Union of India (UOI) and Others vs Bakul Cashew Company

Sathiadev, J.—Respondents 1 to 3 in W.P. No. 3676 of 1981 are the appellants and the petitioner is the sole respondent therein. On the

learned judge remitting the matter for fresh consideration in the light of what had been stated in his judgment dated 8.4.1983 [reported as Bakul

Cashew Company Vs. Union of India (UOI) and Others, , this writ appeal is preferred.

The petitioner (ranking of parties as in W.P.) had exported 5,000 tonnes of tapioca chips after getting customs clearance on 2.2.1978. The

goods were not assessed to any duty. Since the buyer required supply of another 250 tonnes of tapioca chips, that consignment was exported on

13.2.1978. The Customs authorities demanded export duty at Rs. 125/- per tonne, and the petitioner paid the same without prejudice to its right

to claim refund. Thereafter, for the export made on 2.2.1978, it was called upon to pay export duty of Rs. 6,25,000/- treating it as, ""animal feed

liable to export duty under item No. 21 of the Second Schedule to the Customs Tariff Act, 1975. By notification No. 107 dated 16.5.1978 issued

u/s 25(1) of the Customs Act, 1962, the Central Government included ""tapioca chips"" in the table annexed to Notification No. 16 Customs dated

22.1.1977 thus exempting animal feed of the description ""tapioca chips"" from the levy of export duty in item No. 21 of the Second Schedule to the

Customs Tariff Act, 1975. Therefore, the third respondent herein held that tapioca chips were not exempted from levy of export duty as animal

feed prior to 1978 and accordingly levied export duty of Rs. 6,25,000/- u/s 28(2) of the Customs Act, 1962. Against this order, an appeal was

preferred to the second respondent, who remitted the matter to the third respondent for de novo adjudication, but again the demand was

confirmed on 16.3.1979 against which appeal and revision filed were also dismissed, and therefore, the writ petition was filed claiming that tapioca

chips are not only used as animal feed, but also used as food articles for human consumption, and that having allowed 5,000 tonnes to be exported

without demanding duty, and a clarification having been issued on 4.4.1977 that no export duty was leviable on this item, the respondents are

estopped from claiming duty, and that there was an erroneous interpretation of Notification No. 107 of 1978 dated 18.5.1978.

The respondents claim that the point for determination in this case would be for what purpose the export transaction had been entered into by

the exporter with the buyer abroad, and tapioca chips being consumed by human beings in some parts of the country would not mean that the

exported goods were not animal feed, and that it comes within the scope of item No. 21 of Second Schedule to Customs Tariff Act, 1975, and the

plea of promissory estoppel has no relevance, and the Notification No. 411 of 1976 relied upon had been rescinded by Notification No. 16 of

1977, and it has no application to the facts and circumstances of this case.

The learned judge after referring to various notifications issued from time to time, and on pointing out that notification No. 16 of 1977 does not

specifically mention ""tapioca chips"", and that it cannot be always treated as animal feed, remitted the matter for fresh consideration.

Mr. P. Narasimhan, learned Counsel for the appellants, submits that this matter does not merit any remittal, because after a de novo

consideration, concurrently the authorities having come to the same conclusion that the purpose for which it was exported is for being used in

industry and in western countries, it was intended to be ultimately used as animal feed, the duty claimed was proper.

The matter does not call for any elaborate consideration in view of what was decided in 1984 ECR 670 as to how and in what manner tapioca

chips could be treated as animal feed under item 21 of Second Schedule to Customs Tariff Act, 1975. It was pointed out that when reference is

made to ""animal feed"", it has to be understood and interpreted as covering such tapioca chips as were particularly suited for use as animal feed,

and when it is intended for industrial use, it cannot be termed as ""animal feed"" classifiable under item 21 of Second Schedule to the Customs Tariff

Act, 1975. In the instant matter, the petitioner had declared that it was for industrial use. In para 11 in the aforesaid decision of the Tribunal, this

aspect had been considered and concluded in para 15 that:

... While the use to which a particular consignment of goods is put would not be decisive in regard to its classification, it is certainly relevant as an

indication of its suitability for one or another purpose....

It was held that animal feed is not a general description of a particular commodity but refers to goods having a specific utility. The words ""tapioca

chips"", cannot be strangely read into the words ""animal feed"" falling under item 21 of Export Tariff Schedule. Therefore, the demand for payment

of duty as if what was exported was ""animal feed"" was outside the scope and ambit of item 21 of the Second Schedule to the Customs Tariff Act,

1975.

Hence, the writ appeal is dismissed resulting in W.P. No. 3676 of 1981 being allowed as prayed for by the petitioner by quashing the demand

made upon it to pay duty on the consignment of 5250 tonne exported by it on 2.2.1978 and 13.2.1978. No costs.

WA. No. 587 or 1989

In view of what has been stated in WA. No. 33 of 1984, this appeal is dismissed confirming the order of the learned judge with the added

direction that no duty could be claimed on the consignments involved in the matter. No costs.