JURISDICTION Civil Appeal No 3412 13 of 1986
From the Judgment and Order dated 19485 of the Madhya Pradesh High Court in Misc
Petition Nos 259 and 503 of 1982
157 Shanti Bhushan NP B Dutta SK Jain Pradeep Aggarwal and Mrs Pratibha Jain for the Appellants
MK Ramamurthy RK Garg CK Ratnaparkhi Arun Madan SK Agnihotri and SV Deshpande for the Respond ents
Respondent No 15 In person
The Judgment of the Court was delivered by OJHA J
These two civil appeals by special leave have been preferred against the common judgment of the Madhya Pradesh High Court rendered in two writ petitions being Miscellaneous Petition No 259 of 1982 and Miscellaneous Petition No 503 of 1982
Certain persons after being select ed by the Public Service Commission were appointed as Sales tax Inspectors in the State of Madhya Pradesh
They shall hereinafter for the sake of convenience be referred to as existing Sales tax Inspectors
In another Department of the Government of Madhya Pradesh there were certain persons who were working as Block Level Extension Officers
The Government of Madhya Pradesh reorganised Blocks all over the State as a result whereof 50 of the posts of Block Level Extension Officers were rendered surplus
A policy decision was taken by the State Government to absorb the surplus employees in equivalent post in other Government Depart ments
A meeting was held on 30th September 1965 in the office room of the Secretary Planning and Development De partment for settling principles and procedure for absorp tion of such surplus personnel which was attended by the Secretaries of the various Department of the Government Director of Panchayat and Social Welfare Director of Indus tries and Director of Public Instruction
In that meeting general principles and procedure for absorbing the surplus personnel were settled and it was inter alia agreed that a the surplus staff should be absorbed on equivalent posts and carrying the same pay scale as far as possible
But if they are absorbed on posts carrying slightly lower pay scale their present pay scale should be protected b they should be treated as having been transferred from one post to another so that there may be no break in their service
 A Committee consisting of the Commissioner of Sales Tax the Addi 158 tional Commissioner of Sales Tax and the Deputy Commissioner of Sales Tax Headquarters held an interview of such sur plus Block Level Extension Officers who were to be absorbed as Sales tax Inspectors and as a result of that interview they were appointed to the post of Sales tax Inspectors
These appointments seem to have been made on various dates between 13th February 1967 and 28th September 1970
The Block Level Extension Officers who were so absorbed as Sales tax Inspectors shall hereinafter be referred to as the absorbed sales tax Inspectors
At this place it is necessary to refer to certain orders having a bearing on the matter of absorption as aforesaid
The first such order in the se quence which deserves to be noticed is a Memo dated 29th March 1967 issued in the name of Governor of Madhya Pra desh
It provided The Ex Block Development Officers and the Ex Block Level Extension Officers have been exempted by the Government from the competitive examinations to be conducted by the Public Service Commission for the purpose of absorption as Sales tax Inspectors
The selection of these personnel to the said post shall be done by the departmental selection committee
 The other order which requires mention is a memorandum dated 22nd may 1967 issued by the Government of Madhya Pradesh General Administration Department inter alia to all Departments of Government
In contained certain decisions in respect of the surplus class III Executive ministerial and Class IV employees of the development blocks on their ab sorption in other Departments of Government
These decisions inter alia were about fixation of pay and fixation of sen iority
With regard to fixation of seniority it was provided that seniority should be fixed with regard to the completed years of service counted for fixation of initial pay and the number of increments allowed therein
This Memorandum was also issued By order and in the name of the Governor of Madhya Pradesh
With reference to this Memorandum it was by a subsequent Memorandum dated 8th November 1967 provid ed that the State Government had further decided that the facilities granted to surplus personnel to the Development Blocks vide GAD Memo under reference may also be extended to such employees absorbed in Class III executive posts
this place it may be mentioned that the post of Sales tax Inspector is a Class III Executive post
Another Order dated 19th July 1973 was issued by the Madhya Pradesh Gov ernment to all the Heads of the Departments regarding facil ities to the extra officials on being 159 absorbed in other Departments
The provision with regard to seniority was the same as in the Memorandum dated 22nd May 1967
As is apparent from the seniority list dated 6th Janu ary 1981 showing the position of the Sales tax Inspectors as on 1480 the existing Sales tax Inspectors were con firmed on various dates between 1st November 1956 and 5th October 1968
With regard to fixation of seniority of the absorbed Sales tax Inspectors on decision seems to have been taken till 15th February 1980 when an Order of that date was issued from the office of Sales tax Commissioner of Madhya Pradesh which provided that the Sales tax Inspectors men tioned therein who were absorbed between 1967 and 1970 were made permanent to that post according to the directions of the Government with effect from 31st March 1967 presumed date
The seniority list referred to above indicates that the names of the absorbed Sales tax Inspectors are to be found at serial Nos
21 to 104 having 31st March 1967 as the date of confirmation of all of them
The existing Sales tax Inspector Soni Badri Prasad shown at serial No 20 was confirmed on 22nd May 1966 whereas the existing Sales tax Inspector Cangrade Dashreth Lal shown at serial No 105 was confirmed on 1st April 1967
The existing Sales tax Inspectors as well as the ab sorbed Salestax Inspectors both felt aggrieved by the con firmation order of the absorbed Sales tax Inspectors with effect from 31st March 1967 the seniority list aforesaid prepared on its basis as well as a subsequent seniority list dated 15th May 1982
The two writ petitions referred to above were filed in the High Court one by the existing Sales tax Inspectors and the other by the absorbed Sales tax Inspectors
Both of them were decided by a common judgment whereby the order dated 15th February 1980 referred to above was quashed and seniority was directed to be fixed in accordance with the Recruitment Rules and general conditions of Service Rules
It is this judgment which is the subject matter of these two civil appeals both having been filed by some of the absorbed Sales tax Inspectors
The contention of the existing Sales tax Inspectors is that the absorbed Sales tax Inspectors could not be con firmed on 15th February  1980 retrospectively with effect from a presumed date namely 31st March 1967
According to them the determination of seniority taking confirmation as the basis is erroneous as they were entitled to have the entire period between their actual appointment and confirma tion taken into consideration whereas the grievance of 160 the absorbed Sales tax Inspectors is that since they had been working in another department of the State Government as Block Level Extension Officers from various dates between 13th November 1956 and the actual date of their absorption they were entitled to have the entire period of their serv ice as Block Level Extension Officers taken into considera tion and the fixation of their seniority on the basis of their having been confirmed from the presumed date of 31st March 1967 is erroneous
It was also sought to be urged before us on behalf of the existing Sales tax Inspectors that the appointment of the absorbed Sales tax Inspectors as Sales tax Inspectors was illegal having been made not in conformity with the relevant rules and without the recommendation of the Public Service Commission
For the absorbed Sales tax Inspectors on the other hand it was urged that none of the rules relied on by the existing Sales tax Inspectors was applicable to the absorption as Salestax Inspectors of the surplus Block Level Extension Officers and that it was the executive instruc tions issued in this behalf particularly dated 29th March 1967 22nd May 1967 8th November 1967 and 19th July 1973 referred to above which applied to their absorption
Having heard learned counsel for the parties and MC Katarpanch respondent No 15 in CA No 3412 of 1986 we are on the facts of the instant case so far as this sub mission is concerned of the opinion that the validity of the absorption as Sales tax Inspectors of the surplus Block Level Extension Officers does not deserve to be permitted to be challenged in these appeals and that we have to proceed on the basis that their appointment by absorption as Sales tax Inspectors was valid
It is true as has been pointed out on behalf of the existing Sales tax Inspectors that the surplus Block Level Extension Officers when called for interview for the purpose of being considered suitable for absorption were required to bear themselves the travelling expenses and that fresh letters of appointment were issued to them after the interview
In our opinion however these circumstances are of very little significance for discerning the true nature of their absorption
In this connection it is of significance that no material has been brought to our notice to indicate that the services of the surplus Block Level Extension Officers had ever been factually terminated
Again notwithstanding the fact that the nature of their appointment as Salestax Inspectors after interview was temporary they were allowed to uninterruptedly continue to hold the post of Sales tax Inspector and were subsequently not only confirmed on that post but were also given ad hoc promotions as Assistant Sales tax Officers
Another circums 161 tance which is of significance in this behalf is that no relief for the quashing of their appointments was sought for by the existing Sales tax Inspectors in the writ petition flied by them before the High Court nor was as is apparent from the judgment appealed against any such relief pressed before the High Court
In fact even the fixation of their pay as Sales tax Inspectors consequent upon their absorp tion which was done in accordance with the executive in structions referred to above does not seem to have been ever challenged
On the other hand it is specifically stated in the judgment appealed against It is not in dispute that the respondents 4 to 88 were absorbed in the Sales tax Department between 132 1967 to 2891970 although the respondent State adds that they were in Government service in other governmental departments and some of them right from the year 1948 long before the petitioners were appoint ed as Sales tax Inspectors
 It is for these reasons that we are of the opinion that now it is too late a stage to chal lenge the validity of appointment of the absorbed Sales tax Inspectors on that post
Now coming to the question of seniority the term absorbed in Service Jurisprudence with reference to a post in the very nature of things implies that an employee who has not been holding a particular post in his own right by virtue of either recruitment or promotion to that post but is holding a different post in a different department is brought to that post either on deputation or by transfer and is subsequently absorbed in that post whereafter he becomes a holder of that post in his own right and loses his lien on his parent post
No one asserts that the instant one was a case of the absorbed Sales tax Inspectors being initially sent on deputation from the post of Block Level Extention Officer to the post of Sales tax Inspector and being subse quently absorbed in that post
Consequently when as pointed out by the High Court it was not disputed that the surplus Block Extension Officers had been absorbed in the post of Sales tax Inspectors it is obvious that it was a case of absorption by transfer
In this connection it would be useful to recapitulate that the minutes of the meeting referred to above held on 30th September 1965 laying down the principles of procedure for absorbing the surplus per sonnel specifically stated that the surplus staff which was to be absorbed should be treated as having been trans ferred from one post to another so that there may be no break in their service
 The question as to whether the fixation of seniority by the Government was valid or not has to be considered in the aforesaid background
The crux of the problem therefore is as to what princi 162 pie should govern the fixation of inter se seniority of the Sales tax Inspectors who were directly recruited as such namely the existing Sales tax Inspectors and those who became holders of that post by absorption on transfer from one Government department to another namely the absorbed Sales tax Inspectors
The competing claims are as already indicated above that whereas the existing Sales tax Inspec tors contend that the date of confirmation alone was not relevant and that even the period between the dates of their actual appointment and confirmation should be counted for fixing their seniority the contention of the absorbed Sales tax Inspectors is that the entire period of their service as Block Level Extension Officers should also be taken into consideration while fixing their seniority
In so far as the legal position with regard to fixation of seniority is concerned it may be pointed out that a Constitution Bench of this Court in Direct Recruit Class 11 Engineering Officers  Association vs State of Maharashtra and Others  after a conspectus of various earlier decisions has inter alia held A Once an incumbent is appointed to a post according to rule his seniority has to be counted from the date of his appointment and not according to the date of his confirma tion
The corollary of the above rule is that where the initial appointment is only ad hoc and not according to rules and made as stop gap arrangement the officiation in such post cannot be taken into account for considering the seniority
B If the initial appointment is not made by following the procedure laid down by the rules but the appointed continues in the post uninterruptedly till the regularisation of his service in accordance with the rules the period of offici ating service will be counted
 On its basic there is obviously substance in the asser tion of the existing Sales tax Inspectors that the period from the respective dates of their appointments to those of their confirmation deserve to be counted while fixing their seniority
As regards the absorbed Sales tax Inspectors even if their initial appointment as Sales tax Inspector is for the sake of argument taken to be irregular as was sought to be urged before us on behalf of the existing Sales tax Inspectors the said appointment not being only ad hoc and they having continued in the 163 pOSt uninterruptedly till the regularisation of their serv ice which event even if may be treated to have taken place on 15th February 1980 when they were granted retrospective confirmation with effect from 31st March 1967 they are entitled to have the entire period of their service as Sales tax Inspector counted inasmuch as their confirmation at any rate with effect from 15th February 1980 cannot be said to be in violation of any rule
The question which  therefore remains to be considered is about the period during which they worked as Block Level Extension Officers before they were absorbed as Sales tax Inspectors
Is the entire period to be taken into consideration or only a part of it and if so what part or is the said period to be ignored in its entirety are questions which call for an answer
In RS Makashi vs IM Menon  the question of seniority arose among the members of the staff who for maintaining a new department had been drawn from four different sources
It was pointed out that in such a situation it was inevitable that some reasonable principles had to be formulated for the determination of the inter se seniority of the personnel appointed to work in the differ ent categories of posts in the new organisation
Rules for fixation of seniority were framed by the Government validi ty of some of which was challenged on the ground of being violative of Articles 14 and 16 of the Constitution
Rule 4a was one such rule
A learned Single Judge of the High Court struck down that rule
While reversing the judgment of the High Court it was held Almost the entire reasoning of the learned Single Judge is based on an assumption that there is an invariable normal rule that seniority should be determined only on the basis of the respective dates of appointment to the post and that any departure from the said rule will be prima facie unrea sonable and illegal
The said assumption is devoid of any legal sanction
We are unable to recognise the existence of any such rigid or inflexible rule
It is open to the rule making authority to take a note of the relevant circum stances obtaining in relation to each department and deter mine with objectivity and fairness what rules should govern the inter se seniority and ranking of the personnel working in the concerned departments and the courts will only insist that the rules so formulated should be reasonable just and equitable
Judged by the said test of reasonableness and fairness the action taken by the Government in equating the clerical personnel which had rendered two years  regular 164 service in other departments with the temporary Supply Inspectors of the CFD and in directing as per impugned Rule 4a that their inter se seniority shall be determined with reference to the length of service calculated on the basis of the said equation cannot be said to be in any way dis criminatory or illegal
We are unable to accept as correct the view expressed by the learned Single Judge of the High Court that while fixing the seniority in the higher post it is not open to take into consideration any service ren dered in the lower post and that by itself spells out dis crimination Emphasis supplied
Relying on the aforesaid decision it was held in Wing Commander J Kumar vs Union of India and Others  Equally untenable is the further plea advanced by the appellant that since the R  D is an integrated cadre there cannot be any further classification of the officers com prised therein on the basis of the length of service put in by them in their respective parent services prior to their permanent statement in the R  D
As pointed out by this Court in the decision in RS Makashi vs IM Menon supra it is a just and wholesome principle commonly applied in such situations where persons from different sources are drafted to serve in a new service that their pre existing length of service in the parent department should be respected and preserved by taking the same into account in determining their ranking in the new service cadre
Such a provision does not involve any discrimination violative of Article 16 of the Constitution In K Madhavan and Anr
vs Union of India and Ors
 it was held that it will be against all rules of service jurisprudence if when a Government servant holding a post is transferred to the same or an equivalent post in another Government Department the period of his service in the post before transfer is not taken into consideration in computing his seniority in the post to which he is transferred
The transfer cannot wipe out his length of service in the post from which he has been trans ferred
It is true that RS Makashi and Others as well as Wing Commander J Kumar supra were cases where new service was created in our opinion on that ground alone the principle enunciated 165 therein cannot be treated as to be confined only to a case where new service was created
The observations made therein are obviously based on equitable principles and it is those principles which were applied in the case of K Madhavan supra
Reliance was placed by learned counsel for the absorbed Salestax Inspectors on the decision of this Court in the case of KC Vasudeva and Others vs Union of India and Others where it was held that fixa tion of seniority between existing employees and those taken over from an autonomous body after its dissolution must be based not on mere compassion but on rational criteria having full consideration for rights of other parties affected and having nexus with efficiency in administration
Government must apply its mind and give reasons for its exercise of power to give relaxation to one class of employees
In our opinion the said decision in clearly distinguishable
First ly that was a case where employees not of another Govern ment Department but of an autonomous body were brought in a Government Department and in the matter of determination of seniority the period during which they had worked in the autonomous body was taken into account
Emphasis was placed in that case on this circumstance when it was pointed out that such employees were new entrants into Government serv ice and even so they were given credit for their former service in the autonomous body
Secondly unlike the instant case in that case credit for the entire period of Service in the autonomous body seems to have been given
What is however noteworthy is that it was specifically stated in paragraph 5 the report of that case that it is perfectly within the power of the Government to have a rationalisation of the entire situation and if it thinks fit even to give weightage or credit for service in the autonomous body
The principle of giving weightage was approved by this Court in an earlier decision also in the case of SG Jai Singhani vs Union of India  and is a well recognised principle in the sphere of determination of seniority
In view of the legal position enumerated above it is true that the claim of the existing Sales tax Inspectors that the period between the dates of their appointment and confirmation should be counted seems to be justified but it is equally true that the claim of the absorbed Sales tax Inspectors that the period during which they worked in their parent Department should also be taken into account does not obviously appear to be off the mark
If the period between the dates or  appointment and confirmation of the existing Sales tax Inspectors was counted for fixing their seniority but the period during which the 166 absorbed Sales tax Inspectors worked in their parent Depart ment was ignored the former would have obviously been placed on a more advantageous position but only to the prejudice of the latter as it would have amounted to sacri ficing their interest
If on the other hand the periods referred to above in case of both the sets of Sales tax Inspectors was taken into account it would have resulted in granting benefit of the absorbed Sales tax Inspectors at the cost of the existing ones and presumably including those who had already been promoted as Assistant Sales tax Officers even prior to 22nd May 1967 inasmuch as the period during which they had served in their parent Department was much longer than the period of officiation of the existing Sales tax Inspectors
This was the situation with which the State Government was faced and it was its duty to evolve some policy or equitable formula which did justice as far as possible to the competing claims of both the sets of Sales tax Inspectors
It was apparently in search of such a formula that the State Government appears to have given retrospective confirmation to the absorbed Sales tax Inspec tors from a presumed date and determined the seniority on the basis of the dates of confirmation
This section can be justified even on the well recognised principle referred to above of giving weightage in the matter of determination of seniority
The principle formulated in the case of RS Makashi supra with reference to a rule of seniority namely that the Courts will only insist that the rules so formu lated should be reasonable just and equitable with the result that if they meet this requirement the Court will not interfere would in our opinion apply even to a case of executive action of determining seniority if the above test is satisfied
It is also relevant to point out that no statutory rule has been brought to our notice which may run counter to the decision mentioned above taken by the govern ment
The two rules to which our attention has been invited are i Madhya Pradesh Civil Services General Conditions of Service Rules 1961 and ii Madhya Pradesh Sales taX Subor dinate Class III Executive Service Recruitment Rules 1966
In so far as the 1966 Rules are concerned they do not contain any provision about seniority
The 1961 Rules no doubt deal with seniority in Rule 12 but having gone through the said Rule we are of the opinion that the case of the absorbed Sales tax Inspectors does not fail under any of the categories enumerated therein
At this place we may mention that nothing substantial has been brought to our notice by either party on  the basis of which it could safely be said that on the peculiar facts and circumstances of this case already referred to above the decision of the State Government did not satisfy the above said test and was either arbitrary or discriminatory
167 In this view of the matter
we are of the opinion that it was not a fit case for interference by the High Court in exercise to its jurisdiction under Article 226 of the Con stitution of India with the decision of the State Govern ment
In the result these civil appeals are allowed the common judgment of the High Court in the two writ petitions referred to above set aside and both the said writ petitions are dismissed
In the circumstances of the case however the parties shall bear their costs in this Court as well as in the High Court
PSS Appeals allowed


Summary:
The appellants purchased groundnuts without shell in raw form and after subjecting them to various processes and treatment packed them in packets and tins which were then exported
The goods were charged to duty under item 13 of the Second Schedule to the Indian Tariff Act 1934 and later under item 20 of the Second Schedule to the as groundnut kernel 
The appellant however contended that the product exported by it was processed peanuts and since the product exported by the assessee though basically groundnuts had been so processed and treated that it lost its quality of germination it could no longer be described as groundnut kernel 
Another argument of the appellant was that groundnut kernel could be said to be of two varieties one an edible variety and the other a variety used for oil extraction purposes and that the tariff entry should be confined only to groundnut kernel of the oil yielding variety and not the variety exported by the assessee which could be more appropriately described as processed food rather than as groundnut kernel
The appellant s contentions were rejected by the Collec tor of Customs on appeal by the Central Board of Excise and Customs and on further revision by the Government of India
Subsequently the contentions were rejected by a Full Bench of the Customs Excise  Gold Control Appellate Tribu nal
Before this Court the appellants while reiterating the submissions made before the authorities below contended that the entry in the export tariff should be given a re strictive interpretation and if there was any ambiguity or doubt it should be resolved in favour of the assessee
It was further submitted that in matters of export and import the func 142 tional test was slowly replacing other tests
On the other hand it was contended on behalf of the Revenue that i the expressions groundnut kernel and groundnut shell  used in the export entry were of widest connotation ii there was no justification whatsoever for restricting the meaning of the word kernel  on the basis of the capaci ty to germinate or to yield oil iii the functional test may be attracted where there was a bifurcation or classifi cation as in the entries but there was no justification to import any such test where the expression
as in this in stance was broad and unrestricted and iv groundnut kernel remains groundnut kernel even after roasting and frying and the processing and treatment did not create a different product
Dismissing the appeals this Court
HELD 1 There is no difficulty or ambiguity in the interpretation of the tariff entry
Groundnut is a well known commodity which is available both in shell and as kernel
In this context kernel  clearly means the grain seed or the soft matter inside the shell whatever the use or purpose to which it is put eating or crushing for oil or sowing
The tariff entry covers all groundnut and there is no justification for confining it to the germinating or the oil seed variety alone
151C D Ms Health ways Dairy Products Co vs Union of India  Ors1976 2 SCC 887 referred to
2 Assuming that two different commercial commodities fall under the same entry there is no reason why the entry should be restricted to only one of them
It can and should cover both unless one can say that the commodity marketed by the appellant is not groundnut kernel 
151E Diwan Chand Chainart Lal s Case 1977 39 STC 75 referred to
Though the raw groundnut kernel has undergone a dry ing roasting and frying process its identity as groundnut is not lost
Even in the market to which it is exported and where it is marketed it is purchased as groundnuts
I51G 4 The legislature must be presumed to know that for import purposes for instance groundnuts are classified under different headings with differential rates of duty
Those entries appear not elsewhere 143 but in the First Schedule of the very enactment which sets out the export tariff
If in spite of such detailed classi fication elsewhere the legislature decided to use a wider expression in the Second Schedule
the intention of the legislature must be given effect to
152C D 5 Once it is realised that both oil seeds and roasted groundnuts exported by the assessee are capable of being described as groundnut kernel  which is what the entry talks of the various circumstances pointed out that they have different markets that their end use is different that one of them has been excepted from the export ban that their export is done under the auspices of different Export Promotion Councils all fall into place and reveal no incon sistency with
and have no bearing on the interpretation to be placed on the entry
153B C Kalaivani Fabrics vs Collector  Over ruled