M/S. Granules India Ltd. vs Union Of India on 23 January, 2020

Supreme Court of India

M/S. Granules India Ltd. vs Union Of India on 23 January, 2020

Author: Navin Sinha

Bench: Ashok Bhushan, Navin Sinha


                                      IN THE SUPREME COURT OF INDIA
                                       CIVIL APPELLATE JURISDICTION

                                  CIVIL APPEAL NO(s). 593­594 OF 2020
                           (arising out of SLP (Civil) No(s). 30371­30372 of 2017)

               M/S. GRANULES INDIA LTD.                            ...APPELLANT(S)

               UNION OF INDIA AND OTHERS                           ...RESPONDENT(S)



Leave granted.

2. The appellant is aggrieved by orders dated 07.12.2016 and

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
Signature Not Verified

chemical “Acetic Anhydride” under three Bills of Entry bearing nos.
Digitally signed by
Date: 2020.01.23
16:54:15 IST

290, 291 and 300 dated 01.12.1993, 01.12.1993 and 14.12.1993

through 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 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withdrawn.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 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.


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 other consignments

under Bill of Entry No.312 dated 12.09.1993, Bill of 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, 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.

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 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.

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 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 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.

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 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 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
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 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 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 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 18.09.1994. The onus heavily

rests on them and a casual statement generating litigation by State

apathy cannot be 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 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 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 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 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 justice between
the parties. The obligation on the part of the
State or its instrumentalities to act fairly can
never be over­emphasised.”

11. The impugned orders are therefore held to be unsustainable

and are set aside. The appeals are allowed.


(Navin Sinha)


(Krishna Murari)
New Delhi,
January 23, 2020


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