M/S. GRANULES INDIA LTD. versus UNION OF INDIA AND OTHERS on 23 January 2020

1. Leave granted.

2. The appellant is aggrieved by orders dated 07.12.2016 andC14.06.2017, rejecting the writ petition as also the review application arisingfrom the same.

3. The appellant, during the year 1993 imported 96 tons of thechemical “Acetic Anhydride” under three Bills of Entry bearing nos.290, 291 and 300 dated 01.12.1993, 01.12.1993 and 14.12.1993 throughDthe Inland Water Container Depot (ICD), Hyderabad under the AdvanceLicence Scheme. It claimed clearance of the consignment free of importduty in terms of Customs Notification nos. 203/1992, 204/1992, bothdated 19.05.1992. The notification contained a scheme permitting importwithout payment of customs duty subject to fulfilment of certain normsand conditions. The Notification nos. 203/1992 and 204/1992 wereEamended by a Notification no. 183/1993 dated 25.11.1993, by which thesubject imports became liable for duty, the exemption having beenwithdrawn. The Notification dated 25.11.1993 was further amended byanother clarificatory Notification no. 105/1994 dated 18.03.1994permitting the import of the chemical without customs duty subject toFcertain terms and conditions. The clarificatory notification wasnecessitated to obviate the difficulties faced by the importers like theappellant, who had imported the chemical under the advance licenceissued by the Director General of Foreign Trade prior to the amendmentNotification no. 183/1993 dated 25.11.1993.

G4. The appellant was allowed to clear the consignments under theaforesaid three Bills of Entry without payment of duty. Subsequently therespondents issued show cause notice under Section 28 (1) of the CustomsAct, 1962 with regard to the same consignments as having been importedafter 25.11.1993. The appellant made a representation on 20.11.1997seeking exemption. It was considered favourably in respect of threeH

other consignments under Bill of Entry No.312 dated 12.09.1993, Bill ofEntry No.28 dated 10.02.1994 and Bill of Entry No.27 dated 09.02.1994.The entire consignments were imported under the same advance licence.In pursuance of the show cause notice the appellant was held liable toduty by order dated 12.2.1998 with regard to the consignments underthree Bills of Entry bearing nos.290, 291 and 300 dated 01.12.1993,01.12.1993 and 14.12.1993 respectively though these were also underthe same advance licence. The respondents while considering the replyto the show cause notice and fixing liability for payment of customs dutydid not make any reference to their notification dated 18.03.1994. TheCommissioner (Appeals) on the same reasoning rejected the appealleading to the institution of the writ application.

5. Dismissing the writ application, the High Court opined that nomandamus for exemption could be issued. The consignments wereadmittedly imported after 25.11.1993 and before the clarificatorynotification dated 18.03.1994. Thus, there was no arbitrariness on partof the respondent. The appellant preferred a review application interalia relying upon a Division Bench order of the Andhra Pradesh HighCourt in Shri Krishna Pharmaceuticals Limited vs. Union of India,(2004) 173 ELT 14. Rejecting the plea, the High Court opined that sincethe appellant did not produce the clarificatory notification along with thewrit petition and neither were the respondents aware of the clarificatorynotification the appellant was not entitled to any relief.

6. Shri B. Adinarayana Rao, learned senior counsel appearing onbehalf of the appellant, submitted that denial of exemption to theconsignment actually imported after 25.11.1993 under the advance licenceobtained prior to 19.05.1992 notwithstanding the clarificatory notificationdated 18.03.1994 holding the appellant liable for customs duty iscompletely unsustainable. Special Leave Petition (Civil) No.14288 of2004 (CC No.5418/2004) preferred against the order in Shri KrishnaPharmaceuticals Limited (supra) was dismissed. The mere failure toenclose a copy of the notification could not be a ground for denial ofrelief. Denial of exemption in the facts and circumstances of the case inview of the statutory notifications were per se arbitrary.

7. Learned counsel appearing for the State supported the order ofthe High Court and urged that the consignments having been importedafter withdrawal of the exemption and before issuance of the clarificatorynotification was justified.

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1186SUPREME COURT REPORTS

A8. We have considered the submissions on behalf of the partiesand are of the considered opinion that the order of the High Court iscompletely unsustainable. The entire consignment was imported underone advance licence issued to the petitioner prior to 19.05.1992. Thefortuitous circumstance that part of the consignment was actually importedprior to 25.11.1993 and the rest subsequent thereto is hardly relevant inBview of the clarificatory notification dated 18.03.1994 that the exemptionwould continue to apply subject to fulfilment of the specified terms andconditions. It is not the case of the respondents that the consignmentsimported subsequently did not meet the terms and conditions of theexemption. In Shri Krishna Pharmaceuticals Limited (supra), the HighCCourt observed as follows:

“7. …Obviously, the petitioner had the facility of exemption frompayment of the customs duty under the scheme known as AdvanceLicense Scheme, but the same was banned through notificationdated 25.11.1993 and later through another clarificatory notificationDthe same was extended by Notification dated 18.3.1994. Thus,since the Government itself has clarified by its second notificationproviding exemption, we are inclined to hold that the petitionershall be entitled to be exemption for all the three consignments aslong as the three consignments are imported under the AdvanceLicense scheme. Moreover, it is not the case of the respondentsEthat these three consignments are not covered under the AdvanceLicense scheme.”

9. It is unfortunate that the High Court failed to follow its ownorders in a similar matter. The High Court further gravely erred in holdingthat the authorities of the State were also unaware of the clarificatoryFnotification and neither did the appellant bring it on record. The State isthe largest litigant as often noted. It stands in a category apart having asolemn and constitutional duty to assist the court in dispensation of justice.The State cannot behave like a private litigant and rely on abstract theoriesof the burden of proof. The State acts through its officer who are givenGpowers in trust. If the trust so reposed is betrayed, whether by casualnessor negligence, will the State still be liable for such misdemeanor by itsofficers betraying the trust so reposed in them or will the officers beindividually answerable. In our considered opinion it is absolutely nodefence of the State authorities to contend that they were not aware oftheir own notification dated 18.03.1994. The onus heavily rests on themH

and a casual statement generating litigation by State apathy cannot beapproved.

10. We can do no better than quote the following extract fromNational Insurance Co. Ltd. vs. Jugal Kishore, (1988) 1 SCC 626,observing as follows: -

“10. Before parting with the case, we consider it necessary torefer to the attitude often adopted by the Insurance Companies,as was adopted even in this case, of not filing a copy of the policybefore the Tribunal and even before the High Court in appeal. Inthis connection what is of significance is that the claimants forcompensation under the Act are invariably not possessed of eitherthe policy or a copy thereof. This Court has consistently emphasisedthat it is the duty of the party which is in possession of a documentwhich would be helpful in doing justice in the cause to producethe said document and such party should not be permitted to takeshelter behind the abstract doctrine of burden of proof. This dutyis greater in the case of instrumentalities of the State such as theappellant who are under an obligation to act fairly. In many caseseven the owner of the vehicle for reasons known to him does notchoose to produce the policy or a copy thereof. We accordinglywish to emphasise that in all such cases where the InsuranceCompany concerned wishes to take a defence in a claim petitionthat its liability is not in excess of the statutory liability it should filea copy of the insurance policy along with its defence. Even in theinstant case had it been done so at the appropriate stage necessityof approaching this Court in civil appeal would in all probabilityhave been avoided. Filing a copy of the policy, therefore, not onlycuts short avoidable litigation but also helps the court in doingjustice between the parties. The obligation on the part of the Stateor its instrumentalities to act fairly can never be over-emphasised.”

11. The impugned orders are therefore held to be unsustainableand are set aside. The appeals are allowed.

Appeals allowed.

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