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TMI Blog1980 (4) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... lanners. The administration, however, attimes loses sight of this broad scheme and gets bogged down on short-term objectives. The result of such administrative short sightedness here is tragic hold up of the vital food for children over a year. Denial of food is, itself a food for thought and concern in the present case. (2) The petitioners are the trustees of a charitable trust, registered with the Charity Commissioner, Bombay, 'since 1970. The trust is recognised by the Government of Maharashtra as U.P.C.C. and given regular grant-in-aid. The trust is also assisted by Bombay Municipal Corporation financially. The work of the trust is appreciated by the Union Ministry of Health and Family Welfare. The trust is affiliated To Maharashtra United Nations Association and Unicef, in the sphere of the social work. The trust runs an institution where it renders wide spectrum of social, public and medical services including propagating family planning programmes, undertaking family planning measures, devising and implementing immunisation programmes and catering to the social hygienic, medical and nutritive needs of the poor and needy sections of the society. The trust distributes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hip two consignments each of about 500 tons per ship M.S. Fortune Glory and M. S. Khadijaan . Vessel Fortune Glory arrived in Bombay on 24-7-1979. However, shipment was not allowed to be cleared by the customs authorities. On contacting, the customs authorities informed the petitioner trust that on 18th June, 1979, another notification was issued by the Ministry of Finance, Government of India, superseding the original notification dated 16th July, 1977, under section 25(1) of the Customs Act. The said notification, of 18th June, 1979, made one important change. The earlier notification required that the donee importer should be a charitable organisation. The new notification, in addition, required that the donor organisation should also be a charitable organisation. The notification, also. empowered Assistant Collector, Customs to refuse exemption if he was satisfied that gift was not bonafide. The relevant portion of the notification reads: GOVERNMENTOF India Ministry Of Finae Department Of Revenue New Delhi, the 18th June, 1979. Notification Customs G.S.R. No In exercise of the powers centered bysubsection (1) of section 25 of the Customs. Act, 1962 (52 of 1962) and in sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Glory and Khadijaan were already booked for carrying 500 tons each of the milk powder. They brought to the. notice of Central Government that when shipment actually came through and they produced the documents, the customs authorities informed them of the new notification and refused to release the shipment. They further informed that after receiving a copy of the new notification, they forwarded the same to the donor and requested him to stop further shipment. However, the donor informed them on telephone that. they had already opened an irrevokable letter of credit for million U.S. Dollars in favor of shipper in Denmark much before the notification and no cancellation of shipping of additional milk powder was possible. The petitioner further wrote. So there are now before us two main problems first urgent and needing immediate decision and action is of milk which has been already shipped, is now lying in the warehouse and which needs to be cleared before it gets spoiled; secondly of the irrevokable letter of credit which the petitioner has opened for giving free gift much before the notification . The petitioner then requested the Central Government: WE,therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in the Ofificial Gazette, exempt generally either absolutely or subject to such conditions (to be fulfillled before or afterclearance) as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon. (ii) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by special order in each case, exempt from the payment of duty, under circumstances of an exceptional nature to be stated in such order, any goods on which duly is leviable. (8) For appreciating the respective submissions, it is necessary to refer sections 12(1) and 15(l)(a) of the Act also. They run as follows: 12(1)Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Indian Tariff Act, 1934, or any other law for the time being in force, on goods imported into, or exported from, India. 15(l)(a) The rate of duty, rate of exchange and Tariff valuation, if any, applicable to any imported goods, shall be the rate and valuation in force (a) in the case of goods entered for home consumpti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely. There Is no power to impose any conditions while permitting the exemption from duty. Being a special power to be exercised in exceptional circumstances, the section requires that the Central Government must record what exceptional circumstances weighed with lhs Central (Government in granting the exemption (12) It would be at once clear from the distinct language of section 25(1) arid 25(2) that an order under section 25(1) is a general order in the nature of legislation. The word Notification in section 25(1) show that such general order is in the nature of delegated legislation, but legislation nonetheless. The order under section 25(2) is not an order of a general nature but a 'special order' passed in 'each case'. The question is, can we import the prohibition of restrospectivity in regard to an order passed under section 25(2). It can be assumed for the present purposes, that a notification under section 25(1) would be bad if it has the effect of exempting goods, which have already arrived at a port, because that would amount to giving retrospective effect to a notification. (13) The counsel for the respondents submits, that the bar of retrospectivit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not support the impugned demand on the basis of retrospective effect. (15) But a more fundamental question must be answered at this stage. Is the impugned order under section 25(2) either in fact or in law, 'retrospective'. An order referring to some past events 'is not necessarily or invariably an order falling within the mischief of retrospectivity. (16) A statute is not properly called a retrospective statute because a part of the requisites for its action is drawn from a time antecedent to its passing. (Craies on Statute Law, P. 387 7th Edition) Mischief of retrospectivity lies in taking away or impairing vested rights, or creating new obligations or imposing new duties on citizens. There is a great and apparent difference between making an unlawful act lawful and the making an innocent action criminal and punishing it as a crime (Craies on Statute Law, p. 389 7th edition). The courts frown at creation of new penalties but does not stand in the way of a relief granted by retrospective operation of an enactment. The 'mischief must be ascertained by looking at the general scope and purview of the statute, the remedy sought to be applied and considering th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfy himself that importation is bona fide. must be read in the impugned order. The counsel submits that the impugned order under section 25(2) was passed only because the petitioners made the grievance against the new conditions imposed by the said order under section 25(1). I cannot accept this submission. It is totally misconceived. An order under section 25(2) can beissued, where there is no prior notification under section 25(1). So also such an order can be issued in spite of a contrary notification under section 25(1). Section 25(1) expressly empowers the Central Government to impose conditions, if necessary, while granting an exemption. There is no such provision in section 25(1). Absence of inch a clause in section 25(2) is not difficult to understand. A key to section 25(2) is the special character of the order passed in exceptional circumstances. The rule of construction reading a general order overriding a specific order is not applicable in this base. The rule of construction directly relevant is that a special power prevails over a general power. (20) Even assuming that such conditioni can be read by implication in section 25(2), the difficulty for the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the nature of the order passed by the Central Government under section 25(2) in this context. Normally, power to exempt from an obligation created by a statute is regarded as a legislative power, if it is a general power. But if it is a special power exercisable in an individual case can it be described as a legislative power ? If not, is it a purely executive or administrative order ? But, since the order is passed on the objective circumstances and on consideration of the special grievance of a citizen, vitally affecting his civil rights, does not the order partake character of adjudication? It is recognised by all authorities on administration law that classification of a given action in- these three departments is an extremely difficult task. As a general proposition, rule-making is the process by which the administrator lays down new prescriptions to govern the. future conduct of those subject to his authority; adjudication is the process by which the administration applies either law or policy to the facts of a particular case. Rule-making is general and looks only to the future adjudication is particular and looks also to the past. Legal control of government by Bern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passing of the impugned order. According to him, the date of bill of entry is the decisive date. A Division Bench of the Bombay High Court in Shawhney v. Sylvania and Laxman, 77, Bombay L.R. 380(2) has held that 'taxable event under the Customs Act, takes place when a ship enters the territorial waters and not When the bill of entry is filed. I am in respectful agreement with the Division Bench. The contention of the respondent is, however, not of much consequence in the interpretation of section 25(2) of the Act. I have already held that the considerations of retroactivity are not relevant for an order under section 25(2) and that in fact, the impugned order is not retrospective in character. In this context I may also refer to the observations of the Board regarding the alleged misrepresentation by the petitioners regarding the date of importation. The learned Member 61 ttift Board has held : BESIDES,as exemption obtained on misrepresentation of fact made by Dr. Pophale of the appellant institution or organisation regarding filing of bill of entry was void ab initio. The petitioners have strongly denied in their rejoinder affidavit that any such misrepresentation, as all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ship M. S. 'Fortune Glory' and M. S. 'Khadijaan'.... .When the shipment actuary came through and we produced the documents, at that time we were informed of the said change (notification dated 18-6-79). We have then immediately sent a copy of the new notification to the petitioner and requested him to stop further shipment to which 'a reply came by the telephone that he had already open- ed a irrevokable letter of credit for one million U.S. Dollars in favor of shipper in Denmark much before the notification, which cannot be cancelled because .of the amendment. So there are now before us two main problems. First, urgent and needing immediate decision and action is of the milk powder which is already shipped, is now lying in the warehouse and which needs to be cleared before it gets spoiled. Secondly, of the irrevokable letter of credit which the petitioner has opened for giving the free gift much before the notification. We, therefore, request you to exempt shipment which has already arrived, from duty and I.T.C. under prior notification and give consideration for the remaining of the shipment as the donor has already opened irrevokable letter of credit much ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without evidence and which are in the nature of surmises. (30) The Board has further held : THATthe evidence on record clearly establishes that the goods were not intended or capable of being distributed free of charge to the needy and poorer under the supervision of the Maharashtra Government and that the appellants who were an organisation for promotion of family planning, were not equipped for or capable of such free distribution as is evident from their approaches to different organisations and institutions. The Board, while exercising appellate power, was entitled to the reappraisal of the facts. The order, however, does not disclose that such reappraisal of the evidence was made or the submissions of the petitioners are considered in the light of challenge 10 findings of the Collector. An administrative adjadication, by way of appellate order must at least disclose application of mind to the evidence on record and .the submissions ofthe parties. Hearing before the Administrative Tribunals is not an empty formality. I haw been taken through the evidence on record and I am satisfied that the Collector's findings cannot be sustained in law. Had the Board applied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his own office dated 15th February, 1979 permitting the petitioner to import the milk powder. The said letter reads : from the doments produced, it seems that he had already received a certificate from the Government of Maharashtra as required under the relevant Government of India notification. Milk powder when imported would, therefore, be released free of duty provided you give an undertaking to produce a certificate from the Government of Maharashtra regarding distribution of the same. The Collector has referred to certain charitable agencies and has stated that the petitioners tried to distribute the milk powder through the said organisation. There is no allegation that the petitioners were not distributing the milk powder to the poor and needy people nor there is any allegation that the petitioners were selling the milk .powder to other agencies and making profit. The finding of the Collector is contrary to evidence on record and is based on irrelevant consideration. (32) The second ground mentioned in the Collector's order is that distribution of milk powder to children and poor people, is ultra vires the objects of the petitioner's trust. The ground i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner trust and the capacity of the trust to distribute large quantity are matters common to all importation. The Collector does not hold that 'Fortune Glory' has violated any conditions. He holds that only 'Khadijaan' has transgressed those conditions. This is total non-application of mind. On this ground also the orders stand vitiated. (36) There is no contravention whatsoever of the notification dated 7-9-1979 and the relevant provisions of the Customs Act, 1962 and Imports and Exports (Control) Act, 1947. The order of absolute confiscation of milk powder is, therefore, illegal and must be set aside. The orders of the Board in so far as they upholdhe orders of the Collector are also illegal and must be set aside. (37) The order of the Collector of Customs dated 24-12-1979 in regard to milk powder imported through S. S. 'Fortune Glory' is contrary to the order of the Central Government dated 17-8-1979 passed under section 25(2) of the Customs Act. The Collector had no power to go behind the order and read any limitations in the said order. The petitioners have not committed any violation of the provisions of Customs Act and the Imports and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the importation was not covered by the said notifications of the Central Government under section 25(2), the Central Government and the department were estopped in law from imposing customs duty and requirements of permission under the Import and Export (Control) Act, The petitioners submit that there is a clear, specific and unequivocal representation made by the Central Government, the Customs Department and the Government of Maharashtra. The petitioners, it is submitted, acting on the said representations have changed their position. In addition a grave prejudice is caused to them by imposing customs duty of more than ₹ 10 lacs and subjecting them to other penalties and the coercive process of law. The petitioners rely on the decision of the Supreme Court in M. P. Sugar Mills vs. State, of U.P. . (42) There is good deal of force in the above submission. The facts of the case show that milk powder was not imported clandestinely or by practicing deception. After the receipt of the letter from the donor, the petitioners wrote, to the customs authorities on 23-11-78, for exemption from customs duty and import restrictions. Along with the sad letter they sent a copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment granted an unconditional exemption to the petitioners. The entire controversy in the. present case has arisen because of the ad hoc and temporary decision of the Central Government to impose the said unreasonable condition. The result is that a charitable organisation has been subjected. to a punitive import duty of over ₹ 10 lacs. The organisation is also threatened with other penalties under the Act. A court cannot sit with .folded hands in such circumstances. (44) The promise of exemption from import duty and import permission through the letter of Collector of customs dated 15th February, 1979 (Annexure F) the letters of Government of Maharashtra dated 12th February, 1979, and 16th October, 1979 and Central Government's special order under section 25(2) dated 17-8-1979, create an equitable right to exemption and effective defense against imposition of penalties/duty liability. The representations made through these communications are specific, unambiguous and irrevokable. Had they been incorporated in a contract they would have been certainly enforced by any court of law. (45) For applying the principle of Promissory estoppel it is not necessary, that &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . I feel that the extraordinary jurisdiction under article 226 must be exercised. (47) I (accordingly) declare that the orders of the Central Board of Excise and Customs bearing No. 338-A and 339-A dated 12th February, 1980 are set aside. The orders of the Collector of Customs dated 24-12-1979 (Exhibits 'U' and 'V') are set aside. Show cause notices dated 13th November, 1979 (Exhibit 'L'), 4th December, 1979 ^(Exhibit 'R'), 11th December, 1979 (Exhibits 'S' and Exhibit 'T') are also set aside. Consequently, the seizure order of the 36000 bags of skimmed milk powder and orders imposing duty/penalty are also set aside- I further direct the respondents to immediately release and hand over 36000 bags of skimmed milk powder seized from the petitioners. The petitioners shall distribute all the 40000 bags of skimmed milk powder among poor and needy persons under the supervision of department of social welfare, Government of Maharashtra within six months from the date of this order in accordance with the order of the Central Government dated 17-8-1979 issued under section 25(2) of the Customs Act, as modified by me, in respect of the star ..... X X X X Extracts X X X X X X X X Extracts X X X X
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