Case: M/S. French India Importing Corporation, Delhi Vs. The Chief Controller Of Imports &amp; Exports And Others

as mentioned in this Agreement to realise customs duty on goods imported after the merror should be taken into consideration in applying the saving provisions of the order in notification S. R. O. 3315.25. We are unable to persuade ourselves that there is any justification in reading into the order S. R. O. 3315 anything to the contrary that might have been expressed in the Indo-French Agreement. It is true that the provisions of this para, of the Indo-French Agreement were referred to in the majority judgment in the Universal Imports Agency case, AIR 1961 SC 41 and it was said that the conclusion already reached was reinforced by what appeared in para 17. It is one thing however for a court to consider that conclusion reached on legal principles is in keeping, with the intention expressed in a document between high contracting parties, it is quite another thing to say that the conclusion reached on legal principles should be departed from because it seems to be at variance with what has been said in such a document. In view of what was agreed to in para 17 of the Indo-French Agreement there would have been no difficulty for the Government of India to make provision when providing for the saving of the operation of certain laws to be applied to the French Establishments in respect of "things done" before the commencement of the order to exempt the levy of customs duty from such saving. That was not done. There is nothing in law that we are aware of which would compel the Government of India because of the above Agreement, in para 17 to extend the provisions of levy of customs duty in the Sea Customs Act in respect of things done before the commencement of the order. Though the Government of India could have well made the exception when inserting the saving clause in the order S. R. O. 3315 in respect of levy of customs duty they did not do so. It will be improper in our opinion to hold that even though the Government of India did not expect it we should do so to give effect to what is considered to be the Government of Indias intention as expressed in the Indo-French Agreement. Reference has also been made to another order made by the Government of India. i.e. S.R.O. 3314 which saved the operation of the pre-existing French law except in so far as it had been affected by S.R.O. 3315.26. Paragraph 5 of this order provides that all laws in force in the French Establishments immediately before the commencement of the order and not repealed by paragraph 6 of the French Establishments (Application of Laws Order) 1954 that is the order in S. R. O. 3315 shall continue to be in force until repealed or amended by competent authority. Para 6 of the same order (S.R.O. 3314) provides that all taxes duties, cesses or fees which immediately before the commencement of the order were being lawfully levied in the French Establishment : in so far as such levy has not been discontinued by any of the laws extende to the French Establishments by the French Establishments (Application of Law Order) 1954 continued to be levied. Thus if any customs duty had been payable under the French law which was in force prior to November 1, 1954, that would have continued to be payable in respect of "things done" which are saved from the operation of the Indian laws in the matter by para 6 of S.R.O. 3315.27. We are unable to see how either of these provisions in S. R.O. 3314 or anything else therein can deprive the petitioners from the benefit of the saving clause in para 6 of the French Establishments (Application of Laws Order) 1954, in respect of the levy of customs duty.28. What is it that is saved by this saving provision in para 6? It is the things done before the commencement of the order. If that thing done did not include the bringing of the goods across the customs barrier, it would not have been-saved. It was held in the Universal Imports Agency case, AIR 1961 SC 41 that bringing the goods across the customs barrier was a "thing done" before the commencement of the order when the contract in pursuance of which this was done, was concluded before the date of commencement of order. Under the saving clause in para, 6. this "thing done" - i.e. the bringing the goods across the customs barrier - is saved from a body of Indian laws and is incurred to be controlled by a corresponding body of the previously prevailing French laws. It is not possible without reading into para. 6. some words like - "provided that in respect of levy of customs duty under the Sea Customs Act, the corresponding French law will cease to have effect, if the actual import takes place after the commencement of the order" - to hold that the levy of customs duty will be governed by the Indian law in respect even of an import - which was a "thing done" before the commencement : of the order.29. We are of opinion that on the law as laid down in the Universal Imports Agency case the importation of goods in the present case in pursuance of a contract which was concluded before the date of the commencement of the order (S.R.O. 3315) was governed by the French laws and not by the Indian Laws, no less as regards the question of levy of customs duty than as regards the question of import licences. Under the French lavy no duty was payable on these imports. Consequently these petitioners were not liable to pay duty on these imports.30. In our opinion the petitioners are entitled to the relief they have prayed for both against the levy of customs duty and against the order imposing penalty for importation without licence.31. We should accordingly allow the petition.ORDER32.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]In our opinion, these are wholly immaterial. Learned Counsel had to admit that there was no legal requirement to have a Letter of Credit and also that it was not inn contravention of French law which prevailed before November 1, 1954, to obtain foreign exchange requirements by what are termed "open market purchases". In fact, in the case of the Universal Imports Agency AIR 1961 SC 41  the orders impugned were passed and were sought to be supported before this Court on the ground that the foreign exchange requirements were met by "open market purchases" and that in consequence the importation was not authorized by the French law, and this contention was expressly negatived. We therefore hold that the petitioners are entitled to relief so far as the petition relates to the quashing of the order imposing the penalty and for a direction to refund the same.We find ourselves unable to accept this argument. The expression "free port" in the case of Pondicherry merely meant freedom from restriction as to importation in the shape of licence, etc., and not a complete absence of duties leviable on importation. But that apart, if the submission of the learned counsel amounted to saying that the point about the exemption of the petitioner from payment of customs duty is also covered by the decision of this Court in Universal Imports Agencys case AIR 1961 SC 41  we consider it wholly unjustified. As we have already shown, the liability to pay customs duty was admitted by the petitioner and the reasoning by which he sought relief in this Court proceeded on the basis that such duties were exigible. Besides, the entire reasoning of Subba Rao, J., was directed to show that the authorisation under the French law to effect the import should be held to protect the petitioners then before the Court from being treated as having imported goods without a licence under the Imports and Exports (Control)for instance, if S.R.O. 3315 contained a specific proviso excepting from the saving as regards "things done" the obligation, say, to pay duties of customs, it could hardly be contended that as the imports under pre-transfer contracts should be deemed to be authorised even if the goods arrive subsequent thereto, they should be exempt from the payment of duty. No doubt there is no such express provision but such a situation can also arise by necessarywe have already pointed out, this is exactly what is sought to be achieved by the conjoint operation of para. 6 of S.R.O. 3314 and the extension of fiscal laws to Pondicherry effected by paragraph 3 of S.R.O. 3315. It is precisely this that is also brought out by paragarph 4 of the notification dated November 1, 1954, extracted earlier. In the circumstances it looks somewhat curious that the petitioners now before us, who as interveners in the petitions by the Universal Imports Agency etc., supported the invoking of para. 6 of S.R.O. 3314, or Art. 17 of the Articles of Agreement and para 4 of the notification dated November 1, 1954, as an aid to the construction of the words "things done" in para. 6 of S.R.O. 3315 - the Government resisting their use as an aid, should now take up the position that these materials are irrelevant for determining the scope of those crucial words.In our opinion the petitioners are not entitled to have their goods imported into Pondicherry after November 1, 1954, without payment of customs duty notwithstanding that the contracts by reason of which the goods were imported, were entered into or the shipment took place before that date.17. The result is that the petition is allowed and the orders of the Government, of the Central Board of Revenue and the Collector of Customs are quashed only in so far as they impose a penalty on the petitioner for importing goods without a licence under the Imports and Exports (Control) Act, 1947, and the Import Control Order. The respondents were entitled to demand and to enforce the payment of customs duty and the relief prayed in the petition in so far as it relates to the quashing of the order in that respect and the refund of the duty collected, fails and isare unable to persuade ourselves that there is any justification in reading into the order S. R. O. 3315 anything to the contrary that might have been expressed in the Indo-French Agreement. It is true that the provisions of this para, of the Indo-French Agreement were referred to in the majority judgment in the Universal Imports Agency case, AIR 1961 SC 41  and it was said that the conclusion already reached was reinforced by what appeared in para 17. It is one thing however for a court to consider that conclusion reached on legal principles is in keeping, with the intention expressed in a document between high contracting parties, it is quite another thing to say that the conclusion reached on legal principles should be departed from because it seems to be at variance with what has been said in such a document. In view of what was agreed to in para 17 of the Indo-French Agreement there would have been no difficulty for the Government of India to make provision when providing for the saving of the operation of certain laws to be applied to the French Establishments in respect of "things done" before the commencement of the order to exempt the levy of customs duty from such saving. That was not done. There is nothing in law that we are aware of which would compel the Government of India because of the above Agreement, in para 17 to extend the provisions of levy of customs duty in the Sea Customs Act in respect of things done before the commencement of the order. Though the Government of India could have well made the exception when inserting the saving clause in the order S. R. O. 3315 in respect of levy of customs duty they did not do so. It will be improper in our opinion to hold that even though the Government of India did not expect it we should do so to give effect to what is considered to be the Government of Indias intention as expressed in the Indo-French Agreement. Reference has also been made to another order made by the Government of India. i.e. S.R.O. 3314 which saved the operation of the pre-existing French law except in so far as it had been affected by S.R.O. 3315.