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TMI Blog1989 (5) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Liberty Oil Mills v. Union of India & Others, as the leading case. 3. On 17th January, 1977 the Government of India issued a Public Notice permitting private parties to import edible oils for direct human consumption. It was not permissible to use such imported oils for the manufacture of Vanaspati or for any industrial purpose. Under the Import Policy of 1978-79, the Government canalised the import of edible oils so that the State Trading Corporation alone was permitted to import edible oils. Some of the private importers who had entered into firm commitments with foreign suppliers, and were now being denied permission to import the edible oils filed writ petitions in various High Courts, and these writ petitions were allowed and they were granted licences to import the edible oils. 4. Prior to 1st March, 1979 the import of edible oils was exempt from customs duty, but with effect from that date the exemption was partially withdrawn and certain specified oils were made liable to import duty at 12½ per cent. Exemption was granted from additional duty chargeable under Section 3 of the Customs Tariff Act, 1975. Auxiliary duty chargeable under the Finance Act was, however, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns have also been filed directly. 7. At the outset learned Counsel for the private importers states that no objection is being taken to canalisation in favour of the State Trading Corporation. Nor is there any objection to the permission granted to the State Trading Corporation to import 17 lakh tonnes of edible oils. The complaint is directed against the differential treatment meted out to the private importers in the rate of customs duty. 8. The contention of the petitioners is that the discriminatory treatment has no real or substantial nexus with the proposed object of the exemption orders, having regard to the terms of Section 25(2) under which the exemption orders in favour of the State Trading Corporation have been made and, therefore, there is a violation of Article 14 of the Constitution. Section 25(2) provides : "(2) 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 duty is leviable." It is apparent that the power conferred on the Central Government under Section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the stated need for maintaining the domestic prices of vanaspati at reasonable levels, learned Counsel for the private importers urges that the oils which were being imported by private importers were intended for direct human consumption and could not have been supplied to the vanaspati industry. Reference is made to the affidavits of the parties to show that the oils imported by the petitioners could not be utilised in the manufacture of vanaspati as permission to do so had not been granted. Accordingly, the private importers say, there is no basis for the differential duty set out in the exemption orders and no real or substantial nexus between the differentiation made and the object of Section 25(2). Then, it is also urged, there is no real or substantial distinction between the private importers and the State Trading Corporation having regard to the object of the statute, the nature of customs duty, the rationale of Section 25 and the professed object of the exemption orders under Section 25(2). The State Trading Corporation, it is contended, cannot be equated with the Central Government, and we are referred to S.T.C. v. Commercial Tax Officer, Visakhapatnam - (1964) 4 SCR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the exemption from duty has been granted in the public interest, namely, to control or reduce the price of edible oils, the relief which should be granted is to include the imports made by the private importers within the particular customs duty rate of five per cent already extended to the oils imported by the State Trading Corporation. In some cases, it is alleged that if the imports effected by the private importers has to bear the duty levied upon them, the impact of the total duty would be so impossible that it would cripple the business of those private importers. 10. In reply, the learned Attorney General has laid great stress on the submission that the State Corporation, in undertaking the imports, acts solely as an agent or nominee of the Government of India and all the profits and losses are on account of the Government of India, the State Trading Corporation being entitled to service charges only at one per cent irrespective of loss or profit. It is submitted that the Central Government is not liable to customs duty and we are referred to various considerations in support of that claim. It seems to us unnecessary to enter into that question because we have before us a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... government in issuing the exemption notifications was the consideration that the domestic prices of vanaspati should be maintained at reasonable levels. It cannot be doubted that the entire edible oil market is an integrated one, and that it is not reasonable to treat anyone of the edible oils or vanaspati in isolation. It is a well accepted fact that vanaspati manufacturers constitute a powerful organised sector in the edible oil market, and a high vanaspati price would encourage an unauthorised diversion of the edible oils to vanaspati manufacturing units, resulting in a scarcity in the edible oil market, giving rise to erratic prices and depriving consumers of access to edible oils. The need for preventing vanaspati prices ruling high was also to prevent people normally using vanaspati from switching over to other edible oils, thus leading to an imbalance in the oil market. An overall view made it necessary to ensure that domestic prices of vanaspati remained at reasonable levels. To all these considerations the learned Attorney General had drawn our attention, and we cannot say that they are not reasonably related to the policy underlying the exemption orders. So that the Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X
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