JUDGMENT 1995 (3) SCR 227 The Judgment of the Court was delivered by MRS. SUJATA V. MANOHAR, J. The appellants imported 5000 metric tonnes of white cement which arrived at the Port of Bombay on or about 17.11.1984. The appellants filed bills of entry for home consumption in respect of the goods so imported and sought clearance of the said goods as an Open General Licence Item under Appendix 6 List 8 Part III Item 33 of the Import and Export Policy for April 1984- March 1985. Clearance, however, was not permitted. The respondents issued a show-cause notice claiming that white cement was not importable under Open General Licence since it was a canalised item under Appendix 5 Part B Serial No. 8 of the Import and Export Policy for April 1984-March 1985. The show-cause notice was challenged by the appellants by filing writ petitions in the High Court.
Pursuant to an interim order passed in the writ petitions, the appellants were allowed to clear the goods on furnishing a bank guarantee of a nationalised bank for 35% of the C.I.F. value of the goods imported as also an I.T.C. bond for the full C.I.F. value. The appellants also gave an undertaking that in the event of failing in the petition, they will pay interest on the amount covered by the I.T.C. bond at 15%. They also gave certain other undertakings as recorded in the interim order. Under the interim order, the respondents were allowed to proceed with adjudication under the impugned show-cause notice. Accordingly the 5th respondent adjudicated the matter and passed an order dated 13th January, 1986 holding that white cement was covered at Serial No. 8 Appendix 5 Part B of the Import and Export Policy 1984-85. Hence it could not be imported under Open General Licence. The import of white cement without an import licence, therefore, was not permissible and the goods imported were liable for confiscation under Section 111 (d) of the Customs Act, 1962, read with Section 3 of Import (Control) Order, 1955. Respondent No. 5 passed an order imposing penalty of Rs. 29,57,000 and directed that the bond/bank guarantee executed by the appellants shall be enforced forthwith as the goods were already cleared and were not available for confiscation.
The writ petitions challenging the show-cause notice were dismissed by the High Court by its judgment and order dated 23rd of March, 1994. The High Court held that white cement did not fall under Appendix 6 List 8 Part III Item 33 and could not be imported as an Open General Licence Item. The High Court held that white cement was covered by Appendix 5 Part B Serial No. 8 and was a canalised item. The present appeals are from the above judgment and order of the High Court.
Under the Import and Export Policy for April 1984 - March 1985, chapter 22 lays down Rules for the interpretation of the policy. Paragraph 242 (f) provides, "Any item in Appendices 2 to 5 or 8 with a specific or a generic description, will preclude the eligibility to its import under Open General Licence, except where the policy allows this clearly". Appendix 5 Part B Serial No. 8 covers the following :
"8. Cement including Clinker :-
In the case of cement including clinker, the import will be made only by the State Trade Corporation of India (STC), under Open General Licence on the basis of foreign exchange released by the Government in its favour, imports, distribution, and pricing will be made by the STC as per the connected policy of Government in the Ministry of Industry."
We have to consider whether this item would cover white cement. If white cement is not covered by the above item then it would fall under Appendix 6 List 8 Part III Item 33 which is as follows :
"33. All other items permitted under Open General Licence in terms of the Import Policy in force, other than these covered by Paras I and II above."
Prima facie, one would be inclined to hold that cement would cover all types of cement including white cement. Hence white cement should be considered as a canalised item, importable only by the State Trading Corporation of India under Open General Licence as set out in Item 8 of Appendix 5 Part B above. In fact this is what has been held by the High Court. However, our attention has been drawn to certain other provisions which are relevant for the purposes of interpreting Item No. 8 in Appendix 5 Part B. In Item No. 8 itself there is a clear reference to the manner in which cement which is covered by that item is to be imported. The item provides that (1) import will be made only by the State Trading Corpora- tion of India on the basis of foreign exchange released by the Government of India in its favour; and (2) import, distribution and pricing will be made by the State Trading Corporation as per the connected policy of Government in the Ministry of Industry. The item, therefore, refers to the policy of the Government in the Ministry of Industry in connection with import of cement and specifically states that import by the State Trading Corporation shall be governed by such policy.
The policy of the Government in the Ministry of Industry is, there-fore, directly relevant for the purpose of interpreting this item. In this connection, the central Government has made an order called the Im-ported Cement Control Order, 1978. In Clause 2(a) of the Order 'cement' is defined as follows :
"2(a): 'Cement' means any variety of cement imported into India bat does not include oil-well cement and white cement and coloured cement (other than grey portland cement)."
This definition of cement excludes white cement from the purview of the Order. Under Clause 2(C) 'agent' is defined to mean the State Trading Corporation of India or any person who acquires cement from the State Trading Corporation of India. This Order, therefore, has a direct link with the cement imported by the State Trading Corporation of India as a canalising agency under Appendix 5 Part B, Serial No. 8 of the Import and Export policy for April 1984-March 1985. The Order provides for the sale and transport of such cement, prices at which the State Trading Corporation may sell cement, maintenance and production of accounts and so on. The, State Trading Corporation therefore, is required to import and sell cement in accordance with the Imported Cement Control Order of 1978 which excludes white cement from its purview. In other words, white cement is not considered to be a canalised item which can be imported by the State Trading Corporation of India. Had it been so considered, the Imported Cement Control Order of 1978 would have included white cement within the scope of its definition. It is not disputed that this Order was in force during the period covered by the Import and Export Policy for April 1984- March 1585.
The Cement Control Order of 1967 also excludes from the definition of cement, white cement. This Order, however, is under the Industries (Development and Regulation) Act, 1951 and is made for the purpose of securing equitable distribution and availability at fair prices of cement. So this Order will not be of direct relevance while interpreting the entry at Serial No. 8 of Appendix 5 Part B. The Imported Cement Control Order of 1978, however, is of direct relevance for the purpose of interpreting this entry, and a combined reading of both these would clearly show that white cement was not considered as a canalised item under the said entry. The appellants have also relied upon a Press Note issued by the Government of India, Ministry of Industry dated 27th February, 1982 which also refers, inter alia, to the import of ordinary portland cement by the State Trading Corporation and makes no reference to the import of white cement.
The appellants have also drawn our attention to the composition of white cement which is different from ordinary portland cement. Properties of white cement are also somewhat different from those of ordinary portland cement. In commercial parlance, white cement is considered as a different commercial commodity. It is submitted before us that if a customer asks for cement from a cement dealer, he will get ordinary portland cement and not white cement. Our attention was drawn to a decision of the Calcutta High Court in Re : M/s. Purbachal International & Anr., (1985) 21 E.L.T. 673 (Cal.). A learned Single Judge in that judgment has discussed at length the properties of ordinary portland cement as against the proper-ties of white cement. He has set out the relevant portions of a booklet issued by the Indian Standards Institution under the title "Indian Standard Specification for White Portland Cement". It states :
"White Portland Cement is generally meant for non- structural use. White Portland Cement is made from raw material containing very little iron oxide and manganese Oxide. Limited quantities of certain chemicals, which will improve whiteness of cement without affecting the physical properties, may be added during manufacture........."
There is a separate booklet issued by the Indian Standards Institution under the title "Indian Standard Specifications for Ordinary and Low Heat Portland Cement" which also provides the terminology, manufacturing process, chemical requirements, physical requirements etc. of ordinary portland cement. The chemical requirements of white Portland cement and ordinary and low heat portland cement are quite distinct and separate. The learned Single Judge has also observed that the pricing of the two commodities is quite different. Their chemical composition and uses are also quite different, and in the commercial world, the two are treated as different commodities. He has, therefore, held that for the purposes of import, white cement is not a canalised item at Serial No. 8 of Appendix 5 Part B. We respectfully agree with these findings of the learned Single Judge. What is more important, the entry in question makes a clear reference to the connected policy of the Government in the Ministry of Industry in connection with the items canalised at Serial No. 8 of Appendix 5 Part B. This connected policy of the Government is reflected in the Imported Cement Control Order of 1978, the Cement Control Order, 1967 and the Press Note which do not cover within their ambit white cement.
In the premises, the appeals are allowed. The impugned judgment of the High Court is set aside. The appellants are, however, bound to pay all duties of customs in relation to this import. If they have not done so already, they shall do so within weeks from today. The amount of customs duties required to be paid by the appellants shall bear [email protected] 15% per annum from the date of adjudication till payment. The order imposing penalty, however, is set aside. The respondents shall be entitled to realise the bank guarantee furnished by the appellants towards any unpaid duty together with interest. Looking to the circumstances, however, there will be no order as to costs.
Appeals allowed.