1. The short question which requires determination in this petition filed under Article 226 of the Constitution of India to challenge the legality of the order dated February 17, 1981 passed by the Assistant Collector of Customs, 'Group 'E', Bombay, is whether the petitioners are entitled to take advantage of the exemption notification dated December 5, 1979 issued under sub-section (1) of Section 25 of the Customs Act. The facts giving rise to the petition are required to be briefly stated to appreciate the contention of the petitioners.
2. The petitioner Company is a manufacturer of paper and has its factory at Dombivali in Thana District. For the manufacture of paper, pulp is an essential raw material and the said pulp is made out of waste papers which includes rejected piece of paper or paper-board either from conversion or after use. Under Tariff Item 47.02 under Chapter 47 of the Central Tariff, rate of duty of 100% is levied in respect of 'waste paper and paper-board; scrap articles of paper or of paper-board, fit only for use in paper-making'. The Central Government issued notification dated December 5, 1979 exempting waste paper falling within Chapter 47 of the First Schedule to the Customs Tariff Act, 1975 when imported into India for the manufacture of pulp for use in paper-making from whole of the duty of customs leviable thereon under the said First Schedule and from the whole of the additional duty leviable thereon under Section 3 of the Customs Tariff Act. The exemption was granted provided the importer binds himself by executing of a bond to pay the duty if the waste paper is not proved to the satisfaction of the Collector to have been used for the manufacture of pulp for use in paper-making.
3. The petitioners imported 1619 Bales of waste paper corrugated paper cuttings from Sri Lanka, and the said goods arrived by ship in Bombay Port on December 1, 1980. The petitioners filed advance bill of entry and furnished a bond claiming that the goods were waste papers and were required by the petitioners for the manufacture of pulp for making paper. On December 16, 1980, the Assistant Collector of Customs made endorsement on the bill of entry for home consumption stating 'the goods imported are old corrugated carton boards and chippings of the same. Notification No. 234/79 is restricted to waste paper and does not appear to cover the subject goods'. On January 13, 1981, the petitioners filed another bill of entry for removing the goods in a bonded warehouse. Respondent No. 2 assessed the goods for the customs duty amounting to Rs. 1,65,136.51 on the basis that the exemption notification was not applicable. The petitioners approached the Assistant Collector for clearance of the goods as demurrage was mounting up and also requested to permit the petitioners to remove the goods in the bonded warehouse. The Assistant Collector called upon the petitioners to execute a bond for double the amount of customs duty, that is Rs. 3,30,273.02. The petitioners failed to do so. The petitioners thereafter filed the present petition in this Court on February 20, 1981 to challenge the legality of the order passed by the Assistant Collector of Customs, who by his order found that the exemption notification is available only in respect of waste paper and does not include waste of paper-boards, and therefore, the exemption to the petitioners cannot be granted. On admission of the petition, the petitioners secured an order to clear the goods on executing a bank guarantee in respect of the demurrage charges due to the Port Trust.
4. Shri Andhyarujina, learned counsel appearing in support of the petition, challenged the order passed by the Assistant Collector of Customs holding that the exemption notification is not available in respect of waste of paper-boards. The learned counsel did not dispute that the exemption notification makes no reference to the waste paper-board, but submitted that the expression 'waste paper' includes not only the rejected pieces of paper, but of board also and in support of the submission relied upon the I. S. I. Specifications, a copy of which is annexed as Exhibit 'A' to the petition. The expression 'waste paper' is explained as 'rejected pieces of paper or board either from conversion or after use, which may be reused as raw material during manufacture'. The learned counsel submitted that the Assistant Collector should have granted exemption by holding that the exemption notification covers not only waste paper but waste of paper-board also. In answer to the petition, respondent No. 2 has filed return dated August 29, 1983 sworn by Shri N. M. Mulla, Assistant Collector of Customs. The return claims that the exemption notification is restricted only to the waste paper and the petitioners are not entitled to take advantage of import of waste paper-board.
5. It is undoubtedly true that the exemption notification makes no reference to the expression 'waste paper-board', but that itself is not sufficient to conclude that the import of waste paper-board is not entitled to the advantage of the exemption notification. As mentioned hereinabove, the I. S. I. Specifications clearly indicate that the expression 'waste paper' is not restricted only to the waste paper but also takes in its sweep waste paper-board. Shri Sethna, learned counsel appearing on behalf of the Department, submitted that the words of the exemption notification are clear and unambiguous, and it is not permissible to take aid of the I. S. I. Specifications to claim advantage. The learned counsel submitted that the intention of the Government in granting exemption is clear from the notification itself and the Government desired to left out import of waste paper-board. It is not possible to accept the submission of the learned counsel, because the exemption is given in respect of import of waste paper which is imported for the manufacture of pulp for use in paper-making. I inquired from Shri Sethna as to whether the waste paper-board can be made use of for any other purpose than the manufacture of pulp for use in paper-making. The learned counsel stated that the paper, which can be manufactured from the pulp of paper-board would be of rough quality as compared to the paper manufactured from waste paper. The learned counsel was unable to substantiate his submission either by reference to any standard book or by any averment made in the return. In may judgment, it the use of both, 'waste paper and waste paper-board' is for manufacture of pulp for the ultimate end product of paper, then it would not be proper to read the notification in a restricted manner and to restrict the advantage of the notification only to the import of waste paper.
6. Shri Sethna submitted that the Government of India has subsequently issued two notifications dated July 5, 1980 and May 23, 1980 where the import of paper-board is specifically exempted and the issuance of these notifications indicate that the intention of the Government earlier while issuing the notification dated December 5, 1979 was to exclude the import of paper-board from the advantage of exemption. It is not possible to conclude from issuance of subsequent notifications granting exemption to paper-board that the intention of the Government on earlier occasion was to exclude import of paper-board. It is possible that the subsequent notifications were issued to clear any misunderstanding in the mind of the importers, because as mentioned hereinabove, the use of either the waste paper or the waste paper-board is nothing but manufacture of pulp for the ultimate use in paper-making. The learned counsel was unable to produce the notifications for my perusal at the hearing, and in my judgment, it would not be proper to deny advantage of the exemption notification to the petitioners and the impugned order passed by the Assistant Collector of Customs will have to be quashed.
7. Shri Andhyarujina then submitted that the goods could not be cleared because of the action of respondent No. 2 with the result that the demurrage has mounted up to a very substantial amount and respondent No. 2 should be directed to issue a detention certificate which would entitle the petitioners to claim that the Port Trust should not charge the demurrage in respect of storage of goods. It is not possible to accept this submission. Both, Shri Sethna and Shri Chinoy appearing on behalf of the Port Trust, submitted that the petitioners took no action for a considerable time to clear the goods and it is not open for the petitioner to compel the Department to remove the goods to the bonded warehouse without complying with the requirements of Section 59(1) of the Customs Act, which demands that removal of the imported goods to the warehouse is conditional on importers executing a bond for twice the amount of the duty. It is not in dispute that the petitioners did not execute any such bond. Shri Chinoy also points out that the petitioners did not clear the goods for more than two months from the date of import on a spacious ground that there was a break-down in their factory. In these circumstances the request of Shri Andhyarujina that respondent No. 2 should be compelled to issue a detention certificate cannot be accepted. Respondent No. 2 could not be said to be totally wrong in taking the view that the exemption notification was not applicable to the import of waste paper-boards. The request of the petitioners, therefore, to compel respondent No. 2 to issue the detention certificate deserves to be rejected.
8. Shri Chinoy then submitted that under the interim order passed by this Court, the petitioners were directed to furnish the bank guarantee for an amount of Rs. 86,000 and odd on the basis that such was an amount of demurrage due on that date. Shri Chinoy submits that inspite of the interim order, the petitioners took some more time to clear the goods, with the result that the demurrage charges jumped up to Rs. 94,626.24. Shri Chinoy submits that as the goods were cleared by the petitioners without payment of entire demurrage charges in pursuance of the order of this Court, it is necessary that the petitioners should be compelled to pay the balance amount to the Port Trust forthwith. It is not possible to grant such relief in the present proceedings. It is obvious that the Port Trust is entitled to enforce the bank guarantee furnished by the petitioners and which the petitioners counsel informs me are valid till October 1983. In case any more amount is due towards demurrage or other charges to the Port Trust, then the Port Trust is at liberty to recover it by taking appropriate proceedings against the petitioners, and it is not permissible to grant any relief in that connection in the present petition.
9. Accordingly, the petition partly succeeds and the order dated February 17, 1981 passed by the Assistant Collector of Customs is set aside and it is declared that the petitioners are entitled to the advantage of the exemption notification in respect of their import of 1619 bales of waste paper corrugated paper cuttings from Sri Lanka on December 1, 1980. The other reliefs sought by the petitioners are refused. The petitioners shall pay the costs of respondent Nos. 3 and 4 and there will be no order as to costs against respondent Nos. 1 and 2.