Lakshmi Traders Delhi And Another vs Union Of India Others
1987 Latest Caselaw 71 Del

JUDGMENT

B.N. Kirpal, J.

1. The challenge in this petition is to the decision of the respondents who have not extended the validity of an import license which was held by the Petitioner.

2. On the basis of the exports which had been made, M/s. Ciba Geigy of India Limited had been even a replenishment license dated 10th September, 1980 for a sum of Rs. 14,66,325. On the basis of this license a number of items mentioned therein could be imported. One of the items which could be imported, by virtue of the said license, was Oxy Tetracyclene.

3. The aforesaid replenishment license is easily transferable. The petitioner herein, according to the averments made in the writ petition, had purchased the said license.

4. On the basis of the said license, on 5th May, 1981, the petitioner opened a letter of credit for the import of Oxy Tetracyclene of the value of Rs. 14,43,124. The foreign suppliers shipped two consignments under the said letter of credit, one of which was cleared by the Customs authorities. The second consignment of 4250 Kgs. valued at U.S. $ 85,000 was shipped on board the vessel S.S. "PRESIDENT EISENHOWER" on 15th June, 1981. The petitioners filed Bills of Entry for clearance of the goods but it was they discovered that the entire consignment of the goods but it was then discovered that the entire consignment consisting of 425 packages containing 4250 Kgs of Oxy Tetracyclene was missing.

5. The Port Trust and the Customs authorities issued the necessary Short Landing Certificate in September, 1981. The petitioners filed a claim with the Insurance Company and the claim was settle only on 2nd November, 1982 for a sum of Rs. 8,94,736.84.

6. On 28th January, 1983, the petitioner wrote to respondent No. 3, the Additional Chief Controller of Import and Export, Delhi, requesting for the validation of its license so that it could import the aforesaid item of Oxy Tetracyclene. This application was made in terms of paragraph 345(2) of Hand Book of Rules and Producers for the year 1982-83.

7. By order dated 28th April, 1983, the petitioners' request for revalidation was received on the ground that the item sought to be imported fell under the list which contained the na,me of items whose import was absolutely banned. Being aggreieved, the petition filed an appeal against the said decision. By order dated 21st December, 1983, the appeal was dismissed,o the three reasons given were :-

"First6y there was a delay of one year and seven months in applying for revalidation;

Secondly, the item,s sought to be imported were absolutely banned; and

Thirdly, the petitioners' insurance claim has been settled, therefore, the petitioners had suffered no loss."

The petitioners then filed a revision petition before the Central Government but by order dated 30th July, 1984, the same was dismissed on the ground that as per the current policy, revalidation was not possible.

8. In this petition filed under Article 226 of the Constitution, the petitioner challenge to the decision of the respondents in refusing to extend the validity of the license.

9. In order to appreciate the contentions, it is first of all necessary to examine the relevant provisions of the Hand Book of Rules and Procedure and the Import Policy in connection with this item namely, Oxy Tetracyclence.

10. The license which was sought to be utilised by the petitioners had been issued on 10th September, 1980 and was, therefore,covered by the policy for the year 1979-80 . Appendix 3 of the policy for the year 1979-80 contained a list of banned items. Oxy Tetracyclene was at Sr. No. 357 of the said list. Appendix 17 contains the statement of import policy for registered exporters. Item No. B-11 of Appendix 17 inter alia provided 15 per cent import replenishment of unprocessed bulk drugs and Chemicals appearing in the list of banned and canalized items of Appendix 3. As a result of this the said import license of Oxy Tetracyclene, which was otherwise in the list of banned items , could be imported to the extent of 15 per cent of the exports which had been made by the exporter, namely, M/s. Ciba Geigy of India Limited.

11. The application for revalidation was filed on 28th January, 1983. The relevant policy at that time was for the year 1982-83. Oxy Tetracyclene, in the year 1982-83, was now placed in Appendix 4 of the Import Policy. Appendix 4 contained the list of non-permissible items (banned.). Nevertheless Item B-11. 1 of Appendix 17 inter alia permitted import of unprocessed bulk drugs and Chemicals appearing in Appendix 3 and 4, to the extent of 15 per cent imports. It will be by virtue of this that in 1982-83 also import of Oxy Tetracyclene was permissible on the said license.

12. A persual of the relevant entries for the year 1979-80 and of 1982- 83 will show that whereas Oxy Tetracyclene was in the list of banned items nevertheless by trite of the provisions of Appendix 17, the said item could be imported up to a particular percentage of exports made. Reference may now be made to the provisions of paragraph 345 of the Hand Book of Import and Exports Procedure for the year 1982-83.

Replacement licenses :

345. (1) Goods imported in replacement of those previously imported which have been found to be defective or otherwise unfit for use, or have been lost or damaged after import, would be allowed to be cleared under Open General license No. 4 provided the conditions stipulated under the said OGL are fulfillled. In respect of such replacement imports, the shipment should be made within 24 months from the date of clearance of thee previously imported goods through the Customs or within the guarantee period in the case of machines or parts thereof. Cases, where shipments for replacement have not been made within 24 months will not morally be considered. However, in case of genuine hardship, for reasons beyond the control of applicants, the licensing authority may consider such requests on the merit of each case. In such case, the applicants should produce the same documents as have been laid down for import under OGL No. IV, and should give reasons for which import court not be made under OGL No. IV.

(2) In cases, where the goods have been found short shipped, short- landed or lost in transit prior to actual import, and are detected as such at the time of clearance through the customs, no fresh license will be issued to cover the goods. In cases where the validity or original license has expired, the same will be revalidated to facilitate the rampart of such goods.

(3) In the cases not covered by sub-paras (1) and (2) above licensing authority may consider, on merits, applications for issue of replacement license. Such applications may be made in the form relevant to the category of the applicant concerned.''

13. Paragraph 345 (1) deals with the cases where imported goods are found to be defective or unfit for use or lost or damaged after import has been made. Paragraph 345 (1) provides that in replacement of such damaged or lost goods import can be made and cleared under Open General license No. 4. The said conditions contained in paragraph 345 (1) and those contained in Open General license will of course have to be adhered to. Sub-para (2) of Paragraph 345, however, is concerned with those types of cases, like the present, where the loss or short shipment or short landing is discovered at the time of clearance. In such cases the original license if it has expired, is to be revalidated to facilitate the rampart of such gods, sub-para (3) provides of cases not covered by sub-paras (1) and (2) to be considered by the licencing authority on merits.

14. Reference may also be made, at this stage, to the provisions of Appendix 16 for the year5s 1979-80. Clause (5) of said Appendix 16 inter alia provided that goods could be imported which had been supplied free of charge by foreign suppliers or be imported against insurance (marine), claim settle by insurance company in replacement of the goods previously import but were found defective or otherwise unfit for use or loss damage for import. Similar provision existed in Appendix 16 for the policy for the year 1982-83.

15. It has been contended before me by counsel for the respondent, and this is one of the reasons given in the impugned order also, that the license cannot be revalidated because items sought to be imported was in the banned list.

16. To my mind there is no merit in this submission. Firstly, the expression banned list is really a misnomer, because goods mentioned in the said list can in fact be imported against a license. It is not that as if the goods mentioned in Appendix 3 or 4, cannot be imported at all. In fact in this case itself import of Oxy Tetracyclene was allowed. The problem has arisen only because the said consignment could not be located and may have been lost in transit. Secondly, there is no dispute that originally the item was being validly imported in the year 1980- 81. At that time Oxy tetracycline was in Appendix 3 which contained the list of items import was otherwise banned. The position with regard to this item, namely, Oxy Tetracyclene remained unchanged in the year 1982-83 as well. In that year also Oxy Tetracyclene was in the list of banned items but, as already noted herein above it could be imported by virtue of the relevant provisions of Appendix 17. Therefore, merely because Oxy Tetracycline was an item in the banned list in the year 1982-83 cannot be a valid ground for refusing to revalidate the license because that item was on the banned list even in the year 1979-80. The position in the two years, remained the same.

17. Learned counsel for the respondent has strongly relied upon a decision of the Supreme Court in the case of Union of India v. M/s. Godrej Soaps Pvt. Ltd. - and also Rajparkash Chemical Pvt. Ltd. v. Union of India - . These cases have no application to the present case. The Supreme Court, in the aforesaid cases, was dealing with the items whose import had been banned but the importers therein were seeking to import the banned items and in those cases originally the import items which was sought to be imported has not been banned. Those items no doubt were put on the banned list subsequently. It is under those circumstances the Supreme Court said that dealing with cases of additional license, and not replacement license, in the present case, that the importer cannot be permitted to import an item which had now been placed on the banned list at the time when the license was sought for. In the present case at the time when the revalidation was asked for, the position regarding import of the item, namely, Oxy Tetracyclene remained unchanged. This item was no doubt in the banned list of 1982-83 but is was also in the banned list at the time when its import was originally allowed in 1979-80. In 1979-80 as well as in 1982-83 the license holder could, however import this item by virtue of the provisions of Appendix 17. Therefore, in law, it was in fact wrong to state that his item was on banned list as far as the petitioner were concerned. As regard the petitioners were concerned, the said item could be validly imported.

18. The other two reasons which have been given by the first appellate authority in rejecting the application also are not valid. It is incorrect to state that in the present case there is a delay of one year and seven months for applying for revalidation. The facts enumerated above show that the claim was settled by the insurance company only in November, 1982. The application for revalidation, was made soon thereafter in Janufary, 1983. To my mind there is no unreasonable delay. In any case under paragraph 345 (1) import under O.G.L. by way of replacement can be made within 24 months. In the present case, the goods were originally sought to be imported in July/September, 1981. Taking the time of 24 months as an indication, the present application for revalidation was made within that time, and as such the petitioner's application could not be having rejected on the ground of delay.

19. With regard to the insurance claim having been settled, that is not dispurted. However, that is not the ground given in the import policy for rejecting the claim for revalidation. The settlement of the insurance claim only mean that the petitioners were not out of pocket. The payment of insurance claim did not mean that the petitioners could enjoy the fruits of the license, namely, to be able to import the items specified in the import license, to sell those goods imported and to make profit from them. The insurance money paid was only by way of compensation for the foreign exchange lost. It did not make good the loss of profit.

20. No other contention has been raised before me. In may view, therefore, the reasons given by the respondents for rejecting the petitioner's application for revalidation are not valid in law.

21. This writ petition is accordingly allowed. The impugned order and quashed. A writ of mandamus is issued directing the respondents to revalidate the license of the petitioners with in a period of six weeks from today. The petitioners will be entitled to costs.