S.B. Wad, J.
(1) The operative part of the order was pronounced by me on 21-3-80. The reasons for passing the order are now stated. The point .of controversy in this writ petition centre round importation of skimmed milk powder meant for distribution to children and poor people in the International Year of Child, 1979. The milk 'powder was donated by a foreign donor to the petitioners. Petitioners Trust is a wellknown social organisation devoted to social work, principally, the family planning. The unfortunate victims of the controversy are the children and slum dwellers. The government have 3 special social obligation towards children arid poor people. The Directive Principles of the Constitution create a fundamental duty in this regard. The resolution of the United Nations declaring 1979 as a Child Year further emphasis this obligation. The role of voluntary social organisatins in regard to the social and welfare programmes is crucial and is repeatedly emphasised by the planners. The administration, however, attimes loses sight of this broad scheme and gets bogged down on short-term objectives. The result of such administrative short sightedness here is tragic hold up of the vital food for children over a year. Denial of food is, itself a food for thought and 'concern in the present case.
(2) The petitioners are the trustees of a charitable trust, registered with the Charity Commissioner, Bombay, 'since 1970. The trust is recognised by the Government of Maharashtra as U.P.C.C. and given regular grant-in-aid. The trust is also assisted by Bombay Municipal Corporation financially. The work of the trust is appreciated by the Union Ministry of Health and Family Welfare. The trust is affiliated To Maharashtra United Nations Association and Unicef, in the sphere of the social work. The trust runs an institution where it renders wide spectrum of social, public and medical services including propagating family planning programmes, undertaking family planning measures, devising and implementing immunisation programmes and catering to the social hygienic, medical and nutritive needs of the poor and needy sections of the society. The trust distributes free of costs, items of medicine and vitamins and renders free medical service.
(3) Sometime prior to November, 1178, one B. S. Aujala, Managing Director of B.S. Aujala Private Limited, Singapore, visited the institution run by the trust in Bombay. He was very much impressed by the social work dons by the trust-and expressed' his desire to donate free gift skimmed milk powder of the value of one million dollars for free distribution among children and poor. The petitioners immediately contacted the customs authorities, to know whether-they can.get an exemption from the customs duty and import restrictions. A copy of the letter' from 'B. S. Aujala/Private Ltd., making the offer of the free gift, was also attached to the said letter. Ministry of Finance informed the petitioner that such free gifts of food stuff were exempted from Customs duty and duty importation vide customs notification No. .142 dated 16th July, 1977. A copy of 'the notification was also sent to the petitioner by the Ministry of Finance. One of the requirements of the said notification was, that organisation must secure certificate from the State. Government recommending exemption. On 12th, February, 1979 the government of Maharastra issued the required certificate inter-alia stating: 'Distribution of milk should be free in slum. areas and. organisation should not sell milk under any circumstances.' The petitioner, then approached the customs authorities for exemption. The Assistant Collector of Customs, Bombay by this letter dated 15th February, 1979 granted exemption from customs duty and import, restrictions under Notification dated 16-7-1977 (issued under section 25(1) of the Act). He also took note of the certificate from the Government of Maharashtra.The letter finaily state J:
'MILK' power when imported would thereforee, be released of duty provided you give an undertaking to produce a certificate from the Government of Maharashtra regarding distribution of the same.'
Under the notification inquestion the ememption was to be finally operative after its free distribution was certified by the State Government. '
(4) Aftercompleting all the necessary formalities for free importation of the milk powder, the petitioner informed the donor company at Singapore. In April, 1979, Donor company informed the petitioners that they had directed an agency in Denmark to ship two consignments each of about 500 tons per ship M.S. 'Fortune Glory' and M. S. 'Khadijaan'. Vessel 'Fortune Glory' arrived in Bombay on 24-7-1979. However, shipment was not allowed to be cleared by the customs authorities. On contacting, the customs authorities informed the petitioner trust that on 18th June, 1979, another notification was issued by the Ministry of Finance, Government of India, superseding the original notification dated 16th July, 1977, under section 25(1) of the Customs Act. The said notification, of 18th June, 1979, made one important change. The earlier notification required that the donee importer should be a charitable organisation. The new notification, in addition, required that the donor organisation should also be a charitable organisation. The notification, also. empowered Assistant Collector, Customs to refuse exemption if he was satisfied that gift was not bonafide. The relevant portion of the notification reads:
'GOVERNMENTOF India Ministry Of Finae Department Of Revenue New Delhi, the 18th June, 1979. Notification Customs G.S.R. No In exercise of the powers centered bysubsection (1) of section 25 of the Customs. Act, 1962 (52 of 1962) and in supersession of the notification of the Government of India, Department of Revenue and Banking (Revenue Wing) No. 142-Customs, dated the 16th July, 1977, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts foodstuffs, medicines, medical stores of perishable nature, clothing and blankets with when imported into India by a charitable organisation in India as free gifts by a charitable organisation abroad or purchase out of, donations received abroad in foreign exchange by charitable organisation in India, for free distribution to the poor and the needy without any distinction of caste, creed or race, from (a) the whole of the duty of customs livable thereon under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975); and (b) the whole of the additional duty livable thereon under section 3 of the said Custom Tariff Act, subject to the following conditions, namely:-. (i) The Assistant Collector of Customs is satisfied, having regard to the activities and bonafides of the importing organisation the areas of its operations; its financial resources; the status of the donor or organisation; the nature, value and quantity of the goods imported; the food and surtorial habits of the people amongst whom the imported goods are to be distributed and the climatic conditions in the areas where the goods are to be distributed, that the goods are bona fide gifts for free distribution to the poor and the needy without any distinction of caste, creed or race.'
(5) It may be interesting to note that the government changed its policy again and removed the said requirement (Of the foreign donor being also a charitable organisation) within three months. This was accomplished by the third notification under section 25(1) of the Customs Act, dated 7th September, 1979. Thus restriction, that a foreign donor should be acharitable organisation, was operative only for a short period of 21 months. To continue the narrative, after the refusal of the customs authorities, to release the ship 'Fortune Glory', the petitioners approached the Central Government on 14th August, 1979. They urged the government to issue a special order of exemption under section 25(2) of the Customs Act. In the said letter, the petitioners informed the Central Government that donor had informed them as early as April, 1979, that two ships 'Fortune Glory' and 'Khadijaan' were already booked for carrying 500 tons each of the milk powder. They brought to the. notice of Central Government that when shipment actually came through and they produced the documents, the customs authorities informed them of the new notification and refused to release the shipment. They further informed that after receiving a copy of the new notification, they forwarded the same to the donor and requested him to stop further shipment. However, the donor informed them on telephone that. they had already opened an irrevokable letter of credit for million U.S. Dollars in favor of shipper in Denmark much before the notification and no cancellation of shipping of additional milk powder was possible. The petitioner further wrote. 'So there are now before us two main problems first urgent and needing immediate decision and action is of milk which has been already shipped, is now lying in the warehouse and which needs to be cleared before it gets spoiled; secondly of the irrevokable letter of credit which the petitioner has opened for giving free gift much before the notification'. The petitioner then requested the Central Government:
'WE,therefore, request you to exempt shipment which has already arrived, from duty and Itc under prior notification and give consideration for the remaining of the shipment as the donor has opened irrevocable letter of credit much earlier than a notification, which cannot be revoked by them due to the amendment.'
5A. After considering the exceptional circumstances of the case, the Central Government issued a special order on 17-8-79 granting exemption to entire quantity of milk powder under section 25(2) of the Act. That ship was thereafter released. The second ship arrived at Bombay port after the notification dated 7-9-1979, nad was also released. However, the Assistant Collector subsequently withdrew the release orders on the ground that the orders were 'inadvertantly' passed. The Department then, issued show cause notices and the Collector passed orders imposing duty and confiscation of goods. The Board confirmed the said orders.
(6) Notifications dated 16-7-1977, 18-6-1979 and 7-9-1979, exempting goods such as foodstuffs, medicines medical stores by charitable organisations, are issued by the Central Government under section 25(1) of the Act. The petitioner, in this petition claim exemption under the order of. the Central Government dated 17-8-1979. This order.was issued by the Central Government in exercise of the powers under section 25(2) of the Act. The Collector of customs and the Board held that this notification, in so far as it purported to exempt goods arrived prior to the order was not applicable and was bad in law. The Collector and the Board treated the order non est. and rsfused to give benefit of exemption to the petitioners. The petitioners have challenged competence of the Collector and the Board in ignoring the order of the Central Government. They have also assailed the Board's finding that importation of the second shipment was not bona fide. The petitioners pray that the show cause notices, confiscation orders and the orders of the Collector and the Board be quashed. They further pray that the milk powder be handed back for free distribution.
(7) Let us first examine the scope and nature of the Central Govt's powers under the two sub-sections of section 25. Section 25 reads:
'POWERto grant exemption from duty: (i) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, bynotification in the Ofificial Gazette, exempt generally either absolutely or subject to such conditions (to be fulfillled before or afterclearance) as may be specified in the notification goods of any specified description from the whole or any part of duty of customs livable thereon. (ii) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by special order in each case, exempt from the payment of duty, under circumstances of an exceptional nature to be stated in such order, any goods on which duly is leviable.
(8) For appreciating the respective submissions, it is necessary to refer sections 12(1) and 15(l)(a) of the Act also. They run as follows:
'12(1)Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Indian Tariff Act, 1934, or any other law for the time being in force, on goods imported into, or exported from, India.' 15(l)(a) The rate of duty, rate of exchange and Tariff valuation, if any, applicable to any imported goods, shall be the rate and valuation in force (a) in the case of goods entered for home consumption under section 46. on the date o which a bill of entry in respect of such goods is presented under the section.'
(9) The petitioners submit that on true and correct reading of the order dated 17-8-79, it is clear that the order is not retrospective. (2) The opening words of section 12, (which is a charging section), 'except as otherwise provided in this Act, or any other law for the time being in force' read with section 25(2) of the Act indicate that the normal rule of construction against retro-activity is varied by the legislature in regard to exemptions from payment of customs duty. (3) The power of the Central Government under section 25(2) is a special power which indicates that the legislature did not want to the down the Central Government with any fetters, including that of retro-activity. (4) The object and scheme of the Act make it obligatory on the authority subordinate to the Central Government to act in Compliance with the orders of the Central Government, including the special orders of exemption under section 25(2) of the Act. In other words, the Collector and the Board cannot sit in judgment over the orders of Central Government and challenge the legality of the orders of the Central Government.'
(10) Let us analyze the provisions of section 25(1) and 25(2). Both under section 25(1) and section 25(2) the orders can be issued only if the Central Government is satisfied that such orders of exemption are necessary in public interest. A notification under section 25(1) can be issued in regard to the goods of a specified description only. Exemption can be granted absolutely, i.e. without any condition or with such conditions as are specified. The exemption can be from the whole of the duty or from any part of the duty leviable. An order under section 25(1) is a. general order and must take form of a notification. The Publication of notification in the Official Gazette is mandatory.
(11) On the other hand, exemption under section 25(2) can be granted by the Central Government by means of a special opder (and not by the notification). An Exemption can be granted in respect of any goods, and it is not necessary that they should be goods of specified description. The Central Government must pass a special order in each case. Naturally the Central Government must be satisfied about the merits and necessity for exemption in each case separately. There Is no power to impose any conditions while permitting the exemption from duty. Being a special power to be exercised in exceptional circumstances, the section requires that the Central Government must record what exceptional circumstances weighed with lhs Central (Government in granting the exemption
(12) It would be at once clear from the distinct language of section 25(1) arid 25(2) that an order under section 25(1) is a general order in the nature of legislation. The word 'Notification' in section 25(1) show that such general order is in the nature of delegated legislation, but legislation nonetheless. The order under section 25(2) is not an order of a general nature but a 'special order' passed in 'each case'. The question is, can we import the prohibition of restrospectivity in regard to an order passed under section 25(2). It can be assumed for the present purposes, that a notification under section 25(1) would be bad if it has the effect of exempting goods, which have already arrived at a port, because that would amount to giving retrospective effect to a notification.
(13) The counsel for the respondents submits, that the bar of retrospectivity applies to order under section 25(2) also., He has relied upon Cannanore Spinning & Weaving Mills vs . Customs Collector : 1978(2)ELT375(SC) . I do not think that this authority helps the respondents. Firstly, in the decision cited, the orders were issued under rule 8(1) of the Central. Excise and Salt Act rules which is in parmateria, with section 25(1) of the Customs Act. These are not orders similar to the orders under section 25(2) of the Customs Act. Secondly, the legislative schemes of the Central Excise arid Salt Act Customs Act) are differant. The Central Excise and Salt Tax Act makes all manufactured goods liable to excise. The Act empowers the rule making authority to frame rules regarding exemption. Under the said rule making power, the Central Government had issued the rules, which are the subject matter of the said decision. The Excise Act does not. directly confer the power of granting exemption. On 'the other hand all the goods imported or exported are not per se liable to duty. The Act. itself has carved out certain areas, where customs duty would not be attracted. If exemption from payment of customs duty is granted by any law other than the the Customs Act, the goods are not liable to customs levy. So are the cases where the exemption is granted by the Central Government under section 25(1) or section 25(2) of the Act. Inorder words no taxing event under section 12 of the Act takes place, if the goods are covered by exemption order. To use the language of the Civil Procedure Code, no cause of action accrues, exposing the importer or exporter to the levy where the goods are already exempted by the Central Government. ..
(14) The notification, in that case, was issued in exercise of powers under Rule 8 of the Central Excises Rules (1944). Although the notification was issued on February 16, 1963, it was deemed to have taken effect from August 1.7, 1962. The notification thus expressly aimed at giving retrospective effect by a deeming fiction. The Supreme Court held that the rule making authority had not been vested with the powers under the Act to make rules with retrospective effect. Consequently; the notification was beyond the powwers of the authority. The impugned order under section 25(2), in the present case did not attempt to do anything of this sort. The case, in fact, helps the petitioners because the counsel for the department in that case did not support the impugned demand on the basis of retrospective effect.
(15) But a more fundamental question must be answered at this stage. Is the impugned order under section 25(2) either in fact or in law, 'retrospective'. An order referring to some past events 'is not necessarily or invariably an order falling within the mischief of retrospectivity.
(16) A statute 'is not properly called a retrospective statute because a part of the requisites for its action is drawn from a time antecedent to its passing.' (Craies on Statute Law, P. 387 7th Edition) Mischief of retrospectivity lies in taking away or impairing vested rights, or creating new obligations or imposing new duties on citizens. There is a great and apparent difference between making an unlawful act lawful and the making an innocent action criminal and punishing it as a crime' (Craies on Statute Law, p. 389 7th edition). The courts frown at creation of new penalties but does not stand in the way of a relief granted by retrospective operation of an enactment. The 'mischief must be ascertained by looking at the general scope and purview of the statute, the remedy sought to be applied and considering the former state of the law and what it was the legislature contemplated (Fardo v. Bingham (1870) L.R. 4 Ch., ApP. 735.
(17) In the present case. the Government of Maharashtra recommended and permitted the goods to be imported by its letter dated 12-2-1979. On 15-2-1979 the customs department issued a letter permitting the importation of goods, and granting exemption from the payment of duty. After intimation of the clearance from the State Government and the Central Government, the donor opened a letter of credit and gave direction for the shipment of the' goods. When the two governments gave the clearance, there was no bar that a foreign donor must also be a charitable organisation. The effect of the Central Government's order under section 25(2) is merely to remove a cloud and that to for short period created by subsequent notification of the Central Government dated 18-6-1979. On the facts of the case, I hold that impugned notification of the Central Government under section 25(2) is not retrospective in operation.
(18) Tht question can be looked at-from another angle. In the present case, a well; known charitable organisation, wanted to import skimmed milk powder for distribution among the children of the slum dwellers during the 'child year'. The Central Government has special responsibility and obligation towards welfare of children and weaker sections of society under the Directive Principles of Constitution. The powers under section 25(2) are plenary and of widest amplitude to cope up .with all difficulties and to fufil all such Obligations. Considering these wider implications, I would not like to sultify these powers or to render them ineffective. To put it differently, would be slow to accept any construction which would take away the special character of these powers by applying the supposed principle of retrospectivity.
(19) The counsel for the respondents then submits that notification under section 25(1), being general in character must always prevail over a specific order under section 25(2). He submits that I must read the additional condition viz. the Collectors power to refuse importation if he is satisfied that the requirements of the said notification are not complied with imposed by the Notification under section 25(1) in the order under section 25(2). Factually, the submission is that the power of the Collector to satisfy himself that importation is bona fide. must be read in the impugned order. The counsel submits that the impugned order under section 25(2) was passed only because the petitioners made the grievance against the new conditions imposed by the said order under section 25(1). I cannot accept this submission. It is totally misconceived. An order under section 25(2) can beissued, where there is no prior notification under section 25(1). So also such an order can be issued in spite of a contrary notification under section 25(1). Section 25(1) expressly empowers the Central Government to impose conditions, if necessary, while granting an exemption. There is no such provision in section 25(1). Absence of inch a clause in section 25(2) is not difficult to understand. A key to section 25(2) is the special character of the order passed in exceptional circumstances. The rule of construction reading a general order overriding a specific order is not applicable in this base. The rule of construction directly relevant is that a special power prevails over a general power.
(20) Even assuming that such conditioni can be read by implication in section 25(2), the difficulty for the respondent is not over. Because, the impugned order under section 25(2) althogh a subsequent order does not even indicate to. The notification relied upon by the respondents, was issued prior to the impugned notification under section 25(2). How it can have an overriding effect on the subsequent notification. It is reasonable to presume that the Central Government was aware of the said condition imposed by the earlier notification under section 25(1) and still preferred not to impose it in the special carder under section 25(2). Considering the nature of the two powers, I cannot see how a notification under section 25(1) can in law have an overriding effect over an order issued under section 25(2). But even assuming that a: general notification under section 25(1) can supersede a special order under section 25(2), the Notification must be a subsequent Notification lo that of an order under section 25(2) and must, in so many words purport to do it.
(21) This brings us to a question regarding the competence of the Collector and the Board in relation to the order of the Central Government under section 25(2). It may be noted, at the outset, that the impugned order under section 25(2) is still an operative legal order, as the same is not withdrawn by the Central Government. The Collector and the Board, under the Act are authorities subordinate to the Central Government. Their powers are defined by the Act. The powers in the nature of appeal and revision are specified by section 128 and 130 of the Act. On the basis of hierarchy of authorities created by the statute, these sections provide that an appeal or revision would lie in regard to the orders passed by the respective subordinate, authorities. There is no power to revise or to read down or to ignore or to bye-pass the orders of the 'highest' authority namely the Central Government. The learned counsel for the respondents, however submits, that the Collector and the Board, in exercise of their quasi-judicial powers are entitled to ignore the orders of a statutory authority including the Central Government if they are not legal orders. This question is of great importance for the administration of all the enactments imposing tax or duties. In particular, the question has vital implications to the enforcement of customs Act, which has national as well as international signification.
(22) Let us first consider the nature of the order passed by the Central Government under section 25(2) in this context. Normally, power to exempt from an obligation created by a statute is regarded as a legislative power, if it is a general power. But if it is a special power exercisable in an individual case can it be described as a legislative power If not, is it a purely executive or administrative order But, since the order is passed on the objective circumstances and on consideration of the special grievance of a citizen, vitally affecting his civil rights, does not the order partake character of adjudication? It is recognised by all authorities on administration law that classification of a given action in- these three departments is an extremely difficult task. 'As a general proposition, rule-making is the process by which the administrator lays down new prescriptions to govern the. future conduct of those subject to his authority; adjudication is the process by which the administration applies either law or policy to the facts of a particular case. Rule-making is general and looks only to the future adjudication is particular and looks also to the past.' 'Legal control of government' by Bernard. Schwariz and H.W.R. Wade f. 93 (1972 Edition). Administration law developes with the needs of administration. The legal categories, such as legislative, executive and judicial, cannot, thereforee, have the last word. The complexity of modern administration cannot be tackled without the amalgam of the powers falling under these three departments. Good administration is the pole star, legal categories are the path finders.
(23) If an order under section 25(2) is quasi-judicial in nature, the subordinate authorities such as Collector and Board are powerless to challenge Or ignore it. This is a sound judicial principle. But even if it not, the subordinate authorittes must comply with the statutory orders. The area of operation at subordinate level in the administrative process is small and vision of the administrative problems is necessarily narrow. These authorities are concerned with short term, immediate and smaller administrative problems. Import and export are conditioned by international requirement. They involve fundamental policy considerations. Coming to the la,cts of the present case, permitting import of free gift of milk powder from donor abroad involves a policy consideration. The social obligations to children and poorer sections of society are also matters of higher national policy and programme. It is beyond the subordinate authorities to comprehend these bigger policy consideration. From purely administrative point of view, the subordinate authorities must comply with- the orders of the' Central Government and cannot fault them.
(24) .INDEED, it cannot be presumed that the Central Government does not know the elementary principles of law that all legislations are prospective in their operation. It must further be presumed that the Central Government knew that it was exercising a special and somewhat extra ordinary power to meet the administrative needs. The very fact that the Central Government has not cancelled the impugned order, even after the Notification dated 18th June, 1979 was promulgated, fortifies this conclusion.
(25) The learned counsel for the respondents has led stress on the provisions of section 15 of the Act in support of his contention, that the impungned order under section 25(2) was bad in law for the vice of retrospectivity. The argurfient is that the date of bill of entry in the present case is prior to the passing of the impugned order. According to him, the date of bill of entry is the decisive date. A Division Bench of the Bombay High Court in Shawhney v. Sylvania and Laxman 77, Bom L.R. 380 has held that 'taxable event under the Customs Act, takes place when a ship enters the territorial waters and not When the bill of entry is filed. I am in respectful agreement with the Division Bench. The contention of the respondent is, however, not of much consequence in the interpretation of section 25(2) of the Act. I have already held that the considerations of retroactivity are not relevant for an order under section 25(2) and that in fact, the impugned order is not retrospective in character. In this context I may also refer to the observations of the Board regarding the alleged misrepresentation by the petitioners regarding the date of importation. The learned Member 61 ttift Board has held :
'BESIDES,as exemption obtained on misrepresentation of fact made by Dr. Pophale of the appellant institution or organisation regarding filing of bill of entry was void ab initio.
The petitioners have strongly denied in their rejoinder affidavit that any such misrepresentation, as alleged, was ever made by the petitioners. Apart from this, the learned Member is wrong in holding that the impugned order had become void ab initio and non-est because of alleged misrepresentation. The Supreme Court in M/s. East India V. Collector of Customs, : 1983(13)ELT1342(SC) has held that an order does not become void ab initio by reason of fraud but only becomes voidable at the option of the Government. I have already noted that the Central Government has not, till this date, cancelled the impugned order. The findings of the Board in this regard are,. thereforee, untenable in law and are set aside.
(26) It is difficult to understand how exemption can be denied to milk powder imported through the second ship 'Khadijaan'. Admittedly, the said ship arrived in the customs barrier after the impugned notification under section 25(2) was issued by the Central Government. The reason for denying the benefit of exemption to the second ship is that the Collector was satisfied that the importation was not bona fide, having regard to the conditions laid down in the notification dated 18-6-1979. I have already held that the said notification under section 25(1) does not override or supersede the impugned notification under section 25(2) of the Act. The impugned notification does not lay down any conditions and it is wrong to read the conditions laid down by prior notification in the subsequent special order issued by the Central Government. I hold that milk powder imported through the ship 'Khadijaan' is also entitled to exemption under the impugned order under section 25(2) of the Act.
(27) Apart from this, the findings and the approach of the Board (as also the Collector) in passing the impugned orders is so perverse that orders must stand vitiated on this ground alone. The learned Member of the Board has picked up some stray sentences from the letter written by the petitioners dated, 14th August, 1979, (to the Central Government) and has held that the petitioners themselves did not ask for any exemption to the importation of the milk powder through the second ship. I have carefully gone through the letter dated 14th August, 1979. The. following passages would demonstrate how the learned Member was wrong in this regard :
'THEdonor informed us in April, 1979 that they will go through the shipment. They have sent two consignments so far each of about 500 tonnes per ship M. S. 'Fortune Glory' and M. S. 'Khadijaan'.... .When the shipment actuary came through and we produced the documents, at that time we were informed of the said change (notification dated 18-6-79). We have then immediately sent a copy of the new notification to the petitioner and requested him to stop further shipment to which 'a reply came by the telephone that he had already open- ed a irrevokable letter of credit for one million U.S. Dollars in favor of shipper in Denmark much before the notification, which cannot be cancelled because .of the amendment. So there are now before us two main problems. First, urgent and needing immediate decision and action is of the milk powder which is already shipped, is now lying in the warehouse and which needs to be cleared before it gets spoiled. Secondly, of the irrevokable letter of credit which the petitioner has opened for giving the free gift much before the notification........ We, thereforee, request you to exempt shipment which has already arrived, from duty and I.T.C. under prior notification and give consideration for the remaining of the shipment as the donor has already opened irrevokable letter of credit much earlier than the notification which cannot be revoked by them due to amendment.'
(28) The learned Member of the Board has further ignored that the letter in question has repeatedly referred to the entire quantity of the milk powder supplied by the donor. The letter also refers to the exemption order issued by the Collector of Customs on 15-2-1979 arid the letter of the Government of Maharashtra dated 12th February, 1979 recommending and permitting importation of the total quantity milk powder. None of those letters restricts exemption only to the part of the milk powder. The impugned order under section 25(2) of the Act, does not restrict exemption only to milk powder imported through 'Fortune Glory'. The order states that the exemption was available 'to goods in question'. This obviously ha,s a reference to all the goods mentioned in the petitioners' letter dated 14-8-1979. It was not permissible to the learned Member of the Board to interpret the impugned order according to his whim or to read any restriction or limitation in the impugned order.
(29) The petitioners filed the present writ petition immediately after the show cause notices were served on them. The Division Bench while admitting the writ petition, issued an order staying the operation of the show cause notices. However, since the stay order could not be communicated to the Collector in time, exparte orders were passed against the petitioners. The petition was thereafter amended. Since the Division Bench was of the opinion that the petitioners should pursue the remedy of appeal to the Board before the writ petition was heard, the petitioners preferred the appeals to the Board. Along with the appeals, the petitioners filed the copies of writ petition (as amended) and other documents. They also gave the written submissions. This is clear from the order of the Board itself. However, the learned Member of the Board in paragraph 3 has referred only to the two points and recorded his findings on them. The ' grievance of the petitioners is, that the documents produced by the petitioners and the submissions made are not considered by the learned Member. As indicated above, the learned Member has failed to look into the admitted facts disclosed in the government communications as well as the representations of the petitioners. This infirmity has resulted in the conclusions which are without evidence and which are in the nature of surmises.
(30) The Board has further held :
'THATthe evidence on record clearly establishes that the goods were not intended or capable of being distributed free of charge to the needy and poorer under the supervision of the Maharashtra Government and that the appellants who were an organisation for promotion of family planning, were not equipped for or capable of such free distribution as is evident from their approaches to different organisations and institutions.'
The Board, while exercising appellate power, was entitled to the reappraisal of the facts. The order, however, does not disclose that such reappraisal of the evidence was made or the submissions of the petitioners are considered in the light of challenge 10 findings of the Collector. An administrative adjadication, by way of appellate order must at least disclose application of mind to the evidence on record and .the submissions ofthe parties. Hearing before the Administrative Tribunals is not an empty formality. I haw been taken through the evidence on record and I am satisfied that the Collector's findings cannot be sustained in law. Had the Board applied its mind, I am sure, the orders of the Collector would not have been upheld.
(31) The bill of entry of the ship M.V.'Khadijaan' was presented to the customs authorities on 8-8-1979 but the Ship actually entered the port on 10-9-79. By this time the third notification of the Central Government under section 25(1) of the Act was issued on 7-9-1979. Although, the petitioners were exempted from payment of customs duty and import restrictions by the order of the Central Government dated 17-8-1979, the Collector assumed (Contrary to fact) that the petitioners were claiming exemptions, under the third notification dated 7-9-1979, issued under section 25(1) of the Act. The petitioners submit that even assuming that the notification dated 7-9-1979, was applicable, the Collector gravely erred in holding that the coanditions prescribed by the said notification were not fulfillled by 'the petitioners. Although a number of irrelevant grounds were mentioned inthe show ca,use notices the Collector by his order dated 24-12-1979 finally held that the petitioners had acted contrary to the spirit of the said' notification by committing four infractions. The Collector held that the importation was made contrary to the Customs Act, 1962 and the Imports and Exports (Control) Act, 1947. The Collector, thereforee, ordered confiscation of the milk powder. On reading the Collector's order I am satisfied that the petitioners' challenge must be upheld. The first objection raised by the Collector is, that the petitioner trust does not have manpower, experience and machinery to handle these huge stocks of skimmed milk powder. This cannot be hed as a ground against 'the petitioners on the basis of the evidence on record. The Collector has completely ignored the impugned notification dated 17th August, 1979 issued by the Central Government under section 25(2) of the Act. The Central Government had issued the order of execution on an express condition that 'skimmed milk powder would be distributed among poor and needy under the supervision of the Department of Social Welfare, Government of Maharashtra.' This condition was inserted because the petitioners in their letter dated 14th August, 1979, had informed the Central Government 'we are small organisation capable of distribution only through State Government.' The Collector even ignored the letter of his own office dated 15th February, 1979 permitting the petitioner to import the milk powder. The said letter reads :
'from the doments produced, it seems that he had already received a certificate from the Government of Maharashtra as required under the relevant Government of India notification. Milk powder when imported would, thereforee, be released free of duty provided you give an undertaking to produce a certificate from the Government of Maharashtra regarding distribution of the same.'
The Collector has referred to certain charitable agencies and has stated that the petitioners tried to distribute the milk powder through the said organisation. There is no allegation that the petitioners were not distributing the milk powder to the poor and needy people nor there is any allegation that the petitioners were selling the milk .powder to other agencies and making profit. The finding of the Collector is contrary to evidence on record and is based on irrelevant consideration.
(32) The second ground mentioned in the Collector's order is that distribution of milk powder to children and poor people, is ultra virus the objects of the petitioner's trust. The ground is totally misconceived. The only requirement of the relevant notification under section 25(1) is that the donee organisation should be a charitable organisation and nothing more. The reference to the trust deed was, thereforee, totally irrelevant except for the purpose of finding out whether the trust was a charitable trust or not.
(33) The third ground mentioned in Collector's order is also irrelevant and extraneous. There is nothing wrong in the petitioner's trust to collect donations for payment of clearance charges. and storage charges from outsiders. The clearance charges and storage charges of 40000 bags are bound to be very high. The donee organisation was not-selling the milk powder or making profit by the same. Being a charitable organisation whose principal activities are themselves .run on public donationa and grants from the government, there was no breach of the spirit of notification if the clearance charges and storage charges were collected by public donations. There was no requirement in either of the notifications that the milk powder should be distributed only in Maharashtra. Indeed the Government of Maharashtra by its letter dated 16th. October, 1979 (Annexure 1) has permitted the distribution even. outside Maharashtra. The only condition attached was, that the certificate of free distribution should be produced from the concerned District Magistrate.
(34) The fourth ground in the Collector's order is also without substance and is irrelevant. The Collector has stated that he donor organisation is not a reputed concern and it was hard to believe that they could donate such a large quantity worth of Rs. 51 lacs a afree gift. 1 Apart from a suspicion, there is no evidence or material referred to by the Collector in support of the said observations. Whether a gift is free or not and whether a transaction is bonafide or not, cannot be decided on the suspicion rega rding the reputation of the donor. What is relevant for the notification is that a gift must be free gift and not a general reputation of a donor. Even a bad person cap do charity. After all, Ramayana was not written by Rama but by Balmiki with dreadful antecedents.
(35) A curious aspect of the Collector/Board's order, is, worth noting. The facts and circumstances of importation regarding both the ships are same. The reputation of the donor, the object of the petitioner trust and the capacity of the trust to distribute large quantity are matters common to all importation. The Collector does not hold that 'Fortune Glory' has violated any conditions. He holds that only 'Khadijaan' has transgressed those conditions. 'This is total non-application of mind. On this ground also the orders stand vitiated.
(36) There is no contravention whatsoever of the notification dated 7-9-1979 and the relevant provisions of the Customs Act, 1962 and Imports and Exports (Control) Act, 1947. The order of absolute confiscation of milk powder is, thereforee, illegal and must be set aside. The orders of the Board in so far as they upholdhe orders of the Collector are also illegal and must be set aside.
(37) The order of the Collector of Customs dated 24-12-1979 in regard to milk powder imported through S. S. 'Fortune Glory' is contrary to the order of the Central Government dated 17-8-1979 passed under section 25(2) of the Customs Act. The Collector had no power to go behind the order and read any limitations in the said order. The petitioners have not committed any violation of the provisions of Customs Act and the Imports and Exports (Control) Act, 1947. Consequential orders, absolutely confiscating the milk powder covered by the said ship 'Fortune Glory', is illegal and set aside. The order of the Board in so far as it upholds the order of the Collector is also illegal and set aside. The Board was also incompetent in law to go behind the order of the Central Government passed under section 25(2) and to limit its operation from the date of the order namely 17-8-1979, prospectively.
(38) The show cause notices dated 11th December, 1979, in region to the milk powder imported through both the ships are illegal. The show cause notice in relation to the ship 'Fortune Glory' contravenes the order of the Central Government dated 17-8-1979 issued under section 25(2). The show cause notice in relation to M. V. Khadijaan is contrary to the requirements of the Central Government dated 17-8-1979 under section 25(2) of the Act and the Central Government notification dated 7-9-1979 issued under section 25(1) of the Act.
(39) Consequential orders dated 4-11-1979 and 16-11-1979 imposing customs duty amounting to Rs. 534,853.87 and Rs. 5,30,642.45 in respect of milk powder imported through M. V. Khadijaan and S. S. Fortune Glory, respectively, are illegal and set aside..
(40) The Assistant Collector had cleared the milk powder imported through the said two ships under the provisions of section 47 of the Customs Act. The Assistant Collector had no power under the Act to review his own order. It is candidly admitted by the counsel for the department that the orders of the Assistant Collector could have been revised by the superior authorities but they have not done so. I have already held that the authorities subordinate to the Central Government had no competence to sit in judgment over the orders of the Central Government. The Assistant Collector has stated that the ships, were pleaded, 'inadverfantly'. The reasons given by the Assistant Collector for going behind the orders of the Central Government and reading fanciful limitations in the said orders, are wholy untenable in law. The said orders of the Assistant. Collector reviewing the earlier orders clearing the ships under section 47 of the Act are, thereforee, illegal and set aside.
(41) This brings us to the submission alternatively made by the petitioners. The petitioners submit that even assuming that the importation was not covered by the said notifications of the Central Government under section 25(2), the Central Government and the department were estopped in law from imposing customs duty and requirements of permission under the Import and Export (Control) Act, The petitioners submit that there is a clear, specific and unequivocal representation made by the Central Government, the Customs Department and the Government of Maharashtra. The petitioners, it is submitted, acting on the said representations have changed their position. In addition a grave prejudice is caused to them by imposing customs duty of more than Rs. 10 lacs and subjecting them to other penalties and the coercive process of law. The petitioners rely on the decision of the Supreme Court in M. P. Sugar Mills vs. State, of U.P. : 118ITR326(SC) .
(42) There is good deal of force in the above submission. The facts of the case show that milk powder was not imported clandestinely or by practicing deception. After the receipt of the letter from the donor, the petitioners wrote, to the customs authorities on 23-11-78, for exemption from customs duty and import restrictions. Along with the sad letter they sent a copy of the letter received from the donor and audited statement of accounts of the petitioner trust. Even the donor's letter mentions that the petitioners should first obtain the exemption from the Government. The petitioners had further 'informed the customs authorities that they were charitable organisation and the object of the donations was free distribution of milk powder amongst the children and poor sections of society during the Children Year. After the flew condition was imposed by the Government notification dated 18-6-1979. (that the donor should also be a charitable organisation). The petitioners promptly wrote to the Central Government to exempt them by issuing an order under section 25(2). Copy of the donor's letter was annexed to the said communication. After the customs authorities informed the petitioners to secure clearance from the Government of Maharshtra, the petitioners complied with that arid obtained the clearance from fee State Government. The State Government clarified in the clearance letter that the petitioners shall not sell but shall distribute free said milk powder. 'The petitioners accepted the said conditions.
(43) An additional condition was imposed by the Central Government while issuing the order under section 25(2) to the effect that the milk powder should be distributed under the supervision of the Social Welfare Department of Maharashtra. The said condition was also accepted by the petitioners. The petitioners trust is a reputed charitable organisation in Bombay and was undertaking a social service by distributing free milk powder to children and poor sections of society. The cause was obviously a public cause and there was no monetary benefit whatsoever to the petitioners. The equities are, thereforee, completely in favor of the petitioners and need protection from this Court. The customs department on the other hand did not know its mind. After imposing the condition on 18-6-77, that the donor should also be charitable organisation, the Central Government changed its mind and issued another notification under section 25(1) on 7-9-1979 withdrawing the said conditions and restoring the original position. Perhaps after the imposition of the said condition, the Central Government was itself satisfied that the condition was unreasonable and, thereforee, a special older was issued under section 25(2). The Central Government granted an unconditional exemption to the petitioners. The entire controversy in the. present case has arisen because of the ad hoc and temporary decision of the Central Government to impose the said unreasonable condition. The result is that a charitable organisation has been subjected. to a punitive import duty of over Rs. 10 lacs. The organisation is also threatened with other penalties under the Act. A court cannot sit with .folded hands in such circumstances.
(44) The promise of exemption from import duty and import permission through the letter of Collector of customs dated 15th February, 1979 (Annexure F) the letters of Government of Maharashtra dated 12th February, 1979, and 16th October, 1979 and Central Government's special order under section 25(2) dated 17-8-1979, create an equitable right to exemption and effective defense against imposition of penalties/duty liability. The representations made through these communications are specific, unambiguous and irrevokable. Had they been incorporated in a contract they would have been certainly enforced by any court of law.
(45) For applying the principle of Promissory estoppel it is not necessary, that 'the party claiming protection should suffer detriment or loss. It is sufficient that the aggrieved party has brought about a change in the original position acting upon the representations made by the Government. There must be a casual link between representations and the change in the position of the aggrieved party. Here, but for the promise of the State Government and Central Government, a charitable organisation would not have risked importation of such a large quantity of milk powder despite, the fact that they were doing social work. However, in this case, I find that a grave prejudice is caused to a charitable organisation by subjecting it to such heavy duty and other penalties. Following the decision of the Supreme Court in M. P. Sugar Mills' case, : 118ITR326(SC) and two Division Bench Judgment's of this Court namely J. S. Vanaspati Ltd. vs. Union of India A.T.R. 1979 Del 122 and M/s. Jasjeet Films Pvt. Ltd. vs. Delhi Development Authority : AIR1980Delhi83 , I hold tha't the respondents are estopped from resiling from their promise and to subject the goods in question to import, duty and import restrictions. I also hold that the respondents are obliged to stand by their promise and exempt the goods.
(46) The learned counsel for the respondents draws my attention to the decision of the Supreme Court in Assistant Collector Central Excise vs. J. S. Exports, reported in : 1979(4)ELT511(SC) , and submits that since the special investigation is pending in this matter, I should not exercise the extraordinary jurisdiction under Article 226 of the Constitution, in favor of the petitioners. In the said decision, the Supreme Court has held that the High Court should be extremely circumspect where the investigation is going on and should not readily release the seized goods. In the present case, the respondents have not furnished any particulars of the pending investigation or the stage at which the investigation stands. The goods in question namely the milk powder are highly perishable. The intention of the donor and willingness of the donee to distribute milk powder free, is connected with another urgent factor. The free distribution was to be made during the Child Year. Another peculiarity of the present case is that under the orders of the Central Government, the distribution is to be done under the supervision of the Government of Maharashtra. Considering the special circumstances of the case. I feel that the extraordinary jurisdiction under article 226 must be exercised.
(47) I (accordingly) declare that the orders of the Central Board of Excise and Customs bearing No. 338-A and 339-A dated 12th February, 1980 are set aside. The orders of the Collector of Customs dated 24-12-1979 (Exhibits 'U' and 'V') are set aside. Show cause notices dated 13th November, 1979' (Exhibit 'L'), 4th December, 1979 ^(Exhibit 'R'), 11th December, 1979 (Exhibits 'S' and Exhibit 'T') are also set aside. Consequently, the seizure order of the 36000 bags of skimmed milk powder and orders imposing duty/penalty are also set aside- I further direct the respondents to immediately release and hand over 36000 bags of skimmed milk powder seized from the petitioners. The petitioners shall distribute all the 40000 bags of skimmed milk powder among poor and needy persons under the supervision of department of social welfare, Government of Maharashtra within six months from the date of this order in accordance with the order of the Central Government dated 17-8-1979 issued under section 25(2) of the Customs Act, as modified by me, in respect of the starting point of the period of distribution. The operative part of the order was already pronounced by me on 21-3-80. Rule made absolute with costs.