Bombay High Court
Videocon International Ltd.& Ors vs Union Of India & Ors on 13 December, 2017
Bench: A.S. Oka
1 oswp2433group-2-1
ssp
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.2433 OF 1990
Videocon International Limited
and another ...Petitioners
vs.
Union of India & Ors. ...Respondents
ALONG WITH
WRIT PETITION NO.3314 OF 1990
Videocon International Limited
and another ...Petitioners
vs.
Union of India & Ors. ...Respondents
ALONG WITH
WRIT PETITION NO.2117 OF 1990
Videocon International Limited
and another ...Petitioners
vs.
Union of India & Ors. ...Respondents
ALONG WITH
WRIT PETITION NO.1970 OF 1990
Videocon International Limited
and another ...Petitioners
vs.
Union of India & Ors. ...Respondents
ALONG WITH
WRIT PETITION NO.3225 OF 1989
M/s.Pacific Export ...Petitioner
vs.
Union of India & Ors. ...Respondents
ALONG WITH
WRIT PETITION NO.350 OF 1991
::: Uploaded on - 14/12/2017 ::: Downloaded on - 15/12/2017 02:00:59 :::
2 oswp2433group-2-1
Videocon International Limited
and another ...Petitioners
vs.
Union of India & Ors. ...Respondents
ALONG WITH
WRIT PETITION NO.86 OF 1991
Videocon International Limited
and another ...Petitioners
vs.
Union of India & Ors. ...Respondents
ALONG WITH
WRIT PETITION NO.3315 OF 1990
Videocon International Limited
and another ...Petitioners
vs.
Union of India & Ors. ...Respondents
ALONG WITH
WRIT PETITION NO.2834 OF 1990
M/s. Television & Components
Limited and another ...Petitioners
vs.
Union of India & Ors. ...Respondents
ALONG WITH
WRIT PETITION NO.1805 OF 1990
M/s. Holly Hock Investments
Private Limited and another ...Petitioners
vs.
Union of India & Ors. ...Respondents
ALONG WITH
WRIT PETITION NO.485 OF 1992
Videocon International Limited
and another ...Petitioners
vs.
Union of India & Ors. ...Respondents
ALONG WITH
::: Uploaded on - 14/12/2017 ::: Downloaded on - 15/12/2017 02:00:59 :::
3 oswp2433group-2-1
CIVIL APPELLATE JURISDICTION
TRANSFERRED FROM AURANGABAD BENCH
WRIT PETITION NO.2109 OF 2002
Videocon International Limited
and another ...Petitioners
vs.
Union of India & Ors. ...Respondents
ALONG WITH
CIVIL APPELLATE JURISDICTION
TRANSFERRED FROM AURANGABAD BENCH
WRIT PETITION NO.2110 OF 2002
Videocon International Limited
and another ...Petitioners
vs.
Union of India & Ors. ...Respondents
ALONG WITH
CIVIL APPELLATE JURISDICTION
TRANSFERRED FROM AURANGABAD BENCH
WRIT PETITION NO.2111 OF 2002
Videocon International Limited
and another ...Petitioners
vs.
Union of India & Ors. ...Respondents
Mr.K.R.Bulchandani a/w Mr. Avik Sarkar and Mr. Amit
Nikam i/b Kamal & Co. for the petitioners in all
petitions
Mr.Pradeep Jetly for respondent-Union of India in
all petitions.
CORAM : A.S.OKA AND RIYAZ I. CHAGLA,JJ.
DATE ON WHICH JUDGMENT IS RESERVED:SEPTEMBER 15,2017
DATE ON WHICH JUDGMENT IS PRONOUNCED:DECEMBER 13,2017
JUDGMENT:(PER A.S.OKA,J.)
1 As the factual controversy in these petitions
is admittedly more or less identical, these
4 oswp2433group-2-1
petitions can be disposed of by a common Judgment.
For the sake of convenience, we are making a
detailed reference to the facts of the case in Writ
Petition No.2433 of 1990. In fact, the main
submissions have been canvassed in the said Writ
Petition.
2 The petitioners in the Writ Petition No.2433 of
1990 were at the relevant time manufacturers of
colour televisions and other electrical items. At
the relevant time, the petitioners were importing
Video Tape Deck Mechanism (VTDM) and Colour Picture
Tubes (CPTs) as electronic items against the
additional licences issued pursuant to Import and
Export policy 88-91 (for short `the said policy').
Under the said policy, export houses/trading houses
were eligible for additional licences for the period
for which the export house/trading house
certificates are valid. It was provided that items
permissible will be those allowed under the policy
on the date of issue of licences. At the relevant
time, VDTMs and CPTs were listed as Open General
Licence (for short "OGL) items. VDTMs were at Serial
no.821(79) and CPTs were at Serial no.821(5) of
Appendix-6, List-8 Part-1 forming a part of the said
policy. There is no dispute about the fact that both
the items were listed as OGL items at the relevant
time. Between the period from 2nd August 1988 to 10th
March 1989, the petitioners purchased additional
licences which were of the dates prior to 21st March
1989. The licences were endorsed under clause 215
of the said policy.
5 oswp2433group-2-1
3 According to the case of the petitioners,
between 2nd February 1990 to 26 th February 1990, they
opened Letters of Credit in favour of the foreign
suppliers for the import of said two categories of
goods. All imports were made prior to 31st March
1990. Between 1st November 1989 to 11th October 1990,
the petitioners filed Bills of Entry with Sea
Customs and Air Customs against the imports made
from time to time of the said goods. It is their
case that similar goods were cleared earlier.
However, the Customs raised an objection to the
validity of the additional licences. Therefore, the
goods were allowed to be bonded and where goods were
meant for export, re-export was allowed against bond
with bank guarantee. However, the goods which were
meant for home clearance were not allowed to be
cleared in view of ITC public public notice No.109
of 1989 issued on 21 st March 1989. By the said
public notice, CPTs were deleted from Sr. No.821(5)
and shifted to Entry No.129 of Appendix 2-B. By the
said public notice, even VTDMs were deleted from 821
(79) and were shifted to Entry No.138A in Appendix
2B. Both the categories of goods were shifted by the
public notice to the list of restricted items for
import. As the clearance of the goods was not
allowed, the petitioners filed the present petition.
Writ Petitions in this group were admitted by
granting interim relief in terms of prayer clause
(b) by which the respondents were directed to allow
the petitioners to clear the goods against
additional licences the copies of which have been
6 oswp2433group-2-1
annexed as Exhibit A and B to the petitions on
petitioners executing ITC Bond in favour of the
respondents. A liberty was granted by the said
interim order dated 10th September 1990 to the
respondents to adjudicate after following the
principles of natural justice. Accordingly, an
Order in Original was passed by the Commissioner of
Customs(C) in respect of the Bills of Entry subject
matter of some of the petitions. By the said Order
in Original, the Commissioner of Customs ordered
confiscation of goods by holding that imports under
the additional licences were invalid in view of the
public notice No.109/89 dated 21st March 1989 (for
short "the said public notice"). Against the Order
in Original dated 30th April 1992, the petitioners
preferred a statutory appeal before the Customs,
Excise and Gold Control Appellate Tribunal at Mumbai
(for short "the Appellate Tribunal"). By order
dated 10th November 1997, the Appellate Tribunal
disposed of the appeal on the ground that this Court
was seized of the matter. By carrying out
amendment, the Order in Original dated 30th April
1992 was permitted to be challenged and accordingly,
additional grounds were added and prayer (aa) was
added for incorporating a challenge to the order
Dated 30th April 1992. Only other substantive relief
claimed in this petition is prayer (a) enjoining the
respondents to allow clearance of the goods imported
by the petitioners against the additional licences
the copies of which have been annexed as Exhibits A
and B to the petition.
7 oswp2433group-2-1
4 There is a reply dated 6th January 2003 filed by
Shri Bachan Singh, Assistant Commissioner of
Customs, Group VB, Mumbai. In the reply, reliance
was placed on the said public notice by which the
category of goods subject matter of the Writ
Petition was transferred from the list of OGL items
to the list of restricted items. It was contended
that the imports in question were made by the
petitioners after the date of the said public notice
and therefore, they were not entitled to import the
goods under the additional licences. It was
contended that the validity of the additional
licences was limited to the items which are placed
under the OGL. A submission was made that the
import policy prevailing at the time of public
notice will be applicable.
5 The submission of the learned counsel for the
petitioners is that if sub-clauses 2 and 8 of clause
215 of the said policy are read together, it is
clear that the additional licences were issued
permitting import of OGL items appearing in
Appendix-6 List-8 Part-1. Inviting our attention to
the said public notice, he pointed out that VTDM and
CPTs were deleted from Appendix-6 List-8 Part-1 from
the date of the said public notice and that the same
were included in the list of restricted items. He
submitted that the public notice refers only to
imports made under the OGL by eligible actual users
and not to the imports of OGL items under the
additional licences issued to export houses/trading
houses. He submitted that the said public notice
8 oswp2433group-2-1
does not contain any provision invalidating
additional licences issued prior to the date of the
said public notice. He submitted that vested right
accrued under one policy cannot be taken away by
another policy. In any event, he submitted that
sub-clause 2 of clauses 223 and 224 of the Import
and Export policy AM 1990-93 (for short "the
subsequent policy") permitted the holders of the
additional licences issued prior to 1st April 1990 to
import the items listed in Appendix-6 List-8-Part-1
of the OGL provided the Letter of Credit were
opened prior to 1st April 1990.
6 The learned counsel for the petitioners relied
upon various decisions of the Apex Court and this
Court, viz; M/s. Bharat Barrel and Drum Mfg.Co.Ltd.
vs. The Collector of Customs, Mumbai1, M/s. Jain
Exports (P) Ltd. Vs. Union of India 2, Union of India
Vs. Loksons Pvt.Ltd3, Jayant Vegoils & Chemicals (P)
Ltd. vs. Union of India4, Ashok Kumar Jain Vs. Union
of India5, Mahindra & Mahindra Ltd. Vs. Union of
India6, D.Navinchandra Vs. Union of India7 and Prem
Chand Somchand Shah Vs. Union of India8.
7 His submission is that the Apex Court has held
that the public notices are always prospective and
1 AIR 1971 SC 704
2 (1988) 3 SCC 579
3 1989(43) ELT 226 (Bom)
4 1987 (30) ELT 134 (Bom)
6 AIR 1979 SC 798
7 AIR 1987 SC 1794
8 1991 (53) ELT 498 (SC)
9 oswp2433group-2-1
the same cannot be applied to the licences issued
prior to date of public notices. He submitted that
the import licences are governed by the policy
prevailing when the licences are issued and the same
are not governed by the subsequent changes in the
policy. He submitted that the policy on the date of
licences will apply to the imports and not the
policy on the date of import. He would, therefore,
submit that the action of not clearing the goods is
illegal and the Orders in Original are illegal.
8 The learned counsel for the respondents opposed
the petition. He invited our attention to the
decision of the Apex Court in the case of the
Collector of Custom (Bombay) vs. Elephanta Oil and
Industries9. He also relied upon a decision of the
Apex Court in the case of Union of India vs. Godrej
Soaps Pvt Ltd10. He also pointed out the law laid
down in the case of Darshan Oils Pvt Ltd vs. Union
of India11.
9 We have given careful consideration to the
submissions. Firstly, we must make a reference to
the said policy. Clause 61 of the said policy deals
with Open General Licence (OGL). Clause 61 reads
thus:
"Open General Licence
61. (1) Appendix 6 of this Policy contains a
9 2003 (152) ELT 257 (S.C.)
10 1986(26) ELT 465 (SC)
11 1995(75)ELT 32 (SC)
10 oswp2433group-2-1
number of lists of items allowed for import
under Open General Licence by various
categories of importers and the conditions
for their import. Open General Licence
facility can be availed of by the specified
categories and subject to the conditions laid
down therein. In addition to the items
listed in Appendix 6. Actual Users
(Industrial) can import under Open General
Licence raw materials, components and
consumables which do not appear in Appendices
2, 3, 5 and 8 of this Policy, subject to the
conditions laid down. Before effecting
import of such unlisted items under Open
General Licence Actual Users (Industrial) are
advised to obtain confirmation from the
CCI&E, New Delhi that the concerned Actual
User can import the item under Open General
Licence facility only to import such items as
are in conformity with the provisions of
their industrial licence or registration
certificates as well as the extent of
indigenisation already achieved or to be
achieved by them. Units subject
indigenisation in the Phased Manufacturing
Programme will be required to follow the List
Attestation Procedure for import of
components under Open General Licence as
mentioned in this Policy. Import of
scientific and measuring instruments is not
permitted under the Open General Licence.
(2) Import of chemical and allied items under
11 oswp2433group-2-1
brand names, will not normally be allowed
unless full description thereof along with
specifications and chemical structure are
furnished. Eligible importers desirous of
importing any such item under Open General
Licence are advised to clear it with the DGTD
(...Policy Cell), New Delhi, before placing
orders overseas. Import of consumables under
brand names shall not be allowed under OGL.
(3) In the case of any professional grade
electronic component, importers should set
down internationally accepted specification
in the invoices so as to enable the Customs
authorities to satisfy themselves whether its
clearance is permissible or not under OGL or
otherwise."
(emphasis supplied)
10 As far as additional licences are concerned,
the same are dealt with in clause 215 of the said
policy. Sub-clauses 1,2 and 8 of clause 215 read
thus:
"Additional Licences
215 (1) The Export Houses Trading Houses
will be eligible to Additional Licences on
the basis of the admissible exports made in
the proceeding licensing year. The value of
these licences will be calculated at 10% of
the NFE earnings on the total eligible
exports made in the proceeding licensing
year. This percentage shall be 12% in cases
12 oswp2433group-2-1
where an Export Trading House is able to
achieve a minimum growth of 10% in terms of
NFE realisation in the previous year, over
and above the year preceding the same. The
NFE earnings for this purpose, would have the
same meaning as defined in the Note below
Para 212 (2)(a) above.
(2) The Additional Licences will be valid
for the import of the following items upto
the full value of the licence :-
(i) Items appearing in Part 1 of List 8,
Appendix 6 of this Policy; and
(ii) Import of capital goods listed in
Appendix 1 Part B of this Policy.
(3)...
(4)...
(5)...
(6)...
(7)...
(8) Export Houses/Trading Houses will be
eligible for Additional Licences for the
period(s) for which the Export House/Training
House Certificates are valid. However, the
items permissible will be those as allowed
under the Policy on the date of issue of the
licence (s). It may not, therefore, be
necessary for an applicant Export
House/Trading House to hold a valid Export
House/Trading House Certificate at the time
of submission of the application for the
Additional licences, if otherwise due."
(emphasis added)
13 oswp2433group-2-1
11 Thus, sub-clause 1 of clause 215 lays down that
the export houses/trading houses will be eligible
for additional licence on the basis of the
admissible exports made in the preceding licencing
year. The value of the licence is to be calculated
as provided in sub-clause 1. As stated earlier,
sub-clause 2 provided that additional licences will
valid for the import of the items appearing in Part-
1 of List-8 of Appendix-6 of the said policy. Sub-
clause 8 provides that additional licence will be
valid for the period for which the export
house/trading house certificates are valid. Sub-
clause 8 reiterates that additional licences will be
in respect of the items permissible under the said
policy on the date of issue of licences. Clause 216
of the said policy makes the licences transferable
in part without requirement of endorsement or
permission from the licencing authority.
12 The said public notice dated 21st March 1989 is
already referred earlier. As stated earlier, by the
said public notice, two items subject matter of the
petitions were removed from the Appendix-6 List-8
Part-1. Clauses 3 and 4 of the public notice are
relevant for our consideration. Clauses 3 and 4 of
the said notice read thus:
"3 In respect of capital goods taken out of
Open General Licence in terms of this Public
Notice, Import under Open General Licence by
eligible importers shall not be permitted
14 oswp2433group-2-1
except to the extent covered by firm
contracts entered into and registered with a
foreign exchange dealer (Bank) before the
date of this public Notice.
4 In respect of raw materials, components
and consumables taken out of Open General
Licence in terms of this Public Notice Import
under Open General Licence by eligible
importers shall not be permitted except to
the extent of irrevocable letters of credit
already opened and established before the
date of this Public Notice for which
shipments are made within a period of ninety
(90) days from the date of this Public
Notice."
13 One of the arguments of the learned counsel for
the petitioners was that public notice applies only
to the Open General Licences and not to the
additional licences. According to us, there is a
fallacy in this argument. We have referred to
clause 61 of the said policy which provides that
Appendix 6 of the policy contains number of items
allowed for import under OGL by various categories
of importers. The export houses/trading houses are
entitled to additional licenses for the import of
items appearing in Part 1 of the List 8 of the
Appendix 6 of the said policy. Additional licence
can be granted only to export houses/trading houses
and by virtue of grant of additional licence, the
holder thereof is entitled to import OGL items
15 oswp2433group-2-1
specified in Part 1 of the List 8 of the Appendix 6
of the said policy. The Appendix 6 contains the
items which can be imported by holders of OGL.
Thus, if some item goes out of Appendix 6, the
holder of additional licence cannot import the said
item. The other question will be whether the said
public notice will affect the existing additional
licences which were valid on the date of notice. We
have dealt with this question in the subsequent part
of this Judgment.
14 We may also make a reference at this stage to
the subsequent policy (for the years 1990-93).
Clauses 223 and 224 are relevant for our
consideration. Clause 1 of paragraph 223 lays down
that additional licences issued to export
houses/trading houses prior to 1st April 1990 on the
basis of the exports made during 1986-87 or earlier
period shall cease to be valid on or after 1 st April
1990 for the import of the items of raw material,
components and spares which appear in Appendix-6
List-8 Part-I of the said policy but which are not
covered by Appendix-6 List-8 Part-I of the
subsequent policy. There is a similar provision
made in sub-clause 1 of clause 224 in respect of
additional licences issued to export/trading houses
prior to 1st April 1990 on the basis of the exports
made during 1987-88 and 1988-89. However, sub-
clauses 2 of both clauses 223 and 224 are relevant.
Both the clauses provided that restriction imposed
by sub-clauses 1 of clauses 223 and 224 will not
apply to those licence holders who have already made
16 oswp2433group-2-1
firm commitments by irrevocable Letters of Credit
opened and established through authorised dealers in
foreign exchange on or before 31st March 1990. It
means that on the basis of the Additional licences
issued prior to 1st April 1990 on exports made in the
years 1986-87, 1987-88 and 1988-89, the imports made
after 1st April 1990 will be valid notwithstanding
sub-clauses 1 of clauses 223 and 224 provided the
irrevocable Letters of Credit have been opened and
established through authorised dealers in foreign
Exchange prior to 1st April 1990. Therefore,
wherever the Letters of Credit as aforesaid have
been opened before the cut off date, the import on
the basis of the extended licences issued prior to
1st April 1990 was permissible. The learned counsel
for the petitioner stated that in all cases, the
Letters of Credit were opened prior to 1st April
1990. In some cases where imports were made on the
basis of documents against payment, the imports have
been made prior to 31st March 1990. Only in one
case, (in Writ Petition No.1805/90), the import was
made after 31st March 1990.
15 The issue is whether any vested right is
accrued on the basis of the extended licences
obtained by the petitioners. The question is whether
the subsequent policy will affect the additional
licences which were valid on 1st April 1990 when the
subsequent policy came into force. On this aspect,
reliance is placed on the decision of the Apex
Court in the case of M/s. Jain Exports Pvt. Ltd and
another vs. Union of India and others. In paragraph
17 oswp2433group-2-1
2, it is observed thus:
"2.The following common contentions have been advanced by learned Counsel
for the appellants:
(1) The import policy of which year would be applicable to the facts of the
present case -- the period during which the licences were issued or the time
when import actually took place.
(2) Whether "coconut oil" appearing in para 5 of Appendix 9 of the Import Policy of
1980-81 was confined to the edible variety or covered the individual (sic-industrial)
variety.
(3) Whether in the face of the decision of the Board and Central Government as
the statutory appellate and revisional authorities, it was open to the Collector
functioning in lower tier to take a contrary view of the matter in exercise of quasi-
judicial jurisdiction; and
(4) Whether the order of the Collector was vitiated for breach of rules of natural
justice, and collateral considerations in the making of the orders.
It is not in dispute that the relevant import policy to be referred to is of the
year 1980-81 as all the licences were issued during that period. The Collector
found and the High Court has not recorded a different finding that when the
licence was first revalidated on 18-1-1982, such revalidation was subject to
paragraph 215 of the Import Policy of 1981-82. Again while revalidating some of
the licences on 25-9-1982, it was stipulated that during the extended period, items
which do not appear in Appendices 5 and 7 of Import Policy of 1982-83 could not
be allowed to be imported and items which appear in Appendix 26 of the Import
Policy of 1982-83 will also not be allowed to be imported. The Collector turned
down the plea that the licences allowed the import of items appearing in
Appendices 5 and 7 of 1979-80 policy and 1982-83 policy in addition to the items
appearing in the OGL and industrial coconut oil. In the instant case, the licences
were either of 1980 or 1981 and were revalidated from time to time. For
convenience we may refer to a sample order of revalidation dated 28-6-1982.
Revalidation was subject to the following conditions:
"This licence is revalidated for a further period of six months from the date of
revalidation with the condition that during the extended period of validity the
items which do not appear in Appendices 5 and 7 of the Import Policy of 1982-83
will not be imported. This licence will also not be valid for the import of items
appearing in Appendix 26 of the Import Policy of 1982-83 during the extended
period of validity.
3.The High Court has come to the correct conclusion that the terms of
Import Policy of 1980-81 would apply to the facts of these cases. "
(emphasis added)
16 Another decision of the Apex Court on the point
is in the case of M/s. Bharat Barrel and Drum Mfg.
Co. Ltd vs. Collector Of Customs, Bombay2. In this
case, the appellant before the Apex Court had
obtained import licences in June 1962 in respect of
a particular steel item. The appellant placed
orders for import on the basis of the two licences.
2 1971 (3) SCC 170
18 oswp2433group-2-1
Clearance of the goods was not allowed on the ground
that the goods were not as specified in the import
licence. It was objected on the ground that under
the import licence, the appellant was entitled to
import only prime quality steel sheets and what was
imported was industrial scrap sheets. The argument
of the appellant before the Authority was that the
licence did not contain a condition of importing
prime quality sheets. The condition that the sheets
must be of prime quality was imposed for the first
time by the public notice dated 6 th December 1962.
The Revisional Authority took the view that the
public notice dated 6th December 1962 was issued
after the licence was issued and the said notice
had no retrospective operation. In paragraph 5 and
6, the Apex Court observed thus:
"5.Interrupting the narrative, it is necessary to point out at this stage two
important matters: (1) that the difference in the conditions of the two licences was
apparently not noticed by the Collector of Customs and by the Board and ( 2) that
the condition that the goods should be of "prime quality" was not a condition of
either licence. Under the first licence the sheets were to be of 18 gauge quality;
under the second licence there was no such condition relating to thickness of the
sheets. There was again no evidence that any part of the consignment was not fit
for use in the manufacture of drums and barrels. By importing sheets of 11, 12
and 13 gauge or of gauges varying between 18 and 24 no breach of the conditions
of the second licence was committed. The condition that the sheets imported
must be of "prime quality" was imposed for the first time by the Iron and
Steel Controller's Public Notice No.I/I-S/62, dated December 6, 1962 and
could not obviously apply to the sheets imported under the two licences
which were issued earlier. But the Collector as well as the Central Board of
Excise and Customs decided the cases principally on the ground that the goods
were not of "prime quality". The Collector of Customs and the Central Board of
Excise and Customs also did not keep the facts in respect of the twelve
consignments distinct and decided them together as if there was no difference
between the conditions of the two licences.
19 oswp2433group-2-1
6. The revision applications filed before the Government of India were
consolidated for the purpose of hearing and a single order was passed. The
Officer who heard the revision applications on behalf of the Central
Government was of the view, and rightly, that the Public Notice No. I/I-S/62,
dated December 6, 1962 of the Iron and Steel Controller had no
retrospective operation and the condition of "prime quality" could not be
applied to the sheets imported under the licences issued before that date.
But in his view, one of the two licences e.g. licence, dated June 13, 1962, covering
the consignments was issued specifically for 18 gauge sheets, while sheets of
different sizes (including 18 gauge) were imported against that licence and on that
account consignments covered by that licence "had to be treated as
unauthorised". He then proceeded to observe that the fine in lieu of confiscation
of the goods covered by the Collector of Customs, Bombay Orders S/10-530/63-
LC, S/10-531/63-LC, S/10-532/63-LC, S/10-533/63-LC, S/10-534/63-LC, and S/10-
535/63-LC all, dated November 30, 1963, be remitted in full; that in respect of four
consignments covered by the Collector's Orders S/10-443/63-LC, S/10-444/63-LC,
S/10-445/63-LC and S/10-446/63-LC all, dated October 5, 1963, the five be reduced
by half; and that the fines reduced by the Board in the cases covered by the
Collector's Orders S/10-22/64-LC and S/10-71/64-LC both, dated March 2, 1964, be
further reduced as decided by them. "
(emphasis and underline added)
Therefore, in the cases in hand, the said public
notice will have no effect on the additional
licences issued before the date of public notice.
17 Another decision pressed into service by the
petitioner is of a Division Bench of this Court in
the case of Union of India vs. Loksons Pvt.Ltd.
However, in this case the Court was not dealing with
the issue of the effect of the changes in the policy
after issue of a licence. However, the Division
Bench held that public notices cannot govern the
applications which were made and rejected prior to
coming into operation of the new policy.
18 Reliance was also placed on the decision of the
20 oswp2433group-2-1
learned Single Judge of this Court in the case of
Jayant Vegoils And Chemical (P) Limited vs. Union of
India3. In this case, import licences were issued on
the basis of the policy for the period of April 1980
to March 1981. Show cause notices were issued to
the petitioner in respect of the eight licences
granted during the subsistence of the said policy of
1980-81. Licences were in respect of beef tallow.
In the show cause notice, it was alleged that the
licences were not valid for the import of beef
tallow. A public notice was issued on 5 th June 1981
as a result of which beef tallow could not be
imported thereafter under OGL, but only through a
canalising agency. The contention of the Revenue
was that after 5th June 1981, on the basis of the
licence granted earlier, import of beef tallow was
not permissible. The learned Single Judge observed
in paragraph 6 as under:
"The gravemen of the charge is that after June 5, 1981 the petitioners were
not entitled to import beef tallow as the import was canalised through the
State Trading Corporation. The petitioners on the other hand contend that
each R.E.P. import licences were issued prior to June 5, 1981 and each of the
licence contains a condition that the licence would be subject to the
conditions in force relating to the goods at the time of issuance of the
licence. The petitioners claim that as the public notice dated June 5, 1981
did not specifically prohibit import of beef tallow under licence granted
prior to June 5, 1981, the import though was of a period subsequent to June
5, 1981, was not in contravention of any law. The petitioners claim that the
Government of India and the Central Board of Excise and Customs have always
accepted the position that in respect of the licences granted prior to June 5, 1981
it is open to import beef tallow subsequent to June 5, 1981, in the absence of
specific prohibition in the public notice."
In paragraphs 9 and 10, it was held thus:
"With these rival arguments, the first contention which requires answer
3 1987 (30) E.L.T. 134 (Bom.)
21 oswp2433group-2-1
is whether the petitioners violated any provisions of the Import (Control) Order,
1955 by import of beef tallow subsequent to June 5, 1981. It is not in dispute that
8 R.E.P. licences held by petitioner No. 1 and granted during the subsistence of
Import Policy of AM 1981 enabled the petitioners to import beef tallow under
O.G.L. It is not in dispute that for the entire Policy period AM 1981 the item
"beef tallow" was not a canalised item and was available for import under
O.G.L. It is also not in dispute that at the time of declaration of Import
Policy for AM 1982 beef tallow was not made a canalised item but could be
imported under O.G.L. Condition 1 set out in the import licence reads as under:
"This licence will be subject to the conditions in force relating to the goods
covered by the licence, as described in the Import Trade Control Policy Book for
the period during which the licence has been issued, or any amendments thereof
made upto, and including the date of issue of the licence, unless otherwise
specified. Relying on this clause, Shri Desai urged that the importability
under the licence was governed by the Import Policy prevailing on the date
of issue of licence and as beef tallow could be imported under O.G.L. at the
time of issuance of the licence, it is not open for the respondents to claim
that the import could not be effected subsequent to June 5, 1981. As
mentioned hereinabove, it is not in dispute that the public notice dated
June 5, 1981 did not specify that the inclusion of beef tallow as a canalised
item would affect the licence granted prior to that date. Shri Desai then
submits that not only this position is very clear by the plain reading of the licence
and the Import Policy, but the Central Board of Excise and Customs and the
Government of India have consistently taken that view. The submissions of the
learned counsel is correct. "
(emphasis added)
Thereafter, the learned Judge proceeded to hold thus:
"It is futile for the respondents to suggest that as soon as the policy was
amended on June 5, 1981 the import of beef tallow would be prohibited under the
licences issued during 1980-81 unless firm commitments made by opening
irrevocable letters of credit are established prior to April 1, 1981.
.........Shri Dhanuka is right in his submission that once the item is
included in Appendices 8 and 9, then it is not permissible for the licence
holder, who has secured licence subsequent to that date, to import beef
tallow, but that would not prevent the licence holder who has secured the
licence prior to that date. As there is no specific prohibition in the public
notice affecting the earlier licence holders, it is not possible to disturb their
rights. "
(emphasis added)
19 Thus, the learned Single Judge held that such
a licence will be governed by the prevailing policy
when the same was issued and the subsequent notice
will not affect the licence issued earlier.
20 In the case of Ashok Kumar Jain, Proprietor of
M/s.Jain Brothers vs. The Union of India decided by
22 oswp2433group-2-1
a Division Bench of this Court, the issue was about
REP licence granted on 13th February 1990 when import
and export policy of April 1988 to March 1991 was in
force. The argument before the Division Bench was
that the licence was valid for 18 months from 13 th
February 1990 and as the import had taken place in
June 1992 after expiry of the policy of 1988-91, the
import will be governed by the policy for the years
1991-94. The Division Bench considered the decision
in the case of Jain Export Pvt.Ltd. vs. Union of
India. Ultimately, the Division Bench, relying upon
the aforesaid decision of the Apex Court, this Court
held thus:
"In paragraph No.3 of the decision, the
Supreme Court held that the High Court had
come to the correct conclusion to the terms
of import policy of 1980-81 (i.e period
during which the licence was issued) would
apply. In view of the decision of the Supreme
Court, we have no doubt that the import in
question which was effected in pursuance of a
REP Licence dated 13th December 1990, would be
governed by the import export policy of AM
1988-91."
(emphasis added)
21 In the case of M/s. D. Navinchandra and Company
Vs. Union of India, a similar issued arose for
consideration of Bench of the Apex Court consisting
of three Hon'ble Judges. In paragraphs 21 and 22 of
its decision the Apex Court held thus:
23 oswp2433group-2-1
" 21. It must be emphasised that in the case of Raj Prakash, this position has
been explained by saying that only such items could be imported by diamond
exporters under the Additional Licences granted to them as could have been
imported under the Import Policy of 1978-79, the period during which the
diamond exporters had applied for Export House Certificates and had been
wrongly refused and were also importable under the import policy prevailing at
the time of import which in the present case would be during the Import Policy of
1985-88. These were the items which had not been "specifically banned" under
the prevalent import policy. The items had to pass two tests, firstly, they should
have been importable under the Import Policy 1978-79 and secondly they should
also have been importable under the Import Policy 1985-88 in terms of the order
dated April 18, 1985 and if one may add, in such terms "in accordance with the
import rules" whether canalised or not canalised. It must be emphasised that in
this case also, the court had no occasion to consider the significance of the words
"whether canalised or otherwise" mentioned in the order dated April 18, 1985
because that point did not arise in the case before it. What did the court then
intend by these words used by the court? We have seen that diamond exporters
could import the items which they were entitled to import under the Import
Policy 1978-79 provided they were importable also under the import policy ruling
at the time of import. These are items which were open to import by Export
Houses holding Additional Licences for sale to the Actual Users (Industrial). These
are items which were directly imported, for example, items in Part 2 List 8 of
Appendix 6 of Import Policy 1985-88. These are items which are not canalised.
Canalised items are those items which are ordinarily open to import only through
a public sector agency. Although generally these are importable through public
sector agencies, it is permissible for any import policy to provide an exception to
the rule and to declare that an importer might import a canalised item directly. It
is in that sense and that sense only that the court could have intended to define
the entitlement of diamond exporters. They would be entitled to import items
which were canalised or not if the import policy prevailing at the time of
import permitted them to import items falling under such category. This was
also viewed in that light in the case of Indo Afghan Chambers of Commerce
[(1986)3SCC352]
22. It must be emphasised that in the order dated April 18, 1985, this Court
did not do away with canalisation. That was not the issue before this Court. The
expression "whether canalised or not canalised" was to include both. This Court
did not say that canalised items could be imported directly by the importers
ignoring the canalisation process. We are of the opinion that this Court did not
say that canalisation could be ignored. That was not the issue. High public policy,
it must be emphasised, is involved in the scheme of canalisation. This purpose of
canalisation was examined by this Court in Daruka & Co. v. Union of India [AIR
24 oswp2433group-2-1
1973 SC 2711 : (1974) 1 SCR 570 : (1973) 2 SCC 617] where the Constitution Bench
of this Court observed that the policies of imports or exports were fashioned not
only with reference to internal or international trade, but also on monetary policy,
the development of agriculture and industries and even on the political policies of
the country and rival theories and views may be held on such policies. If the
Government decided an economic policy that import or export should be by a
selected channel or through selected agencies the court would proceed on the
assumption that the decision was in the interest of the general public unless the
contrary was shown. Therefore it could not be collaterally altered in the manner
suggested. The policy of canalisation which is a matter of policy of the
Government was not given a go-by by the observations referred to in the order of
April 18, 1985. Indeed it is possible to read the order in a manner consistent with
canalisation scheme in the way we have indicated. If that is so, then it should be
so read. When this Court observed that the fact whether items were sought to be
imported by diamond merchants were canalised would not be an impediment to
the import directly by them, the court meant to say that this could be imported
directly by them through the canalisation organisation. The need for canalisation
stands on public policy and that need cannot be lightly or inferentially given a go-
by. It should not be presumed that collaterally the court had done away with the
system of canalisation based on sound public policy. We have found nothing in
the different authorities on this subject, which militate against the above views.
Therefore, the action taken by the Custom authorities in issuing adjudication
notice and proceeding in the manner they did, we are of the opinion that they
have not acted illegally or without jurisdiction. This must proceed in accordance
with law as laid down by this Court which, in our opinion, is clear enough. The fact
that in subsequent decisions, the petitioner is not a party is not relevant.
Generally legal positions laid down by the court would be binding on all
concerned even though some of them have not been made parties nor were
served nor any notice of such proceedings given."
(emphasis added)
22 In the decision relied upon by the learned
counsel for the petitioner in the case of Prem Chand
Somchand Shah vs. Union of India, the Apex Court
reiterated the law laid down in the case of
M/s.Navinchandra and Company (supra). Ultimately,
in paragraphs 13 and 14 the Apex Court held thus:
"13 Shri H.N.Salve, has, however, urged that
25 oswp2433group-2-1
the view of the decision of this Court in
D.Navinchandra & Company case the Export
Houses who were granted Additional Licences
under the Import and Export Policy 1978-79
have to be treated at par with Export Houses
who have been granted Additional Licences
under the Import and Export Policy for the
subsequent years and since there has been
relaxation in the matter of policy of
canalisation of imports under sub-para (4) of
para 215 in respect of Additional Licences
granted to Export Houses under the Import and
Export Policy 1988-91, the petitioners are
also entitled to a similar relaxation. We
are unable to agree with this contention. In
D. Navinchandra & Company case this Court has
not laid down that Export Houses, like the
petitioners, who are granted Additional
Licences on the basis of the order dated
April 18,1985, are to be treated under Import
and Export Policy prevalent at the time of
import. In that case this Court, while
explaining the background in which the order
dated April 18, 1985, was passed has
observed: (SCC P.76 para 20)
"It has to be borne in mind that the
basic background under which the Rajnikant
decision was rendered, (sic) the Export
Houses had been refused Export House
Certificates because it was insisted that
they should have diversified their export and
26 oswp2433group-2-1
that was a condition for the grant or
entitlement of an Export House Certificate.
It was found and it is common ground now that
that was wrong. Therefore, the wrong was
undone. Those who had been denied Export
House Certificates on that wrong ground were
put back to the position as far as it could
be if that wrong had not been done. To do
so, the custom authorities and government
authorities were directed to issue necessary
Export House Certificates for the year 1978-
79 though the order was passed in April 1985.
This was a measure of restitution,but the
court while doing so, ensured that nothing
illegal was done."
After referring to the decision in Raj
Prakash Chemicals Limited this Court has
stressed: (SCC p.77 para 21)
"The items had to pass to two tests,
firstly, they should have been importable
under the Import Policy 1978-79 and secondly
they should also have been importable under
the Import Policy 1985, and if one may add,
in such terms in accordance with the import
rules, whether canalised or not canalised."
This Court has gone on to emphasise: (SCC
p.77, para 20)
"It must be emphasised that in the
27 oswp2433group-2-1
order dated April 18, 1985, this Court did
not do away with canalisation. That was not
the issue before this Court. The expression
`whether canalised or not canalised' was to
include both. This Court did not say that
canalised items could be imported directly by
the importers ignoring the canalisation
process. We are of the opinion that this
Court did not say that canalisation could be
ignored. That was not the issue. High
public policy, it must be emphasised, is
involved in the scheme of canalisation."
14 Shri Salve has placed reliance on the
following observations of this Court in this
case: (SCC p.77, para 21)
"Canalised items are those items
which are ordinarily open to import only
through a public sector agency. Although
generally these are importable through public
sector agencies, it is permissible for any
import policy to provide an exception to the
rule and to declare that an importer might
import a canalised item directly. It is in
that sense and that sense only that the court
could have intended to define the entitlement
of diamond exporters. They would be entitled
to import items which were canalised or not
if the import policy prevailing under such
category. This was also viewed in that light
in the case of Indo Afghan Chambers of
28 oswp2433group-2-1
Commerce."
(emphasis added)
23 On the other hand, the learned counsel for the
Revenue relied upon the decision of the Apex Court
in the case of Collector of Customs, Bombay vs.
Elephanta Oil and Industries Limited. In the said
decision, the Apex Court has considered the view
taken in the case of D. Navinchandra and Company
(supra) and Jain Export Pvt. Ltd.(supra). The
question involved in the appeal is quoted in the
first paragraph of the said decision which reads
thus :
"SHAH, J.-- The question involved in this appeal is -- whether import of beef
tallow under open general licence (hereinafter referred to as "OGL") was
permissible after issue of Import Trade Control Public Notice No. 29-ITC (PN/81)
on 5-6-1981 clarifying that the existing description "mutton tallow" in Entry 44
shall be read as "tallow of any animal origin including mutton tallow".
Paragraphs 2 and 3 note the factual aspects
which read thus:
"2. Appendix to Import Policy 1981-82 provides for a list of items, import of
which is canalised through public sector agencies. Item 44 provides that import of
tallow of any animal origin including mutton tallow was canalised through State
Trading Corporation of India.
3. It is contended by the respondent that OGL item was imported against licence
dated 29-6-1981 which was an impress licence issued to M/s B. Arun Kumar and
Co., Bombay under the Import-Export Policy for the period 1981-82 and that the
respondent entered into a contract for import which was notarised on 6-6-1981.
Subsequently, the written contract signed by the supplier was submitted to New
Bank of India for issuing letter of credit. However, as the Bank refused the same
and as on 3-2-1983 notice was issued by the supplier for cancellation of the
contract, Writ Petition No. 313 of 1983 was filed in the High Court of Delhi for
various reliefs including the directions to the Bank to open letter of credit. On 30-
3-1983, letter of credit was actually opened. On 16-6-1983 and 1-7-1983, bills of
entries for import of beef tallow were filed."
29 oswp2433group-2-1
In this case, the licence in question was
issued on 29th June 1981 when import policy of 81-82
was in force. On the basis of the public notice
dated 5th June 1981, a notice was issued by the
Department to the assessee. Notice was issued on
the basis of the contention that after 5th June 1981
import of beef tallow was not permissible. An order
of confiscation was passed by the Collector of
Customs on the ground that import of beef tallow was
not permissible. Accordingly, the assessee preferred
an Appeal. The Tribunal held that right to import
the goods under OGL is a statutory right and cannot
be overruled by a public notice and that the import
of beef tallow which ceased to be OGL item when it
was canalized by the public notice is governed by
the import policy when the licence was issued and
not by the public notice. Therefore, an appeal was
preferred before the Apex Court. The Apex Court
allowed the Appeal after considering its decision in
the case of D. Navinchandra. In paragraphs 14 and
16, the Apex Court held thus:
"14. The aforesaid aspect was further considered in Darshan Oils (P) Ltd. v.
Union of India [(1995) 1 SCC 345 : 1994 Supp (5) SCR 278] wherein this Court held
thus: (SCC p. 348, para 8)
"8. In D. Navinchandra & Co. v. Union of India [(1987) 3 SCC 66 : (1987) 2 SCR
989] it was clearly held that the entitlement to import items which were
canalised or not, is governed by the Import Policy prevalent at the time of
import. In the present case, the import of a canalised item being made after
amendment of the Policy by the public notice dated 11-11-1983 in a manner
not permitted by the amended Policy, the appellants cannot claim to avoid
the logical consequences of the import being made contrary to the Import
Policy prevailing at the time of import of the goods."
30 oswp2433group-2-1
16. For levying of the fine also, it is to be stated that before issuance of licence to
the respondent on 29-6-1981 by Import Trade Control Public Notice, it was
clarified that the existing description "mutton tallow" in Entry 44 shall be read as
any tallow of any animal origin including mutton tallow. The bills of entry were
tendered only on 16-6-1983 and 1-7-1983 respectively and at that time
Import-Export Policy of 1983-84 was in force which prohibited import of beef
tallow. Therefore, the respondent has imported a prohibited item. It is also
to be stated that the respondent was an experienced export house well
versed in the policies and procedure in regard to the import and export of
goods as noted by this Court in the other matter of the respondent. [Re: Jain
Exports (P) Ltd. v. Union of India [(1993) 4 SCC 51 : 1993 Supp (1) SCR 185] .]
(emphasis added)
24 In the case of Collector of Customs & Central
Excise Vs. Lekhraj Jessumal & Sons, the Apex Court
was dealing with the interpretation of import policy
in the context of tariff schedule. In the case of
P.T.R. Exports vs. Union of India relied upon by the
learned counsel for the respondent, it was held that
the applicant has no vested right to have export or
import licences in terms of the policies in force at
the time of making application. The Apex Court held
that grant of a licence depends upon policy
prevailing as on the date of grant of licence. The
Apex Court held that the Government is entitled to
issue or withdraw or modify the export or import
policy.
25 Thus, the consistent view taken by the Apex
Court in the case of D. Navinchandra and Elephanta
Oil and Industries is that the import will be
governed by the policy in force on the date of
import and not on the date on which licence was
issued. The case of D. Navinchandra was decided by a
31 oswp2433group-2-1
Bench of three Hon'ble Judges. The decision in the
case of M/s.Jain Exports is by a Bench of two
Hon'ble Judges.
26 We have already referred to the subsequent
policy which came into force on 1 st April 1990. Sub-
clauses 1 of both clauses 223 and 224 thereof
provide that additional licences issued to
export/trading houses prior to 1st April 1990 shall
cease to be valid on or after 1st April 1990. In
these petitions under Article 226 of the
Constitution of India, there is no challenge to sub-
clauses 1 of clause 223 and 224 of the subsequent
policy. However, sub-clauses 2 of clauses 223 and
224 protect imports made after 1st April 1990 subject
to the conditions mentioned therein. Both the
clauses, provided that the restriction imposed by
sub-clauses 1 of clauses 223 and 224 will not apply
to those licence holders who have already made firm
commitments by irrevocable Letters of Credit opened
and established through authorised dealers in
foreign exchange on or before 31st March 1990. It
means that on the basis of the Additional licences
issued prior to 1st April 1990 on exports made in
1986-87, 1987-88 and 1988-89, the imports made after
1st April 1990 will be valid notwithstanding sub-
clauses 1 of clauses 223 and 224 provided the
irrevocable Letters of Credit have been opened and
established through authorised dealers in foreign
Exchange prior to 1st April 1990. Therefore,
wherever the Letters of Credit as aforesaid have
been opened before the cut off date, the import on
32 oswp2433group-2-1
the basis of the extended licences issued prior to
1st April 1990 was permissible.
27 Therefore, the petitioners are entitled to
relief in respect of the cases which are governed by
the sub-clauses 2 of clauses 223 and 224 of the
subsequent policy (1990-93).
28 We have perused the Order in Original passed by
the Collector of Customs. The order is completely
erroneous as it relies upon the said public notice.
We have already held that the said public notice
will not affect the validity of additional licences
issued earlier. However, after the said policy came
to an end on 31st March 1990, the additional licences
which were unexpired and valid would be governed by
the sub-clauses 1 and 2 of the clauses 223 and 224
of the said subsequent policy. In view of sub-
clause 2, the import under the additional licences
could have been permitted after 1st April 1990 only
if the petitioners had made confirmed commitment by
irrevocable Letters of Credit opened and established
through authorised dealers in foreign exchange prior
to 1st April 1990. However, if an extension
thereafter is made after 31 st March 1990, the same
shall be treated as a fresh commitment to which
protection under sub-clause 2 will not apply.
29 In these writ petitions, we cannot go into the
question of fact whether the petitioners had already
made confirmed commitments by irrevocable Letters of
Credit opened and established through authorised
33 oswp2433group-2-1
dealers in foreign exchange prior to 1st April 1990.
30 In Writ Petition No.2433 of 1990 the impugned
order of the Collector of Customs will have to be
set aside by passing an order of remand to the
Collector to decide the show cause notices afresh in
the light of what is held above.
31 In Writ Petition Nos.2109, 2110 and 2111 of
2002 which were transferred from Aurangabad Bench,
there is a challenge to the show cause notices. The
said challenge cannot be upheld and the show cause
notices will have to be decided in accordance with
law in light of what is held in this Judgment.
32 In Writ Petition No.3550 of 1991, there is a
challenge to a similar Order in Original passed by
the Collector of Customs and therefore, by setting
aside the said order, the matter will have to be
remanded to the Collector of Customs for fresh
adjudication on the show cause notices. The same is
the case with the Writ Petition Nos.3225 of 1989,
1970 of 1990, 3314 of 1990, 3315 of 1990 and 86 of
1991.
33 In Writ Petition Nos.2117, 2834, 1805 of 1990
and Writ Petition No.485 of 1992, there is no
challenge to any show cause notice or any order.
Only writ of mandamus is prayed.
34 Accordingly, we pass the following order:
34 oswp2433group-2-1
(I) Writ Petition Nos.2117, 2834 and 1805 of
1990 as well as Writ Petition No.485 of 1992
stand disposed of in terms of what is held in
this Judgment. The authorities are free to
issue show cause notices and pass appropriate
orders thereon within a period of four months
from today;
(II) Writ Petition Nos.2109, 2110 and 2111 of
2002 stand disposed of by directing the
concerned Authority to adjudicate upon the show
cause notices in the light of what we have held
in this Judgment and order;
(III) In rest of the writ petitions, impugned
orders of the Collector of Customs are quashed
and set aside and the matters are remanded to
the Collector of Customs or to the Authority
which is empowered to adjudicate upon the show
cause notices for deciding the show cause
notices afresh in the light of what is held in
this Judgment and Order in accordance with law;
(IV) Fresh order shall be passed in the
aforesaid cases as expeditiously as possible
and in any event within a period of four months
from today;
(V) We make it clear that in those cases which
are not covered by sub-clauses 2 of clauses 223
and 224 of the import and export policy 1990-
1993, the Authorities are free to take
appropriate action in accordance with law.
However, no adverse action can be taken in the
cases which are covered by the aforesaid
clauses;
35 oswp2433group-2-1
(VI) The Bonds furnished by the Petitioners
shall be kept alive for a period of five months
from today;
(VII) Rule is made partly absolute on above terms
with no order as to costs.
(RIYAZ I. CHAGLA,J.) (A.S.OKA,J.)
