Maharaja Exporters (India) vs Union Of India & Ors.
1999 Latest Caselaw 744 Del

ORDER

Arun Kumar, J.

1. Under a Scheme announced by the Govt. of India categories were granted Special Import Licences (for short SIL). The basis for grant of SIL could be Net Foreign Exchange (for short NFE) earned during the previous year or the Free on Board (for short FOB) value of the exports during the previous year. The petitioner has challenge the refusal of the respondents to issue SIL for the licencing year 1993-94 in favour of the petitioner on the basis of NFE. According to the petitioner it is entitled to the SIL on the basis of NFE instead of on the basis of FOB.

2. Briefly the facts are that the petitioner at all material times enjoyed the status of a "Trading House" in terms of the Import-Export Policy of the Government. The petitioner is carrying on the business of exporting hand knitted carpets of staple/rayon synthetic yarn, silk and other categories. Earlier it enjoyed the status of "Export House" which was upgraded to the status of Trading House with effect from 1st April, 1989. It continued to enjoy the same status of Trading House up to the material time. According to the Import-Export Policy effective from 1st April, 1992 to 31st, March 1997, the status of Export House, Trading House, Star Trading House was granted to the exporters on the basis of their average Annual Net Foreign Exchange earnings during the three preceding years. According to the said Policy the Export Houses, Trading Houses and Star Trading Houses were entitled to Special Import Licence for such value of bearing such portion to the NFE earned during the previous licensing year as shall be fixed by a Scheme to be notified under the Policy for the particular year. As per public notice No. 64/(PN)/92-97 dated 21st October, 1992 the Scheme was set out for the licencing year AM 93 for grant of SILs to various categories of exporters. For Trading Houses the maximum value of SILs was fixed at 7.5% of the NFE earned in the previous licencing year. Even prior to the said public notice the practice used to be that SILs were granted on the basis of net NFE earned during the preceding year.

3. A public notice No. 120/(PN)/92-97 dated 31st March, 1993 brought about a sudden change in the basis or grant of SILs. FOB value of exports in the preceding licencing year became the basis for grant of SILs instead of NFE. Under the public notice the maximum value for which SILs were to be granted for various categories of exporters was fixed on the basis of FOB value of exports in the preceding licencing year. This change in the Policy placed the petitioner in a disadvantageous position. The petitioner had an advantage in the NFE system because the commodities exported by the petitioner there was no expense involved by way of use of Foreign Exchange in the inputs. The raw material comprised of local yarn available in India. Therefore, the content of Foreign Exchange earnings was quite substantial. However, in view of the public notice dated 31st March, 1993 the petitioner had no option but to file its application for grant of SIL for the licencing year 1994 on the basis of FOB value of exports affected by the petitioner during the year 1993. The last date for submission of the applications as per the public notice was 30th September, 1993. The petitioner filed its application on 23rd September, 1993.

4. It appears that in view of several representations received by the Government from various quarters specially from the exporters of products in the small scale sector like handicrafts, handlooms and carpets, the Govt. revised its policy about issue of SILs. On 9th December, 1993 another public notice No.179/(PN)/92-97 was issued. The existing provision for grant of status as well as SILs on the basis of FOB value of exports was continued. However, an alternative route was provided to the exporters on the basis of NFE. The exporters were given an option. They could either seek SIL on the basis of FOB value of exports in the previous year or on the basis of NFE during the previous year. The petitioners being fully eligible to apply for grant of SIL on the basis of NFE submitted a revised application on 3rd January, 1994 for grant of SIL on the basis of NFE. The petitioner deposited the difference in licence fee amounting to Rs. 13,426/- alongwith the revised application. On 9th April, 1994 the Licencing Authority directed the Petitioner to have the Trading House Certificate endorsed from the Director General of Foreign Trading so as to enable the petitioner to claim SIL on NFE basis. The petitioner's revised application was found to be incomplete in this respect and the petitioner was called upon to complete the same. Vide its letter dated 29th April, 1994, the petitioner submitted a photo copy of the Trading House Certificate duly endorsed by the Director General of Foreign Trade. The grievance of the petitioner in the present writ petition is that inspite of having submitted the revised application for issuance of SIL on the basis of NFE, the respondent has issued SIL to the petitioner only on the basis of FOB for Rs. 56,39,000/- instead of the NFE basis according to which it would come to Rs. 1,23,52,000/-. This has resulted in a loss to the petitioner to the extent of Rs. 53,13,000/- the petitioner has requested the respondent vide its letter dated 4th October, 1994 for carrying out the necessary correction which was however, declined by the respondent. The petitioner has challenged the decision of the respondent by way of the present writ petition.

5. It is not in dispute that the petitioner enjoyed the status of Trading House as per the Export-Import Policy during the relevant period. A public notice dated 31st March, 1993 brought about the change in the criteria in the issue of SIL. Prior to this as per the criteria the petitioner was entitled to SIL on the basis of NFE. After the public notice dated 31st March, 1993 the petitioner was entitled to SIL only on the basis of FOB, i.e. 3% of the FOB value of exports in the preceding licencing year. In view of representations from the Trade this was admittedly again revised by way of public notice dated 9th December, 1993 according to which the NFE route was restored as an alternative route for grant of SILs. This was done primarily for the reason that exporters of certain products particularly in the SSI Sector like handicrafts, handlooms and carpets having negligible import intensity were adversely affected. The relevant portion of the revised scheme is reproduced as under :-

"x x x x x x x while the existing provisions for the grant of Export House, Trade House and Special Trading House status as well as special import licence on the basis of FOB value of exports continue to be operative, an alternative route is provided to the exporters based on the NFE criateria. Exporters can now exercise the option and once such option is exercised, it shall not be permitted to change."

6. The petitioner exercised its option under the said public notice and filed its revised application on 3rd January, 1994 and deposited the balance licence fee. The letter of the respondents dated 9th April, 1994 in response to the said revised application of the petitioner has an important bearing on the controversy in the present case and, therefore, needs a special mention. The same is reproduced as under:-

"M/s. Maharaja Exporters India, 135, 1st Floor, Devika Tower, 6, Nehru Place, New Delhi.

Subject: APPLICATION FOR GRANT OF SPL. IMPORT GEM REP. LIC. DURING THE EXPORT PERIOD AM-93

Sir,

On the above mentioned subject I write to say that, your case is deficient for the following reasons:-

You are advised to furnish the following;

(1) Declaration duly certify by C.A. the FOB value mentioned in Col. No. 13% the application has actually been realised in terms of Rep. Cir. No. 16/93 dated. 29.10.93.

(2) You are also advised to furnish the C.A. Regd. No. Photocopy issued by the Institute of Chartered Accountants of India.

(3) You are also informed as per P. Notice No.179 on NFE basis application cannot be considered because you here to endorsed on the Export House Certificate from DGFT Office.

Your reply should reach this office within 30 days from the date of issued of this letter, failing which your case will be treated as finally closed.

Yours faithfully,

(H.K. SHARMA) CONTROLLER OF IMPORT & EXPORTS FOR JT. DIRECTOR GENERAL OF FOREIGN TRADE."

7. This letter shows that the respondent was processing the application of the petitioner for SIL on the basis of revised criteria and it was not the stand of respondents that the petitioner was not entitled to exercise its option under the alternative route provided by the public notice dated 9th December, 1993.

8. Learned counsel for the petitioner submitted that the case of the petitioner for grant of SIL on the basis of NFE earned during the previous year is fully covered under the revised policy declared as per public notice issued on 9th December, 1993 and the refusal of the respondents to grant SIL on that basis to the petitioner is wholly arbitrary, illegal and unjustified. The counsel has particularly drawn our attention to para 2 of the public notice dated 9th December 1993 wherein it is provided that while the FOB route for grant of SIL continued to be operative, an alternative route was provided to the exporters based on NFE criteria. Exporters were permitted to exercise the option in pursuance of the said notice. Opening of an alternative route and providing option to the exporters to adopt either of the two routes for grant of SIL squarely shows that the exporters could make up their mind as to which route they wanted to take after declaration of the said revised policy. The following table was provided in the said public notice showing entitlement of each category of exporters for the Special Import Licence:-

                Export House        Trading House  Star Trading                                          House
Category A.    2% of the FOB       3% of the FOB  4% of the value of 
               value of exp-       value of exp-  exports in the 
               orts in the         orts in the    preceding licensing
               preceding           preceding      year.
               licensing year.     licensing year.
               OR                  OR              OR
Category B.    5% of NFE on the    7.5% of NFE on  10% of NFE on the
               exports in the      exports in the  exports in the
               preceding lice-     preceding lic-  preceding licens-
               nsing year.         ensing year.    ing year."

 

9. The table confirms that both routes were available to exporters. The exporters had to make up their mind as to which route they wanted to adopt for purposes of grant of SIL. They had to choose the route more beneficial to them. There is nothing in the said Public Notice which debars an exporter like the petitioner who had already made an application for grant of SIL under the Public Notice dated 31st March, 1993 or FOB basis. The petitioner was vigilant enough to make the application before the expiry of the last date under the Public Notice dated 31st March, 1993. The revised policy announced on 9th December, 1993 does not contain any restriction qua those who had already applied under the previous policy. It leaves the filed open for applications in either category. The last date for making the application was also prescribed. The petitioner accordingly applied for SIL on NFE basis on 3rd January, 1994 for the balance amount and paid the requisite balance licence fee. As a matter of fact the respondents processed the case of the petitioner on the basis of the application dated 3rd January, 1994. This is clear from respondents' letter dated 9th April, 1994 wherein certain deficiencies in the fresh application of the petitioner were pointed out. The petitioner was called upon to comply with the said letter and remove the deficiencies within thirty days from the date of issue of the letter. The letter further stated that if the petitioner failed to do so, its case would be treated as closed. From this letter also it is clear that there was no move on the part of respondents to disqualify the petitioner for the NFE route or reject the application of the petitioner for grant of SIL on NFE basis as per the revised policy dated 9th December, 1993. The Petitioner removed whatever deficiencies were pointed out by the respondents in their letter dated 9th April, 1994. In the rejection letter also the respondents did not disclose any ground for the rejection. The letter of rejection is totally silent on the reasons for declining to issue the licence to the petitioner on NFE basis.

10. In the above facts and circumstances of the case we are unable to accept the stand of the respondents that the petitioner was not entitled to exercise the option under the revised policy declared vide public notice dated 9th December, 1993 for the reason that the petitioner had already applied for SIL on FOB basis under the pre-revised policy. Accepting the stand of the respondents would amount to putting premium on indolence. The petitioner cannot be punished on account of its diligence in making the application in pursuance of the pre-revised policy just for the last date for applying under the then existing policy. In our view the test for rejection of an application can only be when the party does not fall within the criteria contained in the policy. It is not the case of the respondents that the petitioner does not fall within the criteria under the revised policy. The basis now spelled out by the respondents for the first time in their counter affidavit for rejecting the petitioner's application appears to be wholly unjustified and arbitrary. Secondly, the present case set up by the respondents against the petitioner appears to be an after-thought because if the application of the petitioner for SIL under the NFE route was to be rejected on the ground now held out against the petitioner, there was no reason to write letter dated 9th April, 1994 asking the petitioner to remove deficiencies in the application. The ground for rejection clearly appears to be an after-thought. The respondents have raised only one defense in their counter affidavit. According to them those who had already obtained or filed application for grant of SIL on or before 30th September, 1993, i.e. prior to the announcement of the revised policy, the alternative route was not available. In other words the respondents are trying to confine the benefits under the revised policy to those who had not applied at all under the pre-revised policy. The respondents have stated that there was no reason to provide fresh opportunity to those who had already applied under the pre-revised policy. In our view this is no ground for rejection of the claim of the petitioner. If the petitioner falls within the criteria contained in the revised policy the benefits should not be denied to the petitioner simply because it had applied under the then prevailing policy when it was not known whether there will be a revision in the policy or not. The revised policy contains certain parameters and those who are able to meet them ought to get the benefit flowing from the revised policy. We find the impugned decision of the respondents in denying the benefit of the NFE route for grant of SIL to the petitioner wholly arbitrary and unjustified. Accordingly this writ petition is allowed and the respondents are directed to issue Special Import Licence in favour of the petitioner on the basis of Net Foreign Exchange earned during the precious year as per the revised application filed by the petitioner. This is, however, subject to the petitioner complying with any other requirement, if necessary, in this behalf. The petition stands disposed of. The petitioner will be entitled to costs of these proceedings.