Customs exemption in public interest upheld as rational classification and no unreasonable trade restriction.

A customs exemption granted in public interest under statutory power was upheld because the distinction between a Government-controlled undertaking and private importers was held to be rational and not discriminatory under Article 14. The court found that the exemption served a pricing policy the Government could regulate through the public undertaking's imports, so the higher import price for the private petitioner did not amount to an unconstitutional classification. It further held that a price-control or duty-reduction measure is not an unreasonable restriction on trade merely because it reduces private profit margins or causes loss, so there was no violation of Article 19(1)(g). The challenge to the exemption notifications therefore failed.

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Issues: (i) Whether the exemption from customs duty granted to a public undertaking, but not to the petitioner, was discriminatory and violative of Article 14 of the Constitution of India; (ii) Whether the grant of exemption and the resulting higher import price for the petitioner violated Article 19(1)(g) of the Constitution of India.

Issue (i): Whether the exemption from customs duty granted to a public undertaking, but not to the petitioner, was discriminatory and violative of Article 14 of the Constitution of India.

Analysis: The exemption was issued under the statutory power conferred on the Central Government by Section 25 of the Customs Tariff Act, 1975 for public interest purposes. The classification between a Government-controlled undertaking and private importers was treated as rational, because the Government could regulate the former's imports and ensure that the benefit of reduced duty served the intended pricing policy.

Conclusion: The exemption was not discriminatory and did not offend Article 14 of the Constitution of India.

Issue (ii): Whether the grant of exemption and the resulting higher import price for the petitioner violated Article 19(1)(g) of the Constitution of India.

Analysis: A measure adopted to control prices or to achieve a public pricing policy is not rendered an unreasonable restriction merely because it reduces profit margins or causes some loss to private traders. The burden on the petitioner flowed from a valid fiscal measure linked to public interest and not from an unconstitutional restriction on trade or business.

Conclusion: There was no violation of Article 19(1)(g) of the Constitution of India.

Final Conclusion: The challenge to the customs exemption notifications failed, and the petitioner remained liable to pay the balance customs duty on the imported goods.

Ratio Decidendi: A customs exemption granted in public interest under statutory power is valid where the classification is reasonable and a price-control or duty-reduction measure does not become unconstitutional merely because it affects the profitability of private importers.

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