2013 (6) TMI 40 - HC - Customs

Import of Crude Palm Oil - high content of Acid about 10% - applicability of exemption notification 21/2002 cus dated 1.3.2003 - held that - the judgment in the case of Gokul Refoils & Solvents Pvt. Ltd. v. Union of India & Others 2012 (10) TMI 8 - CALCUTTA HIGH COURT has no application to the facts of the cases on hand inasmuch as according to paragraph 52 thereof, the principal question that arises for determination in this appeal is whether the Palm Oil sought to be imported by the appellant was a prohibited goods within the meaning of the Customs Act , whereas in this case the issue is, whether exemption is available to Crude Palm Oil having Acid Value more than 10. Under the notification, as the limit of acid value has been given as 4 and above, there is no reason to construe the notification by taking aid of the Prevention of Food Adulteration Rules, 1955 which has no application to the facts of the present case when the petitioners intended to import the same not as a food but as crude palm oil (edible grade) as pointed out in the exemption notification. Discrimination - held that - If importer in a different State gets benefit of exemption whereas the importers of the State of Gujarat is deprived of such benefit, they will not be able to compete with importers of other States in the same field of business. On that count also, we are of the view that the plea of the Revenue is not tenable. Impact of Non filing of appeal in earlier case - held that - By taking benefit of Article 14 of the Constitution of India, one cannot get benefit of a wrong order, but at the same time, when Committee of Commissioners has decided to accept the decision and decided not to prefer appeal, as it appears from the affidavit of the Revenue, the present case cannot be said to be one of acceptance of a wrong order when the decision not to prefer the appeal is of the Committee of Commissioners and is a positive decision. Crude palm oil imported, which falls within Serial No. 1511 having acid value of more than 4, is entitled to get benefit of exemption of duty, and such exemption cannot be taken away by adding to the words in the notification as between 4 and 10 . - Decided in favor of assessee.

Summary

Issues Involved:
1. Entitlement to exemption under Customs Notification No. 21/2002 for crude palm oil with acid value above 10.
2. Applicability of the Prevention of Food Adulteration Rules to the exemption notification.
3. Interpretation of the term "edible grade" in the context of Customs and Food Safety laws.
4. Consistency in application of exemption benefits across different jurisdictions.

Issue-wise Detailed Analysis:

1. Entitlement to Exemption under Customs Notification No. 21/2002 for Crude Palm Oil with Acid Value Above 10:
The petitioner, an importer of crude palm oil, sought exemption from customs duty under Notification No. 21/2002-Cus., which provides for concessional duty for crude palm oil with an acid value of 4 or more. The Revenue denied this exemption, arguing that the acid value of the imported oil exceeded 10, making it ineligible for the exemption. The Court examined the specific language of the notification, which does not impose an upper limit on the acid value for the exemption. The Court concluded that the notification should be interpreted strictly according to its terms, which provide for exemption for crude palm oil with an acid value of 4 or more, without any upper limit.

2. Applicability of the Prevention of Food Adulteration Rules to the Exemption Notification:
The Revenue argued that the acid value should be less than 10 based on the Prevention of Food Adulteration Rules, which define "edible grade" palm oil. The Court held that the exemption notification under the Customs Act should be interpreted independently of the Prevention of Food Adulteration Rules. The exemption notification specifically recognizes crude palm oil with an acid value of 4 or more as eligible for exemption, regardless of the standards set by the Prevention of Food Adulteration Rules.

3. Interpretation of the Term "Edible Grade" in the Context of Customs and Food Safety Laws:
The Court noted that the term "edible grade" in the exemption notification is specifically defined for the purpose of customs duty exemption and does not necessarily align with the standards under the Food Safety and Standards Act. The Court emphasized that the crude palm oil in question was not intended for immediate human consumption but for further refining, which would bring it within the standards required for edible oil.

4. Consistency in Application of Exemption Benefits Across Different Jurisdictions:
The Court referred to a similar case decided by the Calcutta High Court, where crude palm oil with an acid value above 10 was granted exemption. The Committee of Commissioners had accepted this decision and did not appeal against it. The Court held that the Revenue cannot take a different stance in the present case, as it would lead to inconsistency and unfair competition among importers in different states. The Court stressed that once a principle is accepted in one jurisdiction, it should be uniformly applied to maintain fairness and consistency.

Conclusion:
The Court allowed the writ applications, holding that crude palm oil with an acid value of 4 or more is entitled to exemption under Notification No. 21/2002-Cus., regardless of the upper limit of the acid value. The Court directed the Customs authorities to release the detained goods and discharge the bonds submitted by the petitioner. The Court also refused the Revenue's request for a stay on the order.