Delhi High Court
Nocil Ltd. vs The Policy Relaxation Committee & ... on 17 July, 2017
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: July 06, 2017
Date of decision: July 17, 2017
+ W.P. (C) 8324/2016 & CM No. 34511/2016
NOCIL LTD. ..... Petitioner
Through: Mr. P. Chidambaram, Senior
Advocate with Mr. Sandeep Sethi,
Senior Advocate with Ms.Reena
Khair, Ms. Praveena Gautam, Mr.
Jitesh P. Gupta, Mr. Ashutosh Mishra,
Advocates.
versus
THE POLICY RELAXATION COMMITTEE
& ORS. ...... Respondents
Through: Mr. Abhishek Ghai Advocates for R1
& R2.
Mr. Piyush Gaur, Govt. Pleader for
Union of India.
CORAM: JUSTICE S.MURALIDHAR
JUSTICE PRATHIBA M. SINGH
JUDGMENT
Prathiba M. Singh, J.:
1. The challenge in the present petition is to the orders/minutes dated 24th
April, 2015 of the Policy Relaxation Committee (hereinafter referred to as
'PRC'), a body constituted under the Foreign Trade Policy of 2009-2014.
2. The PRC vide the impugned order dated 24th April, 2015 permitted the
clubbing of three Advanced Authorizations (hereinafter referred to as
'AAs') issued to the Petitioner. However, while permitting the clubbing of
the said AAs, the PRC added the following conditions:-
"I. Clubbing of the 3 Advance Authorizations as
referred above be allowed. On clubbing, all
Authorisations shall for all purposes, be deemed to
be one Authorisation.
II. Export obligation period for the clubbed
Advance Authorisations would be 48 months
from the date of issuance of the first
Authorisation.
III. This is only for regularization of exports
already effected and closure purpose and not for
any further exports/imports.
IV. Accounting of exports made against the
Authorisations so clubbed, beyond 36 months but
upto 48 months, from issue of the earliest
Authorisation would be as under:
(a) For exports made after 36 months but upto 42
months subject to payment of composition fee @
0.5% of FOB value of exports.
(b) For exports made after 42 months but upto 48
months on payment of composition fee @ 0.5%
per month of FOB value of exports.
V. RA shall examine the case in terms of Para 4.09
of FTP (2015-2020) and ensure value addition of
minimum 15%. The 15% value addition for
evaluating entitlement is to be applied on the
entire FOB and CIF of the Authorizations to be
clubbed.
VI. RA should ensure proper accounting of the
duty free inputs with reference to the export
product while clubbing the Authorizations.
VII. Even after clubbing, shortfall, if any, shall be
regularized on payment of Customs Duty +
Interest in terms of Para 4.49 of H.B.P."
(emphasis supplied)
The Petitioner is primarily aggrieved by condition (II) and (IV) (a) and (b)
above.
3. The Petitioner further challenges the impugned Public Notice No. 02 (RE-
2013)/ 2009-2014 dated 18th April, 2013 which permitted clubbing of
applications filed till 4th June, 2012 to be considered under Public Notice
No. 79 (RE-2010)/2009-14. As a consequence of the Petitioner's non-
compliance of the conditions imposed by the PRC, the Petitioner was placed
in a DEL list on the websites of the authorities. The Petitioner prays for its
name to be deleted in the list of defaulter from the respective websites.
Brief Background
4. Three AAs were issued to the Petitioner during the period 2007-10. Two
AAs bearing numbers 0310450977 and 0310450982 were dated 21st
November, 2007 and under these licences, the Petitioner was permitted to
import goods without payment of duty and was obliged to fulfil all the
export obligations attached thereto. The Petitioner was unable to fulfil its
export obligations and had sought revalidation of the said licenses which
was initially granted for a period of 30 months, meaning thereby that the
export obligations had to be fulfilled by the end of 36 months i.e., by 20th
November, 2010. Since the Petitioner was unable to fulfil its export
obligations, it sought an extension for a further period of six months in
December, 2010. Its request came to be rejected by the competent authority
vide its letter dated 8th December, 2010 as only one revalidation was
permissible under para 4.20.3 of Handbook of Procedures ('HBP'). Upon
this rejection, the Petitioner had approached the Policy Relaxation
Committee ('PRC') which rejected the Petitioner's request vide letter dated
3rd March, 2011 and a request for reconsideration of the same was also
rejected by the PRC vide letter dated 22nd November, 2011.
5. On 10th June, 2010, the Petitioner had also obtained its 3rd AA licence no.
0310578263 which was valid for a period of 36 months i.e., up to 10th June,
2013.
6. Around the time of rejection for revalidation of the first two licences by
the PRC, the DGFT issued Public Notice No. 79 (RE-2010)/2009-14 dated
13th October, 2011 by which the HBP was amended. The amended paras
4.20.3 and 4.20.4 are set out below:
"4.20.3 Only such Advance Authorisations shall be
clubbed which have been issued within 36 months
from the date of issue of the earliest Authorisation
that is sought to be clubbed, whether such
Authorisations are valid or not.
4.20.4 Upon clubbing wherever exports are
accounted beyond the EO period of the earlier
Authorisation, a composition fee of 0.5% of the
shortfall in EO shall be levied."
The amendments, thus, permitted clubbing of AAs which were dated within
a time span of 36 months and if exports were not completed within the
prescribed period, then a composition fee of 0.5% of the shortfall in Export
Obligation ("EO") was leviable. This notification gave a second breath of
life to the Petitioner's AAs, which, of course, turned out to be short lived as
will be evidenced from the facts below.
7. On 5th June, 2012, para 4.20.3 of the Handbook of Procedures (Vol-1)
was again amended vide to the following effect:
"4.20.3 Only such Advance Authorisations shall be
clubbed which have been issued within 18 months
from the date of issue of the earliest authorisation
that is sought to be clubbed, whether such
authorisations are valid or not. "
Thus the clubbing of AAs was now permissible for only those which were
issued within 18 months from the date of issue of the earliest Authorisation
and no clubbing of AAs with less than 18 months EOP was permissible.
8. The Petitioner made an application on 29th August, 2012 seeking clubbing
of the aforementioned three Advanced Authorizations which were issued
within 36 months of the earliest AA, after completing the exports and
collecting all the documents. Vide letter dated 30th August, 2012, the
application for clubbing was rejected, as the extant policy, by then, only
permitted clubbing of licences which were issued within the 18 months'
limit. The three AAs of the Petitioner were falling outside the 18 months'
limit and were not entitled to clubbing.
9. The Petitioner, thereafter, sought to clarify vide letter dated 26th
September, 2012 that it had sought clubbing of the three AAs as per Public
Notice No. 79 dated 13th October, 2011. However, the ADGFT
communicated to the Petitioner that the clubbing request is not maintainable
in terms of para 4.20.3 of the HBP, as it stood on the date of application.
10. The DGFT, on 18th April, 2013 issued Public Notice No. 02, as a
clarification in the HBP. The relevant portion of this clarification reads as
under:-
"(1) In order to facilitate disposing of pending
requests of the exporters by RAs, it has been
decided to amend Para 4.20.5 of HBP v1 which
reads as under:-
No clubbing of authorisations issued on or
before 31st March, 2004 shall be allowed.
Further, no clubbing of authorisations
covered under Appendix 30A of the HBPv1
or authorisations with less than 18 months
EOP shall be allowed.
The amended Sub-para shall read as under
[new portion in bold letters]:-
"No clubbing of authorisations issued on
or before 31st March, 2004 shall be
allowed. Further, no clubbing of
authorisations covered under Appendix
30A of the HBPv1 or authorisations with
less than 18 months EOP shall be allowed.
However, requests for clubbing of
Advance Licences/Authorisations, issued
between 1.4.2002 and 31.5.2012, and
received by RAs on or before 4.6.2012
may be disposed of as per the provisions
of HBP-v1 prior to issue of Revised
Edition/Annual Supplement dated
5.6.2012, provided conditions stipulated
in Public Notice No. 79 dated 13.10.2011
are adhered".
11. As per this Public Notice No. 02, all such requests for clubbing filed
prior to the coming into force of the amendment i.e., on or before 4th June,
2012 were to be considered and disposed of as per the provisions prevalent
i.e., as per Public Notice No. 79. It is this clarification that the Petitioner is
aggrieved by. The Petitioner states that the fixing of this date of 4th June,
2012 is completely perverse and arbitrary as it was done on 18th April, 2013
in a retrospective manner.
12. The Petitioner approached the PRC, for the second time, on 25th
November, 2013 seeking clubbing of the three AAs for the purpose of
redemption. The said request of the Petitioner was duly considered and
clubbing was permitted subject to the conditions as extracted in para no.2
above. The Petitioner sought re-consideration of the said conditions but the
PRC reiterated its earlier order, in its meeting dated 26th April, 2016. The
said two orders dated 24th April, 2015 and 26th April, 2016 so passed form
the genesis of the present petition.
Petitioner's submissions
13. Mr. P. Chidambaram, learned Senior Advocate appearing for the
Petitioner, submits as under:-
(i) the PRC had no jurisdiction or power to impose the composition
fee, and having allowed the clubbing of the three AAs, the imposition
of conditions in effect constituted an amendment of the Policy as
envisaged in Public Notice No. 79 which was outside the powers of
the PRC;
(ii) the PRC had no jurisdiction to fix a period of 48 months for
fulfillment of its export obligations, as, under Public Notice No. 79
there was no outer limit so long as the flat rate of 0.5% composition
fee was paid on the exports made after 36 months;
(iii) the Notification dated 18th April, 2013 while fixing a deadline of
4th June, 2012 as the date by which all applications filed for clubbing
would be considered was arbitrary, discriminatory and illegal
inasmuch as there is no basis for the fixation of 4th June, 2012, that
too for filing of an application - what, according to Mr.
Chidambaram, is relevant is the date of completion of exports and that
if the export obligations have been undertaken by 5th June, 2012, the
request ought to be considered under Public Notice No. 79, even
though the request may be filed later;
(iv) the Petitioner had a `legitimate expectation' for being considered
as per Public Notice No. 79 as its AAs were within the 36 months'
period;
(v) the non-compliance of the conditions of the payments as directed
by the PRC in the impugned order, has resulted in the Petitioner being
reflected in a list of defaulters and thus, enormous hardship has been
caused to the Petitioner in view of the same.
14. Mr. Chidambaram further submits that the conditions imposed by the
PRC also lack any basis in the policy inasmuch as while the Petitioner is
willing to fully adhere to the Public Notice No. 79, any conditions
extraneous to the said notification could not have been imposed as the same
are in the realm of policy.
Respondent's submissions
15. Mr. Abhishek Ghai, the learned counsel for Respondent Nos. 1 and 2
submits that this is not the first occasion when the Petitioner has failed in its
obligations. The Petitioner was repeatedly given relaxation for compliance
with its export obligations and having failed to do so, the Respondents
invoked Public Notice No. 79. However, on the date of the filing of the
application by the Petitioner for clubbing i.e., on 29th August, 2012, the
Petitioner's application was not liable to be entertained as the Public Notice
No. 79 had already been superseded and the policy stood amended by the
Notification dated 5th June, 2012. The relevant paragraph of the HBP having
stood amended on 29th August, 2012 - the date of the Petitioner's request,
the Petitioner could not have invoked the policy as it stood prior to 5th June,
2012.
16. It is further the submission of Mr. Abhishek Ghai, that the PRC has the
power to grant relaxation and within the power of relaxation includes the
power to impose conditions. The PRC having allowed the request of the
Petitioner for clubbing of the three AAs, the conditions imposed by the PRC
are not arbitrary or illegal. Mr. Ghai refers to and relies upon the judgment
of Bombay High Court in Kim Chemicals Limited v. Union of India
[decision dated 6th September 2016 in W.P.(C) No. 2325/2015] in support
of his submissions.
Analysis and findings:
17. We have heard the submissions made by the learned counsels for the
parties. From the facts and submissions, the following issues arise for our
consideration:-
Whether the Petitioner is entitled to invoke Public Notice No. 79
dated 13th October, 2011 on 29th August, 2012 and seek clubbing of
the three AAs?
Whether the PRC has the power to impose conditions, while allowing
clubbing of the said three AAs?
Issue No. 1 Whether the Petitioner is entitled to invoke
Public Notice No. 79 dated 13th October, 2011
on 29th August, 2012 and seek clubbing of the
three AAs?
18. The Petitioner, admittedly, filed the application for clubbing of the three
AAs on 29th August, 2012. On this date, the Policy that was prevalent was
the policy dated 5th June, 2012 and not the Policy as envisaged under the
Public Notice No. 79. Thus, the Petitioner could only seek clubbing as per
the policy prevalent on the date of filing of the application. The subsequent
Notification dated 18th April, 2013 merely clarified that all applications filed
till 4th June, 2012 would be considered under the Public Notice No. 79. This
was a logical step inasmuch as the cut-off date of 4th June, 2012 for filing of
the applications and consideration of the same was fixed keeping in mind
the fact that the subsequent policy came into effect from 5th June, 2012.
Thus, the fixation of 4th June, 2012 is not arbitrary or perverse but in fact
stands to logic.
19. Policies of this nature which allow exemptions and benefits are by
themselves dynamic and not static. Just as the Petitioner got a chance to
avail of Public Notice No. 79 after the expiry of the validity of all the three
AAs - which it did not avail during its prevalence, in the same way the
amendment which came into effect on 5th June, 2012 reduced the period of
the AAs which could be clubbed. There cannot be any vested right for a
Petitioner to contend that a particular notification, in this case Public Notice
No. 79 should be continued to be applicable indefinitely, until the Petitioner
has had the opportunity of availing the same.
20. The Petitioner's contention that it has a legitimate expectation for its
request to be considered under Public Notice No. 79 is belied by the fact that
its request for clubbing itself was after the supersession of the said Public
Notice. The HBP had stood amended and hence, there cannot be a legitimate
expectation for continuation of a relaxation policy, which is non-existent on
the date it is invoked.
21. The Petitioner having filed its application for clubbing on 29th August,
2012 cannot, therefore, legitimately expect that its application would be
considered under Public Notice No. 79 which already stood amended and
superseded. The authorities, therefore, rightly rejected the application for
clubbing of the three AAs which were not as per the Notification dated 5th
June, 2012.
Issue No. 2: Whether the PRC has the power to impose
conditions, while allowing clubbing of the 3
AAs.
22. The Petitioner, under these circumstances, approached the PRC for
seeking an exemption and exercise of discretion in its favour. The powers of
the PRC are contained in Para 2.5 of the Foreign Trade Policy 2009-14. The
said paragraph is reproduced herein below:-
'2.5 Exemption from Policy / Procedure
DGFT may pass such orders or grant such
relaxation or / Procedure relief, as he may deem fit
and proper, on grounds of genuine hardship and
adverse impact on trade. DGFT may, in public
interest, exempt any person or class or category of
persons from any provision of FTP or any
procedure and may, while granting such
exemption, impose such conditions as he may deem
fit. Such request may be considered only after
consulting committees as under:
Sl. Description Committee
No
(i) Fixation / modification of Norms Committee
product norms under all
schemes
(ii) Nexus with Capital Goods (CG) EPCG Committee
and benefits under EPCG
Schemes
(iii) All other issues Policy Relaxation
Committee (PRC)
A mere perusal of the above reveals that the DGFT/PRC may grant an
exemption in case of genuine hardship and adverse impact on trade or in
public interest, and, while doing so, impose such conditions as it deems fit.
23. Thus, the powers of the PRC, while making its recommendations are
wide and are purely discretionary. The PRC, in its order dated 24th April,
2015 has considered the relevant facts and permitted the clubbing of the
three Advanced Authorizations and while permitting the said clubbing,
conditions 'as it deemed fit' have been imposed by it which cannot be said
to be perverse or arbitrary. The review order of the PRC dated 26th April,
2016 also clearly shows that the case of the Petitioner was discussed at
length and it is only thereafter, that the decision dated 24th April, 2015 was
reiterated. The submission of the Petitioner that the PRC does not have the
power to impose such conditions does not appear to be correct inasmuch as
the order of clubbing is by itself an exercise of power for granting an
exemption.
24. No person is entitled to an exemption as a matter of right. Exemptions
are granted by Authorities, which are purely discretionary orders. While
exercising discretion, as per Para 2.5 of the Foreign Trade Policy 2009-14, if
the PRC has imposed the conditions which it deemed fit, in public interest,
unless it can be shown that the said conditions were completely perverse,
arbitrary or illegal, the same cannot be interfered with. There is nothing that
is being pointed out to show that the conditions imposed by the PRC are in
any manner grossly unreasonable in order to call for any interference by us.
The exercise of discretion to grant exemption is a delicate balance between
balancing the hardship of the Petitioner and the adverse impact on trade. The
PRC, in the background of the Petitioner's case, has imposed conditions
which are neither illegal nor arbitrary. Similar conditions have also been
imposed by the PRC in the case which came up for consideration before the
Bombay High Court in Kim Chemicals (supra). The said power, being
exercised by the PRC in public interest, the conditions imposed therein
cannot be challenged on the ground of legitimate expectation, inasmuch as,
the principle of legitimate expectation does not come into play where there
is exercise of power in public interest. Recently, the Supreme Court in
Reliance Telecom Ltd. v. Union of India (2017) 4 SCC 269 has held as
under:-
"The principle of "legitimate expectation" can
never override public interest and when there is
larger public interest, the question of legitimate
expectation does not arise; and in any case, in the
present case, if we allow ourselves to say so, this
contention is absolutely sans merit."
25. The Bombay High Court in Kim Chemicals (supra), has rightly
observed as under:-
"18. We are in agreement with the Respondents
that the Petitioners case as set out in the petition
cannot be accepted. It is evident from the petition
itself that they aware of the defaults and which had
occurred. They firstly sought a relaxation from the
condition and then made an application for
clubbing. The Petitioners have gone as far as
insisting that their case is similar to other two
companies one of which is M/s. Prachi
Pharmaceuticals Pvt. Ltd. They had also, in
similar circumstances, sought identical relief of
clubbing according to the Petitioners. However, on
the facts and circumstances and which are
peculiar to the Petitioners case, the Respondents
have, in the impugned orders, copies of which are
from pages 43 to 48 of the paper-book, duly
informed the Petitioners that the clubbing of the
two advance authorisations as referred
particularly by us in the foregoing paragraphs is
allowed. This is only for recognition of exports
already effected and closure purpose and not for
any further exports/imports. Pertinently, such a
condition is not challenged. Then condition No. III
appearing at page 43 in the order dated 11th
February, 2014, reads as under:
"III. Exports made within 48 months from
the date of earliest Authorisation i.e. upto
31.07.2012 shall only be taken in to
consideration for EO fulfilment and
clubbing subject to payment of composition
fee @ 0.5% on FOB value of export made
beyond the stipulated EOP in the earliest
Authorisation. RA is directed to examine the
case in terms of Para 4.1.6 of FTP and
ensure value addition of minimum 15%. The
15% value addition for evaluating
entitlement is to be applied on the entire
FOB and CIF of the authorisations to be
clubbed. RA should ensure proper
accounting of the duty free inputs with
reference to the export product while
clubbing the Authorisations."
19. On a perusal of this condition, we do not find
that the Petitioners have been treated unfairly and
inequitably. A person who has not been able to
fulfill the obligations cannot insist on an
unconditional relaxation or exemption. The
Committee in the elaborate exercise conducted by
it and which resulted in passing of the order dated
3rd September, 2014, by the second Respondent,
found that the relaxation has to be granted on case
to case basis taking into consideration genuine
hardship and the likely adverse impact on trade. It
is empowered to grant an exemption/relaxation of
the conditions. One decision of the Policy
Relaxation Committee cannot be quoted as a
precedent in another case as the extent and
genuineness of hardship may vary from case to
case. Policy relaxation by its very nature is for
relaxing normal policy/procedural provisions and
cannot be claimed as of right. The Policy
Relaxation Committee has extensively considered
the case of the Petitioner. It found that it got 51
months effectively for completing the export
obligations, but the commitment made was not
honoured. It is in these circumstances that the
clubbing applications were considered and the
condition was imposed restricting the compliance
to 48 months. Thus, exports effected upto 48
months from the date of issuance of the earliest
authorisation for clubbing the authorisations came
to be imposed. We do not think that such an
exercise which by its very nature is a matter of
discretion so as to enable the defaulters like the
Petitioners to fulfill their obligations belatedly,
can be challenged on the ground that there is a
condition imposed in the relaxation or exemption.
The above conclusion of the Committee cannot be
said to be perverse or based on no material. We do
not think that the Committee has failed to apply its
mind to the relevant facts and circumstances of the
Petitioner's case. The Petitioners cannot go on
improving their version as originally projected by
relying on some information available to them
after an application made under the Right to
Information Act, 2005, was invoked by them. By its
very nature, the power to relax is exercised on
case to case basis. Once relaxation is not a right
and nothing accrues in the Petitioners' favour to
apply and seek unconditional relaxation, then, all
the more we do not think that the exercise
undertaken by the experts in the field and in
charge of interpretation and implementation of the
foreign trade policy should be interfered by us in
our equitable and discretionary jurisdiction under
Article 226 of the Constitution of India."
26. Moreover, in the present case, the earliest AAs which were issued, dated
back to 21st November, 2007 with an export obligation period of 24 months.
The Petitioner has had sufficient time to discharge the said obligations. In
fact, even the Public Notice No. 79 which permitted clubbing of the three
AAs with a time span of 36 months was a relaxation. The invocation of the
said relaxation after the same was superseded and amended cannot be
claimed as a matter of right. On the date when the application was filed by
the Petitioner, the said Public Notice No. 79 had already lapsed. The
relaxation by the PRC allowing clubbing of the three AAs being an exercise
of discretionary power and the conditions imposed thereon, being in
furtherance of the exercise of that discretion for granting exemption from
applicable policy and procedure, this Court does not deem it a fit case for
interference under Articles 226/227 of the Constitution of India.
27. The writ petition and the pending application are, accordingly, dismissed
with no orders as to costs.
PRATHIBA M. SINGH, J
S.MURALIDHAR, J
JULY 17, 2017
j
