Supreme Court of India
SUBHASH PHOTOGRAPHICS ETC.versusUNION OF INDIA AND ORS.
- Citation
- 1993 INSC 191
- Decided
- 11 May 1993
- Disposal
- Dismissed
- Bench
- B P JEEVAN REDDY
Holding
The regulation‑making power under Section 157 is not limited to procedural matters; Chapter Note (2) does not constitute excessive delegation, and the Project Imports Regulations, 1986 are valid, so photographic equipment does not fall within "industrial plant".
Summary
The petitioners, Subhash Photographies, imported photographic machinery and claimed a concessional customs duty by classifying the equipment as "industrial plant" under Heading 98.01 of the Customs Tariff Act, 1975. The Customs authorities treated the machinery as falling under Chapter 90, levying a higher duty. The Central Board of Customs and Excise, under Section 157 of the Customs Act, 1962, had issued the Project Imports Regulations, 1986 which defined "industrial plant" and expressly excluded establishments such as photographic studios. The petitioners challenged the validity of these regulations, arguing that the Board’s power was limited to procedural matters and that the definition amounted to excessive delegation of legislative power. The Supreme Court held that the regulation‑making power under Section 157 is not confined to peripheral matters, that Chapter Note (2) of Chapter 98 validly empowers the Board to define expressions, and that such delegation is not excessive. Consequently, the regulations were upheld and the photographic equipment was held not to be "industrial plant", leading to dismissal of the appeals.
Issues considered
- Whether the Central Board of Customs and Excise, exercising power under Section 157 of the Customs Act, 1962, can define the term "industrial plant" and exclude photographic equipment, i.e., whether such definition is within the scope of delegated legislation.
- Whether Chapter Note (2) of Chapter 98 of the Customs Tariff Act, 1975, amounts to an excessive delegation of Parliament’s essential legislative function.
- Whether the Project Imports Regulations, 1986 are valid and can be applied to deny the concessional duty claimed by the petitioners.
Legislation cited
- Central Boards of Revenue Act, 1963
- Customs Act, 1962s. 156, s. 157, s. 159
- Customs Tariff Act, 1975s. Chapter 98, s. Heading 98.01
- Project Imports Regulations, 1986s. Regulation 3
Subjects
Customs dutyIndustrial plantDelegated legislationExcessive delegationCustoms Tariff ActSection 157Project Imports RegulationsConcessional dutyStatutory interpretation
Judgment
A SUBHASH PHOTOGRAPHICS ETC. ETC. -
v.
UNION OF INDIA AND ORS.
MAY 11, 1993
B
[B.P.JEEVAN REDDY ANON. VENKATACHALA,JJ.]
Customs Act, 1962/Cust01ns Tariff Act, 1975/Project Imports Regulations,
1986:
Ss. 156. 157, 159/First Schedule, Second Schedule, Chapter 90, Chapter 98.
c Heading 98.01, Chapter Notes (1) and (2) Regulation/(3)-"Industrial
Plant"-Meaning of-Pfrotographic machinery does not fall within the p11111iew
of "industrial plant".
Administrative Law :
D Delegated Legislation-Chapter 98 of Customs Tariff Act,
1975-Concessional rate of duty on certain articles including "industrial
plant"-Chapter Note (2) conferring power on Central Board of Customs and
Excise to define expressions used in Chapter 98-Project imports Regulations
made by Board defining "industrial plant"- Etclusion of industrial systems
meant for establishments designed to offer services of any description such as
E photographic studios, photo-graphic film processing laboratory etc. from the
purview of "industrial p/ant"-Held-Regulation making power conferred on
Board bys. 157 of Customs Act, 1962 is same as rule-making power conferred on
Central Government under s. 156-Reg.ulations should not be contrary ro rules
made under s. 156-Project Import Regulations cannot be said to have travelled
beyond purview ofstatltte-Board by defining" industrial plant" has not travelled
F
beyond its brief-Chapter Note (2) does not amount to excessive delegation of
Parliaments' essential legislative function.
Words and Phrases :
"Industrial Plant" occurring in Chapter 98 of Customs Tariff Act,
G 1975-Meaning of
The Customs Tariff Act, 1975 by its First and Second Schedules
provided the rates of and custom duties to be levied under the Customs Act,
1962. Chap,ter 98 introduced in Second Schedule prescribed a concessional
rate of duty in respect of articles and items specified therein. As per Chapter
H
654
SUBHASH PHOTOGRAPHICS v. U. 0. I. 655
Note (1 ), if a particular article mentioned in Chapter 98 also fell under some A
other Chapter/heading, still such item would be governed by Chapter 98 and
not by that other chapter/heading .
. Photographic machinery was covered under Chapter 90 wherein the
rate of duty was far higher, but for purposes of duty it was claimed as
"industrial plant',' under Chapter 98.01. The expression "industrial plant"
B
was defined neither in Customs Tariff Act nor in Customs Act.
Chapter Note (2) of Cliapter 98 of the Customs Tariff Act laid down that
Heading 98.01 would apply to all goods imported in accordance with the
regulations made under. s.157 of the Act and the expressions used in heading c
98.01 should have the meaning assigned to them in the said regulations.
Accordingly, the Project Import Regulations, 1986 were framed. Regulation
(3) of said Regulations defined "industrial plant" excluding from its ~urview
industrial systems meant for "establishments designed to offer services ofany
description" such as. photographic studios, photographic film processing
laboratories ete. D
On coming into force of the Project Import Regulations, the Customs
authorities refused to treat the photographic equipment imported by the
appellants as industrial plant falling under heading 98.01 and sought to levy
duty thereon under Chapter 90 of the Customs Tariff Act, 1975.
E
The appellant filed writ petitions before the High Court challenging the
validity of the Project Import Regulations, 1986. T6e writ petitions were
dismissed. Hence the appeals by special leave.
The appellant contended that regulations made by the Central Board of
customs and Excise under s. 157 of the Customs Act 1962, not being subject F
to Parliament's scrutiny in the sense that they were not required to be laid on
the Door of the Houses of Parliament u~der s. 159 stand on an inferior footing
to rules ml:'de by the Central Government under s. 156, and therefore, the ·
regulation making power was confined only to peripheral and procedural
matters and not for making substantive provisions; the Act spe~ified the G
articles and things subjected to duty as also the rates of duty and such a ·
power was not left to be e~ercised by a delegate; the Parliament did not
contemplate delegating to the Board the power to cut down the field and
ambit occupied by the provisions ofihe Customs Act or the Customs Tariff
Act and such a power, if delegated to the Board, would amount to excessive
delegation oflegislative power; Regulation (3) of the Project Imports Regu- H
\
656
-·
SUPREME COURT REPORTS (1993] 3 S.C.R. .
A lation defining "Industrial plant" was outside the purview of the regulation-
making power conferred by s. 1?7 as the same took away under the garb of
defining the said expression the beneficial rate of duty provided by the
Parliament ill the interest of industrial progress of the country.
Dismissing the appeals, this Courtt- _ _.,,
B
HELD : 1. The regulation-making power conferred on the Central
Board of Customs and Excise by s.157 of the customs Act, 1962 is not confined
only to peripheral and/or procedural matters. The Parliament has appointed
the Central Government and the Board to make rules/regulations to carry out
purposes of the Act. The character of Rules and of the Regulations made
c under ss. 156 and 157 of the Act respectively 15 the same-both constitute
delegated legislation. The Regulations are subject to an additional limitation
viz., they should not be contrary to the Rules made under s.156. The purpose
of sub-section (2) in both the sections is to allocate certain matters to each of
them exclusively; subject to these sub-sections, both the delegates can exer-
cise the power vested in them for carrying out the purposes of the Act. (662-
D
G-H, 663-G-H, 664-A)
2.1. It is not for the Court to question the wisdom of the Government's-
or for that matter, of Board's policy. Enactments like Customs Act and
Customs Tariff Act are not merely taxing statutes but are also potent
instruments in the hands of the Government for regulating the economy and
E
the industrial development of the country. Power of taxation is one of the
weapons in the Government's armoury to regulate the economy. A certain
industry may require encouragement while another may not. Such legisla-
tions can be properly administered only by constantly adjusting them to the
needs of the situation. This calls for a good amount of discretion to be allowed·
F to the delegate. "Flexibility is essential (in law-making) and it is one of the
advantages of rules and regulations that they can be altered m~ch more
quickly and easily than can Acts of Parliament". Probably, itis for this reason
that the Parliament has through Chapter Note (2) vested the power to define
the expressions, occurring in Chapter 98, in the Board which is a part of the
Government and is in immediate direct charge of the administration of the
G Act alongwith and subject to the guidance of the Central Government.
Looked at from this angle, it cannot be said that Chapter Note (2) amounts to
excessive delegation of the Parliament's essential legislative function. (665-D~ ...
~· . I
2.2. Chapter 98 of the Customs Tariff Act provides a concessional.tariff
H to industrial plant. The expression "industrial planf' is a term of wide
SUBHASH PHOTOGRAPHICS v. U. 0. I. 657
connotation. All kinds of Industrial plants may not require to be encouraged. A
Some may; others may not. Decisions of this nature have to be made from time
to time. Parliament cannot obviously do this. It has, therefore, rightly left the
function to the Board. In 1986, the Government-which expression includes
the Board-thought that import of 'industrial systems' meant for 'establish·
ments designed to offer services of any description such as hotels, hospitals,
.photographic stud.ios, phoU]graphic fdm processing laboratories, etc. need no B
encouragement in the shape of concessional custom tariff and they said so
through the Project Imports Regulations,)986 which cannot be said to have
travelled beyond the purview of the statute~ Nor can it be said that the Board
has travelled beyond its brief by excluding the "Establishments designed to
offer services of any description" from the preview of "industrial plant" as
defined under Regulation (3) of the Project Imports Regulations. Accord·
c
ingly, photographic equipment does not fall within the ambit of "industrial
plant". (665-G-H, 666-A, 668-E)
2.3. It cannot be said that the Parliament has, by empowering the Board
to define the expression "industrial plant" occurring in Chapter 98, delegated D
its essential legislative function. There is, indeed, no self-abnegation on the
part of the Parliament. The express power conferred by Chapter Note (2) of
Chapter 98 uf Customs Tariff Act is undoubtedly different from the power of
exemption conferred by Section 25. It makes little difference in principle that
while an exception notification is required to be laid on the floor of the
parliament, Regulations made under Section 157 are not so required. Ab· E
sence ofsuch requirement does not mean absence of control by the Parliament
over tbe acts of the delegate. (661-G-H)
Supreme Court Employees Welfare Association v. Union of India [1989] 4 S.C.C.
181.Avinder Singh v. Punjab [1979] 1S.C.R.845 & State of Tamil Nadu v. Hind
Stone [1981] 2 S.C.R. 742, relied on.
F
-
Vasantial Maganbhai Sanjanwala v. State of Bombay [1961] 1 S.C.R. 341 &
Devidas v. State of Punjab [1967] 3 S.C.R. 557, referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2684 (NM) /93 G
etc. etc.
From the Judgment and Order dated 2. 4. 92/ 27. 4. 92 of the Bombay High
Court in W.P. No. 2?°~f 1990.
H
658 SUPREME COURT REPORTS
A Harish N. Sal\'e, R.P. Bhatt, A.K. Ganguli, Dr. Nitin Kantawala, Ms.
Hemantika Wahi, T.V.S.N. Chari, Ms Tanuja Sheel, Mrs. Sheela S. Rao, P.
Parmeswar arid E.C. Agrawala, Ranjit Kumar, R. Venkataramani, Mrs. M.
Qamaruddin, Abhijat P. Medh for the appearing parties.
The Judgment of the Court was delivered by
B
B.P. JEEVAN REDDY J. Leave granted. Heard counsel for the parties.
· These appeals arise from the common judgment and order of the Bombay
High Court in a batch of writ petitions. The question is whether the photographic
c machinery imported by the appellants falls under Customs Tariff Heading No.
98.01. If it falls under it, it is entitled to a concessional rate of duty. If not. it is
chargeable to a higher duty.
The Customs Tariff Act, 1975 was enacted by Parliament with a vi~w to
consolidate and amend the law relating to customs duties. It repealed the Indian
D Tariff Act, 1934 and Indian Tariff(Amendment) Act, 1949. Section 2 says that the
rates at which duties and customs shall be levied under the Customs Act, 1962 are
those specified io the First and Second Schedules. Section~ levies additional duty
equal to excise duty. Chapter 98 was introduced in the Schedule with effect from
February 28, 1986. It relates to "Project Imports; Laboratory Chemica!s; Passen-
gers Baggage, Personal Importation by air or post; Ship Stores". Chapter 98
E
provides a concessional rate of duty in respect of articles and items specified
therein. Chapter Note ( 1) declares, "this chapter is to be taken to apply to all goods
which satisfy the conditions prescribed therein, even though they may be covered
by a more specific heading elsewhere in this Schedule." In other words. if a
particular article mentioned in Chapter ?8 also falls under some other chapter/
F heading, still such item will be governed by chapter 98 and not by that other
- chapter/heading. So far as photographic machinery is concerned, it is not disputed
that it falls under chapter 90 where the rate of duty is far higher. Chapter Note (2)
which is of crucial relevance ~erein reads :
"Heading No. 98.01 is to be taken to apply to all goods which are
G imported in accordance with the regulations made under section
157 of the Customs Act, 1962 (52of1962) and expressions used in
this heading shall have the meaning assigned to them in the said
regulations. " ......
(emphasis added)
H
SUBHASH PHOTOGRAPHICS v. U. 6. I. (REDDY,J.] 659
--- Heading 98.0 l (Sub-Heading 9801.00), being relevant for our purpose, must A .
also be set out:
Heading Sub Description of Rate of duty
No. heading article Standard
No. Prefential Areas
98.01 98.01.00 All items of machinery 60% B
including prime movers,
instruments, apparatus and
appliance, control gear and
transmission equipment,
auxiliary equipment (inclu-
C·
. ding those required for
research and development
purposes, test and quality
control), as well as all
components (whether finished
'or not) or raw materials for the D
manufacture of the aforesaid
items and their components requi-
red for the intial selling up of a
unit, or the substantial expan-
sion of an existing unit, of a
specified: E
(1) Industrial plant,
(2) irrigation project,
(3) power project,
(4) mining project,
· (5) project for the exploration
or oil \ or other mirienlls, and F
.
(6) such 'other projects as
·.Central Government may,
having regard to the econo-
mic development of the
country notify in the official
G
Gazette in this behalf.;
and spare parts, other raw
materials (including semifinished
material} or consumable stores
not exceeding 10% of the value
of the goods specified. above H
A
'560 SUPREME COURT REPORTS
provided $hat such spare parts,
raw materials or .consumable
[1993] 3 S.C.R.
·--
stores are assential for the
maintenance of the plant or
·project mentioned in 1 to 6 above."
(emphasis added)
B
The expression "industrial plant" is not defined in the Customs Tariff Act,
1975 or, for that matter, in theCustomsAct, 1962. ChapterNote(2)ofChapter98,
which it must be emphasised is a part of statute itself, says thatlhe expressions used
in heading No. 98.Ql shall have the meaning assigned to them by the regulations
c made under Section 157 of the Customs Act and further that heading No. 98.01
shall apply to all goods which are imported in accordance with such regulations.
As contemplated by Chapter Note (2) of Chapter 98 of the Customs Tariff
Act, the Central Government framed the Project Imports Regulations under
Section 157 of the Customs Act, contained in notification No. 230/86-Cus. dated
D AprH 3, 1986. They came into force·on the same day. Regulation (1) of these
Regulations says that they shall be called "Project Imports Regulations, 1986" and
shall come into force on April 3, 1986. Regulation (2) says that the said
Regulations shall apply for assessment and clearance of goods falling under
heading No. 98.01. Regulation (3) defines certain expressions including the
expression "industrial Plant". The definition reads as follows:
E
"Industrial Plant" means an industrial system designed to be em- ·
ployed directly in the performance of any process or series of
. processes necessary for manufacture production or extraction of a
commodity."but does not include- ·
F
(i) establishments designed to offer services of any description such
as hotels, hospitals, photographic studios, photographic film pro-
cessing laboratories, photocopying"'studios, laundries, garages and
workshops; or
G
(ii) a single machine or a composite machine, within the meaning
assigned to it, in Notes 3 and 4 to section XVI of the ~aid First
Schedule."
.A perusal of the definition of "industrial
.
plant" makes it clear
l
that it seeks
.
to
H: • exclude industrial systems meant for "establishment designed to offer services of
SUBHASH PHOTOGRAPHICS v. U. 0. I. [REDDY,J.] 661
any description". It mentions certain service establishments by way of illustration. A
Photographic studios and photographic film processing laboratories happen to be
.
mentioned specifically as some of the establishments designed to offer services. .
Once the Project Imports Regulations came into force, the Customs authori-
ties refused to treat the photographic equipment imported by the appellants and
others as "industrial plant" falling under heading 98.01 of the customs Tariff Act. B
They sought to levy duty thereon under Chapter 90. In view of the refusal of the
Customs authorities to treat the photographic machinery imported by them as
"industrial plant" within the meaning ofCha..nter 98, the appellants approached the
· Bombay High Court by way of the batch of writ petitions. Their contention was
that until April 3, 1986, photographic machinery was included within the expres- c
sion "industrial plant'.' occurring in heading 98.0 I as well as in tariff heading 84.66
of the old tariff. This fact was affirmed by the Government of India - when a doubt
was raised-in their letter bearing No.F 526/52/83-Cus. (T.U.) dated November
4, 1988. Even according to the normal meaning and connotation of the expression
"industrial plant", photographic machinery falls within its purview. This is the
sense in which the said expression is used in the TariffEntry 98.0 l. If so, the ambit D
and field of the said expression cannot be cut-down by a regulation made under
Section 157 of the Customs Act. If any particular machinery or equipment is to be
excluded from the purview of the "industrial plant", it can and should be done only
by the Act itself but not by a subordinate legislation like regulations. It was
submitted that the 1986 regulations are outside the purview of Section 157 and are
incompetent. The contentions were negatived. and writ petitions dismissed by the E
Division Bench.
In these appeals, S/Sri Harish Salve and Kantawala urged the following
contention :
F
(1) A perusal of the Customs Tariff Act discloses its scheme. The Act
specifies the articles and things subjected to duty ·as also the rate to duty.
Specification of articles is not left to be done by a delegate. It is true that power of
exemption is conferred upon· the Central government under Section 25. of the
Customs Ac.t, but it is relevant tQ notice that a notification of exemption issued
under Section 25 is required to be laid on the floor of both the houses ofparliament . G
by Section 159 of the Act. This shows the close control which the Parliament
intended to exercise over the specification of articles and the rate of duty thereon.
The Regulations made under Section 157 are not subject to Parliament's scrutiny
in the sense that .they are not required to be laid on the floor of the houses cf
Parliament under Section 159. Evidently, Regulations were notsupposed to deal
H
(I
·'
662 SUPREME COURT REPORTS [1993) 3 S.C.R.
A with any matters of substance.
(2) While enacting Section 157, Parliament could never have contemplated
delegating, to the Board, the power to cut-down the field and ambit occupied by
the provisions of the Customs Ac.tor Customs Tariff Act. Regulations made by the
Board stand ori an inferior footing to the rules made by the Central Government
B under Section 156. The regulation-making power was intended to be utilised for
the purpose of ptoviding procedural and peripheral provisions but certainly not for
making a substantive provision cutting down the content and ambit of the
provisions of the Act
c (3) Even if it is held for some reason that such a power was intended to be
and wa5 delegated to the Board, it would be bad since it amounts to excessive
delegation of legislative power. Regulation (3) of the new. Regulations which
defines the expression "industrial plant" is clearly outside the province of
regulation-making power conferred by Section 157. The legislative history of
tariff entry 98 militates against any such power being exercised by the Board. The
D · Board cannot take away what the Parliament has given. The regulation in effect
have the effect of amending the provision in the Act. They take away under the garb
·of defining the expression "industriill plant", the beneficial rate of duty provided
by Parliament in the interest ofindustrial progress of the country. The Regulations
are inconsistent with the pto_visions of the Customs Tariff Act.
E
S/Sri Ganguly andT.V.S.N. Chari, learned counsel appearing forthe Central
Government, on the other hand, fully supported the validity of the said regulations.
They pointed out that the validity of chapter Note (2) was not questioned before
the High Court has been expressly recorded in the judgment under appeal. They
submitted that the appellants should not be permitted to do so at this stage. Once
F Chapter Note (2) is taken as good, the challenge to the 1986 Regulations must fail.
The said note is not bad as amounting to excessive delegation oflegislative power.
In short. they refuted each and every submission made by the learned counsel for
the appellants.
Customs Act, 1962 and Customs Tariff Act, 1975 are complimentary. to each
G · other. Section 157 of the Cuitoms Act confers upon the Central Board of Excise
and Customs (constituted under the Central Boards o( Revenue Act, 1963) the
power to make regulations "consistent with this Act and Rules, generally to carry
out the purposes of this Act". Sub-section (2) particularises certain matters with
respect to which regulations can be made. The specification of certain matters in
H sub-section (2) is without prejudice to the generality of the power conferred by
SUBHASH PHOTOGRAPHICS v. U. 0. I. [REDDY,J.) 663
Sub-section (1). This is consistent with the standard legislative practice. Section A
157 reads;
"157. Central power to make regulations.
( l) Without prejudice to any power to make regulations contained
B
elsewhere, in this Act, the Board may make regulations consistent
with this Act and the rules, generally to carry out the purposes of this
Act.
(2) In particular and without prejudice to the generality of the
foregoing power such regulations may provide for all or any of the C
following matters, namely-
(a) the form of a bill of entry, shipping bill, bill of export, import
manifest, import reports, export manifest, export report, bill or
transshipment, boat note and bill of coastal goods;
D
(b) the conditions subject to which the transshipment of all or any
goods under sub-section (3) of ISection 54, the transportation of all
or any goods under Section 56 and the removal of ware-housed
goods from one warehouse to another under section 67 may be
allowed without payment of duty; E
(c) the conditions subject to which any manufacturing process or
other operations may be carried on in a warehouse under Section
65.''
Section 156 confers upon the Central Government the power to make rules F
"consistent with this Act generally, to carry out the purposes of this Act". Sub-
section (2) of Section 156 again Specifies certain matters with respect to which
rules can be made. The specification in sub-section (2) is without prejudice to the
generality of the power conferred by sub-section (1).
G
The Parliament has appointed two authorities i.e. central government and the
Board to make rules/regulations to carry outthe purposes of the Act generally. The
character of Rules and of the Regulations made under Sections 156 and 157
respectively is the same - both constitute delegated legislation. The Regulations
are subject to im add.itional limitation viz., they should not be contrary to the Rules
H
SUPREME COURT REPORTS (1993] 3 S.C.R.
A made under Section 156. The purpose of sub-section (2) in both the sections is inter
alia to allocate certain matters to each of them exclusively; subject to these sub-
sections, both the delegates can exercise the power vested in them for carrying out
the purposes of the Act. No established legislative practice of any considerable
duration has been brought to our notice to read any further limitation into the
regulation-making power under Section 157, assuming that a legislative practice
B can be read as a limitation. We cannot, therefore, accept the contention that
regulation-making power under Section 157 should be confined only to peripheral.
and/or procedural matters. It is not necessary for the purposes of this case to
emphasis the need or the growing relevance of delegated legislation. Moreover,
enactments like customs Act and Customs Tariff Act are not merely taxing statutes
but are also potent instruments in the hands of the Government for regulating the
c economy and the industrial development of the country. The 'economic' minis-
tries nad the establishments allied to them keep a close watch on the economy,
closely monitoring its behaviour. Power of taxation is one of weapons in the
Government's armoury to regulate the economy. A certain industry may require
encouragement while another may not. Yet another sector may require to be
D controlled-nay, discouraged on some occasions. In an under-developed country
like ours, the emphasfs is bound to be more on capital goods industry rather than
on consumer goods' industry. The domestic industry has also to be protected and
encouraged in certain situations. In 1986. the government - which expression in
this discussion inclucfes the Board--evidently thought that import of 'industrial
systems' meant for ·establishments designed to offer services of any description
such as hotels, hospitals, photographic studios, photographic film processing
laboratories' etc. needs no encouragement in the shape of concessional custom
tariff and they said so through the said Regulations made in April 1986. It is not
for the court to question the wisdom of the government's - or for that matter, of
Board's - policy. Boardis a part of the government. It is in direct charge of the
administration of the Act along with ~he government. Probably, it is for this reason
F that the Parliament has, through Chapter Ncite (2), vested the power to define the
expressions occurring in Chapter 98 in the Board. In this scheme of things, we
cannot accept the argument of Sri Salve with respect to some kind of an inherent
limitation upon the regulation-making power of the Board. We cannot say that the
said power is confined only to, what the learned counsel calls, peripheral and/or
procedural matters.
G
There is another and perhaps more simpler answer to the attack upon the
validity of the said Regulations.
They are relatable not only to Section 157 of the Customs Act but more
H
SUBHASH PHOTOGRAPHICS v. U. 0. I. [REDDY,J.) 665
particularly to Chapter Note (2) of Chapter 98 of the Customs Tariff Act. Chapter . A
Note (2) expressly ~tates that the expressions used in Heading 98.0 l shall have the
meaning assigned to them in the said regulations. In accordance with the said
Chapter Note, Project Imports ~egulations have been made excluding "establish-
ments designed to offer services of any description" from the purview of "indus-
trial plant". If the said regulations are good any vali~ there can be no escape from
what they say; the. photographic equipment does not fall within the ambit of B
"industri.al plant". In this view of the matter, the relevance of the alleged legislative
practice with respect to regulation-making power, or of the situation obtaining
prior to the framing of the said regulations, is very little. The express power
conferred by Chapter Note .(2) of Chapter 98 cannot be curtailed or abridged with
reference to alleged legislal'ive. practice relating to regulation-making power,
assuming that such a practice is established and is relevant. The only question
c
which really arises is whether Chapter Note (2) amounts to excessive delegation
of legislative power.
As rightly pointed out by Thommen,J. In Supreme Court Employees Welfare
Association v. Union of India [1989] 4 S.C.C. 187 "where the validity of a D
subordinate legislation (whether made directly under the constitution or statute) is
in question, the court has to consider the nature, objects and scheme of the
instrument as a whole, and on the basis of that examination, it has to consider what
exactly was the area over which and the purposes for which power has been
delegated by the governing law." In statutes like Customs Act and Customs Tariff
Act one has also to keep in mind that such legislation can be properly administered E
only by constantly adjusting it to the needs of the situation. This calls for a good
amount of discretion to be allowed to the delegate. As is often pointed out
"flexibility is essential (in law-making) and it is one of the advantages of rules and
regulations that they can be altered much more quickly and easily than can acts of
Parliament." We have pointed out hereinbefore the necessity of constant and
continuous monitoring of the nation's economy by the government (and its various F
institutions) and the relevance of these enactments as a means of ensuring a proper
and healthy growth. Looked at from this angle, we are unable to see any substance
in the argument that Chapter Note (2) amounts to excessive delegation of ttie
Parliament's essential legislative function. Chapter 98 provides a concessional
tariff inter alia to industrial plant. The expression "industrial plant" is a term of G
wide connotation. All kind of industrial plants may not require to be encouraged.
Some may; others may not. Decisions of this nature have to be made from time to
time. Parliament cannot obviously do this. It has, therefore.left the function to the
Board which, as emphasised hereinbefore, is in immediate direct charge of the
administration of the Act, along with and subject to the guidance of the central
H
666 SUPREME COURT REPORTS [1993] 3 S.C.R.
A government.
----
In Vasantlal Maganbhai Sanjanwala v. State of Bomab)• [1961] 1 S.C.R. ·
341, it is observed by this Court that "self-effacement of legislative power in
favour of another agency either in whole or in part is beyond the permissible limits
of delegation". At the same time, it is held, "it is for a court to hold on a fair,
B
generous and liberal construction of an impugned statute whe.ther the legislature
exceeded such limits. But the said liberal construction should not be carried by the
Courts to the extent of always trying to discover a dormant or a latent legislative
policy to sustain an arbitrary power conferred an executive authorities. It is the
duty of the Court to strike down .without any hesitation any arbitrary power
c conferred on the executive by the legislature". These words were quoted with
· approval in a subsequent decision of the Constitution Bench in Devidas v .. State
of Punjab [1967] 3 S.C.R. 557.
Krishna Iyer, J. emphasised this very aspect in the context of a taxing statute
in Avinder Singh v. Punjab [1979] 1 S.C.R. 845. The learned Judge said:
D
" ... .the legislature cannot self-efface its personality and make over,
in terms plenary, the essential legislative functions. The legislature
is responsible and responsive to the people and its representatives,
the delegate may not be and that is why excessive delegation and
legislative, hara kiri have been frowned upon by constitutional.law.
E
This is a trite proposition but the complexities of modern adminis-
tration are so bafflingly intricate and bristle with details, urgencies,
difficulties and need for flexibility that our massive legislatures may
not get off to a start if they must directly and comprehensively
handle legislative business in all their plenitude, proliferation and
F particularisation. Delegation of such part of legislative power
becomes a compulsive necessity for viability. If the 500-odd parlia-
mentarians are to focus on every minuscule of legislative detail
leaving nothing to subordinate agencies the annual output may be
both unsatisfactory and negligible. The law-making is not a turnkey
project, readymade in all .detail and once this situation is grasped the
G dynamics of delegation easily follow. Thus, we reach the second
constitutional rule that the essentials of legislative functions shall
not be delegated but the inessentials, however, numerous and
significant they be, may well be made over to appropriate agencies.
Of course, every delegate is subject to the authority and control of
the principal and exercise of delegated power can always be
H directed, corrected or cancelled by the principal."
1
SUBHASH PHOTOGRAPHICS v. U. 0. I. [REDDY,J.] 667
Applying the principles aforesaid, we cannot say that the Parliament has, by A
empowering the Board to define the expression "industrial plant" occurring in
Chapter 98, delegated its essential legislative function. Indeed, we see no self-
abnegation on the part of the Parliament. The power conferred by Chapter Note (2)
is undoubtedly different from the power of exemption conferred by Section 25. It
makes little difference in principle that while an exemption notification is required
to be laid on the floor of the Parliament, Regulations made under Section 157 are B
not so required. Absence of such requirement does not mean absence of control by
.. the Parliament overthe acts of the delegate. Nor are we satisfied that by excluding
the industrial systems meant for establishments designed to offer services of any
description, the Board has travelled beyond its brief. Reference may be had, in this
connection to the decision of tis court in State ofTamilNadu v. Hind Stone [1981]
2 S.C.R. 742] Section 15 of the Mines and Minerals (Regulation and Develop-
c
ment) Act, 1957 empowers the State Government to make rules for regulating the
grant of quarry lease, mining lease and other mineral concessions in respect of
minor minerals and pufP?ses.connected therewith. In exercise of the said power,
the Government of Tamil Nadu framed Tamil Nadu Minor Mineral concession
Rules, 1959. Rule 8 of the Rules prescribed the procedure for lease of quarries to D
private persons. Rule 8(C), which was introduced in the year 1977, imposed a
prohibition on the grant of lease of quarries in respect of black granite to private
persons. The Rule provided that notwithstanding anything to the contrary con-
tained in the said rules, no lease for quarrying black granite shall be granted to
private persons on or after 7th December, 1977. It could be granted only to the State
Government or to a corporation wholly owned by it. The validity of Rule 8(C) was E
challenged on the ground that it travels beyond the purview of the Act inasmuch
as the power to make rules conferred upon the State Government by Section 15 was
meant for regulating the grant of quarry leases in respect of minor minerals but not
for prohibiting it for creating a monopoly in itself (State Government). It was also
argued that since the decision contained in Rule 8(C) involved a maj9r change of
policy, it could be done only by the legislature and not by a subordinate legislative F
body. Both these arguments were rejected. Following observations are apposite :
" .... .It was pointed out by the Privy Council in Commonwealth of
Australia v. Bank of New South Wales- and we agree with what
was stated therein-that the problem whether an enactment was G
regulatory or something more or whether a restriction was direct or
only remote or only incidental involved, not so much legal as
political, social or economic consideration .... Each case, it was said,
must be judged on its own facts and in its own setting of time and
Circumstances and it might be that in regard ~o some economic
H
668 SUPREME COURT REPORTS [1993] 3 S.C.R.
A activities and at same Stage of social development. prohibition with
a view to State monopoly was the only practical and reasonable
manner of regulation.
Another of the submiss.ion of the learned counsel was that the .
G.O.Ms. No. 1312 dated December 2, 1977 involved a major
B change of policy, which was a legislative function and therefore
beyond the competence of a subordinate legislating body. We do
not agree with the submission. Whenever there is a switch over from
'private sector' to 'public sector' it does not necessarily follow that
a change of policy requiring express legislative sanction is in-
volved. It depends on the subject and the statute. For example, if a
c
decision is taken to impose a general and complete ban on.private
mining of all minor minerals, such a ban may involve the r~versal
of a major policy and so it may require Legislative sanction. But if
a decision is taken to ban private mining of a single minor mineral
for the purpose of conserving it, such a ban, if it is otherwise within
D the bounds of the authority given to the Government by the Statute,
cannot be said to involve any change of policy."
The statement of law is clear - and we agree with it respectfully. We are,
therefore. of the considered opinion that Chapter Note (2) cannot be faulted as an
instance of excessive delegation of essential legislative function nor can the
E Project Imports Regulations be faulted on the ground of travelling beyond the
purview of the statute.
For the above reasons, the appeals fail and are dismissed. No costs.
, RP. Appeals failed.
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