
covered under item no. 1, Appendix 4 of the Import Policy. Accordingly,
the learned Judge ordered the goods to be cleared on payment of such
duties as were Ieviable on 28.1.88, when the appellant had entered the
bill of entry seeking clearance of the goods.
The Division Bench on appeal affirmed the order of the Trial
Court in so far as the setting aside of the adjudication order was concerned. The Division Bench however held that the appellant shall be
entitled to get delivery of the balance goods on payment of duty at the
rate prevailing in October, 1987.
Both the parties preferred appeal before the Court by special
leave,
A
B
c
D
E
Before the Court it was inter alia contended on behalf of the
appellant company that (i) Palm seed and Palm Kernel were two diffeF
rent items as shown in the commercial transactions in the trading community and Palm seeds alone was a canalised item; (ii) a f1SCal statute
had to be construed strictly and in favour of a citizen especially when
the question of imposing rme and penalties was involved, and (iii) the
Palm Kernel having been shipped by the foreign seller from Nigeria on
or before 27. 7.87 the appellant was legally entitled to import the same
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under the O

## Text

_Characters 0–39,694 of 65,789. This is a partial read: ask again with offset=39694 for what follows._

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PRIYANKA OVERSEAS PVT. LTD. AND ANR.
v.
UNION OF INDIA AND ORS.
NOVEMBER 15, 1990
[K.N. SINGH AND N.M. KASLIWAL, JJ.]
Customs Act, 1962-Sections 26, 60, 68, 112(a)-Palm Kerne/-
Import of-Whether permissible-Duty payable-What is.
The appellant company made a contract on 10.6.87 with the
C
foreign suppliers to Import under Open General Licence 35 ,000 MT of
"Palm Kernel". Under the above contract 10681.832 MT of palm
kernel was shipped from Nigeria on 26.6.87 and 25. 7 .87 under different
bills of lading. The goods arrived in the territorial waters of India on
2 /3rd October, 1987.
D
Prior to 27. 7 .1987 Import of palm seeds was canalised under the
Import Policy for the years 1985-88. On 27.7.1987 the Chief Controller
of Imports & Exports issued a Public Notice Cl!Jlalising _import of "any
other material from which oil can be extracted" also.
As the appellant was apprehending some dispute on the import of
E
palm kernel, it filed a writ petition in the High Court on 28.7.87, and
the learned Single Judge passed two interim orders. On BJ:lpeal 11gainst
these orders, the Division Bench on 2.12.87 set aside the interim orders
with the consent of the parties and expedited the proceedings already
initiated under section 124 of the Customs Act, 1962 for conf"iscation of
the goods.
F
The Collector of Customs by adjudication order passed on
7.12.1987 held that the item "Palm Kernel" was a prohibited item for
import except through canalisation by the State Trading Corporation in
terms of the Import Policy and, consequently its import without a valid
licence was in contravention of the provisions of the Customs Act, 1962
G
read with the Imports and Exports (Control) Act, 1947. The Collector
in these circumstances directed· the confiscation of the entire goods but
gave an option to the appellant company to redeem the goods on
payment of f"me of Rs.90 lacs. The Collector also imposed a personal
penalty on the appellant.
H
The customs duty as applicable on the date of the arrival of the
138
PRIYANKA OVERSEAS v. U.0.1.
139
ships, i.e. 2/3rd October, 1987 was 105%. The said customs duty was
withdrawn on 4.12.87 and as such there was oil duty on palm Kernel,
and this position remained opto 28.1.88. The exemption from customs
duty was however withdrawn from 29.1.88 as a result of which the
earlier duty of 105% came into effect. The customs duty was further
increased from 1.3.88 and the new customs duty was at 245%.
The appellant company removed 3935.364 MT of Palm Kernel on
17.12.87 by paying proportionate amount of penalty and nil customs
duty. The appellant then f'I)ed bills of entry for the remaining1i746.468
MT of Palm Kernel on 28.1.88 but did not depoit the redemption fme.
On merits, the learned Single Judge by his order dated 19.4.88
held that the Palm Kernel was an item different and distinguished from
Palm seeds, and the same could be imported under OGL as it was
covered under item no. 1, Appendix 4 of the Import Policy. Accordingly,
the learned Judge ordered the goods to be cleared on payment of such
duties as were Ieviable on 28.1.88, when the appellant had entered the
bill of entry seeking clearance of the goods.
The Division Bench on appeal affirmed the order of the Trial
Court in so far as the setting aside of the adjudication order was concerned. The Division Bench however held that the appellant shall be
entitled to get delivery of the balance goods on payment of duty at the
rate prevailing in October, 1987.
Both the parties preferred appeal before the Court by special
leave,
A
B
c
D
E
Before the Court it was inter alia contended on behalf of the
appellant company that (i) Palm seed and Palm Kernel were two diffeF
rent items as shown in the commercial transactions in the trading community and Palm seeds alone was a canalised item; (ii) a f1SCal statute
had to be construed strictly and in favour of a citizen especially when
the question of imposing rme and penalties was involved, and (iii) the
Palm Kernel having been shipped by the foreign seller from Nigeria on
or before 27. 7.87 the appellant was legally entitled to import the same
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under the OGL.
It was further contended that the rate of duty of the imported
goods, as provided in section 15 of the Customs Act, 1962 shall be the
rate and valuation in force, in the case of goods cleared from a
warehouse under section 68, on the date on which the goods were actoH
140
SUPREME COURT REPORTS
[ 1990] Supp. 3 S.C.R.
ally removed from the warehouse, and the Division Bench committed
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error in holding that the date for actoal removal of the goods in the
present case shall be considered as 2 /3rd October, 1987 when the goods
entered the territorial waters of India; that irrespective of the physical
removal of the goods from the warehouse, the goods would be deemed
to have been actually removed in law on 28.1.88 when the petitioner had
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filed ex-bond bills of entry seeking clearance of the goods; in the facts
and circumstances of this case the term 'actual removal' used in section
lS(l)(b) could not mean physical removal as the same was made impossible by the wrongfUI act of the respondents; and it should be given a
meaning in the juristic sense as deemed removal.
On behalf of the Revenue, it was contended that (i) the distinction
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sought to be made between 'Palm Kernel' and 'Palm Seed' was artificial; (ii) 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 under the OGL; (iii) the appellant had let no evidence
to show that the 'Palm Kernel' and 'Palm seed' were considered as two
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different commodities in the popular sense in commerce or trade. As
regards the question of levy of duty, it was contended that in the matter
of taxation there was no question of applying any principles of equity or
the deeming fiction in construing the provisions of section 15(l)(b) of
the Customs Act; even if the appellant had entered the bill of entry on
28.1.88, admittedly the goods were not actually removed on that date
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and the hiatus if any in actual removal, could not be extended to an
artificial date.
In the alternative it was contended that the appellant fully knowing that the rate of duty in October, 1987 when the goods had arrived in
India was 105% and even if the deeming provision for removal of the
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goods was applied for the purpose of section 15(l)(b) of the Customs
Act, then the date of actual removal should be 2j3rd October, 1987.
Dismissing the appeal filed by the Revenue and allowing the appeal filed by the appellant company the Court,
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HEID: (1) "Palm Kernel" is not included in the item "Palm
Seeds", and the two commodities are different as understood in commerce or trade. [155H-156A]
'
(2) Prior to 27.7.87 'Palm Kernel' was not a canalised item, the·
High Court rightly held that 'Palm Kernel' was not included within the
H entry of 'Palm seed'. The Government of India itself realised the dif-
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PRIYANKA OVERSEAS v. U.0.1.
141
ference in the two commodities, therefore it amended its previous
policy. [1560]
(3) As the Palm Kernel was not a canalised item before 27. 7 .87,
it could have been imported under the OGL before that date. The
crucial dates in this regard are 26.6.87 and 25.7.87 when the goods
were actually loaded in the ship and not the date of arrival of the ship in
the territorial waters oflndia. [ 156F]
( 4) Since 'Palm Kernel' was not included within 'Palm seed' the
Customs authorities had no legal justification to confiscate or impose
redemption fine or penalty. [ 156E]
(5) Section 15 of the Customs Act provides for determination of
rate of duty on imported goods. The rate of duty and tariff valuation, if
any, applicable to any imported goods, shall he the rate and valuation
in force in the case of goods cleared from a warehouse under section 68, the
date on which the goods are actually removed from the warehouse. [158C-D]
(6) One cannot introduce the concept of deeming provision while
determining the question of actual removal of the goods from the
warehouse. The rate has to be determined on the basis of the date on
which goods are actually removed from the warehouse and thereafter
the question would be examined as to how the relief is to be moulded in
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case it is found that the Customs authorities were themselves responsiE
hie in preventing the importer of goods from actually removing the
goods from the warehouse. [ 158E-F]
Duni Chand Rataria v. Bhuwalka Brothers, [1955] 1 S.C.R. 1071;
M/s. Bharat Surfactants Pvt. Ltd. v. Union of India, [1989] 4 S.C.C.
21; distinguished.
F
Commissioner of Sales Tax, Madhya Pradesh v. Jaswant Singh
Charan Singh, [1967] 2 S.C.R. 720 referred to.
(7) The statutory principle is that if a party discharges its liability
by complying with the requirement of law, and presents papers for
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clearance of goods, it is obligatory on the Revenue authorities to pass
the order immediately thereon. If the Revenue authorities either refuse
to pass the order on some erroneous or imaginary grounds or on
account of any misconception of law, the Department cannot take
advantage of its own wrong in demanding higher rate of duty from the
importer. [ 1620-EI
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SUPREME COURT REPORTS
[1990] Supp. 3 S.C.R.
(8) Admittedly, the appellant had done its part of legal duty by
presenting bills of entry and complying with section 68(a) of the Act on
28.1.88. But the Customs Officer refused to release the goods on
erroneous assumption that the appellant was liable to pay redemption
fine and since it had not paid the said amount, the goods were not liable
to be released. In the circumstances, the Department cannot be allowed
to take advantage of its own wrongful act. [ 162F -G]
(9) In moulding relief, the Court has always applied principles of
equity In order to do complete justice between the parties. The appellant is therefore entitled to the delivery of goods without paying any
duty as on 28.1.88 no duty was payable on the goods. [ 162H, 164EJ
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
5333-34 of 1990.
From the Judgment and Order dated 20.5.1988 of the Calcutta
High Court in Appeal No. 303 of 1988.
Ashok H. Desai, Solicitor General, A.K. Sen & Vijay Bahuguna, D.K. Garg, G.L. Rawal, Neerja Mehra, A. Subba Rao, C.V.
S ubba Rao and Ms. Sushma Suri for the appearing parties.
The Judgment of the Court was delivered by
KASLIW AL, J. Special leave granted.
Two important questions are involved in the case out of which
one is relating to Import Policy and the other is regarding the duty
payable under the Customs Act, 1962.
Facts relating to the question of Import Policy are that the
Government of India framed Import Policy for the years 1985-88
under which import of items under Open General Licence (in short
OGL) have been mentioned under Appendix 6 Entry No. 1 as under:
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( 1) Raw materials, components and consumables (non iron and
steel items) other than those included in the Appendices 2, 3 Part
(a), 5 & 8.
Appendix 5 Part-B provides for petroleum products, fertilizers, drugs,
feature films, video films, oil/seeds, cement, cereals, newsprint, photo
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assistance etc. under the head oils/seeds item No. 5 reads as under:
PRIYANKA OVERSEAS v. U.0.1. (KASLIWAL, J.]
143
"In the case of the following items, whether edible or non
edible, import" will be made by the State Trading Corporation (STC)/Hindustan Vegetables Oil Corporation, New
Delhi (A Govt. of India Undertaking) under Open General
Licence on the basis of foreign exchange released by the
Government in its favour, imports, distribution and their
pricing will be made by the State Trading Corp./Hindustan
Vegetables Oil Corp., New Delhi as per the connected
policy of the Government in the Ministry of Food & Civil
Supplies, Dept!. of Civil Supplies."
Out of the 9 items under this head, we are concerned with SL No. 4
which provides as under:
Palm Oil (all types including Palmolein and other fractions)/
Palm seeds."
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B
c
Thus according to the above provision palm seeds were canalised items
falling under Appendix 5-B of the said Policy. The Import & Exports
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(Control) Act, 1947 empowers the Central Government 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(l) 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
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customs clearan~e 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.
Open General Licence No. 1/87 dated 1.4.1987 provided as
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follows:
"Import Trade Control Orders Nos. 68/85-88, OGL
No. 1/87 dated. 1.4.87 in exercise of the powers conferred
by Sec. 3 of the Import & Export (Control) Act, 1947, the
Central Government hereby gives general permission to
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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 item to be imported are .not covered by Appendices 2,
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144
SUPREME COURT REPORTS
[1990] Supp. 3 S.C.R.
3, 5 & 8 of Import & Export Policy for the year 1985-88
Vol. I as amended from time to time by issue of a Public
Notice in the Official Gazette.··
Clause 32 with which we are concerned, reads as under:
Clause32;-
"Such goods are shipped on through consignment to India
on or before 3 lst March on the licensing Order or, in the
case of actual users (industrial), on or before 30th June of
the following licensing year against firm order for which
irrevocable letters of credit are opened and established on
or before last date of February of the licensing year, without any grace period whatsoever."
M/s. Priyanka Overseas Private Limited (hereinafter referred to
as the appellant) made a contract for import of 35 ,000 MT of "Palm
Kernel" on 10.6.87 with the foreign suppliers. The contract was entered as an agent on behalf of various actual users. On 27.7.87 the
Chief Controller of Imports & Exports issued a Public Notice No.
205-ITC (PN)/85-88 canalising import of "any other material from
which oil can be extracted." Under the above contract 11,570.570 MT
of Palm Kernel was shipped by the foreign seller from Nigeria to the
appellant company under different Mills of Lading on 26.6.87 and
25.7.87. As regards the above quantity of goods the Collector Customs
in his adjudication order No. 1/87 dated 7.12.87 has observed as
under:
"Further, as reported by the Assistant Collector, Kakinada, the actual quantity landed and bonded, as per the
share weighment under customs supervision as well as
under the supervision of the surveyor was only 10681.832
MT involving a short landing to the extent of 886. 738 MT."
Thus we take this figure of 10681.832 MT as correct.
Since the Customs authorities professed to the appellant not to
clear the goods it filed a Writ Petition No. 3265 of !987 before a Single
Judge of the Calcutta High Court. Learned Single Judge passed an
interim order in favour of the appellant on 2f>:7.87. The interim order
was granted in terms of prayers (e) & (f) of the petition, on certain
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conditions. The above order dated 28.7.87 was modified on 3.8.87 to
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PRIYANKA OVERSEAS v, U.0.1. [KASLIWAL, J.]
145
the extent that the interim order was granted on the condition that the
appellant shall pay the entire customs duty as may be determined and
demanded by the respondents in cash and shall furnish a bond for the
entire value of the goods. The Order for furnishing bank guarantee
was recalled. It was made clear that the Customs 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.
The Division Bench of the Calcutta High Court on 18.9.87
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."
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On 2/3rd 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
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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 order on
18.10.87 for allowing warehousing of the goods under Sec. 60 of the
Customs Act, 1982 (hereinafter referred to as the Act) on the appellant executing a general bond to that effect. The appellant accordingly
p
executed the bond.
Since the Collector of Customs had already issued notice under
Sec. 124 of the Customs Act initiating proceedings for confiscation of
the goods, the appellant approached the Collector and filed representation against the proposed confiscation. In view of these circumsG
lances the parties were heard on 2.12.87 by the Division Bench of the
High Court and with the consent of the parties the interim orders of the
Single Judge were set aside and the proceedings initiated under Sec.
124 of the Customs Act, before the Collector of Customs were
expedited, without prejudice to the rights and contentions of the
parties in the pending writ petition before the learned Single Judge.
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SUPREME COURT REPORTS
[1990] Supp. 3 S.C.R.
The Division Bench, further issued the following direction for the
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expeditious disposal of the writ petition pending before the Single
Judge.
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"Affidavit in opposition to the writ petition to be filed by
22.12.87, affidavit in reply if any to be filed by 10.1.88.
Liberty is given to the parties to apply before the first
Court for early disposal of the writ petition. It is expected
that the matter will be disposed of expeditiously by the first
Court. We make it clear that we have not adjudicated on
the merits of the disputes and the parties will be at liberty
to adjust all their claims and contentions before the Collector of Customs and in the pending writ petition"
The Collector of Customs by adjudication order passed on
7. 12.87 held that the item "Palm Kernel" was prohibited item for
import except through canalisation by the State Trading Corporation
in terms of the Import Policy, and, consequently the import of
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11,570.570 MT of Palm Kernel of Nigeria origin valued at
Rs.2,88,88,414/cif value without a valid licence was in contravention of
the provisions of Sec. 3(i)(a) of the Customs Act read with Sec. 3(ii) of
the Imports & Exports (Control) Act, 1947. The Collector in these
circumstances directed the confiscation of the entire goods and gave
the importer an option to redeem the goods on payment of a fine of
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Rs.90 lacs. The option was to be exercised within one month of the
order. The Collector also imposed on the importer i.e. the appellant a
personal penalty of Rs.10 lacs in terms of Sec. !12(a) of the Customs
Act. On 17.12.87 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 or personal penalty of Rs. JO lacs and also
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part payment of the redemption fine to the tune of Rs.35 lacs. On
28.1.88 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. 2/3rd October, 1987 was
105 % . The said customs duty was withdrawn by a notification dated
4. 12.87 and as such there was nil duty on Palm Kernel and this position
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remained upto 28.1.88. By a notification dated 29.1.88, 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 29.2.88 and as such from 1.3.88
the new customs duty was levied at 245%. The appellant removed the
balance of the goods also on 17.6.88 under the orders of this Court
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dated 2.6.88.
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PRIY ANKA OVERSEAS v. U.0.1. IKASLIWAL, J.]
147
Learned Single Judge by order dated 19.4.88 held that the Palm
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Kernel was an item different and distinguished from Palm seeds and
the same could be imported under OGL as the same was covered
under item No. 1, Appendix 4 of the Import Policy. Learned Single
Judge also directed the Customs authorities to clear the goods
immediately which were imported pursuant to the contract dated
10.6.87 and to allow the appellant (petitioner in the High Court) to
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import the goods, already arrived or likely to arrive pursuant to the
contract dated 10.6.87. The goods were ordered to be allowed to be
cleared on payment of such duties as leviable on 28.1.88. The Orders
of adjudication dated 7.12.87 passed by the Collector of Customs,
Guntur including the showcause notices were quashed. The Customs
authorities were further prohibited from giving effect or taking any
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steps pursuant to the adjudication proceeding or in pursuance to the
showcause notices or putting any impediment or obstruction in the
matter of release of Palm Kernel imported on the basis of agreement
dated I0.6.87.
The Collector Customs aggrieved against the judgment of the
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Single Judge dated 19.4.88 filed a Letters Patent Appeal before the
Division Bench of the Calcutta High Court. The Division Bench by
order dated 20. 5. 88 also affirmed the order of the Trial Court so far as
the setting aside of the adjudication order was concerned. The appellant was allowed the refund of the sum of Rs.90 lacks as redemption
fine and Rs. IO lacs as penalty subject to the following condition:
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"They have already cleared three thousand tons approximately without payment of duty. We have held that they
are liable to pay duty. This amount of duty to be paid is to
be ascertained and the said sum is to be adjusted against
Rs.90 lacs and Rs. IO lacs respectively. The balance amount F
shall be held by them for a period of two months from this
date. The writ petitioner shall be entitled to get delivery of
the balance goods on payment of duty at the rate prevailing
in October, 1987 or upon adjustment with the balance of
the month. But, if they do not do so within a period of two
months, then respondents shall be enti.tled to proceed in G
accordance with law.
We make it clear that the goods must be cleared by
the Customs authorities and allowed to be taken delivery
of, within 72 hours from the time of depositing of the
amount of duty in respect of the goods to be cleared alongH
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SUPREME COURT REPORTS
[ 1990] Supp. 3 S.C.R.
with payment of charges and expenses in accordance with
Jaw.
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."
The above judgment was given on May 17, 19 & 20, 1988 and as
already mentioned above the petitioner removed the remaining goods
also on 17.6.88 by paying nil duty.
Both the parties had come in appeal before this Court by Special
leave, aggrieved against the Order of the High Court.
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The first question to be considered is as to whether Palm Kernel I
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 Undertakings). The contention
in this regard by Mr. Ashok Sen on behalf of the appellant company is
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that Palm seeds and Palm Kernel were two different items as shown in
the commercial transactions in the trading community in such goods,
as well as interpreted by the Central Plantation Crops Research Institute, Trivandrum by letter dated 21.1.87 and by a reply of the Customs
Authorities themselves dated 19.2.87 that Palm Kernel would not be
covered under Notification No. 127-CUS dated 1.7.77. M/s. Oil Palm
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India Limited, a Public Sector Corporation also wrote on 27.7.87 to
the appellant that Palm Kernel and Palm seeds were two different items
in trade.
It was also pointed out that the Chief Controller of Imports &
Exports had to issue an amendment notification on 27.7.87 canalising
0
the import of "any other material from which oil can be extracted." It
has thus been submitted that before 27. 7. 87 there was no question of
importing Palm Kernel through canalisation and the appellant was
perfectly justified and in its right to import the Palm Kernel under the
OGL admittedly issued in its favour. It was thus submitted that Palm
seeds alone was a canalised item and Palm Kernel cannot be conH
sidered as Palm seed. According to Mr. Sen Palm seeds had the quality
•
..
I
-
PRIYANKA OVERSEAS v. U.0.1. [KASL!WAL, J.l
149
of germination while Palm Kernel could not germinate. Oil was
A
extracted from the pulp and Palm Kernel was prepared after putting
Palm seeds to a process of manufacturing. A fiscal statute is to be
construed strictly and in favour of a citizen especially when the question of imposing fine and penalties is involved. It was further argued
that both learned Single Judge as well as the Division Bench of the
B
Calcutta High Court have rightly taken the view that Palm seeds and
Palm Kernel were different items and 11,570.570 MT of Palm Kernel
having been shipped by the foreign seller from Nigeria on or before
27.7.87, the appellant was legally entitled to import the same under
the OGL. Mr Sen frankly conceded that so far as the balance of Palm
Kernel now to be imported by the appellant even under the original
contract dated 10.6.87, can only be made by the State Trading Corp. C
or Hindustan Vegetables Oil Corp., New Delhi as already made clear
vide notification dated 27. 7.87.
Mr. Sen further contended that Sec. 15 of the Customs Act, 1962
provides for the date for detennination of rate of duty and tariff valuaD
tion of imported goods. Sec. 15 reads as under:
( 1) The rate of duty and tariff valuation, if any, applicable
to any imported goods, shall be the rate and valuation in
force,-
(a) in the case of goods entered for home consumption
under Sec, 46, on the date on which a bill of entry in respect
of scuh goods is presented under that section;
E
(b) in the case of goods cleared from a warehouse under
Sec. 68, on the date on which the goods are actually
F
removed from the warehouse;
(c) in the case of any other goods, on the date of payment
of duty:
Provided that if a bill of entry has been presented before
G
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.
(2) The provisions of this section shall not apply to
baggage and goods imported by post.
H
150
SUPREME COURT REPORTS
[ 1990] Supp. 3 S.C.R.
A
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 Sec. 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
B considered as 2/3rd October, 1987 when the goods entered in the
territorial waters of India. On the other hand it was contended that
once it is held that the Customs authorities wrongly confiscated the
goods and wrongly imposed the redemption fine and penalty and the
appellant with no fault on its part had to keep the goods in a bonded
warehouse under the orders of the Division Bench of the High Court
dated 18.9.87, the date of actual removal from the warehouse be
C
treated as 28.1.88 when the appellant had filed Ex-bonds bills of
entries seeking the clearance of the balance quantity of Palm Kernel.
While considering the SNuence of dates with regard to the levy
of duty it was an admitted position that there was an ad valorem duty of
D
105% upto 3.12.87. On 4.12.87 a notification was issued by the
Finance Ministry under Sec. 25{1) of the Customs Act so as to include
Palm Kernel within the scope of notification No. 127.dated 1. 7. 77 as a
result of which Palm Kernel became liable for clearance on nil duty.
This position remained up to 28. !.88 and on 29. I.88 the notification
exempting Palm Kernel from Customs duty was withdrawn. ThereE fore, from 29.1.88 Palm Kernel became liable for payment of 105% ad
valorem import duty. It has thus been contended by Mr. Sen that
irrespective of the physical removal of the goods from the warehouse,
the goods would be deemed to have been actually removed in law on
28.1.88 when the petitioner had filed ex-bond bills of entry seeking
clearance of the balance goods. As regards the quantity of 3335.864
F
MT of Palm Kernel are concerned, the same were rightly cleared on
payment of nil duty on 15.12.87 as no duty was leviable on that day of
Palm Kernel.
G
H
It was further argrued by Mr. Sen that Sec. 68 of the Act which
reads as under will not apply in the present case.
Sec. 68:-
"The importer of any Warehoused goods may' clear them
for home consumption, if-
(a) a bill of entry for home consumption in respect of such -
'
...
PRIYANKA OVERSEAS v. U.0.I. [KASL!WAL, J.]
151
goods has been presented in the prescribed form;
(b) the import duty Jeviable on such goods and all penalties, rent, interest, and other charges payable in respect of
such goods have been paid; and
A
(c) an order for clearance of such goods for home conB
sumption has been made by the proper officer.
It has been contended that clause (b) of Sec. 68 only speaks of
the import duty leviable on such goods and all penalties, rent, interest
and other charges payable in respect of such goods. 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
Sec. 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 28.1.88 itself when he
had filed the ex-bond bills of entry.
It has been further submitted by Mr. Sen that in the facts and
circumstances of this case the term actual removal used in Sec.
lS( l)(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 effectually passes the control to the new possessor, for example
by handing over the key of a warehouse or of a plate chest
c
D
E
F
in which the goods are stored, with the intention of transG
ferring possession; but, as has been repeatedly observed,
the delivery of a key does not have this effect unless it
actually gives full control of the goods in question. Hence,
where it operates as delivery it is, strictly speaking, not
symbolic but actual delivery of the goods. The mere
transfer of a document representing goods does not orH
A
B
c
152
SUPREME COURT REPORTS
[ 1990] Supp. 3 S.C.R.
dinarily change the possession of the goods, save that
possession of goods at sea can be transferred by indorsement and delivery of the bill of lading."
Para 757. Meaning of "delivery":
"Delivery means voluntary transfer of possession from one
person to another. It includes symbolic delivery and is not
restricted to the physical transfer of the goods themselves,
but covers also transfer of possession of documents of title
to goods. Where the buyer takes possession pursuant to the
leave of the seller, whether concurrent or antecedent, that
is a voluntary transfer of possession."
It was contended that the learned Single Judge had taken a
correct view that the crucial date for levy of duty would be 28.1.88 and
the Division Bench of the High Court committed a clear error in
D
holding that the actual date of delivery for the entire lot of goods J
should be considered as 2/3rd October, 1987 when the goods actually
arrived in the territorial waters of India. In support of the above contention reliance was also placed on Duni Chand Rataria v. Bhuwa/ka
Brothers Ltd., [ 1955] 1 SCR, P. 1071.
E
Mr. Sen support of his contention that Palm Kernel and Palm
seeds are different and distinguished, placed reliance on the same
authorities which were cited before the High Court. By Public Notice
No. 205/27-7-87 Appendix 5 Part-B Item No. 5 "Oil/seeds" was
amended to bring within the canalised list "all other materials from
which oil is extracted". He argued that it was not merely a clarificatory
F
notification but it was in fact a notification by which the Government
added the words "all other materials from which oil is extracted" in
order to include Palm Kernel within the canalised list.
Mr. Desai, Ld. Solicitor General appearing on behalf of the
Union of India and Custom authorities urged that the distinction
G
sought to be mere between 'Palm Kernel' 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.
H
The importation of the Palm Kernel by taking out the o'!ter shell must
....
PRIYANKA OVERSEAS v. U.0.1. [KASLIWAL, J.]
153
be considered only as an ingenuous act on the part of the importers to
take shelter 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 wa& 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 seeds contained with
in any fruit
(2) The softer part within the hard shell of a
A
B
nut or stone-fruit
C
(3) The body of a seed within its husk
He pointed out that Brushel Tariff Nomenclature in Chapter 12
which consists of oil seeds and oleaginous fruit; miscellaneous grains,
seeds and fruits; industrial and medical plants; straw and fodder, at
D
item No. 12.01 the list of oil seeds and oleaginous fruit are broken as
under:
A. Ground-nuts.
B. Copra.
E
C. .Palm nuts and Kernels.
D. Soya beans.
E. Linseed.
F. Cotton seeds.
F
G. Caster oil seeds.
H. Other.
He contended that Palm nuts and Kernels under clause ( c) have been
included in the category of oil seeds. He emphasised that the appellant
had led no evidence to show that the 'palm kernel' and 'palm seed' are G
considered as two different commodities in its popular sense in commerce or trade. He further submitted that Sec. 21 under Chapter 2( 1)
of the Import and Export Policy Vol. I issued by the Government,"
Ministry of Commerce lays down the principles applying to the inter se
interpretation of the entries .in· the various Appendices as well as
imports under OGL. Clause (f) of Sec. 21 reads as under:
H
A
B
c
D
E
F
G
H
154
SUPREME COURT REPORTS
[ 1990] Supp. 3 S.C.R.
"any item in Appendices 2, 3, 5 or 8 with a specific or a
generic description, will preclude the eligbility to its import
under Open General Licence, except where the policy
allows this clearly."
Reliam;e was also placed on Sec. 24 of the above Policy which
provides that actual users may also seek clarification on any itemwise
entry applicable to them, from the Regional Licensing Authorities at
Bombay, Madras and Calcutta, who will secure technical advice in the
atter.
M/s. Ganesh Dass Bhoj Raj had sought a clarification and the
Chief Controller of Imports and Exports by their letter dated 12.6.87
had clarified that Palm Kernel is a part of the palm seed and therefore
the policy applicable to palm seed was applicable to its part as well and
as such its import is canalised through the STC. The appellant M/s.
Priyanka Overseas Pvt. Ltd. was also aware about the aforesaid reply
given to M/s. Ganesh Dass Bhoj Raj as it itself relied upon various
correspondences between the Customs authorities and M/s. Ganesh .
Dass Bhoj Raj. The appellant, Mr. Desai contended had no justification to get the goods shipped between 26.6.87 and 25.7.87. In any
event, nothing prevented the appellant to seek clarification from the
Chief Controller of Imports & Exports and then proceed in the matter,,
particularly when the appellant was importing goods valued nearly 3
crores of rupees. Seeking clarification from other agencies as to justify
distinction between 'Palm kernel' and 'palm seed' was of no consequence under Sec. 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 goc;>ds and imposing the penalty as well as redemption fine.
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 the 17.6.88 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 28.1.88, admittedly the goods were not actually
I
PRIYANKA OVERSEAS v. U.0.I. IKASLIWAL, J.]
155
removed on that date and the hiatus if any in actual removal, cannot be
extended to an artificial date. It was submitted that this Court's deciA
sion in Duni Chand Rataria v. Bhuwalka Brothers Ltd. (supra) cited by
the learned counsel for the appellant supports his contention. He
further contended that it was a well settled proposition that in construing the words of one Statute, no help can be sought from the interpre-
. talion put to such words in another Statute, and to support his contenB
tion he placed reliance on Comm. of Sales Tax, Madhya Pradesh v.
Jaswant Singh Charan Singh, [1967] 2 SCR P. 720 and M/s. Bharat
Surfactants (Private) Ltd. & Anr. v. Union of India and Anr., [1989] 4
sec p. 21.
·
Ld.