Full Judgment Text
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PETITIONER:
JAIN EXPORTS (P) LTD. & ANR.
Vs.
RESPONDENT:
UNION OF INDIA & ORS.
DATE OF JUDGMENT05/05/1988
BENCH:
MISRA RANGNATH
BENCH:
MISRA RANGNATH
PATHAK, R.S. (CJ)
CITATION:
1988 SCR (3) 952 1988 SCC (3) 579
JT 1988 (2) 602 1988 SCALE (1)1123
ACT:
Customs Act 1962: Sections 111 and 112 & Import and
Export Policy 1980-81 Appendix 9 Para 5 Entry 1-Coconut oil-
’Edible’ and ’non edible’ i.e. commercial or industrial-
Classification of-Canalised goods-Determination of-Whether
Customs Collector entitled to take view contrary to that of
Board and Central Government.
Administrative Law: Quasi judicial tribunals-Lower
authorities bound by decisions of higher authorities.
Natural justice-Extent of opportunity of hearing to be
given-Not referable to the quantum of the stake but
relatable to the demands of the situation.
HEADNOTE:
The appellants are a Company and its Managing Director.
The Company imported two consignments of refined industrial
Coconut oil. The ships carrying the aforesaid cargo arrived
at the port of destination on 10th September, 1982 and 22nd
September, 1982. The appellant No. 1 filed the bills of
entry for release of the said cargo in the office of the
Assistant Collector of Customs. Instead of release of the
cargo, notices to show cause were received by the appellant
on the allegation that the import of industrial coconut oil
was not legal as it was a canalised item. The appellant No.
I was also called upon to show cause as to why the cargo
should not be confiscated under section 111(d) of the
Customs Act and also as to why he should be not penalised
under Section 112 thereof.
The appellant showed cause and took the stand that
import of industrial coconut oil was not banned under the
import policy of the Government for the relevant period.
When personal hearing was afforded, it was also pointed out
that the notices issued by Respondent No. 3 were the outcome
of bias, and that the Joint Chief Controller of Imports and
Exports had taken undue interest in the matter.
By the adjudication orders dated 17th December, 1982
and 20th December, 1982, the respondent No. 3 came to the
conclusion that
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"coconut oil", whether edible or not, were canalised items
and fell within the ambit of Appendix 9 Para 5(1) of the
Import Policy of 1980-81, and that it was also not an item
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under the o.G.L. of 1980-81 Policy. It was held that the
items that were imported were liable to be confiscated under
section 111(d) of the Customs Act, but an option was given
to redeem the goods on payment of Rs.3 crores and Rs.2
crores respectively as redemption fines.
The appellants filed two Writ Petitions challenging the
action of the Collector. The Writ Petitions were heard by a
Full Bench of the High Court. Two Judges held that the writ
petitions were liable to be dismissed, while the third Judge
took the view that the action of the Collector was totally
untenable and that the writ petitions should be allowed and
the order of the Collector should be set aside. The majority
of the Judges were also of the view that the quantum of
redemption fine should be considered by the Customs
Appellate Tribunal.
In the appeals to this Court it was contended on behalf
of the appellants: (1) The import policy of which year would
be applicable-the period during which the licences were
issued or the time when import actually took place. (2)
Whether "coconut oil" appearing in para 5 of Appendix 9 of
the Import Policy of 1980-81 was confined to the edible
variety or covered the industrial variety. (3) Whether in
the face of the decision of the Board and Central Government
as the statutory appellate and revisional authorities, it
was open to the Collector functioning in lower tier to take
a contrary view of the matter in exercise of quasi judicial
jurisdiction, and (4) Whether the orders of the Collector
were vitiated for breach of rules of natural justice, and
collateral considerations in the making of the order.
Dismissing the Appeals,
^
HELD: 1. The High Court has come to the correct
conclusion that the terms of the Import Policy of 1980-81
would apply to the facts of these cases. [957F]
In the instant case, the licences were either of 1980
or 1981 and were revalidated from time to time subject to
the condition that items which do not appear in Appendices
26, 5 and 7 of the Import Policy of 1982-83 will not be
imported.[957D]
2(a) Whatever may have been the reason for specifying
’edible and non-edible’ classification in 1981-82, if
’coconut oil’ takes within its
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fold all varieties, it must follow that in 1980-81, all
varieties of coconut oil were included in paragraph 5 of
Appendix 9. [958H;959A]
(b) If ’coconut oil’ of the industrial variety was
covered by paragraph 5 of Appendix 9 then it would not have
been included in Appendix 10 and, therefore, could not have
been imported under OGL. [958C]
(c) In Appendix 9, no classification of coconut oil is
given and, therefore, all varieties of coconut oil should be
taken as covered by the term. [958D]
(d) When a customer goes to the market and asks for
coconut oil to buy, he is not necessarily supplied the
edible variety. Coconut oil is put to less of edible use
than non-edible. [958E]
(e) The S.T.C. was not competent to bind the customs
authorities in respect of their statutory functioning, and
if on actual interpretation it turns out that ’coconut oil’
covered what the appellants have imported, the fact
situation cannot take a different turn on account of the
letter of the S.T.C. At the most, it may have some relevancy
when the quantum of redemption fine is considered by the
Tribunal. [959C-D]
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3. In a tier system, undoubtedly decisions of higher
authorities are binding on lower authorities and quasi-
judicial Tribunals are also bound by this discipline.
However, what the Court is now concerned with is not
disciplining the Collector in his quasi-judicial conduct,
but to ascertain what the correct position in the matter is.
[959H;960A-B]
4. The observance of Rules of Natural Justice is not
referable to the fatness of the stake but is essentially
related to the demands of a given situation. The position
here is covered by statutory provisions and it is well
settled that Rules of Natural Justice do not supplant but
supplement the law. [960D-E]
Broome v. Cassell & Co., [1972] 1 AER 801 referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2705 &
5383 of 1985.
From the Judgment and Order dated 20.12.1984 of the
Delhi High Court in Writ Petition No 4037 and 4038 of 1982.
L.M. Singhvi, Kailash Vasdev, G.L. Rawal, Ms. Neerja,
Sandeep Narain, R. Narsimha. Abhishek Manu Singhvi and C.
Mukhopadhya for the Appellants.
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T.S.K.M. Iyer, R.P. Srivastava and C.V.S. Rao for the
Respondents.
The Judgment of the Court was delivered by
RANGANATH MISRA, J. These appeals by certificate are
directed against the common judgment of a full Bench of the
Delhi High Court dated December 20, 1984, in two writ
petitions under Article 226 of the Constitution. The
appellants are respectively a Company and its Managing
Director. The Company was the holder of Letter of Authority
in respect of three licences for import of coconut oil in
one case and of two licences in the other and was appointed
Letter of Authority Holder in respect of the said licences.
It imported two consignments of 5342.369 Mts. and 3002.557
Mts. of refined industrial coconut oil from Sri Lanka and
the delivery port was Kandla. The respective ships carrying
the aforesaid cargo arrived at the port of destination on
22nd September, 1982, and 10th September, 1982, and
appellant No. 1 filed the bills of entry for release of the
said cargo in the office of the Assistant Collector of
Customs at Kandla. Instead of release of the cargo on the
basis of steps taken by appellant No. 1, notices to show
cause were received by appellant No. 1 on the allegation
that import of industrial coconut oil was not legal as it
was a canalised item. The appellant No. 1 was called upon to
show cause as to why the cargo may not be confiscated under
section 111(d) of the Customs Act as also why the appellants
may not be penalised under section 112 thereof. The
appellants showed cause and took the stand that import of
industrial coconut oil was not banned under the Import
Policy of the Government for the relevant period and the
premises upon which the authorities had proceeded to direct
issue of show cause was factually untenable. When personal
hearing was afforded, on behalf of the appellant No. 1 it
was pointed out that the notices by respondent No. 3 were
the outcome of bias and the said statutory authority had not
applied his own mind to the matter in controversy. It was
also pointed out that Shri Takhat Ram, Joint Chief
Controller of Imports and Exports had taken undue interest
in the matter to the prejudice of the appellants and had
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brought to bear upon the statutory authority pressure to act
against the interests of the appellants. By the adjudication
orders dated 17th December, 1982 and 20th December, 1982,
the respondent No. 3 came to the conclusion that "coconut
oil, whether edible or not, were canalised items and fell
within the ambit of Appendix 9 para 5(1) of the Import
Policy of 1980-81. It was not an item under the O.G.L. of
1980-81 Policy". Respondent No. 3 further held that either
of the consignments was covered by the import
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licences produced by the appellants and was, therefore,
liable to be confiscated under section 111(d) of the Act but
gave an option to appellant No. 1 to redeem the goods on
payment of Rs.3 crores and Rs.2 crores respectively as
redemption fines. On 27.12.1982 two writ petitions were
filed in the High Court of Delhi challenging the action of
the Collector. The said writ petitions were finally placed
before a Bench of three-Judges of the High Court; two of
them being Sachar and Khanna, JJ., came to hold that the
writ petitions were liable to be dismissed while the other
Judge being Wad, J. took the view that the action of the
Collector was totally untenable and that the writ petition
should be allowed and the order of the Collector should be
set aside. The majority of the learned Judges were of the
further view that the quantum of redemption fine should be
considered by the Appellate Tribunal. Sachar, J. with whom
Khanna J. concurred, directed:
"I would in the circumstances remit the matter to
the Appellate Tribunal but only on the question of
consideration of the question of quantum of
redemption fine. The Appellate Tribunal could hear
and dispose of this matter as if it was hearing an
appeal filed by the petitioners but, only on the
question of quantum of redemption fine."
In the absence of any challenge, this part of the order of
the High Court has become final and has to operate
irrespective of the fate of the two appeals.
The following common contentions have been advanced by
learned counsel for the appellants:
(1) The import policy of which year would be
applicable to the facts of the present case-the
period during which the licences were issued or
the time when import actually took place.
(2) Whether "coconut oil" appearing in para 5
of Appendix 9 of the Import Policy of 1980-81 was
confined to the edible variety or covered the
individual variety.
(3) Whether in the face of the decision of
the Board and Central Government as the statutory
appellate and revisional authorities, it was open
to the Collector functioning in lower ties to take
a contrary view of the matter in exercise of quasi
judicial jurisdiction; and
957
(4) Whether the order of the Collector was
vitiated for breach of rules of natural justice,
and collateral considerations in the making of the
orders.
It is not in dispute that the relevant import policy to be
referred to is of the year 1980-81 as all the licences were
issued during that period. The Collector found and the High
Court has not recorded a different finding that when the
licence was first revalidated on 18.1.1982, such
revalidation was subject to paragraph 215 of the Import
Policy of 1981-82. Again while revalidating some of the
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licences on 25.9.1982, it was stipulated that during the
extended period, items which do not appear in Appendix 5 and
7 of Import Policy of 1982-83 could not be allowed to be
imported and items which appear in Appendix 26 of the Import
Policy of 1982-83 will also not be allowed to be imported.
The Collector turned down the plea that the licences allowed
the import of items appearing in Appendix 5 and 7 of 1979-80
policy and 1982-83 policy in addition to the items appearing
in the OGL and Industrial coconut oil. In the instant case,
the licences were of either of 1980 or 1981 and were
revalidated from time to time. For convenience we may refer
to a sample order of revalidation dated 28.6.1982.
Revalidation was subject to the following conditions:
"This licence is revalidated for a further period
of six months from the date of revalidation with
the condition that during the extended period of
validity the items which do not appear in Appendix
5 and 7 of the Import Policy of 1982-83 will not
be imported. This licence will also not be valid
for the import of items appearing in Appendix 26
of the Import Policy of 1982-83 during the
extended period of validity."
The High Court has come to the correct conclusion that
the terms of the import policy of 1980-81 would apply to the
facts of these cases.
The basic question is whether at the relevant time,
import of coconut oil had become canalised through the State
Trading Corporation (’STC’ for short). Rule 3 of the Imports
(Control) Order, 1955 made under the Imports and Exports
(Control) Act, 1947 provides:
"3(1) Save as otherwise provided in this order, no
person shall import in case of the descriptions
specified in Schedule I except under and in
accordance with the licence
958
or a custom’s clearance permitting grant by the
Central Government or by any officer specified in
Schedule II."
Para 5 of Appendix 9 ran thus:
"In the case of the various items mentioned
therein, import will be made only by the State
Trading Corporation of India on the basis of
foreign exchange released by the Government in its
favour. The items mentioned therein are."
It is thus clear that if ’coconut oil’ of the
industrial variety was covered by paragraph 5 of Appendix 9,
then it would not have been included in Appendix 10 and,
therefore, could not have been imported under OGL.
In Appendix 9, no classification of coconut oil is
given and; therefore, all varieties of coconut oil should be
taken as covered by the term. There is no warrant for the
assumptions that item 1 of paragraph 5 of Appendix 9 covered
only the edible variety when ’coconut oil’ as such has been
mentioned. It is not disputed that ’coconut oil’ without
anything more could cover both the edible as also the non-
edible (commercial or industrial) varieties. When a customer
goes to the market and asks for coconut oil to buy, he is
not necessarily supplied the edible variety. Coconut oil is
put to less of edible use than non-edible. Reliance has been
placed on the entry in the Import Policy of 1981-82 where in
paragraph 5 of Appendix 9 it has been said thus:
"In the case of the following items, whether
edible of non-edible, import will be made only by
the S.T.C. ...........
(1) Coconut oil............................."
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"All other oils/seeds, whether edible or non-
edible, not specifically mentioned above or
elsewhere in this policy, will also be imported
only by S.T.C. under these provisions."
In our view no support can be had for the contention
advanced by appellants’ learned counsel from the change in
the language of paragraph 5 in the Import Policy of the
subsequent year. Whatever may have been the reason for
specifying ’edible and non-edible’ classification in 1981-
82, if ’coconut oil’ takes within its fold all varieties of
it, it must follow that in 1980-81, all varieties of coconut
oil were
959
included in paragraph 5 of Appendix 9. It is, in our
opinion, unnecessary to refer to authorities and precedents
to support such an obvious conclusion.
Similarly no support is available from the
communication by way of reply received by the appellants
from the S.T.C. to the effect that import of edible coconut
oil alone was canalised through it. When the question before
us is as to what exactly was the ambit of the entry No. 1 in
paragraph 5 of appendix 9, the letter of the S.T.C. has no
light to throw and the matter has to be ressolved with
reference to broader aspects than the letter of the
Corporation. Nor can that letter or the representation
contained therein be used to build up a plea of estoppel.
The S.T.C. was not competent to bind the customs authorities
in respect of their statutory functioning and if on actual
interpretation it turns out that ’coconut oil’ covered what
the appellants have imported, the fact situation cannot take
a different turn on account of the letter of the S.T.C. At
the most, it may have some relevant when the quantum of
redemption fine is considered by the Tribunal in terms of
the direction of the High Court.
Massive arguments were built up by learned counsel for
the appellants on the basis that the decision of the Central
Board and the Central Government rendered in similar matters
were binding on the collector and he could not have acted to
the contrary. Several precedents have been cited during the
hearing. In a tier system, undoubtedly decisions of higher
authorities are binding on lower authorities and quasi-
judicial Tribunals are also bound by this discipline.
In Broome v. Cassell and Co., [1972] 1 AER 801, the
Lord Chancellor delivering the opinion of the House
observed:
"I hope it will never be necessary to say so again
that in the herichical system of courts which
exists in this country, it is necessary for each
lower tier, including the Court of Appeal, to
accept loyally the decisions of the higher tiers."
This Court in Kaushalya Devi Bogra v. Land Acquisition
officer, [1984] 2 SCC 324 has clearly approved this
position. There is aubundance of authority that quasi-
judicial tribunals too are bound by this rule.
That, however, does not assist the appellants at all.
It may be that the Collector of Customs should have felt
bound by the decision of
960
the Board or the Central Government but the matter has
passed that stage. What we are now concerned with is not
disciplining the Collector in his quasi-judicial conduct but
to ascertain what the correct position in the matter is.
Very appropriately, appellants’ learned counsel has not
found fault with the High Court for not following the quasi-
judicial opinion of the Board or the Central Government nor
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has he pleaded for acceptance of that by us as a precedent.
Once on analysis we reach the conclusion that ’coconut oil’
of every description was covered in paragraph 5 of appendix
9, the quasi-judicial decision ceases to be relevant. We
propose to say no more on this aspect of the submission.
What survives for consideration is the argument
relating to the vice of breach of natrual justice and the
vice of collateral pressure of the Import Authorities in the
making of the order. We must frankly state that this aspect
of the argument has not at all impressed us. It has not been
disputed that show cause notices were issued, cause was
shown and considered by the statutory authorities. It may be
that more of opportunities than extended were expected by
the appellants in view of the fact that large stakes were in
issue. The observance of the Rules of Natural Justice is not
referable to the fatness of the stake but is essentially
related to the demands of a given situation. The position
here is covered by statutory provisions and it is well
settled that Rules of Natural Justice do not supplant but
supplement the law.
We have not been able to find any breach in the
compliance of the statutory procedure. We are not inclined
to agree that the role played by Sri Takht Ram vitiated the
order of the Collector.
All the contentions fail and these appeals are,
therefore, dismissed. The respondents are entitled to their
costs throughout.
S.L. Appeals dismissed.
961