Civil Appeal No 390 of 1979
From the Order dated 1421978 of the Central Govt
at New Delhi in Revision Petition No MB13377
Anil B Dewan SK Dholakia PC Kapur and P Nara simhan for the Appellants
Kapil Sibbal Additional Solicitor General NP Ms Nisha Bagchi
Ms Sushma Suri and CVS Rao for the Re spondents
The Judgment of the Court was delivered by RANGANATHAN J
All these appeals involve a common ques tion as to whether the goods exported by the appellants are liable to export duty
There are 67 appeals which relate to various batches of exports made by the appellants during the period from 4376 to 14282
They will be disposed of by this Common order
The goods exported by the appellants are blanched roasted and salted peanuts packed in vacuum containers
The appellants purchase groundnuts without shell in raw form various parts of Saurashtra in the State of Gujarat
There after they are sorted out into different sizes small medium and big
The medium and small sizes are separated
Dust and husk are cleaned out and other foreign material removed
The commodity then goes to a dry roaster where it is roasted at a 144 temperature of 150 deg
This results in reduction of the moisture and destruction of enzymes to a considerable ex tent
It is also stated that by this process any fungus or aflotoxin is removed
After dry roasting the product is cooled down with the aid of a blower so that the skin of the groundnuts become loose and the groundnut contracts
There after it goes through automatic blanching machines
This separates the skin of the groundnut and on removal of the skin it becomes white
Thereafter the seeds are put on running tables and picked according to uniform sizes with the aid of an electric eye sorter
The commodity thereafter goes to a frying section for being subjected to deep oil bath frying in an automatic fryer
They are then subjected to anti oxident chemicals and thereafter sent through the blower for being cooled down
The extra oil is sucked out
They are then subjected to a glazing process and are given permeated chemicals and salt treatment and are packed in packets and tins
The goods thus exported by the appellants are 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 
The entry is the same under both enactments but the rate of duty is differ ent
The entry reads Item N0
The first line of argument of the assessee was that the item groundnut kernel  refers to groundnut seeds the basic characteristic of which is the quality of germination
It was submitted that since the product exported by the assessee though basically ground nuts had been so processed and treated that it lost its quality of germination it could no longer be described as groundnut kernel 
The second line of argument put forward on behalf of the appellant was that the entry in the export tariff referred only to groundnut kernel used for oil ex traction
It was pointed out that groundnut in shell as well as groundnut kernel can be said to be of two varieties one an edible variety and the other a variety used for oil extraction purposes
While it is true that it is not a mutually exclusive classification in that perhaps all groundnut is capable of being eaten or of being 145 processed to yield oil the submission was that these two varieties of groundnut kernels or groundnut in shell were two different trade commodities
They had different charac teristics they were meant for different markets
 their end use was different and their prices as well as mode of pricing were totally different
Referring to entries in this regard in the BTN British Trade Nomenclature the Indian Import Tariff as well as the Indian Import Export Policy it was contended on behalf of the appellant that the entry should be confined only to groudnut kernel of the oil yield ing variety and not the variety exported by the appellant which could be more appropriately described as processed food rather than as groundnut kernel
The appellant s contention initially put forward before the Assistant Collector of Customs in an application for refund was rejected by the Collector of Customs on appeal by the Central Board of Excise and Customs and on further revision by the Government of India under the then existing procedure
So far as the subsequent periods of exports were concerned the contentions of the appellant were considered and rejected by a Full Bench of the Customs Excise Gold Control Appellate Tribunal
The appellant preferred a Spe cial Leave Petition from the order of the Central Government in revision dated 1421978 which was admitted and num bered as Civil Appeal No 146 of 1979
Against the other orders of the Tribunal the appellant has preferred appeals to this Court under section 130 E of the 
On behalf of the appellants a number of circumstances have been relied upon to justify the distinction sought to be made between groundnut kernel simpliciter and blanched and roasted groundnuts exported by the assessee
It will be convenient to summarise the points made on behalf of the appellant here 1 In the Indian Trade Classification ITC which has been published by the Government of India for purposes of foreign trade there is a bifurcation in the classification between the oil seeds and roasted nuts
There are various revisions of this classification
Upto 1st April 1972 the ITC classified oil seeds oilnuts and oil kernels in Division 22
The various items occurring under this Division were as follows Code No Description Unit of Quantity Group 221 Oil seeds oilnuts and oil kernels 146 2211 Groundnuts Peanuts green
whether or not shelled excluding flour and meal 2211001 Groundnut kernels
HPS 2211002 Groundnut kernels
NES 2211003 Groundnut in shell
HPS TONNE 2211004 Groundnut in shell
NES
As against the above in group No 053 roasted nuts are specified as below 0539009 Others roasted nuts including groundnuts In a revised alphabetic index to the commodities the relevant code numbers for various commodities pertaining to groundnuts are as follows Commodity Code No Groundnut in Shell HPS 2211003 Groundnut in Shell NES 2221004 Groundnut kernels HPS 2221001 Groundnut kernels NES 2221002 Groundnut oil crude 4234001 Groundnut oil purified 4234002 Groundnut oil deodorized 4234003 Groundnut oil hydrogenated 4312001 Groundnut oil cake and meal 10813201 Groundnut roasted 0589107 In the more recent classification heading No 1202 refers to groundnuts not roasted or otherwise cooked whether or not shelled 147 or broken
The unit of quantity in which these goods are sold is tonne
This chapter deals with various types of oil seeds like soya beans copra linseed rape or colza seeds sunflower seeds palm nuts and kernels and other oil seeds and oleaginous fruits
On the other hand edible nuts come under heading 2008 which reads thus Fruit nuts and other edible parts of plants otherwise prepared or preserved whether or not containing added sugar or other sweetening matter or spirit not elsewhere speci fied or included Nuts ground nuts and other seeds whether or not mixed together Ground nuts Kg
Other including mixtures Cashew nut roasted Kg
Nuts prepared or preserved Kg
Other roasted nuts and seeds n es
 2 A similar classification has also been made under the BTN
Note i under this Chapter reads thus 1
It is to be taken not to apply to coconuts or other products of heading No 0801 or to olives Chapter 7 or Chapter 20
It does not however include olives Chapter 7 coconuts heading 0801 or certain seeds and fruits from which oil may be extracted but which are primarily used for other purposes eg walnuts and almonds heading 0805 apricot peach and plum kernels heading 1208 and cocoa beans heading 1801
148 It is also stated that the heading covers inter alia ground nuts except roasted ground nuts heading 2006
As against this heading 2006 which deals with fruit otherwise prepared or preserved whether or not containing added sugar or spirit carries the following sub heading 3 Almonds ground nuts areca or betel nuts and other nuts dry roasted oil roasted or fat roasted whether or not containing or coated with vegetable oil salt flavours spices or other additives
3 Even under the Customs Tariff the first Schedule which deals with import contains a similar classification
Chapter 12 and note 1 to the Chapter are the same as in BTN
Item 1201 reads oil seeds and oleaginous fruit whole or broken 1not elsewhere specified 2 Copra
Chapter 20 deals with preparations of vegetables fruit or other parts of plants
It contains a note that the Chapter covers edible plants
parts of plants and roots of plants conserved in syrup for example ginger and roasted groundnuts
This indi cates that the customers for two types of goods are totally different
5 0n 14th July 1976 the Government of India decided to ban with immediate effect export of HPS Hand Picked Seeds groundnuts both in shell and kernel which is canalised through Indian Oil and Oil Produce Exporters  Association
However by an export trade notice dated 8976 the Government of India clarified that the item blanched and roasted groundnut kernels does not fall within the purview of Exports Control Order 1968 and its export is allowed without any licensing formalities
6 It has been pointed out that the Collector of Cus toms used to levy and recover an agricultural cess on the goods in question until the Government of India by an order of 1976 held that the roasted and salted peanutsgroundnuts exported by the assessee were not liable to cess under the 
7 It is pointed out that the packed roasted seeds exported by the appellants are more value added than raw groundnut kernel used 149 for other purposes
The assessee s product is packed in vacuum containers and sold in terms of kilograms whereas other groundnuts are exported in bags or drums and sold in tomes
It would not be correct to bring both of them under same classification for export purposes
Relying on the above points of difference Shri Divan and Dholakia appearing on behalf of the appellant vehement ly contend that the entry in the export tariff should be given a restrictive interpretation
Reliance is placed in this context on a judgment of the Madras High Court in Kalaivani Fabrics vs Collector a direct decision on the present issue
Reference is made also to the cases cited therein and in particular to the ruling of this Court in Ms Healthways Dairy Products Co vs Union of India  Ors  Shri Divan submits that if there is any ambiguity or doubt it should be re solved in favour of the assessee
He contends that while the taxing authorities on whom the onus lies have merely rested on the dictionary meaning of the word groundnut kernel  the assessee has placed a lot of material show that there are two different commercial varieties of groundnut kernel
He submits that in matters of export and import the functional test is slowly replacing other tests an approach clearly indicated by the classifications under the BTN ITC and the import tariffs
Shri Dholakia appearing on behalf of the appellant in one of the appeals very strongly urges that the commodity known as groundnut kernel consists of two entirely different varieties or classes particularly in matters of trade
There is a sea of difference between the groundnut kernel which is exported as an oil producing variety and the roasted peanuts which are exported more or less as a processed food  by the appellant
The produce exported by the appellants has no oil content it is incapa ble of being used for germinating purposes its market its unit of quantity of sale itS price and even its exporters are totally different viewed from the commercial point of view it is impossible to mix up these two varieties under one common heading and this could not have been the inten tion of the export tariff
He therefore submits that the export tariff item should be restricted only to one of these varieties namely the oil seed variety or the germinating variety and should not be extended to the roasted items sold by the assessee
Shri Dholakia also raised a point that the appellant s factory was located in a free trade zone trod that having regard to the various notifications of the Government of India the Government was estopped from levying any export duty on its products
The necessary facts to 150 found any such promissory estoppel have not been put forward or considered by any of the assessing or appellate authori ties
We therefore decline to permit Shri Dholakia to raise this question at this belated stage
On the other hand Ms Nisha Bagchi who argued the case on behalf of the Union of India very ably submitted that the expressions groundnut kernel  and groundnut shell  used in the export entry were of the widest connotation
She referred to the dictionary meanings of the word kernel  and submitted that there is no justification whatsoever for restricting its meaning on the basis of the capacity to germinate or to yield oil
In fact she contended the very fact that the export tariff avoids all these classifications and uses a wide expression which is capable of taking in both the edible as well as the oil seed varieties of the groundnuts supports her conten tion that so far as export tariff is concerned the legis lature intended no limitations whatsoever
In support of her contention as to the wide meaning of the expression ground nut kernel  she relied on certain observations of this Court in State vs Shanmagha Vils Cashewnut Factory 1953 4 STC 205 and of the Madras High Court in Binod Cashew Corporation vs Deputy Commercial Tax Officer 1986 61 STC 1
She submitted that the interpretation sought to be placed on the entries in the export tariff by the appellant will carve away a substantial category of the goods de scribed in the wide tariff entry from its scope
So far as agricultural cess is concerned she pointed out rightly that it was leviable only in respect of seeds an expres sion that imports a concept of a capacity to germinate particularly in an agricultural context
Obviously the groundnut kernel roasted and salted could not be described as seeds  and therefore the Government of India had rightly exempted them from agricultural cess
According to counsel the functional test may be attracted where there is a bifurcation or classification as in the tariff entries referred to on behalf of the appel lant but there is no justification to import any such test where the expression as in this instance is broad and unrestricted
Referring to the exemption from export ban learned counsel submitted that the very fact that it was considered necessary to exempt the blanched and roasted peanuts from the export ban indicates that otherwise they would have been included in the export ban
Learned counsel took us through the 151 orders of the appellate authorities and the tribunal and submitted that they have taken a correct view in the matter which does not call for any interference
She submitted that groundnut kernel remains groundnut kerneI even after roasting and frying
The process though described elaborately on behalf of the appellant does not create a different product
This she pointed out was the finding of the appellate authorities
There is no justification therefore counsel contended to read any limitation into the export entry
Having considered the submissions of both parties we are of opinion that the contention of the Revenue should prevail
To our mind 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
On behalf of the appellant it is emphasised that the goods exported by the assessee and groundnut oil seeds are totally different commercial commod ities
Even the acceptance of this argument does not carry the appellant s case to the desired
Assuming that two different commercial commodities fail 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 
We are not convinced that the goods exported by the assessee have ceased to be groundnuts in the ordinary accep tation of the term or that they have become a different commodity say a processed food indeed there is no such classification in the tariff entry
The decision in Diwan Chand Chaman Lal 1977 39 STC 75 turned on the descrip tion of groundnuts in Schedule C of the Punjab Sales Tax Act as a species of oil seeds and it was held that parched groundnuts constituted a different commodity
But the fact is that though the raw groundnut kernel has undergone a drying
roasting and frying process its identity as ground nut is not lost
Even in the market to which it is exported and where it is marketed it is purchased only as groundnuts or peanuts as they are called in the USA
May be there are two 152 different commodities but both are known only as ground nuts 
The argument that the scope of the entry should be restricted because of the two fold classification existing elsewhere between groundnuts as oil seeds and groundnuts as fruits nuts and edible substances does not appeal to us
In the first place it does not meet the argument that basically both items are only varieties of groundnuts and hence not taken out of the relevant entry
Secondly there is force in the argument of State counsel that the legisla ture has deliberately not adopted for the purposes of the Second Schedule the minute multiclassification of the First Schedule and allied classifications
Unlike the Import Tariff the BTN and the ITC there is no sub classification  attempted in the export entry
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 else where but in the First Schedule of the very enactment which sets out the export tariff
The First Schedule to the Indian Tariff Act refers to seeds oil seeds and oil in section II and talk only of canned fruits and vegetables in section IV dealing with products of food preparing industries
The entries in the Customs Tariff relating to imports have already been touched upon
If in spite of such detailed classification elsewhere the legislature decided to use a wider expression in the Second Schedule the intention of the legislature must be given effect to
Shri Dholakia submitted that while the need to restrict imports necessitated a detailed enumeration and precise classification the export duty is levied only on a short list of items
This may be so but this point of distinction is not enough to explain why when an entry finds a place in the export tariff it should not receive its normal interpretation but should receive one circumscribed by the entries in the import tariff or other classifications
A point was also made by Sri Dholakia that since the export duty is on the basis of tonnes and it is only the groundnut oil seed that is exported in units of tonnes the entry should be confined to this commodity alone
This we are afraid is a very precarious basis for the interpretation of the body of the entry
In this context we should also point out that no difficulty anomaly or absurdity arising out of the computation of export duty in terms of tonnes on these goods was brought to the notice of the authorities at any stage
It may perhaps have helped if material had been placed before the authorities as to the nature and magnitude of the exports of the two classes of groundnuts their relative prices and the duty impact there on
In the absence of any such material we find it diffi cult to hold that the commodity in question should be excluded because of the mode of computation of duty 153 prescribed by the tariff entry
Once it is realised both oil seeds and roasted ground nuts 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 Coun cils all fall into place and reveal no inconsistency with and have no bearing on the interpretation to be placed on the entry
For these reasons we are of opinion that the stand of the Revenue has to be upheld and the decision of the Madras High Court in Kalaivani Fabrics supra overruled
These appeals therefore fail and are dismissed
We however make no order as to costs
RSS Appeals dis missed


Summary:
In the absence of bad faith the detaining authority can supersede an earlier order of detention which has been challenged as defective on merely formal grounds and make a fresh order wherever possible which is free from defects and duly complies with the requirements of the law in that behalf
The question of bad faith if raised must be decided with reference to the circumstances of each case
In habeas corpus proceedings the Court is to have regard to the legality or otherwise of the detention at the time of the return and not with reference to the date of the institution of the proceedings
396 Basanta Chandra Ghose vs King Emperor 1945 FCR 81 followed
Naranjan Singh vs The State of Punjab unreported explained
Makhan Singh Tarsikka vs The State of Punjab 1952 SCR 368 referred to