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2011 DIGILAW 354 (CAL)

Gokul Refoils And Solvents Ltd. v. UNION OF INDIA

2011-03-11

INDIRA BANERJEE

body2011
JUDGMENT 1. THIS writ application under Article 226 of the Constitution of India has been filed seeking orders on the respondent authorities to allow the petitioner to process the imported consignments of Crude Palm Oil imported into India under Bills of Entry Nos. 2471693 and 2471923 dated December 23, 2010, to bring the same to conform to the standards laid down under the Prevention of Food Adulteration Act, 1955 and the rules framed thereunder. 2. THE petitioner, a company incorporated under the provisions of Companies Act, 1956 operates a unit for manufacture of refined palm oil. On December 23, 2010 the petitioner imported two consignments of Crude Palm Oil of the Edible Grade from Indonesia covered by Bills of Entry No.2471693 and 2471923. On arrival at the Port of Haldia requisite documents were filed for clearance of the consignments. Section 5 of the Prevention of Food Adulteration Act, 1954, hereinafter referred to as the PFAA, provides as follows:- "Section 5. Prohibition of import of certain articles of food No person shall import into India- (i) any adulterated food; (ii) any misbranded food; (iii) any article of food for the import of which a licence is prescribed, except in accordance with the conditions of the licence; (iv) any article of food in contravention of any other provision of this Act or of any rule made thereunder." 3. SECTION 2(v) of the PFA defines 'food' to mean any article used as food or drink for human consumption other than drugs and water and includes any article which is used in human food. Palm oil is admittedly 'food' within the meaning of the PFAA. 4. UNDER Section 2(ia) of the PFAA an article of food is to be deemed to be adulterated in any of the circumstances specified in sub- clauses (a) to (n) of the said section. Clause (a) of Section 2(ia) of the PFAA, provides that an article of food shall be deemed to be adulterated, if it is not of the nature, substance or quality which it purports or is represented to be and Clause (d) of the said sub-section provides that an article may be deemed to be adulterated if it contains any ingredient which renders it injurious to health. Similarly an article of food may also be deemed to be adulterated under Section 2(ia)(l) if the quality or purity of the article falls below the prescribed standard or its qualities are present in quantities not within prescribed limits of variability which renders it injurious to health. In any case, Section 5 of the PFAA not only prohibits import of adulterated food but also import of any food, that is, in contravention of any provision of PFAA or any rules framed thereunder. In exercise of power conferred by the PFAA, the Prevention of Food Adulteration Rules, 1955, hereinafter referred to as "the PFA Rules", have been framed. The standards of quality of various items of food have been specified in Appendices B, C and D to the PFA Rules. Paragraph- A.17.19 of Appendix 'B' which gives the requisite specification for Palm Oil, is set out here in below for convenience:- "A.17.19 PALM OIL means the oil obtained from fleshy mesocarp of fruits of the oil palm (Elaeis guinesis) tree by the method of expression or solvent extraction. It shall be clear, free from rancidity, suspended or other foreign matter, separated water, added colouring and flavouring substances or mineral oil. It shall conform to the following standards, namely: (a) Butyro-refractometer reading at 50-C 35.5-44.0 or Refractive index at 50-C 1.4491-1.4552 (b) Melting point (capillary slip method) Not more than 37?C (c) Iodine value (Wijs' method) 45-56 (d) Saponification value 195-205 (e) Unsaponifiable matter Not more than 1.2 per cent Acid value Not more than 10.0 1 [Indigenously produced raw palm oil obtained by method of expression may be supplied for human consumption as such provided acid value is not more than 6.0. But palm oil imported into the country or produced by solvent extraction shall be refined before it is supplied for human consumption and it shall conform to the standards laid down under A.17.15. Additionally, it shall have flash point (Pensky-Marten closed method)-Not less than 250 decree C] 2 [Test for argemone oil shall be negative.] 3 [However, it may contain food additives permitted in these rules and Appendix C] 4 [The oil so refined shall not contain Hexane more than 5.00 ppm]". 5. FROM the specifications it is patently clear that the acid value of palm oil is not to exceed 10.00 under any circumstances. 5. FROM the specifications it is patently clear that the acid value of palm oil is not to exceed 10.00 under any circumstances. In view of the proviso, indigenously produced raw palm oil obtained by method of extraction may be supplied for human consumption, as such, provided acid value is not more than 6.00. But palm oil imported into the country is required to be refined before it is supplied for human consumption, even though the acid value of the palm oil so imported, may be within the limit specified in Paragraph A 17.19. Imported palm oil would necessarily have to be refined and made to conform to the standards laid down under A.17.15. The acid value, after refining, is not to exceed 0.5. Additionally, it is to have flash point of not less than 250 degree centigrade as per the Pensky-Marten closed method. Paragraph A.17.15 of Appendix 'B' is set out herein below for convenience: "[A.17.15 REFINED VEGETABLE OIL means any vegetable oil which is obtained by expression or solvent extraction of vegetable oil bearing materials, de-acidified with alkali and/or physical refining and/or by miscella refining using permitted foodgrade solvents followed by belching with absorbent earth and/ or carbon and deodorised with steam. No other chemical agent shall be used. The name of the vegetable oil from which the refined oil has been manufactured shall be clearly specified on the label of the container. In addition to the undermentioned standards, to which refined vegetable oils shall conform to the standards prescribed in these rules for the specified edible oils shall also apply except for acid value which shall be not more than 0.5. Moisture shall not exceed 0.10 per cent by weight.] [Test for argemone oil shall be negative.] [However, it may contain food additives permitted in these rules and Appendix C.]." 6. THE acid value of palm oil, whether imported or indigenous, whether refined or crude, cannot exceed 10.00. Indigenously produced raw palm oil obtained by method of extraction may be supplied for human consumption, without refining, provided acid value is not more than 6.0. However, palm oil imported into the country or produced by solvent extraction has to be refined before it is supplied for human consumption so the same conforms to the standards laid down in A. 17.15. THE acid value has to be brought down to 0.5. However, palm oil imported into the country or produced by solvent extraction has to be refined before it is supplied for human consumption so the same conforms to the standards laid down in A. 17.15. THE acid value has to be brought down to 0.5. Some of the relevant provisions of the Customs Act adverted to by the respective parties set out here in below for convenience:- "Section 2(25) "imported goods" means any goods "brought into India from a place outside India but does not include goods which have been cleared for home consumption; Section 2(33) "prohibited goods" means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with; Section 11 A-In this Chapter, unless the context otherwise requires.— (a) "illegal import" means the import of any goods in contravention of the provisions of this Act or any other law for the time being in force; (b) "import place" means a place intimated under sub-section (1)sub-section (2) or sub-section (3), as the case may be, of Section 11C; (c) "notified date", in relation to goods of any description, means the date on which the notification in relation to such goods is issued under Section 11B; (d) "notified goods" means goods specified in the notification issued under Section 11B. Section 47. Clearance of goods for home consumption- (1) Where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance of the goods for home consumption. 7. SECTION 5(1) and (IV) of PFAA prohibit import of any adulterated food or any article of food in contravention of any other provision of the PFAA or any rule framed thereunder. Under SECTION 47 of the Customs Act, goods might be cleared for home consumption only if the proper officer is satisfied that the goods entered for consumption are not prohibited goods. Under SECTION 47 of the Customs Act, goods might be cleared for home consumption only if the proper officer is satisfied that the goods entered for consumption are not prohibited goods. On a conjoint reading of sections and SECTION 5 2(ia) of the PFAA and Sections 2(33) of the Customs Act, Palm Oil that does not conform to the standards prescribed in Serial No. A.17.19 of Appendix 'B' of PFA Rules falls within the category of "prohibited goods". 8. UNDER Section 47 of the Customs Act, clearance of goods for home consumption is subject to satisfaction of the proper officer that the goods are not prohibited goods. The appraising officers of the Customs, therefore, drew samples from the consignments for testing. The samples failed the tests and accordingly release of consignments was withheld. From the documents annexed to the writ petition, it appears that samples drawn from the consignment were tested thrice and there were three different test reports. One of the test reports being the test report of the Department of Chemical Technology of the University of Calcutta, which is dated 6th January, 2011, showed that the acid value was 9.93, which is within limit. However, a report of the Food Safety and Standards Authority of India dated 10th January, 2011 reveals that the acid value was 10.96 which is in excess of the maximum permissible limit of 10.00. A third report which is dated 24th January, 2011 of the Central Food Laboratory shows that the acid value was substantially higher than the permissible limit. The acid value was found to be 11.40 as against the maximum limit of 10.00. 9. MR. R. K. Chowdhury, appearing on behalf of the petitioner, pointed out that the acid value was increasing with passage of time. The first report showed that the acid content is within permissible limit at the time of impost. The second report showed a marginally higher acid limit and the third report showed that the acid value was even higher. 10. MR. Chowdhury argued that the failure of the concerned respondents to allow clearance of the goods resulted in enhancement in the acid value. However, this Court is not technically competent to decide whether acid content increases with passage of time as contended. 10. MR. Chowdhury argued that the failure of the concerned respondents to allow clearance of the goods resulted in enhancement in the acid value. However, this Court is not technically competent to decide whether acid content increases with passage of time as contended. The Customs Authorities, on the basis of the test reports of the Central Food Laboratory, Kolkata, which showed a higher acid content refused to clear the goods until and unless the appropriate PFA authority, that is, the Port Health Officer, gave 'no objection' to release of the goods. Under the PFA Rules 'laboratory' means a Central Food Laboratory. Rule 3 requires samples of food to be tested and analyzed by the Central Food Laboratory. The Customs Authorities were thus obliged to send the samples for testing to the Central Food Laboratory and to proceed on the basis of the report of the Central Food Laboratory. The report of the Central Food Laboratory showed acid value in excess of the permissible limit. The Customs Authorities were thus justified in withholding clearance till receipt of 'no objection' from the Food, Health Officer. Whether the presence of acid value in excess of the permissible limits or variability rendered the palm oil injurious to health or not would necessarily have to be determined by the Health Authority. 11. THE provisions of Chapter 15 of the Customs Tariff Act, 1975, referred by Mr. Chowdhury prescribe the tariff for palm oil and its fractions whether or not refined, but not chemically modified. THE rate of duty has been prescribed for crude oil, other categories of palm oil, refined bleached deodorised palm oil, plitched palm oil and other categories of palmolein. Mr. Chowdhury has also referred to various notifications issued under the Customs Act and/or the Customs Tariff Act including, in particular, Circular 40/2001-Cus. dated July 13, 2001, and Notification : 7/2005-Cus. dated February 4, 2005. 12. ALL the aforesaid notifications and/or circulars pertain to assessment of duty in respect of palm oil. None of the notifications provide for release of edible palm oil not in conformity with the PFAA and/or the PFA Rules framed thereunder. The circular/notification referred to above and emphasized by Mr. Choudhury relates to determination of duty; whether duty for edible purpose or duty for non- edible purpose should be charged. The circular inter alia provided:- "6. None of the notifications provide for release of edible palm oil not in conformity with the PFAA and/or the PFA Rules framed thereunder. The circular/notification referred to above and emphasized by Mr. Choudhury relates to determination of duty; whether duty for edible purpose or duty for non- edible purpose should be charged. The circular inter alia provided:- "6. In view of the above, and with a view to ensure that the benefit of the concessional rate of 35% where claimed for crude oils is extended only where the actual use is shown to be for industrial application to the satisfaction of the proper officer, the following procedure/guidelines may be followed: (a) For consignments of vegetable oils, where the importers claim concessional rate of duty of 35%, as applicable for oils other than edible oils, samples may be sent for testing to see whether the oil conforms to standards of PFA Act, 1954. If it is found that the vegetable oil conforms to the standards of PFA, 1954, the higher effective duty for edible oils only be charged and lower rate denied, apart from taking suitable action for misdeclaration etc.; (b) In case on test, it is found that vegetable oil does not conform to the standards of PFA Act, 1954 and acid value and free fatty acid are higher than the permissible limits (i.e. acid value exceeds 10%) the consignments may be assessed provisionally at the rate claimed, i.e., 35% and allowed to be moved on execution of a bond for establishing the end use of the oil for actual manufacture of soap or other industrial use as claimed. The bond should cover the differential duty liability between the industrial and edible grade oil. In case, import is by an actual user manufacturer, a security/bank guarantee amounting to 25% of the bond value may be taken. The bond should cover the differential duty liability between the industrial and edible grade oil. In case, import is by an actual user manufacturer, a security/bank guarantee amounting to 25% of the bond value may be taken. However, where the import is not for actual use but for trading and sale to actual industrial users, the concessional rate may be extended on provisional basis but the amount of security/bank guarantee should be equal to bond value, i.e. 100% of differential duty liability between the industrial and edible grade oil; (c) The bond shall be discharged and security/bank guarantee released when the actual end use certificate from the Assistant/Deputy Commissioner of Central Excise having the jurisdiction over the factories of soap manufacturers (or other industrial applications for which the vegetable oil is claimed to have been used), is produced to the Customs authorities within a period of 3 months or a period as may be extended by the Commissioner of Customs on being requested by the importers. In case, such certificate is not produced to Customs within 3 months or period as extended by the Commissioner of Customs, immediate recovery action of differential amount be initiated." Mr. Chowdhury has also referred to Circular No.29/97-Cus. (TU) dated July 31,1997 the relevant part whereof is extracted herein below:- "It is clarified that the term 'vegetable oils of edible grade' will cover vegetable oils which are fit for human consumption at the time of import as also the vegetable oils which are fit for human consumption after further processing. The benefit of duty exemption is admissible so long as the oil imported is used for edible purposes, even after refining. Pending cases of assessment may be finalised on the basis of above clarification." 13. DEPARTMENTAL instructions have from time to time been issued laying down the procedure for clearance of various imported items including food items. Circular No.36-2001 Customs dated June 15, 2001 lays down detailed guidelines for examination and testing of food items prior to customs clearance. The circular enjoins Customs to undertake certain general checks in addition to testing of samples. 14. FIRST Customs is required to check whether the condition in which the bulk products are transported meet the requirements of storage. The Customs is then required to check the physical/visual appearance of goods in terms of possible damage. The circular enjoins Customs to undertake certain general checks in addition to testing of samples. 14. FIRST Customs is required to check whether the condition in which the bulk products are transported meet the requirements of storage. The Customs is then required to check the physical/visual appearance of goods in terms of possible damage. The third important thing is compliance of labeling requirements under the PFA Rules and Packaged Commodities Rules. This includes ensuring that the label is written in English and the details of ingredients are specified. Food items are required to have valid shelf-life, that is, not less than sixty per cent of the original shelf-life. In other words the time period between the 'best before' date and date of import should at least be sixty per cent of the time period between the 'Date of Manufacture' and 'Best before Date'. Apart from the aforesaid general checks all consignments of edible/food products imported through ports are required to be referred to the Port Health Officer for testing. To alleviate the difficulties of the importers, pending receipt of the test reports, consignments are allowed to be stored in warehouses under Section 49 of the Customs Act, 1952. There is no provision of law which provides for processing of imported food before clearance to bring the same to conform to prescribed standards. Any imported food that is, to be deemed to be adulterated, and/or is otherwise not in conformity with standards prescribed by the PFA Rules, have either to be re-exported or destroyed. The situation may be different where goods not in conformity with prescribed standards can be segregated from goods, which conform to standards. In case of segregable consignments those which conform to standards may be cleared and the rest re-exported or destroyed. 15. MR. Chowdhury relied on the proviso to Section 18 of PFAA in support of his contention that this Court would allow pre-processing. Section 18 provides that when any person has been convicted under PFAA for contravention of any of the provisions of PFAA or any Rules framed thereunder, the article of food in respect of which the contravention has been committed may be forfeited by the Government. Section 18 provides that when any person has been convicted under PFAA for contravention of any of the provisions of PFAA or any Rules framed thereunder, the article of food in respect of which the contravention has been committed may be forfeited by the Government. However, where the Court is satisfied that the article of food is capable of being made to conform to prescribed standards for human consumption after processing, the Court may order the article of food to be returned to the owner, on his executing a bond with or without sureties, for being sold, subject to the other provisions of the said Act, after reprocessing under the supervision of such officer as might be specified therein. The proviso to Section 18 applies in case of conviction and imposition of penalty of forfeiture. In this case, the petitioners have not been convicted. The proviso is not attracted in case of prohibited imports. 16. IT is well-established proposition that the language of a proviso is to be construed in relation to the subject-matter covered by the section to which the proviso is appended. The proviso does not travel beyond the provision. The proviso to a particular provision of a statute only embraces the field which is covered by the main provision. IT carves out an exception to the main provision to which it has been enacted as a proviso and to no other provision. Furthermore, for this Court to pass an order directing the Customs Authorities to allow reprocessing to bring the consignments in conformity with PFA Rules, this Court has to be satisfied that palm oil can be refined to bring down the acid content and this can be done under the supervision and control of the Customs Authorities. Unfortunately, the Writ Court cannot, on affidavits, arrive at such a finding. Moreover as observed above, it is reiterated that there is no provision in the Customs Act and/or the rules and regulations, notifications and/or circulars placed before me which provide for release subject to reprocessing. 17. MY attention has been drawn to several earlier unreported judgments and/or orders of this Court allowing reprocessing. In W.P. No. 158 of 2006 (M/s. Teej Impex Pvt. Ltd. and Anr. 17. MY attention has been drawn to several earlier unreported judgments and/or orders of this Court allowing reprocessing. In W.P. No. 158 of 2006 (M/s. Teej Impex Pvt. Ltd. and Anr. v. Union of India and Ors.) a Single Bench of this Court directed that the petitioner should be granted an opportunity to reprocess the imported Hydrogenated Vegetable Oil (Vanaspati) by adding sesame oil and vitamin 'A' so that the same may conform to the standards prescribed for human consumption. The direction was given in view of the admission of the Counsel of the respondent that the imported Hydrogenated Vegetable Oil (Vanaspati) could be brought to conform to the specified standards by reprocessing. Similar direction was given by the Single Bench on 1st March, 2006 in W.P. No.255 of 2006 (M/s. S.R. Enterprise v. Union of India and Ors.). The order dated 1st March, 2006 indicates that in the aforesaid case too, there was an admission. This Bench also passed an order in W.P. No.1527 of 2006 (Adani Export Ltd. v. Union of India). The issues of the aforesaid case were found to be identical to the issues involved in W.P. No.1096 of 2006 (Prime Impex Ltd. v. Union of India) disposed of by an order dated 8th September, 2006. This Court accordingly passed similar directions. Another order dated 10th November, 2006 in W.P. No.1591 of 2006 (Ahika Exports Pvt. Ltd. v. Union of India) has been relied upon. The aforesaid order was only an interim order. Directions for affidavits were issued. The order dated 30th September, 2006 of this Bench in W.P. No.1527 of 2006 [Adani Export Ltd. v. Union of India) is also an interim order. 18. A writ lies for enforcement of a statutory right, a legal right, or may be even an equitable right. It is difficult to appreciate how any right of the petitioners could have been infringed by refusal to clear goods not in conformity with standards prescribed under PFA Rules. There is no provision of law which confers on the petitioners any right to re-process sub-standard goods to bring the same to conform to standards. In any case, for exercise of power to pass an order in terms of the proviso, the Court would have to be satisfied that the article of food is capable of being made to conform to prescribed standards for human consumption after reprocessing. In any case, for exercise of power to pass an order in terms of the proviso, the Court would have to be satisfied that the article of food is capable of being made to conform to prescribed standards for human consumption after reprocessing. This Court cannot on the basis of the materials disclosed in the petition arrive at the conclusion that palm oil can be made to conform to prescribed standards by reprocessing. 19. A judgment is a precedent for the proposition of law that is decided. An order disposing of a writ application in the particular facts of the case, having regard to concession cannot and does not constitute a binding precedent. In the instant case, reprocessing has been opposed not only by the Customs Authorities, but also by the PFA Authorities. There is no admission as in the other cases that the acid value can be reduced by reprocessing. This Court is, therefore, not inclined to pass orders, as prayed for in the writ petition. The writ petition is dismissed.