TaxTMI 
TaxTMI 
1992 (5) TMI 23
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.... with effect from 25th March, 1947, initially for a period of three years and was extended from time to time. The Act was substantially amended by the Imports and Exports (Control) Amendment Act, 1976. Section 3 of the Act is relevant for our present purposes. It reads :— "3. Powers to prohibit or restrict imports and exports - (1) the Central Government may, by order published in the Official Gazette, make provisions for prohibiting, restricting or otherwise controlling in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the order :- (a) the import, export carriage coastwise or shipment as ships stores of goods of any specified description; (b) the bringing into any port or place in India of goods of any specified description intended to be taken out of India without being removed from the ship or conveyance in which they are being carried. (2) All goods to which any order under sub-section (1) applies shall be deemed to be goods of which the import or export has been prohibited under Section 11 of the Customs Act, 1962 (52 of 1962), and all the provisions of that Act shall....
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....rt-Export Policy of the Government for the period 1988—91 (hereinafter referred to as `the policy') is the one with which we are concerned. Appendix 6 to the policy deals with the categories of goods that can be imported under an Open General Licence (O.G.L.) and lists out the categories of importers, the items allowed to be imported by them under O.G.L. and the conditions governing such importation. Item 36 of this Appendix permits the import, under O.G.L., "by all persons" of "Life saving equipment as per List 2 of the Appendix and their spares". Item 37 permits the import, under O.G.L., "by all persons" of "finished drug preparations, life saving and anti-cancer drugs as per List 3 of this Appendix". List 2 which contains the "List of life saving equipment allowed for import under O.G.L." includes, as Item No. 27, "Haemafiltration instrument/Haemodialysers and accessories/spares thereof". 5.A notification was also issued by the Government of India under Section 25 of the Customs Act, 1962 (hereinafter referred to as `the Act'). This notification, as it stood at the relevant time, was in these terms :— "In exercise of the powers conferred by sub-section (1) of Section 25 of....
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....o make quick money. It imported Haemodialysers from West Germany and exported them to Russia at a profit. We are told that sometime in 1987 he imported several sets of such Haemodialysers through Bombay customs and, within a short interval, exported them to the U.S.S.R. through Bombay customs without any objection being taken thereto by the customs authorities. This, apparently, emboldened the appellant to repeat the attempt with some variation and it is with this second transaction that we are here concerned. In May, 1988, the appellant obtained from the Trade Representative of the U.S.S.R. in India another order for the supply of 53 Haemodialysing machines (along with spare parts and accessories) manufactured by the renowned West German Company M/s. Fresenins A.G. bearing the trade name "A-2000 C". In pursuance of the above order, the appellant, in turn, placed an order with the West German manufacturers for the import of 53 Haemodialysers into India through the port of Bombay. The Bombay Custom House allowed the clearance of the goods on 19-10-1988 under O.G.L. and without payment of customs duty. After clearing the goods, the appellant took the goods to its Ankleshwar factory a....
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....Act." A "Show-cause" notice was, therefore, issued on 25-3-1989 and, after considering the appellant's reply dated 31-7-1989, the Collector of Customs passed an order on 22-10-1990. He agreed with the appellant that the goods were not liable to import duty and that, in any event, the Kandla Collector of Customs had no jurisdiction to demand customs duty on goods imported through Bombay. But, he concluded : "The goods under export were liable to confiscation under Section 113(d) of the Customs Act. Since the goods have already been exported, they are not available for confiscation. By rendering the goods liable to confiscation, M/s. M.J. Exports have rendered themselves liable to a penalty under Section 114 of the Customs Act. Considering the fact that the goods have already been exported, I proceed to take action in terms of the bond, Bank Guarantee and cash deposit furnished by the exporter. I therefore impose a penalty of Rs. 50 lakhs on M/s. M.J. Exports. In order to realise this amount I order the appropriation of the cash deposit furnished by them towards penalty and direct the Department to invoke the Bank Guarantee furnished by them immediately. The balance amount shall be ....
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....ed to exemption from customs duty on the import of the goods in question - an issue which was decided in favour of the assessee by the Collector of Customs and has not been pursued further and is not in issue before us - the basic and only controversy before us is whether the export of the subject goods is barred, expressly or by necessary implication, by the provisions of the Customs Act or any other law in force. The Revenue bases its case of prohibition on the export of the goods on two grounds. It is submitted firstly, that the terms of the O.G.L. under which the goods were permitted to be imported by any person made it clear beyond doubt that they were intended to be used in India and not to be exported. Secondly, it is pointed out, the import clearance of the goods had been granted "for home consumption" and not for export. It is urged that the provisions of the Customs Act make it clear that clearance of imported goods can be only for "home consumption" or "warehousing"; the import of goods just for the purpose of export is not envisaged or permitted under its provisions. Reference was also made to certain provisions of the Foreign Exchange Regulation Act, 1973 (FERA). 15.T....
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....ible for the appellant to export goods cleared for home consumption. 16.We do not think that this contention of the Revenue is sound. The contrast that finds emphasis in the sections as well as the forms above referred to is of clearance for home consumption as opposed to clearance for warehousing. The presentation of a bill of entry for home consumption only means that the importer does not intend to warehouse the goods; in the latter case, he is not required to pay the import duties, if any, immediately (Ss. 59 and 59A). The form of the Bill of Entry prescribed under the Act does not require any declaration from the importer as to the purpose for which the imported goods are required or that they will be used or sold only in India. The expression `home consumption' has also, in the context, no clear or definite meaning and raises a lot of conundrums if literally interpreted to mean that imported goods should always be consumed in India. Is it home consumption if the importer does not use the goods himself but sells them? At what point of time should the importer make up his mind whether he proposes to sell the imported goods in India or wishes to export them outside? Is the cond....
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...., he cannot clear the goods from the customs area. The warehouse is only a place which the importer, on payment of prescribed charges, is permitted to utilise for keeping the goods where he is not able to take the goods straightaway outside the customs area. There is nothing in the provisions of the Act to compell an importer even before or when importing the goods, to make up his mind whether he is going to use or sell them in India or whether he proposes to re-export them. Again, there may be cases where he has imported the goods for use or sale in India but subsequently receives an attractive offer which necessitates an export. It would make export trade difficult to say that he cannot accept the export offer as the goods, when imported, had been cleared for home consumption. S. 69, therefore, should be only read as a provision setting out the procedure for export of warehoused goods and not as a provision which makes warehousing an imperative pre-condition for exporting the imported goods. The second reason for not reading Ss. 68 and 69 as supporting the Revenue's interpretation is even more weighty. That interpretation would mean that imported goods can be re-exported after be....
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....mits that the object and purpose of putting the goods in question on the O.G.L. and making it available for import by any person is writ large in the very heading of the list in which it is included. The import is permitted so that life-saving equipment and medicines are available for use in the country and not to enable a private party to make profit by their export either directly or through someone else. To permit such a thing will result in frustrating the very intent of the Government in placing the item on the O.G.L. and, indeed, going further, and exempting them from import duty. It is pointed out that, when a doubt regarding the scope of the O.G.L. was raised, the customs authorities had, with the appellant's concurrence, made a reference to the Chief Controller of Imports and Exports (CCIE) under para 24.1 of the policy who had "clarified" that the imports under the OGL and certain other licences "are entirely meant for use within the country and therefore cannot be allowed for re-exports as such". The policy no doubt refers to the goods imported under O.G.L. being meant for "stock and sale" but this also means only that it is for home consumption and not export purposes. ....
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....-91, and their import is allowed by all persons for actual use/stock and sale. The contention of Mr. Aggarwal is that since the goods were imported for stock and sale, these could not be re-exported. We are unable to agree with the contention of Mr. Aggarwal or with the view taken by the respondents. Again, to us, the goods do not appear to be prohibited goods. We may usefully refer to Para 4 of Section I, dealing with Export Control, in Import and Export Policy, 1988-91, Vol. II, in respect of Export Control and Procedures, which is as follows :- "Only item included in Schedule I to the Exports (Control) Order, 1988 are under control. No such item can be exported unless it is covered by a valid licence issued by a licensing authority competent to grant an export licence for that item. Goods which are not included in this Schedule can be shipped without any export licence unless their export is controlled under any other law for the time being in force." Thus, the Exports (Control) Order, 1988 is not applicable to photographic film (colour). If reference is made to S. 74 of the Act, it appears that6. when any goods capable of being easily identified which have been imported into....
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....em as permitting a sale of the goods outside the country. Note (44) in Appendix 6 reads thus : "Import of Life Saving Equipment appearing in List 2 of this Appendix shall be eligible to import spares of such equipment either along with the machines or separately". This also carries a mild indication that the equipment permitted to be imported is only for purposes of use in the country. The circumstances that these items are also exempted from customs duty at the time of import - although the list of such exempted items is not identical with List No. 2 of Appendix 6 - also lends support to the conclusion that the goods so permitted are not meant for re-export. An indication to a similar effect is also seen in the foreward issued by the Government while publishing Vol. I of the Import Export Policy (1988-91), Vol. I. Para 3 of the foreward says :— "The Open General Licence lists have been expanded by inclusion of more items. In particular, the lists of life saving equipment and drugs have been substantially enlarged to facilitate easy access to imported equipment and drugs which are not available in the country." 22.We are, therefore, of the opinion that, although there is no e....
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....e used. But, as pointed out by this Court in Surjit Singh Kalra v. Union of India [1991 (2) S.C.C. 87], "though it is not permissible to read words in a statute which are not there, where the alternative lies between either supplying by implication words which appear to have been accidentally omitted, or adopting a construction which deprives certain existing words of all meaning, it is permissible to supply the words". The Court should construe a provision in a harmonious way to make it meaningful having regard to the context in which it appears. Here, we are only interpreting the language used and giving content and meaning to the classification and heading used in the order permitting imports under O.G.L. in certain cases in the context of the provisions of the Imports and Exports (Control) Act, 1947, as well as the orders and notifications issued thereunder. We, therefore, do not find any force in the contention of Sri Habbu. 24.Taking into account all the above considerations, we hold that the goods in question were "prohibited" goods within the meaning of Section 2(33) and that their confiscation under Section 113(d) and the penalty under Section 114 were fully justified. 2....
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....ection certificate of the RBI to the export "on humanitarian grounds" in view of the appellant's representation that the goods were needed for the succour of the victims of the Armenian earthquake in Russia. There is no material before us regarding the date of the earthquake or to indicate that the purchase orders had been placed thereafter. We do not even know whether the earthquake was only a subsequent development taken advantage of by the assessee to have the goods cleared pending adjudication of issue by the Customs authorities. It is true that the goods, being in the nature of life-saving equipment, may have been eventually used only for that purpose in the country of export. But, if as we have held, the imports of the goods were intended for their use in India, this circumstance is of no assistance. Learned counsel has, however, contended that the exports have been made in pursuance of a mutual trade agreement between the Government of India and U.S.S.R. considered beneficial to both countries and hedged in with conditions ensuring the interests of both the countries and that this should be considered sufficient to justify the export. In our opinion, the mere fact that mutu....
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....e words "or otherwise" after the words "ship stores". The CEGAT has relied upon the amendment to draw an inference against the appellant that, since the goods do not fall under this clause, their export was not permitted. We think that this is not correct for the reasons we have pointed out in respect of clause 15(g) of the Export Control Order, 1988. To say that goods bonded for re-export as above will not be affected by the provisions of the order does not mean that goods, not so bonded, cannot be exported at all. Their export can be interdicted only if there is some other express or implicit prohibition in clause 3 of the Export Control Order or otherwise. Reliance has also been placed by the Tribunal on Clause 10C(6) of the Imports Control Order for rejecting the assessee's contentions. It is sufficient to extract sub-clause (1) of this clause which reads : "10C.Power to make directions for the sale of imported goods in certain cases - (1) Where, on the importation of any goods or at any time thereafter, the Chief Controller of Imports and Exports is satisfied after giving a reasonable opportunity to the licensee of being heard in the matter, that such goods cannot or should ....