COMMNR. OF CUSTOMS (PREVENTIVE) MUMBAIversusM/S. M. AMBALAL & CO.

                 [2010] 15 (ADDL.) S.C.R. 937


    COMMNR. OF CUSTOMS (PREVENTIVE) MUMBAI                             A
                                 v.
                   M/S. M. AMBALAL & CO.
                (Civil Appeal No. 8235 of 2003)

                     DECEMBER 09, 2010
                                                                       B
              [D.K. JAIN AND H.L. DATIU, JJ.]

        Customs Act, 1962 - ss. 2(25) rlw s. 11, 111 and 112 and
 s. 25 - Exemption notification issued by Central Government,
 in exercise of its power under s.25(1), exempting certain C
 articles when imported into India from payment of duty -
 Interpretation of - Meaning of the term 'imported goods' in the
 exemption notification - Plea of respondent that by virtue of
 the said Notification, rough diamonds were exempted from
 payment of duty under the Act and, therefore, adjudicating D
 authority was not justified in directing the respondent for
 payment of duty under the Act for release of the confiscated
 goods (rough diamonds) - Tribunal allowed the respondent's
 appeal by extending the benefit of exemption notification to
 it - On appeal, held: The notification has to be read as a whole E
 - If any of the conditions laid down in the notification is not
 fulfilled, the party is not entitled to the benefit of that notification
 - The goods seized in this case cannot be imported into India
 without a licence under the Import Control Act - It is not the
 case of the respondent-firm that the goods were imported with F
 a valid licence - Goods so imported cannot therefore, be
 treated to be lawfully "imported goods" within the definition of
 that term in s. 2(25) - Therefore, the respondent was not
 entitled to the benefit of the notification - 'Smuggled goods'
 will not come within the definition of 'imported goods' for the G
·purpose of exemption notification, for the reason, the Act
 defines both the expressions looking at the different definitions
 given to the two classes of goods: imported and smuggled,
 and if the two were to be treated as the same, then there would
                                937                                    H
    938    SUPREME COURT REPORTS (2010] 15 (ADDL.) S.C.R.

A be no need to have two different definitions - It would be
    contrary to the purpose of exemption notifications to accord
    the benefit meant for imported goods on smuggled goods. -
    Notification No.247-Cus. dated 02-08-1976.
        Notification - Exemption Notification - Interpretation of
8
   - Held: The rule regarding exemptions is that exemptions
   should generally be strictly interpreted but beneficial
   exemptions having their purpose as encouragement or
   promotion of certain activities should be liberally interpreted
C - General rule is strict interpretation while special rule in the
   case of beneficial and promotional exemption is liberal
 . interpretation.

          Customs Act, 1962 - Object of - Discussed.

D        Words and Phrases - 'dutiable goods', 'duty', 'import',
    'imported goods', 'importer' and 'smuggling' - Meaning of -
    Customs Act, 1962.
       In a search and seizure In the office premises of the
  respondent-firm conducted by the officers of Customs
E Department, large quantity of rough diamonds was
  recovered. The partner of the respondent-firm was
  neither able to offer any satisfactory explanation nor
  produce any documents in relation to the import of the
  said diamonds, and the diamonds were seized by the
F officers. After investigation, a Show Cause Notice was
  issued to the respondent and others wherein confiscation
  of the seized diamonds was proposed. The adjudicating
  authority passed an order confiscating the seized
  diamonds under Section 111 (d) of the Customs Act, 1962.
G However, an option was given to the respondent to
  redeerll the seized goods on payment of redemption fine.
  The respondent was also asked to pay the appropriate
  duty on the said confiscated diamonds which were
  allowed to be released on payment of redemption fine. In
H
 COMMNR. OF CUSTOMS (PREVENTIVE) MUMBAI v. 939
           M/S. M. AMBALAL & CO.
 addition, penalty was also imposed on the respondent      A
 under Section 112 of the Act.

      Aggrieved, the respondent preferred an appeal
 before the Tribunal. The Tribunal confirmed the
 redemption fine of Rs.60,00,000/- (Rupees Sixty Lakhs
                                                            8
 only) and the penalty of Rs. 25,00,000/- (Rupees Twenty
 Five Lakhs only) on the respondent. The respondent
 thereafter filed a Writ Petition before the High Court but
 later withdrew the same to avail benefit under the Kar
 Vivad Samadhan Scheme, 1998 (KVS Scheme). Pursuant C
 to the order passed under the KVS Scheme by the
 designated authority, the respondent was directed to pay
 an amount of Rs.42,50,000/· (Rupees Forty Two Lakhs
 and Fifty Thousand only) towards redemption fine and
 penalty and the designated authority also gave liberty to
 the respondent to redeem the ·goods on payment of duty · D
 at the appropriate rate.            ·

       The respondent thereafter requested the appellants
  for release of diamonds by placlng reliance on the
  Notification No.247/76-Cus dated 02.08.1976. This E
  request was turned down by the department and the
  respondent was informed that the seized diamonds
  would be released only after payment of duty.
  Respondent thereafter preferred a Writ Petition. The Writ
  Petition was dismissed by the High Court, wherein it was F
  specifically observed "that ~he petitioner imported
  diamonds of foreign origin without a valid licence." This
  order was questioned before this Court jn S.L.P. This
  Court, while dismissing the SLP, directed the Additional
  Collector of Customs (Preventive), Mumbai or other G
. appropriate Assessing Officer to decide the amount of
  duty payable under the Customs Act in respect of seized
  goods.
     The Commissioner of Customs· quantified the duty
                                                           H
    940    SUPREME.COl,JRT REPORTS [2010] 15 (ADDL.) S.C.R.

                            •
A payable by the respondent for an amount of
  Rs.2,20,50,125/- (Rupees Two Crores Twenty Lakhs Fifty
  Thousand One Hundred and Twenty Five only) before
  redemption of the confiscated diamonds. Aggrieved, the
  respondent filed appeal before the Tribunal which allowed
B the same holding that exemption would be available to
  the goods imported by the respondent in the light of the
  Notification No.247/76-Cus dated 02.08.1976.

       The primary issue that arose for consideration in the
  instant appeal was whether the benefit of the exemption
C notification was rightly granted to the respondent-firm by
  the Tribunal.

          Disposing of the appeal, the Court

D       HELD: 1. The Customs Act, 1962 is a·n Act to
  consolidate and amend the law relating to Customs. The
  object of the Act is to regulate the import and export of
  goods, into and from the shore~ of India, or otherwise,
  and determine the customs duty payable. It also attempts
E to fill the lacunae of the previou$ customs legislations,
  viz., the Sea Customs Act and the Land Customs Act. It
  also aims to counter the difficulties that have emerged
  over the years due to the changing economic and
  financial conditions; amongst them it proposes to tackle
  the increasing problems of smuggling both in and out of
F the country. The Act aims to sternly and expeditiously
  deal with smuggled goods, and curb the dents on the
  revenue thus caused. In order to deal with the menace
  of smuggling, the authorities are enabled to detect,
  conduct search and seizure, and if necessary, confiscate
G such smuggled goods, within the territory of India. [Para
  5] [949-B-D]

       2.1. Dutiable goods are goods whose import is
  permitted by the Act or any other law in force. Duty is the
H tax leviable on the goods occasioned by their import into
 COMMNR. OF CUSTOMS (PREVENTIVE) MUMBAI v. 941
           M/S. M. AMBALAL & CO.
                                        '
    India or their export out of India. The dutiability o.f the     A
    goods is covered by .Section 12 of the Act which is the
    charging section. Under this Section, an· goods imported
    into or exported from India are liable to Customs duty
    unless the Customs Act itself or any other law for-the time
    being iil force provides otherwise. The rate of duty is fixed   B
    by the Customs Tariff Act, 1975. "Import" and "Imported
    Goods" means that if goods are brought into India,
    meaning thereby into the territory of India from outside,
    there is import of goods and the goods become imported
    goods and. become chargeable to duty upto the moment            c
    they are cleared for home consumption. The word
    'importer' has been defined in the Act as importer in
    relation to any goods at any time between their
    importation and the time when they are cleared for home
·,consumption includes any owner or any person who
                                                                    0
 1. holding himself out to be importer. The word 'smuggling',
    ijl relation to goods, means any act or omission which
    Wit~. render such goods liable to confiscation under
    Section 111 or Section 113 of the Act. [Para 7) [950-C-F)

      2.2. Section 11 of the Act enables the Central E
 Government to prohibit importation or exportation of
 goods either absolutely or subject to conditions as
 specified in the notification, the import or export of the
 goods of any specified description. Section 11 A to 11 G
 speaks of detention of illegally imported goods and F
 prevention of the disposal thereof. Section 12 of the Act
 is the charging Section. Under this Section, the duty is
 leviable on all imported goods. Valuation of the imported
 goods is done as provided under Section 14 of the Act.
 Section 25 of the Act empowers the Central Government G
 to issue notifications exempting generally either
 absolutely or subject to such conditions as specified in
 the notification, goods of any specified description from
 the whole or any part of the Customs Act leviable thereon.
 The definition of imported goods has to -be read along H
    942   SUPREME COURT REPORTS (2010] 15 (ADDL.) S.C.R.

A with Section 111 of the Act which deals with goods
  brought from place outside India. Section 111 of the Act
  provides for confiscation of goods and conveyances and
  imposition of penalties. Section 111 (d) of the Act provides
  that any goods which are imported or attempted to be
B imported or are brought within Indian Custom Waters for
  the purpose of being imported, contrary to any
  prohibition imposed by or under this Act or any other law
  for the time being in force, shall be liable for confiscation.
  Section 112 of the Act provides for penalties for impr~per
c importation of goods. [Para 8) (950-G-H; 951-A-C]

         3.1. The Central Government, in exercise of Its power
    under Section 25(1) of the Act, has Issued Notification
    No.247-Cus. dated 02-08-1976 exempting certain articles
    from payment of duty: It Is settled law that the notification
D   has to be read as a whole. If any of the conditions laid
    down In the notification Is not fulfilled, the party Is not
    entitled to the benefit of that notification. The rule
    regarding exemptions Is that exemptions should
    generally be strictly Interpreted but beneficial exemptions
E   having their purpose as encouragement or promotion of
    certain activities should be liberally interpreted. This
    composite rule is not stated in any particular judgment
    in so many words. In fact, majority of judgements
    emphasize that exemptions are to be strictly interpreted
F   while some of them insist that exemptions in fiscal
    Statutes are to be liberally interpreted giving an apparent
    impression that they are contradictory to each other. But
    this is only apparent. A close scrutiny will reveal that
    there is no real contradiction amongst the judgements at
G   all. The synthesis of the views is quite clearly that the
    general rule is strict interpretation while special rule in the
    case of beneficial and promotional exemption is liberal
    interpretation. The two go very well with each other
    because they relate to two different sets of
H   circumstances. [Paras 9, 10) (951-D; 952-D-G]
 COMMNR. OF CUSTOMS (PREVENTIVE) MUMBAI v. 943
           M/S. M. AMBALAL & CO ..
     3.2. The notification issued by the Central A
Government in exercise of the powers conferred by
Section 25(1) of the Act exempts the articles enumerated
in the table annexed when imported into India from
payment of duty under the Act. The language used in the
notification is plain and unambiguous. Therefore, the B
same is required to be considered in their ordinary sense~
A construction which permits one to take advantage of
one's own wrong or to impair one's own objections under
a Statute should be disregarded. The interpretatloii
should as far as possible be beneficial in the sense that   c
it should suppress the mischief and advance the remedy
without doing violence to the language. [Para 11] [952·
H; 953·A·B]

       3.3. From the wording of the above exemption
  notification, It Is clear that the benefit of the exemption D
  envisaged Is for those goods that are Imported.
  According to Section 2(25) 'Imported goods' has been
  defined to mean " ... any goods brought Into Ind/a from a
  place outside Ind/a but does not Include goods which have
  been cleared for home consumption." It is necessary that E
  the above definition is read along with Section 11, Section
  111 and Section 112 of the Act, which provide for
  detection of illegally imported goods and prevention of
  the disposal thereof, confiscation of the goods and
  conveyances and imposition of penalties respectively. F
  Under Section 111 (d) of the Act, any goods which are
  imported contrary to any prohibition imposed by or under
  this Act or any other law for the time being in force shall
  be liable for confiscation. The goods which have been
. seized in this case cannot be imported into India without · G
  a licence under the Import Control Act and there is,
  therefore, a prohibition in law for the import of goods
  except in compliance with the Import Control Act. It is not
  the case of the respondent-firm that the goods were
  imported with a valid licence and, therefore any import of H
    944   SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.


A   goods of which importation is prohibited by law, cannot
    be valid import under the Act. Goods so imported cannot
    therefore, be treated to be lawfully "imported goods"
    within the definition of that term in Section 2(25) of the
  . Act. Therefore, the respondent was not entitled to the
B benefit of the notification. There is no merit in the ·
    contention raised by the respondent that by virtue of the
    Notification No.247-Cus dated 02.08.1976, rough
    diamonds are exempted from payment of duty under the
    Act and, therefore, adjudicating authority was not justified
c in directing the respondent for payment of duty under
    the Act for release of the confiscated goods. The goods
    become exempted goods provided all the conditions of
    the notification are fulfilled. If any condition of the
    notification is not fulfilled, goods are not exempted
0   goods.  [Para 12] [953-C-H; 954-A-B]

        Union of India v. Ganesh Metal Processors Industries
    2003 (151) ELT 21 - relied on.

      4. 'Smuggled goods' will not come within the
E definition of 'imported goods' for the purpose of the
  exemption notification, for the reason, the Act defines
  both the expressions looking at the different definitions
  given to the two classes of goods: imported and
  smuggled, and if the two were to be treated as the same,
F then there would be no need to have two different
  definitions. [Para 13] [954-D]

       5. In order to understand the true meaning of the
  term 'imported goods' in the exemption notification, the
  entire scheme of the Act requires to be taken note of.
G 'Imported goods' for the purpose of this Act is explained
  by a conjoint reading of Section 2(25), Section 11,
  Section 111 and Section 112. Reading these Sections
  together, it can be found that one of the primary
  purposes for prohibition of import referred to the latter is
H the prevention of smuggling [See section 11 (2)(c)].
COMMNR. OF CUSTOMS (PREVENTIVE) MUMBAI v. 945
          M/S. M. AMBALAL & CO.
Further, in the light of the objects of the Act and its basic    A
skeletal framework, it is clear that one of the principal
functions of the Act is to curb the ills of smuggling on the
economy. In the light of these findings, it would be
antithetic to consider that 'smuggled goods' could be
read within the definition of 'imported goods' for the           B
purpose of the Act. In the same light, it would be contrary
to the purpose of exemption notifications to accord the
benefit meant for imported goods on smuggled goods.
[Para 14) [954-E-H; 955-A]

    Associated Cement Companies v. Commissioner of C
Customs 2001 (128) ELT 21 (SC) -- distinguished.

     6. Two other issues which were argued by the
respondent and the revenue before the Tribunal were not
answered since the Tribunal allowed the assessee's D
appeal by extending the benefit of the exemption
notification to the respondent-firm. These issues now
require to be considered by the Tribunal. Accordingly,
while setting aside the order passed by the Tribunal, the
matter is remanded to the Tribunal to consider those E
issues after affording personal hearing to both the
parties. [Para 16] [955~H; 956-A]

                     Case Law Reference
    2003 (151) ELT 21         relied on            Para 12       F
    2001 (128) ELT 21 (SC)distinguished            Para 15
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
8235 of 2003.
                                                                 G
    From the Judgment & Order dated 23.6.2003 of the
Customs, Excise and Gold (Control) Appellate Tribunal, West
Zonal Bench at Mumbai in Appeal No. C/138/03.

     R.P. Bhatt, Arijit Prasad, H.R. f3ao, P.1 Parmeswaran for
the Appellant.                                                   H
    · 946    SUPREME COURT REPORTS (2010] 15 (ADDL.) S.C.R.


A .        Dr. Surat Singh, Pratibha Chopra, Ashok K. Mahajan for
      the Respondent.

            The Judgment of the Court was delivered by

            H.L. DATTU, J. 1. This appeal is by the Revenue against
B the Order passed by the Customs, Excise and Gold (Control)
  Appellate Tribunal, West Zonal Branch at Mumbai [hereinafter
  referred to as 'Tribunal'] in Appeal No.C/138/03 Mum dated
  23.06.2003. By the impugned order, the Tribunal has allowed
  the appeal filed by the respondent and has set aside the original
C order passed by the adjudicating authority, wherein it had
  directed the respondent to pay a sum of Rs. 2,20,50, 125/-
  (Rupees Two Crores Twenty Lakhs Fifty Thousand One
  Hundred & Twenty Five only) by way of duty under the
  provisions of The Customs Act, 1962 (hereinafter referred to
D as, "the Act") for release of the goods seized from the
  possession of the respondent.

            2. The factual matrix in brief is as follows:

        In a search and seizure in the office premises of the
E respondent-firm conducted by the officers of Customs
  Department, on the basis of specific information, a large
  quantity of rough diamonds was recovered. The partner of the
  respondent-firm, Shri Maganbhai Patel was neither able to offer
  any satisfactory explanation nor produce any documents in
F relation to the import of the said diamonds, and the diamonds
  were seized by the officers in the reasonable belief that they
  are liable for confiscation under the provisions of the Act. After
  investigation, a Show Cause Notice was issued to the
  respondent and others wherein confiscation of the seized
G diamonds was proposed. After adjudication, the adjudicating
  authority passed an order confiscating the seized diamonds
  under Section 111 (d) of the Act. However, .an option was given
  to the respondent to redeem the seized goods on payment of
  redemption fine. The respondent was also asked to pay the
H
 COMMNR. OF CUSTOMS (PREVENTIVE) MUMBAI v. 947
     MIS. M. AMBALAL & CO. [H.L. DATT.U, J.]

 appropriate duty on the said confiscated diamonds which were A
 allowed to be releas.ed on payment of redemption fine. In
 addition, penalty was also imposed on the respondent under
 Section 112 of the Act. Being aggrieved by the aforesaid order,
 the respondent had preferred an appeal before the Tribunal. The
 Tribunal, by its orqer dated 29.12.1995, disposed of the appeala
 and confirmed the redemption fine of Rs. 60,00,000/- (Rupees ·
 Sixty Lakhs only) and the penalty of Rs. 25,00,000/- (Rupees
 Twenty Five Lakhs only) on the respondent herein. The
 respondent thereafter filed a Writ Petition before the Bombay
 High Court and the same was withdrawn to avail the benefit     c
'under Kar Vivad Samadhan Scheme, 1998 (in short, "KVS
 Scheme"). Pursuant to the order passed under the KVS
 Scheme by the designated authority, the respondent was
 directed to pay an amount of Rs. 42,50,000/- (Rupees Forty
 Two Lakhs and Fifty Thousand only) towards redemption fine
                                                                 0
 and penalty and the designated authority also gave liberty to
 the respondent to redeem the goods on payment of duty at the
 appropriate rate. The respondent thereafter requested the
 appellants for release of diamonds by placing reliance on the
 Notification No.247/76-Cus dated 02.08.1976. This request
 was turned down by the department and the respondent was E
 informed that the seized diamonds would be released only after
 payment of duty in the light of the order (original) dated
 03.12.1992. Respondent thereafter preferred a Writ Petition
 No.1976 of 2000 before the Bombay High Court. The said Writ
 Petition was dismissed by the High Court, wherein it was F
 specifically observed "that the petitioner imported diamonds of
 foreign origin without a valid licence." This order was
 questioned before this Court in S.L.P.(C) No.1495 of 2000.
 This Court, by its order dated 06.09.2002, while dismissing the
 Special Leave Petition, directed the Additional Collector of G
 Customs (Preventive), Mumbai or other appropriate Assessing
 Officer to decide the amount of duty payable under the Customs
·Act in. respect of seized goods. The Commissioner of Customs
 vide order in Original No.CCP/KPM/ADJN/M&P/27/2002,
 quantified the duty payable by the respondent for an amount of H
         /
    948     SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.


A   Rs. 2,20,50, 125/- (Rupees Two Crores Twenty Lakhs Fifty
    Thousand One Hundred and Twenty Five only) before
    redemption of the confiscated diamonds. Being aggrieved by
    the same, the respondent herein filed appeal before the Tribunal
    and the Tribunal, by its order dated 23.06.2003, allowed the
B   appeal and held that the exemption would be available to the
    goods imported by the respondent in the light of the Notification
    No.247/76-Cus dated 02.08.1976. It is this order which is the
    subject matter in this appeal filed by the Revenue under
    Section 130E(b) of the Act.
c       3. Shri R.P. Bhatt, learned senior counsel appearing for
  the Revenue, submitted that the benefit of the exemption
  notification cannot be extended to a person who/which had
  illegally imported rough diamonds into the country. He further
  argued that the same could not be availed by those persons
D who did not have the licence to import diamonds, or who had
  smuggled rough diamonds into the country clandestinely without
  payment of duty. Per contra, Dr. Surat Singh, learned counsel
  for the respondent-firm, would contend that there is no infirmity
  in the order passed by Tribunal since the Tribunal, by placing
E reliance on the principles laid down by this Court, has granted
  relief to the respondent-firm.

        4. The three issues that falls for our consideration and
    decision are :-
F         (a) Whether the benefit of the exemption notification has
          been rightly granted to the respondent-firm by the Tribunal.

          (b) Whether the declaration made under the KVS Scheme
          and the subsequent payment of amount quantified under
G         the said Scheme by the respondent-firm vis-a-vis the
          release of the diamonds that were confiscated by the
          department.

          (c) Whether the Baggage Rules were correctly applied by
H
 COMMNR. OF CUSTOMS (PREVENTIVE) MUMBAI v. 949
     M/$. M. AMBALAL & CO. [H+. DATTU, J.]
      the Commissioner of Customs, while deciding the duty           A
      payable by the respondent-firm.

       5. The Customs Act, 1962 is an Act to consolidate and
. amend the law relating to Customs. The object of the Act is to
  regulate the import and export of goods, into and from the
                                                                     8
  shores of India, or otherwise, and determine the customs duty
  payable. It also attempts to fill the lacunae of the previous
  customs legislations, viz., the Sea Customs Act and the Land
_Customs Act. It also aims to counter the difficulties that have
  emerged over the years due to the changing economic and
  financial conditions; amongst them it proposes to tackle the       C
  increasing problems of smuggling both in and out of the country.
  The Act aims to sternly and expeditiously deal with smuggled
  goods, and curb the dents on the revenue thus caused. In order
  to deal with the menace of smuggling, the authorities are
  enabled to detect, conduct search and seizure, and if              D
  necessary, confiscate such smuggled goods, within the territory
  of India.

     6. '{Ve may now briefly notice the scheme of the Act. The
 expression 'dutiable goods', 'duty', 'import', 'imported goods'_,_ .E
 'importer' and 'smuggling' are defined in the following manner


      'Dutiable Goods' means any goods which are chargeable
      to duty and on which duty has not been paid.
                                                                     F
            'Duty' means a duty of Customs and leviable under
      this Act.

           'Import', with its grammatical variations and cognate
      expressions, bring into India from a place outside India.      G

            'Imported goods' means any goods brought into
     India from a place outside India but does not include goods
     which have been cleared for home consumption.

            'Importer' means in relation to any goods at any time    H
     950    SUPREME COURT REPORTS [2010) 15 (ADDL) S.C.R.


/A         between their importation and the time when they are
           cleared for home consumption, includes any owner or any
           person holding himself out to be the importer.

                 'Smuggling', in relation to any goods, means any act
           or omission which will render such goods liable to
           confiscation under Section 111 or Section 113 of the Act.

        7. Dutiable goods are goods whose import is permitted
  by the Act or any other law in force. Duty is the tax leviable on
  the goods occasioned by their import into India or their export
C out of India. The dutiability of the goods is covered by Section
  12 of the Act which is the charging section. Under this Section,
  all goods imported into vr exported from India are liable to
  Customs duty unless t:ie Customs Act itself or any other law
  for the time being in force provides otherwise. The rate of duty
D is fixed by the Customs -1ariff Act, 1975. "Import" and "Imported
  Goods" means that if goods are brought into India, meaning
  thereby into the territory of India from outside, there is import
  of goods and the goods become imported goods and become
  chargeable to duty upto the moment they are cleared for home
E consumption. The word 'importer' has been defined in the Act
  as importer in relation to any goods at any time between their
  iriportation and the time when they are cleared for home
  consumption includes any owner or any person who holding
  himself out to be importer. The word 'smuggling', in relation to
F goods, means any act or omission which will render such goods
  liable to confiscation under Section 111 or Section 113 of the
  Act.

        8. Section 11 of the Act enablec; the Central Government
   to prohibit importation or exportation of goods either absolutely
 G or subject to conditions as specified in the notification, the
   import or export of the goods of any specified description.
   Section 11A to 11G speaks of detention of illegally imported
   goods and prevention of the disposal thereof. Section 12 of the
   Act is the charging Section. Under this Section, the duty is
 H leviable on all imported goods. Val •ation of the imported goods
 COMMNR. OF CUSTOMS (PREVENTIVE) MUMBAI v. 951
     MIS. M. AMBALAL & CO. [H.L. DATIU, J.]

 is done as provided under Section 14 of the Act. Section 25          A
 of the Act empowers the· Central Government to issue
 notifications exempting generally either absolutely or subject to
 !lUCh conditions as specified in the notification, goods of any
 specified description from the whole or any part of the Customs
-Act leviable thereon. The definition of imported goods has to        s
 be read along with Section 111 of the Act which deals with
 goods brought from place outside India. Section 111 of the Act
 provides for confiscation of goods and conveyances and
 imposition of penalties. Section 111 (d) of the Act provides that
 any goods which are imported or attempted to be imported or          c
 are brought within Indian Custom Waters for the purpose of
 being imported, contrary to any prohibition imposed by or under
 this Act or any other law for the time being in force, shall be
 liable for confiscation. Section 112 of the Act provides for
 penalties for improper importation of goods.
                                                                      D
      9. The Central Government, in exercise of its power under
Section 25(1) of the Act, has issued Notification No.247-Cus.
dated 02-08-1976 exempting certain articles from payment of
duty. For better understanding the lis between the parties, the
notification is extracted. It reads as under :-                       E

     Exemption to raw pearls, rubies, emeralds and
     sapphires, rough diamonds, etc.- In exercise of the
     powers conferred by sub-section (1) of section 25 of the
     Customs Act, 1962 (52of1962), the Central Government,            F
     being satisfied that it is necessary in the public interest so
     to do, hereby exempts each of the articles specified in
     column (2) of the Table annexed hereto and falling within
     Chapter 71 of the First Schedule to the Customs Tariff Act,
     1975 (51 of 1975) when imported into India from the              G
     payment of so much of the duty which is specified in the
     said First Schedule, as is in excess of the rate of duty
     mentioned in the1 corresponding entry in column (3) of the
     said Table.

                                                                      H
      952    SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.


 A
                                   TABLE
            SI. No    Description of article                   Rate of
                                                               duty

 B          (1)                     (2)                        (3)

            1.        Raw pearls, other than cultured        . Nil
                      pearls·

 c          2.        Rubies, emeralds and sapphires,          Nil
                      unset and imported uncut
            3.        Rough diamonds                           Nil


 D           10. It is settled law that the notification has to be read as
       a whole. If any of the conditions laid down in the notification is
       not fulfilled, the party is not entitled to the benefit of that
       notification. The rule regarding exemptions is that exemptions
       should generally be strictly interpreted but beneficial exemptions
       having their purpose as encouragement or promotion of certain
,E
'      activities should be liberally interpreted. This composite rule is
'      not stated in any particular judgment in so many words. In fact,
       majority of judgements emphasize that exemptions are to be
       strictly interpreted while some of them insist that exemptions
       in fiscal Statutes are to be liberally interpreted giving an
  F apparent impression that they are contradictory to each other.
       But this is only apparent. A; close scrutiny will reveal that there
       is no real contradiction amongsf the judgements at all. The
       synthesis of the views is quite clearly that the general rule is
       strict interpretation while special rule in the case of beneficial
  G . 1and promotional exemption is liberal interpretation. The two go
  I

      :very well with each other because they relate to two different
       sets of circumstances.
          11 .. The notification issued by the Central Government in
      exercise of the powers conferred by Section 25(1) of the Act
:H    exempts the articles enumerated in the table annexed when
COMMNR. OF CUSTOMS (PREVENTIVE) MUMBAI v. 953
   MIS. M. AMBALAL & CO. [H.L. DATIU, J.]

imported into India from payment of duty under the Act. The       A
language used in the notification is plain and unambiguous.
Therefore, we are required to consider the same in their
ordinary sense. A construction which permits 9ne to take
advantage of one's own wrong or to impair one's own
objections under a Statute ·should be disregarded. The            B
interpretation should as far as possible be beneficial in the
sense that it should suppress the mischief and advance the
remedy without doing violence to the language.

      12. From the wording of the above exemption notification,
it is clear that the benefit of the exemption envisaged is for    C
those goods that are imported. According to Section 2(25)
'imported goods' has been defined to mean " ... any goods
brought into India l.rom a place outside India but does not
include goods which have been cleared for home
consumption." It is necessary that the above definition is ~ead D
along with Section 11, Section 111 and Section 112 of the Act,
which provide for detection of illegally imported goods and
prevention of the disposal thereof, confiscation of the goods and
conveyances and imposition of penalties respectively. Under
Section 111 (d) of the Act, any goods which are imported E
contrary to any prohibition imposed by or under this Act or any
other law for the time being in force shall be liable for
confiscation. The goods which have been seized in this case
cannot be imported into India without a licence under the Import
Control Act and there is, therefore, a prohibition in law for the F
import of goods except in compliance with the Import Control
Act. It is not the case of the respondent-firm that the goods were
imported with a valid licence and, therefore any import of goods
of whicJ'l importation is prohibited by law, cannot be valid import
under the Act. Goods so imported cannot therefore, be treated G
to be lawfully "imported goods" within the definition of that term
in Section 2(25) of the Act. T~erefore, the respondent was not
entitled to the benefit of the ~otification. The learned counsel
for the respondent. would contend that by virtue of the
Notification No.247-Cus dated 02.08.1976, rough diamonds H
    954    SUPREME COURT REPORTS (2010] 15 (ADDL.) S.C.R.


A   are exempted from payment of duty under the Act and,
    therefore, adjudicating authority was not justified in directing the
    respondent for payment of duty under the Act for release of the
    confiscated goods. We find no merit in the contention. The
    goods become exempted goods provided all the conditions of
B   the notification are fulfilled. If any condition of the notification is
    not fulfilled, goods are not exempted goods. [See Union of India
    Vs. Ganesh Metal Processors Industries- 2003 (151) ELT 21]

          13. In short, question before us is whether goods that are
    smuggled into the country can be read within the meaning of
C   the expression 'imported goods' for the purpose of benefit of
    the exemption notification. We are of the view that 'smuggled
    goods' will not come within the definition of 'imported goods'
    for the purpose of the exemption notification, for the reason, the
    Act defines both the expressions looking at the different
D   definitions given to the two classes of goods: imported and
    smuggled, and we are of the view that if the two were to be
    treated as the same, then there would be no need to have two
    different definitions.

E        14. In order to understand the true meaning of the term
  'imported goods' in the exemption notification, the entire
  scheme of the Act requires to be taken note of. As noted above,
  'imported goods' for the purpose of this Act is explained by a
  conjoint reading of Section 2(25), Section 11, Section 111 and
F Section 112. Reading these Sections together, it can be found
  that one of the primary purposes for prohibition of import
   referred to the latter is the prevention of smuggling [See section
   11 (2)(c)]. Further, in the light of the objects of the Act and the
   basic skeletal framework that has been enumerated above, it
G is clear that one of the principal functions of the Act is to curb
  the ills of smuggiing on the economy. In the light of these
   findings, it would be antithetic to consider that 'smuggled
   goods' could be read within the definition of 'imported goods'
  _for the purpose of the Act. In the same light, it would be contrary

H
 COMMNR. OF CUSTOMS (PREVENTIVE) MUMBAI v. 955
     M/S. M. AMBALAL & CO. [H.L. DATTU, J.]

to the purpose of exemption notifications to accord the benefit     A
meant for imported goods on smuggled goods.

        15. The Tribunal has relied on the decision of this Court in
  the case of Associated Cement Companies v. Commissioner
  of Customs, [2001 (128) ELT 21 (SC)] to extend the benefit of B
  the exemption notification on the respondent-firm, despite the
  fact that the goods that were in question were not smuggled
  goods. In the case of Associated Cement Companies Ltd.
  (supra), the question that fell for consideration was whether
  customs duty was leviable on technical material supplied in the C
 form of drawings, manuals and computer disc. etc. The further
  question was that if customs duty was leviable, how it was to
  be valued. While answering the issue, this Court has observed
  that Section 12 of the Act provides that the duties of customs
  shall be levied at such rates as may be specified under the
  Customs Tariff Act. When the Customs Tariff Act itself provides D
  that the import of drawings and designs under Heading
  No.49.06 is 'free', it must follow that these drawings and
  designs, though goods were not chargeable to duty. In our
  considered view, this decision would not assist the respondent
  herein. In the present case, as we have already stated that the E
  notification exempts certain articles when imported into India
  from payment of duty under the Act. The import must be valid
  and in accordance with the provisions of the Act. In the present
. case, it is the finding of the Bombay High Court that the
  respondent-firm had imported diamonds of foreign origin F
 without a valid licence and that finding has become final.
  Therefore, we agree with the learned senior counsel Sri R.P. ·
  Bhatt on this aspect. The Tribunal, in our view, erred in holding
  that the situation was covered by the case of Associated-
 Cements Company (supra.) decided by this Court.                     G-

 .   16. The other two issues wh)ch were ar!Jued by the 1 -
     /    I   . I                                               •

respondent and the revenue before the Tribunal and same was
not an_swered since the Tribunal allowed the assessee's appeal
by extending the benefit of the exemption notification to the
                                                                    H
    956      SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.


A   respondent-firm. We are of the view that these issues now
    require to be considered by the Tribunal. Accordingly, while
    setting aside the order passed by the Tribunal, we remand the
    matter to the Tribunal to consider those issues after affording
    personal hearing to both the parties. The appeal is disposed
B   of accordingly. No order asio costs.

    B.B.B.                                   Appeal disposed of.I