Full Judgment Text
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PETITIONER:
M.J. EXPORTS LTD. AND ANR.
Vs.
RESPONDENT:
CUSTOMS, EXCISE AND GOLD (CONTROL) APPELLATETRIBUNAL, BOMBAY
DATE OF JUDGMENT14/05/1992
BENCH:
RANGNATHAN, S.
BENCH:
RANGNATHAN, S.
RAMASWAMI, V. (J) II
YOGESHWAR DAYAL (J)
CITATION:
1992 AIR 2014 1992 SCR (3) 300
1993 SCC Supl. (1) 169 JT 1992 (3) 398
1992 SCALE (1)1145
ACT:
Customs Act, 1962:Sections 2(33), 25, 45, 51, 53, 54,
59, 68, 69, 74, 113(d) & 114.
Import-Export Policy 1988-91: Paras 22, 23, 24(1),
174(1)-Appendix 6-List 2, Item 36-List 3, Item 37.
Import (Control) Order, 1955: Clauses 10 (C), 11(1)
(d), 11(4)-Schedules I,II,III & V.
Exports (Control) Order, 1988: Clause 3, 15 (g).
Bill of Entry (Forms) Regulations, 1976: Regulation 3-
Forms I,II and III
"Haemodialyser"-Life Savings Equipment-Exemption from
Customs duty-Import under Open General Licence-Customs
Clearance obtained for "Home Consumption"-Goods repacked and
exported-Confiscation and penalty Order-Validity of-Held the
export of goods was impliedly barred under the conditions of
Open General Licence-Goods exported were "Prohibited goods"-
Confiscation and penalty order held justified.
Interpretation of statues-Provisions should be
construed harmoniously making it meaningful in the context.
Practice and Procedure-Raising a fresh plea involving
investigation of facts at the appellate stage-Permissibility
of.
Words & Phrases :
"Home consumption"-"Stock and sale"-Meaning of.
HEADNOTE:
The Imports (Control) Order, 1955 provides that the
items of goods
301
set out in Schedule 1 to the said order cannot be imported
except under a Licence or Customs clearance permit. Clause
11(4) of the Order, however, empowers the Central Government
to issue an Open General Licence (OGL) permitting the import
of such goods subject to the conditions specified. Appendix
6 to the Import-Export Policy 1988-91 deals with categories
of goods that can be imported under an Open General Licence
and lists out the Categories of importers, the items allowed
to be imported by them and the conditions governing such
importation. Item 36 of this Appendix permits the import,
under OGL, "by all persons" of Life-saving equipment as per
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List 2 of the Appendix and their spares. List 2 which
contains the List of life saving equipment allowed for
import under OGL includes, as item no. 27, "Haemafiltration
instrument/haemo-dialysers and accessories/spares thereof.
By a Notification issued by the Government of India under
Section 25 of the Customs Act, 1962 the Haemodialysers and
accessories, thereof were exempted from duty. The
Haemodialysers are, however, not included in Schedules I and
III of the Exports (Control) Order, 1988, clause 3 of which
prohibits or restricts the exports of items of goods
specified in the two schedules.
The appellant, a recognised trading house carrying on
business as Exporters, imported Haemodialysers from West
Germany under Open General Licence and obtained the import
clearance of goods from Bombay Customs House for "Home
consumption" free of duty by relying on the notification
granting exemption from custom duty. After clearance the
goods were taken to Ankleshwar factory at Gujarat where they
were re-packed and presented to kandala port for export to
U.S.S.R. The custom authorities detained the goods for
examination because it was of the opinion the re-export of
goods imported under Open General Licence was not
permissible except with specific approval of Import-Export
authorities. During the pendency of the proceedings before
the Collector, the appellant obtained a No Objection
Certificate of the Reserve Bank of India for export on
"humanitarian grounds" that the goods were needed for the
help of the victims of the Armenian Earthquake in Russia and
consequently the goods were exported.
The Customs authorities, with the appellant’s
concurrence, made a reference to the Chief Controller of
Imports and Exports under para 24.1 of the Import-Export
policy who clarified that the imports under the OGL and
certain other licences were entirely meant for use within
the country
302
and therefore cannot be allowed for re-exports as such.
By its order dated 22.10.1990 the Collector of Customs
held that the goods exported were liable to confiscation
under section 113(d) of the Customs Act and imposed a
penalty of Rs.50 lakhs under section 114. However, the
Collector held that the goods imported were not liable to
import duty. The appellant preferred an appeal before the
Central Excise & Gold Control Appellate Tribunal which was
dismissed.
In appeal to this Court it was contended on behalf of
the appellant that: (1) The confiscation or the penalty can
be justified only if the goods fall under description in
section 113(d) of the Customs Act. The appellant was
entitled, as a matter of right, to export the goods because
the goods were not included in Schedule I or III to the
Export Control Order nor was the export of goods prohibited
by or under any other law for the time being in force; (2)
Appendix 6 of the Import and Export Policy imposes no
specific conditions that the Life Saving equipment should be
used in India and should not be exported. The words ’stock
and sale’ are very wide and there is no justification to
restrict them to mean only sales within the country; and (3)
The exports were made in pursuance of the mutual trade
agreement between Government of India and U.S.S.R.
considered beneficial to both countries and that this should
be considered sufficient to justify the export.
On behalf of the Revenue, it was contended that: (1)
Under the provisions of the Customs Act clearance of goods
can only be for "home consumption" or "warehousing" and the
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import of goods just for the purpose of export is not
permitted under the Act. The appellant cleared the goods
for home consumption and so they were to be utilised in
India and it was not permissible to export the goods; (2)
Under the Terms of the Open General Licence the goods
imported were to be used in India and not to be exported.
Permitting export would defeat the intent of placing the
goods under O.G.L. because the duty free import was
permitted so that life saving equipment and medicines are
available for use in the country and not to enable a private
party to make profit by their export; and (3) The goods in
question were "prohibited goods" under section 2(33) of the
Customs Act. Therefore, the imposition of penalty was
justified.
Dismissing the appeal, this Court,
303
HELD: 1. The Customs Act does not prohibit the export
of imported goods. There are provisions which indicate that
export of imported goods is very much envisaged under the
statute. The provisions contained in section 74 fully
reinforce this view. Para 174(1) of the Import Export
Policy 1988-91 also impliedly recognises that imported goods
can be re-exported. [315 E, 317 B-D]
2. The goods imported into India have to be cleared
from the customs area for home consumption or warehousing
and this is done by presenting a bill of entry under section
46. The terms of this section read with Regulation 3 and
Forms I, II or III appended to the Bill of Entry (Forms)
Regulations, 1976, make it clear that there are three forms
of the bill of entry: for home-consumption, for warehousing
and for ex-Bond clearance for home consumption. The
presentation of a bill of entry for home consumption only
means that the importer does not intend to warehouse the
goods. The form of the Bill of Entry prescribed under the
Act does not require any declaration from the importer as to
the purpose for which the imported goods are required or
that they will be used or sold only in India. [314 C-D, 315
A-B]
3. The expression ’home consumption’ has also, in the
context, no clear or definite meaning and raises a lot of
conundrums if literally interpreted to mean that imported
goods should always be consumed in India. The
uncertainities in the connotation of the expression ’home
consumption’ preclude one from giving an interpretation to
this expression that the imported goods cannot be at all
exported and incline one to hold that, in the context, it is
only used in contrast to the expression ’for warehousing’.
[315 B-D]
4. The Customs Act provides that that goods which are
cleared from the customs area for warehousing can be cleared
from the warehouse for home consumption under section 68 or
for exportation under section 69. The suggestion that if an
importer intends to export the imported goods, he should
clear them for warehousing and then proceed in terms of
section 69 cannot be accepted because that would mean that
imported goods can be re-exported after being warehoused for
some time even a day or a few hours - but that they cannot
be exported otherwise. Therefore, it would not be correct
to insist that an importer must clear goods for warehousing
and then export them by clearing from the warehouse.
Whether to deposit the goods in a warehouse or not is an
option given to the importer. [315 E-F, 316 E, 316A]
304
4.1. There is nothing in the provisions of the Act to
compel an importer even before or when importing the goods,
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to make up his mind whether he is going to use or sell them
in India or whether he proposes to re-export them. Again,
there may be cases where he has imported the goods for use
or sale in India but subsequently receives an attractive
offer which necessitates an export. It would make export
trade difficult to say that he cannot accept the export
offer as the goods, when imported, had been cleared for home
consumption. Section 69, therefore, should be only read as
a provision setting out the procedure for export of ware-
housed goods and not as a provision which makes warehousing
an imperative pre-con-dition for exporting the imported
goods. [316 C-E]
5. Clause 15(g) of the Export (Control) Orders, 1988
cannot be interpreted to mean that imported goods cannot be
exported unless they are cleared, at the time of import,
under a bond for re- export. [324 E]
6. It will not be correct to say that since the goods
do not fall under clause 11(i) (d) of the Import (Control)
Order, 1955, their export was not permitted. To say that
goods bonded for re-export will not be affected by the
provisions of the order does not mean that goods, not so
bonded, cannot be exported at all. Their export can be
interdicted only if there is some other express or implicit
prohibition in clause 3 of the Export Control Order or
otherwise. [324 H, 325 A-B]
7. Prima facie the words "stock and sale" may be,
generally speaking, wide enough to comprehends sales inside
as well as outside the country and that their scope should
not be restricted unless such a restriction can be read into
the terms of the OGL itself. Whatever may be the position
in regard to the other lists in Appendix 6 to the Import-
Export Policy, 1988-91 the items of goods enumerated in list
no.2 that Appendix stand in a class of their own. There is
sufficient indication in the heading given to the List to
show that the import of these items into India is permitted
only because such life-saving equipment is required for use
in the country. The use of the words "stock and sale" shows
only that the items are not restricted to use by the
importer but can be transferred by him to another. But it
is not proper to read them as permitting a sale of goods
outside the country. Note (44) in Appendix 6 also carries a
mild indication that the equipment permitted to be imported
is only for the purposes of use in the country. [320 B-F]
Janak Photo Enterprises (1990) 49 E.L.T. 339,
distinguished.
305
7.1. Although there is no express prohibition, the re-
export as such of items of goods specified in list 2 of
Appendix 6 to Import-Export Policy 1988-91 and imported into
India is prohibited by necessary implication by the language
of, and the scheme underlying, the grant of OGL in regard to
them. It is difficult to agree that the import-export
policy envisages the re-export of goods belonging to this
category. The opinion of the CCIE is also to the same
effect. [321 B]
7.2. The appellant had obtained the import of the goods
free of duty by relying on the notification granting
exemption from customs duty. It is obvious that it could
not have been the intention of the legislature to grant
exemption from customs duty in respect of vital goods of the
nature in question in order that an importer may make profit
by selling them abroad. The notification is, therefore,
relevant for the issue before us to the limited extent that
it lends supports to the construction of List 2 of Appendix
6. [322 F-H]
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8. The Court should construe a provision in a
harmonious way to make it meaningful having regard to the
context in which it appears. In this case the language used
is being interpreted for giving content and meaning to the
classification and heading used in the order permitting
imports under OGL in certain cases in the context of the
provisions of the Imports and Exports Control Act, 1947, as
well as the orders and notifications issued thereunder. [322
C-D]
Hansraj Gordhandas v. H.H. Dave, Assistant Collector of
Central Excise & Customs, Surat & Two Ors., [1969] 2
S.C.R.253; State of M.P. v. G.S. Dall and Flour Mills,
(1991) 187 I.T.R. 478 S.C.; Union of India & Anr. v. Deoki
Nandan Aggarwal, (1991) 3 J.T.(S.C.) 608 and Surjit Singh
Kalra v. Union of India, [1991] 2 S.C.C. 87, referred to.
9. Clause 10-C of the Imports (Control) Order enables
the authorities to interfere in any individual case where
they find that the purpose of the import is not being
achieved. It does not impose an obligation on an importer
to seek the directions or the permission of the CCIE before
exporting the goods if otherwise permissible. While clause
11(4) of the order makes clause 10 C applicable to the
subject imports, it releases them from the application of
the other restrictions and conditions on imposed by the
Import Control Order. [325 G-H, 326 A-B]
306
However, clause 10 C is of some indirect assistance in
the present case. The CCIE’s opinion on the Import and
Export Control order is final and binding. In view of this,
when the CCIE came to know that the appellant was seeking to
export the goods, he could have intervened and issued
directions under clause 10 C either permitting the export of
the goods to the U.S.S.R. or directing them to be sold to
needy hospitals or other parties in India. He could have
effectively stopped the export of the goods. This shows
that the export of the goods is not free or unrestricted.
[326 C-E]
10. Since the goods imported were intended for use in
India the circumstance that the appellants secured a no
objection certificate of the RBI for export "on humanitarian
grounds" is of no assistance. [323 E-F]
11. The mere fact that mutual trade was allowed between
the two countries is not enough to hold that even goods of
this type - which had been allowed to be imported with a
specific end in view - could be exported. The export of
such goods may also enure to the benefit of India indirectly
but, in the absence of anything to show that the goods in
question constituted one of the categories of goods
specifically envisaged by the mutual trade agreement, it is
not possible to override the prohibition implicit in the
Import regulations. [324 A-B]
12. The goods in question were "prohibited" goods
within the meaning of S.2(33) and their confiscation under
S.113(d) and the penalty under section 114 of the Customs
Act were fully justified. [322 E]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4105 of
1991.
From the Judgment and Order dated 14.6.1991 of the
Custom, Excise & Gold (Control) Appellate Tribunal, Bombay
in C-598/90-BOM.
R.K. Habbu, B.R. Agrawala, Dr. Sumant Bhardwaj and
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Sunil Goyal for the Appellants.
A.K. Ganguli, A. Subba Rao and P. Parmeshwaran for the
Respondents.
The Judgment of the Court was delivered by
RANGANATHAN, J. Import Trade Control was introduced in
India
307
as a war-time measure in the early stages of the Second
World War, initially by a notification issued in exercise of
the powers conferred under the Defence of India rules. The
primary object of the notification was to conserve foreign
exchange resources and restrict physical imports so as to
reduce the pressure on the limited available shipping space.
To start with, the import of only 68 commodities, mainly
consumer items, were brought under control. Subsequently,
as foreign exchange resources came under pressure, import
control was extended to cover other commodities as well.
Soon after the second world war came to an and, the
control of imports and exports was statutorily provided for.
The Imports and Exports (Control) Act, 1947 (18 of 1947)
came into force with effect from 25th March, 1947, initially
for a period of three years and was extended from time to
time. The Act was substantially amended by the imports and
Exports (Control) Amendment Act, 1976. Section 3 of the Act
is relevant for our present purposes. It reads:
"3. Powers to prohibit or restrict imports and
exports - (1) The Central Government may, by order
published in the Official Gazette, make provisions
for prohibiting, restricting or otherwise
controlling, in all cases or in specified classes
of cases and subject to such exceptions, if any, as
may be made by or under the order:-
(a) the import, export carriage coastwise or
shipment as ships stores of goods of any specified
description;
(b) the bringing into any port or place in India of
goods of any specified description intended to be
taken out of India without being removed from the
ship or conveyance in which they are being carried.
(2) All goods to which any order under sub-section
(1) applies shall be deemed to be goods of which
the import or export has been prohibited under
section 11 of the Customs Act, 1962 (52 of 1962),
and all the provisions of that Act shall have
effect accordingly.
(3) notwithstanding anything contained in the
aforesaid Act, the Central Government may, by order
published in the Official
308
Gazette prohibit, restrict or impose conditions on
the clearance whether for home consumption or for
shipment abroad of any goods or class of goods
imported into India.
Several notifications were issued under s.3 of the
above Act from time to time setting out the lists of
controlled items. At the relevant time with which we are
concerned, the notification governing imports was the
Imports (Control) Order, 1955 as amended from time to time
and the one governing exports was the Exports (Control)
Order, 1988 which came into force on 30th March, 1988. The
broad scheme of the Imports Control Order is that the items
of goods set out in Schedule I to the said order cannot be
imported except under a licence or customs clearance permit
issued in terms of Schedules II, III and V to the order.
Clause 11(4) of the Order, however, also envisages the issue
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of an Open General Licence or Special General Licence by the
Central Government permitting the import of such goods by
such persons and subject to such conditions as may be
specified. Clause 3 of the Exports Control Order likewise
imposes restrictions on exports from the country in the
following terms:
"3. Restrictions on export of certain goods - (1)
Save as otherwise provided in this Order no person
shall export any goods of the description specified
in Schedule I, except under and in accordance with
a licence granted by the Central Government or by
an officer specified in Schedule II.
(2) Notwithstanding anything contained in sub-
clause (1) goods specified in Schedule III may be
exported on fulfilment of the terms and conditions
specified therein.
(3) If in any case, it is found, that the value,
specification, quality and description of the goods
to be exported are not in conformity with the
declaration of the exporter in those respects or
the quality and specification of such goods are not
in accordance with the terms of the export
contract, the export of such goods shall be deemed
to be prohibited."
The Government of India periodically announces its
import-export policy which remains in force for a specified
period subject to such changes or amendments as the
Government may make from time to time. The Import-Export
Policy of the Government for the period 1988-1991
309
(hereinafter referred to as ’the policy’) is the one with
which we are concerned. Appendix 6 to the policy deals with
the categories of goods that can be imported under an Open
General Licence (OGL) and lists out the categories of
importers, the items allowed to be imported by them under
OGL and the conditions governing such importation. Item 36
of this Appendix permits the import, under OGL, "by all
persons" of "Life-saving equipment as per List 2 of the
Appendix and their spares". Item 37 permits the import,
under OGL, "by all persons" of "finished drug preparations,
life saving and anti-cancer drugs as per List 3 of this
Appendix".List 2 which contains the "List of life saving
equipment allowed for import under OGL" includes, as item
no. 27, "Haemafiltration instrument/Haemo-dialysers and
accessories/spares thereof".
A notification was also issued by the Government of
India under s.25 of the Customs Act, 1962 (hereinafter
referred to as ’the Act’). This notification, as it stood
at the relevant time, was in these terms:
"In exercise of the powers conferred by sub-section
(1) of Section 25 of the Customs Act, 1962 (52 of
1962), and in supersession of the notification of
the Government of India in the Department of
Revenue and Banking No.182-Customs, dated the 2nd
August, 1976, the Central Government, being
satisfied that it is necessary in the public
interest so to do, hereby exempts goods specified
in the Schedule annexed hereto when imported into
India from (i) the whole of the duty of customs
leviable thereon under the First Schedule to the
Customs Tariff Act, 1975 (51 of 1975); and
(ii) the whole of the additional duty leviable
thereon under Section 3 of the Customs Tariff Act,
1975 (51 of 1975).
The Schedule annexed was in three parts. Part A set
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out a list of life-saving drugs or medicines, item 8 in
which is "Haemodyalisers and accessories/spare parts
thereof". Part B gave a list of "life-saving equipments".
Part C enabled the exemption to be availed of even in case
of other "life-saving drugs, medicine or equipment" not
specified in Parts A and B if the Director General of Health
Services certified that the goods fell under the above
category and recommended exemption from customs duty.
The Import Policy read with the Customs notification
made it pos-
310
sible for any person to import, inter alia, haemodialysers
free of import duty. This is what may be called the import-
side of the picture we have to consider.
Now, we turn to the export angle. We have already
referred to clause 3 of the Exports (Control) Order, 1988.
It prohibits or restricts the exports of the items of goods
specified in Schedules I and III thereto. It is common
ground that Haemodialyers do not figure in either of the
these two Schedules. The wide liberty granted for exports
(particularly to hard currency areas) of all goods other
than a few specified in the above two Schedules is easily
understood in the context of the country’s imperative need
to boost up its exports and augment its foreign exchange
reserves. Simultaneously, India had also entered into
reupee-trade agreements with U.S.S.R. and certain other
countries with view to improving mutual trade between India
and these countries. These agreements permitted, subject to
certain monetary limits and other restrictions, exports of
various types of goods from India to these countries.
The appellant, which is a "recognised trading house",
carrying on business as exporters, saw in these provisions
an opportunity to make quick money. It imported
Haemodialysers from West Germany and exported them to Russia
at a profit. We are told that sometime in 1987 he imported
several sets of such Haemodialysers through Bombay customs
and, within a short interval, exported them to the U.S.S.R.
through Bombay customs without any objection being taken
thereto by the customs authorities. This, apparently,
emboldened the appellant to repeat the attempt with some
variation and it is with this second transaction that we are
here concerned. In May, 1988, the appellant obtained from
the Trade Representative of the U.S.S.R. in India another
order for the supply of 53 Haemodialysing machines (along
with spare parts and accessories) manufactured by the
renowned West German company M/s. Fresenins A.G. bearing the
trade name "A-2000C". In pursuance of the above order, the
appellant, in turn, placed an order with the West German
manufacturers for the import of 53 Haemodialysers into India
through the port of Bombay. The Bombay Custom House allowed
the clearance of the goods on 19.10.88 under OGL and without
payment of customs duty. After clearing the goods, the
appellant took the goods to its Ankleshwar factory at
Gujarat where the goods are claimed to have been subjected
to "moisture proof packing, pelletisation, fabrication of
necessary stand etc." but arguments before us have
311
proceeded on the footing - as was also found by the
authorities - that nothing special had been done to the
imported goods and that, in India, they were merely repacked
for the purposes of export. The goods were then taken to
Kandla Port for shipment to the U.S.S.R. and shipping bills
were presented to the Customs Department at Kandla on
2.12.88. The C.I.F. value of the imports to the appellant
was Rs. 2,33,91,288 whereas the F.O.B. value of the exports
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was Rs.3,31,27,600. The appellant thus earned a profit of
Rs.97,36,312 on the transaction.
Eleven shipping bills were presented to the Kandla
Customs authorities on 2.12.88. The pro-forma of the bills
contained three alternative descriptions for the goods
sought to be exported viz. "free goods/India Produce to be
exported/India Produce", none of which were struck off. On
examination it was found that the goods were of foreign
origin in original packing and that they had been cleared in
October 1988 through Bombay Customs House "for home
consumption" but got repacked at Ankleshwar and presented
for export at Kandla. As the Customs authority was of
opinion that re-export of goods imported under OGL was not
permissible except with the specific approval of the Import-
Export Control authorities - he subsequently also got this
clarified by the Chief Controller of Imports and Exports -
he detained the goods for further examination. The
appellant, however, represented that the immediate export
of the goods was an imperative necessity to cater to the
victims of the earthquake in Armenia and persuaded the
authorities to clear the goods for export, subject to the
outcome of the proceedings, on payment of a cash desposit of
Rs. 6 lakhs, furnishing a bank guarantee of Rs. 10 lakhs and
a bond for the full value of the goods.
On looking further into the matter, the Customs
authorities were of opinion "that the appellant had
contravened the conditions of the customs notification and
so not entitled to its benefit and had also contravened the
provisions of the OGL" and "that they (the goods) appeared
to be liable to confiscation under s.113(d) of the Customs
Act and to have rendered themselves liable to a penalty
under s.114 of the Customs Act". A "show-cause" notice was,
therefore, issued on 25.3.89 and, after considering the
appellant’s reply dated 31.7.1989, the Collector of Customs
passed an order on 22.10.1990. He agreed with the appellant
that the goods were not liable to import duty and that, in
any event, the Kandla Collector of Customs had no
jurisdiction to demand customs duty on goods imported
312
through Bombay. But, he concluded,:
"The goods under export were liable to
confiscation under Section 113(d) of the Customs
Act. Since the goods have already been exported,
they are not available for confiscation. By
rendering the goods liable to confiscation, M/s.
M.J. Exports have rendered themselves liable to a
penalty under Section 114 of the Customs Act.
Considering the fact that the goods have already
been exported, I proceed to take action in terms of
the bond, Bank Guarantee and cash deposit furnished
by the exporter. I therefore impose a penalty of
Rs.50 lakhs on M/s. M.J. Exports. In order to
realise this amount I order the appropriation of
the cash deposit furnished by them towards penalty
and direct the Department to invoke the Bank
Guarantee furnished by them immediately. The
balance amount shall be paid by M/s. M.J. Exports
separately in terms of the bond furnished by them".
The appellant preferred an appeal to the Central Excise
& Gold Control Appellate Tribunal (’the Tribunal’) which,
by an order dated 14.6.91, dismissed the appeal. The
present appeal by Special Leave is from the Tribunal’s
order.
Sri Habbu, learned counsel for the appellant, contended
that, under s.113(d) read with s.114, the confiscation or
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the penalty can be justified only if the subject goods fall
under the following description in cl.(d) of s.113 viz.
"any goods attempted to be exported or brought
within the limits of any customs area for the
purpose of being exported, contrary to any
prohibition imposed by or under this Act or any
other law for the time being in force".
He submits that the appellant was entitled, as a matter
of right, to export the subject goods as they were not
included in Schedule I or Schedule III to the Exports
Control Order. According to him, far from prohibiting the
export of the goods in question, the provisions of the
Customs Act actually permit their export. He invited our
attention, in particular, to section 51, 54, 69 and 74. He
submitted that trade agreement with the U.S.S.R. also
encouraged exports to that country. According to
313
learned counsel, the export is also not "prohibited by or
under any other law for the time being in force". He,
therefore, submits that the orders of confiscation and
penalty deserve to be set aside.
On the other hand, learned counsel for the Revenue
submits that s.51 of the Act disentitles a person from
exporting "prohibited goods", an expression defined by
s.2(33) of the Act thus:
"prohibited goods" means any goods the import or
export of which is subject to any prohibition under
this Act or any other law for the time being in
force but does not include any such goods in
respect of which the conditions subject to which
the goods are permitted to be imported or exported
have been complied with".
According to him, the goods now in question fall within
the scope of this definition for various reasons to be
elaborated upon later. In this view, he says, ss.54, 69 and
74 do not help the assessee’s case in any manner. It is,
therefore, submitted that the provisions of ss.113(d) and
114 were rightly invoked in the present case.
Leaving out of consideration the issue whether the
appellant was entitled to exemption from customs duty on the
import of the goods in question - an issue which was decided
in favour of the assessee by the Collector of Customs and
has not been pursued further and is not in issue before us -
the basic and only controversy before us is whether the
export of the subject goods is barred, expressly or by
necessary implication, by the provisions of the Customs Act
or any other law in force. The Revenue bases its case of
prohibition on the export of the goods on two grounds. It is
submitted firstly, that the terms of the OGL under which the
goods were permitted to be imported by any person made it
clear beyond doubt that they were intended to be used in
India and not to be exported. Secondly, it is pointed out,
the import clearance of the goods had been granted "for home
consumption" and not for export. It is urged that the
provisions of the Customs Act make it clear that clearance
of imported goods can be only for "home consumption" or
"warehousing"; the import of goods just for the purpose of
export is not envisaged or permitted under its provisions.
Reference was also made to certain provisions of the Foreign
Exchange Regulation Act, 1973 (FERA).
314
The second point may be considered first. S.45 of the
Act provides that all imported goods unloaded in a customs
area shall remain in the custody of such person as may be
approved by the Collector of Customs until they are cleared
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for home consumption or are wareshoused or are transhipped
in accordance with the provisions of Chapter VIII. The
third of these cases is dealt with in Chapter VIII. It is
one in which there is, in substance, no import of the goods
into India for, though technically the goods enter Indian
territory, such entry is only by way of transit through this
country to their real destination. Such goods are mentioned
by the transporter in his "import manifest" and may be
transitted in the same vessel or aircraft or transhipped by
a different vessel or aircraft to their actual destination:
(vide, sections 53 & 54). Except in the above case, the
goods are actually imported into India and have to be
cleared from the customs area for home consumption or
warehousing and this is done by presenting a bill of entry
under section 46. The terms of this section read with
Regulation 3 and Forms I, II or III appended to the Bill of
Entry (Forms) Regulations, 1976, make it clear that there
are three forms of the bill of entry : for home-consumption,
for warehousing and for ex-Bond clearance for home
consumption. Imported goods can, therefore, be cleared only
for home-consumption or warehousing and, in this case, there
is no dispute that they were cleared by the appellant under
a bill of entry for home consumption. The argument for the
Revenue is that the enactment, understandably, does not
envisage the entry of goods into India for the mere purpose
of being exported again from India in the same form and
without any change. The appellant had purchased the goods
from Germany admittedly for their sale to Russia. It could
have effected the transaction by asking its vendors to
consign the goods to some Russian destination directly or,
if it considered it necessary, via an Indian port and,in the
latter case, it could have had them transitted or
transhipped (without actual clearance in India) under the
provisions of Chapter VIII. The law, however, does not
permit, says State counsel, an import just for the purposes
of export. Even otherwise, the appellant has cleared the
goods for home consumption and so they are to be used or
utilised in India; it is not permissible for the appellant
to export goods cleared for home consumption.
We do not thing that this contention of the Revenue is
sound. The contrast that finds emphasis in the sections as
well as forms above referred to is of clearance for home
consumption as opposed to clearance
315
for warehousing. The presentation of a bill of entry for
home consumption only means that the importer does not
intend to warehouse the goods; in the latter case, he is not
required to pay the import duties, if any, immediately
(ss.59 and 59A). The form of the Bill of Entry prescribed
under the Act does not require any declaration from the
importer as to the purpose for which the imported goods are
required or that they will be used or sold only in India.
The expression ’home consumption’ has also, in the context,
no clear or definite meaning and raises a lot of conundrums
if literally interpreted to mean that imported goods should
always be consumed in India. Is it home consumptions if the
importer does not not use the goods himself but sell them?
At what point of time should the importer make up his mind
whether he proposes to sell the imported goods in India or
wishes to export them outside? Is the condition infringed
if a purchaser of goods from the importer sells it to a
buyer in a foreign country? Will it be permissible for the
importer to use the imported goods in the manufacture of
other goods which he proposes to export? All these
uncertainties in the connotation of the expression ’home
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consumption’ preclude one from giving an interpretation to
this expression that the imported goods cannot be at all
exported and incline one to hold that, in the context, it is
only used in contrast to the expression ’for wareshousing’.
The above general consideration apart, there are other
indications in the statute which show that the Act does not
prohibit the export of imported goods. The Act provides
that that goods which are cleared from the customs area for
warehousing can be cleared from the warehouse for home
consumption (s.68) or exportation (s.69). At first blush,
this may seem to support the Revenue’s interpretation that
clearance for exportation and clearance for home consumption
are two different things. It is indeed suggested by State
counsel that, if an importer intends to export the imported
goods, he should clear them for warehousing and then proceed
in terms of s.69. But a little though would show this
interpretation cannot be correct. In the first place, where
an importer, even at the time of the import purchase has
decided to sell the goods in another country (as in the
present case), he may, as pointed out earlier, easily ask
the goods to be transitted or transhipped to the country of
sale and thus avoid any necessity for their being at all
cleared in India. But where, for one reason or other, he
wants to import the goods into India and then sell them to
the foreign country or where the importer decides on an
export sale only after he has arranged for the import of the
goods into India, the Act prescribes
316
no form of a Bill of Entry under which he can clear such
goods intended for re-export. It would not be correct to
insist that he must clear them for warehousing and then
export them by clearing from the warehouse. Whether to
deposit the goods in a warehouse or not is an option given
to the importer. If he is able to pay the import duties and
has his own place to stock the goods, he is entitled to take
them away. But, where he has either some difficulty in
payment of the duties or where he has no ready place to
stock the goods before use or sale, he cannot clear the
goods from the customs area. The warehouse in only a place
which the importer, on payment of prescribed charges, is
permitted to utilise for keeping the goods where he is not
able to take the goods straightaway outside the customs
area. There is nothing in the provisions of the Act to
compel an importer even before or when importing the goods,
to make up his mind whether he is going to use or sell them
in India or whether he proposes to re-export them. Again,
there may be cases where he has imported the goods for use
or sale in India but subsequently receives an attractive
offer which necessitates an export. It would make export
trade difficult to say that he cannot accept the export
offer as the goods, when importer, had been cleared for home
consumption. S.69, therefore, should be only read as a
provision setting out the procedure for export of warehoused
goods and not as a provision which makes warehousing an
imperative pre-condition for exporting the imported goods.
The second reason for not reading ss.68 and 69 as supporting
the Revenue’s interpretation is even more weighty. That
interpretation would mean that imported goods can be re-
exported after being warehoused for sometime (even a day or
a few hours) but that they cannot be exported otherwise.
Such an interpretation has no basis in logic or sense and
makes mincemeat of the broader principle contended for by
the Revenue that imports are intended for use in the country
and not for export. Incidentally, we may observe that even
this principle contended for by Revenue may itself be of
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doubtful validity as it is based on an erroneous assumption
that a re-export of imported goods will always be
detrimental to the country. It is true that, in the present
case, the appellant has been criticised for having utilised
valuable hard currency for the purchases and reselling the
goods only for rupee consideration. But, conceivably, there
may be cases where an importer is able to import goods from
a soft-currency area and sell them in a hard-currency area
earning foreign exchange for the country. It is also
possible to think of cases where, though economically
unremunerative, the exports can be jusitified on
considerations of
317
international amity and goodwill such as for example, where
the goods are exported to a country which is in dire need of
help and assistance. The principle is also non-acceptable
on the ground of vagueness as to the extent of its
application to exports made after an interval or after
changing several hands inside the country by way of sale.
We are, therefore, unable to read ss.68 and 69 as supporting
the Revenue’s contention.
On the other hand, there are provisions which indicate
that export of imported goods is very much envisaged under
the statute. The provisions contained in s.74 fully
reinforce this interpretation. Indeed s.74 would be
redundant if the Department’s stand that imported goods
cannot be exported were to be accepted as correct. As
pointed out by counsel for the appellant, para 174(1) of the
Policy which reads:
"No REP benefits are admissible in the case of
imported goods which are re-exported in the same
State without undergoing any processing or
manufacturing operations in India."
also impliedly recognises that imported goods can be
re-exported as such; only the exporter thereof cannot claim
REP benefits.
This brings us to the consideration of the second issue
in this case as to whether the attempted export of the goods
contravenes any condition under which the import of the
goods was permitted. The Revenue submits that the object
and purpose of putting the goods in question on the OGL and
making it available for import by any person is writ large
in the very heading of the list in which it is included.
The import is permitted so that life saving equipment and
medicines are available for use in the country and not to
enable a private party to make profit by their export either
directly or through some one else. To permit such a thing
will result in furstrating the very intent of the Government
in placing the item on the OGL and, indeed, going further,
and exempting them from import duty. It is pointed out that,
when a doubt regarding the scope of the OGL was raised, the
customs authorities had, with the appellant’s concurrence,
made a reference to the Chief Controller of Imports and
Exports (CCIE) under para 24.1 of the policy who had
"clarified" that the imports under the OGL and certain other
licences "are entirely meant for use within the country and
therefore cannot be allowed for re-exports as such". The
policy no doubt refers to the goods imported under OGL being
meant for "stock and sale" but this also means only that it
is for home consumption and not
318
export purposes. It is said that the appellant having
agreed to the reference to the CCIE is bound by the latter’s
opinion.
On the other hand, the learned counsel for the
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appellant stresses the point that Appendix 6 imposes no
specific condition that the life saving equipment should be
used in India and should not be exported. The words ’stock
and sale’ are very wide and there is no justification to
restrict them to mean only sales within the country. In
support of this interpretation, reliance is placed on the
decision of the Delhi High Court in the case of Janak Photo
Enterprises (1990) 49 E.L.T. 339.
We have considered this aspect of the matter carefully.
The relevant OGL is the one dated 20/5/88 covered by Order
No. 15/88-91 which refers in its Schedule to "Life-saving
equipment appearing in List No.2 of Appendix-6 of Import and
Export Policy, 1988-91 (vol.1) and their spares". It also
set out a number of conditions of grant of the OGL, the very
first of which is that, except in the case of "teaching
aids" covered by serial no.1, "all other items covered by
the Schedule annexed to it may be imported by any person for
stock and sale purposes". Prima facie, there appears to be
no reason to confine this only to sales in India and as
prohibiting the re-export of the imported goods from India.
The interpretation of a condition in these terms came up for
consideration, though not finally decided, in the case of
Janak Photo Enterprises, relied upon for the appellant. In
that case, the assessee had imported photographic colour
films from Japan, cleared them for home consumption, and
then presented them for export to Singapore. The customs
authorities, relying upon a certificate of the CCIE
analogous to the one in the present case, confiscated the
goods under s.113(d) but allowed them to be re-exported on
payment of a huge redemption fine, a penalty and payment of
appropriate duty for ex-bond clearance. The assessee filed
a writ petition challenging this order. Pending disposal of
the writ, the High Court permitted the export of the goods
subject to certain conditions. In doing so, the court made
certain observations which, learned counsel for the
appellant says, are equally apposite in the present case:
"5. The goods in question, being the photographic
films (colour), fall under App.7, List 8, Part II,
Serial No.41 of the Import and Export Policy, 1988-
91, and their import is allowed by all persons for
actual use/stock and sale. The contention of Mr.
aggarwal is that since the goods were imported for
stock
319
and sale, these could not be re-exported. We are
unable to agree with the contention of Mr. Aggarwal
or with the view taken by the respondents. Again,
to us, the goods do not appear to be prohibited
goods. We may usefully refer to Para 4 of Section
I, dealing with Export Control, in Import and
Export Policy, 1988-91, Vol. II, in respect of
Export Control and Procedures, which is as
follows:-
"Only item included in Schedule I to the Exports
(Control) Order, 1988 are under control. No such
item can be exported unless it is covered by a
valid licence issued by a licensing authority
competent to grant an export licence for that item.
Goods which are not included in this Schedule can
be shipped without any export licence unless their
export is controlled under any other law for the
time being in force."
Thus, the Export (Control) Order, 1988 is not
applicable to photographic film (colour).
6. If reference is made to S.74 of the Act, it
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appears that when any goods capable of being easily
identified which have been imported into India upon
which any duty has been paid on importation, are to
be re-exported and the goods are not prohibited
goods, then clearance for exportation can be given
by the proper officer (S.51) and on such
exportation 98% of the duty paid on importation is
to be re-paid as drawback. We have not been shown
which are those goods which can thus be re-exported
and where import duty already paid is to be claimed
as drawback. We have also not been shown any
provision of law stating that the goods which have
been imported could be sold only in the country
itself. The clarification given by the CCI & E
does not appear to be appropriate. We may also
note that under S.18 of the Foreign Exchange
Regulation Act, 1973 and various other provisions
thereof, there are sufficient safeguards to see
that proper sale price on export of goods is
realised. It is not the case of the respondents
that there is dearth of photographic film (colour)
in the country, and export of the goods in question
would certainly result in earning of some foreign
exchange for the country.
320
xxx xxx xxx
8. We would like to add that the view which we
have taken above is only a prima facie view and is
subject to final determination in the petition.
All the CMs stand disposed of.
We have no information as to whether the said writ
petition has since been disposed of by the High Court and
become final. We are inclined to agree with the prima facie
view expressed by the High Court that the words "stock and
sale" may be, generally speaking, wide enough to comprehend
sales inside as well as outside country and that their scope
should not be restricted unless such a restriction can be
read into the terms of the OGL itself. That, we think, is
where the present case essentially differs from the one
before the Delhi High Court. We are clearly of opinion that
whatever may be the position in regard to the other lists in
Appendix 6, the items of goods enumerated in list no.2 of
that Appendix stand in a class of their own. There is
sufficient indication in the heading given to the List to
show that the import of these items into India is permitted
only because such life-saving equipment is required for use
in the country. The use of the words "stock and sale" shows
only that the items are not restricted to use by the
importer but can be transferred by him to another. But we
do not think it proper to read them as permitting a sale of
the goods outside the country Note (44) in Appendix 6 reads
thus:
"Import of Life Saving Equipment appearing in List
2 of this Appendix shall be eligible to import
spares of such equipment either along with the
machines or separately".
This also carries a mild indication that the equipment
permitted to be imported is only for purposes of use in the
country. The circumstance that these items are also
exempted from customs duty at the time of import - although
the list of such exempted items is not identical with list
no.2 of Appendix 6 - also lends support to the conclusion
that the goods so permitted are not meant for re-export. An
indication to a similar effect is also seen in the foreword
issued by the Government while publishing Vol. I of the
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Import-Export Policy (1988-91), Vol. I Para 3 of the
foreword says:
"The Open General Licence lists have been expanded
by inclusion of more items. In particular, the
lists of life saving equipment and drugs have been
substantially enlarged to
321
facilitate easy access to imported equipment and
drugs which are not available in the country".
We are, therefore, of the opinion that, although there
is no express prohibition, the re-export as such of items of
goods specified in list 2 and imported into India is
prohibited by necessary implication by the language of, and
the scheme underlying, the grant of OGL in regard to them.
It is difficult to agree that the import-export policy
envisages the re-export of goods belonging to this category.
The opinion of the CCIE is also to the same effect. This
opinion also derives some binding effect from para 24(1) of
the Import Policy read with paras 22 & 23 of the Export
Policy, which say:
Para 24(1): The interpretation given by the Chief
Controller of Imports and Exports, New Delhi in the
matter of interpretation of Import Policy and
procedures shall be final and will prevail over any
clarification given by any other authority and
person in the same matter.
Para 22: Cases for relaxation of existing policy
and procedures where it creates genuine hardship or
where a strict application of the existing policy
is likely to affect exports adversely may be
considered by the Chief Controller of Imports and
Exports.
Para 23: In matters relating to export, as well as
the interpretation of export policy and procedures,
the person concerned may address the Chief
Controller of Imports and Exports, New Delhi for
necessary advice. Any interpretation of the export
policy given in any other manner or by any other
person will not be binding on the Chief Controller
of Imports and Exports, or in law.
Sri Habbu contended that we should construe the OGL
strictly on its terms and should not be guided by
"extraneous" considerations as to the possible object or
intention of the Government in inserting List 2 in Appendix
6. In this context, he referred to the decisions of this
Court in Hansraj Gordhandas v. H.H. Dave, Assistant
Collector of Central Excise & Customs, Surat & Two Ors.,
[1969] 2 S.C.R. 253 [followed and applied in State of M.P.
v. G.S. Dall and Flour Mills, (1991) 187 I.T.R. 478 S.C.]
and Union of India & Anr, v. Deoki Nandan Aggarwal, (1991) 3
J.T. S.C. 608.
322
The principal enunciated in the said decisions is that the
court should construe the terms of the statutory provision
or instrument before it and should not supply or introduce
words which are not found therein to give effect to a
possible intention behind the provision or instrument which
is not borne out by the language used. But, as pointed out
by this Court in Surjit Singh Kalra v. Union of India,
[1991] 2 S.C.C. 87, "though it is not permissible to read
words in a statute which are not there, where the
alternative lies between either supplying by implication
words which appear to have been accidentally omitted, or
adopting a construction which deprives certain existing
words of all meaning, it is permissible to supply the
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words". The Court should construe a provision in a
harmonious way to make it meaningful having regard to the
context in which it appears. Here, we are only interpreting
the language used and giving content and meaning to the
classification and heading used in the order permitting
imports under OGL in certain cases in the context of the
provisions of the Imports and Exports Control Act, 1947, as
well as the orders and notifications issued thereunder we,
therefore, do not find any force in the contention of Sri
Habbu.
Taking into account all the above considerations, we
hold that the goods in question were "prohibited" goods
within the meaning of S.2(33) and that their confiscation
under S.113(d) and the penalty under S.114 were fully
justified.
Before we conclude, we may refer to certain other
aspects which were touched upon by one side or the other in
the course of the arguments before us:
(1) Much emphasis has been laid by the counsel for the
Revenue on the circumstance that the appellant had obtained
the import of the goods free of duty by relying on the
notification granting exemption from customs duty. It is
obvious that it could not have been the intention of the
legislature to grant exemption from customs duty in respect
of vital goods of the nature in question in order that an
importer may make profit by selling them abroad. The
notification is, therefore, relevant for the issue before us
to the limited extent that it lends supports to the
construction of List 2 of Appendix 6 in the manner we have
interpreted it. This apart, we are not concerned here with
the questions whether the attempt of the assessee to export
the goods (which has, in the event, been successful) would
amount
323
to an infringement of the conditions permitting the import
so as to render either the import itself [vide s.111(0) of
the Act] or the exemption from import duty or both illegal
and invalid and, if so, the consequences thereof.
(2) Reference has been made on behalf of the Revenue to
the foreign exchange loss incurred to the country by the
import from a hard currency area and the export to a country
which will pay for the goods only in rupees. We do not,
however, think this argument or the foreign exchange
regulations, to which some casual reference was made, have
any relevance to the present issue. It is not the
suggestion of the Revenue that there has been any
infringement of the FERA in this case. Even if there had
been, the consequences flowing from such infringement have
to be worked out elsewhere. The issue before us is only
that of the permissibility of the export, the destination of
export being immaterial. As pointed out for the appellant -
and as indeed happened in Janak Photo Enterprises (supra) -
the export could well have been to a hard currency area in
which event this objection of the Revenue would have had no
force. But, on the ratio of our decision, an attempted
export to such a country would have been equally
objectionable. The goods were for use in this country, not
in another.
(3) During the pendency of the proceedings before the
Collector, the appellants are said to have secured a no
objection certificate of the RBI to the export "on
humanitarian grounds" in view of the appellant’s
representation that the goods were needed for the succour of
the victims of the Armenian earthquake in Russia. There is
no material before us regarding the date of the earthquake
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or to indicate that the purchase orders had been palced
thereafter. We do not even know whether the earthquake was
only a subsequent development taken advantage of by the
assessee to have the goods cleared pending adjudication of
issue by the Customs authorities. It is true that the
goods, being in the nature of life-saving equipment, may
have been eventually used only for that purpose in the
country of export. But, if as we have held, the imports of
the goods were intended for their use in India, this
circumstance is of no assistance.
Learned counsel has, however, contended that the
exports have been made in pursuance of a mutual trade
agreement between the Government of India and U.S.S.R.
considered beneficial to both countries and hedged in with
conditions ensuring the interests of both the countries and
that this should be considered sufficient to justify the
export. In our opinion, the
324
mere fact that mutual trade was allowed between the two
countries is not enough to hold that even goods of this type
- which had been allowed to be imported with a specific end
in view - could be exported. Learned counsel did not place
the trade agreement or any material to show that it
specifically provided for the export of goods of this nature
to U.S.S.R. We have no doubt that the export of such goods
may also enure to the benefit of India indirectly but, in
the absence of anything to show that the goods in question
constituted one of the categories of goods specifically
envisaged by the mutual trade agreement, it is not possible
to override the prohibition implicit, as held by us, in the
Import regulations.
(4) The show cause notice referred to clause 15(g) of
the Export Control Order, 1988. The said clause 15 is
headed "savings" and it enumerates situations in which the
Export Control order does not apply; in other words, it
provides that, in certain circumstances, exports can be
permitted even where such export might otherwise contravene
the provisions of the order. It is, in this context, that
it provides that goods cleared under a bond for re-export to
countries other than Nepal and Bhutan [sub- cl.(g)] or goods
imported in transit or transhipment to destinations outside
India [sub-cls.(c) and (f)] or even goods imported without a
valid licence if permitted to be re-exported [sub-cl.(i)]
could be re-exported irrespective of any restrictions under
Export Control Orders issued from time to time. We agree
with learned counsel for the appellant that sub-clause (g)
cannot be interpreted to mean that imported goods cannot be
exported unless they are cleared, at the time of import,
under a bond for re-export.
(5) Two clauses of the Import Control Order, 1955 have
also been relied upon by the Revenue. The first of these is
sub-clause (d) of clause 11(1). This clause, like clause 15
of the Export Control Order, is headed "savings" and, by
virtue of sub-clause (d), nothing in the order was to apply
to the import of the goods "by transhipment, as imported and
bonded on arrival for re-export as ships stores to any
country outside India except Nepal, Tibet and Bhutan or
imported and bonded on arrival for re-export as aforesaid
but subsequently released for use of diplomatic
personnel...who are exempt from payment of duty...." This
sub-clause was amended in 1985 to add the words "or
otherwise" after the word "ships stores". The CEGAT has
relied upon the amendment to draw an inference against the
appellant that, since the goods do not fall under this
clause,
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325
their export was not permitted. We think that this is not
correct for the reasons we have pointed out in respect of
clause 15(g) of the Export Control Order, 1988. To say that
goods bonded for re-export as above will not be affected by
the provisions of the order does not mean that goods, not so
bonded, cannot be exported at all. Their export can be
interdicted only if their is some other express or implicit
prohibition in clause 3 of the Export Control Order or
otherwise.
(6) Reliance has also been placed by the Tribunal on
clause 10 C of the Imports Control Order for rejecting the
assessee’s contentions. It is sufficient to extract sub-
clause (1) of this clause which reads:
"10C. Power to make directions for the sale of
imported goods in certain cases - (1) Where, on the
importation of any goods or at any time thereafter,
the Chief Controller of Imports and Exports is
satisfied after giving a reasonable opportunity to
the licensee of being heard in the matter, that
such goods cannot or should not be utilised for the
purpose for which they were imported he may by
order direct the importer of the goods (in case the
goods were imported under Open General Licence or
Special General Licence) or the licensee or any
other persons having possession or control of such
goods to sell such goods to such person within such
time, at such price and in such manner as may be
specified in the direction.
The Tribunal agrees that the opinions or clarifications
given by the CCIE in the present case are not directions
under s.10C. But, apparently, their suggestion is that, if
the appellant felt that the imported goods could not be
utilised "for home consumption" or "for stock and sale in
India" and there were sound reasons for exporting it to
U.S.S.R., they could and should have obtained the directions
of the CCIE permitting such sale. It is difficult to
approve of this line of reasoning. The provision relied
upon is one enabling the Import-Export Control authorities
to interfere in any individual case where they find that the
purpose of the import is not being achieved. It does not
impose an obligation on an importer to seek the directions
or the permission of the CCIE before exporting the goods if
otherwise permissible. Moreover, as pointed out by learned
counsel for the appellant, while clause 11(4) of the order
which reads:
"Nothing in this order except paragraph (iii) of
sub-clause (3)
326
of clause (5), clause 8, clause 8A, clause 8C and
clause 10C, shall apply to the import of any goods
covered by Open General Licence or Special General
Licence issued by the Central Government".
makes clause 10C applicable to the subject imports, it
releases them form the application of the other restrictions
and conditions on imports imposed by the Import Control
Order.
We think, however, that para 10C is of some indirect
assistance in the present case. We may put it this way.
The interpretation of the OGL that has commended itself to
us (viz. that the import of the goods is permitted only for
use in India) was also the one which the CCIE had formed and
this opinion he had formulated in his two letter dated
10.10.1988 and 27.1.1989. As we have already pointed out,
the CCIE’s opinion on the Import and Export Control Order is
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 20 of 20
final and binding. In view of this, when the CCIE came to
know that the appellant was seeking to export the goods, he
could have intervened and issued directions under clause 10C
either permitting the export of the goods to the USSR or
directing them to be sold to needy hospitals or other
parties in India. He could have effectively stopped the
export of the goods. This shows that the export of the
goods is not free or unrestricted as made out by the learned
counsel for the appellant.
(7) Learned counsel for the Revenue also pointed out
that the shipping bills called for a mention as to whether
the goods of which export was sought were "free goods or
India produce to be exported or India Produce". The
appellant did not strike off any of these descriptions as
inappropriate. The customs authorities were given the
impression that these were Indian goods that were being
exported. Indeed, the appellant itself well knew that goods
imported could not be exported as such without the
performance of some operation of processing or manufacture
in regard to them. That is why it put up a facade of taking
the goods to Ankleshwar after their import allegedly for
being subjected to some processes. The customs officers, on
verification, found that all this was untrue and that the
appellant was surreptitiously trying to export imported
goods, after just repacking them as goods of Indian
manufacture. The appellant had adopted a similar subterfuge
on the earlier occasion in December 1987 and succeeded in
exporting like goods by not striking out the appropriate
327
columns of a shipping bill proforma which required the
exporter to specify whether the goods were "Indian produce
or foreign produce to be re-exported". It is, therefore,
urged that the goods sought to be exported do not conform to
the description in the bill of entry for export, attracting
the provisions of clause 3(3) of the Export Control Order
and, in turn, s.113(d) of the Act. There is some force in
this contention but we exporess no opinion thereon as this
was not the ground on which action was taken and it is a new
ground, involving investigation of facts, taken for the
first time before us.
For the reasons discussed above, we uphold the order of
the Tribunal and dismiss the appeal. We, however, direct
the parties to bear their own costs.
T.N.A. Appeal dismissed.
328