UNION OF INDIA OTHERS Vs. KANUNGA INDUSTRIES

JUDGEMENT

(1.) THE respondent which is a partnership firm was at the material time engaged in the manufacture of stainless steel equipments and utensils with its factor)' at Bangalore. Under the Registered Exporters' Promotion Scheme promulgated by the government of India and in operation at that time, an exporter of leather was entitled to a licence for importing raw material. THE Scheme also provided that the exporter could nominate another person to receive the said import licence. THE respondent-firm was so nominated by an exporter of leather and pursuant to this nomination, the respondent obtained an import licence dated 7/06/1969 for the import of certain raw material. In accordance with the provisions of paragraph 85 of the Import Trade Control Hand Book, 1969 which was effective from April 1969, the respondent imported stainless steel strips which landed at Madras on 12/09/1969. THE import was in three consignments of the total value of Rs. 3,46,087.00. It is not necessary to refer to the intervening facts leading to the imposition of penalty of Rs. 8,48,000.00 on the said three consignments. Suffice it to say that this penalty was imposed by the central Board of Excise and Customs under S. 112(a) of the Customs Act, 1962 on the ground that the import of the stainless steel strips was unauthorised. Against the said order the respondent preferred a revision to the appellant and the appellant by its order of 2/08/1972 dismissed the same. THE respondent then approached the Madras High court by way of a writ petition under Article 226 of the Constitution. THE learned Single Judge of the High court dismissed the same. Against the said order, the respondent preferred a Letters Patent Appeal before the division bench of the High court and the division bench allowed the appeal holding that paragraph 85, as it stood at the relevant time, did not prohibit the import of stainless steel strips. Consequently, the order imposing the penalty was quashed. 37

(2.) "Die only question in controversy before us is whether the provisions of said paragraph 85 prohibited the import of stainless steel strips. It is not disputed that the relevant provisions of paragraph 85, to be precise of 85(1(i)(c) as they stood in 1967 did not allow the import of stainless steel strips of any specifications. This provision was, however, modified in 1968 and the import of stainless steel sheets, plates, strips and circles of any specifications was not permitted. It may be observed from this modification made in 1968 that as against the expression "stainless steel of any specifications" which occurred in the 1967 provisions, this modification detailed the various forms of stainless steel such as sheets, etc. which included strips and stated that the import of stainless steel in these forms was prohibited. In the next year, i.e. 1969 which is relevant for our purpose, there was a further amendment to this provision and that read as follows:

(3.) MR Krishnamurthy lyer, however, contended that since in the earlier entry the words "stainless steel and sheets/plates/circles" were mentioned, it should be held that the words "stainless steel" included every form of it including the strips. This argument wants us to take into account only the words "stainless steel" and to ignore the words "and sheets/plates/circles". If the entry contained only the words "stainless steel" it was possible to argue that stainless steel in any form whether strips, sheets, plates, circles, ingots, rods etc. was included in it and hence prohibited. But the entry proceeded to mention the specific forms of stainless steel. It would mean that stainless steel only in its original form whatever it may be and its specific forms enumerated therein were alone banned. It may also mean that the conjunctive "and" after the words "stainless steel" had crept in in the entry inadvertently. Such a reading of the entry would be legitimate taking into account its history referred to earlier. We have pointed out that in 1967 the relevant entry was "stainless steel of any specifications" whereas in 1968 it was "stainless steel sheets/plates/strips/circles of any specifications". The erratum only brought the situation to the 1968 position. It is also for this reason that we cannot accept the contention that the erratum only made clear or explicit what was implicit in the entry earlier. This is apart from the settled legal position that taxation statutes have to be construed strictly, and the benefit of doubt, if any has to be given to the assessee.