PETITIONER:
M/S. JAIN EXPORTS PVT. LTD. & ANR.
Vs.
RESPONDENT:
UNION OF INDIA & ORS.
DATE OF JUDGMENT: 14/08/1996
BENCH:
BHARUCHA S.P. (J)
MAJMUDAR S.B. (J)
CITATION:
1996 SCALE (5)839
ACT
HEADNOTE
JUDGMENT
JUDGMENT BHARUCHA, J.
The correctness of the order of the High Court of Delhi dismissing the writ petition filed by the appellants before it is under challenge.
The appellants imported liquid caustic soda in bulk, on which Customs, auxiliary and countervailing duty was payable at the aggregate rate of 98.5 per cent. The State Chemicals and Pharmaceuticals Corporation of India Ltd. (the 3rd respondents) also imported caustic soda but were required to pay duty thereon only at the rate of 10 per cent because of an exemption granted to the public interest under the terms of Section by the appellants on the ground that there was discrimination; the appellants were also entitled to the exemption granted to the 3rd respondents. The writ petition prayed for the grant of such exemption; and, in the alternative, that the exemption in favour of the 3rd respondents should he declared null and void.
It is not now in dispute that the case would stand covered by the judgment of this court in M.Jhangir Bhatusha and Ors. vs. Union of India & Others, 1989 Supp. (2) S.C.C. 201, but for the appellant’s argument that there were special or peculiar circumstances which created an equity in its favour.
Learned counsel for the appellants relied upon the following passage in Jhangir Bhatusha’s case:
"13. First, as to the contention
that both the reasons set forth in
the exemption notifications under
Section 25(2) of the Act are
without foundation. It seems to us
that the two reasons set forth in
the exemption notifications can
constitute a reasonable basis for
those notifications. It does appear
from the material before us that
international prices were
fluctuating, and although they may
have shown a perceptible fall there
was the apprehension that because
of the history of fluctuations
there was a possibility of their
rising in the future. The need to
protect the domestic market is
always present, and therefore
encouragement had to be given to
the imports effected by the State
Trading Corporation by reducing the
rate of customs duty levied on
them. This involved a long term
perspective, since the exclusive
monopoly to import these edible
oils was now entrusted to the State
Trading Corporation. What appears
to have dominated the policy of the
government in issuing the exemption
notifications was the consideration
that the domestic prices of
vanaspati should be maintained at
reasonable levels. It cannot be
doubted that the entire edible oil
market is an integrated one, and
that it is not reasonable to treat
any one of the edible or vanaspati
in isolation. It is a well accepted
fact that vanaspati manufacturers
constitute a powerful organised
sector in the edible oil market,
and a high vanaspati prices would
encourage an unauthorised diversion
of the edible oils to vanaspati
manufacturing units, resulting in a
scarcity in the edible oil market,
giving rise to arratic prices and
depriving consumers of access to
edible oils. The need for
preventing vanaspati prices ruling
high was also to prevent people
normally using vanaspati rom
switching over to other edible
oils, thus leading to an imbalance
in the oil market. An overall view
made it necessary to ensure that
domestic prices of vanaspati
remained at reasonable levels. To
all these considerations the
learned Attorney General has drawn
our attention, and we cannot say
that they are not reasonably
related to the policy underlying
the exemption orders. So that the
government would have sufficient
supplies of edible at hand in order
to feed the market, the learned
Attorney General says, it was
considered desirable and in the
public interest to reduce the rate
of customs duty to 5 per cent on
the imports made by the State
Trading Corporation. Now it is the
Central Government which has to be
satisfied, as the authority
appointed by Parliament under
Section 25(2), that it is necessary
in the public interest to make the
special orders of exemption. It has
set out the reasons which prompted
it to pass the orders. In our
opinion, the circumstances
mentioned in those notifications
cannot be said to be irrelevant or
unreasonable. It is not for this
Court to sit in judgment on the
sufficiency of those reasons. The
limitations the jurisdiction of the
court in cases where the
satisfaction has been entrusted to
executive authority to judge the
necessity for passing orders is
well defined and has been long
accepted.
14. It is true that the State dons
the robes of a trader when it
enters the field of commercial
activity, and ordinarily it can
claim no favoured treatment. But
there may be clear and good reason
for making a departure. Viewed in
the background of the reasons for
granting a monopoly to the State
Trading Corporation, acting as an
agent or nominee of the Central
Government in importing the
specified oils, it will be evident
that policy considerations rendered
it necessary to make consummation
of that policy effective imposing a
concessional levy on the imports.
No such concession is called for in
the case of the private importers
who, in any event, are merely
working out contracts entered into
by them with foreign sellers before
December 2, 1978."
Learned counsel for the appellants submitted that special circumstances favoured the appellants in that the interio order passed by this Court on 23rd April, 1980, obliged the appellants to sell its caustic soda at a price that did not take duty at the rate of 92.5 per cent into account.
By the said interim order on the appellant’s application for stay of recovery of the difference in duty, the appellants were permitted to clear the quantity of caustic soda stated therein on the condition that they furnished security to the satisfaction of the Collector of Customs, Bombay, for the difference in duty between 10 per cent and 92.5 per cent, and, in the event that the Collector was not satisfied with such security, the appellants furnished a bank guarantee for the said difference. The interim order recorded that the appellants undertook "not to sell caustic soda imported under the aforesaid licence at a rate higher than Rs.5132 only per M.T. Ex-godown, which is represented by the counsel for State Chemicals and Pharmaceuticals Corporation of India Limited as one price at which they have sold the quantity of caustic soda imported by them."
According to learned counsel for the appellants, an obligation had been imposed by this Court upon the appellants not to sell the caustic soda at more than Rs. 5132 per metric tonne. The appellants mad complied with that obligation. Consequently, they had been unable to realise from the purchasers of the caustic soda a price sufficient to cover the balance 82.5 per cent of duty. An equity arose in favour of the appellants by reason of the interim order and they should be permitted to pay as duty only 10 per cent as provided under its terms.
In the first place, the interim order was passed upon the application for stay of recovery of the difference in duty made by the appellants. If the appellants found the conditions imposed by the order unacceptable, they could have sold the caustic soda at a price higher than Rs. 5132 per metric tonne and paid duty thereon at the rate of 92.5 per cent after applying to this Court to relieve them of their undertaking. The appellants acted upon the interim order knowing full well that if the appeal was decided against them they would be required to pay duty at the rate of 92.5 per cent. Acting upon the interim order created no equity in favour of the appellants, nor are these any or peculiar circumstances.
In the second place, an undertaking given to Court is not an obligation imposed by the Court. It as a promise voluntarily made to the Court. Acting upon its own undertaking to court creates no equity in favour of the party giving it, nor is it a special or peculiar circumstance.
In the third place, the passage from the decision in Jhangir Bhatusha’s case does not assist the appellants.
In the fourth place, should a court come to the conclusion that an exemption is arbitrary or discriminatory or violative of Article 14, it may strike the exemption down but it cannot widen its scope so as to cover those it finds have been discriminated against. Reference in this behalf may be made to the judgment in State of M.P. vs. Mohan Singh, (1995) 6 S.C.C. 321, to which one of us (S.P. Bharucha, J.) was a party. Paragraph 6 is self-explanatory :
"6. Here we part company with the
High Court. Having come to the
conclusion that the grant of
special remission to Scheduled
Caste and Scheduled Tribe prisoners
was unlawful, the proper course to
about should have been to strike it
down. It was beyond the High
Court’s power to expand the reach
of the remission so as to give the
benefit of it to the writ
petitioner, who did not belong to
the Scheduled Castes or Scheduled
Tribes. The power to grant the
remission lay with the State. If
the power was improperly exercised,
the High Court could quash the
exercise. The High Court could not,
in effect, grant a general
remission where the State had
intended it to be restricted."
Before we part with the appeal we should mention that it had once been allowed and that judgment and order was set aside on a review petition filed by the 1st. respondents.
The appeal is dismissed, with costs. The costs payable by the appellants to the 1st and 2nd respondents are quantified at Rs.25,000/- and to the 3rd respondent at Rs.5,000/-.