REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(s).  593­594 OF 2020 (arising out of SLP (Civil) No(s). 30371­30372 of 2017)

M/S. GRANULES INDIA LTD.  ...APPELLANT(S)

VERSUS

UNION OF INDIA AND OTHERS ...RESPONDENT(S)

JUDGMENT

NAVIN SINHA, J.

Leave granted.

2. The  appellant is  aggrieved  by  orders  dated  07.12.2016 and

14.06.2017, rejecting the writ petition as also the review application

arising from the same.   

3. The appellant, during the year 1993 imported 96 tons of the

chemical “Acetic Anhydride” under three Bills of Entry bearing nos.

290, 291 and 300 dated 01.12.1993, 01.12.1993 and 14.12.1993

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through the Inland Water Container Depot (ICD), Hyderabad under

the Advance Licence Scheme. It claimed clearance of the

consignment free of  import duty in terms of Customs Notification

nos. 203/1992, 204/1992, both dated 19.05.1992.  The notification

contained a scheme permitting import without payment of customs

duty subject to fulfilment of certain  norms and conditions. The

Notification nos. 203/1992 and 204/1992 were amended by a

Notification no. 183/1993 dated 25.11.1993, by which the subject

imports became liable for duty, the exemption having been

withdrawn. The Notification dated 25.11.1993 was further amended

by another clarificatory Notification no. 105/1994 dated 18.03.1994

permitting the import of the chemical without customs duty subject

to certain terms and conditions.   The clarificatory notification was

necessitated to obviate the difficulties faced by the importers  like

the appellant, who had imported the chemical under the advance

licence issued by the Director General of Foreign Trade prior to the

amendment Notification no. 183/1993 dated 25.11.1993.  

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4. The appellant was allowed to clear the consignments under the

aforesaid three Bills of Entry without payment of duty.

Subsequently the respondents issued show cause notice under

Section 28 (1) of the Customs Act, 1962 with regard to the same

consignments as having been imported after 25.11.1993. The

appellant made a representation on 20.11.1997 seeking exemption.

It was considered favourably in respect of three other consignments

under Bill of Entry No.312 dated 12.09.1993, Bill  of Entry 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

to duty by order dated 12.2.1998 with regard to the consignments

under three  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 under the same advance licence.   The respondents while

considering the reply to the show cause notice and fixing liability for

payment of customs duty did not make any reference to their

notification dated 18.03.1994.   The Commissioner (Appeals) on the

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same reasoning rejected the appeal leading to the institution of the

writ application.  

5. Dismissing the writ application, the High Court opined that no

mandamus for exemption could be issued.  The consignments were

admittedly imported after  25.11.1993 and before the  clarificatory

notification dated 18.03.1994. Thus, there was no arbitrariness on

part of the respondent.  The appellant preferred a review application

inter alia relying upon a Division Bench order of the Andhra Pradesh

High Court in Shri Krishna Pharmaceuticals Limited vs. Union

of India,  (2004) 173 ELT 14.   Rejecting the plea, the High Court

opined  that  since the  appellant  did  not  produce  the  clarificatory

notification along with the writ petition and neither were the

respondents aware of the clarificatory notification the appellant was

not entitled to any relief.  

6. Shri B. Adinarayana Rao, learned senior counsel appearing on

behalf of the appellant, submitted that denial of exemption to the

consignment actually imported after 25.11.1993 under the advance

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licence obtained prior to 19.05.1992 notwithstanding the

clarificatory notification dated 18.03.1994 holding the appellant

liable for customs duty is completely unsustainable.  Special Leave

Petition (Civil) No.14288 of 2004 (CC No.5418/2004) preferred

against the order in  Shri Krishna Pharmaceuticals Limited

(supra) was dismissed.   The mere failure to enclose a copy of the

notification could not  be a ground  for denial  of  relief.  Denial  of

exemption in the facts and circumstances of the case in view of the

statutory notifications were per se arbitrary.

7. Learned counsel appearing for the State supported the order of

the High Court and urged that the consignments having been

imported after withdrawal of the exemption and before issuance of

the clarificatory notification was justified.

8. We have considered the submissions on behalf of the parties

and are of the considered opinion that the order of the High Court is

completely unsustainable. The entire consignment was imported

under one advance licence issued to the petitioner prior to

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19.05.1992. The fortuitous circumstance that part of the

consignment was actually imported prior to 25.11.1993 and the rest

subsequent thereto is  hardly relevant in  view of the  clarificatory

notification dated 18.03.1994 that the exemption would continue to

apply subject to fulfilment of the specified terms and conditions.  It

is not the case of the respondents that the consignments imported

subsequently did not meet the terms and conditions of the

exemption. In Shri Krishna Pharmaceuticals Limited (supra), the

High Court observed as follows:

“7. …Obviously, the petitioner had the facility of exemption from payment of the customs duty under the scheme known as Advance License Scheme, but the same was banned through notification dated 25.11.1993 and later through another clarificatory notification the same was extended by Notification dated 18.3.1994.   Thus, since the Government itself has clarified by its second notification providing  exemption,  we are inclined  to  hold that the petitioner shall be entitled to be exemption for all the three consignments  as long as the three consignments are  imported under the Advance License scheme.  Moreover, it is not the case of the respondents that these three consignments are not covered under the Advance License scheme.”

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9. It is unfortunate that the High Court failed to follow its own

orders in a similar matter. The High Court further gravely erred in

holding that the authorities of the State were also unaware of the

clarificatory notification and neither did the appellant bring it  on

record. The State is the largest litigant as often noted. It stands in a

category apart having a solemn and constitutional duty to assist the

court in  dispensation  of justice.  The  State  cannot  behave like  a

private litigant and rely on abstract theories of the burden of proof.

The State acts through its officer who are given powers in trust. If

the trust so reposed is betrayed, whether by casualness or

negligence, will the State still be liable for such misdemeanor by its

officers betraying the trust so reposed in them or will the officers be

individually answerable. In our considered opinion it is absolutely

no defence of the State authorities to contend that they were not

aware of their own notification dated 18.09.1994. The onus heavily

rests on them and a casual statement generating litigation by State

apathy cannot be approved.  

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10.   We  can  do  no  better than  quote the following  extract from

National Insurance Co.  Ltd.  vs.  Jugal Kishore,  (1988)  1  SCC

626, observing as follows: ­  

“10. Before parting with the case, we consider it necessary to refer to the attitude often adopted by the Insurance Companies, as was adopted even in this case, of not filing a copy of the policy before the Tribunal and even before the  High Court in  appeal. In this  connection what is  of significance is that the claimants for compensation under  the Act  are invariably not possessed of either the policy or a copy thereof. This Court has consistently emphasised that it is the duty of the party which is in possession of a document which would be helpful in doing justice in the cause to produce the said document and such party should not be permitted to take shelter behind the abstract doctrine of burden of proof. This duty is greater in the case of instrumentalities of the State such as the appellant who are under an obligation to act fairly. In many cases even the owner of the vehicle for reasons known to him does not choose to produce the policy or a copy thereof. We accordingly wish to emphasise that in all such cases where the Insurance Company concerned wishes  to take a defence  in a claim petition that its liability is not in excess of the statutory liability it should file a copy of the insurance policy along with its defence. Even in the instant case had it been done so at the appropriate stage necessity of  approaching this Court in civil appeal would in all probability have been avoided. Filing a copy of the policy,

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therefore, not only cuts short avoidable litigation but also helps the court in doing justice between the  parties. The obligation on the part of the State or its instrumentalities to act fairly can never be over­emphasised.”

11. The impugned orders are therefore held to be unsustainable

and are set aside.  The appeals are allowed.    

.……………………….J.   (Navin Sinha)   

………………………..J.    (Krishna Murari)   

New Delhi, January 23, 2020

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