2003 (2) TMI 82 - HC - Customs

Skimmed Milk Powder /= Milk Powder: Writ Petition Allowed under Import Control Policy.

The court allowed the writ petition, ruling that skimmed milk powder and milk powder are distinct products as per the Import Control Policy of 1977-78. ... Milk powder Issues Involved:1. Whether skimmed milk powder and milk powder are two different products or the same.2. Validity of the import of skimmed milk powder under the Import Control Policy of 1977-78.3. Applicability of the Import Control Policy of 1977-78 versus the Import Control Policy of 1978-79.4. Interpretation of fiscal laws favoring the assessee.Detailed Analysis:1. Whether Skimmed Milk Powder and Milk Powder are Two Different Products or the Same:The primary issue in this case is to determine if skimmed milk powder and milk powder are distinct products. The petitioners argued that these are different products, supported by the Import Control Policy of 1977-78, which lists skimmed milk powder as a canalised item and milk powder in the general list. The respondents contended that milk powder is a genus, and skimmed milk powder is a species thereof, implying they are not different. The court referred to various judgments, including *State of Uttar Pradesh v. M/s. Kores (India) Ltd.*, to emphasize that a word not defined in an enactment should be understood in its popular and commercial sense. The court concluded that milk powders could be of different kinds, and skimmed milk powder is a distinct product, given different treatment by the framers of the Import Control Policy.2. Validity of the Import of Skimmed Milk Powder Under the Import Control Policy of 1977-78:The petitioners imported skimmed milk powder under licences issued against exports of products unrelated to the use of milk powder. According to the Import Control Policy of 1977-78, only milk powder, not skimmed milk powder, could be imported against exports of specified products. The court noted that the policy distinguished between milk powder and skimmed milk powder, treating them as separate items. Therefore, the import of skimmed milk powder by the petitioners was valid under the policy.3. Applicability of the Import Control Policy of 1977-78 Versus the Import Control Policy of 1978-79:The petitioners opened Letters of Credit on 1-4-1978, making the Import Control Policy of 1977-78 applicable to their case. The respondents did not dispute this applicability. The court observed that the Import Control Policy of 1977-78 was valid until 2-4-1978, and the 1978-79 policy was promulgated on 3-4-1978. Hence, the petitioners' case was governed by the 1977-78 policy.4. Interpretation of Fiscal Laws Favoring the Assessee:The petitioners argued that even if two views were possible, the one favoring the assessee should be preferred, citing the principle of interpretation of fiscal laws. The court agreed, stating that when the view propounded by the petitioner is plausible, the benefit should go to the assessee, referencing the judgment in *Priyanka Overseas Pvt. Ltd. v. Union of India*.Conclusion:The court allowed the writ petition, ruling that skimmed milk powder and milk powder are distinct products as per the Import Control Policy of 1977-78. The import of skimmed milk powder by the petitioners was valid under the said policy. The interim order dated 17-11-1978, directing the release of goods on payment of duty and bank guarantee, was upheld, and the bank guarantee was discharged. No costs were imposed.