Case Note & Summary
The appellant, M/s. Granules India Ltd., imported 96 tons of Acetic Anhydride under three Bills of Entry in December 1993 through the Inland Water Container Depot, Hyderabad, under the Advance Licence Scheme. The appellant claimed exemption from customs duty under Notification Nos. 203/1992 and 204/1992 dated 19.05.1992. However, these notifications were amended by Notification No. 183/1993 dated 25.11.1993, which withdrew the exemption. Subsequently, a clarificatory Notification No. 105/1994 dated 18.03.1994 was issued, restoring the exemption for imports under advance licences issued prior to 25.11.1993, subject to conditions. The appellant was initially allowed clearance without duty, but later a show cause notice was issued under Section 28(1) of the Customs Act, 1962, demanding duty for consignments imported after 25.11.1993. The appellant's representation for exemption was allowed for three other consignments under the same advance licence but denied for the three consignments in question. The Commissioner (Appeals) upheld the demand, and the High Court dismissed the writ petition and review application, holding that no mandamus for exemption could be issued as the consignments were imported after the withdrawal and before the clarificatory notification. The Supreme Court allowed the appeal, holding that the High Court's order was unsustainable. The Court noted that the entire consignment was under one advance licence issued prior to 19.05.1992, and the clarificatory notification dated 18.03.1994 made it clear that exemption would continue for such imports. The Court criticized the State for pleading ignorance of its own notification and failing to act fairly. The Court also held that the High Court erred in not following its own decision in Shri Krishna Pharmaceuticals Limited vs. Union of India, which dealt with identical facts. The impugned orders were set aside, and the appeals were allowed.
Headnote
A) Customs Law - Exemption from Customs Duty - Advance Licence Scheme - Notification Nos. 203/1992 and 204/1992 dated 19.05.1992, as amended by Notification No. 183/1993 dated 25.11.1993 and clarificatory Notification No. 105/1994 dated 18.03.1994 - The appellant imported Acetic Anhydride under an Advance Licence issued prior to 19.05.1992. Part of the consignment was imported after 25.11.1993 but before the clarificatory notification dated 18.03.1994. The Supreme Court held that the fortuitous circumstance of date of import is irrelevant in view of the clarificatory notification which extended exemption subject to conditions. The State cannot deny exemption merely because the consignment was imported during the interregnum. (Paras 3-8) B) Administrative Law - State's Duty to Act Fairly - Burden of Proof - The State cannot plead ignorance of its own notification. The onus is on the State to be aware of and apply its own notifications. Failure to do so amounts to casualness and negligence, and the State cannot take shelter behind abstract theories of burden of proof. (Paras 9-10) C) Precedent - Binding Nature of Own Orders - The High Court erred in not following its own decision in Shri Krishna Pharmaceuticals Limited vs. Union of India, (2004) 173 ELT 14, which dealt with identical facts and granted exemption. The High Court's failure to follow its own order is unsustainable. (Paras 8-9)
Issue of Consideration
Whether the appellant is entitled to exemption from customs duty for consignments imported after withdrawal of exemption but before a clarificatory notification, and whether the High Court erred in denying relief due to non-production of the clarificatory notification.
Final Decision
The Supreme Court allowed the appeals, set aside the impugned orders of the High Court dated 07.12.2016 and 14.06.2017, and held that the appellant is entitled to exemption from customs duty for the three consignments in question.
Law Points
- Customs duty exemption
- Advance Licence Scheme
- Clarificatory notification
- State's duty to act fairly
- Burden of proof on State
