S.H. Kapadia, J.@mdashBy this petition, the petitioners seek a declaration that the petitioner No. 1 Company is not liable to pay any customs
duty or additional duty of customs for the imported material cleared between December 30, 1986 and January 21, 1987. The company also seeks
a declaration that they are entitled to clear the material imported prior to December 30, 1986 and lying in bond without payment of any customs
duty or additional duty of customs. The facts briefly are as follows :-
The petitioner No. 1 Company is infer alia engaged in the manufacture of speciality chemicals used in oil industry in connection with oil exploration
viz. Flow Improver under the trade name ''Daitrolite''. In respect of the said chemical, respondent No. 1 from time to time offered diverse
incentives to promote exports from the country. However, in September 1982 new Policy was introduced by Union of India and the incentives of
duty free imports were also extended to deemed exports viz. supplies of diverse products by Indian manufacturer to projects financed by
International Development Association or International Bank for Reconstruction and Development or bilateral or multilateral aided projects. Under
the said new Policy, manufacturers who supplied goods on deemed exports basis also became eligible to import material free of duty for use in the
manufacture of products supplied by such manufacturers as deemed exports. A public notice came to be issued on September 8, 1982 in that
regard and express directions were issued for supplies to be made for aforesaid projects by indigenous manufacturers and for issue of special
imprest licences, subject to fulfilment of certain prescribed conditions, were to be issued. The Government of India, in exercise of powers
conferred u/s 25(1) of the Customs Act and in public interest, by Notification No. 210/82 dated September 10, 1982 exempted from payment of
customs duty and additional duty of customs all raw materials and components imported for manufacture of goods to be supplied to various
organisations mentioned therein. The said Notification specifically stated that it would be valid and in force and effect upto September 10, 1987.
Pursuant to the said Notification dated September 10, 1982, full exemption came to be extended. In 1983 by an amendment to the said
Notification No. 210/82, Oil and Natural Gas Commission was also included as one of the organisation mentioned in the Notification dated
September 10, 1982. Accordingly, public notice was also issued on September 20, 1983 amending the Import Policy for 1983-84 whereby
supplies to O.N.G.C. were also qualified as deemed exports. Under the said Notification, public notice came to be issued qualifying O.N.G.C.''s
supplies as deemed exports with consequential benefits of duty free imports being available to Indian suppliers. It is the case of the petitioners that
pursuant to the above Notification bearing No. 210/82 as amended and in view of the promises/representations/assurances made by the
Government, petitioners entered into contracts with O.N.G.C. on September 9, 1986 for sale and supply of the above mentioned chemicals on the
basis of duty free imports of the raw materials. For the import of the raw materials and for the manufacture of speciality chemicals to be supplied to
the ONGC, the petitioner No. 1 Company applied and the respondent No. 1 acting upon the said representation, issued import licences under the
Duty Exemption Scheme. The petitioners thereafter imported raw materials from time to time. In the present case, we are concerned with the
goods being imported during the period December 30, 1986 upto January 21, 1987 during which period the goods were cleared without payment
of customs duty as shown in Exh.''E'' to the petition. Similarly, statements showing raw materials imported prior to December 30, 1986 and stored
in bond, imported material expected during the period February 1987 upto April 1987 and unutilised value of special imprest licences are annexed
as Exhs.''F'', ''G'' and ''H'' respectively to the petition. The above exhibits are relevant in view of the fact that on January 27, 1987 petitioners filed
three bills of entry for home consumption in respect of 92.2 Mts. of the raw materials stored in bonded warehouses. The respondents refused
clearance of the said goods unless the petitioners paid duty at 25% ad valorem in view of above Notification No. 513/86 dated December 30,
1986 which is one of the impugned Notifications. Being aggrieved by the above impugned Notifications all dated December 30, 1986 by which full
exemption with regard to payment of customs duty came to be partly withdrawn, the present writ petition has been filed.
2. Shri Bharucha, learned counsel appearing on behalf of the petitioners, firstly contended that in the present case goods were imported and stored
in bond even prior to December 30, 1986. This was pursuant to Notification No. 210/82 under which full exemption was granted from payment of
customs duty for five years i.e. upto September 10, 1987 and since the goods were fully exempted when they entered into territorial waters of
India prior to September 30, 1986, there was no question of the Company being asked to pay customs duty at 25% ad valorem. Shri Bharucha
contended that the rate at which imports are chargeable to customs duty ought to be determined u/s 15 of the Customs Act provided such imports
are not wholly exempted when the goods entered into territorial waters of India. Shri Bharucha contended that in the present case the goods
entered into territorial waters of India prior to December 30, 1986 and therefore the impugned Notification Nos. 517/86 and 513/86, dated
December 30, 1986 were not applicable. Shri Bharucha placed heavy reliance in support of his contention on the judgment of the full Bench of this
Court in the case of Apar Private Ltd. and others Vs. Union of India and others, . We do not find any merit in the said contention. As stated
hereinabove, full exemption was granted to the petitioners vide Notification No. 210/82 which was valid for five years. The subsequent
Notification No. 517/86 expressly amended the Notification No. 210/82 and by reason of the said amendment, supply to O.N.G.C. has been
expressly removed from the Notification No. 210/82. This Notification No. 517/86 is thereafter followed by Notification No. 513/86, also dated
December 30, 1986 which indicates that in respect of goods supplied to O.N.G.C., the importer is required to pay duty at the rate of 25% ad
valorem and full exemption with regard to additional duty u/s 3 of the Customs Act. In the above circumstances, the facts of the present case
indicate that the ratio of the judgment of the Full Bench of this Court in the case of Apart Pvt. Ltd. and Others v. Union of India and Others (supra)
has no application to the facts of the present case. We also do not find any merit in the contention of Shri Bharucha that in the present case
exemption was project based and not goods related exemption as generally is the case. In this connection, it was contended that the Notification
No. 210/82 granted exemption to import of raw material used for manufacture of chemicals to be supplied to projects financed by IBRD/IDA or
to goods to be supplied to O.N.G.C. /Oil India etc. The public interest was to encourage manufacture of goods indigenously for effecting supplies
to essential Indian enterprises as a part of the Scheme which was Project Based. In this connection, it was contended that since exemption under
the said Notification No. 210/82 was a part of Project Based Exemption Scheme, the judgment of the Supreme Court in Kasinka Trading and
another, etc. etc. Vs. Union of India and another, has no application. We do not find any merit in the above contention. In Kasinka Trading (supra)
the Apex Court has laid down that the power to exempt flows from Section 25 of the Act, that just as the Notification is issued granting exemption
in public interest, it can also be modified or withdrawn in public interest. In our view, whether exemption is project based or specific goods related
does not make any difference. Moreover, by impugned Notification No. 517/86, exemption to goods supplied to O.N.G.C. stood revoked by
amendment of Notification No. 210/82. In the circumstances, the judgment of the Supreme Court in Kasinka Trading (supra) would squarely
apply. In the present case, Notification No. 210/82 was issued in public interest. By impugned Notifications, it is modified in public interest.
Therefore, the judgment in Kasinka (supra) is applicable to the present case.
3. For the above reasons, there is no merit in the Writ Petition. Writ Petition fails and rule is discharged. Petitioners are directed to make payment
of duty within four weeks from today. In default of payment of duty, the respondents would be entitled to enforce the bank guarantee. In the
circumstances, there will be no order as to costs.
