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M/S. Granules India Ltd. v. Union of India

Civil Appeal · 2020 INSC 82Decided 23 Jan 2020
Civil Appeal Nos. 593-594 of 2020
Justice Navin Sinha · Justice Krishna Murari

Background

In 1993, Granules India Ltd. imported a chemical called "Acetic Anhydride" duty-free under an Advance Licence Scheme, relying on customs exemption notifications. A later notification withdrew the exemption for imports made after 25.11.1993, but a further clarificatory notification in March 1994 restored the exemption for importers like the company who held licences issued before the withdrawal. Despite this, customs authorities demanded duty on three of the company's import consignments, and the High Court upheld that demand, partly because the company had not placed the clarificatory notification on record.

Decision Breakdown

The Supreme Court held that the High Court's order was unsustainable, since the entire consignment was imported under one advance licence issued before the exemption scheme began, and the clarificatory notification of 18.03.1994 continued the exemption regardless of exactly when each part of the consignment arrived. The Court criticized the government for claiming ignorance of its own notification, holding that the State, as a party to litigation, has a heightened duty to produce relevant documents and cannot hide behind technical burden-of-proof arguments. It relied on an Andhra Pradesh High Court ruling on nearly identical facts and on a prior Supreme Court judgment emphasizing that the State must act fairly in litigation. The impugned orders were set aside and the appeals were allowed.

Lesson Learnt

Government authorities cannot avoid honoring their own notifications or circulars by claiming they were unaware of them: the State is held to a higher standard of diligence and fairness than an ordinary litigant.

Official source (sci.gov.in)View Judgment (PDF)

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