Bombay High Court
Sanjay Kumar Agarwal (The Company … vs Union Of India And Ors on 12 June, 2025
Author: M.S. Sonak
Bench: M.S. Sonak
Digitally signed
2025:BHC-OS:8604-DB
by REVATI
REVATI VAIBHAV
KADAM
VAIBHAV Date: 901.WP.872.94(J).DOCX
KADAM 2025.06.12
15:22:03
+0530
Revati
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.872 OF 1994
1. Sanjay Kumar Agarwal
The company liquidator of Biotor
Industries Limited (under liquidation
having his office at Martin Burn House,
2nd Floor, Room No.243,
1, R N Mukherjee Road,
Kolkatta-700001.
2. Mr. Vithaldas G Udeshi
Sett Minat, 13th floor, Peddar Road,
Bombay 400026. ... Petitioners
Versus
1. Union of India
through the Under Secretary
Government of India,
Ministry of Commerce, Udyog Bhavan,
New Delhi 110011.
2. The Joint Director General of Foreign
Trade
New CGO Building, New Marine Lines,
Churchgate, Bombay 400020.
3. Agricultural Marketing Adviser
to the Government of India,
Directorate of Marketing & Inspection,
Ministry of Food and Agriculture,
having its office at Nirman Bhavan,
Department of Rural Development,
Room No.527, New Delhi. ... Respondents
______________________________________________________
Mr Gouresh Mogre a/w Ms Tripty Kapadia i/by Joy Legal
Consultants , for Petitioners.
Page 1 of 10
::: Uploaded on - 12/06/2025 ::: Downloaded on - 12/06/2025 22:20:36 :::
901.WP.872.94(J).DOCX
Dr G R Sharma a/w Mr D P Singh and Mr Vikas Salgia , for
Respondent No.1 and 2.
______________________________________________________
CORAM : M.S. Sonak &
Jitendra Jain, JJ.
RESERVED ON : 10 June 2025
PRONOUNCED ON : 12 June 2025
JUDGMENT (Per Jitendra Jain, J.):
–
1. This Petition is filed under Article 226 of the
Constitution of India challenging the order dated 29 October
1993 passed by the Respondent No.2 whereby the Petitioner’s
application, for the period 3 July 1989 to 7 May 1991, for
refund of Cash Compensatory Scheme (CCS) has been
rejected primarily on the ground that ‘Castor Oil First Special
Grade’ cannot be equated as ‘Castor Oil Medicinal’ for grant of
benefit of CCS.
Brief facts :-
2. In 1964, the Ministry of Food and Agricultural,
Government of India issued a Circular for the purpose of
grading Castor Oil as ‘Medicinal’. The grading was based
upon the test to be conducted, which was known as ‘Carbon
Disulphide Test’. In 1966, Cash Compensatory Support
Scheme was introduced to incentivize the exports from India.
As per the said Scheme, the exporter would be entitled to
certain cash compensatory amount on the export of the
relevant goods. The said cash assistance for the present
purpose was at the rate of 5% of FOB. This rate was
Page 2 of 10
::: Uploaded on – 12/06/2025 ::: Downloaded on – 12/06/2025 22:20:36 :::
901.WP.872.94(J).DOCX
prescribed by the Circular dated 31 March 1989 issued by the
Government of India, Ministry of Commerce. The relevant
entry 97 read as ‘Castor Oil Medicinal’. The said Circular
further stated that the rates prescribed for cash compensatory
would be applicable from 1 April 1989 to 31 March 1992.
3. On 23 June 1989, Government of India, Ministry of
Agricultural superseded its Circular dated 3 October 1964
which provided for the test to be conducted. As per 23 June
1989, the test was changed to ‘Thin-Layer Chromatographic
Test’ (TLC) for identification of Castor Oil of Medicinal grade.
The Petitioner conducted the new test i.e. TLC test. However,
same good i.e. ‘Castor Oil Medicinal’ was graded as ‘Castor Oil
First Special’ after undergoing new test although the
Petitioner had protested against the introduction of the new
test.
4. On 8 May 1991, the respondent issued Circular
whereby it clarified that ‘Castor Oil First Special’ would be
eligible for cash compensatory support. Based on this
Circular, the Petitioner was denied the benefit of cash
compensatory support scheme for the period 22 June 1989 to
8 May 1991.
5. It is on the above backdrop that the present Petition
came to be filed, challenging the denial of cash compensatory
support scheme to the Petitioner for the period 22 June 1989
to 8 May 1991.
Page 3 of 10
::: Uploaded on – 12/06/2025 ::: Downloaded on – 12/06/2025 22:20:36 :::
901.WP.872.94(J).DOCX
6. Mr Mogre, learned counsel for the Petitioner submitted
that on identical issue the Co-ordinate Bench of this Court in
the Petitioner’s own case while dealing with the refund of
duty drawback has held that ‘Castor Oil First Special’ qualifies
as ‘Castor Oil Medicinal’ for the purpose of duty drawback. He
submitted that the said decision squarely covers the
controversy raised in the present Petition and therefore the
Respondents be directed to refund the cash compensatory
amount as prayed for.
7. Mr Sharma, learned counsel for the Respondent
opposed the petition and submitted that the decision of the
Co-ordinate Bench in Writ Petition No. 871 of 1994 dealt with
duty drawback scheme whereas the present Petition deals
with Cash Compensatory Support Scheme. He submitted that
post the introduction of new Circular laying down new tests,
the Petitioner is not entitled to the said benefit for the period
under consideration. He also submitted that Petitioner has not
challenged rejection order. Therefore, he submitted that the
Petition be dismissed.
8. We have heard learned counsel for the Petitioner and
Respondents and with their assistance have perused
documents brought to our notice.
9. The short issue which arises for our consideration is
whether the goods ‘Castor Oil Medicinal’ is different than the
‘Castor Oil First Special’ post of the introduction of the new
test i.e. TLC. This issue arose before the Co-ordinate Bench of
Page 4 of 10
::: Uploaded on – 12/06/2025 ::: Downloaded on – 12/06/2025 22:20:36 :::
901.WP.872.94(J).DOCX
this Court in the case of this very Petitioner in Writ Petition
No.871 of 1994. Though Writ Petition No. 871 of 1994 was in
regard to duty drawback rules, the controversy which was
posed for consideration of the Co-ordinate Bench was
identical to the question raised in the present Writ Petition
before us.
10. Writ Petition No.871 of 1994 was disposed of vide order
dated 18 September 2009 and 5 February 2010. The relevant
observations of the Co-ordinate Bench relevant for the
purpose of the present order is paragraph 20 and 21 which
reads as under:-
20. As noted earlier by virtue of Rule 3 of the Drawback Rules,
it is open to the Government to fix the rates of drawback duty.
In so far as the Petitioners are concerned the Government by
their communication dated 6th December, 1989 in respect of
Castor Oil medicinal and/or Castor Oil First Grade had fixed
rate for the period 1-6-1989 to 31-5-1990. By a further
communication of 6-11-1990 the communication of 6-12-1989
was amended by substituting the description by “Castor Oil
medicinal”. Thus Castor Oil First Special Grade was excluded.
The question that we are called upon to consider is whether it
was open to respondents by subsequent communication of 6-
11-1990 to amend the communication on 6-12-1989 for the
period 1-6-1989 to 31-5-1990. In our opinion the Petitioners
had already exported Castor Oil First Grade under the mark
Castor Oil First Special Grade as they were doing earlier. It is
only that the same oil then was being described as Castor Oil
medicinal, pursuant to the test which was earlier being done in
terms of Circular of 3rd October, 1964. That was by hot
extraction or by extraction with solvents as has been described
earlier. Such Castor Oil was always treated by the Government
as Castor Oil medicinal. It is only pursuant to the Circular
dated 22/23-6-1989 that the Thin-layer Chromatographic Test
was applied for identification of Cold draw Castor Oil of
Medicinal Grade. The communication of 6-12-1989 covered
Page 5 of 10
::: Uploaded on – 12/06/2025 ::: Downloaded on – 12/06/2025 22:20:36 :::
901.WP.872.94(J).DOCX
the period 1-6-1989 to 31-5-1990. In other words upto 22/23-
6-1989 the Castor Oil undergoing the earlier test was still
treated as Castor Oil medicinal. It is only subsequent to 22/23-
6-1989 it had to undergo the Thin-layer Chromatographic Test.
The Petitioners had been exporting Castor Oil First Grade and
the Government in fact recognised the same by fixing the rates
by letter of 6th December, 1989. Under these circumstances
could the Government have withdrawn the same by
communication of 6-11-1990.
21. We may make reference to some of the judgments referred
to at the Bar. In Mazda International (P) Ltd. vs. Union of
India, 1995 (77) E.L.T. 526 (Bom), the Government of India
removed Gripe water from the entitlement of drawback benefit
with retrospective effect. The submission before the Court was
that the Authority exercising subordinate legislation could not
have withdrawn the benefits with retrospective effect. A
learned Division Bench of this Court accepted the said
contention as unless there be a power to make subordinate
legislation with retrospective effect it is not open to an
Authority to give retrospective effect to a Notification. This was
followed by another Division Bench in Gandhi Sons & Ors., vs.
Union of India, 2002 (81) ECC 261 (Bom.) and subsequently
reiterated by another judgment in Arviva Industries (I) Ltd. vs.
Union of India, 2004 (167) E.L.T. 135 (Bom.). Based on these
Authorities it will be clear that once the rates had been fixed in
respect of the goods described in the communication it could
not have been open to the respondents to retrospectively
amend the benefit given. Even otherwise from the reply filed
on behalf of the respondents it would be clear that this was
done as Castor Oil First Grade would not fall under Entry 12
namely Drugs and Pharmaceutical products. This was only
because the change and nature of the test. Upto 22/23-6-1989
under the test in force the same Castor Oil could have been
exported and was being exported as Castor Oil medicinal.
Letter of 6th December, 1989 is recognition of this and apart
from that it can also be traced to the Governmental powers
under Rule 15 of the Rules to avoid hardships. Under these
circumstances, in our opinion, the subsequent communication
for all these reasons be would without authority of law and
consequently no reliance can be placed on the letter of 6th
Page 6 of 10
::: Uploaded on – 12/06/2025 ::: Downloaded on – 12/06/2025 22:20:36 :::
901.WP.872.94(J).DOCX
November, 1990 amending the letter by letter dated 6-12-1989
with retrospective effect.
11. Post the above order, the Coordinate Bench reviewed its
order on 5 February 2010 and directed revenue to grant
refund of duty drawback.
12. The Co-ordinate bench in Writ Petition No.871 of 1994
vide order dated 18 September 2009 and 5 February 2010 in
Writ Petition No.3 of 2010 directed the Revenue authority to
refund the duty drawback for the period 1 June 1989 to 31
May 1990 by rejecting the contention of the revenue
authorities that the goods ‘Castor Oil Medicinal’ is different
than ‘Castor Oil First Special’.
13. In our view, although the order in Writ Petition No. 871
of 1994 dealt with duty drawback rules, but since the
controversy is identical to the one which is raised before us,
the ratio of the said decision squarely applies to the facts of
the present case and, therefore, respondents are not justified
in rejecting the application of the Petitioner denying the
benefit of Cash Compensatory Support Scheme merely on the
ground that ‘Castor Oil First Special’ is not the same as ‘Castor
Oil Medicinal’ after the introduction of the new test i.e. the
TLC test.
14. There is also no dispute that the contracts under which
the exports were made by the Petitioner for the period under
consideration were executed prior to June 1989. The
Petitioner is justified in relying upon the following decisions
Page 7 of 10
::: Uploaded on – 12/06/2025 ::: Downloaded on – 12/06/2025 22:20:36 :::
901.WP.872.94(J).DOCX
(i) Union of India Vs Cosmique International1, (ii) Vibgyor
Textile International vs Union of India2, (iii) Parmanand
Industries Vs Union of India3 and (iv) Old Village Industries
Ltd. Vs Union of India4 wherein the Co-ordinate Bench of this
Court and other high courts have taken the view that
contracts executed prior to the cutoff day would not be
governed by the subsequent change in the scheme granting
the benefit. In our view, the ratio of this decision squarely
applies to the facts of the present case, since in the present
case also, there is no dispute that the exports made for the
period under consideration were in respect of contracts
executed prior to 23 June 1989 Therefore, even on this count,
the rejection of the benefit of cash compensatory support
scheme by the respondents is not justified. This view is also
supported by the Circular dated 8 May 1991 which lays
emphasis on the date of execution of the contracts and not
the date of exports.
15. We do not agree with learned counsel for respondents
that the Petitioner has not challenged the order dated 29
October 1993. In the prayer clause (c), there is a specific
challenge to the same and therefore the said submission is
required to be rejected.
16. It is also important to note that merely because the test
required is changed would not alter the nature of the goods.
1
1994 (73) ELT 526 (Del.)
2
1989 (39) ELT 535 (Bom.)
3
1993 (68) ELT 726 (Bom.)
4
1994 (73) ELT 289 (Del.)
Page 8 of 10
::: Uploaded on – 12/06/2025 ::: Downloaded on – 12/06/2025 22:20:36 :::
901.WP.872.94(J).DOCX
Furthermore, from 8 May 1991, the benefit of the CCS
scheme has been granted to the goods ‘Castor Oil First
Special’. If that be so, then we fail to understand as to how
the said benefit can be denied for the period 22 June 1989 to
8 May 1991 merely on the ground of change in the test.
Therefore looked from any angle, the goods ‘Castor Oil
Medicinal’ and ‘Castor Oil First Special’ would remain the
same although there was a change in the test by Circular
dated 23 of June 1989.
17. The Petitioner has also obtained Technical Report by
Expert Authorities on whether the ‘Castor Oil Medicinal’ is
different product post the TLC test. The said technical reports
given by the experts confirm that the product ‘Castor Oil
Medicinal’ remains the same even after change of test from
‘Carbon Disulphide test’ to TLC test. These technical reports
have not been controverted by the Respondents.
18. The Circular dated 31 March 1989 by which rate of 5%
of FOB as CCS was granted applied for the period 1 April
1989 to March 1992 and as per the said Circular, the benefit
of CCS was granted to the Petitioner on export of goods on
the premise that the same constitutes of ‘Castor Oil
Medicinal’. In our view, since the said Circular applied for the
period 1989 to 1992, the Respondents were not justified in
denying the benefit of CCS for the period 22 June 1989 to 8
May 1991 merely on the basis of change of test to be
conducted.
Page 9 of 10
::: Uploaded on – 12/06/2025 ::: Downloaded on – 12/06/2025 22:20:36 :::
901.WP.872.94(J).DOCX
19. The Circular dated 8 May 1991 whereby the benefit was
granted to Castor Oil First Special indicates that the goods
Castor Oil Medicinal and Castor Oil First Special are identical.
This, we say so because of the entry post 8 May 1991 which
reads as under:
“97. Castor Oil Medicinal/First Special-5%”
20. In view of the above, we pass the following order:
(a) Order dated 29 October 1993 (Exhibit-Y) is quashed
and set aside.
(b) The Respondents are directed to pay to the Petitioner
the Cash assistance of Rs.4,33,75,866/- within the
period of 8 weeks from the date of uploading of the
present order. If this is not done, then this amount
shall carry interest at 6 per cent per annum,
commencing from 1.9.2025 until effective payment.
(c) The Petition is allowed in the above terms.
(d) No order as to costs.
(Jitendra Jain, J) (M.S. Sonak, J) Page 10 of 10 ::: Uploaded on - 12/06/2025 ::: Downloaded on - 12/06/2025 22:20:36 :::