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2003 DIGILAW 209 (CAL)

Union of India v. Sancheti Food Products Ltd.

2003-04-25

ASOK KUMAR GANGULY, Hrishikesh Banerji

body2003
JUDGMENT Hrishikesh Banerji, J. Briefly stated the facts of the case are as follows :- Inspector General of Police, Andaman & Nicobar Islands published in 'the Statesman' that a Public Auction would be held on 21.12.1986 at Port Blair for disposal of three confiscated wooden trawlers owned by Thai personnel, seized within the territorial waters of India in exercise of sovereign powers of the Government. 2. In the said advertisement dated 9.12.1986 it was published that customs duty would be worked out on the basis of the final bid price and that the responsibility of such payment would be that of the Andaman Administration. By his letter dated 5.6.1987 the Superintendent of Police, Andaman & Nicobar Islands informed the respondent that 51.7% of the bid amount would have to be credited towards customs duty. Subsequently, by a letter dated 28.6.1989 addressed to the Collector of Customs, Calcutta a demand draft calculated @ 51.7% towards customs duty in respect of the said three trawlers was sent to the Customs Authority. 3. By the Notification No. 262/58/CUS dated 11.10.1958 the Government of India exempted ocean going vessels other than the vessels imported for breaking up, from the payment of customs duty leviable thereon provided that any such vessel subsequently broken up would be chargeable with the duty payable on her as if she was imported for breaking up. 4. The respondents purchased the aforementioned vessels to press them in service for catching fish and exporting the same since extensive deep-sea fishing was to be carried out with the help of those trawlers. 5. It is submitted on behalf of the respondents that their case was squarely covered by the aforementioned Notification and pursuant thereto no customs duty was chargeable or leviable on the said trawlers. 6. Accordingly the respondent/Company claimed refund of the duty amounting to Rs. 6,81,923/- (six lakhs eighty-one thousand nine hundred and twenty-three) which is 51.7% of the bid value of Rs. 13,19,000/- (thirteen lakhs nineteen thousand). Assistant Collector of Customs rejected the refund claim. The appeal preferred before the Collector of Customs (Appeals) was dismissed. Appeal therefrom preferred before the Customs, Excise and Gold (Control) Appellate Tribunal (ERB) was allowed and it was held by the Tribunal that the appellants were entitled to get the refund of the duty paid by them and directed refund of the duty amount of Rs. 6,81,923/-. The appeal preferred before the Collector of Customs (Appeals) was dismissed. Appeal therefrom preferred before the Customs, Excise and Gold (Control) Appellate Tribunal (ERB) was allowed and it was held by the Tribunal that the appellants were entitled to get the refund of the duty paid by them and directed refund of the duty amount of Rs. 6,81,923/-. This, however, was subject to the condition that the appellants would execute a personal bond/guarantee along with a surety to the effect that the three trawlers in question would not be broken up in future and that in case they were broken up the appellants would have to refund the aforesaid duty amount. 7. The reference application from the said judgment and order was rejected by the Tribunal on September 6, 1992. 8. As the Customs Authority were not complying with the order of the Tribunal by making the refund, the respondents herein filed a writ petition praying for the refund of the customs duty amounting to Rs. 6,81,923/- as a consequential relief in compliance of the Tribunal's order. 9. By the judgment and order dated April 26, 1993 Hon'ble Justice Ruma Pal (as her lordship then was) allowed the writ application directing the respondents (Customs Authorities) to make refund of the customs duty amounting to Rs. 6,81,923/- illegally withheld by them and directed them to make the payment to the appellant/Company. 10. The Customs Authorities filed a reference application (R.A. No. 17/92 in Appeal No. C-213/90-Collector of Customs, Calcutta vs. Sancheti Food Products Ltd.) having been aggrieved by the order of the Tribunal whereby the said application of the department was rejected. 11. Mr. Roychowdhury submits that price of the three confiscated trawlers was Rs. 13,19,000/-; that no payment had been made towards customs duty and that customs duty was paid to the Andaman Authorities out of the sale proceeds from the sale of trawlers and therefore any refund therefrom would reduce the auction price. 12. Mr. Roychowdhury contends that sub-section (5) of section 27 was introduced in terms of section 78 of the Finance Act of 1988 w.e.f. 13.5.1988, a later date and prior to its introduction the refund could only be claimed on payment of duty on an assessment made by an Officer. 12. Mr. Roychowdhury contends that sub-section (5) of section 27 was introduced in terms of section 78 of the Finance Act of 1988 w.e.f. 13.5.1988, a later date and prior to its introduction the refund could only be claimed on payment of duty on an assessment made by an Officer. Therefore, if refund could only be claimed of a duty paid in terms of an assessment, there would be no necessity of introducing sub-section (5) in section 27 of the 1962 Act w.e.f. 13.5.1988. 13. The next question relates to the applicability of sub-section (5) of section 27 on the ground that the said sub-section was introduced w.e.f. 13.5.1988 while the refund claim of the respondent/Company was made in 1987 when the provisions of sub-section (5) were not in the Statute Book. 14. This argument is not acceptable as in that case sub-section (5) of section 27 would become otiose. Admittedly there is no dispute that customs duty amounting to 51.7% of the bid value in respect of the three trawlers had been collected by the Customs Department and it is evident that the refund claim of the respondent/Company is squarely covered under sub-section (5) of section 27 of the 1962 Act. 15. Mr. Roychowdhury refers to the following decisions on the question of interpretation of a proviso incorporated to the main section:- 1. AIR 1975 SC 1758 (Dwarka Prasad vs. Dwarka Das Saraf), 2. AIR 1985 SC 582 (paragraph 9) S. Sundaram vs. R. Pattabhiraman), 3. AIR 1949 Privy Council 39 at p. 42 (G.C. in Council vs. Madura Municipality). 16. In AIR 1975 SC 1758 (supra) it was held by the Apex Court that if on a fair construction the principal provision was clear, a proviso would not expand or limit it; that a proviso must be limited to the subject-matter of the enacting clause and that must be read and considered in relation to the principal matter to which it is a proviso. 17. In AIR 1985 SC 582 (supra) it has been held that normally a proviso is meant to be an exception to something within the main enactment or to qualify something enacted therein which but for the proviso would be within the purview of the enactment. 17. In AIR 1985 SC 582 (supra) it has been held that normally a proviso is meant to be an exception to something within the main enactment or to qualify something enacted therein which but for the proviso would be within the purview of the enactment. It was further held that a proviso could not be torn apart from the main enactment nor would it be used to nullify or set at naught the real object of the main enactment. 18. The third decision cited by Mr. Roychowdhury is reported in AIR 1949 Privy Council 39 at p. 42 (supra) where Lord Watson observed:- "The language of the enacting part of the statute does not contain the provisions which are said to occur in it, you cannot derive these provisions by implication from a proviso." 19. In reply it is submitted by Mr. Dutta that customs duty amounting to Rs. 6,81,923/- was realised by the Customs Department in respect of the three trawlers purchased by the respondent for the purpose of deep-sea fishing. Mr. Dutta further contends that by virtue of the Notification dated October 11, 1958 referred to above the respondent is entitled to get exemption from the payment of customs duty. 20. It is also submitted by Mr. Dutta that there is no gainsaying that the sum of Rs. 6,81,923/- towards duty was realised by the Customs Department in respect of the said three trawlers purchased by the respondent/Company for deep-sea fishing. In view of the Government of India Notification dated October 11, 1958 granting exemption to the ocean going vessels the Notification would be applicable to the facts of the present case and the above benefit cannot be denied to the respondent/Company to which it is entitled. Accordingly it is submitted by Mr. Dutta that the respondent/Company is entitled to the refund of the customs duty which has been admittedly collected by the Customs Department in respect of the aforesaid three trawlers. 21. The first two questions in the reference application relate to the applicability of sub-section (5) of section 27 of the 1962 Act to a claim for refund of any amount collected as duty. 21. The first two questions in the reference application relate to the applicability of sub-section (5) of section 27 of the 1962 Act to a claim for refund of any amount collected as duty. In the non obstante clause in sub-section (5) referred to above it is clearly stated that notwithstanding anything contained in any other law the provisions of the said section would apply to a claim for refund of any amount collected as duty. It is rightly contended by Mr. Dutta that the reading of sub-section (5) of section 27 makes it clear that it is independent of sub-section (1) of section 27 of the 1962 Act. 22. Mr. Dutta refers to the Supreme Court decision in the case of Lakshmi Narayan Guin vs. Niranjan Modak, reported in AIR 1985 SC 111 (paragraph 9) where it has been held that a change in law during the pendency of an appeal has to be taken into account and such change will govern the rights of the parties. 23. In the case at hand the refund application filed by the respondent/Company was kept pending by the Customs Department and when the same was taken up for adjudication sub-section (5) of section 27 had come into force. The Apex Court’s observation regarding such change in law is as follows:- "If the new law speaks in language, which, expressly or by clear intendment takes in even pending matters, the Court of trial as well as the Court of appeal must have regard to an intention so expressed, and the Court of appeal may give effect to such a law even after the judgment of the Court of first instance." In view of the above we hold that sub-section (5) of section 27 of the Customs Act is squarely applicable to the facts of the present case. We find no merit either in the appeal or in the reference application both of which are dismissed with costs assessed at 200 G.Ms. Later : In view of this judgment, Bank guarantee furnished by the respondent is discharged. Asok Kumar Ganguly, J. : I agree. Appeal and reference application both dismissed.