Supreme Court of India
PRIYANKA OVERSEAS PVT. LTD. AND ANRversusUNION OF INDIA AND ORS.
- Citation
- 1990 INSC 353
- Decided
- 15 November 1990
- Disposal
- Dismissed
- Bench
- K N SINGH
Holding
Palm kernel is a distinct commodity not canalised before 27 July 1987 and may be imported under OGL; the duty rate is to be fixed on the actual removal date from the warehouse, which was 28 January 1988, when no duty was payable, and the redemption fine and penalty are unlawful.
Summary
Priyanka Overseas Pvt. Ltd. imported 10,681.832 metric tonnes of palm kernel from Nigeria in 1987 under an Open General Licence (OGL). The Customs authorities treated palm kernel as a canalised item, confiscated the goods and imposed a redemption fine and penalty. The company argued that palm kernel is distinct from palm seed, was not canalised before 27 July 1987, and could be imported under OGL; it also contended that duty should be levied on the date of actual removal from the warehouse under Sec. 15(1)(b) of the Customs Act. The Supreme Court held that palm kernel and palm seed are different commodities, that the goods were not canalised at the time of shipment and could be imported under OGL, and that the applicable duty is determined on the actual removal date – the date the warehouse licence was cancelled and bills of entry filed (28 January 1988), when no duty was payable. Consequently, the appellant was not liable for customs duty and was entitled to a refund of the redemption fine and penalty. The Court dismissed the Union’s appeal and allowed the appellant’s appeal.
Issues considered
- Whether palm kernel is covered by the canalised list of the Import Policy and therefore required to be imported through the State Trading Corporation, or it can be imported under an Open General Licence.
- On what date the rate of customs duty should be determined for goods cleared from a bonded warehouse – the date of arrival in Indian waters or the date of actual removal from the warehouse as per Sec. 15(1)(b) of the Customs Act, 1962.
- Whether the Customs authorities were justified in imposing a redemption fine and personal penalty on the appellant.
Legislation cited
- Customs Act, 1962s. 112(a), s. 124, s. 15, s. 26, s. 60, s. 68, s. 71
- Import Policy 1985-88
- Imports and Exports (Control) Act, 1947
- Imports (Control) Order, 1955
Subjects
Import PolicyPalm KernelPalm SeedOpen General LicenceCustoms DutyActual RemovalRedemption FineCanalisationCustoms ActWarehousing
Judgment
PRIYANKA OVERSEAS PVT. LTD. AND ANR.
A
v.
UNION OF INDIA AND ORS.
NOVEMBER 15, 1990
B [K.N. SINGH AND N.M. KASLIWAL, JJ.]
Customs Act, 1962-Sections 26, 60, 68, 112(a)-Palm Kerne/-
Import of-Whether permissible-Duty payable-What is.
The appellant company made a contract on 10.6.87 with the
C foreign suppliers to Import under Open General Licence 35 ,000 MT of
"Palm Kernel". Under the above contract 10681.832 MT of palm
kernel was shipped from Nigeria on 26.6.87 and 25. 7.87 under different
bills of lading. The goods arrived in the territorial waters of India on
2 /3rd October, 1987.
D Prior to 27. 7.1987 Import of palm seeds was canalised under the
Import Policy for the years 1985-88. On 27.7.1987 the Chief Controller
of Imports & Exports issued a Public Notice Cl!Jlalising _import of "any
other material from which oil can be extracted" also.
As the appellant was apprehending some dispute on the import of
E palm kernel, it filed a writ petition in the High Court on 28.7.87, and
the learned Single Judge passed two interim orders. On BJ:lpeal 11gainst
these orders, the Division Bench on 2.12.87 set aside the interim orders
with the consent of the parties and expedited the proceedings already
initiated under section 124 of the Customs Act, 1962 for conf"iscation of
the goods.
F
The Collector of Customs by adjudication order passed on
7.12.1987 held that the item "Palm Kernel" was a prohibited item for
import except through canalisation by the State Trading Corporation in
terms of the Import Policy and, consequently its import without a valid
licence was in contravention of the provisions of the Customs Act, 1962
G read with the Imports and Exports (Control) Act, 1947. The Collector
in these circumstances directed· the confiscation of the entire goods but
gave an option to the appellant company to redeem the goods on
payment of f"me of Rs.90 lacs. The Collector also imposed a personal
penalty on the appellant.
H The customs duty as applicable on the date of the arrival of the
138
PRIYANKA OVERSEAS v. U.0.1. 139
ships, i.e. 2/3rd October, 1987 was 105%. The said customs duty was
A
withdrawn on 4.12.87 and as such there was oil duty on palm Kernel,
and this position remained opto 28.1.88. The exemption from customs
duty was however withdrawn from 29.1.88 as a result of which the
earlier duty of 105% came into effect. The customs duty was further
increased from 1.3.88 and the new customs duty was at 245%.
B
The appellant company removed 3935.364 MT of Palm Kernel on
17.12.87 by paying proportionate amount of penalty and nil customs
duty. The appellant then f'I)ed bills of entry for the remaining1i746.468
MT of Palm Kernel on 28.1.88 but did not depoit the redemption fme.
On merits, the learned Single Judge by his order dated 19.4.88
held that the Palm Kernel was an item different and distinguished from
c
Palm seeds, and the same could be imported under OGL as it was
covered under item no. 1, Appendix 4 of the Import Policy. Accordingly,
the learned Judge ordered the goods to be cleared on payment of such
duties as were Ieviable on 28.1.88, when the appellant had entered the
bill of entry seeking clearance of the goods. D
The Division Bench on appeal affirmed the order of the Trial
Court in so far as the setting aside of the adjudication order was con-
cerned. The Division Bench however held that the appellant shall be
entitled to get delivery of the balance goods on payment of duty at the
rate prevailing in October, 1987. E
Both the parties preferred appeal before the Court by special
leave,
Before the Court it was inter alia contended on behalf of the
appellant company that (i) Palm seed and Palm Kernel were two diffe- F
rent items as shown in the commercial transactions in the trading com-
munity and Palm seeds alone was a canalised item; (ii) a f1SCal statute
had to be construed strictly and in favour of a citizen especially when
the question of imposing rme and penalties was involved, and (iii) the
Palm Kernel having been shipped by the foreign seller from Nigeria on
or before 27. 7.87 the appellant was legally entitled to import the same G
under the OGL.
It was further contended that the rate of duty of the imported
goods, as provided in section 15 of the Customs Act, 1962 shall be the
rate and valuation in force, in the case of goods cleared from a
warehouse under section 68, on the date on which the goods were acto- H
140 SUPREME COURT REPORTS [1990] Supp. 3 S.C.R.
ally removed from the warehouse, and the Division Bench committed
A error in holding that the date for actoal removal of the goods in the
present case shall be considered as 2/3rd October, 1987 when the goods
entered the territorial waters of India; that irrespective of the physical
removal of the goods from the warehouse, the goods would be deemed
to have been actually removed in law on 28.1.88 when the petitioner had
B filed ex-bond bills of entry seeking clearance of the goods; in the facts
and circumstances of this case the term 'actual removal' used in section
lS(l)(b) could not mean physical removal as the same was made impos-
sible by the wrongfUI act of the respondents; and it should be given a
meaning in the juristic sense as deemed removal.
On behalf of the Revenue, it was contended that (i) the distinction
C sought to be made between 'Palm Kernel' and 'Palm Seed' was artifi-
cial; (ii) the appellant had clearly understood the Import Policy and was
fully aware of the fact that Palm Kernel was a canalised item and still it
imported the same under the OGL; (iii) the appellant had let no evidence
to show that the 'Palm Kernel' and 'Palm seed' were considered as two
D different commodities in the popular sense in commerce or trade. As
regards the question of levy of duty, it was contended that in the matter
of taxation there was no question of applying any principles of equity or
the deeming fiction in construing the provisions of section 15(l)(b) of
the Customs Act; even if the appellant had entered the bill of entry on
28.1.88, admittedly the goods were not actually removed on that date
E and the hiatus if any in actual removal, could not be extended to an
artificial date.
In the alternative it was contended that the appellant fully know-
ing that the rate of duty in October, 1987 when the goods had arrived in
India was 105% and even if the deeming provision for removal of the
F goods was applied for the purpose of section 15(l)(b) of the Customs
Act, then the date of actual removal should be 2j3rd October, 1987.
Dismissing the appeal filed by the Revenue and allowing the ap-
peal filed by the appellant company the Court,
G HEID: (1) "Palm Kernel" is not included in the item "Palm
Seeds", and the two commodities are different as understood in com-
merce or trade. [155H-156A] '
(2) Prior to 27.7.87 'Palm Kernel' was not a canalised item, the·
High Court rightly held that 'Palm Kernel' was not included within the
H entry of 'Palm seed'. The Government of India itself realised the dif-
PRIYANKA OVERSEAS v. U.0.1. 141
ference in the two commodities, therefore it amended its previous
A
policy. [1560]
(3) As the Palm Kernel was not a canalised item before 27. 7.87,
it could have been imported under the OGL before that date. The
crucial dates in this regard are 26.6.87 and 25.7.87 when the goods
were actually loaded in the ship and not the date of arrival of the ship in B
the territorial waters oflndia. [156F]
(4) Since 'Palm Kernel' was not included within 'Palm seed' the
Customs authorities had no legal justification to confiscate or impose
redemption fine or penalty. [156E]
(5) Section 15 of the Customs Act provides for determination of c
rate of duty on imported goods. The rate of duty and tariff valuation, if
any, applicable to any imported goods, shall he the rate and valuation
in force in the case of goods cleared from a warehouse under section 68, the
date on which the goods are actually removed from the warehouse. [158C-D]
D
(6) One cannot introduce the concept of deeming provision while
determining the question of actual removal of the goods from the
warehouse. The rate has to be determined on the basis of the date on
which goods are actually removed from the warehouse and thereafter
the question would be examined as to how the relief is to be moulded in
case it is found that the Customs authorities were themselves responsi- E
hie in preventing the importer of goods from actually removing the
goods from the warehouse. [158E-F]
Duni Chand Rataria v. Bhuwalka Brothers, [1955] 1 S.C.R. 1071;
M/s. Bharat Surfactants Pvt. Ltd. v. Union of India, [1989] 4 S.C.C.
21; distinguished. F
Commissioner of Sales Tax, Madhya Pradesh v. Jaswant Singh
Charan Singh, [1967] 2 S.C.R. 720 referred to.
(7) The statutory principle is that if a party discharges its liability
- by complying with the requirement of law, and presents papers for
clearance of goods, it is obligatory on the Revenue authorities to pass
the order immediately thereon. If the Revenue authorities either refuse
G
to pass the order on some erroneous or imaginary grounds or on
account of any misconception of law, the Department cannot take
advantage of its own wrong in demanding higher rate of duty from the
importer. [1620-EI H
142 SUPREME COURT REPORTS [1990] Supp. 3 S.C.R.
(8) Admittedly, the appellant had done its part of legal duty by
A
presenting bills of entry and complying with section 68(a) of the Act on
28.1.88. But the Customs Officer refused to release the goods on
erroneous assumption that the appellant was liable to pay redemption
fine and since it had not paid the said amount, the goods were not liable
to be released. In the circumstances, the Department cannot be allowed
B to take advantage of its own wrongful act. [162F-G]
(9) In moulding relief, the Court has always applied principles of
equity In order to do complete justice between the parties. The appel-
lant is therefore entitled to the delivery of goods without paying any
duty as on 28.1.88 no duty was payable on the goods. [162H, 164EJ
c CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
5333-34 of 1990.
From the Judgment and Order dated 20.5.1988 of the Calcutta
High Court in Appeal No. 303 of 1988.
D
Ashok H. Desai, Solicitor General, A.K. Sen & Vijay Bahu-
guna, D.K. Garg, G.L. Rawal, Neerja Mehra, A. Subba Rao, C.V.
S ubba Rao and Ms. Sushma Suri for the appearing parties.
The Judgment of the Court was delivered by
E
KASLIW AL, J. Special leave granted.
Two important questions are involved in the case out of which
one is relating to Import Policy and the other is regarding the duty
payable under the Customs Act, 1962.
F
Facts relating to the question of Import Policy are that the
Government of India framed Import Policy for the years 1985-88
under which import of items under Open General Licence (in short
OGL) have been mentioned under Appendix 6 Entry No. 1 as under:
G ( 1) Raw materials, components and consumables (non iron and
steel items) other than those included in the Appendices 2, 3 Part
(a), 5 & 8.
Appendix 5 Part-B provides for petroleum products, fertilizers, drugs,
feature films, video films, oil/seeds, cement, cereals, newsprint, photo
H assistance etc. under the head oils/seeds item No. 5 reads as under:
PRIYANKA OVERSEAS v. U.0.1. (KASLIWAL, J.] 143
"In the case of the following items, whether edible or non
A
edible, import" will be made by the State Trading Corpora-
tion (STC)/Hindustan Vegetables Oil Corporation, New
Delhi (A Govt. of India Undertaking) under Open General
Licence on the basis of foreign exchange released by the
Government in its favour, imports, distribution and their
pricing will be made by the State Trading Corp./Hindustan B
Vegetables Oil Corp., New Delhi as per the connected
policy of the Government in the Ministry of Food & Civil
Supplies, Dept!. of Civil Supplies."
Out of the 9 items under this head, we are concerned with SL No. 4
which provides as under:
c
Palm Oil (all types including Palmolein and other fractions)/
Palm seeds."
Thus according to the above provision palm seeds were canalised items
falling under Appendix 5-B of the said Policy. The Import & Exports D
(Control) Act, 1947 empowers the Central Government to prohibit;
restrict or otherwise control imports and exports. In exercise of the
powers conferred in the above Act, the Imports (Control) Order, 1955
has been issued. Schedule I(l) to the said Order contains the list of
articles of which imports are controlled. The import of such items is
prohibited except: (i) under and in accordance with a licence or a E
customs clearan~e permit issued under the said Order, or (ii) if they
are covered by an OGL (subject to such conditions as may be
stipulated) or (iii) if they are covered by the semi-clause (ii) of the
Imports (Control) Order.
Open General Licence No. 1/87 dated 1.4.1987 provided as F
follows:
"Import Trade Control Orders Nos. 68/85-88, OGL
No. 1/87 dated. 1.4.87 in exercise of the powers conferred
by Sec. 3 of the Import & Export (Control) Act, 1947, the
Central Government hereby gives general permission to G
import into India from any country, except the Union of
South Africa/South-West Africa, raw materials, com-
ponents and consumables by actual users (industrial) sub-
ject to the following conditions:
The item to be imported are .not covered by Appendices 2, H
144 SUPREME COURT REPORTS [1990] Supp. 3 S.C.R.
3, 5 & 8 of Import & Export Policy for the year 1985-88
A Vol. I as amended from time to time by issue of a Public
Notice in the Official Gazette.··
Clause 32 with which we are concerned, reads as under:
B Clause32;-
"Such goods are shipped on through consignment to India
on or before 3 lst March on the licensing Order or, in the
case of actual users (industrial), on or before 30th June of
the following licensing year against firm order for which
irrevocable letters of credit are opened and established on
c or before last date of February of the licensing year, with-
out any grace period whatsoever."
M/s. Priyanka Overseas Private Limited (hereinafter referred to
as the appellant) made a contract for import of 35 ,000 MT of "Palm
D Kernel" on 10.6.87 with the foreign suppliers. The contract was en-
tered as an agent on behalf of various actual users. On 27.7.87 the
Chief Controller of Imports & Exports issued a Public Notice No.
205-ITC (PN)/85-88 canalising import of "any other material from
which oil can be extracted." Under the above contract 11,570.570 MT
of Palm Kernel was shipped by the foreign seller from Nigeria to the
E appellant company under different Mills of Lading on 26.6.87 and
25.7.87. As regards the above quantity of goods the Collector Customs
in his adjudication order No. 1/87 dated 7.12.87 has observed as
under:
"Further, as reported by the Assistant Collector, Kaki-
F nada, the actual quantity landed and bonded, as per the
share weighment under customs supervision as well as
under the supervision of the surveyor was only 10681.832
MT involving a short landing to the extent of 886. 738 MT."
Thus we take this figure of 10681.832 MT as correct.
G
Since the Customs authorities professed to the appellant not to
clear the goods it filed a Writ Petition No. 3265 of !987 before a Single
Judge of the Calcutta High Court. Learned Single Judge passed an
interim order in favour of the appellant on 2f>:7.87. The interim order
was granted in terms of prayers (e) & (f) of the petition, on certain
H conditions. The above order dated 28.7.87 was modified on 3.8.87 to
PRIYANKA OVERSEAS v, U.0.1. [KASLIWAL, J.] 145
the extent that the interim order was granted on the condition that the
A
appellant shall pay the entire customs duty as may be determined and
demanded by the respondents in cash and shall furnish a bond for the
entire value of the goods. The Order for furnishing bank guarantee
was recalled. It was made clear that the Customs authority shall not
release the goods unless the entire customs duty as may be determined
and demanded by them was fully paid by the appellant in cash. The B
Collector of Customs filed an appeal before the Division Bench
against the aforesaid order.
The Division Bench of the Calcutta High Court on 18.9.87
passed the following order:
"We direct that in case the writ petitioner-respondent c
chooses to import the Palm Kernel pursuant to the order of
the learned Trial Judge under appeal, the imported goods
will be kept in a bonded warehouse or any other ware-
houses availed by the Customs authorities and until further
I ·orders the respondent being the writ petitioner in the
above matter, would not take delivery of the same."
D
On 2/3rd October, 1987 the imported goods entered into the
territorial waters of India and arrived at the port of Kakinada. On the
application moved by the appellant on 15th October, 1987, to the
Assistant Collector of Customs, Kakinada for allowing it to keep the E
Palm Kernel cargo in a bonded warehouse or any other warehouse
approved by the Customs authorities till the final disposal of the case
before the High Court, the Assistant Collector passed an order on
- 18.10.87 for allowing warehousing of the goods under Sec. 60 of the
Customs Act, 1982 (hereinafter referred to as the Act) on the appel-
lant executing a general bond to that effect. The appellant accordingly
executed the bond.
p
Since the Collector of Customs had already issued notice under
Sec. 124 of the Customs Act initiating proceedings for confiscation of
the goods, the appellant approached the Collector and filed represen-
tation against the proposed confiscation. In view of these circums- G
lances the parties were heard on 2.12.87 by the Division Bench of the
High Court and with the consent of the parties the interim orders of the
Single Judge were set aside and the proceedings initiated under Sec.
124 of the Customs Act, before the Collector of Customs were
expedited, without prejudice to the rights and contentions of the
parties in the pending writ petition before the learned Single Judge. H
146 SUPREME COURT REPORTS [1990] Supp. 3 S.C.R.
The Division Bench, further issued the following direction for the
A expeditious disposal of the writ petition pending before the Single
Judge.
"Affidavit in opposition to the writ petition to be filed by
22.12.87, affidavit in reply if any to be filed by 10.1.88.
B Liberty is given to the parties to apply before the first
Court for early disposal of the writ petition. It is expected
that the matter will be disposed of expeditiously by the first
Court. We make it clear that we have not adjudicated on
the merits of the disputes and the parties will be at liberty
to adjust all their claims and contentions before the Col-
lector of Customs and in the pending writ petition"
c
The Collector of Customs by adjudication order passed on
7. 12.87 held that the item "Palm Kernel" was prohibited item for
import except through canalisation by the State Trading Corporation
in terms of the Import Policy, and, consequently the import of
D 11,570.570 MT of Palm Kernel of Nigeria origin valued at
Rs.2,88,88,414/cif value without a valid licence was in contravention of
the provisions of Sec. 3(i)(a) of the Customs Act read with Sec. 3(ii) of
I
the Imports & Exports (Control) Act, 1947. The Collector in these
circumstances directed the confiscation of the entire goods and gave
the importer an option to redeem the goods on payment of a fine of
E Rs.90 lacs. The option was to be exercised within one month of the
order. The Collector also imposed on the importer i.e. the appellant a
personal penalty of Rs.10 lacs in terms of Sec. !12(a) of the Customs
Act. On 17.12.87 the appellant exercised its option within the afore-
said period of one month and took delivery of part of the goods of
F
3935.360 MT on payment or personal penalty of Rs. JO lacs and also
part payment of the redemption fine to the tune of Rs.35 lacs. On
28.1.88 the appellant filed the bills of entries before the authority
concerned. It may also be mentioned that the customs duty as applic-
-
able on the date of the arrival of the ships i.e. 2/3rd October, 1987 was
105 % . The said customs duty was withdrawn by a notification dated
4. 12.87 and as such there was nil duty on Palm Kernel and this position
G remained upto 28.1.88. By a notification dated 29.1.88, the exemption
from customs duty was withdrawn and as a result of which the earlier
duty of 105% came into operation. The customs duty was further
increased in the Budget submitted on 29.2.88 and as such from 1.3.88
the new customs duty was levied at 245%. The appellant removed the
balance of the goods also on 17.6.88 under the orders of this Court
H dated 2.6.88.
PRIYANKA OVERSEAS v. U.0.1. IKASLIWAL, J.] 147
Learned Single Judge by order dated 19.4.88 held that the Palm A
Kernel was an item different and distinguished from Palm seeds and
the same could be imported under OGL as the same was covered
under item No. 1, Appendix 4 of the Import Policy. Learned Single
- Judge also directed the Customs authorities to clear the goods
immediately which were imported pursuant to the contract dated
10.6.87 and to allow the appellant (petitioner in the High Court) to B
import the goods, already arrived or likely to arrive pursuant to the
contract dated 10.6.87. The goods were ordered to be allowed to be
cleared on payment of such duties as leviable on 28.1.88. The Orders
of adjudication dated 7.12.87 passed by the Collector of Customs,
Guntur including the showcause notices were quashed. The Customs
authorities were further prohibited from giving effect or taking any C
steps pursuant to the adjudication proceeding or in pursuance to the
showcause notices or putting any impediment or obstruction in the
matter of release of Palm Kernel imported on the basis of agreement
dated I0.6.87.
I
The Collector Customs aggrieved against the judgment of the D
Single Judge dated 19.4.88 filed a Letters Patent Appeal before the
Division Bench of the Calcutta High Court. The Division Bench by
order dated 20. 5. 88 also affirmed the order of the Trial Court so far as
the setting aside of the adjudication order was concerned. The appel-
lant was allowed the refund of the sum of Rs.90 lacks as redemption
fine and Rs. IO lacs as penalty subject to the following condition: E
"They have already cleared three thousand tons approxi-
mately without payment of duty. We have held that they
are liable to pay duty. This amount of duty to be paid is to
be ascertained and the said sum is to be adjusted against
Rs.90 lacs and Rs. IO lacs respectively. The balance amount F
shall be held by them for a period of two months from this
date. The writ petitioner shall be entitled to get delivery of
the balance goods on payment of duty at the rate prevailing
in October, 1987 or upon adjustment with the balance of
the month. But, if they do not do so within a period of two
months, then respondents shall be enti.tled to proceed in G
accordance with law.
We make it clear that the goods must be cleared by
the Customs authorities and allowed to be taken delivery
of, within 72 hours from the time of depositing of the
amount of duty in respect of the goods to be cleared along- H
148 SUPREME COURT REPORTS [ 1990] Supp. 3 S.C.R.
with payment of charges and expenses in accordance with
A
Jaw.
So far as the question of interest is concerned, in the
facts and circumstances of the case we are not inclined to
grant any interest.
B
We also make it clear that in respect of the balance
goods allowing, the writ petitioner shall be entitled to clear
the same at one time or from time to time."
The above judgment was given on May 17, 19 & 20, 1988 and as
already mentioned above the petitioner removed the remaining goods
c also on 17.6.88 by paying nil duty.
Both the parties had come in appeal before this Court by Special
I
leave, aggrieved against the Order of the High Court.
D The first question to be considered is as to whether Palm Kernel
at the relevant time could be imported under OGL as done by the
appellant or it could not be done as the same was canalised item which
could have been imported through STC or Hindustan Vegetables Oil
Corp., New Delhi (A. Govt. of India Undertakings). The contention
in this regard by Mr. Ashok Sen on behalf of the appellant company is
E that Palm seeds and Palm Kernel were two different items as shown in
the commercial transactions in the trading community in such goods,
as well as interpreted by the Central Plantation Crops Research Insti-
tute, Trivandrum by letter dated 21.1.87 and by a reply of the Customs
Authorities themselves dated 19.2.87 that Palm Kernel would not be
covered under Notification No. 127-CUS dated 1.7.77. M/s. Oil Palm
F India Limited, a Public Sector Corporation also wrote on 27.7.87 to
the appellant that Palm Kernel and Palm seeds were two different items
in trade.
It was also pointed out that the Chief Controller of Imports &
Exports had to issue an amendment notification on 27.7.87 canalising
0 the import of "any other material from which oil can be extracted." It
has thus been submitted that before 27. 7. 87 there was no question of
importing Palm Kernel through canalisation and the appellant was
perfectly justified and in its right to import the Palm Kernel under the
OGL admittedly issued in its favour. It was thus submitted that Palm
seeds alone was a canalised item and Palm Kernel cannot be con-
H sidered as Palm seed. According to Mr. Sen Palm seeds had the quality •
PRIYANKA OVERSEAS v. U.0.1. [KASL!WAL, J.l 149
of germination while Palm Kernel could not germinate. Oil was A
extracted from the pulp and Palm Kernel was prepared after putting
Palm seeds to a process of manufacturing. A fiscal statute is to be
construed strictly and in favour of a citizen especially when the ques-
tion of imposing fine and penalties is involved. It was further argued
that both learned Single Judge as well as the Division Bench of the B
Calcutta High Court have rightly taken the view that Palm seeds and
Palm Kernel were different items and 11,570.570 MT of Palm Kernel
having been shipped by the foreign seller from Nigeria on or before
27.7.87, the appellant was legally entitled to import the same under
the OGL. Mr Sen frankly conceded that so far as the balance of Palm
Kernel now to be imported by the appellant even under the original
contract dated 10.6.87, can only be made by the State Trading Corp. C
or Hindustan Vegetables Oil Corp., New Delhi as already made clear
vide notification dated 27. 7.87.
.. Mr. Sen further contended that Sec. 15 of the Customs Act, 1962
provides for the date for detennination of rate of duty and tariff valua- D
I tion of imported goods. Sec. 15 reads as under:
( 1) The rate of duty and tariff valuation, if any, applicable
to any imported goods, shall be the rate and valuation in
force,-
E
(a) in the case of goods entered for home consumption
under Sec, 46, on the date on which a bill of entry in respect
of scuh goods is presented under that section;
(b) in the case of goods cleared from a warehouse under
Sec. 68, on the date on which the goods are actually F
removed from the warehouse;
(c) in the case of any other goods, on the date of payment
of duty:
Provided that if a bill of entry has been presented before G
the date of entry inwards of the vessel by which the goods
are imported, the bill of entry shall be deemed to have been
presented on the date of such entry inwards.
- (2) The provisions of this section shall not apply to
baggage and goods imported by post. H
150 SUPREME COURT REPORTS [ 1990] Supp. 3 S.C.R.
A On the basis of the above provision it is contended that the rate
of duty of the imported goods shall be the rate and valuation in force in
the case of goods cleared from a warehouse under Sec. 68, on the date
on which the goods are actually removed from the warehouse. It has
been submitted that the High Court committed error in holding that
the date for actual removal of the goods in the present case shall be
B considered as 2/3rd October, 1987 when the goods entered in the
territorial waters of India. On the other hand it was contended that
once it is held that the Customs authorities wrongly confiscated the
goods and wrongly imposed the redemption fine and penalty and the
appellant with no fault on its part had to keep the goods in a bonded
warehouse under the orders of the Division Bench of the High Court
dated 18.9.87, the date of actual removal from the warehouse be
C treated as 28.1.88 when the appellant had filed Ex-bonds bills of
entries seeking the clearance of the balance quantity of Palm Kernel.
While considering the SNuence of dates with regard to the levy
of duty it was an admitted position that there was an ad valorem duty of
D 105% upto 3.12.87. On 4.12.87 a notification was issued by the
Finance Ministry under Sec. 25{1) of the Customs Act so as to include
Palm Kernel within the scope of notification No. 127.dated 1. 7. 77 as a
result of which Palm Kernel became liable for clearance on nil duty.
This position remained up to 28. !.88 and on 29. I.88 the notification
exempting Palm Kernel from Customs duty was withdrawn. There-
E fore, from 29.1.88 Palm Kernel became liable for payment of 105% ad
valorem import duty. It has thus been contended by Mr. Sen that
irrespective of the physical removal of the goods from the warehouse,
the goods would be deemed to have been actually removed in law on
28.1.88 when the petitioner had filed ex-bond bills of entry seeking
clearance of the balance goods. As regards the quantity of 3335.864
F MT of Palm Kernel are concerned, the same were rightly cleared on
payment of nil duty on 15.12.87 as no duty was leviable on that day of
Palm Kernel.
It was further argrued by Mr. Sen that Sec. 68 of the Act which
reads as under will not apply in the present case.
G
Sec. 68:-
"The importer of any Warehoused goods may' clear them
H
for home consumption, if-
(a) a bill of entry for home consumption in respect of such -
PRIYANKA OVERSEAS v. U.0.I. [KASL!WAL, J.] 151
goods has been presented in the prescribed form; A
(b) the import duty Jeviable on such goods and all penal-
ties, rent, interest, and other charges payable in respect of
such goods have been paid; and
(c) an order for clearance of such goods for home con- B
sumption has been made by the proper officer.
It has been contended that clause (b) of Sec. 68 only speaks of
the import duty leviable on such goods and all penalties, rent, interest
and other charges payable in respect of such goods. It has been submit-
ted that the redemption fine does not come within the meaning of
penalties, rent, interest and other charges mentioned in Clause (b) of
c
Sec. 68. The appellant being an importer of the warehoused goods was
thus entitled to clear them without any payment of redemption fine or
penalty as neither any rent nor interest or any other charges were
payable and in this view of the matter, such goods should have been
allowed to be taken away by the appellant on 28.1.88 itself when he D
had filed the ex-bond bills of entry.
It has been further submitted by Mr. Sen that in the facts and
circumstances of this case the term actual removal used in Sec.
lS( l)(b) cannot mean physical removal as the same was made impossible
by the wrongful act of the respondents, it should be given a meaning in E
' the juristic sense as deemed removal. Reliance was placed on the
following passage in volume 35 para 1154 and Volume 41 Para 757 of
Halsbury's Laws of England, Fourth Edition.
Para 1154. Methods of Delivery:
F
"Possession of ponderous goods and chattels in large
quantities which cannot readily be transferred from hand to
hand may be transferred by any transaction which effec-
tually passes the control to the new possessor, for example
by handing over the key of a warehouse or of a plate chest
in which the goods are stored, with the intention of trans- G
ferring possession; but, as has been repeatedly observed,
the delivery of a key does not have this effect unless it
actually gives full control of the goods in question. Hence,
where it operates as delivery it is, strictly speaking, not
... symbolic but actual delivery of the goods. The mere
transfer of a document representing goods does not or- H
152 SUPREME COURT REPORTS [ 1990] Supp. 3 S.C.R.
A
dinarily change the possession of the goods, save that
possession of goods at sea can be transferred by indorse-
ment and delivery of the bill of lading."
Para 757. Meaning of "delivery":
B
"Delivery means voluntary transfer of possession from one
person to another. It includes symbolic delivery and is not
restricted to the physical transfer of the goods themselves,
but covers also transfer of possession of documents of title
to goods. Where the buyer takes possession pursuant to the
leave of the seller, whether concurrent or antecedent, that
c is a voluntary transfer of possession."
It was contended that the learned Single Judge had taken a
J
correct view that the crucial date for levy of duty would be 28.1.88 and
the Division Bench of the High Court committed a clear error in
D holding that the actual date of delivery for the entire lot of goods
should be considered as 2/3rd October, 1987 when the goods actually
arrived in the territorial waters of India. In support of the above con-
tention reliance was also placed on Duni Chand Rataria v. Bhuwa/ka
Brothers Ltd., [ 1955] 1 SCR, P. 1071.
E Mr. Sen support of his contention that Palm Kernel and Palm
seeds are different and distinguished, placed reliance on the same
authorities which were cited before the High Court. By Public Notice
No. 205/27-7-87 Appendix 5 Part-B Item No. 5 "Oil/seeds" was
amended to bring within the canalised list "all other materials from
which oil is extracted". He argued that it was not merely a clarificatory
F notification but it was in fact a notification by which the Government
added the words "all other materials from which oil is extracted" in
order to include Palm Kernel within the canalised list.
Mr. Desai, Ld. Solicitor General appearing on behalf of the
Union of India and Custom authorities urged that the distinction
G sought to be mere between 'Palm Kernel' and 'Palm seed' was artifi-
cial. The term 'Palm seed' includes 'Palm Kernel' within the Import
Policy of the Government. It was contended that 'Kernel' means the
seed of a fruit enclosed within a hard shell as defined in the dictionary.
The Import Policy applicable to seed would apply to Kernel also, and
the import of Palm Kernel by the appellant under the OGL was illegal.
H The importation of the Palm Kernel by taking out the o'!ter shell must
PRIYANKA OVERSEAS v. U.0.1. [KASLIWAL, J.] 153
be considered only as an ingenuous act on the part of the importers to
A
take shelter under the plea that what has been imported was different
than seed as it did not have the capacity to germinate. The appellant
had clearly understood the Import Policy and wa& fully aware of the
fact that Palm Kernel was a canalised item and still it imported the
same illegally under the OGL. He drew our attention to the definition
of the word 'Kernel' in the Shorter Oxford English Dictionary 3rd B
Edn., Vol. I, Page 1081 which is as under:
Kernel : ( 1) A seed; especially the seeds contained with
in any fruit
(2) The softer part within the hard shell of a
nut or stone-fruit C
(3) The body of a seed within its husk
He pointed out that Brushel Tariff Nomenclature in Chapter 12
which consists of oil seeds and oleaginous fruit; miscellaneous grains,
seeds and fruits; industrial and medical plants; straw and fodder, at D
item No. 12.01 the list of oil seeds and oleaginous fruit are broken as
under:
A. Ground-nuts.
B. Copra.
E
C. .Palm nuts and Kernels.
D. Soya beans.
E. Linseed.
F. Cotton seeds.
F
G. Caster oil seeds.
H. Other.
He contended that Palm nuts and Kernels under clause (c) have been
included in the category of oil seeds. He emphasised that the appellant
had led no evidence to show that the 'palm kernel' and 'palm seed' are G
considered as two different commodities in its popular sense in com-
merce or trade. He further submitted that Sec. 21 under Chapter 2( 1)
of the Import and Export Policy Vol. I issued by the Government,"
Ministry of Commerce lays down the principles applying to the inter se
interpretation of the entries .in· the various Appendices as well as
.... imports under OGL. Clause (f) of Sec. 21 reads as under: H
154 SUPREME COURT REPORTS [ 1990] Supp. 3 S.C.R.
"any item in Appendices 2, 3, 5 or 8 with a specific or a
A
generic description, will preclude the eligbility to its import
under Open General Licence, except where the policy
allows this clearly."
Reliam;e was also placed on Sec. 24 of the above Policy which
B provides that actual users may also seek clarification on any itemwise
entry applicable to them, from the Regional Licensing Authorities at
Bombay, Madras and Calcutta, who will secure technical advice in the
atter.
M/s. Ganesh Dass Bhoj Raj had sought a clarification and the
Chief Controller of Imports and Exports by their letter dated 12.6.87
c had clarified that Palm Kernel is a part of the palm seed and therefore
the policy applicable to palm seed was applicable to its part as well and
as such its import is canalised through the STC. The appellant M/s.
Priyanka Overseas Pvt. Ltd. was also aware about the aforesaid reply
given to M/s. Ganesh Dass Bhoj Raj as it itself relied upon various
D correspondences between the Customs authorities and M/s. Ganesh .
Dass Bhoj Raj. The appellant, Mr. Desai contended had no justifica-
tion to get the goods shipped between 26.6.87 and 25.7.87. In any
event, nothing prevented the appellant to seek clarification from the
Chief Controller of Imports & Exports and then proceed in the matter,,
particularly when the appellant was importing goods valued nearly 3
E crores of rupees. Seeking clarification from other agencies as to justify
distinction between 'Palm kernel' and 'palm seed' was of no conse-
quence under Sec. 24 of the Import Policy. The clarification could
have been sought from the Regional Licensing Authorities at Bombay,
Madras and Calcutta who could have given technical advice in the
matter. He thus contended that Palm Kernel was a canalised item and
F the appellant had no right to import Palm Kernel under'the OGL and
as such the Customs authorities were perfectly justified in confiscating
the goc;>ds and imposing the penalty as well as redemption fine.
As regards the question of levy of duty it was contended by the
learned Solicitor General that 6746.472 MT of goods were actually
G removed the 17.6.88 and on that date the duty was 245% and the
petitioners are liable to pay difference in duty on the aforesaid
quantity of the goods. He urged that in the matter of taxation there
was no question of applying any principles of equity and there was no
question of applying the deeming fiction in construing the provisions
of Sec. 15(1)(b) of the Customs Act. Even if the appellant had entered
H the bill of entry on 28.1.88, admittedly the goods were not actually
PRIYANKA OVERSEAS v. U.0.I. IKASLIWAL, J.] 155
removed on that date and the hiatus if any in actual removal, cannot be
extended to an artificial date. It was submitted that this Court's deci- A
sion in Duni Chand Rataria v. Bhuwalka Brothers Ltd. (supra) cited by
the learned counsel for the appellant supports his contention. He
further contended that it was a well settled proposition that in constru-
ing the words of one Statute, no help can be sought from the interpre-
. talion put to such words in another Statute, and to support his conten- B
tion he placed reliance on Comm. of Sales Tax, Madhya Pradesh v.
Jaswant Singh Charan Singh, [1967] 2 SCR P. 720 and M/s. Bharat
Surfactants (Private) Ltd. & Anr. v. Union of India and Anr., [1989] 4
sec p. 21. ·
Ld. Solicitor General in the alternative contended that even if
this Court comes to the conclusion that Palm Kernel was not a c
canalised item .and the Customs authorities had no justification to
consficate and impose redemption fine and penalty, the appellant is
liable to pay the customs duty at the rate of 105% on the enure goods
as held by the Division Bench of the High Court. The appellant fully
knowing that the rate of duty in October, 17 when the goods had arrived D
I in India was 105% and even if the deeming provision for removal of
the goods is applied for the purpose of Sec. 15(J)(b) of the Customs
Act, then it should be 2/3rd October, 87.
We have given our careful consideration to the arguments
advanced by the learned counsel for the parties and have thoroughly E
perused the record. We have to first consider whether 'Palm Kernel'
and 'palm seed' were two different commodities or 'Palm Kernel' was
included in 'Palm seed' for the purposes of import. The difference
between 'palm seed' and 'Palm Kernel' has been explained in the
letter of the Central Plantation Cross Research Institute dated 2 l. LS7
(placed on record), it reads as under: p
"The difference between Palm Kernel and Palm seeds has
also been pointed out in the aforesaid letter according to
which Palm seed is specially extracted from fruits while
kernel is a product obtained after sterilisation, digestion at
95 degree Celsius, pressing, decarping, shelling etc. The G
Palm .Kernel will loose its viability due to the above proces-
ses and cannot be used for germination."
Under Appendix 5 para (b )(5) of the Import Policy under the heading
Oils/seeds only Palm Oil/Palm seeds have been mentioned. We agree
with the view taken by the High Court in this regard that Palm Kernel }{
156 SUPREME COURT REPORTS [1990] Supp. 3 S.C.R.
cannot be included under the item palm seeds and the two commodi-
A
ties were different as understood in commerce or trade. We do not
want to burden this judgment by citing those authorities which have
already been considered for deciding this controveFsy by the High
Court. We do not see· any force in the contention of the learned
Solicitor General in this regard that the Government had only made a
B clarification vide notification dated 27.7.87 by introducing in Appen-
dix 5 para (b) Item No. 5 "all other oils/seeds/any other material frQITI
wliich oil can be extracted." It is significant that in the aforesaid notifi-
cation published in the Gazette of India Extraordin'>I'y para(!) Sec.
121, it was clearly mentioned that \he same was issued as an amend-
merit to the earlier notice No. l-I'TC(PN)/85-88 dated the 12.4.85. The
notification stated that the following amendment shall be made in the
c Policy at proper places indicated below and then under the head
'amendment' the new provision which included "all other seeds from
which oil can be extracted" was mentioned. It is therefore evident that
the Govt. of India itself, realised the difference in the two commodi-
ties therefore it amended its previous policy. We are.therefore of the
D opinion that prior to 27.7.87 'Palm Kernel' was not a canalised item
and the High Court rightly held that 'Palm Kernel' was not included
within the entry of 'Palm seed'. ·
Since 'Palm Kernel' was not included within 'Palm seed' the
Customs authorities had no legal justification to confiscate or impose
E redemption fine, or penalty, as the goods had already been shipped on
various dated i.e. on 26.6.87 and 25.7.87. It is no longer in dispute that
if the Palm Kernel was not a canalised item before 27.7.87 then it could
have been imported under the OGL before that date. The crucial dates
in this regard are 26.6.87 and 25.7.87 when the goods were actually
loaded in the ship and not the date of arrival of the ship in the territo-
F rial waters of India.
The next question which falls for consideration is· as to what duty
could be imposed in the facts and circumstances of the present case.
The admitted facts of the case are that 10681.832 MT of Palm Kernel
arrived in the territorial waters of India on 2/3rd October, 1987. As the
G appellant was apprehending some dispute on the import of the same
under OGL from the Customs authorities, it filed writ petition in the
High Court on 28.7.87 and obtained an interim order from the learned
Single Judge to the effect that the goods shall be released to the party
on furnishing bank .guarantee for a value equivalent to I/4th value of
the goods and on the strength of a bond for the remaining 3/4th value
H of .the goods. That order was ciaFified by another Order on 3.8.87 by .•
PRIYANKA OVERSEAS v. U.0.1. [KASLIWAL, J.I 157
which the Court directed that the appellant shall pay the entire
customs duty as may be determined and demanded by the Customs A
authorities in cash and it shall furnish a bond for the entire value of the
goods. It was further made clear that the Customs authorities shall not
release the goods unless the entire Customs duty as determined .and
demanded by them was fully paid in cash by the appellant. The Union
of India filed an appeal against the aforesaid Order before the Division B
Bench of the High Court. The Division Bench passed an Order on
18.9.87 to the effect that the imported goods should be kept in a
bonded warehouse or in any other warehouse approved by the
Customs authorities and until further orders M/s. Priyanka Overseas
Pvt. Ltd. will not take delivery of the same. In the light of the direc-
tions of the Court the petitioners filed 16 bills of lading for bonding the
entire cargo of Palm Kernel and the goods were allowed to be bonded C
in terms of the Court's order in a private warehouse. Meanwhile pro-
ceedings were continuing for adjudication before the Customs authori-
ties. The Division Bench of the High Court on 2.12.87 directed the
Collector to adjudicated the matter within 10 days. The Collector by
his order dated 7.12.87 held that the Palm Kernel was a canalised item D
and as such he gave an order to confiscate the entire quantity of Palm
Kernel but gave an option to the appellant to redeem the goods on
payment of a fine of Rs.90 lacs. The option was to be exercised within
one month and the appellant was _directed to pay penalty of Rs. JO lacs.
The appellant deposited the amount of Rs. JO lacs imposed as penalty
and a proportionate amount of Rs.35 lacs _for redeeming 3935.364 E
.MT of Palm Kernel and removed the goods on 17.12.87. The peti-
tioners then ~iled bills of entry for the remaining 6746.468 MT of Palm
Kernel on 28.1.88 but did not deposit the redemption fine. The Govt.
issued a notification on 29.1.88 withdrawing the exemption duty on
Palm Kernel and as a result of which the earlier duty of J05% came
into effect. The petitioners then deposited the balance amount of F
Rs.55 lacs as redemption fine on 30.1.88, but the goods could not be
released as again controversy arose regarding the amount of duty on
the goods. The Govt. increased the duty from J05% to 245% in its
budget which came to be applied on 1.3.88. The petitioney then
approached this Court by filing a SLP. The Court on 2.6.68 passed the
following order: G
"Issue notice.
Issue notice on the_ stay application.
Meanwhile the operation of the order of the Division
.Bench of the High Court directing payment of duty in H
158 SUPREME COURT REPORTS [ 1990] Supp. 3 S.C.R.
respect of the goods to the extent of 3935.364 MT which
A
had already been released to the petitioner is stayed. The
respondents are further directed to release the remaining
goods to the petitioner in respect of which Bills of Entry
were filed on 28th January 1988 on payment of such duty as
was leviable on 28th January 1988. The respondents shall
B refund a sum of Rs.50 lacs to the petitioners out of the sum
of Rs. I crore which has been directed by the High Court to
be refunded within two weeks and the remaining amount of
Rs.50 lacs shall be retained by the respondents towards the
duty payable on goods, which are to be released to the
petitioners within two weeks."
c Sec. 15 of the Act provides for determination of rate of duty on
imported goods. The rate of duty and tariff valuation, if any, applic-
able to any imported goods, shall be the rate and valuation in force in
the case of goods cleared from a warehouse under Sec. 58, the date on
which the goods are actually removed (emphasis added) from the
D warehouse. There can be no manner of doubt that the term 'actual
removal' is even more stronger than the term 'physical removal' and
the intention of the Legislature in using these words clearly stipulates
the actual removal of the goods from the warehouse. The rate of duty
and tariff valuation on the imported goods may be changed from time
to time and as such the Legislature· has clearly expressed its intention
E under Sec. 15 as to on what date the rate of duty and tariff valuation is
to be determined. We cannot introduce the concept of deeming provi-
sion while determining the question of actual removal of the goods
from the warehouse. The rate has to be determined on the basis of the
date on which the goods are actually removed from the warehouse and
thereafter the question would be examined as to how the relief is to be
F moulded in case it is found that the Customs authorities were them-
selves responsible in preventing the importer of goods from actually
removing the goods from the warehouse. In a case of the present kind
where there is no ambiguity in the expressed intention of the Legisla-
ture in determining the date for applying the rate of duty, no juristic
principle of deemed removal of the goods, can be applied as contended
G by Mr. Sen. (Many contingencies may happen in between the filing of
bill of entry and actual removal of the goods from the warehouse for
which sometimes the importer of goods may himself be responsible, in
some cases the responsibility may lie on the Customs authorities and
!Here may also be contingencies beyond the control of both the parties.
H
In any case the intention of the Legislature being clear, rate of duty is
to be applied, as may be in force on the date of actual removal of goods
-
PRIYANKA OVERSEAS v. U.0.1. IKASLIWAL, J.l 159
from the \i;arehouse under Sec. 15(1)(b) ofthe (:ustoms Act.
A
Learned counsel for both the parties have placed reliance on
Duni Chand Rataria's case (supra) on the question of actual removal of
goods. In that case the q!!estion arose regarding ihe expression "actual
delivery of possession" in Sec. 2(1)(b)(i) of the West Bengal Jute
Goods Future Ordinance, 1949. It was held that the expression meant
actual delivery as contrasted with mere dealing in itself within the
intendment of the Ordinance and such actual delivery of possession
included within its scope symbolical as well as .constructive delivery of
possession. The above case in our view lends no assistance to either of
the parties in determining the controversy raised before us in the pre-
sent case. In Duni Chand Rataria's case, the appellant Duni Chand
entered into three contracts with the respondent agreeing to purchase c
jute bags on the terms and conditions contained in the relative contract
forms of the Indian Jute Mills Association. The respondent expressed
its inability to deliver the goods under the said contracts and requested
the appellantto settle the same by selling back the goods. Three settle-
ment contracts were accordingly entered into between the parties .iJ
whereby the appellant agreed to sell the goods under the original
contracts to the respondent. The appellant therein then submitted to
the respondent his bills for the amounts due at the foot of the said
contracts aggregating to Rs.!, 15,650 which the respondent accepted
but neglected to pay. The appellant therefore ftled suit for the reco-
very of the said sum with interest and costs. The defendant-respondent E
contested the appellant's claim on the main ground that ihe three
settlement contracts were illegal and prohibited by the West Bengal
Jute Goods Future Ordinan~e, 1949. The respondent contended that it
never dealt in sale and purchase of jute goods involving actual delivery
and possession thereof, nor did it possess or have control over any
godown and other means and equipments necessary for the storage F
and supply of jute goods and therefore said settlement contracts were
void and not binding on it. The Trial Court decreed the suit. The
learned Judges of the Appeal Court however held that the settlement
contracts were contracts relating to the purchase of jute goods made
on a forward basis by the respondent not being a person who habitu-
ally dealt with in the sale -and purchase of jute goods involving the G
actual delivery and possession thereoC and were therefore void and
unenforceable. In view of these findings the Appeal Court allowed the
appeal and dismissed the suit. The Plaintiff Duni Chand then filed an
appeal before this Court. This Court observed that the only point at
issue was whether the respondent was a person who habitually dealt irt
the sale or purchase of jute goods involving the actual delivery and H
'.
160 SUPREME COURT REPORTS [1990] Supp. 3 S.C.R.
possession thereof and the contention which was vehemently urged
A
on behalf of the respondents in the Courts below was that the transac-
tions were purely speculative, that mere delivery orders did not repre-
sent the goods and the transfer, thereof did not involve as between the
intermediate parties actual delivery or possesson of the goods but
differences in rates were only paid or received by the parties. While
dealing with the above question, it was held as under: r
B
"The learned Judges of the Appeal Court also laid unwar-
ranted emphasis on the words "actual delivery or posses-
sion" and contrasted actual delivery with symbolical or
constructive delivery and held that only actual delivery or
possession meaning thereby physical or manual delivery
c was within the intendment of the Ordinance. Delivery has
been defined in Sec. 2(2) of the Indian sale of Goods Act as
meaning voluntary transfer of possession from one person
to another and if nothing more was said delivery would not
only include actual delivery but also symbolic or construc-
D tive delivery within the meaning of the term. The use of the
word "actual" in Sec; 2(l)(b)(i) of the Ordinance was con-
sidered by the Appeal Court as indicative of the intention
of the Government to include within the scope of the exemp-
tion only cases of actual delivery of possession as contras-
ted with symbolical or constructive delivery. This construc-
E tion in our opinion is too narrow. Even if regard be had to
the mischief which was sought to be averted by the prom ul-
gation of the Ordinance, the Government intended to pre-
vent persons who dealt in differences only and never
intended to take delivery under any circumstances, from
entering into the market. Provided a person habitually
F dealt in the sale or purchase of jute goods involving deli-
very of the goods, he was not to be included in the ban.
This could be the only intendment of the Ordinance,
because otherwise having regard to the ordinary course of
business, business, in jute goods would become absolutely
impossible. The manufacturer of jute goods does not come
G normally into direct contact with the shipper. It is only
through a chain of contracting parties that the shipper
obtains the goods from the manufacturer and if only actual
delivery of possession as contrasted with symbolical or con-
structive delivery were contemplated it would be impossi-
ble to carry on the business. If the narrow construction
H which was put by the Appeal Court on the expression
PRIYANKA OVERSEAS v. U.OJ. (KASLIWAL, J.] 161
"actual delivery of possession" was ac;cepted it would
involve each one of the intermediate parties actually taking A
phsical or manual delivery of the goods from their sellers
and again in their turn giving physical or manual delivery of
the goods which they had thus obtained to their immediate
buyers. Such an eventuality could never have been contem-
plated by the Government and the ·only reasonable inter- B
pretation of the expression "actual delivery of possession"
can be that actual delivery as contrasted with mere dealings
in differences was within the intendment of the Ordinance
and such actual delivery of possession included within its
scope symbolical as well as constructive delivery of
possession."
c
Thus the above case dealt with the meaning of "actual delivery of
possession" in the background and context of its meaning as laid down
in the West Bengal Jute Goods Future Ordinance, 1949 and it can
render no assistance in determining the question of actual removal of
goods as mentioned in Sec. 15(1)(b) of the Customs Act. D
M/s. Bharat Surfactants (Private) Lt.d. & Anr. v. Union of India
and Anr. case (supra) relied by the learned Solicitor General was a
case of Sec. 15(1)(a) of the Customs Act. Under the above provision
the criteria for determining the rate of duty and tariff valuation is the
rate in force in the case of goods entered for home consumption under E
Sec. 46, on the date on which a bill of entry in respect of such goods is
presented. The Section provides that if a bill of entry has been pre-
sented before the date of entry .inwards of the vessel by which the goods
are imported, the bill of entry shall be·deemdd to have been presented
on the date of such entry inwards. While interpreting the words 'date
of entry inwards of the vessel' it was held that. it would be the date of F
entry recorded in Customs register. Where vessel arrived and bill of
· entry was presented at a prior date to the date of berth given by Port
authorities and entry inwards registered by the Customs authorities at
a later date then it was held that the rate of import duty and tariff.
valuation would be that in force on the later date. This decision is also
of no assistance in interpreting the provisions of sec. J9(J)(b) of the G
Act.
Sec. 15(J)(b) provides that the rate of duty would be the rate, as
applicable on the date of actual removal of t.he goods from the
warehouse. There can be no manner of doubt that the actual removal
of goods "or 3935.364 MT was 17.12.87 and for 6746.468 MT of goods H
162 SUPREME COURT REPORTS (1990] Supp. 3 S.C.R.
A was 17.6.88. Admittedly the quantity of 3935.364 MT of Palm Kernel
were allowed to be cleared by the Customs authorities itself on pay-
ment of nil duty and rightly so as there was no duty on Palm Kernel on
that date. So far as the balance quantity of 6746.468 MT of Palm
Kernel is concerned, the contention of Mr. Sen, Ld. counsel for the
B petitioners is that the Customs authorities had wrongfully detained the
goods and had not permitted the appellant to remove the same by
imposing a redemption fine and penalty in an illegal manner and the
appellant had to approach the Court for quashing the same and it was
only thereafter that it filed the bill of entry on 28.1.88 and thereby it
became entitled to remove the goods on that very day and there being
no duty on that day, the customs authorities were not entitled to
C charge any duty.
The question is whether the appellant is liable to pay duty on the
balance quantity of 6746.468 MT of Palm Kernel and if so, what
should be the rate of duty. In determining this question it must be
D borne in mind the statutory principle that if a party discharges its
liability by complying with the requirement of law, and presents
papers for clearance of goods, it is obligatory on the Revenue
authorities to pass the order immediately thereon. If the Revenue
authorities either refuse to pass the order on some erroneous or imagi-
nary grounds or on account of any misconception of law, the depart-
£ ment cannot take advantage of its own wrong in demanding higher rate
of duty from the importer. Under Secs. 68 and 71 of the Act, goods
placed in a warehouse can be taken out only after clearance for home
consumption. Admittedly, the appellant had done its part of legal duty
by presenting bills of entry and complying with Sec. 68(a) of the Act on
28.1.88. But the Customs Officer refused to release the goods on an
F erroneous assumption that the appellant was liable to pay redemption
fine and since it had not paid the said amount, the goods were not
liable to be released. The High Court held that the imposition of
redemption fine was honest and the petitioner was within its right to
claim release of goods without paying any redemption fine, on the day
•it complied with the formalities under Sec. 68 of the Act. Sec. 68(c) of
G the Act prescribes an official function which was not performed by the
Customs authorities due to entertainment of a wrong and illegal notion
regarding the payment of redemption fine which resulted into a wrong
order by the department. In the circumstances the department cannot
· be allowed to take advantage of its own wrongful and illegal act. In
moulding relief, this Court has always applied principles of equity in
H order to do complete justice between the parties.
PRIYANKA OVERSEAS v. U.0.1. [KASLIWAL, J.] 163
The High Court has overlooked that on 15.10.87 the petitioner
A
had only applied fpr w~rehousing of the goods on the direction of
Division Bench of High Court. The Single Judge had passed an interim
order for clearing fhe goods after payment of customs duty, but the
department went in appeal and the Division Bench by its order dated
18.9.87 directed thdmported goods to be kept in a bonded warehouse
or any other warehouse approved by the Customs authorities and until B
further orders the appellant was directed not to take delivery of the
same. The appellant submitted the bills of entry on 28.1.88 and admit-
tedly no duty was payable on that date. Moreover where go9ds
imported are kept in a warehouse under a bond, the date of arrival of
- such goods in India is not relevant for determining the duty, therefore
the High Court committed error in holding the appellant was liable to
pay duty as in force on the date of arrival of goods. c
On the question of actual removal of goods for the purposes of·
determining the rate of duty payable by the importer under Sec.
15( 1)(b) of the Act it is necessary to bear in mind that the Act provides
for two classes of warehouses, under Chapter IX of the Act. Sec. 58 D
provides for licensing of private warehouses. Sec. 59 requires an
importer to execute a warehousing bond. Sec. 68 provides for clea-
rance of warehoused goods for home consumptiorl. Sec. 73 provides
for cancellation and return of warehousing bond. Whenever, the
Customs authorities permit the storage of imported goods in a private
warehouse, these provisions would be applicable. The appellant filed E
bills of entry for home consumption as required by Sec. 68 of the Act
with a prayer for debonding the goods of 3935.364 MT on 17.12.87
which were stored in a private warehouse. The Customs authorities on
that very day namely 17.12.87 cancelled the licence for warehousing
the quantity of goods in respect of which the bilis of entry were filed by
cancelling the bond and deleting the said godown from the relevant F
licence issued for the quantity of 11500 MT. Endorsement to that
effect was made on the licence of warehouse and keys of the godown
were also handed over to the appellant simultaneously, as a result of
which though the goods remained in the said godown but not as a
warehouse, instead it was treated to be a private godown of the appel-
lant, and it was allowed to remove the goods without payment of any G
duty.
There is no dispute that the remaining goods were also stored in
a private warehouse and the appellant had filed the bills of entry and
complied with all the required formalities for debonding and clearance
of the goods on 28.1.88, therefore the appellant was entitled to an H
,
164 SUPREME COURT REPORTS [ 1990] Supp. 3 S.C.R.
A order cancelling the licence of the private warehouse enabling it to
remove the goods. Had the Customs authorities passed order in
accordance with law the same result would have followed as had been
done on 17.12.87. The Central Manual published by the Director of
Publications, Customs and Central Excise contains directions for de-
termining the actual date of removal of goods from warehouse in terms
B of Sec. 19(1)(b) of the Act. The functioning of private warehousing
has been elaborated therein. Clause 10 of the Manual prescribed the
type of buildings which can be approved as private warehouses under
Sec. 58 of the Act. Para 15 of the Manual provides for purposes of Sec.
15( l)(b) of the Act, that if the goods are in private warehouse the date
of cancellation of the licence of the private warehouse should be taken
as the actual removal of the goods for the purposes of Sec. 15(1)(b) of
the Act. Para 15 as already stated was followed in the appellant's own
case on 17.12.87 in releasing the goods. There is no valid reason as to
-
why the same procedure should not have been followed in respect of
the remaining goods in respect of which the bills of entry were filed on
28.1.88 for debonding and clearance of goods. Merely because the
D Officer failed to discharge his duties by marking illegal demand for
deposit of redemption fine, the appellant could not be held liable to
pay duty. The appellant is therefore entitled to the delivery of goods
without paying any duty as on 28.1.88 no duty was payable on the
goods.
E In the result the appeal filed by the Union of India is dismissed
and the appeal filed by M/s. Priyanka Overseas Pvt. Ltd. & Anr. is
allowed in the manner indicated above.
The respondents are therefore directed to refund the amount of
Rs.50 lacs lying in deposit towards redemption fine and personal
F penalty within one month from today. It is made clear the appellant
is not entitled to any interest on the aforesaid amount, but if the amount
is not returned within one month as directed, the respondents will be
liable to pay interest@ 15% per annum from today till, the date of
payme'nt to the appellant.
G In the facts and circumstances the parties shall bear their own
costs throughout.
R.S.S. Appeal by Union of Indiadlsniissed.
Appeal by Priyanka Overseas allowed.
'
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