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TMI Blog1996 (4) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... 1992 and March, 1993 when the minimum export price fixed was US $ 270 per M.T. the total amount payable by Oswal Agro would come to US $ 24,54,644 at the current foreign exchange rate. We, accordingly, direct this amount to be paid by Oswal Agro to the appellant within a period of four weeks from the date of this judgment. The perusal of the Notification in question indicates that the effective rate of excise duty on clearance of goods from 100% export oriented unit to domestic tariff area would stand reduced if the goods so manufactured are "allowed to be sold in India". Oswal Agro never took permission of the authorities concerned to sell the rice bran oil in India. It is only by virtue of interim orders which were passed by the Punjab 19,75,15,192.97/- as calculated by the appellant. In addition thereto, Oswal Agro is also liable to pay interest @ 18% as calculated by the appellant herein which comes to 12,55,09,088.00/-. It is hereby directed that Oswal Agro shall pay this amount of duty and interest within eight weeks from the date of this judgment and it shall also pay to the appellant herein, as well as to the Union of India, one set of costs which are quantified at 50,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d subject to various conditions one of which was that "the entire ₹ 100 per cent' production shall be exported." 4. Oswal Agro entered into an agreement with the Punjab State Industrial Corporation for establishing the unit for manufacturing Furfural and as a result thereof the name of the Punjab Agro Furane Ltd. was changed to Oswal Agro Furane Ltd. On 18th May, 1987, the Government of India issued a letter by which the industrial licence dated 19th May, 1986, which had been issued for the manufacture of Furfural was amended. By this amendment a number of additional conditions were included in the industrial licence. One of the conditions which was incorporated was that the rice shelling plant will not be a part of 100% export oriented project, but the Government may consider granting permission for the import of this plant subject to levy of such duties as may be decided at that time. This condition regarding the rice shelling plant was challenged by the company by filing Civil Writ Petition No. 3622 of 1987 in the Punjab and Haryana High Court. By judgment dated 2nd June, 1989, the High Court allowed the writ petition and held that the project was a comprehensive one and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate issued by the Agricultural and `Processed Food Product Export Development Authority (hereinafter referred to `APEDA') - appellant herein". This amendment was followed by a Trade Notice dated 15th October, 1991, issued by the Appellant by which procedure was laid down for allotment of quota which envisaged that the minimum export price of non-basmati rice, which was fixed, was US $ 231 FOB per MT. This was followed by a letter dated 15th October, 1991 from Government of India to APEDA, inter alia, stating that additional quota of non-basmati rice for export subject to minimum export price of US $ 231 per MT had been released and it was stated that the highest unit value realisation, and not cornering of quota by any party, should be the priority for allowance of export. 8.It is in the background of the aforesaid facts that we may now refer to the filing of the writ petitions by the respondents with which we are now concerned. 9. On 7th January, 1991, Writ Petition No. 561 of 1991, was filed by Oswal Agro in the Punjab and Haryana High Court wherein they challenged the validity of Clause No. (vi) in the aforesaid amendment letter dated 18th May, 1987 and it was contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation to supply 1,07,000 M.T. of non- basmati rice to M/s. Continental Grain Company, New York. It is an admitted case that the price at which Oswal Agro wanted to export the non-basmati rice, without any registration or authorisation from the appellant was US $ 213 per M.T., i.e., below the minimum price fixed by the appellant herein. 11. On 15th January, 1992, the Delhi High Court issued rule nisi and by an interim order of the same day, stayed the operation of the aforesaid order dated 7th January, 1992, of the Assistant Collector of Customs, Kandla and directed that there shall be no interference in the loading/shipment of non-basmati rice by Oswal Agro to the extent of 13200 M.T. It was further directed that this was subject to the condition that Oswal Agro will furnish a security of the amount of difference between the minimum price fixed by the appellants herein and the price at which the said quantity of rice was being exported by Oswal Agro and the security was to be furnished within three weeks after completion of the shipment/export of the said quantity of rice. 12.By judgment dated 31st March, 1992, a Division Bench of the Delhi High Court allowed the aforesaid writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed this application and extended the time till 8th September, 1992, to export the balance quantity of rice but with the observation that the same was "subject to the conditions laid down by the Supreme Court in their order dated 15th May, 1992." Thereupon, this Court on 8th September, 1992 granted leave to appeal and stayed the operation of the High Court judgment. 15. On behalf of the appellant it is contended by Mr. R.F. Nariman, learned senior counsel, that the industrial licence which had been granted was only for the manufacture of two items, namely, Furfural and edible rice bran oil and this was subject to the condition that the entire 100% product of these items was to be exported. He further submitted that according to clause 15(j) of the Export (Control) Order, 1988, only the export of Furfural and its bye-product edible bran rice oil was saved from the operation of the Export (Control) Order, 1988 and not the export of non-basmati rice. Elaborating this submission he contended that the construction placed by the High Court on Clause 15(j) would mean that so long as there was a 100% approved export oriented unit then it could export any goods irrespective of what was app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich a unit was obliged to export and, therefore, a different meaning or purpose should be assigned to Clause 15(j) By giving the construction to the said clause as canvassed by the appellant, Mr Jethamalani contended that it would result in changing the language of the said clause. Clause 15(j) it was also submitted, brought in the geographical or topographical concepts thereby meaning that whatever was manufactured in the export oriented unit was free from the shackles of the Export (Control) Order, 1988. In the end it was contended that by using the plural word `products' in Clause 15(j), the implication was that it was to apply to all the products, manufactured in that unit. 17.Before considering the rival contentions, it will be important to see the scheme which was proposed for approval by the respondent. The following table set out in the Writ Petition No. 3622 of 1987 filed by the respondent in the Punjab and Haryana High Court is relevant : Paddy Rice Mill White Rice Rice Rice Rice Flour Husk Bran Furfural Rice Bran Oil Exhausted Extraction extraction Rice husk Edible rice Boiler bran oil Steam & Furfural powder Steam Turbo Generator Surpl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iso is not interpreted as stating a general rule. But, provisos are often added not as exceptions or qualifications to the main enactment but as savings clauses, in which cases they will not be construed as controlled by the section. The proviso which has been added to Section 50 of the Act deals with the effect of repeal." 20. Dealing with the proviso to Section 7 of the Bombay General Clauses Act, the Court observed as under : "The substantive part of the section repealed two Acts which were in force in the State of Bombay. If nothing more had been said, Section 7 of the Bombay General Clauses Act would have applied, and all pending suits and proceedings would have continued under the old law, as if the repealing Act had not been passed. The effect of the proviso was to take the matter out of Section 7 of the Bombay General Clauses Act and to provide for a special saving. It cannot be used to decide whether Section 12 of the Act is retrospective" 21. Clauses 3 and 15 of the Export (Control) Order have to be read together. Clause 3 places restrictions and makes provision with regard to export of goods specified in Schedule I and Schedule III of the Order. If, however, a case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 100% export oriented unit. The language of the said sub-clause is, in our opinion, capable of no other interpretation. 24.The submission that sub-clause (j) of Clause 15 of the said Order brings in geographical or topographical concept does not flow from the scheme of the Order or the language of the clause. When the Clause 15(j) refers to "100% export oriented unit" it is quite obvious that the clause has been inserted in the Export Trade (Control) Order, 1988 in view of the promulgation and existence of the export promotion scheme of 1980. The said scheme for export oriented units was for grant of approval for the manufacture of products which, according to the conditions contained in the approval, had to be exported from the country. It is the contention of the respondent herein that under the terms of its licence it was under an obligation to export only Furfural and no other product. It is on this basis that it has been contended in the transferred case that the respondent is under no obligation to export edible rice bran oil. The obligation to export the entire quantity of Furfural manufactured by it arises because of a specific conditions contained in the industrial lice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i and whole meal atta (wheat flour of not less than 95% extraction). Cum-allocation certificate issued by the (v) Barley Agricultural (vi) Maize Processed Food (vii) Bazra Products Export (viii) Jowar Development (ix) Ragi Authority (APEDA)" The aforesaid entry made, the appellant as the authority which was entitled to allow exports against registration-cum-allocation certificate and reading the same along with Clauses 3 and 4 of the Export Trade (Control) Order, conditions not inconsistent with the Act or the Order, could be imposed while permitting export. One of the conditions imposed by the appellant for export of non-basmati rice was that it could not be exported at less than the minimum price fixed by it and, in our opinion, it was clearly entitled to do so. 27. The reliance by the High Court on the earlier decision of the Punjab and Haryana High Court, while allowing import of capital goods, is clearly misplaced. That writ petition was concerned only with the question of import of machinery for the purpose of shelling paddy which would enable Oswal Agro to obtain the raw material required by it, namely, rice husk. That petition was not concerned with the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Punjab and Haryana High Court which was still pending, relating to export of edible rice bran oil, then Delhi High Court most probably would not have entertained the petition because the proper course which should have been followed by Oswal Agro was to raise this contention, regarding export of non-basmati rice, in the writ petition filed in the Punjab and Haryana High Court or to file a new petition there. 30. Under these circumstances, the exercise of jurisdiction under Article 136 of the Constitution is clearly called for, more so when it is admitted that the respondent had exported over 87000 M.T. of non-basmati rice at a price far less than the minimum price fixed by the appellant. 31.For the aforesaid reasons we conclude that Oswal Agro could not, in law, export non-basmati rice. The Delhi High Court, instead of passing interim orders and allowing export of non-basmati rice, ought to have dismissed the writ petition. 32. It was contended by the learned counsel that even if it be assumed that the export of non-basmati [rice] below the minimum price fixed by the appellant was not permissible even then the only loss which has been suffered by the appellant was the 5% on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at they were not entitled to export the said rice. After the imposition of such [a] condition, Oswal Agro chose to make the export of rice. It availed of the permission which was granted by the courts and as the permission was a conditional one, it is now open to them to contend that it is not liable to make good the difference when it has been found that they were not, in law, entitled to export rice without authorisation from the appellant herein. Having taken advantage of the interim orders of the Delhi High Court and of the order dated 15-5-1992 of this Court, in particular, Oswal Agro cannot now be permitted to escape from the condition which was imposed upon it. Even though, if a valid authorisation had been issued for the export of rice, the appellant may have been entitled to receive only 5% commission but as Oswal Agro has made export of rice in violation of law and under the conditional orders passed by this Court, it cannot be now allowed to say that it is not liable to pay the difference between the price at which the rice was exported and the minimum price fixed by the appellant. The liability to pay to the appellant, in other words, arises by virtue of interim orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icence shall apply to the Ministry of (Industrial Development) giving the reasons for the variation or amendment. (2) The Ministry of (Industrial Development) after carrying out such investigation as it may consider necessary, may vary or amend the licence. The Ministry of Commerce and Industry may also consult the Licensing Committee before coming to a decision." 39. Before the issuance of the licence on 19th May, 1986, a letter of 20th August, 1982 was written by the Director, Punjab State Industrial Development Corporation to the Secretariat for industrial approval, Government of India, Ministry of Industries, in which it was stated as follows :- "We are prepared to undertake to export 100% production of the edible rice bran oil and de-oiled cake. Also we are ready to export polished rice produced from our project if allowed by the Government of India. Pursuant to the aforesaid undertaking it was in the letter of intent dated 20th October, 1982, issued by the Government of India, the two items whose manufacture was permitted was Furfural with an annual capacity of 6000 tonnes and edible rice bran oil "as a bye-product" with an annual capacity of 3000 tonnes. It was further s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arn foreign exchange of Rs. 10.70 crores per annum (Annex. II) if it is permitted' to export edible rice bran oil in addition to furfural and rice bran cake. It will be able to earn a foreign exchange of Rs. 16.10 crores per annum (Annex. III) if it is permitted to export non-levy rice, edible grade rice bran oil, rice bran cake and furfural. The company is in a position to export even rice husk ash from the boilers, at the rate of 70 tonnes per day and earn foreign exchange equal to Rs. 1.50 crores per year (Annex. IV)." After the receipt of the aforesaid letter, the impugned letter was issued amending the licence of Oswal Agro whereby the aforesaid condition No. (vi) relating to export of edible rice bran oil was also incorporated. 41. It is clear from the aforesaid letter written and the undertaking given, that Oswal Agro was willing to export edible rice bran oil, if it was permitted to do so. In fact it had also indicated the count of foreign exchange which it would earn by the export of edible rice bran oil. It is on the receipt of the aforesaid letters, specifically letter dated 30th July, 1986, which such followed by a reminder dated 6th November, 1986, that the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he industrial licence and incorporated therein the condition that the respondent would export the entire quantity of edible rice bran oil produced by it. 44. lt will also be seen in the said letters of 20th August, 1982 as well as of 30th July, 1986, not only was a mention made with regard to the export of edible rice bran oil but an undertaking was given that if it was allowed it would also export polished rice produced at its unit. While providing for the export of edible rice bran oil, when an amendment to that effect in the industrial licence was carried out vide letter dated 18th May, 1987, no amendment was made in the industrial licence for granting permission for export of rice, even though such permission was sought for. It can, therefore, be concluded that whereas the Government had agreed to allow Oswal Agro to export edible rice bran oil produced by it, and had made it a condition of the industrial licence, no such permission was granted in respect of export of rice. This would be an additional reason for dismissing Oswal Agro's writ petition filed in the Delhi High Court and for allowing the appellant's appeal. 45. In the Writ Petition filed in the Punjab & Haryana Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act further states that general exemption which is granted under Section 5A(1) will apply to excisable goods which were produced or manufactured by a 100% export oriented undertaking and allowed to be sold in India. Sub-section 2 of the said Section does give the Government power to exempt from payment of excise duty on any excisable goods by passing a special order to that effect. But, in the present case, no such exemption duty in fact was applicable. It appears that a Notification granting exemption from payment of excise duty of goods manufactured in a l00% export oriented undertaking vide Notification dated 9-12-1988 was issued under Section 5A(1) of the Act but by a subsequent Notification dated 20-3-1990, the earlier Notification of 9-12-1988 was rescinded. The clear effect of this was that with effect from 20-3-1990, there was no exemption from payment of excise duty on the goods manufactured by a 100% export oriented units which goods were cleared for sale in domestic market. 48. In a present case the oil which had been produced was stored in a bonded warehouse and it is only after the interim orders of the Punjab and Haryana High Court dated 4-1-1991 and 4-2-1991 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay interest thereon at the bank rate then prevailing. A lending institution like a bank would normally have advanced money for the purposes of business at the bank rate which is fixed with periodical rest. In addition thereto, a bank would normally also obtain a collateral security so as to safeguard the loan advanced by it. Oswal Agro has, on the other hand, not paid the excise dues to the Government and the Government money has presumably been used in its business. No collateral security has been furnished by them because none was ordered by the Court. Under these circumstances, there is no reason as to why Oswal Agro should not be required to pay at least that rate or interest, and on such terms, as it would have to pay to a bank if that amount of money had been obtained by it on loan. Keeping this principle in mind, it would be just and proper that Oswal Agro be directed to pay, in addition to the excise duty payable, interest at the rate of 18% per annum. CONCLUSION : 51. In view of the aforesaid discussion Oswal Agro is under an obligation to pay the difference between the actual export price and the minimum export price, fixed by the Appellant in respect of non-basmati r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g opposed by the authorities, that the oil was removed from the bonded warehouse and sold in the domestic tariff area. The conditional order passed by the High Court permitting the sale of the oil in the domestic tariff area cannot be regarded as Oswal Agro having been allowed to sell goods in the domestic tariff area as contemplated by the said Notification dated 7-10-1991. In that view of the matter, full amount of basic duty and auxiliary duty was payable by it. Taking into consideration the different quantities of oil cleared during different periods and keeping in view the current rate of duty, the total amount of basic and auxiliary duty payable by Oswal Agro would come to the aforesaid figure of Rs. 19,75,15,192.97/- as calculated by the appellant. In addition thereto, Oswal Agro is also liable to pay interest @ 18% as calculated by the appellant herein which comes to Rs. 12,55,09,088.00/-. It is hereby directed that Oswal Agro shall pay this amount of duty and interest within eight weeks from the date of this judgment and it shall also pay to the appellant herein, as well as to the Union of India, one set of costs which are quantified at Rs. 50,000/-. X X X X Extracts X X X X X X X X Extracts X X X X
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