PHARMACHEM Vs. COLLECTOR OF CUSTOMS

JUDGEMENT

(1.) THE appellant in C/635/88 -A manufactures product by name Oxytetracycline (capsule) using Oxytetracycline HCL as raw material. Manufacturer imported two consignments of Oxytetracycline HCL from a concern by name Krka, Yugoslavia (each of 500 kgs.) under open general licence at US 28.30 per kg. The goods were provisionally released. The Collector, after observing legal formalities, passed order holding that import could not have been made under OGL as it required specific licence, that there was misdeclaration of value as was evident from the price declared in a comparative import at almost the same time and demanded differential duty, confiscated the goods fixing redemption fine of Rs. 1,37,000.00 for each consignment and levied penalty of Rs. 70,000.00 on the manufacturer. Penalty of Rs. 3000.00 was imposed on the Manager of the Bank who issued the letter of credit on the ground that the document was antedated. This order is now challenged in the present appeals, one filed by the importer and the other by the Manager of the Bank.

(2.) IMPORT Trade Control Order 1 of 1982 dated 5 -4 -1982 issued under Section 3 of the Imports and Exports (Control) Act, 1947 gave general permission to import into India from any country, except the two named countries, raw materials, components and consumables by actual users (industrial) subject to various conditions enumerated therein. One of the conditions was that the items to be imported were not covered by Appendices 3 to 9 and 15 of the Import and Export Policy, 1982 -83 Volume I. Admittedly, Oxytetracycline was mentioned in Appendix 4 of that Policy. Para 218(4) of the Policy stated that:

(3.) THE answer of the appellant is two -fold. It is contended that while the Import Control Order 1 of 1982 has statutory root, inasmuch as it was issued in exercise of the power vesting in the Central Government under Section 3 of the Imports and Exports (Control) Act, 1947, the Policy and the amendment to the Policy are purely executive in character and cannot override the statutory order. It is further contended that Appendix 4 was incorporated by reference in the Import Trade Control Order 1 of 1982 and, therefore, the appellant's rights under the Order are governed by Appendix 4 as it stood on the date of the issue of the Order and any subsequent changes brought about in Appendix 4 by amendment to the Policy would not derogate from such right. The effect of incorporation by reference has been examined by the Supreme Court in Mahindra and Mahindra Ltd. v. The Union of India and Anr. - AIR 1979 SC 798. In a case of incorporation by reference, as distinct from a reference, any subsequent amendment in the former statute or even its repeal would not affect the provision incorporated in the latter statute. The Tribunal has followed this principle in Collector of Customs v. Mansingka Brothers - 1988 (38) E.L.T. 105. The Bombay High Court has followed the same principle in American Dry Fruit Stores v. Union of India and Ors. - AIR 1990 Bombay 376. The effect of incorporation is, as if, the provision incorporated is written out in the incorporating statute and is a part of it. Once the incorporation is made, the provision incorporated becomes an integral part of the statute in which it is transposed and thereafter there is no need to refer to the statute from which the incorporation is made and any subsequent amendment made in it has no effect on the incorporating statute.