COMMNR. OF CUSTOMS (PREVENTIVE) MUMBAI versus M/S. M. AMBALAL & CO.

Citation: [2010] 15 S.C.R. 937 · Decided: 09-12-2010 · Supreme Court of India · Bench: D.K. JAIN · Disposal: Disposed off

Cited by 4 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2010] 15 (ADDL.) S.C.R. 937 
COMMNR. OF CUSTOMS (PREVENTIVE) MUMBAI 
v. 
M/S. M. AMBALAL & CO. 
(Civil Appeal No. 8235 of 2003) 
DECEMBER 09, 2010 
[D.K. JAIN AND H.L. DATIU, JJ.] 
Customs Act, 1962 - ss. 2(25) rlw s. 11, 111 and 112 and 
s. 25 - Exemption notification issued by Central Government, 
A 
B 
in exercise of its power under s.25(1), exempting certain 
C 
articles when imported into India from payment of duty -
Interpretation of - Meaning of the term 'imported goods' in the 
exemption notification - Plea of respondent that by virtue of 
the said Notification, rough diamonds were exempted from 
payment of duty under the Act and, therefore, adjudicating D 
authority was not justified in directing the respondent for 
payment of duty under the Act for release of the confiscated 
goods (rough diamonds) - Tribunal allowed the respondent's 
appeal by extending the benefit of exemption notification to 
it - On appeal, held: The notification has to be read as a whole 
E 
- If any of the conditions laid down in the notification is not 
fulfilled, the party is not entitled to the benefit of that notification 
- The goods seized in this case cannot be imported into India 
without a licence under the Import Control Act - It is not the 
case of the respondent-firm that the goods were imported with 
F 
a valid licence - Goods so imported cannot therefore, be 
treated to be lawfully "imported goods" within the definition of 
that term in s. 2(25) -
Therefore, the respondent was not 
entitled to the benefit of the notification - 'Smuggled goods' 
will not come within the definition of 'imported goods' for the 
G 
·purpose of exemption notification, for the reason, the Act 
defines both the expressions looking at the different definitions 
given to the two classes of goods: imported and smuggled, 
and if the two were to be treated as the same, then there would 
937 
H 
938 
SUPREME COURT REPORTS (2010] 15 (ADDL.) S.C.R. 
A be no need to have two different definitions - It would be 
contrary to the purpose of exemption notifications to accord 
the benefit meant for imported goods on smuggled goods. -
Notification No.247-Cus. dated 02-08-1976. 
8 
Notification - Exemption Notification - Interpretation of 
- Held: The rule regarding exemptions is that exemptions 
should generally be strictly interpreted but beneficial 
exemptions having their purpose as encouragement or 
promotion of certain activities should be liberally interpreted 
C - General rule is strict interpretation while special rule in the 
case of beneficial and promotional exemption is liberal 
. interpretation. 
D 
Customs Act, 1962 - Object of - Discussed. 
Words and Phrases - 'dutiable goods', 'duty', 'import', 
'imported goods', 'importer' and 'smuggling' - Meaning of -
Customs Act, 1962. 
In a search and seizure In the office premises of the 
respondent-firm conducted by the officers of Customs 
E Department, large quantity of rough diamonds was 
recovered. The partner of the respondent-firm was 
neither able to offer any satisfactory explanation nor 
produce any documents in relation to the import of the 
said diamonds, and the diamonds were seized by the 
F officers. After investigation, a Show Cause Notice was 
issued to the respondent and others wherein confiscation 
of the seized diamonds was proposed. The adjudicating 
authority passed an order confiscating the seized 
diamonds under Section 111 (d) of the Customs Act, 1962. 
G However, an option was given to the respondent to 
redeerll the seized goods on payment of redemption fine. 
The respondent was also asked to pay the appropriate 
duty on the said confiscated diamonds which were 
allowed to be released on payment of redemption fine. In 
H 
COMMNR. OF CUSTOMS (PREVENTIVE) MUMBAI v. 939 
M/S. M. AMBALAL & CO. 
addition, penalty was also imposed on the respondent A 
under Section 112 of the Act. 
Aggrieved, the respondent preferred an appeal 
before the Tribunal. The Tribunal confirmed the 
redemption fine of Rs.60,00,000/- (Rupees Sixty Lakhs 
8 
only) and the penalty of Rs. 25,00,000/- (Rupees Twenty 
Five Lakhs only) on the respondent. The respondent 
thereafter filed a Writ Petition before the High Court but 
later withdrew the same to avail benefit under the Kar 
Vivad Samadhan Scheme, 1998 (KVS Scheme). Pursuant C 
to the order passed under the KVS Scheme by the 
designated authority, the respondent was directed to pay 
an amount of Rs.42,50,000/· (Rupees Forty Two Lakhs 
and Fifty Thousand 

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