1996 (8) TMI 112 - SC - Customs

Whether the appellants were also entitled to the exemption granted to the 3rd respondents The State Chemicals and Pharmaceuticals Corporation of India Ltd. ? Held that - In the first place the interim order was passed upon the application for stay of recovery of the difference in duty made by the appellants. If the appellants found the conditions imposed by the order unacceptable they could have sold the caustic soda at a price higher than 5132 per metric tonne and paid duty thereon at the rate of 92.5 per cent after applying to this Court to relieve them of their undertaking. The appellants acted upon the interim order knowing full well that if the appeal was decided against them they would be required to pay duty at the rate of 92.5 per cent. Acting upon the interim order created no equity in favour of the appellants nor are these any special or peculiar circumstances. In the second place an undertaking given to Court is not an obligation imposed by the Court. It is a promise voluntarily made to the Court. Acting upon its own undertaking to court creates no equity in favour of the party giving it nor is it a special or peculiar circumstance. In the third place the passage from the decision in Jhangir Bhatusha s case 1989 (5) TMI 61 - SUPREME COURT OF INDIA does not assist the appellants. In the fourth place should a court come to the conclusion that an exemption is arbitrary or discriminatory or violative of Article 14 it may strike the exemption down but it cannot widen its scope so as to cover those it finds have been discriminated against. Appeal dismissed.

Summary

Issues:
Challenge to High Court order dismissing writ petition on grounds of discrimination in duty exemption and equity arising from interim order.

Detailed Analysis:
The appellants imported liquid caustic soda and were required to pay duty at a rate of 92.5%, while the State Chemicals and Pharmaceuticals Corporation of India Ltd. paid duty at a reduced rate of 10% due to an exemption under Section 25(2) of the Customs Act. The appellants filed a writ petition claiming discrimination and seeking the same exemption or nullification of the exemption granted to the 3rd respondent. The appellants argued for special circumstances favoring them despite the precedent set by a previous judgment (M. Jhangir Bhatusha's case).

The appellants relied on an interim order that obligated them to sell caustic soda at a specific price, limiting their ability to cover the higher duty rate. They argued that this created an equity in their favor. However, the Court held that the interim order was based on the appellants' application for stay of duty recovery, and they had the option to sell at a higher price and seek relief. Acting upon the interim order did not create an equity, and no special circumstances existed in their favor.

The Court emphasized that an undertaking given to the Court is not an imposed obligation but a voluntary promise. The precedent from Jhangir Bhatusha's case did not support the appellants' argument for special circumstances. Additionally, the Court clarified that if an exemption is found arbitrary or discriminatory, it can be struck down, but the scope cannot be expanded to cover others affected by the discrimination.

Referring to a previous judgment, the Court highlighted that if a benefit or remission is found unlawful, the proper course is to strike it down without extending it to unrelated parties. The Court dismissed the appeal, noting that a previous allowance had been set aside on a review petition. The appellants were ordered to pay costs to the respondents.