1. This is an appeal by original respondents, Union of India and another against the judgment and order of Lentin J, allowing the petitioner's petition in terms of prayers (a) and (b) of the petition.
2. The question involved in this appeal is in narrow compass. The question is as to the meaning to be given to the expression 'vessel bound for any foreign port' and the express 'Ocean going vessel on foreign run', used in the Government Notification dated 5th April, 1949, (Ex. A to the petition) under clause 12 of the Central Excise Rules and a Notification dated 9th October, 1967 (Ex. D to the petition) issued under Rule 8(1) of the Central Excise Rules read with S. 3(3) of the Mineral Products (Additional Duties of Excise and Customs) Act, 1958 respectively.
3. It may be stated at the outset that after the petition was disposed of by the trial court and the appeal was filed by the original petitioner company which was a foreign company, was taken over by the Government of India and today the petitioners are a fully owned Government Company. Therefore, today - the fight in the petition is purely academic being between the Union of India and its own company. It seems that when the matter had reached for hearing earlier, this court had adjourned the hearing to enable the parties to sort out the disputes among themselves. However, today at the hearing, we were told by the learned counsel for the Union of India that they have instructions from the Customs authorities to get a decision in the matter.
4. A few relevant undisputed facts on which the petition is based are : At the relevant time, the petitioners were a company incorporated under the laws of the United Kingdom and carried on business in India inter alia of buying and selling petroleum products including furnace oil. The first respondent is the Superintendent of Central Excise exercising powers under the Central Excises and Salt Act, 1944 (referred to hereinafter as 'the Excise Act'). The 2nd respondent is the Union of India.
5. Under the provisions of the Excise Act, excise duty is levied inter alia on all bunker fuel. Such duty (described hereinafter as 'the basic duty'), is levied under section 3 of the Excise Act read with Entry 9 of the First Schedule to that Act. This basic duty imposed on industrial diesel oil has varied from time to time, and at all material times was Rs. 50.75 per kilolitre at 15 degree C.
6. Under the provisions of the Excise Act, Government of India has been empowered to make rules to carry out into effect the purposes of that Act, to grant exemptions from duty and to grant rebate of the duty paid in respect of the goods which are exported out of India. In pursuance of this rule making power, Government of India have made rules known as 'The Central Excise Rules, 1944.'
7. In pursuance of the powers conferred by the Excise Act and the Rules, Government of India by a Notification dated 5th April, 1949 (Ex. A to the petition) allowed a rebate of duty paid on all excisable goods exported as ship's stores for consumption on board a vessel bound for any foreign port.
8. Government of India also issued a similar Notification dated 15th January, 1966 in respect of Bunker Coastal Vessels (Ex. B to the petition) which was amended from time to time. The said notification exempted all furnace oil supplied to bunker coastal vessels, from so much of the basic duty of excise leviable under item 10 of the First Schedule of the Excise Act as was in excess of Rs. 40.11 per metric ton. At all relevant times furnace oil was exempted from so much of duty as was in excess of Rs. 4.95 kilolitre at 15 degree C.
9. In 1958, Government of India enacted Mineral Products (Additional Duties of Excise and Customs) Act, 1958 to provide for the levy and collection of additional duties of excise on mineral oils (referred to hereinafter as 'the additional duties'). Such additional duty was imposed under the said Act inter alia on furnace oil and rates of such duty in force at the relevant time was Rs. 39.95 per kilolitre at 15 degree C. Section 3(3) of the said Act, provided that the provisions of the Excise Act relating to exemption from duty were to apply in relation to such additional duty levied under the Mineral Products Act, 1958.
10. Government of India issued a Notification dated 30th June, 1958 (Ex. C to the petition) applying the earlier Notification dated 5th April, 1949 issued under the Excise Rules to such additional duty. By a notification dated 9th October, 1967 (Ex. D to the petition) Government of India granted partial exemption of additional duty on furnace oil supplied to bunker ocean going vessel on a foreign run. The extent of such partial exemption has varied from time to time but at all material times, furnace oil supplied to such vessels was exempted from so much of additional duty as was in excess of Rs. 21.15 per kilolitre at 15 degree C.
11. Government of India also issued a similar notification as regards coastal vessels being Notification dated 21st January, 1967 (Ex. D I to the petition) providing that furnace oil supplied to coastal vessels falling under item 10 to the First Schedule of the Excise Act would be exempted from the whole of the additional duty. By subsequent Notifications, the said exemption has been made partial and the extent of such partial exemption has varied from time to time but the same, as in force at all material times, relevant exempted coastal vessels from so much of the additional duty as was in excess of Rs. 21.15 per kilolitre.
12. The petitioners supply bunkering fuel consisting of furnace oil and/or marine diesel oil, used for the actual propulsion and/or for running auxiliary engines on board ships. This fuel is supplied by the petitioners to vessels calling at the port of Bombay under arrangement with the owners or the agents of the vessels. At the relevant time, M/S B.P. (Indian Agencies) Ltd. were the agents of the vessel s.s. 'British Cannet', and M/s Essto Standard (Eastern) Inc. were the agents of the vessels s.s. 'Royal Venture', s.s. 'Warwich Trader' and s.s. 'World International'.
13. It appears that as represented by the Vessels' agents to the petitioners, s.s. 'British Cannet' was proceeding from the port of Bombay to a port in the Persian Gulf town Bandar Maheshar via. the Indian port of Kandla. At the instance of the agents of the vessel, the petitioners supplied to s.s. 'British Cannet' 164.990 Kilolitres of furnace oil in bulk from their tank at Butcher Island, which tank is maintained in bond under the supervision of the excise authorities of the 2nd respondent. Before effecting this supply, the petitioners applied in the prescribed manner (A.R. 1 form dated 18th October, 1968) to the first respondents for removing this quantity of oil for supplying to the said vessel and applied for exemption of basic duty and partial exemption of additional duty on the same, as this was the vessel bound for a foreign port, viz. Bandar Maheshar, and was also on ocean going vessel on a foreign run and as the furnace oil was required by the vessel for consumption on its voyage to the foreign port of Bandar Maheshar. The petitioners also submitted to the first respondents the relevant Shipping Bill dated 11th October, 1968. On 18th October, 1968 the petitioners application for exemption was granted by the first respondent. On 21st October, 1968, a letter was addressed by the first respondent to the petitioner stating that :-
'British Cannet' cannot be treated as foreign going under section 2(21) of the Customs Act, 1962, as she was loaded with Mineral Oil cargo for discharge at coastal ports only. Hence the entire quantity of 164.990 kls. at 15 degree C is chargeable at Furnace oil tariff duty rate.'
The petitioners also received the demand notice dated 21st October, 1968 for payment of Rs. 11,475.05. This letter and demand notice both dated 21st October, 1968 have been impugned by the petitioners in this petition.
14. Similar was the case in respect of the other three concerned vessels viz. s.s. 'Royal Venture' which was bound for Restanura in Persian Gulf via. Kandla and Okha, s.s. 'Warwick Trader' bound for Restanura viz. Madras and Calcutta and s.s. 'World International' bound for Bahrain via. Kandla and Okha in which demand notices were in identical terms save and except that the amounts sanctioned in the demand notices in each case varied. The petitioners have impugned in the petition letters and demand notices issued in all the said cases.
15. Before dealing with the basic question involved in this case, in order to understand the contentions raised, it would be convenient to set out first the said notifications so far as they are relevant, under which the petitioners claimed rebate of or exemption from excise duty and additional duty.
16. The first notification dated 5th April, 1949 (relates ?) to vessels bound for any foreign port or to ocean going vessel on foreign run, in reference to the definition of 'Foreign going vessel' under Section 2(21) of the customs Act.
17. The learned Judge further held that even if reliance on the definition of 'Foreign bound ship' under Section 2(21) of the Customs Act were permissible, still in the present case all the vessels could be covered under clause (iii) of the said Section 2(21) of the Customs Act.
18. The learned Judge further held that on the plain dictionary meaning, the vessel in this case would not cease to conform to the expression 'bound for a foreign port' or 'ocean going vessel on foreign run' only because on way to the foreign port of destination they had under a specific permission granted by the authorities under Section 407 of the Merchant Shipping Act, the vessel had touched Indian ports to discharge certain cargo. The learned Judge accordingly allowed the petition.
19. The first question to be considered is whether the authorities were justified and/or right in issuing the said demand notices negativing rebate to the petitioners of the Excise duty and exemption of additional duty under the said notifications dated 5-4-1949 and 9-10-1967 respectively on the express basis that the said vessel concerned could not be treated as foreign going vessel under S. 2(21) of the Customs Act, 1963.
20. The learned counsel for the Union of India has sought to justify the said demand notices with reference to S. 2(21) of the Customs Act on the ground that the provisions of the Central Excise Act and Central Excise Rules 1944, under which the said notifications are issued and the Customs Act 1962 were cognate and or both the statutes were in para materia and formed part of the same system disclosing over all scheme. According to him, therefore, different provisions of the Customs Act, 1962, could throw light on the provisions of the Excise Act and/or notifications thereunder and, therefore, it was permissible for them to issue the said demand notice in reference to the said S. 2(21) of the Customs Act.
21. The said contention of the learned counsel cannot be accepted. In our view, the Excise duty and Customs duty being different in their very nature, concept, scope and operation and the very object of the said two Acts being inherently different, the said two statutes cannot be said to be cognate or allied or in para materia. Therefore, the expression in one could not be interpreted in reference to the expression in the other.
22. Apart from that in this case, there are two other difficulties in the way of the respondents in following such a course. Firstly the said two Acts, viz. the Central Excise Act and Central Excise Rules, 1944, and the Mineral Products Act 1958, and the said notification dated 5-4-1949 issued under the Excise Act were enacted many years earlier than the Customs Act of 1962. It is, therefore, difficult to see how an expression in the earlier statute could be interpreted with reference to an expression in the later statute. Secondly the expression in S. 2(21) of the Customs Act, viz. 'Foreign going vessel' was not the same as the expression in the said notification viz. 'Vessel bound for foreign port' or 'Ocean going vessel on a foreign run', so that the meaning of the said expression in the notifications could be ascertained from the definition of an altogether a different expression viz. 'Foreign Going Vessel' appearing in S. 2(21) of the Customs Act. It is not the case of the respondents nor is there any material on record to hold that the said three any material on necessarily mean one and the same thing.
23. In that view of the matter, the said impugned demand notices appear to have been based altogether on extraneous considerations and that by itself was sufficient to set aside the same.
24. The next question then is what meaning, was to be attributed to the expression 'Vessel bound for foreign port' or 'Ocean going vessel on foreign run' used in the said notifications ?
25. The said expressions have not been defined in the said Acts under which the said notifications were issued nor in the notification thereunder. It is, however, well settled that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words. The matter is governed wholly by the language of the notifications (see Mansra v. H. H. Dave : 2SCR253 ). It is also settled that the court while interpreting a taxing statute, will not be justified in adding words thereto so as to make out some presumed object of the legislature and that in case of a doubt, that interpretation of a taxing statute which is beneficial to the tax payer must be adopted. [The State of Bombay v. A & A Indications Corporation (1931) 12 STC 122.
26. Since in this case no definitions of the said expressions are to be found in the Statutes or notifications, the court will have to look for their plain and natural meaning. The learned Judge, was therefore, justified in finding out the plain and natural meaning of the said expression by resorting to the dictionary.
27. As stated by the learned Judge, on the dictionary meaning of the expression 'Bound', the plain and natural meaning of the said expression 'Vessel bound for foreign port' would be a vessel going or intending to go to a foreign port or on the way towards the foreign port'. Secondly on the dictionary meaning of the word 'run', the plain and natural meaning of the said expression 'vessel on foreign run' would be 'a vessel on course or route to foreign port travelling with regularity'. As it appears from the judgment of the learned Judge, the learned counsel for the Union of India and himself contended that a vessel bound for foreign port was a vessel going (??) imported would be utilised only for the consumption of raw materials or accessories in licensor's factory and no portion thereof be sold. The licensee negotiated for the sale of one of machines and actually sold it. The court held that the conditions of licence were applicable to the case and breach thereof was fully intended and designed. It was contended by the accused relying on the dictionary meaning of the expression 'consumption', 'raw material' and 'utilised' appearing in the condition of the licence that the transfer of the press along with the machines was not prohibited under the said conditions of licence. Negativing the said contention, the court observed at page 1289 of the report :-
'In our opinion dictionary meanings, however, helpful in understanding the general sense of the words, cannot control where the scheme of the statute or the instrument considered as a whole clearly conveys a somewhat different shade of meaning. It is not always a safe way to construe a statute or a contract dividing at by a process of etymological dissection and after separating words from their context to give such words some particular definition given by lexicon graphics and then to reconstruct the instrument upon the basis of those definitions. What particular meaning should be attached to words and phrases in a given instrument is usually to be gathered (??) contended that if however a vessel bound for foreign port were to carry cargo to an Indian port and therefore engage in coastal trade, even temporarily at least for that limited period it would cease to be vessel bound for foreign port or on a foreign run and would become a country vessel. In short, the contention is that a vessel to be a vessel 'bound for foreign port' or 'on a foreign run' it must be a vessel directly proceeding to a foreign port from the Indian port.
28. The said contention of the learned counsel for the Union of India is without any basis and on the above mentioned meaning of the said expressions, the same cannot be accepted. It is difficult to see how a vessel in fact bound for foreign port or on a foreign run would cease to be so merely because with a special permission granted under S. 407 of the Merchant Shipping Act it was allowed to discharge cargo at some Indian Ports on its way to the foreign port and thereby engage in coastal trade. The said vessel as the definition of country vessel in S. 3(A) of the Merchant Shipping Act provides inter alia that a vessel to be termed as a country vessel, it must exclusively trade between the Indian Ports. On the contrary the fact that such a foreign vessel is permitted to discharge cargo at the Indian Port only on special permission under S. 407 of the Merchant Shipping Act, would by itself show that the vessel had retained the character of a vessel bound for a foreign port or a vessel on the foreign run.
29. The learned counsel for the Union of India referred to a decision of Single Judge of this court in the case of M/s The Great Eastern Shipping Co. Ltd. v. The Union of India 76 B.L.R. 115. In that case an Indian Ship registered with the shipping authorities as a foreign going vessel on one of its journey back to the Indian ports had essentially carried foreign cargo meant for Indian port. After having discharged its foreign cargo meant to be discharged at the Bombay Port, it took cargo at the Bombay Port for Madras and Calcutta Ports and similarly after having discharged both foreign and Indian Cargo at the Madras Port took some further the above circumstances, the question arose whether the ship would cease to be a foreign going vessel ?
30. On the facts of that case the court negatived the contention of the respondents, the Union of India, that S. 2(21) defines a foreign going vessel as a vessel for the time being engaged in the carriage of goods or passengers between a port at India and a port abroad and that since the vessel carried some goods from Bombay which were intended for delivery in Madras and Calcutta, it was for the time being engaged in carrying coastal goods. The Court observed that, the said contention did not appear to be correct because the vessel was principally engaged in delivering cargo intended for Madras and Calcutta, which it had taken at ports abroad and if in the course of its voyage if the ship took some Indian cargo, it would not be said to be engaged in carrying coastal goods because the main purpose of the voyage was to deliver goods at Indian Ports which the vessel had brought from foreign ports.
31. The said observations of the court, if at all would go against the submission of the learned counsel for the Union of India in this case, instead of supporting him. The said observations would show that any vessel which was principally a foreign going vessel, would not lose its character even if it temporarily engaged in some coastal trade mainly with a view not to waste its carrying capacity.
32. Since we are not accepting the said contentions raised by the learned counsel for the Union of India and since we are upholding the conclusion of the learned Judge on the above contentions, we do not think it necessary to consider various other contentions that have been raised by the parties to the Petition.
33. The result, therefore, is that the appeal stands dismissed with no order as to costs.
34. The learned counsel for the appellants had made normal application for leave to appeal to the Supreme Court against this judgment. Leave refused.