M. JHANGIR BHATUSHA ETC. ETC. versus UNION OF INDIA & ORS. ETC. ETC.

Citation: [1989] 3 S.C.R. 356 · Decided: 17-05-1989 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Dismissed

Cited by 4 judgment(s) · cites 6 · see the full citation network in Lexace

Judgment (excerpt)

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B 
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D 
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G 
M. JHANGIR BHATUSHA ETC. ETC. 
v. 
UNION OF INDIA & ORS. ETC. ETC. 
MAY 17, 1989 
[R.S. PATHAK, CJ. SABYASACHI MUKHARJI, 
· S. NATARAJAN, M.N. VENKATACHALIAH AND 
S. RANGANATHAN, JJ.] 
Customs Act 1962: Section 25(2)-Edible Oil-Import of-
Concessional rate af customs duty in favour of State Trading Cor-
poration-Private importers complaining of differential treatmen~ 
Held necessary in public interest to make special order of exemption. 
The appellants/writ petitioners are private importers of edible 
oils. Under the Import Policy of 1978-79, the Government canalised the 
import of edible oils through the State Trading Corporation. Some of 
the private importers who had entered into firm commitments with 
foreign suppliers, and were now being denied permission to import the 
edible oils, tiled writ petitions in various High Courts. These writ 
petitions were allowed and they were granted licences to import the 
edible oils, in order to honour their commitments. 
From March 17, 1979 the import of edible oils was subjected to 
differential rates of customs duty at the hands of private importers and 
the State Trading Corporation, inasmuch as concessional rate of cus-
toms duty was levied on the imports by the State Trading Corporation 
under the order of exemption issued under section 25(2) of the Customs 
Act, 1962. The order >lated that in view of high international prices of 
vegetable oils and in order to keep the domestic prices at reasonable. 
levels it was considered necessary to exempt the State Trading Corpora-
tion from part of the Customs duty. 
The appellants tiled writ petitions in the High Court of Delhi 
complaining of the differential treatment accorded between the private 
importers and the State Trading Corporation. Similar writ petitions 
were filed in this Court directly. The High Court dismissed the writ 
petitions. 
Before this Court it was contended on behalf of the private 
importers that (i) there was no basis for the differential duty set out in 
H the exemption orders and no real or substantial nexus between the 
356 
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M.J. BHATUSHA v. U.0.1. 
357 
differentiation made· and the object of s. 25(2); (ii) there was no real or A 
substantial distinction between the private importers and the State 
Trading Corporation having regard to the object of the statute, the 
nature of customs duty, the rationale of s. 25 and the professed object of 
the exemption orders under s. 25(2); (iii) the State Trading Corporation 
could pot be equaled with the Central Government; (iv) assuming that· B 
tlte State Trading Corporation could be equated with the Central 
Government or that it was acting on behalf of the Central Government, 
once the Government ventured into the commercial field it donned the 
robes of a trader, and it could not therefore claim any special attribute 
or preference for differentiation; (v) the differentiation proceeded on 
excessive classification, and that resulted in violation of the doctrine of 
equality enshrined in Art'. 14 of the Constitution; (vi) the concession 
C 
must relate to the goods and not to the personality of the importer; and 
(vii) the allegation that the international prices of edible oils were high 
was inconsistent with the reality of the situation. 
Dismissing the appeals. special leave petitions and the writ peti-
D 
tions, this Court, 
HELD: (I) The power conferred on the Central Government 
under s. 25(2) of the Act is to be exercised by it in its subjective satisfac-
tion. The exercise of the power is controlled by the requirement in the 
sub-section that the. exemption order must contain a statement stating 
the circµmstances of an exceptional nature under which the special 
exemption order has been considered necessary. The requirement is 
intended by the statute to ensure that the satisfaction of the Central 
Government concerning the necessity of the order is not reached arbi-
trarily but flows from material relevaljt to the object for which the 
power has been conferred. [361E-G] 
(2) The limitations on the jurisdiction of the Court in cases where 
the satisfaction has been entrusted to executive authority to judge 
the necessity for passing orders is well defined and has been long 
accepted. [365E-F] 
(3) Contracts hy private importers concluded before 2 December, 
1978 were allowed to be worked out after that date without affecting the 
principle that as from December, 1978, the business of importing such 
oils belonged exclusivel

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