MIS. JAIN EXPORTS PVT. LTD. AND ANR.versusUNION OF INDIA AND ORS.

             MIS. JAIN EXPORTS PVT. LTD. AND ANR.                              A
                              v.
                     UNION OF INDIA AND ORS.

                            AUGUST 14, 1996

           [S.P. BHARUCHA AND S.B. MAJMUDAR, JJ.]                              B

      Customs Act, 1962-Section 25(2}-Claim of exemption u11dei-Mai11-
tai11ability-lmport of liquid caustic soda-Levy of duty-Exemption granted
in favour of State Chemicals and Phannaceuticals Coporation by reducing
rate of custom duty levied 011 them-Legality of                                c
      Practice and Procedure-U11de1taki11g given to Court-Not an obliga-
tion imposed by court-Acting upon its own undertaking to Court-No equity
in favour of the party giving iHt is not a special or peculiar circumstance.

      The appellant imported liquid caustic soda in bulk, on which Cos-        D
toms, auxiliary and countervailing duty was payable at the aggregate rate
of 92.5 percent. The respondents, State Chemicals and Pharmaceuticals
Corporation of India Ltd. were required to pay duty on import of caustic
soda only at the rate of 10 percent because of an exemption granted to
them in public interest u/s. 25(2) of Customs Act. The appellants filed a      E
writ petition challenging it as discriminatory while claiming grant of such
exemption. The High Court dismissed the writ petition. Hence this appeal.

       The appellants submitted that special circumstances favoured them
 in that interim order passed on the appellants by this Court on the
appellant's application for the stay of recovery of the difference in duty,    F
obliged them to sell the caustic soda at the price that did not take duty at
the rate of 92.5 percent into account as appellants were permitted to clear
 the quantity of caustic soda on the condition that they furnished security
to the satisfaction of the Collector of Customs for the difference in duty
 between 10 percent and 92.S percent, and, in the event that the Collector
was not satisfied with such security, the appellants furnished a bank          G
guarantee for that difference. The appellant undertook 'not to sell canstic
soda imported nuder the licence at the rate higher than Rs. 5132 only per
M.T. Ex-godown which is represented by the State Chemicals and Phar-
maceuticals Corporation of India Ltd. as the price at which they had sold
the quantity of caustic soda imported by them'. Appellants alleged that an     H
                                    673
    674                   SUPREME COURT REPORTS [1996) SUPP. 4S.C.R.

A   obligation had been imposed by this Court upon the appellant not to sell
    the caustic soda at more than Rs. 5132 per metric tonne and they had been
    unable to cover the balance 82.S percent of duty and therefore, an equity
    arose in favour of the appellant by reason of the interim order and they
    should be permitted to pay as duty only 10 percent as provided under its
    terms.
B
            Dismissing the appeal with costs, this Court

          HELD : 1.1. The interim order was passed upon the application for
    stay of recovery of the difference in duty made by the appellants. If the
C   appellants found the condition imposed by the order unacceptable, they
    could have sold the caustic soda at a price higher than Rs. 5132 per metric
    tonne and paid duty thereon at the rate of 92.5 percent after applying to
    this Court to relieve them of their undertaking. The appellants acted upon
    the interim order knowing full well that if the appeal was decided against
    them they would be required to pay duty at the rate of 92.5 percent. Acting
D   upon the interim order created no equity in favour of the appellants, nor
    were these any special or peculiar circumstances. [678-B-C]

           1.2. An undertaking given to" Court is not an obligation imposed by
    the Court. It is a promise voluntarily made to the Court. Actin11 upon its
    own undertaking to court creates no equity in favour of the party giving
E   it, nor is it a special or peculiar circumstance. [678-D]

          1.3. Should a court come to the conclusion that an exemption is ·
    arbitrary or discriminatory or violative of Article 14, it may strike the
    exemption down but it cannot widen its scope so as to cover those it finds
F   have been discriminated against. [678-E]

        M. Jha11gir Bhatusha & Ors. v. U11io11 of llldia & Ors., [1989] Supp. 2
    SCC 201 and State of M.P. v. Moha11 Si11gh, [1995] 6 SCC 321, relied on.

            CIVIL APPELLATE JURISDICTION : Civil Appeal No. 884 of
G   1980.

            From the Judgment and Order dated 18.4.80 of the Delhi High Court
    in C.W. No. 351 of 1980.

         G.K. Raman, D.K. Garg, N.D.B. Raju and P. Parmcswaran for the
H   Appellants.
          JAIN EXPORTS PVf. LTD. v. U.0.1. [BHARUCHA,J.)                675

      AK. Ganguli, AS. Rao, Sushi! Kr. Jain for the Respondents.               A

      The Judgment of the Court was delivered by

      BHARUCHA, J. The correctness of order of the High Court of Delhi
dismissing the writ petition filed by the appellants aefore it is under
challenge.                                                                     B

       The appellants imported liquid caustic soda in bulk, on which Cus-
toms, auxilliary and countervailing duty was payable at the aggregate rate
of 92.5 per cent. The State Chemicals and Pharmaceuticals Corporation of
India Ltd. (the 3rd respondents) also imported caustic soda but were           C
required to pay duty thereon only at the rate of 10 per cent because of an
exemption granted to them in the public interest under the terms of Section
25(2) of the Customs Act. The writ petition was filed by the appellants on
the ground that there was discrimination; the appellants were also entitled
to the exemption granted to the 3rd respondents. The writ petition prayed      D
for the grant of such exemption; and, in the alternative, that the exemption
in favour of the 3rd respondents should be declared null and void.

      It is not now in dispute that the case would stand covered by the
judgment of this Court in M. Jhangir Bhatusha and 01'. v. Union of India
& Others, (1989] Supp. 2 S.C.C. 201, but for the appellant's argument that     E
there were special or peculiar circumstances which created an equity in its
favour.

      Learned counsel for the appellants relied upon the following passage
in Jhangir Bhatusha's case :
                                                                               F
        "13. First, as to the contention that both the reasons set forth in
        the exemption notifications under Section 25(2) of the Act are
        without foundation. It seems to us that the two reasons set forth
        in the exemption notifications can constitute a reasonable basis for
        those notifications. It does appear from the material before us that G
        international prices were fluctuating, and although they may have
        shown a perceptible fall there was the apprehension that because
        of the history of fluctuations there was a possibility of their rising
        in the future. The need to protect the domestic market is always
        present, and therefore encvuragement had to be given to the H
    676                SUPREME COURT REPORTS [1996] SUPP. 4 S.C.R.

A         imports effected by the State Trading Corporation by reducing the
          rate of customs duty levied on them. This involved a long term
          perspective, since the exclusive monopoly to import these edible
          oils was now entrusted to the State Trading Corporation. What
          appears to have dominated the policy of the government in issuing
B         the exemption notifications was the consideration that the domestic
          prices of vanaspati should be maintained at reasonable levels. It
          cannot be doubted that the entire edible oil market is an integrated
          one, and that it is not reasonable to treat any one of the edible oils
          or vanaspati in isolation. It is a well accepted fact that vanaspati
          manufacturers constitute a powerful organised sector in the edible
c         oil market, and a high vanaspati price would encourage an un-
          authorised diversion of the edible oils to vanaspati manufacturing
          units, resulting in a scarcity in the edible oil market, giving rise to
          erratic prices and depriving consumers of access to edible oils. The
           need for preventing vanaspati prices ruling high was also to prevent
D          people normally using vanaspati rom switching over to other edible
           oils, thus leading to an imbalance in the oil market. An overall view
           made it necessary to ensure that domestic prices of vanaspati
           remained at reasonable levels. To all these considerations the
          learned Attorney General has drawn our attention, and we cannot
E          to say that they are not reasonably related to the policy underlying
           the exemption orders. So that the government would have sufficient
           supplies of edible at hand in order to feed the market, the learned
           Attorney General says, it was considered desirable and in the public
           interest to reduce the rate of customs duty to 5 per cent on the
F          Imports made by the State Trading Corporation. Now it is the
           Central Government which has to be satisfied, as the authority
           appointed by Parliament under Section 25(2), that it is necessary in
           the public interest to make the special orders of exemption. It has
           set out the reasons which prompted it to pass the orders. In our
G          opinion, the circumstances mentioned in those notifications cannot
           be said to be irrelevant or unreasonable. It is not for this Court to
           sit in judgment on the sufficiency of those reasons. The limitations
           on the jurisdiction of the court in cases where the satisfaction has
           been entrusted to executive authority to judge the necessity for
H          passing orders is well defined and has been long accepted.
            JAIN EXPORTS PVf. LTD. v. U.0.1. [BHARUCHA, J.]                677

           14. It is true that the State done the robes of a trader when it enters A
           the field of commercial activity, and ordinarily it can claim no
           favoured treatment. But there may be clear and good reason for
           making a departure. Viewed in the background of the reasons for
           granting a monopoly to the State Trading Corporation, acting as
           an agent or nominee of the Central Government in importing the
                                                                                   B
           specified oils, it will be evident that policy considerations rendered
           it necessary to make consumation of that policy effective by im-
           posing a concessional levy on the imports. No such concession is
           called for in the case of the private importers who, in any event,
           are merely working out contracts entered into by them with foreign
           sellers before December 2, 1978."                                      c
      Learned counsel for the appellants submitted that special cir-
cumstances favoured that appellants in that the interim order passed by
this Court on 23rd April, 1980, obliged the appellants to sell the canst' c
soda at a price that did not take duty at the rate of 92.5 per cent into         D
account.

      By the said interim order on the appellant's application for stay of
recovery of the difference in duty, the appellants were permitted to clear
the quantity of caustic soda stated therein on the condition that they
furnished security to the satisfaction of the Collector of Customs, Bombay,       E
for the difference in duty between 10 per cent and 92.5 per cent, and, in
the event that the Collector was not satisfied with such security, the
appellants furnished a bank guarantee for the said difference. The interim
order recorded that the appellants undertook "not to sell caustic soda
imported under the aforesaid licence at a rate higher than Rs. 5132 only          F
per M.T. Ex-godown, which is represented by the counsel for State Chemi-
cals and Pharmaceuticals Corporation of India Limited as the price at
which they have sold the quantity of caustic soda imported by them.''

      According to learned counsel for the appellants, as obligation had
been imposed by this Court upon the appellants not to sell the caustic soda G
at more than Rs. 5132 per metric tonne. The appellants had complied with
that obligation. Consequently, they had been unable to realise from the
purchasers of the caustic soda a price sufficient to cover the balance 82.5
per cent of duty. An equity arose in favour of the appellants by reason of
the interim order and they should be permitted to pay as duty only 10 per H
    678                   SUPREME COURT REPORTS [1996] SUPP. 4 S.C.R.

A   cent as provided under its terms.

           In the first place, the interim order was passed upon the application
    for stay of recovery of the difference in duty made by the appellants. If the
    appellants found the conditions imposed by the order unacceptable, they
    could have sold the caustic soda at a price higher than Rs. 5132 per metric
B   tonne and paid duty thereon at the rate of 92.5 per cent after applying to
    this Court to relieve them of their undertaking. The appellants acted upon
    the interim order knowing full well that if the appeal was decided against
    them they would be required to pay duty at the rate of 92.5 per cent. Acting
    upon the interim order created no equity in favour of the appellants, nor
c   are these any special or peculiar circumstances.

          In the second place, an undertaking given to Court is not an obliga-
    tion imposed by the Court. It is a promise voluntarily made to the Court.
    Acting upon its own undertaking to court creates no equity in favour of
    the party giving it, nor is it a special or particular circumstance.
D
          In the third place, the passage from the decision in Jhangir
    Blzatusha's case does not assist the appellants.

          In the fourth place, should a court come to the conclusion that an
    exemption is arbitrary or discriminatory or violative of Article 14, it may
E   strike the exen1ption down but it cannot widen its scope so as to cover
    those if finds have been discriminated against. Reference in this behalf may
    be made to the judgment in State of M.P. v. Mohan Singh, [19QS] 6 S.C.C.
    321, to which one of us (S.P. Bharucha, J.) was a party. Paragraph 6 is
    self-explanatory :
F
             "6. Here we part company with the High Court. Having come to
             the conclusion that the gran\ of special remission to Scheduled
             Caste and Scheduled Tribe prisoners was unlawful, the proper
             course to adopt should have been to strike it down. It was beyond
             the High Court's power to expand the reach of the remission so
G            as to give the benefit of it to the writ petitioner, who did not belong
             to the Scheduled Castes or Scheduled Tribes. The power to grant
             the remission lay with the State. If the power was improperly
             exercised, the High Court could quash the exercise. The High
             Court could not, in effect, grant a general remission where the
H            State had intended it to be restricted."
          JAINEXPORTSPVf.LID.v. U.O.I.[BHARUCHA,J.J                    679

       Before we part with the appeal we should mention that it had once      A
been allowed and that judgment and order was set aside on a review
petition filed by the 1st. respondents.

       The appeal is dismissed, with costs. The costs payable by the appel-
lants to the l't and 2nd respondents are quantified at Rs. 25,000 and to
the 3rd respondent at Rs. 5,000.                                              B
R.A.                                                    Appeal dismissed.