Holding

The clarificatory Notification of 18 March 1994 reinstated the exemption and the State bears the burden of proving otherwise; its claim of ignorance is untenable.

Summary

M/s Granules India Ltd imported 96 tonnes of acetic anhydride in 1993 under an advance licence issued before 19 May 1992 and claimed exemption from customs duty under Notifications 203/1992 and 204/1992. The exemption was withdrawn by Notification 183/1993 dated 25 November 1993, but a clarificatory Notification 105/1994 dated 18 March 1994 reinstated the exemption subject to conditions. The Revenue authorities, ignoring the 1994 clarification, levied duty on the consignments and rejected the appellant's claim, leading to a writ petition that the High Court dismissed on the ground that the appellant had not produced the 1994 notification and the State was unaware of it. The Supreme Court held that the clarificatory notification continued the exemption and that the State cannot rely on its own ignorance; the burden of proof rests on the State. Consequently, the Court set aside the High Court orders and allowed the appeals, granting the exemption from customs duty.

Issues considered

What is the effect of the clarificatory Notification dated 18 March 1994 on the exemption from customs duty for imports made under the advance licence scheme?
Whether the State authorities can rely on their own lack of knowledge of the clarificatory Notification as a defence against the appellant's claim for exemption?
Whether the burden of proof for establishing the applicability of the exemption lies on the State or the importer?

Legislation cited

Customs Act, 1962s. 28(1)

Subjects

Customs duty exemptionAdvance Licence SchemeClarificatory NotificationBurden of proof on StateSection 28(1) of Customs ActState liability

Judgment

1182 [2020]REPORTS
SUPREME COURT 2 S.C.R. 1182 [2020] 2 S.C.R.

A M/S. GRANULES INDIA LTD.
v.
UNION OF INDIA AND OTHERS
(Civil Appeal Nos. 593-594 of 2020)
B JANUARY 23, 2020
[NAVIN SINHA AND KRISHNA MURARI, JJ.]
Customs Act, 1962:
Customs duty – Exemption from – Entitlement – Revenue
C imported consignment under one advance licence issued prior to
19.5.1992 – Part of consignment was imported prior to 25.11.1993
and the rest subsequent thereto – Assessee sought exemption from
customs duty in terms of Custom Notifications dated 19.5.1992 –
Revenue allowed exemption from customs duty in respect of part of
the consignments which were actually imported prior to 25.11.1993
D
i.e. the date of Notifications whereby the exemption was withdrawn
– The exemption claim was rejected in respect to the part of the
remaining consignment which was imported after 25.11.1993
without making any reference to clarificatory notification dated
18.3.1994 whereby import of chemical was permitted without
E customs duty subject to certain terms and conditions – Writ petition
of assessee dismissed by High Court – In review petition High Court
held that since the assessee did not produce the clarificatory
Notification and neither the Revenue/State was aware of that
Notification, the assessee was not entitled to any relief – Appeal to
Supreme Court – Held: In view of clarificatory Notification the
F
assessee is entitled to the exemption from customs duty – It is
absolutely no defence of State Authorities to contend that they were
not aware of their own Notification i.e. clarificatory Notification –
The onus heavily rests on the State – The State cannot behave like a
private litigant and rely on abstract theories of burden of proof.
G Allowing the appeals, the Court
HELD: 1 The entire consignment was imported under one
advance licence issued to the petitioner prior to 19.05.1992. Part
of the consignment was actually imported prior to 25.11.1993 and
the rest subsequent thereto is hardly relevant in view of the
H
1182
M/S. GRANULES INDIA LTD. v. UNION OF INDIA AND 1183
OTHERS

clarificatory notification dated 18.03.1994 that the exemption A
would continue to apply subject to fulfilment of the specified terms
and conditions. It is not the case of the respondents that the
consignments imported subsequently did not meet the terms and
conditions of the exemption. [Para 8][1186 A-C]
2. The High Court further gravely erred in holding that the B
authorities of the State were also unaware of the clarificatory
notification and neither did the appellant bring it on record. The
State is the largest litigant. It stands in a category apart having a
solemn and constitutional duty to assist the court in dispensation
of justice. The State cannot behave like a private litigant and rely
on abstract theories of the burden of proof. The State acts through C
its officer who are given powers in trust. If the trust so reposed
is betrayed, whether by casualness or negligence, will the State
still be liable for such misdemeanor by its officers betraying the
trust so reposed in them or will the officers be individually
answerable. It is absolutely no defence of the State Authorities D
to contend that they were not aware of their own notification dated
18.09.1994. The onus heavily rests on them and a casual
statement generating litigation by State apathy cannot be
approved. [Para 9][1186 E-H; 1187-A]
National Insurance Co. Ltd. v. Jugal Kishore (1988) 1 E
SCC 626 – relied on.
Shri Krishna Pharmaceuticals Limited v. Union of India
(2004) 173 ELT 14 – approved.
Case Law Reference
F
(2004) 173 ELT 14 approved Para 8
(1988) 1 SCC 626 relied on Para 10
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 593-
594 of 2020.
From the Judgment and Order dated 14.06.2017 of the High Court G
of Judicature at Hyderabad for the State of Telangana and the State of
Andhra Pradesh in Review WPMP No. 10198 of 2017 in W.P. No. 8937
of 2001 and order dated 07.12.2016 in Writ Petition No. 8937 of 2001.

H
1184 SUPREME COURT REPORTS [2020] 2 S.C.R.

A B. Adinarayana Rao, Sr. Adv., D. Bharat Kumar, Tadimalla
Bhaskar Gowtham, Aman Shukla, Abhijit Sengupta, Advs. for the
Appellant.
Ms. Rukmini Bobde, Ms. Vanshaja Shukla, Ms. Tanisha Samanta,
B. Krishna Prasad, Advs. for the Respondents.
B The Judgment of the Court was delivered by
NAVIN SINHA, J.
1. Leave granted.
2. The appellant is aggrieved by orders dated 07.12.2016 and
C 14.06.2017, rejecting the writ petition as also the review application arising
from the same.
3. The appellant, during the year 1993 imported 96 tons of the
chemical “Acetic Anhydride” under three Bills of Entry bearing nos.
290, 291 and 300 dated 01.12.1993, 01.12.1993 and 14.12.1993 through
D the Inland Water Container Depot (ICD), Hyderabad under the Advance
Licence Scheme. It claimed clearance of the consignment free of import
duty in terms of Customs Notification nos. 203/1992, 204/1992, both
dated 19.05.1992. The notification contained a scheme permitting import
without payment of customs duty subject to fulfilment of certain norms
and conditions. The Notification nos. 203/1992 and 204/1992 were
E
amended by a Notification no. 183/1993 dated 25.11.1993, by which the
subject imports became liable for duty, the exemption having been
withdrawn. The Notification dated 25.11.1993 was further amended by
another clarificatory Notification no. 105/1994 dated 18.03.1994
permitting the import of the chemical without customs duty subject to
F certain terms and conditions. The clarificatory notification was
necessitated to obviate the difficulties faced by the importers like the
appellant, who had imported the chemical under the advance licence
issued by the Director General of Foreign Trade prior to the amendment
Notification no. 183/1993 dated 25.11.1993.
G 4. The appellant was allowed to clear the consignments under the
aforesaid three Bills of Entry without payment of duty. Subsequently the
respondents issued show cause notice under Section 28 (1) of the Customs
Act, 1962 with regard to the same consignments as having been imported
after 25.11.1993. The appellant made a representation on 20.11.1997
seeking exemption. It was considered favourably in respect of three
H
M/S. GRANULES INDIA LTD. v. UNION OF INDIA AND 1185
OTHERS [NAVIN SINHA, J.]

other consignments under Bill of Entry No.312 dated 12.09.1993, Bill of A
Entry No.28 dated 10.02.1994 and Bill of Entry No.27 dated 09.02.1994.
The entire consignments were imported under the same advance licence.
In pursuance of the show cause notice the appellant was held liable to
duty by order dated 12.2.1998 with regard to the consignments under
three Bills of Entry bearing nos.290, 291 and 300 dated 01.12.1993,
B
01.12.1993 and 14.12.1993 respectively though these were also under
the same advance licence. The respondents while considering the reply
to the show cause notice and fixing liability for payment of customs duty
did not make any reference to their notification dated 18.03.1994. The
Commissioner (Appeals) on the same reasoning rejected the appeal
leading to the institution of the writ application. C
5. Dismissing the writ application, the High Court opined that no
mandamus for exemption could be issued. The consignments were
admittedly imported after 25.11.1993 and before the clarificatory
notification dated 18.03.1994. Thus, there was no arbitrariness on part
of the respondent. The appellant preferred a review application inter D
alia relying upon a Division Bench order of the Andhra Pradesh High
Court in Shri Krishna Pharmaceuticals Limited vs. Union of India,
(2004) 173 ELT 14. Rejecting the plea, the High Court opined that since
the appellant did not produce the clarificatory notification along with the
writ petition and neither were the respondents aware of the clarificatory
notification the appellant was not entitled to any relief. E

6. Shri B. Adinarayana Rao, learned senior counsel appearing on
behalf of the appellant, submitted that denial of exemption to the
consignment actually imported after 25.11.1993 under the advance licence
obtained prior to 19.05.1992 notwithstanding the clarificatory notification
dated 18.03.1994 holding the appellant liable for customs duty is F
completely unsustainable. Special Leave Petition (Civil) No.14288 of
2004 (CC No.5418/2004) preferred against the order in Shri Krishna
Pharmaceuticals Limited (supra) was dismissed. The mere failure to
enclose a copy of the notification could not be a ground for denial of
relief. Denial of exemption in the facts and circumstances of the case in G
view of the statutory notifications were per se arbitrary.
7. Learned counsel appearing for the State supported the order of
the High Court and urged that the consignments having been imported
after withdrawal of the exemption and before issuance of the clarificatory
notification was justified. H
1186 SUPREME COURT REPORTS [2020] 2 S.C.R.

A 8. We have considered the submissions on behalf of the parties
and are of the considered opinion that the order of the High Court is
completely unsustainable. The entire consignment was imported under
one advance licence issued to the petitioner prior to 19.05.1992. The
fortuitous circumstance that part of the consignment was actually imported
prior to 25.11.1993 and the rest subsequent thereto is hardly relevant in
B
view of the clarificatory notification dated 18.03.1994 that the exemption
would continue to apply subject to fulfilment of the specified terms and
conditions. It is not the case of the respondents that the consignments
imported subsequently did not meet the terms and conditions of the
exemption. In Shri Krishna Pharmaceuticals Limited (supra), the High
C Court observed as follows:
“7. …Obviously, the petitioner had the facility of exemption from
payment of the customs duty under the scheme known as Advance
License Scheme, but the same was banned through notification
dated 25.11.1993 and later through another clarificatory notification
D the same was extended by Notification dated 18.3.1994. Thus,
since the Government itself has clarified by its second notification
providing exemption, we are inclined to hold that the petitioner
shall be entitled to be exemption for all the three consignments as
long as the three consignments are imported under the Advance
License scheme. Moreover, it is not the case of the respondents
E that these three consignments are not covered under the Advance
License scheme.”
9. It is unfortunate that the High Court failed to follow its own
orders in a similar matter. The High Court further gravely erred in holding
that the authorities of the State were also unaware of the clarificatory
F notification and neither did the appellant bring it on record. The State is
the largest litigant as often noted. It stands in a category apart having a
solemn and constitutional duty to assist the court in dispensation of justice.
The State cannot behave like a private litigant and rely on abstract theories
of the burden of proof. The State acts through its officer who are given
G powers in trust. If the trust so reposed is betrayed, whether by casualness
or negligence, will the State still be liable for such misdemeanor by its
officers betraying the trust so reposed in them or will the officers be
individually answerable. In our considered opinion it is absolutely no
defence of the State authorities to contend that they were not aware of
their own notification dated 18.03.1994. The onus heavily rests on them
H
M/S. GRANULES INDIA LTD. v. UNION OF INDIA AND 1187
OTHERS [NAVIN SINHA, J.]

and a casual statement generating litigation by State apathy cannot be A
approved.
10. We can do no better than quote the following extract from
National Insurance Co. Ltd. vs. Jugal Kishore, (1988) 1 SCC 626,
observing as follows: -
“10. Before parting with the case, we consider it necessary to B
refer to the attitude often adopted by the Insurance Companies,
as was adopted even in this case, of not filing a copy of the policy
before the Tribunal and even before the High Court in appeal. In
this connection what is of significance is that the claimants for
compensation under the Act are invariably not possessed of either C
the policy or a copy thereof. This Court has consistently emphasised
that it is the duty of the party which is in possession of a document
which would be helpful in doing justice in the cause to produce
the said document and such party should not be permitted to take
shelter behind the abstract doctrine of burden of proof. This duty
is greater in the case of instrumentalities of the State such as the D
appellant who are under an obligation to act fairly. In many cases
even the owner of the vehicle for reasons known to him does not
choose to produce the policy or a copy thereof. We accordingly
wish to emphasise that in all such cases where the Insurance
Company concerned wishes to take a defence in a claim petition E
that its liability is not in excess of the statutory liability it should file
a copy of the insurance policy along with its defence. Even in the
instant case had it been done so at the appropriate stage necessity
of approaching this Court in civil appeal would in all probability
have been avoided. Filing a copy of the policy, therefore, not only
cuts short avoidable litigation but also helps the court in doing F
justice between the parties. The obligation on the part of the State
or its instrumentalities to act fairly can never be over-emphasised.”
11. The impugned orders are therefore held to be unsustainable
and are set aside. The appeals are allowed.
G

Kalpana K. Tripathy Appeals allowed.

H