Case: Priyanka Overseas Private Limited and Another Vs. Union of India and Others


Decision reasoning: 0[ds]31. We have given our careful consideration to the arguments advanced by the learned counsel for the parties and have thoroughly perused the record. We have to first consider whether Palm Kernel and palm seed were two different commodities or Palm Kernel was included in Palm seed for the purpose of import. The difference between palm seed and Palm Kernel has been explained in the letter of the Central Plantation Crops Research Institute dated January 21, 1987 (placed on record), it reads as underThe difference between Palm Kernel and palm seeds has also been pointed out in the aforesaid letter according to which palm seed is specially extracted from fruits while kernel is a product obtained after sterilisation, digestion at 95 Degree Celsius, pressing, decarpting, shelling etc. The Palm Kernel will lose its viability due to the above processes and cannot be used for germination. *Under Appendix 5 Part (b) Item 5 of the Import Policy under the heading Oils/seeds only Palm oil/Palm seeds have been mentioned. We agree with the view taken by the High Court in this regard that Palm Kernel cannot be included under the item palm seeds and the two commodities were different as understood in commerce or trade. We do not want to burden this judgment by citing those authorities which have already been considered for deciding this controversy by the High Court. We do not see any force in the contention of the learned Solicitor General in this regard that the government had only made a clarification vide Notification dated July 27, 1987 by introducing in Appendix 5 Part (b) Item No. 5 all other oils/seeds/any other material from which oil can be extracted. It is significant that in the aforesaid notification published in the Gazette of India Extraordinary para (1) Section 121, it was clearly mentioned that the same was issued as an amendment to the earlier Notice No. 1-ITC(PN)/85-88 dated April 12, 1985. The notification stated that the following amendment shall be made in the Policy at proper places indicated below and then under the head amendment the new provision which included all other seeds from which oil can be extracted was mentioned. It is therefore evident that the Government of India itself, realised the difference in the two commodities therefore it amended is previous policy. We are therefore of the opinion that prior to July 27, 1987 Palm Kernel was not a canalised item and the High Court rightly held that Palm Kernel was not included with in the entry of palm seed32. Since Palm Kernel was not included within palm seed the customs authorities had no legal justification to confiscate or impose redemption fine, or penalty, as the goods had already been shipped on various dates i.e. on June 26, 1987 and July 25, 1987. It is no longer in dispute that if the Palm Kernel was not a canalised item before July 27, 1987 then it could have been imported under the OGL before that date. The crucial dates in this regard are June 26, 1987 and July 25, 1987 when the goods were actually loaded in the ship and not the date of arrival of the ship in the territorial waters of India40. The High Court has overlooked that on October 15, 1987 the petitioner had only applied for warehousing of the goods on the direction of Division Bench of High Court. The Single Judge had passed an interim order for clearing the goods after payment of customs duty, but the department went in appeal and the Division Bench by its order dated September 18, 1987 directed the imported goods to be kept in a bonded warehouse or any other warehouse approved by the customs authorities and until further orders the appellant was directed not to take delivery of the same. The appellant submitted the bills of entry on January 28, 1988 and admittedly no duty was payable on that date. Moreover where goods imported are kept in a warehouse under a bond, the date of arrival of such goods in India is not relevant for determining the duty; therefore the High Court committed error in holding the appellant was liable to pay duty as in force on the date of arrival of goods42. There is no dispute that the remaining goods were also stored in a private warehouse and the appellant had filed the bills of entry and complied with all the required formalities for debonding and clearance of the goods on January 28, 1988, therefore the appellant was entitled to an order cancelling the licence of the private warehouse enabling it to remove the goods. Had the customs authorities passed order in accordance with the law the same result would have followed as had been done on December 17, 1987. The Central Manual published by the Director of Publications, Customs and Central Excise contains directions for determining the actual date of removal of goods from warehouse in terms of Section 15(1)(b) of the Act. The functioning of private warehousing has been elaborated therein. Clause 10 of the Manual prescribes the type of buildings which can be approved as private warehouses under Section 58 of the Act. Para 15 of the Manual provides for purposes of Section 15(1)(b) of the Act, that if the goods are in private warehouse the date of cancellation of the licence of the private warehouse should be taken as the actual removal of the goods for the purposes of Section 15(1)(b) of the Act. Para 15 as already stated was followed in the appellants own case on December 17, 1987 in releasing the goods. There is no valid reason as to why the same procedure should not have been followed in respect of the remaining goods in respect of which the bills of entry were filed on January 28, 1988 for debonding and clearance of goods. Merely because the officer failed to discharge his duties by making illegal demand for deposit of redemption fine, the appellant could not be held liable to pay duty. The appellant is therefore entitled to the delivery of goods without paying any duty as on January 28, 1988 on duty was payable on the goods