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TMI Blog1992 (5) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... export of the goods is not free or unrestricted as made out by the learned counsel for the appellant. We uphold the order of the Tribunal and dismiss the appeal X X X X Extracts X X X X X X X X Extracts X X X X ..... Save as otherwise provided in this Order no person shall export any goods of the description specified in Schedule I, except under and in accordance with a licence granted by the Central Government or by an officer specified in Schedule II. (2) Not withstanding anything contained in sub-clause (1) goods specified in Schedule III may be exported on fulfilment of the terms and conditions specified therein. (3) If in any case, it is found, that the value, specification, quality and description of the goods to be exported are not in conformity with the declaration of the exporter in those respects or the quality and specification of such goods are not in accordance with the terms of the export contract, the export of such goods shall be deemed to be prohibited." 4.The Government of India periodically announces its import-export policy which remains in force for a specified period subject to such changes or amendments as the Government may make from time to time. The Import-Export Policy of the Government for the period 1988—91 (hereinafter referred to as `the policy') is the one with which we are concerned. Appendix 6 to the policy deals with the categories of goods that can be impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Clause 3 of the Exports (Control) Order, 1988. It prohibits or restricts the exports of the items of goods specified in Schedules I and III thereto. It is common ground that Haemodialysers do not figure in either of these two Schedules. The wide liberty granted for exports (particularly to hard currency areas) of all goods other than a few specified in the above two Schedules is easily understood in the context of the country's imperative need to boost up its exports and augment its foreign exchange reserves. Simultaneously, India had also entered into rupee-trade agreements with U.S.S.R. and certain other countries with view to improving mutual trade between India and these countries. These agreements permitted, subject to certain monetary limits and other restrictions, exports of various types of goods from India to these countries. 8.The appellant, which is a "recognised trading house". carrying on business as exporters, saw in these provisions an opportunity to make quick money. It imported Haemodialysers from West Germany and exported them to Russia at a profit. We are told that sometime in 1987 he imported several sets of such Haemodialysers through Bombay customs and, with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Control authorities - he subsequently also got this clarified by the Chief Controller of Imports and Exports - he detained the goods for further examination. The appellant, however, represented that the immediate export of the goods was an imperative necessity to cater to the victims of the earthquake in Armenia and persuaded the authorities to clear the goods for export, subject to the outcome of the proceedings, on payment of a cash deposit of Rs. 6 lakhs, furnishing a bank guarantee of Rs. 10 lakhs and a bond for the full value of the goods. 10.On looking further into the matter, the Customs authorities were of opinion "that the appellant had contravened the conditions of the customs notification and so not entitled to its benefit and had also contravened the provisions of the O.G.L." and "that they (the goods) appeared to be liable to confiscation under S. 113(d) of the Customs Act and to have rendered themselves liable to a penalty under S. 114 of the Customs Act." A "Show-cause" notice was, therefore, issued on 25-3-1989 and, after considering the appellant's reply dated 31-7-1989, the Collector of Customs passed an order on 22-10-1990. He agreed with the appellant that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of confiscation and penalty deserve to be set aside. 13.On the other hand, learned counsel for the Revenue submits that S. 51 of the Act disentitles a person from exporting "prohibited goods", an expression defined by S. 2(33) of the Act thus : "prohibited goods" means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with." According to him, the goods now in question fall within the scope of this definition for various reasons to be elaborated upon later. In this view, he says, Ss. 54, 69 and 74 do not help the assessee's case in any manner. It is, therefore, submitted that the provisions of S. 113(d) and 114 were rightly invoked in the present case. 14.Leaving out of consideration the issue whether the appellant was entitled to exemption from customs duty on the import of the goods in question - an issue which was decided in favour of the assessee by the Collector of Customs and has not been pursued further and is not in issue before us - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, in this case, there is no dispute that they were cleared by the appellant under a bill of entry for home consumption. The argument for the Revenue is that the enactment, understandably, does not envisage the entry of goods into India for the mere purpose of being exported again from India in the same form and without any change. The appellant had purchased the goods from Germany admittedly for their sale to Russia. It could have effected the transaction by asking its vendors to consign the goods to some Russian destination directly or, if it considered it necessary, via an Indian port and, in the latter case, it could have had them transitted or transhipped (without actual clearance in India) under the provisions of Chapter VIII. The law, however, does not permit, says State counsel, an import just for the purposes of export. Even otherwise, the appellant has cleared the goods for home consumption and so they are to be used or utilised in India; it is not permissible for the appellant to export goods cleared for home consumption. 16.We do not think that this contention of the Revenue is sound. The contrast that finds emphasis in the sections as well as the forms above referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he may, as pointed out earlier, easily ask the goods to be transitted or transhipped to the country of sale and thus avoid any necessity for their being at all cleared in India. But where, for one reason or other, he wants to import the goods into India and then sell them to the foreign country or where the importer decides on an export sale only after he has arranged for the import of the goods into India, the Act prescribes no form of a Bill of Entry under which he can clear such goods intended for re-export. It would not be correct to insist that he must clear them for warehousing and then export them by clearing from the warehouse. Whether to deposit the goods in a warehouse or not is an option given to the importer. If he is able to pay the import duties and has his own place to stock the goods, he is entitled to take them away. But, where he has either some difficulty in payment of the duties or where he has no ready place to stock the goods before use or sale, he cannot clear the goods from the customs area. The warehouse is only a place which the importer, on payment of prescribed charges, is permitted to utilise for keeping the goods where he is not able to take the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 69 as supporting the Revenue's contention. 18.On the other hand, there are provisions which indicate that export of imported goods is very much envisaged under the statute. The provisions contained in S. 74 fully reinforce this interpretation. Indeed S. 74 would be redundant if the Department's stand that imported goods cannot be exported were to be accepted as correct. As pointed out by counsel for the appellant, para 174(1) of the Policy which reads : "No REP benefits are admissible in the case of imported goods which are re-exported in the same State without undergoing any processing or manufacturing operations in India." also impliedly recognises that imported goods can be re-exported as such; only the exporter thereof cannot claim REP benefits. 19.This brings us to the consideration of the second issue in this case as to whether the attempted export of the goods contravenes any condition under which the import of the goods was permitted. The Revenue submits that the object and purpose of putting the goods in question on the O.G.L. and making it available for import by any person is writ large in the very heading of the list in which it is included. The import is permit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in the case of Janak Photo Enterprises, relied upon for the appellant. In that case, the assessee had imported photographic colour films from Japan, cleared them for home consumption, and then presented them for export to Singapore. The customs authorities, relying upon a certificate of the CCIE analogous to the one in the present case, confiscated the goods under S. 113(d) but allowed them to be re-exported on payment of a huge redemption fine, a penalty and payment of appropriate duty for ex-bond clearance. The assessee filed a writ petition challenging this order. Pending disposal of the writ, the High Court permitted the export of the goods subject to certain conditions. In doing so, the Court made certain observations which, learned counsel for the appellant says, are equally apposite in the present case : The goods in question, being the photographic films"5. (colour), fall under App. 7, List 8, Part II, Serial No. 41 of the Import and Export Policy, 1988-91, and their import is allowed by all persons for actual use/stock and sale. The contention of Mr. Aggarwal is that since the goods were imported for stock and sale, these could not be re-exported. We are unable to agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ie view expressed by the High Court that the words "stock and sale" may be, generally speaking, wide enough to comprehend sales inside as well as outside the country and that their scope should not be restricted unless such a restriction can be read into the terms of the O.G.L. itself. That, we think, is where the present case essentially differs from the one before the Delhi High Court. We are clearly of opinion that whatever may be the position in regard to the other lists in Appendix 6, the items of goods enumerated in List No. 2 of that Appendix stand in a class of their own. There is sufficient indication in the heading given to the List to show that the import of these items into India is permitted only because such life-saving equipment is required for use in the country. The use of the words "stock and sale" shows only that the items are not restricted to use by the importer but can be transferred by him to another. But we do not think it proper to read them as permitting a sale of the goods outside the country. Note (44) in Appendix 6 reads thus : "Import of Life Saving Equipment appearing in List 2 of this Appendix shall be eligible to import spares of such equipment eit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ports and Exports, or in law. 23.Sri Habbu contended that we should construe the O.G.L. strictly on its terms and should not be guided by "extraneous" considerations as to the possible object or intention of the Government in inserting List 2 in Appendix 6. In this context, he referred to the decisions of this Court in Hansraj Gordhandas v. H.H. Dave, Assistant Collector of Central Excise & Customs, Surat & Two Ors. (1969 - 2 S.C.R. 253 = 1978 (2) E.L.T. (J 350) (S.C.)] followed and applied in State of M.P. v. G.S. Dall and Flour Mills [1991 - 1871 I.T.R. 478 (S.C.)] and Union of India & Anr. v. Deoki Nandan Aggarwal [1991 (3) J.T. (S.C.) 608]. The principle enunciated in the said decisions is that the court should construe the terms of the statutory provision or instrument before it and should not supply or introduce words which are not found therein to give effect to a possible intention behind the provision or instrument which is not borne out by the language used. But, as pointed out by this Court in Surjit Singh Kalra v. Union of India [1991 (2) S.C.C. 87], "though it is not permissible to read words in a statute which are not there, where the alternative lies between either ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot, however, think this argument or the foreign exchange regulations, to which some casual reference was made, have any relevance to the present issue. It is not the suggestion of the Revenue that there has been any infringement of the FERA in this case. Even if there had been, the consequences flowing from such infringement have to be worked out elsewhere. The issue before us is only that of the permissibility of the export, the destination of export being immaterial. As pointed out for the appellant - and as indeed happened in Janak Photo Enterprises (supra) - the export could well have been to a hard currency area in which event this objection of the Revenue would have had no force. But, on the ratio of our decision, an attempted export to such a country would have been equally objectionable. The goods were for use in this country, not in another. During the pendency of the proceedings before the Collector,(3) the appellants are said to have secured a no objection certificate of the RBI to the export "on humanitarian grounds" in view of the appellant's representation that the goods were needed for the succour of the victims of the Armenian earthquake in Russia. There is no mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrespective of any restrictions under Export Control Orders issued from time to time. We agree with learned counsel for the appellant that sub-clause (g) cannot be interpreted to mean that imported goods cannot be exported unless they are cleared, at the time of import, under a bond for re-export. Two clauses of the Import Control Order, 1955 have also been(5) relied upon by the Revenue. The first of these is sub-clause (d) of clause 11(1). This clause, like clause 15 of the Export Control Order, is headed "savings" and, by virtue of sub-clause (d), nothing in the order was to apply to the import of the goods "by transhipment, as imported and bonded on arrival for re-export as ships stores to any country outside India except Nepal, Tibet and Bhutan or imported and bonded on arrival for re-export as aforesaid but subsequently released for use of diplomatic personnel...... who are exempt from payment of duty........." This sub-clause was amended in 1985 to add the words "or otherwise" after the words "ship stores". The CEGAT has relied upon the amendment to draw an inference against the appellant that, since the goods do not fall under this clause, their export was not permitted. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause 8, clause 8A, clause 8C and clause 10C, shall apply to the import of any goods covered by Open General Licence or Special General Licence issued by the Central Government." makes clause 10C applicable to the subject imports, it releases them from the application of the other restrictions and conditions on imports imposed by the Import Control Order. We think, however, that para 10C is of some indirect assistance in the present case. We may put it this way. The interpretation of the O.G.L. that has commended itself to us (viz. that the import of the goods is permitted only for use in India) was also the one which the CCIE had formed and this opinion he had formulated in his two letters dated 10-10-1988 and 27-1-1989. As we have already pointed out, the CCIE's opinion on the Import and Export Control Order is final and binding. In view of this, when the CCIE came to know that the appellant was seeking to export the goods, he could have intervened and issued directions under clause 10C either permitting the export of the goods to the U.S.S.R. or directing them to be sold to needy hospitals or other parties in India. He could have effectively stopped the export of the goods. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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