RAJAGOPAL OIL MILLS CO Vs. COLLECTOR OF CENTRAL EXCISE AND CUSTOMS GUNTUR

JUDGEMENT

(1.) The petitioners in most of the petitions carry on the business of manufacturing rice bran oil by the solvent extraction process and export de-oiled rice bran to the foreign countries. On 2-8-1976, there was an amendment to Schedule II of the Customs Tariff Act, 1975 whereby item No. 21 was introduced at the end of the schedule and it was stated that this item viz., animal feed is liable to export duty at the rate of Rs. 125 per tonne. On the same day, a notification was issued in exercise of the powers conferred under Section 25(1) of the Customs Act, 1962. By that notification, the Government in the public interest exempted animal feed containing not more than 40 per cent protein contents falling under item No. 21 of the Second Schedule of the Customs Tariff Act, 1975 and exported out of India, from the whole of the duty of customs leviable thereon under the second schedule. Subsequently, there was another notification on 22-1-1977 which was in supersession of the notification dated 2-8-1976. By that notification the Central Government in the public interest exempted animal feed falling under item 21 of the second schedule of the Customs Tariff Act, 1975 and specified in the Table annexed to the notification, when exported out of India, from the whole of the duty of customs leviable thereon under the said second schedule. The Table is as follows :

(2.) We are concerned in these writ petitions with de-oiled rice bran exported by the petitioners between the period 22-1-1977 and 13-5-1977. Notices were issued to the exporters of rice bran during this period item 21 of Schedule II to the Customs Tariff Act. Challenging the validity of these notices, these writ petitions have been filled.

(3.) Sri Babulu Reddy, the learned counsel for some of the petitioners who has addressed arguments on behalf of all the petitioners has raised the following contentions : 1. De-oiled rice bran is not at all animal feed within the meaning of item 21 of Schedule II of the Customs Tariff Act. De-oiled rice bran is produced by the solvent extraction process using hexane which has a pungent smell, and in view of the presence of this product, it is repulsive to cattle and therefore, the end product cannot be used as animal feed. 2. Even assuming that it is animal feed within the meaning of item 21 of Schedule II, it is exempted by the notification dated 2-8-1976 as it admittedly consists of less than 40 per cent protein. The subsequent notification of 22-1-1977 which exempts other commodities like cotton seed cakes etc., and the mixture containing any one of those ingredients has not the effect of taking away the exemption granted by the previous notification dated 2-8-1976. 3. If the notification dated 22-1-1977 is constructed as denying exemption to rice bran extract containing less than 40 per cent of protein, the notification is arbitrary and also violates Article 14 of the Constitution inasmuch as it discriminates between rice bran extracts and similar products. 4. As the petitioners and others exported de-oiled rice bran under the impression that it was exempted from customs duty and the subsequent notification of 22-1-1977 had not the effect of removing the exemption the authorities were precluded from levying customs duty on the doctrine of equitable estoppel.