2005 Supreme(SC) 1437

2005(8) Supreme 790
Supreme Court of India
(From Customs, Excise and Service Tax Appellate Tribunal, Mumbai)
B.P. Singh and S.B. Sinha, JJ.
Commissioner of Customs (Imports), Mumbai —Appellant
versus
M/s Tullow India Operations Ltd. —Respondents
Civil Appeal No. 5900 of 2004
With
Civil Appeal No. 1882/2004
And
Civil Appeal No. 854 of 2005
All Decided on 28-10-2005
Counsel for the Parties :
For the Appearing : A.K. Ganguly and Rajiv Dutta and S. Ganesh, Sr. Advocates, K. Swamy, S. Beno Bencigar, P. Parmeswaran, Shiv Prakash Pandey, Ms. Rekha Pandey, Shir P. Pandey, Rohitash S. Nagar, V. Lakshmikumaran, Alok Yadav, Rajesh Kumar, R.S. Suri, Advocates.

Important Point
In an exemption notification, an eligibility criteria deserves a strict construction, although construction of a condition thereof may be given a liberal meaning.

Headnote:(i) Customs Act, 1962—Section 25(i)—Exemption Notification—Interpretation of eligibility clause—ONGC, a Govt. of India Undertaking is engaged in the business of exploration and exploitation of oil and gas on shore and off shore—For carrying out seismic survey, the contracts are awarded to the companies specializing therein—A show cause notice was issued by the Customs Department to ONGC—ONGC had applied for grant of exemption certificate—Failure to produce this essentiality certificate before the appropriate authority when importation took place—Both the importers are licensees—Tribunal despite holding that benefit of exemption from duty on imported goods contained in the notifications should not be denied merely on the ground that certificates were required to be produced at the time of importation only, dismissed appeal of ONGC on the ground that the same had not been produced even before it—Whether Tribunal was justified in remitting the matter to the Commissioner—(Yes).

       Held : Both the importers are licensees. Indisputably, they were entitled to the benefit of the exemption notification subject, of course, to the condition that they would produce the essentiality certificate granted by the Directorate General of Hydrocarbons at the time of importation of goods. Grant of essentiality certificate was not in the hands of the assesses. It was a function of a department of the Central Government. The essentiality certificate admittedly was not granted by the Directorate General of Hydrocarbons within a reasonable time. The importers could not be blamed therefor. It is possible that delay in granting the said essentiality certificate was by way of default on the part of the authorities concerned. The essentiality certificate granted in favour of ONGC refers to the notification, the relevant certificate number of the table, list 11 and condition number 34 or 36, as the case may be, of the notification. It even refers to the serial number of the consignments. The serial number of the tapes had also been mentioned therein. Except for the purpose of grant of benefits under the said exemption notification, the said essentiality certificate would not serve any other purpose whatsoever. Construction of an eligibility clause contained in an exemption notification depends inter alia upon the purpose for which an exemption is sought to be granted. The exemption notification was issued by the Central Government in exercise of its power conferred upon it under Sub-section (1) of Section 25 of the Customs Act. An exemption thereunder is granted, if the Central Government is satisfied that it is necessary so to do in public interest. Such exemption can be granted either absolutely or subject to such conditions, as may be specified therein. Such conditions are required to be fulfilled before or after clearance as may be specified. Such exemption would be in relation to the goods of specified description from the whole or any part of duty or customs leviable thereon. (Paras 23 to 25)

       ONGC is a licensee for exploration of petroleum products. ONGC has specifically been mentioned at Serial No. 182 of the said notification. It is not in dispute that importation, if any, has been made in connection with petroleum operations to be undertaken under petroleum exploration licenses granted by the Government of India on nomination basis. The benefit of exemption notification would inter alia be available to the licensee if it is shown in terms of a certificate granted by the Directorate General of Hydrocarbons and the Ministry of Petroleum and Natural Gas that the imported goods are required for petroleum operation referred to in clause (a) of condition No. 34 and under the licence referred to herein. (Para 27)

       Furthermore, it is also well-settled that the Legislature always intends to avoid hardship. In a situation of this nature, the exemption notification cannot be construed in a way which would prove to be oppressive in nature. However, we do not intend to lay down a law that delay on the part of the authorities in granting such certificates would automatically enable an assessee to obtain refund. Each case has to be judged on its own facts. We, however, do not agree with the contention of Mr. Lakshmikumaran that by reason of a public notice issued by a Custom House situate in a State, the effect and purport of statutory notification can be taken away. In terms of Section 151A of the Customs Act, it is only the Board which may issue instructions. Even under the aforementioned provision, the Board exercises a limited power. (Para 39 & 40)

       Having regard to the facts and circumstances of this case, we are of the opinion that the Tribunal has committed no illegality in remitting the mater back to the Commissioner. Civil Appeal No. 5900 of 2004 is, therefore, dismissed. (Para 41)

       (ii) Interpretation of Statutes—Exemption Notification in Fiscal Statutes—Ordinarily, golden rule of literal interpretation must be given effect to—However, where literal interpretation gives rise to an anomaly or absurdity, the same should be avoided—Exemption notification cannot be construed in a way which would prove to be oppressive in nature—Customs Act, 1962—Section 25(1).

       Held : The principles as regard construction of an exemption notification are no longer res integra; whereas the eligibility clause in relation to an exemption notification is given strict meaning wherefor the notification has to be interpreted in terms of its language, once an assessee satisfies the eligibility clause, the exemption clause therein may be construed liberally. An eligibility criteria, therefore, deserves a strict construction, although construction of a condition thereof may be given a liberal meaning. (Para 36)

       It is true that ordinarily, the golden rule of literal interpretation must be given effect to. But it is also well-settled that where literal interpretation gives rise to an anomaly or absurdity, the same should be avoided. (Para 38)

       Furthermore, it is also well-settled that the Legislature always intends to avoid hardship. In a situation of this nature, the exemption notification cannot be construed in a way which would prove to be oppressive in nature. However, we do not intend to lay down a law that delay on the part of the authorities in granting such certificates would automatically enable an assessee to obtain refund. Each case has to be judged on its own facts. (Para 39)