TaxTMI 
TaxTMI 
1996 (4) TMI 119
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....sion etc. Such an export oriented unit was to belong to an industry in respect of which the export potentional and export targets had been considered by the relevant Export Promotion Council. The units which were intending to set up such industries were required to apply for approval, to the Department of Industrial Development, Ministry of Industry. 3. The Punjab State Industrial Development Corporation on 9th/22nd July, 1982, made an application to the Ministry of Industry for the grant of industrial licence to manufacture Furfural and other edible products in a 100% export oriented project. In the application it was stated that the proposed project envisaged the putting up of a composite unit, inter alia, consisting of two paddy shelling units, each having a shelling capacity of 30 tonnes per hour. The application also further stated that after shelling the rice, the rice produced on custom basis would be returned back to the paddy suppliers; the residual rice husk would be subjected to Furfural extraction and edible oil would be extracted from the rice bran obtained as a bye-product. It was stated that the edible rice bran oil so produced would be 100% import substitution be....
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....s." It was also by this amendment letter dated 18th May, 1987, that it was recognised that the project would be implemented by M/s. Oswal Agro Furane Ltd. 6. The Government of India on 30th March, 1988, in exercise of its powers under Section 3 of the Imports and Exports (Control) Act, 1947, issued the Export (Control) Order, 1988. This order repealed the earlier Export (Control) Order, 1977 and it came into force with immediate effect. Restriction on export of certain goods was imposed by Clause 3 of the new Order which, inter alia, stated that "Save as otherwise provided in this Order no person shall export any goods of the description specified in Schedule I, except under and in accordance with a licence granted by the Central Government or by an officer specified in Schedule II." In this order a saving clause was inserted in Clause 15. In the present appeals we are concerned with the construction of Clause 15(j) of the said order, which reads as follows : Saving - Nothing in this Order shall apply to -"15. products manufactured in and exported from the respective(j) Free Trade Zones and approved 100 per cent Export Oriented Units except textile items covere....
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....e bran oil, separately. The case relating to export of rice : The writ petition was filed in the Delhi High Court because vide letter dated 7th January, 1992, the Assistant Collector of Customs, Kandla, did not allow the export of rice and, in fact, directed Oswal Agro to unload the rice which had been loaded. It appears that the action by the customs authorities had been taken when the appellants herein had informed the Assistant Collector of Customs, Kandla, that export of non-basmati rice could be allowed only when registration-cum allocation certificates are issued. Inasmuch as Oswal Agro wanted to export the non-basmati rice without, any registration-cum-allocation certificate from the appellant and below the minimum price which had been fixed, the aforesaid action was taken by the Customs Authorities of stopping Oswal Agro from exporting rice. In the writ petition filed by the respondents in the Delhi High Court it was contended that being a 100 per cent export oriented unit, it was exempted from any trade restriction, inter alia, by virtue of the saving Clause 15(j) of the Export (Control) Order 1988. Another contention which was raised was that the fixation of minimum pr....
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....91, the same will also not apply to the exports being made by 100 per cent export oriented Units." The High Court also held that there was no provision in the Export (Control) Order, 1988 for fixing the minimum price for non-basmati rice. By taking note of the fact that vide letter dated 15th October, 1991, of the appellants herein, the last date for exporting the entire quantity of non basmati rice was 31st March, 1992, the High Court while allowing the writ petition, granted three months' time to export the balance quantity of 83800 M.T. of non-basmati rice. 13. On 15th May, 1992, in Special Leave Petition (C) No. 6854 of 1992, filed by the appellant, from which Civil Appeal No. 3785 of 1992 arises, this Court while directing the petition to be listed on 8th September, 1992, gave Oswal Agro the liberty to export the rice in question on the undertaking that in the event of the Court holding that the item was a canalised item and Oswal Agro was not entitled to export the same, then it would make good the difference, as determined, in dollars. 14. Notwithstanding the fact that the aforesaid special leave petition was pending in this Court, Oswal Agro moved another miscellan....
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....g given by it to this Court, it is liable to pay the difference between the actual export price and the minimum export price fixed by the Government and so calculated this difference which comes to US $ 24,54,644 at the current foreign exchange rates. 16. Mr. Ram Jethamalani, learned senior counsel for Oswal Agro at the outset conceded that in terms of the industrial licence, Oswal Agro was under no obligation to export basmati rice. According to him the only obligation which it had, in terms of the licence, was to export Furfural and not edible rice bran oil. For justifying the export of non-basmati rice, Mr. Jethamalani relied upon clause 15(j) and submitted that the said clause was not confined to the end product governed by the IDR Act but it extended to bye-products manufactured in that factory. In other words his submission was that an export oriented unit, by virtue of Clause 15(j) was entitled to export not merely the goods mentioned in the industrial Unit but also other products manufactured in that factory. He submitted that with respect to the licensed product the Oswal Agro was under an obligation to export but because of Clause 15(j) the Oswal Agro, on its own volit....
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....sp; Turbo Generator Surplus powder of State Grid. 18. A bare perusal of the aforesaid table shows that the raw material which was required for the manufacture of Furfural is rice husk while for the manufacture of rice bran oil the raw material required is rice bran. In the application dated 9th/22nd July, 1982 for the grant of industrial licence, it was clearly stated that though the respondent proposed to set up two shelling units but after shelling the rice produced on custom basis would be returned back to the paddy suppliers. It is only in order to obtain sufficient quantity of raw material, namely, rice husk that a composite project was proposed which contemplated the setting up of a rice mill as well. Under the circumstances it will not be correct to state that the immediate raw material required for the manufacture of Furfural was paddy. In fact the raw material was rice husk, though, no doubt the same is obtained after shelling of paddy....
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.... whether Section 12 of the Act is retrospective" 21. Clauses 3 and 15 of the Export (Control) Order have to be read together. Clause 3 places restrictions and makes provision with regard to export of goods specified in Schedule I and Schedule III of the Order. If, however, a case falls within any of the various provisions of sub-clauses of Clause 15, then in that case only the Order does not apply. Clause 15, to put it differently, merely preserves any right or obligation which existed prior to the issuance of the Export (Control) Order and it did not, and could not, confer any new or additional right. Clause 15(j) merely preserves the right of Oswal Agro to export those products which it could export as on 30th March, 1988, and any amendment in the schedule to the said Order, like the one made on 14th October, 1991, would not and cannot give Oswal Agro a right to export non-basmati rice, which right it did not have on 30th March, 1988. On 30th March, 1988, when the Export Trade (Control) Order, 1988 was promulgated, Oswal Agro had an industrial licence which made it obligatory to export its entire production of Furfural. It was this right to export furfural which was preserved ....
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.... on this basis that it has been contended in the transferred case that the respondent is under no obligation to export edible rice bran oil. The obligation to export the entire quantity of Furfural manufactured by it arises because of a specific conditions contained in the industrial licence which were as follows :- The entire (100 per cent) production shall be"(i) exported. You shall export, the entire production (100%) less(ii) rejects not exceeding 5 (five) per cent for a period of 10 (ten) years." Clause 15(j) had to be inserted so as to save such conditions which had been incorporated in the industrial licence which was issued to the respondent. Had Clause 15(j) not been incorporated in the Order it may have been possible for a unit to try and contend that by virtue of the restriction on exports being placed by Clause 3 of the Export (Control) Order, the unit was not in a position to export its products, though it was obliged to do so when the licence was issued. The implication of the insertion of the saving clause, therefore, was that the existing right or commitment for the export of the products was not in any way curtailed or taken away by the promulg....
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....rt on the earlier decision of the Punjab and Haryana High Court, while allowing import of capital goods, is clearly misplaced. That writ petition was concerned only with the question of import of machinery for the purpose of shelling paddy which would enable Oswal Agro to obtain the raw material required by it, namely, rice husk. That petition was not concerned with the question of export of rice and, therefore, the said decision had no application to the present case. The question whether the rice shelling plant was a part of a 100% export oriented unit is wholly immaterial while considering in the present case whether Oswal Agro could export non-basmati rice. 28.It was also contended by Mr. Jethamalani that even if it be assumed that the High Court has taken an erroneous view and had wrongly concluded that Oswal Agro could export non-basmati rice, this Court, in exercise of its discretionary jurisdiction under Article 136 of the Constitution, should not interfere. 29. The facts as stated hereinabove, on the other hand, show that the High Court ought not to have exercised its jurisdiction under Article 226 of the Constitution, for more than one reason, and, therefore, it wou....
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....Court, instead of passing interim orders and allowing export of non-basmati rice, ought to have dismissed the writ petition. 32. It was contended by the learned counsel that even if it be assumed that the export of non-basmati [rice] below the minimum price fixed by the appellant was not permissible even then the only loss which has been suffered by the appellant was the 5% on the difference in the price at which the [rice] was exported and the minimum price which was fixed. Elaborating the contention it was submitted that the sale proceed of the rice which was exported would always belong to the respondent and the appellant was only entitled to receive 5% of the proceed. Therefore, if there was an export at less than the minimum price fixed then the shortfall of the amount which is received would be to the account of Oswal Agro. The loss to the appellant herein, it was submitted, would only be to the extent of 5% of the sale price which should have been realised and the difference between the actual sale price and the minimum price fixed was not payable by Oswal Agro to the appellant. 33.We are unable to agree with the aforesaid submission. It is clear that Oswal Agro had ex....
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....commission but as Oswal Agro has made export of rice in violation of law and under the conditional orders passed by this Court, it cannot be now allowed to say that it is not liable to pay the difference between the price at which the rice was exported and the minimum price fixed by the appellant. The liability to pay to the appellant, in other words, arises by virtue of interim orders passed by the High Court and this Court, which orders are binding on the parties. Edible Oil 35.As regards the challenge to the amendment of the industrial licence vide letter dated 18th May, 1987, Clause (vi) was included as an additional condition in the industrial licence, which reads as follows : "You shall also export rice bran oil produced in the 100% export oriented unit. If, however, it is so required by the Government, you will agree to supply the said oil to an agency that will be nominated by the Govern ment at prices not higher than the international prices." This amendment was made nearly one year after the grant of the industrial licence and more than four and a half year after the issuance of a letter of intent. The very insertion of this clause shows that, prior thereto, O....
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.... export polished rice produced from our project if allowed by the Government of India. Pursuant to the aforesaid undertaking it was in the letter of intent dated 20th October, 1982, issued by the Government of India, the two items whose manufacture was permitted was Furfural with an annual capacity of 6000 tonnes and edible rice bran oil "as a bye-product" with an annual capacity of 3000 tonnes. It was further stated in the letter of intent that "the entire 100% production shall be exported". 40. Though in the industrial licence dated 18-8-1986 on the formal agreement executed thereafter, there was no mention with regard to the expansion of edible rice bran oil, the Secretary, Government of Punjab, Department of Industries wrote a letter dated 30-7-1986 (photocopy of which has been placed on record in this Court by the appellant) in which reference was made to the approval of the change in the name of the company from Punjab Agro Furane Limited to Oswal Agro Furane Limited, cancellation of an agreement with a foreign company; change of financing pattern for the project as approved by the term lending institutions; and revalidation of capital goods import beyond two years as the ....
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....oresaid letter written and the undertaking given, that Oswal Agro was willing to export edible rice bran oil, if it was permitted to do so. In fact it had also indicated the count of foreign exchange which it would earn by the export of edible rice bran oil. It is on the receipt of the aforesaid letters, specifically letter dated 30th July, 1986, which such followed by a reminder dated 6th November, 1986, that the impugned letter was issue on 18th May, 1987, amending the industrial licence. The amendment now made, whereby clause (vi) was incorporated in the industrial licence, had the effect of making it a condition for Oswa1 Agro to export edible rice bran oil. 42. Under Rule 16 (2) of the aforesaid Rules the owner of an industrial undertaking may ask for variation or amendment of the licence and under sub-rule (2) the Ministry of Industrial Development has the power to vary or amend the licence and, while doing so, amend or alter or add any one of more conditions. Inasmuch as the Export Promotion Scheme of 1980 had been promulgated with a view to encourage export oriented units so as to earn more foreign exchange, it is not surprising that, viewed in that context, the Governme....
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....uded that whereas the Government had agreed to allow Oswal Agro to export edible rice bran oil produced by it, and had made it a condition of the industrial licence, no such permission was granted in respect of export of rice. This would be an additional reason for dismissing Oswal Agro's writ petition filed in the Delhi High Court and for allowing the appellant's appeal. 45. In the Writ Petition filed in the Punjab & Haryana High Court what was impugned was the decision of the Customs and Excise Authorities of Chandigarh in not allowing the respondents to clear the rice bran oil for sale in domestic tariff area. The prayer in the Writ Petition, inter alia, was that Oswal Agro should be allowed to clear the rice bran oil manufactured by it for sale in the domestic tariff area as it was not obligatory on its part to export the rice bran oil produced by it. The High Court vide order dated 14-1-1991, inter alia, stayed the operation of the aforesaid clause (vi) of the letter dated 18-5-1987 requiring the export of rice bran oil subject to the undertaking that if the Writ Petition was dismissed, then Oswal Agro would be liable to pay an amount equal to the custom duty leviable as if....
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....988 was rescinded. The clear effect of this was that with effect from 20-3-1990, there was no exemption from payment of excise duty on the goods manufactured by a 100% export oriented units which goods were cleared for sale in domestic market. 48. In a present case the oil which had been produced was stored in a bonded warehouse and it is only after the interim orders of the Punjab and Haryana High Court dated 4-1-1991 and 4-2-1991 that the oil was cleared from a bonded warehouse. As on that day, by virtue of the aforesaid Notification dated 20-3-1990, there was no exemption from payment of excise duty on edible rice bran oil and full amount of duty was payable on clearance of the goods. 49.Neither in the Writ Petition nor in the application for stay, was there any prayer with regard to non-payment of excise duty by Oswal Agro. Even if the impugned clause (vi) in the amended licence, which made in obligatory for Oswal Agro to export its entire quantity of edible rice bran oil, had been quashed even then for the purposes of removing the oil from the bonded warehouse for sale in the domestic market, excise duty in any case was payable. Under no circumstances, was Oswal Agro ent....
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....ount of money had been obtained by it on loan. Keeping this principle in mind, it would be just and proper that Oswal Agro be directed to pay, in addition to the excise duty payable, interest at the rate of 18% per annum. CONCLUSION : 51. In view of the aforesaid discussion Oswal Agro is under an obligation to pay the difference between the actual export price and the minimum export price, fixed by the Appellant in respect of non-basmati rice exported by it in view of the interim orders which had been passed by the High Court and this court permitting such export. According to the appellant taking into consideration the total quantity of rice exported by Oswal Agro between April, 1991 and March, 1992 when the minimum export price was fixed at the rate of US $ 231 per MT and between April, 1992 and March, 1993 when the minimum export price fixed was US $ 270 per M.T. the total amount payable by Oswal Agro would come to US $ 24,54,644 at the current foreign exchange rate. We, accordingly, direct this amount to be paid by Oswal Agro to the appellant within a period of four weeks from the date of this judgment. 52. With regard to payment of duty regarding rice bran oil, counse....