Holding

The goods were "prohibited" within the meaning of s.2(33) of the Customs Act and the confiscation under s.113(d) and penalty under s.114 were fully justified.

Summary

MJ Exports Ltd., a recognised trading house, imported haemodialysers from West Germany under an Open General Licence (OGL) for "stock and sale" and cleared them for "home consumption" free of duty. The goods were repacked in India and exported to the USSR. Customs detained the goods, deeming the re‑export impermissible without specific approval, and imposed confiscation under s.113(d) and a penalty under s.114 of the Customs Act. The appellant argued that the Customs Act and the Import‑Export Policy permitted re‑export and that the goods were not "prohibited". The Supreme Court held that the goods fell within the definition of "prohibited goods" under s.2(33) and that the confiscation and penalty were justified. The appeal was dismissed, with each party bearing its own costs.

Issues considered

The legality of re‑exporting goods imported under an Open General Licence cleared for "home consumption".
Whether haemodialysers imported under OGL constitute "prohibited goods" under s.2(33) of the Customs Act.
Whether the confiscation under s.113(d) and penalty under s.114 of the Customs Act are justified.
Whether the terms of the Import‑Export Policy and OGL implicitly prohibit re‑export of life‑saving equipment.
Whether the exporter needed prior permission from the Chief Controller of Imports and Exports before export.
Whether the Export Control Order, 1988, restricts export of the goods in question.

Legislation cited

Bill of Entry (Forms) Regulations, 1976
Customs Act, 1962s. 113(d), s. 114, s. 2(33), s. 25, s. 45, s. 51, s. 53, s. 54, s. 59, s. 68, s. 69, s. 74
Exports (Control) Order, 1988
Foreign Exchange Regulation Act, 1973
Import‑Export Policy, 1988‑91
Imports and Exports (Control) Act, 1947
Imports (Control) Order, 1955

Subjects

customs dutyopen general licencere‑exportprohibited goodshome consumptionimport‑export policyconfiscationpenaltylife‑saving equipmenthaemodialysers

Judgment

A MJ. EXPORTS LTD. AND ANR.
'r
v.
CUSTOMS, EXCISE AND GOLD (CONTROL) APPELLATE
TRIBUNAL, BOMBAY AND ORS.

MAY 14, 1992
B
[S. RANAGANATHAN, V. RAMASWAMI AND YOGESHWAR
DAYAL, JJ.]
~
Customs Act, 1962: Sections 2(33), 25, 45, SJ, 53, 54, 59, 68, 69, 74,
c 113(d) & 114.
-
Import-Export Policy 1988-91: Paras 22, 23, 24(1), 174(1}-Appendix
6--List 2, Item 36--List 3, Item 37.

Imports (Control) Order, 1955: Clauses JO (C), 11(1) (dh 11(4}- ~
D Schedules /,II, III & V.

Exports (Control) Order, 1988: Clause 3,15 (g).

Bill of Entry (Forms) Regulations, 1976: Regulation 3-Forms /,II and
III
E ~-
"Haemodialyser''-Life Savings Equipment-Exemption from Customs
duty-Import under Open General Licence-Customs Clearance obtained for
"Home Consumption''-Goods repacked and'' exported-Confiscation and
Penalty Order-Validity of-Held the· export of goods was impliedly bamd
under the conditions of Open General Licence-Goods exported were ---
F "Prohibited goods"-Confiscation and penalty order held justified.

Interpretation of statutes-Provisions should be construed harmonious-
/y making it meaningful in the context.

Practice and Procedure-Raising a fresh plea involving investigation of
•
G facts at t~e appellate stage-Permissibility of.

Words & Phrases : y--
"Home Consumption''-"Stock and sale"-Meaning of.

H The Imports (Control) Order, 1955 provides that the items of goods
300
MJ. EXPORTS v. CUSTOMS EXCISE TRIBUNAL 301

set out in Schedule 1 to the said order cannot be imP,orted except under a A
Licence or Customs cleara.nce permit. Clause 11(4) of the Order, however,
empowers the Central Government to issue an Open General Licence
(OGL) permitting the import of such goods subject to the conditions
specified. Appendix 6 to the Import-Export Policy 1988-91 deals With
categories of goods that can be imported under an Open General Licence B
and lists out the categories of importers, the items allowed to be imported
by them and the conditions governing such importation. Item 36 of this
Appendix permits the import, under OGL, "by all persOJ!S" of Life- saving
equipment as per List 2 of the Appendix and their spares. List 2 which
contains the List of life saving equipment allowed for import under OGL

- includes, as item no. 27, "Haemafiltration instrument/haemo-dialysers and
~ccessories/spares thereof. By a Notification issued by the Government of
India under Section 25 of the Customs Act, 1962 the Haemodialysers and
accessories thereof were exempted from duty. The Haemodialysers are,
C

however, not included in Schedules I and III of the Exports (Control)
Order, '1988, clause 3 of which prohibits or restricts the exports of items D
' of goods specified in the two s.chedules.

The appellant, a recognised trading house carrying on business as
Exporters, imported Haemodialysers from West Germany under Open
General Licence and obtained the import clearance of goods from Bombay
Customs House for "Home consumption" free of duty by relying on the E
notification granting exemption from custom duty. After clearance the
goods were taken to Ankleshwar factory at Gujarat where they were

- re-packed and presented to kandla port for export to U.S.S.R. The custom
authorities detained the goods for examination because it was of the
opinion the re-export of goods imported under Open General Licence was F

Ill not permissible except with specific approval of Import-Export authorities.
During the pendency of the proceedings before the Collector, the appellant
obtained a No Objection Certificate of the Reserve Bank of India for export
on "humanitarian grounds" that the goods wt;re needed for the help of the
victims of the Armenian Earthquake in Russia and consequently the goods •
were exported. G

The Customs authorities, with the appellant's concurrence, made a
reference to the Chief Controller of Imports and Exports under para 24.1
of the Import-Export policy who clarified that the imports under the OGL
and certain other licences were entirely meant for use within the country H
)

302 SUPREME COURT REPORTS [1992) 3 S.C.R.

A and therefore cannot be allowed for re-exports as such.

By its order dated 22.10.1990 the Collector of Customs held that the
goods exported were liable to confiscation under section 113(d) of the
Customs Act and imposed a penalty of Rs.SO lakhs under section 114.
However, the Collector held that the goods imported were not liable to
B import duty~ The appellant preferred an appeal before the Central Excise
& Gold Control Appellate Tribunal which was dismissed.

In appeal t6 this Court it was contended on behalf of the appeallant
that: (1) The confiscation or the penalty can be justified only if the goods
C · fall under description in section 113(d) of the Customs Act. The appellant
was entitled, as a matter of right, to export the goods beeause the goods
were not included in Schedule I or III to the Export Control Order nor
was the export of goods prohibited by or under any other law for the time
-
being in force; (2) Appendix 6 of the Import and Export Policy imposes no
D specific conditions that the Life Saving equipment should be used in India
and should not be exported. The words 'stock and sale' are very wide and
there is no justification to restrict them to mean only sales within the
country; and (3) The exports were made in pursuance of the mutual trade
agreement between Government of India and U.S.S.R.; considered benefl·
cial to both countries and that this should be considered sufficient to
E justify the export.

On behalf of the Revenue, it was contended that: (1) Under the
provisions of the Customs Act clearance of.goods can only be for "home
consumption" or "warehou~ing" and· the import of goods just for the
F purpose of export is not permitted under the Act. The appellant cleared
the goods for home consumption and so they were to be utilised in India
-
and it was not permissible to export the goods; (2) Under the Terms of the IC
Open General Licence the goods imported were to be used in India and
not to be exported. Permitting export would defeat the intent of placing the
0
goods under O.G.L. because the duty free import was permitted so that
G life saving equipment and medicines are available for use in the country
and not to enable a private party to make profit by their export; and (3)
The goods in question were "prohibited goods" under section 2(33) of the
Customs Act. Therefore, the imposition of penalty was justified. "r--
H Dismissing the appeal, this Court,
M.i. EXPORTS v. CUSTOMS EXCISE TRIBUNAL 3')3

HELD: 1. The Customs Act does not prohibit the export of imported A
1

goods. There are provisions which indicate that export of imported goods
is very much envisaged under the statute. The provisions contained in
section 74 fully reinforce this view. Para 174(1) of the Import Export
Policy 1988-91 also impliedly recognises that imported goods can be
re-exported. (315 E, 317 B-D]
B
2. The goods imported into India have to be cleared from the
customs area for home consumption or warehousing and this is done by
presenting a bill of entry under section 46. The terms of this section read i
with Regulation 3 and Forms I, II or Ill appended to the Bill of Entry
(Forms) Regulations, 1976, make it clear that there are three forms of the C
bill of entry: for home-consumption, for warehousing and for. ex-Bond
clearance for home consumption. The presentation of a bill of entry for
home consumption only means that the importer does not intend to
warehouse the goods. The form of the Bill of Entry prescribed under the
Act does not require any declaration from the importer as to the purpose
for which the imported goods are required or that they will be used or , D
sold only in India. [314 C-D, 315 A~B] ·

3. The expression 'home consumption' has also, in the context, no clear
or definite meaning and raises a lot of conundrums if literally interpreted to
mean that imported goods should always be consumed in India. The uncer-
tainities in the connotation of the expression 'home consumption' preclude E
one from giving an interpretation to this expression that the imported goods
cannot be at all exported and incline one to hold that, in the context, it is ,

- only used in contrast to the expression 'for warehousing'. (315 B-D] '

4. The Customs Act provides that that goods which are cleared from F
the customs area for warehousing can be cleared from the warehouse for
home consumption under section 68 or for exportation under section 69. nae '
suggestion that if an importer intends to export the imported goods, he
should clear them for warehousing and then prOceed in terms of section 69
cannot be accepted because that would mean that imported goods can be
re-exported after being warehoused for some time even a day or a few hours G
• but that they cannot be exported otherwise. Therefore, it would not be
correct to insist that an importer must clear goods for warehousing and then
export them by clearing from the warehouse. Whether to deposit the goods
in a warehouse or not is an option given to the importer.
(315 E-F, 316 E, 316 Ai H
)

304 SUPREME COURT REPORTS (1992) 3 S.C.R.

A 4.1. There is nothing in the provisions of the Act to compel an "f""""
importer even before or when importing the goods, to make up his mind
whether he is going to use or sell them in India or whether he proposes to
re-export them. Again, there may be cases where be bas imported the goods
for use or sale in India but sub~quendy receives an attractive offer which
B necessitates an export. It would make export trade difficult to say that he
cannot accept the export offer as the goods, when imported, had been
cleared for home consumption. Section 69, therefore,' should be only read
as a provision setting out the procedure for export of warehoused goods -.
and not as a provision which makes warehousing an imperative pre-con-
dition for exporting the imported goods. (316 C-E]
c
5. Clause 15(g) of the Export (Control) Orders, 1988 cannot be
'interpreted to mean that imported goods cannot be exported unless they
are cleared, at the time of import, under a bond for re- export. (324 E]
-
6. It will not be correct to say that since the goods do not fall under
D clause ll(i)(d) of the Import (Control) Order, 1955, their export was not
permitted. To say that goods bonded for re-export will not be affected by
the provisions of the order does not mean that goods, not so bonded,
cannot be exported at all. Their export can be interdicted only if there is
some other express or implicit prohibitfon in clause 3 of the Export
E Control Order or otherwise. (324 H, 325 A-8)

7. Prima facie the words "stock and sale" inay be, generally speaking,
wide enough to comprehends sales inside as well as outside the country and
that their scope should not be restricted unless such a restriction can be read
into the terms of the OGL itself. Whatever may be the position in regard to
F the other lists in Appendix 6 to the l,mport-Export Policy, 1988-91 the items
of goods enumerated in list no.2 of that Appendix stand in a class of their
own. There is sufficient indication in the heading given to the List to show
that the import of these items into India is permitted only because such
life-saving equipment is required for use in the country. The use of the words
G "stock and sale" shows only that the items are not restricted to use by the
importer but o.m be transferred by him to another. But' it is not proper to
read them as permitting a sale of goods outside the country. Note (44) in
Appendix 6 also carries a mild indication that the equipment permitted to be
imported is only for the purposes of use in the country. (320 B·FJ

H Janak Photo Enterprises (1990) 49 E.L.T. 339, distinguished.
MJ. EXPORTS v. CUSTOMS EXCISE TRIBUNAL 305

.......,..., 7.1. Although there is no express prohibition, the re-export as such A
of items of goods specified in list 2 of Appendix 6 to Import-Export Policy
1988-91 and imported into India is prohibited by necessary implication by
the language of, and the scheme underlying, the grant of OGL in regard
to them. It is difficult to agree that the import-export policy envisages the
re-export of goods belonging to this category. The opinion of the CCIE is
B
also to the same effect. (321 BJ

7.2. The appellant had obtained the import of the goods free of duty
by relying on tbe notification granting exemption from customs duty. It is
obvious that it could not have been the intention of the legislature to grant
exemption from customs duty in respect of vital goods ·of the nature in c
question in order that an importer may make profit by selling them
abroad. The notification is, therefore, relevant for the issue before us to
the limited extent that it lends supports to the construction of List 2 or
-+ Appendix 6. (322 F-HJ
D
8. The Court should construe a provision in a harmonious way to
make it meaningful having regard to the context in which it appears. In
this case the language used is being interpreted for giving content and
meaning to the classification and heading used in the order permitting
imports under OGL in certain cases in the context of the provisions of tbe
--')--- Imports and Exports Control Act, 1947, as well as the orders and notifica- E
lions issued thereunder. [322 C-DJ

-- Hansraj Gordhandas v. H.H. Dave, Assistant Collector of Central
Excise & Customs, Surat & Two Ors., [1969J 2 S.C.R. 253; State of M.P. v.
G.S. Dall and Flour Mills, (1991) 187 I.T.R. 478 S.C.; Union of India & Anr. F

-- v. Deoki Nandan Aggarwal, (1991) 3 J.T.(S.C.) 608 and Swjit Singh Kalra ~·
Union of India, [1991J 2 S.C.C. 87, referred to.

9. Clause 10-C of the Imports (Control) Order enables the
authorities to interfere in any individual case where they find that the
purpose of the import is not being achieved. It does not impose an G
obligation on an importer to seek the directions or the permission of the
--( CCIE before exporting the goods if otherwise permissible. While clause
11(4) of the order makes clause 10 C applicable to the subject imports, it
releases them from the application of the other restrictions and conditions
on imposed by the Import Control Order. [325 G-H, 326 A·BJ H
306 SUPREME COURT REPORTS (1992) 3 S.C.R.

A However, clause 10 C is of some indirect assistana! in the present case.
The CCIE's opinion on the Import and Export Control Order is final and
binding. In view of this, when the CCIE came to know that the appellant was
~king to export the goods, be could have intervened and issued directions
under clause 10 C e~ther permitting the export of the goods to the U.S.S.R.
B or directing them to be sold to needy hosp;tats or other parties in India. He
could have effectively stopped the export of the goods. This shows that the
export of the goods is not free or unrestricted. (326 C·E]

10. Since the goods imported were intended for use in India the
circumstance that the appellants secured a no objection certificate of the

-
C RBI for export "on humanitarian grounds" is of no assistance. (323 E·F]

11. The mere fact that mutual trade was allowed between the two
countries is not enough to bold that even goods of this type • which bad
been allowed to be imported with a specific end in view • could be exported. A--
The export of such goods may also enure to the benefit of India indirectly
D but, in the absence of anything to show that the goods in question con·
stituted one of the categories of goods specifically envisaged by the mutual
trade agreement, it is not possible to override the prohibition implicit in
the Import regulations. (324 A·B]

E 12. The goods in question were "prohibited" goods within the mean·
ing of S.2(33) and their confiscation under S.113(d) and the penalty under
section 114 of the Customs Act ·were fully justified. (322 E]

CIVIL APPELLATE JURISDICTION: Civil Appeal No." 4105 of
1991.
F
From the Judgment and Order dated 14.6.1991 ofthe Custom, Excise
& Gold (Control) Appellate Tribunal, Bombay in C-598/90-BOM. ~

R.K. Habbu, B.R. Agrawala, Dr. Sumant Bhardwaj and Sunil Goyal
for the Appellants.
G
A.K. Ganguli, A. Subba Rao and P. Parmeshwaran for the Respon-
dents.

The Judgment of the Court was delivered by

H RANGANATHAN, J. Import Trade Control was introduced in India
MJ. EXPORTS v. CUSTOMS EXCISE TRIBUNAL (RANGANA1HAN, J.] ' 3(J7

as a war-time measure in the early stages of the Second World War, initially A
---r- by a notification issued in exercise of the powers conferred under the
Defence of India Rules. The primary object of the notification w¥ to
collServe foreign exchage resources and restrict physical imports so as to
reduce the pressure on the limited avail~blc shipping space. To start with,
the import of only 68 commodities, mainly consumer items, were brought
under control. Subsequently, as foreign exchange resources came upder
B
pressure, import control was extended to cover other commodities as well.
"1(
Soon after the second world war came to an ~cl, the control of
imports and exports was statutorily provided for. The Imports and Exports

- (Control) Act, 1947 (18 of 1947) 'came into force with effect from 2sth
March, 1947, initially for a period of three years and was extended from
time to time. The Act was substantially amended by the imports and
Exports (Control) Amendment Act, 1976. Section 3 of the Act is relevant
c

'--J for our present purposes. It reads:

"3. Powers to prohibit or restrict imports and exports - (1) The D
Central Government may, by order published in the Official
Gazette, make provisions for prohibiting, restricting or other-
wise controlling, in all cases or in specified classes of cases and
subject to such exceptions, if any, as may be made by or under
~· the order:- E
(a) the import, export carriage coastwise or shipment as ships

-
stores of goods of any specified description;

(b) the btinging into any port or place in India of goods Qf any

-- specified description intended to be taken out of India without
being removed from the ship or conveyance in which they are
being carried.

(2) All goods to which any order under sub-section (1) applies
shall be deemed to be goods of which the import or export has
F

been prohibited under section 11 of the Customs Act, 1962 (52
G
of 1962), and all the provisions of that Act shall have effect
~-~ accordingly.

(3) N9twithstanding anything contained in the aforesaid Act,
the Central Governinent may, by order published in the Official H
)

308 SUPREME COURT REPORTS r1992] 3 S.C.R.

A Gazette prohibit, restrict or impose conditions on the clearance
whether for home consumption or for shipment abroad of any
goods or class of goods imported into India.

Several notifications were issued under s.3 of che above Act from
time to time setting out the lists of-controlled items. At the relevant time
B with which we are concerned, the notification governing imports was the
Imports (Control) Order, 1955 as amended from time to time and the one
governing exports was the Exports (Control) Order, 1988 which came into
force on 30th March, 1988. The broad scheme of the Imports Control )Ir'
Order is that the items of goods set out in Schedule I to the said order
C cannot be imported except under a licence or customs clearance permit
issued in terms of Schedules 111 III and V to the order. Clause 11(4) of the
Order, however, also envisages the issue of an Open General Licence or
Special General Licence by the Central Government permitting the import
of such goods by such persons and subject to such conditions as may be
specified. Clause 3 of the Exports Control Order likewise imposes restric- A~
D tions on exports from the country in the following terms:

"3. Restrictions on export of certain goods - (1) Save· as otherwise
provided in this Order no person shall export any goods of the
description specified in Schedule I, except under and in ac-
E cordance with a licence granted by the Central Government or
by an officer specified in Schedule II.

(2) Notwithstanding anything contained in sub-clause (1) goods

F
specified in Schedule III may be exported on fulfilment of the
terms and conditions speCified therein.

(3) If in any case, it is found, that the value, specificaiton,
-
quality and description of the goods to be exported are not in
conformity with the declaration of the exporter in those
respects or the quality and specification of such goods are not
in accordance with the terms of the export contract, the export
G
of such goods shall be deemed to be prohibited."

The Government of India periodically announces its import-export
policy which remains in force for a specified period subject to such changes
or amendments as the Government may make from time to time. The
H Import-Export Policy of the Government for the period 1988-1991
MJ. EXPORTS v. CUSTOMS EXCISE TRIBUNAL [RANGANATIIAN, J.] 309
)

310 SUPREME COURT REPORTS (1992) 3 S.C.R.

A sible for any person to 1D1port, inter alia, haemodialysers free of import
duty. This is what may be called the import-side of the picture we have to
consider.

Now, we turn to the export angle. We have already referred to clause·
3 of the Exports (Control) Order, 1988. It prohibits or restricts the exports
B of the items of goods specified in Schedules I and III thereto. It is common
ground that Haemodialysers do not figure in either of the these two .
Schedules. The wide liberty granted for exports (particularly to hard cur-
rency areas) of all goods other than a few specified in the above two
Schedules is easily understood in the context of the country's imperative
C need. to boost up its exports and augment its foreign exchange reserves.
Simultaneously, India had also entered into reupee-trade agreements with
U.S.S.R. and certain other countries with view to improving mutual trade
-
between India and these countries. These agreements permitted, subject to
certain monetary limits and other restrictions, exports of various types of
D goods from India to these countries.

The appellant, which is a "recognised trading house", carrying on
business as exporters, saw in these provisions an opportunity to make quick
money. It imported Haemodialysers from West Germany and exported
them to Russia at a profit. We are told that sometime in 1987 he imported
E several sets of such Haemodialysers through Bombay customs and, within
a short interval; exported them to the U.S.S.R. through Bombay customs
without any objection being taken thereto by the customs authorities. This,
apparently, emboldened the appellant to repeat the attempt with some
variation and it is with this second transaction that we are here concerned.
F In May, 1988, the appellant obtained from the Trade Representative of the
U.S.S.R. in India another order for the supply of 53 Haemodialysing
machines (along with spare parts and accessories) manufactured by the
renowned West German company M/s. Fresenins A.G. bearing the trade
name "A-2000C". In pursuance of the above order, the appellant, in ·turn;
placed an order with the West German manufacturers for the import of 53
G Haemodialysers into India through the port of Bombay. The Bombay
Custom House allowed the clearance of the goods on 19.10.88 under OGL
and without payment of customs duty. After clearing the goods, the appel-
lant· took the goods to its Ankleshwar factory at Gujarat where the goods
are claimed to have been subjected to "moisture proof packing, pelletisa-
H tion, fabrication of necessary stand etc." but arguments before us have
MJ. EXPORTS v. CUSTOMS EXCISE TRIBUNAL [RANGANATIIAN, J.) 311 ·

proceeded on the footing - as was also found by the authorities - that A
nothing special had been done to the imported goods and that, in India,
they were merely repacked for the purposes of export. The goods were
then taken to Kandla Port for shipment to the U.S.S.R. and shipping bills
were presented to the Customs Department at Kandla on 2.12.88. The
C.I.F. value of the imports to the appellant was Rs.2,33,91,288 whereas the
B
F.O.B. value of the exports was Rs.3,31,27,600. The appellant thus earned
a profit of Rs.97,36,312 on the transaction.

Eleven shipping bills were presen~ed to the Kandla customs
authorities on 2.12.88. The pro-forma of the bills contained three alterna-
tive descriptions for the goods sought to be exported viz. "free goods/India ·c
Produce to be exported/India Produce", none of which w<-re struck off. On
- examination it was found that the goods were of foreign origin in original
packing and that they had been cleared in October 1988 through Bombay
Customs House "for home consumption" but got repacked at Ankleshwar
and presented for export at Kandla. As the Customs authority was of D
opinion that re-export of goods imported under OGL was not permissible
except with the specific approval of the Import-Export Control authorities
- he subsequently also got this clarified by the Chief Controller of Imports
and Exports - he detained the goods for further examination. The appel-
lant, however, represented that the immediate export of the goods was an
imperative necessity to cater to the victims of the earthquake in Armenia E
and persuaded the authorities to clear the goods for export, subject to the
outcome of the proceedings, on payment of a cash desposit of Rs.6 lakhs,
furnishing a bank guarantee of Rs. 10 lakhs and a bond for the full value
of the goods.
F
On looking further into the matter, the Customs authorities were of
_opinion "that the appellant had contravened the conditions of the
cumstoms notification and so not entitled to its benefit and had also
contravened the provisions of the OGL" and "that they (the goods) ap-
peared to be liable to confiscation under s.11.3( d) of the Customs Act and G
to have rendered themselves liable to a penalty under s.114 of the Customs
· Act". A "show-cause" notice was, therefore, issued on 253.89 and. after
considering the appellant's reply dated 31.7.1989, the Collector of Customs
--(. passed an order on 22.10.1990. He agreed with the appellant that the goods
were not liable to import duty and that, in any event, the Kandia Collector .
of Customs had no jurisdiction to demand customs duty on goods imported H
)

:nz SUPREME COURT REPORTS (1992] 3 S.C.R.

A through Bombay. But, he concluded, : ~
i

"The goods under export were liable to confiscation under
Section 113(d) of the Customs Act. Since the goods have
already been exported, they are not available for confiscation.
By rendering the goods liable to confiscation, M/s MJ. Exports
B have rendered themselves liable to a penalty under Section 114
of the Customs Act. Considering the fact that the goods have
already been exported, I proceed to take action in terms of the
bond, Bank Guarantee and cush deposit furnished by the ex-
po;ter. I therefore impose a penalty of Rs50 lakhs on M/s. MJ.
c Exports. In order to realise this amount I order the appropria-
tion uf the cash deposit furnished by them towards penalty and
direct the Department to invoke the Bank Guarantee furnished
by them immediately. The balance amount shall be paid by M/s.
-
MJ. Exports separately in terms of the bond furnished by
them".
D
The appellant preferred an appeal to the Central Excise & Gold
Control Appellate Tribunal ('the Tribunal') which, by an order dated
14.6.91, dismissed the appeal. The present appeal by Special Leave is from
the Tribunal's order.
E
Sri Habbu, learned counsel for the appellant, contended that, under
s.113(d) read with s.114, the confiscation or the penalty can be justified
only if the subject goods fall under the following description in cl.(d) of
s.113 viz.

F "any goods attempted to be exported or brought within ·the
limits of any customs area for the purpose of being exported,
contrary to any prohibition imposed by or under this Act or any
other law for the time being in force".

G He submits that the appellant was entitled, as a matter of right, to
export the subject goods as they were not included in Schedule I or
Schedule III to the Exports Control· order. According to him, far from
prohibiting the export of the goods in question, the provisions of the
Customs Act actually permit their export. He invited our attention, in
particular, to sections 51, 54, 69 and 74. He submitted that trade agreement
H with the U.S.S.R. also encouraged exports to that country. According to
MJ. EXPORTS v. CUSTOMS EXCISE 1RIBUNAL (RANGANATIIAN, J.] 313

learned counsel, the export is also not "prohibited by or under any other A
--r law for the time being in force". He, therefore, submits that the orders of
confiscation and penalty deserve to be set aside.

On the other hand, learned counsel for the Revenue submits that s.51
of the Act disentitles a person from exporting "prohibited goods", an B
expression defined by s.2(33) of the Act thus:

''prohibited goods" means any goods the import or export of
which is subject to any prohibition under this Act or any other
law for the time being in force but does not include any such

- goods in respect of which the conditions subject to which the
goods are permitted to be imported or exported have been
complied with".
C

According to him, the goods now in question fall within the scope of
this definition for various reasons to be elaborated upon later. In this view, D
he says, ss.54, 69 and 74 do not help the assessee's case in any manner. It
is, therefore, submitted that the provisions of ss.113(d) anJ 114 were rightly
invoked in the present case.

Leaving out of consideration the issue whether the apf>ellant was
entitled to exemption from customs duty on the import of the goods in E
•. question - an issue which was decided in favour of the assessee by the
Collector of Customs and has not been pursued further and is not in issue
before us - the basic and only controversy before us is whether the export
of the subject goods is barred, expressly or by necessary implication, by the
provisions of the Customs Act or any other law in force. ·The Revenue F
bases its case of prohibition on the export of the goods on two grounds. It
__.L
is submitted firstly, that the terms of the OGL under which the goods were
permitted to be imported by any person made it clear beyond doubt that
they were intended to be used in India and not to be exported. Secondly,
it is pointed out, the import clearance of the goods had been granted "for G
home consumption" and not for export. It is urged that the provisions of
the Customs Act make it clear that clearance of imported goods can be
only for "home consumption" or "warehousing"; the import of goods just
for the purpose of export is not envisaged or permitted under its provisions.
Reference was also made to certain provisions of the Foreign Exchange
Regulation Act, 1973 (FERA). H
314 SUPREME COURT REPORTS [1992] 3 S.C.R.

A The second point may be considered first. S.45 of the Act provides
~
that all imported goods unloaded in a customs area shall remain in the I

custody of such person as may be approved by the Collector of Customs
until they are cleared for home consumption or are wareshoused or are
transhipped in accordance with the provisions of Chapter VIII. The third
of these cases is dealt with in Chapter VIII. It is one in which there is, in
B substance, no import of the goods into India for, though technically the
goods enter Indian territory, such entry is only by way of transit through
this country to their real destination. Such goods are mentioned by the
transporter in his "import manifest" and may be transitted in the same
vessel or aircraft or transhipped by a different vessel or aircraft to their
c actual destination: (vide, sections 53 & 54}. Except in the above case, the
goods are actually imported into India and have to be cleared from the
customs area for home consumption or warehousing and this is done by
presenting a bill of entry under section 46. The terms of this section read
-
with Regulation 3 and Forms I, II or III appended to the Bill of Entry
D (Forms) Regulalions, 1976, make it clear that there are three forms of the
bill of entry : for home-consumption, for warehousing and for ex-Bond
clearance for home consumption. Imported goods can, therefore, be
cleared only for home-consumption or warehousiDg and, in this case, there
is no dispute that they were cleared by the appellant under a bill of entry
for home consumption. The argument for the Revenue is that the enact-
E ment, understandably, does not envisage the entry of goods into India for
the mere purpose of being exported again from India in the same form and
without any change. The appellant had purchased the goods from Germany
admittedly for their sale to Russia. It could have effected the transaction
by asking its vendors to consign the goods to sdme Russian destination
F directly or, if it considered it necessary, via an Indian port and, in the latter
case, it couJd have had them transitted or transhipped (without actual
clearance in India) under the provisions of Chapter VIII. The law, however,
does not permit, says State counsel, an import just for the purposes of
export. Even otherwise, the appellant has cleared the goods for home
consumption and so they are to be used or utilised in India; it is not
G permissible for the appellant to export goods cleared for home consump-
tion.

We do not thing that this contention of the Revenue is sound. The
contrast that finds emphasis in the sections as well as the forms above
H referred to is of clearance for home consumption as opposed to clearance
MJ. EXPORTS v. cusroMS EXCISE TRIBUNAL [RANGANATIIAN, J.] 315

for wareshousing. The presentation of a bill of entry for home consumption A
only means that the importer does not intend to warehouse the goods; in
the latter case, he is not required to pay the import duties, if any, imme-
diately (ss.59 and 59A). The form of the Bill of Entry prescribed under the
Act does not require any declaration from the importer as to the purpose
for which the imported goods are required or that they will be used or sold

- only in India. The expression 'home consumption' has also, in the context,
no clear or definite meaning and raises a lot of conundrums if literally
interpreted to mean that imported goods should always be consumed in
B

India. Is it home consumption if the importer does not not use the goods
himself but sells them? At what point of time should the importer make

- up his mind whether he proposes to sell the imported goods in India or
wishes to export them outside? Is the condition infringed if a purchaser of
goods from the importer sells it to a buyer in a foreign country? Will it be
c

permissible for the importer to use the imported goods in the manufacture
of other goods which he proposes to export? All these uncertainties in the
connotation of th... expression 'home consumption' preclude one from I;)
giving an interpretation to this expression that the imported goods cannot
be at all exported and incline one to hold that, in the context, it is only
used in contrast to the expression 'for wareshousing'.

The above general consideration apart, there are other indications in
the statute which show that the Act does not prohibit the export of E
imported goods. The Act provides that that goods which are cleared from
the customs area for warehousing can be cleared from the warehouse for
home consumption (s.68) or exportation (s.69). At first blush, this may
seem to support the Revenue's interpretation that clearance for exporta-
tion and clearance for home consumption are two different things. It is F
---"- . indeed suggested by State counsel that, if an importer intends to export the
imported goods, he should clear them for warehousing and then proceed
in terms of s.69. But a little though would show this interpretation cannot
be correct. In the first place, where an importer, even at the time of the
import purchase has decided to se!I the goods in another country (as in G
the present case), he may, as pointed out earlier, easily ask the goods to
be transitted or transhipped to the country of sale and thus avoid any
necessity for their being at all cleared in India. But where, for one reason
or other\ he wants to import the goods into India and then sell them to the
foreign country or where the importer decides on an export sale only after
he has arranged for the import of the goods into India, the Act prescribes H
)

316 SUPREME COURT REPORTS (1992] 3 S.C.R.

A no form of a Bill of Entry under which he can clear such goods intended ·
'T"'-
for re-export. It would· not be correct to insist that he must clear them for 1
warehousing and then export them by clearing from the warehouse.
·Whether to deposit the goods in a warehouse or not is an option given to
the importer. If he is able to pay the import duties and has his own place
to stock the goods, he is entitled to take them away. But, where he has
B either some difficulty in payment of the duties or where he h~ no ready
place to stock the goods before use or sale, he cannot clear the goods from
the customs area. The warehouse in only a place which the importer, on
payment of prescribed charges, is permitted to utilise for keeping the goods
where he is not able to take the goods straightaway outside the customs
c area. There is nothing in the .provisions of the Act to compel an importer
even before or when importing the goods, to make up his mind whether he
is going to use or sell them in India or whether he proposes to re-export
them. Again, there may be cases where he has imported the goods for use
-
or sale in India but subsequently receives an attractive offer which neces-
D sitates an export. It would make export trade difficult to say that he cannot
accept the export offer as the goods, when importer, had been cleared for
home consumption. S.69, therefore, should be only read as a provision
setting out the procedure for export of warehoused goods and not as a
provision which makes warehousing an imperative pre-condition for ex-
porting the imported goods. The second reason for not reading ss.68 and
E 69 as supporting the Revenue's interpretation is even more weighty. That
interpretation would mean that imported goods can be re-exported after
being warehoused for sometime (even a day or a few hours) but that they
cannot be exported otherwise. Such an interpretation has no basis in logic
or sense and makes mincemeat of the broader principle contended for by
the Revenue that imports are intended for use in the country and not for
F
export. Incidentally, we may observe that even this principle contended for
by.Revenue may itself be of.doubtful validity as it is based on an erroneous
assumption that a re-export of imported goods will always be detrimental
to the country. It is true that, in the present case, the appellant has been
criticised for having utilised· valuable hard currency for the purchases and
C reselling the goods only for rupee consideration. But, conceivably, there
may be cases where an importer is able to import goods from a soft-cur-
rency area and sell them in a hard-currency area earning foreign exchange
for the country. It is also possible to think of cases where, though economi-
cally unremunerative, the exports can be jusitified on consideratiorui of
H
MJ. EXPORTS v. CUSTOMS EXCISE TRIBUNAL [RANGANATHAN, J.] 317

international amity and goodwill such as for example, where the goods are A
exported to a country which is in dire need of help and assistance. The
principle is also non-acceptable on the ground of vagueness as to the extent
of its application to exports made after an interval or after changing several
hands inside the country by way of sale. We are, therefore, unable to read
ss.68 and 69 as supporting the Revenue's contention.
B

- On the other hand, there are provisions which indicate that export
of imported goods is very much envisaged under the statute. The provisions
contained in s.74 fully reinforce this interpretation. Indeed s.74 would be
redundant if the Department's stand that imported goods cannot be ex-
ported were to be accepted as correct. As pointed out by counsel for the : C
appellant, para 174(1) of the Policy which reads:

"No REP benefits are admissible in the case of imported goods
which are re-exported in the same State without undergoing
any processing or manufacturing operations in India."
D
also unpliedly recognises that imported goods can be re-exported as
such; only the exporter thereof cannot claim REP benefits.

This brings us to the consideration of the second issue in this case
.as to whether the attempted export of the goods contravenes any condition
under which the import of the goods was permitted. The Revenue submits 'E
that the object and purpose of putting the goods in question on the OGL
and making it available for import by any person is writ large in the very
heading of the list in which it is included. The import is permitted so that
life saving equipment and medicines are available for use in the country
and not to enable a private party to make profit by their export either F
1

directly or through some one else. To permit such a_ thing will result in
furstrating the very intent of the Government in placing the item on the
OGL and, indeed, going further, and exempting them from import duty. It
is pointed out that, when a doubt regarding the scope of the OGL was
raised, the customs authorities had, with the appellant's concurrence, made
a reference to the Chief Controller of Imports and Exports ( CCIE) under G
para 24.1 of the policy who had "clarified" that the imports under the OGL
and certain other licences "are entirely meant for use within the country
and therefore cannot be allowed for re-exports as such". The policy no
doubt refers to the goods imported under OGL being meant for "stock and '
sale" but this also means only that it is for home consumption and not H
318 SUPREME COURT REPORTS [1992) 3 S.C.R.

A export purposes. It is said that the appellant having agreed to the reference
to the CCIE is bound by the latter's opinion.

On the other hand, the learned counsel for the appellant stresses the
point that Appendix 6 imposes no specific condition that the life saving
equipment should be used in India and should· not be exported. The words
B 'stock and sale' are very wide and there is no justification to restrict them
to mean only sales within the country. In support of this interpretation,
reliance is placed on the decision of the Delhi High Court in the case of
Janak Photo Enterprises (1990) 49 E.L.T. 339.

C We have considered this aspect of the matter carefully. The relevant
OGL is the one dated 20/5/88 covered by Order No.15/88- 91 which refers
in its Schedule to "Life-saving equipment appearing in List No.2 of Appen-
dix-6 of Import and Export Policy, 1988-91 (Vol.I) and their spares". It also
set out a number of conditions of grant of the OGL, the very first of which
D is that, except in the case of "teaching aids" covered by serial no.1, "all other
items covered by the Schedule annexed to it may be imported by any person
for stock and sale purposes". Prima facie, there appears to be no reason to
confine this only to sales in India and as prohibiting the re-export of the
imported goods from India. The interpretation of a condition in these
terms came up for consideration, though not finally decided, in the case of
E Janak Photo Enterprises, relied upon for the appellant. In that case, the
assessee had imported photographic colour films.from Japan, cleared them
for home consumption, and then presented them for export to Singapore.
The customs authorities, relying upon a certificate of the CCIE analogous
to the one in the present case, confiscated the goods under s.113( d) but
F allowed them to be re-exported on payment of a huge redemption fine, a
penalty and payment of appropriate duty. for ex-bond clearance. The
assessee filed a writ petition challenging this order. Pending disposal of the
writ, the High Court permitted the export of the goods subject to certain
conditions. In doing so, the court made certain observations which, learned
counsel for_ the appellant says, are equally apposite in the present case:
G
"5. The goods in question, being the photographic films
(colour), fall under App.7, List 8, Part II, Serial No.41 of the
Import and Export Policy, 1988-91, and their import is allowed
by all persons for actual use/stock and sale .. The contention of
H Mr. Aggarwal is that since the goods were imported for stock
MJ. EXPORTS v. CUSTOMS EXCISE TRIBUNAL [RANGANATHAN, J.) 319

and sale, these could not be re-exported. We are unable to A
agree with the contention of Mr. Aggarwal or with the view
taken by the respondents. Again, to us, the goods do not appeat
to· be prohibited goods. We may usefully refer to Para 4 of
Section I, dealing with Export Contro~, in Import and Expor~
Policy., 1988-91, Vol. II, in respect of Export Control and B
Procedures, which is as follows:-

"Only item included in Schedule I to the Export~ (Control)
Order, 1988 are under control. No such item can be exp~rted
unless it is covered by a valid licence issued by a licensing

- authority competent to grant an export licence for that item.
Goods which are not included in this Schedule can be shipped
without any export licence unless their export is confrolled
C

under any other law for the time being in force."

Thus, the Export (Control) Order, 1988 is not applicable to D
photographic film (colour).

6. If reference is made to S.74 of the Act, it appears that when
any goods capable of being easily identified which have been
imported into India upon which any duty has been paid on
importation, are to be re-exported and the goods are not E
prohibited goods, then clearance for exportation can be given
by the proper officer (S.51) and on such exportation 98% of
the duty paid on importation is to be re-paid as drawback. We
have not been shown which are those goods which can thus be
re-exported and where import duty already paid is to be F
claimed as drawback: We have also not been shown any
provision of law stating that the goods which have been irit-
ported could be sold only in the country itself. The clarification
given by the CCI & E does not appear to be appropriate. V{e
may.also note that under S.18 of the Foreign Exchange Regula-
tion Act, 1973 and various other provisions thereof, there are G
sufficient safeguards to see that proper sale price on export of
goods is realised. It is not the case of the respondents that there
is dearth of photographic film (colour) in the country, and

- export of the goods in question would certainly result in earnihg
of some foreign exchange for the country. H
320 SUPREME COURT REPORTS (1992] 3 S.C.R.

A xxx xxx xxx

8. We would like to add that the view which we have taken
above is only a prima facie view and is subject to final deter-
mination in the petition. All the CMs stand disposed of.

B We have no information as to whether the said writ petition has since
been disposed of by the High Court and become final. We are inclined to
agree with the prim a f acie view expressed by the High Court that the words
"stock and sale" may be, generally speaking, wide enough to comprehend
sales inside as \\'.ell as outside country and that their scope should not be
C restricted unless such a restriction can be read into the terms of the OGL
itself. That, we think, is where the present case essentially differs from the
one before the Delhi High Court. We are clearly of opinion that whatever
may be the position in regard to the other lists in Appendix 6, the items of
goods enumerated in list no.2 of that Appendix stand in a class of their
-
own. There is sufficient indication in the heading given to the List to show
D that the import of these items into India is permitted only because such
life-saving equipment is required for use in the country. The use of the
words "stock and sale" shows only that the items are not restricted to use
by the importer but can be transferred by him to another. But we do not
think it proper to read them as permitting a sale of the goods outside the
E country. Note (44) in Appendix 6 reads thus:
"Import of Life Saving Equipment appearing in List 2 of this
Appendix shall be eligible to import spares of such equipment
either along with the machines or separately".

F This also carries a mild indication that the equipment permitted to
be imported is only for purposes of use in the country. The circumstance
that these items are also exempted from customs duty at the time of import
- although the list of such exempted items is not identical with list no.2 of
Appendix 6 - also lends support to the conclusion that the goods so
G permitted are not meant for re-export. An indication to a similar effect is
also seen in the foreword issued by the Government while'publishing Vol.I
of the Import-Export Policy (1988-91), Vol. I Para 3 of the foreword says:

"The Open General Licence lists have been expanded by in-
clusion of more items. In particular, the lists of life saving
H equipment and drugs have been substantially enlarged to
MJ. EXPORTS v. CUSfOMS EXCISE TRIBUNAL [RANGANATHAN, J.] 32t

facilitate easy access to imported equipment and durgs which A
are not available in the country''.

We are, therefore, of the opinion that, although there is no express
prohibition, the re-export as such of items of goods specified. in list 2 and
imported into India is prohibited by necessary implication by the language
of, and the scheme underlying, the grant of OGL in regard to them. It is B
difficult to agree that the import-export policy envisages the re-export of
goods belonging-to this category. The opinion of the CCIE is also to the
same effect. This opinion also derives some binding effect from para 24 (1)'
of the Import Policy read with paras 22 & 23 of the Export Policy, which
say: c
Para 24(I): The interpretation given by the Chief Controller of
Imports and Exports, New Delhi in the matter of interpretation
of Import Policy and procedures shall be fmal and will prevail
over any clarification given by any other authority and person
in the same matter. D
Para 22: Cases for relaxation of existing policy and procedures.
where it creates genuine hardship or where a strict application;
of the existing policy is likely to affect exports adversely may
be considered by the Chief Controller of Imports and Exports. E
Para 23 : In matters relating to export, as well as the interpreta-
tion of export policy and procedures, the person concerned
may address the Chief Controller of Imports and Exports, New
Delhi for necessary advice. Any interpretation of the export
policy given in any other manner or by any other person will F
not be binding on the Chief Controller of Imports and Exports,
--+ or in law.

Sri Habbu contended that we should construe the OGL strictly oq
its terms and should not be guided by "extraneous" considerations as to th~
possible object or intention of the Government in inserting List 2 in G
Appendix 6. In this context, he referred to the decisions of this Court in
Hansraj Gordhandas v. H.H. Dave, Assistant Collecter of Central Excise &
Customs, Surat & Two Ors., (1969] 2 S.C.R. 253 [followed and applied in
State of M.P. v. G.S. Dall and Flour Mills, (1991) 187 I.T.R. 478 S.C.] and
Union of India & Anr, v. Deoki Nandan Aggarwa~ (1991) 3 J.T. S.C. 608. H
322 SUPREME COURT REPORTS (1992] 3 S.C.R.

A The principle enunciated in the said decisions is that the court should
construe the terms of the statutory provision or instrument before it and
should not supply or introduce words which are not found therein to give
effect to a possible intention behind the provision or instrument which is
not borne out by the language u5ed. But, as pointed out by this Court in
Surjit Singh Kalra v. Union of India, [1991] 2 S.C.C. 87, "though it is not
B permissible to read words in a statute which_ are not there, where the
alternative lies between either supplying by implication words which appear
to have been accidentally omitted, or adopting a construction which
deprives certain existing words of all meaning, it is permissible to supply
the words". The Court should construe a provision in a harmonious way to
c make it meaningful having regard to the context in which it appears. Here,
we are only interpreting the language used and giving content and meaning
....
.to the classification and heading used in the order permitting imports
under OGL in certain cases in the context of the provisions of the Imports
and Exports Control Act, 1947; as well as the orders and notifications
D issued thereunder we, therefore, do not find any. force in the contention of
Sri Habbu.

Taking into account all the above considerations, we hold that the
goods in question were "prohibited" goods wihin the meaning of S.2(33)

E
and that their confiscation under S.113(d) and the penalty under S.114
were fully justified. -
Before we conclude, we may refer to certain other aspects which
were touched upon by one side or the other in the course of the arguments
before us:
F
(1) Much emphasis has been laid by the counsel for the Revenue on
the circumstance that the appellant had obtained the import of the goods
free of duty by relying on the notification granting exemption from customs
duty. It is obvious that it could not have been the intention of the legislature
to grant exemption from customs duty in respect of vital goods of the
G nature in question in order that an importer may make profit by selling
them abroad. The notification is, therefore, relevant for the issue before us
to the limited extent that it lends supports to the construction of List 2 of
Appendix 6 in the manner we have interpreted it. This apart, we are not
concerned here with the questions whether the attempt of the assessee to
H export the goods (which has, in the event, been successful) would amount
MJ. EXPORTS v. CUSTOMS EXCISE TRIBUNAL [RANGANATHAN, J.) 323

to an infrfugement of the conditions permitting the import so as to render A
either the import itself [vide s.lll(o) of the Act] or the exemption from
import duty or both illegal and invalid and, if so, the consequences thereof.

(2) Reference has been made on behalf of the Revenue to the foreign
exchange loss incurred to the country by the import from a hard currency B
area and the export to a country which will pay for the goods only in
rupees. We do nor, however, think this argument or the foreign exchange
regulations, to which some casual reference was made, have any relevance
to the present issue. It is not the suggestion of the Revenue that there has
been any infringement of the FERA in this case. Even if there had been,
the consequences flowing from such infringement have to be worked out C
elsewhere. The issue before us is only that of the permissibility of the
- export, the destination of export being immaterial. As pointed out for the
appellant - and 2s indeed happened in Janak Photo Enterprises (supra) -
the export could well have been to a hard currency area in which event this
objection of the Revenue would have had no force. But, on the ratio of our D
decision, an attempted export to such a country would have been equally
objectionable. The goods were for use in this country, not in another.

(3) During the pendency of the proceedings before the Collector, the
appellants are said to have secured a no objection certificate of the RBI

- )'"--
to the export "on humanitarian grounds" in view of the appellant's repre- E
sentation that the goods were needed for the succour of the victims of the ·
Armenian earthquake in Russia. There is no material before us regarding
the date of the earthquake or to indicate that the purchase orders had been
palced thereafter. We do not even know whether the earthquake was only
a subsequent development taken advantage of by the assessee to have the F
goods cleared pending adjudication of issue by the Customs authorities. It
is true that the goods, being in the nature of life-saving equipment, may
have been eventually used only for that purpose in the country of export.
But, if as we have held, the imports of the goods were intended fo~ their ,
use in India, this circumstance is of no assistance.
G
Learned counsel has, however, contended that the exports have been
made in pursuance of a mutual trade agreement between the Government
of India and U .S.S.R. considered beneficial to both countries and hedged
in with conditions ensuring the interests of both the countries and that this
should be considered sufficient to justify the export. In our opinion, the H

•,
324 SUPREME COURT REPORTS (1992] 3 S.C.R.

A mere fact that mutual trade was allowed between the two countries is not
enough to hold that even goods of this type - which bad been allowed to
be imported with a specific end in view - could be exported. Learned
counsel did not place the trade agreement or any material to show that it
specifically provided for the export of goods of this nature to U.S.S.R. We
B have no doubt that the export of such goods may also enure to the benefit
of India indirectly but, in the absence of anything to show that the goods
in question constituted one of the categories of goods specifically envisaged
by the mutual trade agreement, it is not possible to override the prohibition
implicit, as held by us, in the Import regulations.

C (4) The show cause notice referred to clause 15(g) of the Export
Control Order, 1988. The said clause 15 is headed "savings" and it
enumerates situations in which the Export Control order does not apply;
in other words, it provides that, in certain circumstances, exports can be
permitted even where such export might otherwise contravene the
D provisions of the order. It is, in this context, that it provides that goods
cleared under a bond for re-export to countries other than Nepal and
· Bhutan [sub- cl.(g)] or goods imported in transit or transhipment to
destinations outside India [sub-cls.(c) and (t)] or even goods imported
without a valid licence if permitted to be re-exported [sub-cl.(i)] could be
re-exported irrespective of any restrictions under Export Control Orders
E issued from time to time. We agree with learned counsel for the appellant
that sub-clause (g) cannot be interpreted to mean that imported goods
cannot be exported unless they are cleared, at the time of import, under a
bond for re-export.

F (5) Two clauses of the Import Control Order, 1955 have also been
relied upon by the Revenue. The first of these is sub-clause (d) of clause
11(1). This clause, like clause 15 of the Export Control Order, is headed
"savings" and, by virtue of sub-clause (d), nothing in the order was to apply
to the import of the goods "by transhipment, as imported and bonded on
G arrival for re-export as ships stores to any country outside India except
Nepal, Tibet and Bhutan· or imported and bonded on arrival for re-export
as aforesaid but subsequently released for use of diplomatic person-
nel......who are exempt from payment of duty...... ." This sub-clause was
amended in 1985 to add the words "or otherwise" after the word "ships
stores". The CEGAT has relied upon the amendment to draw an inference
H against the appellant that, since the goods do not fall under this clause,
,MJ. EXPORTS v. CUSTOMS EXCISE TRIBUNAL [RANGANATIIAN, J.) 325

their export was not permitted. We think that this is not correct for the A
reasons we have pointed out in respect of clause 15(g) of the Export
Control Order, 1988. To say that goods bonded for re-export as above will
'not be-affected by the provisions of the order does not mean that goods,
not so bonded, cannot be exported at all. Their export can be interdicted ,
only if their is some other express or implicit prohibition in clause 3 of the B
Export Control Order or otherwise.

(6) Reliance has also been placed by the Tribunal on clause 10 C of ·
the Imports Control Order for rejecting the assessee's· contentions. It is ,
sufficient to extract sub-clause (1) of this clause which reads:

"lOC. Power to make directions for the sale of imported goods
c
in certain cases - (1) Where, on the importation of any goods
or at any time thereafter, the Chief Controller of Imports and
Exports is satisfied after giving a reasonable opportunity to the
licensee o.f being heard in the matter, that such goods cannot
or should not be utilised for the purpose for which they were D
imported he may by order direct the importer of the goods (in
case the goods were imported under Open General Licence or.
Special General Licence) or the licensee or any other persons
having possession or control of such goods to sell such goods
to such person within such time, at such price and in such E
manner as, may be specified in the direction.
. '
The Tribunal agrees that the opinions or clarifications given by the
CCIE in the present case are not directions under s.lOC. But, apparently!
their suggestion is that, if the appellant felt that the imported goods could
not be utilised "for home consumption" or "for stock and sale in India" and F
there were sound reasons for exporting it to U.S.S.R., they could and
should have obtained the directions of the CCIE permitting such sale. It is
difficult to approve of this line of reasoning. The provision relied upon is
one enabling the Import-Export Control authorities to interfere in any
individual case where they find that the purpose of the import is not being G
achieved. It does not impose an obligation on an importer to seek the
directions or the permission of the CCIE before exporting the goods if ·
otherwise permissible. Moreover, as pointed out by learned counsel for the
appellant, while clause 11(4) of the order which reads:
"Nothing in this order except paragraph (iii) of sub-clause (3) H
326 SUPREME COURT REPORTS [1992] 3 S.C.R.

A of clause (5), clause 8, clause SA, clause SC and clause lOC,
sh~ll apply to the import of any goods covered by Open General
Licence or Special General Licence issued by the Central
Government".

makes clause lOC applicable to the subject import~, it releases them form
B the application of the other restrictions and conditions on imports imposed
by the Import Control Order.

We think, however, that para lOC is of some indirect assistance in
the present case. We may put it this way. The interpretation of the OGL
C that has commended itself to us (viz. that the import of the goods is
permitted only for use in India) was also the one which the CCIE had
formed and this opinion he had formulated in his two letters dated
10.10.19SS and 27.1.1989. As we have already pointed out, the CCIE's
opinion on the Import and Export Control Order is final and binding. In
D view of this, when the CCIE came to know that the appellant was seeking
to export the goods, he could have intervened and issued directions under
clause lOC either permitting the export of the goods to the USSR or
directing them to be sold to needy hospitals or other parties in India. He
could have effectively stopped the export of the goods. This shows that the
export of the goods is not free or unrestricted as made out by the learned
E counsel for the appellant.

(7) Learned counsel for the Revenue also pointed out that the
shipping bills called for a ~ention as to whether the goods of which export
was sought were "free goods or India produce to be exported or India
F Produce". The appellant did not strike off any of these descriptions as
inappropriate. The customs authorities were given the impression that
these were Indian goods that were being exported. Indeed, the appellant
itself well knew that goods imported could not be exported as such without
the performance of some operation of processing or manufacture in regard
to them. That is why it put up a fa--ade of taking the goods to Ankleshwar
G after their import allegedly for bemg subjected to some processes. The
customs officers, on verification, found that all this was untrue and that the
appellant was surreptitiously trying to export imported goods, after just
repacking them as goods of Indian manufacture. The appellant had
adopted a similar subterfuge on the earlier occasion in December 1987 and
H succeeded in exporting like goods by not striking out the appropriate
M.J. EXPORTS v. CUSTOMS EXCISE 1RIBUNAL [RANGANATIIAN. J.) 327

columns of a shipping bill proforma which required the exporter to specify A
whether the goods were "Indian produce or foreign produce to be re-ex-
ported". It is, therefore, urged that the goods sought to be exported do not
conform to the description in the bill of entry for export, attracting the
provisions of clause 3(3) of the Export Control Order and, in turn, s.113(d)
of the Act. There is some force in this contention but we exporess no
opinion thereon as this was not the ground on which action was taken and B
it is a new ground, involving investigation of facts, taken for the first time
before us.

For the reasons discussed above, we uphold the order of the Tribunal
and dismiss the appeal. We, however, direci: the parties to bear their own C

- costs.

T.N.A. Appeal dismissed. ,