1988 (5) TMI 48 - HC - Customs

Summary

Issues Involved:
1. Whether "Palm Kernels" are distinct from "Palm Seeds" and thus not a canalised item under Appendix 5.
2. Validity and applicability of the 27-7-87 Notification.
3. Determination of the applicable customs duty rate.
4. Importation rights under the contract for goods not yet shipped.

Issue-wise Detailed Analysis:

1. Distinction Between "Palm Kernels" and "Palm Seeds":
The court examined whether "Palm Kernels" fall under the category of "Palm Seeds" in Appendix 5, making them canalised items. The court relied on the principle that the meaning of an article should be ascertained based on common parlance rather than scientific or technical definitions. It was determined that "Palm Kernels" and "Palm Seeds" are commercially distinct commodities. Palm seeds are capable of germination, whereas palm kernels, obtained after a manufacturing process, are not. The court concluded that "Palm Kernels" are not "Palm Seeds" and thus fall under Appendix 6, allowing their import under Open General Licence (OGL).

2. Validity and Applicability of the 27-7-87 Notification:
The court addressed whether the 27-7-87 Notification, which included "any other material from which oil can be extracted" under Appendix 5, could override the 1-4-87 Order. It was held that the statutory order itself incorporates public notices and administrative orders by reference. Therefore, the 27-7-87 Notification validly amended Appendix 5. However, the court noted that the goods in question were shipped before the notification came into force, making the date of shipping relevant rather than the date of arrival. Thus, the importation under OGL was valid as the goods were shipped before the notification's effective date.

3. Determination of Applicable Customs Duty Rate:
The court examined the appropriate rate of customs duty for the imported goods. It was noted that the goods were imported in October 1987 but could not be cleared due to the Customs Authority's wrongful stand that they were canalised items. The court held that the rate of duty should be based on the rate prevailing in October 1987, the time of the goods' arrival, rather than the date of actual clearance or the date of filing the Bill of Entry. This decision was made on equitable grounds, aiming to restore the petitioners to the position they would have been in if not for the wrongful detention by the Customs Authority.

4. Importation Rights Under the Contract for Goods Not Yet Shipped:
The court addressed the issue of whether the petitioners could import the remaining goods under the contract. It was held that the OGL under the 1985-88 Import Policy would cover only the goods shipped up to 31st March 1988. Any goods shipped after this date would be governed by the import policy in effect at the time of shipping. As the remaining goods were not shipped before the policy's expiration, they would be subject to the current import regulations, which classify them as canalised items.

Conclusion:
The court confirmed the trial judge's order setting aside the adjudication order and directed the refund of deposited amounts, subject to the payment of duty for the already cleared goods. The petitioners were allowed to clear the remaining goods at the duty rate prevailing in October 1987. The court also clarified that the OGL would not cover goods shipped after 31st March 1988.