Customs, Excise and Gold Tribunal - Mumbai
Raj Copper And Cable Industries vs Collector Of Customs on 29 July, 1987
Equivalent citations: 1990ECR383(TRI.-MUMBAI), 1988(38)ELT371(TRI-MUMBAI)
ORDER K. Gopal Hegde, Member (J)
1. The Revision Application filed before the Government of India against the Order No. 117 of 1981, dated 31.1.1981 passed by the Central Board of Excise and Customs statutorily stood transferred to this Tribunal for being heard as an appeal.
2. The brief facts necessary for the disposal of this appeal are :
The Appellants M/s. Raj Copper and Cable Industries imported six Amine Pencil-lanic Acid valued at Rs. 36,45,402/- and sought clearance against the additional licence dated 19.1.1979 granted to M/s. Sawhney Brothers, exporters of readymade garments, which was valid for import of "items appearing in Appendices 5 and 7 excluding items appearing in Appendix 26 and subject to the condition that the import of a single item shall not exceed Rs. 2 lakhs in value as per para 176 of AM 79 Policy Book". The customs objected to the clearance, firstly, on the ground that the goods imported are not covered by items appearing in Appendices 5 and 7; secondly on the ground that goods are imported are canalised falling under Item 4 under the heading "drugs" of Appendix 9 and it can be imported only by the State Chemicals and Pharmaceuticals of India Ltd., thirdly, that the importers had not entered into a firm commitment with the foreign suppliers by opening an irrevocable letter of credit before 1.5.1979. Show cause notice was issued to the Appellants as to why the goods should not be confiscated and why penalty should not be levied under Section 112. They replied to the show cause. In this the Appellants inter alia contended that as early as on 15.3.1979 orders were placed with M/s. Mitsui & Company for the supply of 6 Amine Pencillinic Acid and the said company had agreed to supply the material within the validity period of the licence and the remittances will be made within 60 days from the date of Airway Bill. Due to scarcity of material in international market the suppliers requested to extend the validity of the licence to give effect to the contract and the licence holder got revalidated the licence. Thereafter letter of credit was opened and in the circumstances they pleaded that there had been no violtion of ITC Regulations. The Addl. Collector of Customs, however, rejected the contentions urged on behalf of the Appellants. He held that the import was not valid and therefore, ordered confiscation of the goods, but allowed redemption on payment of fine of Rs. 10 lakhs.
3. Being aggrieved by the order of the Additional Collector, the Appellants herein preferred an appeal before the Board and the Board rejected the appeal holding that the order passed by the Additional Collector was correct in law and on facts and the fine imposed in lieu of confiscation cannot be considered as punitive. During the hearing of this appeal, Shri B.K. Sheth for the appellants made the following submissions :-
(i) The goods were imported by the Appellants as letter of authority holders in respect of the licence in question. The licence which was issued on 19.1.1979 was valid for 12 months, but it was revalidated on 4.2.1980 for a further period of six months. The import has taken place during the validated period of the licence. Further, the goods imported are raw materials covered by OGL Item I of Appendix 10 of the Policy AM 79. There was a firm agreement for purchase of the goods with the foreign suppliers as early as on 15.3.1979. The agreement was in conformity with the existing policy, namely, the Policy AM 79 which did not stipulate firm commitment by way of opening an irrevocable letter of credit. When the licensing authority revalidated the licence, it had not imposed any condition and therefore the Policy that would be applicable is the Policy during which the licence was issued and not the subsequent Policy. Shri Sheth further contended that the reasons given by the Board are extraneous. The Board's observation that the revalidation was effective only for eligible items on the date of revalidation, namely, 4.2.1980 is erroneous. Once the revalidation is done it relates back to the date of licence and the period of licence gets extended to 18 months instead of 12 months. Shri Sheth further urged that in terms of para 176 of AM 79 policy the Appellants were en- titled to import not only items appearing in Appendices 5 and 7 but also OGL items. During the Policy AM 79,6 Amine Pencillinic Acid was not a canalised item and it became canalised only during the Policy 80. Shri Sheth further contended that the Public Notice 27 of 79, dated 21.5.1979 stipulating the condition regarding opening of irrevocable tetter of credit cannot govern the licence to the Appellants as it has no retrospective effect and it cannot override the 1979 Policy. Shri Sheth submitted that the Board committed an error in observing that the revaldation was obtained by suppressing material facts. All the necessary facts were placed before the licensing authority and once the licensing authority had revalidated the licence, the customs authorities are not competent to question the revalidation or can they go into the competence of the licensing authority to issue revalidation. If there was any intention on the part of the licensing authority to curtail the rights conferred under the licence, the licensing authority would have imposed conditions at the time of revalidation. In the absence of imposition of conditions the licence should be valid for import of items permissible under the 1979 policy.
(ii) In support of his contention that the public notice has no retrospective effect and that it cannot apply to the licence issued earlier, Shri Sheth relied on the following judgments :-
(a) 1988 E.LT. 1342
(b)1986(25)E.LT.385 Shri Pal appearing for the Respondent Collector, however, contended that the additional licence against which clearance was sought did authorise import of items appearing in Appendices 5 and 7. But the goods imported admittedly did not fall under any of the items appearing in those Appendices. Para 175(b) of AM 79 permitted export house to import OGL items. But then under Appendix 10(1) import of OGL items are subject to conditions specified in the Appendix 10(1). One of the conditions stipulated was that the goods should be shipped on or before 31.3.1979, but the goods were actually shipped on 31.3.1980 and therefore there has been no fulfilment of the OGL condition. Shri Pal sub-mitted that by the time goods were imported there has been a change in the policy. The goods imported came to be canalised and therefore excepting the canalising agency other could not import the canalised items. Shri Pal further submitted that the decisions relied on by the Appellants are not applicable. The import is governed by the Policy in force at the time of shipment of the goods. In support of his contention Shri Pal relied on the following decisions :-
(1) 1984(18)E.LT. 694 (2) 1980 S.C. 1149 (3) 1983 E.C.R. 1607 D (4) 1973 S.C. 2711.
(5) 1983 E.LT. 258 (6) 1983 E.C.R. 784 (7) 1986 (25) E.LT. 817 (Tribunal)
5. The short question for consideration is whether the licence dated 19.1.1979 was valid to cover the goods imported, the shipment of which took place after the coming into force of the Policy AM 80.
6. The following facts are undisputed : The licence was issued to the appellants during the Policy period AM 79. It is an additional licence. It is dated 19.1.1979. It was valid for 12 months form the date of licence. By reason of the provisions contained in Handbook of Import Export Procedures the import effected within 60 days from the date of expiry of the licence could also be valid. Before the expiry of the licence period, the licence was revalidated for a further period of six months. Thus the licence period be- comes 18 months instead of 12 months. The licence was valid for import of items appearing in Appendices 5 and 7 excluding items appearing in Appendix 26 and also subject to the condition that the import of a single item shall not exceed Rs. 2 lakhs in value as per para 176 of AM 79 Policy. In the licence, the licensing period is mentioned as AM 79. By reason of para 176 of the Policy AM 79 the additional licences became valid for import of raw materials, components and spares which have been placed on open general licence for actual users (Industrial). But then the export houses are required to dispose of the goods imported against their additional licence to eligible actual users (see para 176 ended upto 31.10.78). The appellants placed orders with M/s. Mitsui & Co. Ltd., Japan, for the supply of 5,000 kgs. of 6 A. P.A. The said company vide its letter dated 15.3.1979 accepted to supply the quantity in respect of which order was placed. The contract so entered into required that the shipment should take place during the validity of the licence and payment should be made within 60 days from the date of airway bill. It is stated that due to scarcity the suppliers could not make the shipment within the validity period and therefore the licence-holders got revalidated the licence for a further period of six months, thereby the shipment that are effected within 18 months from the date of issue of licence would be valid. The actual shipment also took place before the validity period of the license, namely, during the month of March 1980.
7. The goods imported did not appear in Appendices 5 and 7 of the Import Policy AM 79. But being raw materials, para 176 of Am 79 permitted import under OGL Appendix 10(1) of AM 79. During the Policy AM 79 the goods imported were not canalised. It was not one of the items included in Appendix 9. But then during the Policy AM 80, the goods imported came to be included in Appendix 9 and therefore, the same could be imported only by State Chemicals and Pharmaceuticals Corporation of India Ltd., the canalising agency, and by none else. The Policy AM 80, however, made an exception in the case of licence issued to export houses, if there had been firm commitments by opening irrevocable letter of credit through authorised dealers in foreign exchange before 1.5.1979. Because the appellants have not fulfilled this condition, namely, opening of irrevocable letter of credit, the Additional Collector had ordered confiscation of the goods, which order was confirmed by the Board.
8. If the import is governed by the Policy AM 79, as contended by the appellants, then the order of confiscation made by the Additional Collector and confirmed by the Board, is required to be set aside, because neither the licence nor the Policy AM 79 required the importer to open an irrevocable letter of credit to enter into a firm contract. The requirement regarding opening of irrevocable letter of credit before 1.5.1979 for allowing import under OGL by the export houses against their additional licences came to be introduced by Public Notice dated 21.5.1979. It was contended on behalf of the appellants that this Public Notice dated 21.5.1979 being non-statutory, it has not the effect of taking away the rights conferred under the licence which was issued in exercise of the power conferred under the Import Control Order. It was also contended on behalf of the appellants that the license was governed by the Policy AM 79 and since 6 A.P.A. was not included in Appendix 9, its subsequent inclusion in Appendix 9 during the Policy AM 80 would not invalidate the licence issued during the Policy AM 79. It is only such of the amendments which were effected to the Policy upto and including the date of issue of the licence alone are applicable to the licence.
9. On hehalf of the Department, it was, however, urged that since the actual shipment had taken place on and after coming into force of the Policy AM 80 and since no irrevocable letter of credit had been opened before 1.5.1979 and since 6 A.P.A. came to be canalised during the Policy AM 80, the additional licence against which the clearance of the goods was sought, was not valid, because during the Policy AM 79 6 A.P.A. could not be imported as OGL items.
10. The question regarding the retrospective effect of the Public Notice came to be considered by the Supreme Court in Bharat Barrel and Drum Manufacturing Co. Pvt. Ltd. v. Collector of Customs, Bombay and Anr. 1983 E.L.T. page 1342. Accord-ing to the facts of that case, the clearance of the steel sheets imported by M/s Bharat Barrel and Drum Manufacturing Co. Pvt. Ltd. (for short 'the company') was objected to by the Customs on the ground that they are not of prime quality as required by the Iron and Steel Controller's Public Notice No.l/l-8/62, dated 6.12.62. The order of confiscation of the steel sheets made by the Collector and confirmed by the Board was set aside by the Govt. of India in revision holding that the Public Notice dated 6.12.1962 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. The Supreme Court observed that since the condition as to prime quality was imposed for the first time on 6.12.1962, the orders of the Collector were not sustainable. It also upheld the order of the Government of India that the Public Notice dated 6.12.1962 has no retrospective operation. During the course of its order, the Supreme Court observed that the Collector of Customs and the Board have not noticed that the condition that the goods should be of prime quality was not a condition of the licence. The Supreme Court after setting aside the order passed by all the three authorities, remanded the matter to the Govt. of India to consider the question whether the consignments in respect of which fine has been imposed did or did not comply with the condition in the licence.
11. The question regarding the applicability of the Public Notice to the licences issued prior to the issue of Public Notice came up for consideration before the Central Board of Excise and Customs in number of cases, the copies of which have been produced by the appellants along with this appeal. In its Order in 31 of 1978 in the case of . Chhaganlal Kasturchand and Co. Ltd., Bombay, the Board observed that the licence against which clearance was sought had been issued prior to the Public Notice No. 120/77, dated 22.12.77. According to endorsement No. (1) made on the licence the 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. Thus the licence would be governed by the Policy for the period April-March, 1978, as amended upto the date of issue of the licence. The Public Notice No. 120/77 having been issued after the date of issue of the licence had, therefore, no application to the licence". In its Order in 72 of 1980, dated 27.9.80 in the case of . Chinar Exports Pvt. Lfd.,the Board formulated the following question for its consideration:
Whether the ITC Public Notice No. 67/77, dated 2.9.1977 could have retrospective effect so as to adversely affect licencees holding valid import licences issued prior to this Public Notice.
The Board answered the above question by observing "the Board observes that the licence has been issued subject to the condition that 'this licence will be subject to the conditions in force relating to 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". The licence was issued admittedly on 25.8.1977 and in terms of the conditions of the licence the licence will be subject only to any amendment upto 25.8.1977". The Board further observed "the ITC Public Notice in 7/77 dated 2.9.77 was issued subsequent to the issue of the licence and this being so the answer to the first question will have to be in the negative". The above view was further reiterated by the Board in its Order in 21 -A of 1982, dated 23.12.1981, in the case of . Arvind Exports Pvt. Ltd. and in Order No. 179A-189A and 190-B of 1982, dated 28.5.1982 in the case of . Oswal Agro Mills Ltd., M/s. Oswal Woollen Mills Ltd., M/s. Jai Hind Oil Mills Co., M/s. Vinod Sol-vextracts Pvt. Ltd., M/s. Arvind Export Pvt. Ltd., M/s. Kamani Oil Industries, M/s. Food Fats & Fertilizer Ltd. AIR 1985 Calcutta 122 Mangla Brothers v. Collector of Customs and Ors.. A licence similar to the licence in question came up for consideration before the Calcutta High Court. The licence in that case of dated 14.3.1980 and the licence was valid for the import of items appearing in Appendices 5 and 7 excluding the items appearing in Appendix 26 subject to the conditions that the import of a single item should not exceed Rs. 2 lakhs in value and the licence was also valid for import of items placed under open general licence for actual users (Industrial). The licence was also revalidated on 15.6.1982. The licence was covered by the Import Policy of AM 80. At the time of revalidation, certain restrictions were also imposed. The goods imported in that case was Amoxycillin Trihydrate. It was not a canalised item under the Policy AM 80. It was, however, canalised on 16.10.1981 under the Policy AM 82. As in this case, it was urged before the Calcutta High Court that even during the Policy AM 1979-80 the goods was canalised and alternatively it was contended that by the time the goods are imported the goods had been canalised and therefore the additional licence was invalid. Rejecting this contention, the Calcutta High Court observed the next contention which requires consideration is whether the import of the item in question is permissible having regard to the fact that under the Current Policy (1984-85) this item has been canalised and can only be imported by State Trading Corporation. A licence issued during a policy period is governed by that Policy as amended upto the date of the licence and any amendment made after the date of issue cannot have any effect on the licence. There may be a time lag between the date of placing of an order and actual importation. Even after an importer has complied with all the necessary formalities for import of the goods under a licence, he may not complete the importation for no fault of his and when goods arrive, the import policy is found to have been amended to prohibit the import of the goods covered by the said licence. In such a case the importer will suffer loss and prejudice if he is not allowed to clear the goods on the basis of the licence. The time limit can always be prescribed by Import Policy as has been done in para 185(7) of 1982-83 Policy. If within the time prescribed the goods are imported under a licence covered by import policy of a particular year, the Customs Authorities cannot withhold the release of the goods on the ground that when the goods have arrived at the port, the import policy has been amended making the item in question a canalised item. The Customs Authorities have to ascertain whether the items were allowed to be imported under the import policy governing the licence and whether such goods have been imported within the time prescribed by the import policy". Finally, the Calcutta High Court held 'the material in question can be imported under the licence and the restrictions contained in the 1984-85 Policy will not apply. The licence for import was issued on 13.4.1980 and the restrictions if any till the date of issuance of the licence and imposed at the time of revalidation of the licence will only apply". Similar view was taken by the Calcutta High Court in the case of Arora International and Anr. v. Collector of Customs and Ors. 1985 (5) E.L.T. 360. In this case the Calcutta High Court held that the policy in force at the time of issue of licence that would govern the import and not the policy in force on the date of actual import.
12. In the case of Lokash Chemical Works v. M.S. Mehta, Collector of Customs (Preventive), Bombay and Ors. 1981 E.L.T. 235 (Bom), the Bombay High Court held that the policy statements and public notice are not statutory documents. The High Court observed "further so far as the policy and public notices are concerned the question is not at all open and is covered by several judgments including the judgments of the Supreme Court, namely, East India Commercial Co. v. Collector of Customs, AIR 1962 Supreme Court 1693 and J.C. of Imports & Exports v. M/s. Aminchand AIR 1966 S.C. page 476, as also by the aforesaid unreported judgment of our High Court. The contention of Mr. Dalai that the policy statement and the public notice are not statutory document but nevertheless had force of law is self contradictory. A document which is not a statutory document obviously cannot have a force of law. Any document that has a force of law must necessarily be capable of creating obligations as well as conferring or creating rights and it is well settled that the policy statement and the public notices cannot confer or create any right enforceable at law. It is, therefore, obvious that such a policy statement or public notices which cannot confer or create any right cannot have force of law".
"Again the executive instructions ordirections issued under Article 73 of the Constitution can only operate in a field which is not covered by any legislation. The executive cannot issue any directions or instructions which will have the effect contrary to the one contemplated by properly enacted legislation". In High Court also observed "Mr. Dalal's contention that the public notice dated 21.9.72 had the effect of preventing the petitioners from utilising the imported goods cannot be accepted as it has the effect of altering the terms of the licence already granted. The rights of a person to carry on business are and of acquisition, holding and disposal of the property, were protected by Article 19 and could have been restricted only by an enactment of law and not by executive directions or instructions under Article 73. The right to carry on business of import is restricted by law contained in the Imports Exports (Control) Act, 1947 and Imports (Control) Order, 1955 and any executive action or direction or instruction which seeks to control such right must necessarily have its foundation in one or other provisions of the said Act and Order. Mr. Dalai did contend that such a public notice has its foundation in Section 3 of the Act and in Clause 6, 7, 8, 8A, 10B and 10C of the Order and in the conditions of the licence itself. The particular condition which Mr. Dalai relied on is the condition mentioned on the face of the licence to the effect that the licence is without prejudice to the application of any other prohibition or Regulation affecting the importation of goods which may be in force at the time of their arrival. The prohibition or Regulation referred to in this condition must necessarily mean prohibition or Regulation imposed by law or having force of law. It cannot mean something done by mere change in policy or by public notice, which may or may not be published or brought to the notice of a person affected adversely. An officer may issue such a public notice and keep it in his own pocket and it will still be effective as a public notice or an amendment or change in the policy but it cannot have the force of law. However, a right was acquired, and it is beyond dispute that once the licence is granted the person acquires a right, which cannot be taken away by mere executive action but such action must necessarily have its foundation either in the said Act or Order". The Court further observed "Mr. Dalai contended that the licence is issued under the policy, that Government had power to vary the policy from time to time and so even after the goods are imported they can be banned by mere executive directions. To put it differently the licences which were issued by virtue of the policy can be altered or taken away by change of policy by mere executive action. There is a patent fallacy in this argument. The licences are not issued under the policy but licences are issued under the powers vested in the proper officers under the Act and the Order. The principle which are intended to be followed in issuing the licences are earned by the policy. The principles, as already laid down in various decisions do not have statutory effect. The policy is a mere intimation to the public regarding when, in which event and on what basis and conditions the licences would be granted under the Act and the Order. The licences, therefore, cannot be taken away or made ineffective merely by changing policy. If this was so it was unnecessary to provide in the Order, the grounds on which the licences can be cancelled or made ineffective. The very fact that such provision is made shows that licences cannot be cancelled or taken away on the mere whim of the executive but can be cancelled or taken away only in accordance with the provisions of the said Order".
13. The applicability of the Public Notice to the licences issued earlier to coming into force of public notice was considered by this Bench inGujarat Machinery Manufacturers v. Collector of Customs, Bombay, 1986 (6) E.C.R. 489. In that case the Bench observed "in the licence it was stated that this licence will be subject to conditions in force relating to the goods covered by the licence as discussed 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. So it is only such of the amendments which were made in the policy before the issue of the licence that would be relevant for construing the licence, not amendments made subsequent to the issue of the licence. The Public Notice Is admittedly Issued after the issue of the licence. The public notice was not given any retrospective effect. It comes into operation if at all from the date of its publication, which according to the Board took place on 16.8.1978 the date on which Trade Notice No. 85/78 was published. The licences that were issued after 26.8.1978 (16.8.78) would alone be governed by the Public Notice and not the licences which were issued earlier to the date of Public Notice. The above proposition was settled by the decision of the Supreme Court in Bharat Barell & Drums Mfg. Co. Pvt. Ltd. v. Collector of Customs, Bombay and Anr. MR 1971 S.C. page 704".
14. The question as to whether public notice and the import policy is statutory or non-statutory came up for consideration before the Supreme Court in the case of East India Commercial Company Ltd., Calcutta v. Collector of Customs, Calcutta; 1983 E.L.T. page 1542 (S.C). Before the Supreme Court, it was argued that the public notice was an order issued in exercise of the power conferred on the Central Government under Section 3(1) of the Imports and Exports (Control) Act, 1947. The Supreme Court considered this contention and observed "to put it differently, orders made under Section 3 of the Act have statutory force, whereas public notice are policy statements administratively made by the Government for public information. The foreword to the Import Trade Control Handbook of Rules and Procedure, 1952, under the signature of the Secretary to the Government of India, in the Ministry of Commerce and Industry brings out this distinction thus:
"In the past the half yearly publication on Import Control, popularly known as the "Red Book" has included not only a statement of policy for the ensuing six months but also a reproduction of various notifications relating to Import Control and detailed information on points of procedure".
15. It is true the Chief Controller made an affidavit in the High Court that the policy-statements are issued under Section 3 of the Act. But, as we have said, that is only on information which has no support either in the form adopted or the practice followed or the matter incorporated in the Notifications. We have no hesitation in holding that public notices are not orders issued under Section 3 of the Act.
16. The following aspects are explicit and clear from the judgments of the Supreme Court and the Bombay High Court :
(i) The Public Notice as well as the Import Export Policy are non-statutory; (ii) The Public Notice has no retrospective operation;
(iii) The Policy in force at the time of issue of the licence that would govern the import and not the policy in force on the date of actual import;
(iv) Once the licence is granted, the licensee acquires certain rights and that right cannot be taken away by mere executive action.
17. As has been seen earlier, the customs objected to the clearance of the goods firstly on the ground that the goods imported were not covered by items appearing in Appendices 5 and 7; secondly on the ground that the goods imported appeared in Appendix 9 during the Policy AM 80 and therefore the agency that could import is the State Chemicals and Pharmaceuticals Corporation of India Ltd. and the appellants cannot import the goods against their additional licence and lastly, that the appellants had not entered into a firm commitment with the foreign suppliers by opening an irrevocable letter of credit before 1.5.1979.
18. It is admitted that irrevocable letter of credit was not opened before 1.5.1979. It is also admitted that goods imported do not appear in Appendices 5 and 7. It is further admitted that during the Policy AM 80 the goods imported appeared in Appendix 9 and therefore the agency that could import is only the State Chemicals and Pharmaceuticals Corporation of India Ltd. But then the appellants' contention has been that there was a firm contract with the foreign supplier on 15.3.1979 and since the Policy AM 79, during which period the licence was issued, did not require opening of an irrevocable letter of credit this condition which was imposed subsequent to the issue of the licence would not be applicable to the licence and further during the Policy AM 79 the goods imported was not a canalised item and the subsequent canalisation by the subsequent Policy cannot take away the right conferred under the licence issued during the Policy AM 79. Shri Pal had, however, contended that since the actual shipment of the goods had taken place during the Policy AM 80, and since the goods imported has been canalised by the time the shipment took place, the additional licence would not be valid to clear the imported goods. The Government has every right to effect changes in the Policy and the importer has no right to contend that because the licence was issued during the policy AM 79 he is legally entitled to import the goods which were not permitted for import by the registered exporter during the policy AM 80. Shri Pal had referred to certain decisions and we shall now consider the said decisions. In the case of Oswal Woollen Mills Ltd. and Anr. v. Union of India and Ors.; 1984 (18) E.L.T. 694, the Punjab High Court did hold that the licences issued during the year 1981 -82 ceased to be valid for the import of beef tallow by virtue of the provisions of para 231 (3) of the policy AM 1982-83. In this judgment the High Court did did not consider the question whether the policy is statutory or not. It also did not consider whether the subsequent policy could take away the right conferred to the licensee under the licence. Therefore, this decision is distinguishable on facts. As a matter of fact, the High Court has referred to a notification dated 5.6.81 and has observed that notification was given effect to in the policy AM 82-83. Thus it is seen that there was a statutory notification. But then, it was not contended before us that the change in the policy AM 80 was made by giving effect to any statutory notification.
19. In the case of Union of India and Ors. v. C. Damani & Co. and Ors., AIR 1980 S.C. 1149, the Supreme Court considered the enforceability of the export agreement entered into between M/s. C.Damani & Co. and the State Trading Corporation. From the facts, it appears after the agreement of the Export Control Order was amended by Export (Control) 15th Amendment Order, 1979, which imposed a complete ban on export of silver including pre-banned contracts. In the circumstances the Supreme Court held that even though the contract for export of silver related to pre-banned period, the State Trading Corporation could not be allowed to enforce the indemnity Clause contained in the contract because the performance of the contract became impossible on account of legal prohibition. This case has no relevance to the issue involved. Further, the ban on export was imposed not by the executive instructions or policy statement but by statutory order.
20. In the case of . Daruka & Co. v. The Union of India and Ors., AIR 1973 S.C. 2711, the statutory notice issued by the Controller of Imports and Exports under the Export Control Order was challenged on the grounds that it was violative of articles 19(1)(g) and 14 of the Constitution of India. The Supreme Court, however, repelled the contention. From the facts of the case it is clear the canalisation was done by a statutory notice and not by policy or public notice which are non-statutory. Therefore, this case is also distinguishable on facts.
21. In the case of Super Traders and Anr. v. Union of India and Ors., 1983 E.LT. 258(Del.), among other questions, the question as to the competency of the Government and legislature to change the rate of duty for tax during the financial year in the matter of import or export came up for consideration. The subject matter of the amendment in that case also is a statutory amendment made to the Customs Tariff Act. Therefore, this decision also is distinguishable on facts.
22. The next decision relied upon by Shri Pal is the one reported in 1983 E.C.R. page 1607D (SC), Bhatnagar& Co. and Anr. v. Union of India and Ors. This decision also has no application to the facts of the present appeal. The facts are :
"The Petitioners M/s. Bhatnagar & Co. had obtained a licence for the import of soda ash worth about Rs. 50 lakhs during free licensing period in 1952. There was an allegation that the licensee was trafficking in the licences. The investigation disclosed that two consignments of 100 tons and 20 tons of soda ash were imported by M/s. N. Jivanlal & Co. and since M/s. N. Jivanlal & Co. had held no licence, the consignments were seized by the Collector of Customs. During the investigation, the office of the Petitioners and M/s. N. Jivanlal & Co. were also raided. The licence issued to the Petitioners were seized, but were returned to the Petitioners. The goods imported by M/s N. Jivanlal & Co. were ordered to be confiscated by the Collector. Their appeal to the Board and revision to the Government did not meet with any success. The seizure of the goods was questioned in the Supreme Court on the grounds that it virtually invalidated the licences. It appears that the Petitioners' request to revalidate the licences was rejected by the licensing authority. Before the Supreme Court, three contentions were urged: firstly, that the policy statement made by the Government in Press Note dated February 3,1955 and Public Notice No. 25-ITC(PN)/56, dated June, 30 1956 amounts to a monopoly and the Supreme Court was asked to issue appropriate writs terminating the monopoly and to ensure to the Petitioners their fundamental right of carrying on his trade and business. While disposing of this contention, the Supreme Court observed "in our opinion, this petition is also entirely misconceived and there is no substance in the contention raised by the petitioner. It is hardly necessary to emphasize that, in modern times, the export and import policy of any democratic State is bound to be flexible. The needs of the country, the position of foreign exchange, the need to protect national industries and all other relevant considerations have to be examined by the Central Government from time to time and rules in regard to export and import suitably adjusted. It would, therefore, be idle to suggest that there should be unfettered and unrestricted freedom of export and import or that the policy of the Government in regard to export and import should be fixed and not changed according to the requirements of the country. It is in the light of this position that the policy statement in the Press Note has to be considered". After examining the Press Note and the public notice the Supreme Court observed "it is difficult to entertain the argument from the present petitioner that the alleged monopoly has affected his right to carry on trade. In substance no monopoly has been created and the petitioner's application is entirely misconceived. The result is the petition fails and must be dismissed with costs".
23. Second contention urged was that appropriate writ should be issued to forbear the authorities from giving effect to the order of confiscation and sale of the seized goods. It was contended before the Supreme Court that the licences granted to him were to be alive for one year from the 13th February 1952, the illegal seizure of the licences and the unauthorised confiscation of the consignment in question caused considerable prejudice to him. The return of the licences was poor consolation to the petitioner because the period during which the licences were to operate had already expired. It was prayed that the licence should be revalidated in the sense that the period during which he can operate upon the licences should be suitably extended. The Supreme Court observed "it is true that the relevant authorities were inclined to revalidate the licences in that sense, it would have been open to them to do so. But it is difficult to understand how the petitioner can invoke the jurisdiction of this Court under Article 32 of the Constitution for obtaining this relief. Finally, the Supreme Court rejected the contention and dismissed the writ with costs.
24. The third contention raised was that Import-Export Act did not apply to soda ash and every citizen has a right to import and export that commodity without a licence. This contention was also rejected by the Supreme Court. Thus, it is seen that the questions whether the public notice and the policy are statutory or not and whether the subsequent policy changes could affect the rights and interests flowing from the licence already issued were not considered by the Supreme Court. The observation of the Supreme Court regarding the Government's right to effect changes in the Import Policy should be understood in the context of the contention raised in the petition filed under Article 32 of the Constitution. The next decision relied on by Shri Pal is the one reported in 1983 E.C.R.784D(Cegat Bombay), Unique Pharmaceutical Laboratories, Bombay v. Collector of Customs, Bombay. In this case also the questions regarding the statutory nature of the public notice or the applicability of the subsequent policy to the licences issued during the earlier policy were not considered. The order proceeded on the plea made by the appellants, namely, that without knowing the change in the policy and on the basis of the earlier policy, they effected import and they requested for taking a lenient view. The Bench, however, observed that leniency had been shown by the Collector of Customs (Appeals). Further, the appellants could have stopped the import of goods by asking their suppliers and the appellants did not make any such attempt and therefore, there was no scope for further leniency.
25. Another decision relied on by Shri Pal is the one reported in 1986 (25) E.LT. page 817 (Tribunal), Pershwa Automobile Co.Ltd.v. Collector of Customs, Bombay. Even in this case the Bench did not go into the questions regarding the statutory nature of the public notice and the policy as well as the applicability of the subsequent policy to the licences issued during the earlier policy. From the facts narrated in the order, it is seen that the letter of credit was opened against a particular licence, but the clearance was sought against another licence. But in the meantime, there was a change in the policy effected by means of a public notice which prohibited import of the goods imported and in the said circumstances the bench held that it was not open to the appellants to offer an alternative licence from another export house and as such a licence would notbe valid to cover the import of the goods in question.
26. The last decision relied on by Shri Pal is the decision of the Delhi High Court in Suit No. C.W. 4037 & C.W. 4038/82 Jain Exports (P) Ltd. v. Union of India and Ors. The licences which were the subject matter of Delhi High Court judgment had the following endorsements:
(i) This licence is granted under the Government of India order 17.9.1985 as subsequently amended issued under the Import and Export Act, 1947 and is without prejudice to the application of any other prohibition or regulations affecting the importation of goods which may be in force at the time of their arrival;
(ii) The licence is valid for import of items appearing in Appendices 5 and 7 excluding, however, the item appearing in Appendix 26 of 1980-81 policy subject to the conditions laid down in Para 177(3) (5) (6) and (7) of AM-1980-81 (In the first instance the licences were valid for a period of one year; subsequently revalidated and the latest revaiidation was made in January, 1982 for six months and it was subject to the condition this licence will also not be valid for import of items appearing in Appendix 26 of Import Policy 1982-83 during the extended period of validity";
(iii) The conditions appearing in paragraphs 222/1, 222/2 and 222/4 of the Import Policy AM 82; and
(iv) The restriction contained as per para 185(3) of AM 81-82 shall also apply.
27. The licences originally issued were valid for the import of raw materials, components and spares which have been placed no open general licence for actual users (Industrial). Accordingly, the licence holders imported industrial coconut oil as a raw material. The import was objected to on the grounds that at the time of the import, there has been a change in the policy and industrial coconut oil was a canalised item and therefore, there was a prohibition for import of the same against the additional licence. While considering the contention of the importer that their licence permitted import of industrial coconut oil His Lordship Mr. Justice Sachar observed "even assuming that under 1980-81 policy the petitioner could have imported industrial coconut oil as a raw material, the same could not have been imported in July/September, 1982, when the goods arrived because admittedly industrial variety of coconut oil was a canalised item both in 1981-82; 1982-83 policy and, therefore, there was a prohibition regarding the importation of goods (namely coconut oil) at the time of their arrival, as specifically provided by endorsement in terms of the issue of licence. This licence was valid for import of goods if they were not prohibited at the time of their arrival. The petitioner cannot rely for import of coconut oil on a licence which prohibits the particular item of goods. The effect of this endorsement is to make it as if there is no licence for the import of coconut oil in September, 1982; but subject to certain conditions, as in fact he had no licence to import coconut oil at all when the goods arrived. It would be a case of import without any licence".
"The same result follows from a perusal of open general licence No. 1 /80,1 /81, 1/82 issued in April, 1980,1981 and 1982 issued by the Central Government in exercise of the powers conferred by Section 3 of Imports & Exports (Control) Act, 1947, by which it gave general permission to import into India from any country raw materials, components, consumables by Actual Users (Industrial), subject amongst others to the following conditions:
Condition in : The items to be imported are not covered by Appendices 3, 5, 6, 7, 8, 9 and 15 of the Import Policy 1980-81;
Condition No. 15 : Such goods are shipped on through consignment to India on or before 31.3.1981 or on before 30.6.1981 against firm orders for which irrevoable letters of credit are opened on or before 28.2.1981, without any grace period whatsoever;
Condition No. 16: Nothing in this licence shall affect the application to any goods, or any other prohibition or Regulation affecting the import thereof, in force at the time when such goods are imported".
"The same conditions are to be found in 1982, 1983 OGL order, while the dates correspondingly changed to the year in question. It is clear that in view of OGL order actual users (Industrial) though assuming that they could have imported coconut oil during the currency of 1980-81 policy, the same could not have been imported from 1981-82 policy onwards because admittedly the same was a canalised item".
28. Before the Learned Judge, it was contended that OGL order is merely a general permission, but it was not a prohibition. The Hon'ble Judge observed "I cannot agree. Section 3 of the Import and Exports Act empower the Central Government to prohibit or restrict imports. An OGL order passed under the said Section by which it gives general permission to import certain items but subject to certain conditions in effect prohibits the imports of these items unless the condition mentioned in the said order are complied. Thus, notwithstanding, that even if during the currency of 1980-81 Import Policy Industrial coconut oil could be imported, the same were prohibited in terms of 1981-82 policy, 1982-83 policy of the time of arrival of goods in July/September, 1982 as by then these goods were canalised and no longer on open general licence. On another ground also the goods imported in July/September 1982 would be held to be invalid. Revalida-tion was in January, 1982. Condition No. 18 of OGL order dated 3.4.1981 provides by which shipment of goods should have been received by 31st March, 1982 or by 30th June, 1982 and for which irrevocable letter of credit had been opened on or before 28th February, 1982. In the present case the goods arrived in September, 1982. Thus even in terms of condition in 8 of OGL order of 1981 the goods could not have been imported validly. This is another reason for holding the imports to be invalid". From the reading of His Lordship's order, it is clear that there were statutory orders called Open General Licence Orders 1 of 80, 1 of 81 and 1 of 82 issued by the Central Government in exercise of the powers conferred by Section 3 of Import & Exports (Control) Act and these orders not only gave permission to import raw materials, components, consumable stores, but imposed conditions and any importer was required to comply with the conditions. His Lordship proceeded on the footing that the policy 1981 -82 and 1982-83 incorporated the OGL orders. Throughout his order, His Lordship was only referring to the OGL orders. There cannot be any quarrel that the rights conferred under the licences can be whittled down or taken away by statutory orders.
29. The above decision is also not of much help to the Respondent in this case. It was not contended before us that there was any statutory OGL order imposing the conditions similar to the conditions referred to by His Lordship Mr. Justice Sachar in the Delhi High Court case. No statutory OGL order had been produced before us. The public notice and the policy, as has been observed by the Supreme Court, in the case of East India Commercial Co.Ltd. are non-statutory and they contain policy statements administratively made by the Government for public information. The judgment of the Bombay High Court in Lokesh Chemical Works clearly laid down that the policy statements or public notice cannot confer or create any right, cannot have force of law. The Bombay High Court further held that the licences which were issued by virtue of the policy cannot be altered or taken away by change of policy by mere executive action. The Bombay High Court further held that the prohibition or Regulation referred to in the condition of the licences must necessarily mean prohibition or Regulation imposed by law or having force of law. It cannot mean something done by mere changes in policy or by public notice. This decision of the Bombay High Court is binding on this Bench.
30. The question whether the subsequent policy changes could adversely affeet the rights and interests of licence holders came up for consideration before the Delhi High Court in the case of Jain Shudh Vanaspati Ltd. and Anr. v. Union of India and Anr., AIR 1979 Delhi 122. The facts of that case are:Jain Shudh Vanaspati Ltd. made an application for the grant of open general licence in terms of the policy in March 1977 and September 1977 and the company was issued various licences. On the strength of the licences so issued, the company placed orders and also opened irrevocable letter of credit from time to time. The Government by public notice of October 11,1977 notified that all licences issued for palm oil refined for direct human consumption against which shipment is not made (wholly or partly) on or before 15th October, 1977 was stand automatically invalidated for (further) imported oil. M/s Jain Shudh Vanaspati Ltd. challenged the public notice dated October 11,1977 as being illegal, arbitrary and ultra vires. It was also contended that the public notice did not in any way invalidate the licence which had already been issued. The Delhi High Court formulated the following questions:
(i) Whether the subsequent policy changes could adversely affect the rights and interests of the petitioners flowing from the licences already issued or imports already made or which were in the process of being made.
(ii) If so, whether the impugned restrictions do not pass the test of reasonableness and, therefore, impinge on the fundamental rights of the petitioners under Article 19(1)(g) of the Constitution of India.
The Division Bench observed "it was not disputed before us that the Public Notice of September 23,1977, related to the import of refined palm oil and did not bring about any change with regard to the importation of unrefined palm oil and the company was, therefore, within its rights to continue to make commitments for the import of such oil on the basis of the licences which had already been issued. When the Public Notice of October 11, 1977 was issued invalidating licences issued for refined palm oil against which shipment had not been made, the company had obviously made commitments in terms of the pre-existing policy. This uilateral change in the policy could not possibly have retrospective operation so as to affect the interest of the licensees like the petitioners who had, acting on the earlier policy and on the basis of the licences issued, made large commitments, invested funds, and entered into contractual obligations ... Such a change of policy could also not be given retrospective effect so as to deprive the importers, who had already imported palm oil specifically for the purpose of refining in their refineries, of their right to carry on the trade of manufacture and refining of imported palm oil and to market the same in accordance with law". Finally, the Court observed "it would, therefore, be sufficient to declare that for the aforesaid reasons, the rights of the petitioners flowing from the importation of palm oil on the basis of the licences granted to the company would not in any way be affected by the impugned Public Notice and the impugned order, and the company having dealt with the goods in accordance with law, would not in any way be liable to any adverse action by virtue of the aforesaid notice and the order".
31. We have come across a judgment of the Supreme Court reported in 1986 (26) E.L.T.465 (S.C.) Union of India v. Godrej Soaps Pvt. Ltd. and Anr. The facts of the case as set out in the judgment of the Supreme Court are:
"It is the case of the respondents, Godrej Soaps Co.Ltd. and its Director that they have purchased 544.860 M/T of palm karnel fatty acid (now called 'the said acid') on high seas basis from M/s Dimexon. M/s Dimexon had imported the said acid on the strength of an additional licence issued to it pursuant to the order of this Court dated 18th April, 1985 in Civil Appeal No. 1423 of 1984 - Union of India v. Rajnikant Brothers. The Customs authorities, according to the said respondents, refused to permit clearance of the said acid on the ground that the canalised items could not be imported even under such additional licence. The respondents, therefore, filed a writ petition in this Court requiring the Union of India and the Customs authorities to permit clearance of the said acid. It may be mentioned, the said acid was not a canalised item under the Import Policy 1978-79. It is a canalised item under the current Import Policy 1985-88".
"As the Government refused to permit clearance of the said goods because the said goods were canalised, the learned Single Judge of the Bombay High Court by its order dated 10th July, 1986 permitted the clearance of the goods in question".
"Aggrieved by the said order, Union of India preferred an appeal before the Division Bench of the Bombay High Court. The Division Bench was pleased to, by its order dated 23rd July, 1986, allow clearance of the goods. It is the submission of the Union of India that this direction was contrary to the directions given in Raj Prakash's case (supra) and Indo Afghan Chamber's case (supra)".
32. The Supreme Court considered its direction given in Civil Appeal No. 1423 of 1986 on 18th April, 1985. The Supreme Court also referred to its order in Civil Appeal in 978 of 1985 Raj Prakash Chemicals Ltd. and Anr. v. Union of India and Ors. and further referred to its order in Writ Petition No. 199 of 1986 in Indo Afghan Chambers of Commerce and held that their dated 18th April, 1985 should not be construed to have been permitted the import of items sought to be imported against additional licences.
33. The additional licence issued to M/s Dimexon contained a description of the goods and the description given was -
"This licence is valid for import of items permissible to export houses under additional licence category as per para 176 of Import Policy for 1978-79 excluding those items which were banned in the Policy for the period 1978-79 and which have been banned in the Import Export Policy volume 1,1985-88. The additional licence category import shall be subject to the provisions of para 176 of the Import Policy for 1978-79".
34. The scope of this licence came up for consideration before the Supreme Court in Writ Petition No. 199 of 1986 in Indo Afghan Chambers of Commerce case. The Supreme Court held that the items imported should pass through two tests. They should have been importable under the Import Policy 1978-79 and they should have been importable under the Import Policy 1985-88 in terms of the order dated 18th April, 1985. Thus it is seen that the licence issued, though allowed import of items permissible under the policy 1978-79 though fell under the additional licence category of the policy 1978-79 further contain a restriction regarding the import of items which were banned in the policy for the period 1985-88. The ratio of the decision of the Supreme Court would not be applicable to the facts of the present case. The licence, as originally issued or at the time of revalidation, did not contain any restriction regarding import of OGL items which were importable under the policy AM 79.
35. The only other aspect that remained for consideration is the contention of Shri Pal that import of OGL items are subjected to conditions specified in the Appendix 10 of AM 79 and one of the conditions imposed was that the shipment should take place on or before 31.3.1979: But then the actual shipment took place on 31.3.1980 and therefore the OGL condition had not been satisfied and on this ground the import has to be held as invalid. Shri Pal's contention is altogether a new contention. This contention was not raised in the show cause notice. Even during the adjudication this objection was not taken. When the matter was before the Board also this objection was not taken. In the circumstances, it would not be open for Shri Pal to contend that the import is invalid because there had been no compliance with one of the conditions incorporated in Appendix 10. Otherwise also, there is no merit in this contention. The licence was originally valid for a period of 12 months from 19.1.1979. Therefore, if the shipment takes place on or before 31.1.1980 it would be covered by the licence. Since the licence has been revalidated extending the validity period by six months, the shipment taking place during the revalidated period would be covered by the licence. The import of OGL items was on account of the additional licence issued to the export house. If the OGL items are sought to be cleared against a licence the condition regarding the period of shipment stipulated in the policy would not apply, but only the period of validity mentioned in the licence govern the shipment. The condition regarding shipment on or before 31.3.1979 would apply to those importers who import under OGL and not against any licence issued which authorised import of OGL items.
36. As the licence in this case was governed by the policy AM 79 and in that policy goods imported was not canalised and since the firm contract for supply of goods was made on 15th March 1979 and since the public notice which required opening of irrevocable letter of credit before 1.5.1979 cannot take away the right acquired under the licence and since the changes effected in the policy AM 80 cannot govern the licences issued during the policy AM 79, the order of confiscation passed by the Addl. Collector and confirmed by the Board requires to be set aside and accordingly we set aside the same. The fine, if any, paid shall be refunded to the Appellants.
K.S. Dilipsinhji, Member (T)
37. I have given the careful thought to the draft order proposed by Brother Hegde. However, I am not in agreement with his conclusions and hence this dissenting order. The facts of the case and the arguments of the appellants and the respondent have been set out in Brother Hegde's draft order and therefore I am riot reproducing them hereunder for the sake of brevity.
38. The appellants imported 6 Amino pencillanic Acid (6 APA) valued at Rs. 36,45,402/- under Bill of Entry No.A 3931/26A dated 31.3.1980 and claimed clearance of this consignment under licence No. PW 2863338 dated 19.1.1979 issued in favour of M/s. Sawhney Bros., New Delhi. They produced a letter of authority dated 11.3.1980 from M/s. Sawhney Bros, to clear the imported consignment. The description of the goods permitted import under the licence was for items appearing in Appendices 5 & 7 of the 1978-79 Policy excluding items appearing in Appendix 26, and subject to the condition that import of single one item shall not exceed Rs. 2 lakhs in value as per para 176 of the A.M. 1979 Policy Book. The licence was revalidated for a further period of six months. The Addl. Collector, however, objected to the clearance of the goods under the aforesaid licence as the goods imported did not appear in Appendices 5 & 7 of the import policy 1978-79, that the import of the goods had been canalised under Serial No. 3(4) of Appendix 9 of 1979-80 Policy, and that there was no firm commitment by opening an irrevocable letter of Credit before 1.5.1979 to allow benefit of 1978-79 Policy. After holding the adjudication, the Addl. Collector passed the impugned order dated 26.4.1980 confiscating the goods but allowing them to be redeemed on payment of a fine of Rs. 10,00,000/- (Rupees ten lakhs only).
39. The appellant's main contention in the appeal is that the change in the Policy in the subsequent year 1979-80 should not affect the validity of the licence issued during the period 1978-79. In support of this contention, the learned Consultant put forward several pleas and relied on several pronouncements which have been incorporated in Brother Hegde's order. However, scrutinising the main contention that the provisions of the subsequent Policy for the year 1979-80 would not apply to the import of the goods under the licence for the 1978-79 Policy, it is seen that the description of goods permitted to be imported refers to the items included in Appendices 5 & 7. As regards the appellants claim to import raw materials etc. which were OGL items, it is seen that during the Policy 1979-80, the import of the goods in question was covered by Appendix 9, Sr. No. 3 (4), which was a canalised item and hence ceased to be an OGL item. The appellants, however, claim that during the 1978-79 Policy the import of the goods was allowed under the OGL for Actual Users and hence the licence submitted by them was valid to cover the goods. They further submitted that the changes made in the Policy for the subsequent year should not affect the validity of the licence issued to them. However, this argument is fallacious and ignores an important condition under which the licence is issued. This condition printed on the face of the licence is as follows :
"This licence is granted under the Government of India, Ministry of Commerce and Industry Order No. 17/55 dated the 7th December, 1955, as subsequently amended issued under the Imports and Exports (Control) Act, 1947 (XVIII of 1947) and is without prejudice to the application of any other prohibition or Regulation affecting the importation of the goods which may.be in force at the time of arrival".
The aforesaid condition clearly stipulates that if there is any prohibition affecting the importation of goods in force at the time of their arrival, the grant of the licence is subject to such a condition. The goods in question were imported and the Bill of Entry was noted with the Customs on 7.4.1980. This is the date when the Bill of Entry had been filed with the Custom House and hence the date of import of the goods. On this day, the Policy 1980-81 had come into effect. But since the Addl. Collector in his impugned order has accepted that the Bill of Entry was dated 30.3.1980 he has confined his order to the provisions of 1979-80 Policy and hence I am also taking the provisions of this Policy into account in my present order, though I find from the copy of the Bill of Entry that the aircraft arrived at Bombay on 31.3.1980 and the B/E was noted on 7.4.1980. As per the provisions of the 1979-80 Policy, the goods were canalised as held in the Addl. Collector's order and they were not allowed import under the OGL and hence the licence submitted by the appellants cannot be treated as valid.
40. Besides, the licence in question was an Additional Licence and was granted to an Export House against exports of ready-made garments. The validity of additional licences came to be examined by the Supreme Court in the case of Raj Prakash Chemical Ltd. AIR 1986 S.C. 1027. While examining this aspect, the Supreme Court held that for the licence to be treated as valid, it should not only cover the goods which were permissible to be imported for the policy during which the licence was issued, but also It should be valid to cover import of those items which were permitted import when the actual Import takes place. This is one of the series of decisions pronounced by the Supreme Court in dealing with the scope of additional licences. Brother Hegde has referred to these decisions in his order. Another decision referred to by him is the case of . Godrej Soaps Pvt. Ltd 1986 (26) ELT 465. This decision of the Supreme Court also refers to its order in the case of Raj Prakash Chemicals Ltd. as also in case of . Indo Afghan Chambers of Commerce AIR 1986 SC 1567. In all these decisions, the Supreme Court has laid down the ratio, namely that the goods should be permissible for import both during the licensing period as also at the time when the goods are actually imported. However, Brother Hegde has distinguished the present appeal from the decisions of the Supreme Court In those cases on the ground that the licences examined by the Supreme Court bore the endorsements that the import of items which was banned during the Policy period 1985-88, was not permitted. However, this endorsement does not have much of significance in In-terpretting the permissible items under the Policy prevailing at the time of the import. The endorsements became necessary on account of the fact that the licence holders had to spend a long time in litigating before the High Courts and the Supreme Court and this passage of time delayed the grant of additional licences to the Export Houses during the relevant years, making the endorsements necessary on the licences. However, the ratio of the decisions is quite explicit and Is not fettered by the endorsements as held by Brother Hegde. The same is clearly incorporated in thelhree cases of M/s. Indo Afghan Chamber of Commerce, M/s. Raj Prakash Ltd. and M/s. Godrej Soaps Ltd. The Supreme Court thus consistently held that the additional licences should be valid not only in terms of the Policy during which they were issued but could be utilised for importing those items which were permissible to be imported when the goods actually arrive in India. In view of the aforesaid decisions of the Supreme Court, there is not an iota of doubt that the licence of M/s. Sawhney Bros, submitted by the appellant was not valid to cover the imported goods when the import was made.
41. The further argument which has been advanced by the appellant is that the Public Notice in 7 ITC(PN)/79 dated 21.7.1979 could not take away their right to import the goods under the licence in question. This Public Notice permitted an Export House to import any item during 1979-80 Policy which was under OGL during the 1978-79 policy provided a firm commitment had been made by the Export House by opening an irrevocable Letter of Credit before 1.5.1979. Therefore a reading of the Public Notice shows that it confers the advantage of importing an item which was permitted in the earlier policy provided there was a firm commitment by opening an Irrevocable L/C before 1.5.1979. It has been admitted by the appellants that they did not have any such firm commitment. Therefore, they were not saved from the operation of the 1979-80 policy in this behalf. The arguments advanced by the appellants that the Public Notice cannot have retrospective effect is besides the point. The Addl. Collector has not given retrospective effect to the Public Notice. He has merely held that there was no firm commitment as enjoyed by this Public Notice and hence the benefit of the previous policy as envisaged by the Public Notice could not be given to the appellants. As mentioned in the Board's order, the L/C was opened long after 1.5.1979 and the so-called firm commitment by way of the letter from the New Delhi representative of the suppliers to the licence holders on 15.3.1979 was not acted upon for more than one year.
42. Besides, the Public Notice offered a concession to the licence-holder. In this case, the licence-holder is M/s Sawhney Brothers, and not the appellants. There was no opening of an irrevocable letter of credit as envisaged by the Public Notice by the licence holder and hence the benefit of the Public Notice cannot be extended to the appellant who was merely a letter of authority holder on behalf of the licence. The appellant is also not the actual user of the goods. Therefore what is not permitted to an actual user cannot be allowed to a Letter of Authority holder. In this behalf, I rely on the decision dated 20.12.1984 of the Delhi High Court in C.A. Nos. 4037 and 4038 of 1982 in the case of . Jain Exports Pvt. Ltd. and the Punjab and Haryana High Court in the case of Oswal Woollen Mills Ltd. AIR 1985 Punjab and Haryana, page 88.
43. In the foregoing view, I find that the import policy for the year 1979-80 cannot be ignored in judging the validity of the licence and that there was no firm commitment on the part of the licence holder before 1.5.1979 to give them the benefit of the previous years policy for the import of the goods, and that the importers were not the licence holders or the actual users. Accordingly, I find that the order of the Addl. Collec-tor of Customs, as confirmed by the Board, is correct. I uphold the same and reject the appeal.
44. Since there has been a difference of opinion between the two members, this matter has to be referred to the President in terms of Section 129-C(5) of the Customs Act to decide the following point of difference :
Whether in the facts and circumstances of the case the appeal of M/s. Raj Copper & Cable Industries should be allowed as held by Member (Judicial) or should be rejected as held by Member (Technical).
ON DIFFERENCE OF OPINION BETWEEN MEMBER (T) & MEMBER (J) OPINION
45. Hon'ble President of the Tribunal has referred the matter to me, in terms of Section 129-C(5) of the Customs Act, to decide the following point of difference:
Whether in the facts and circumstances of the case the appeal of M/s. Raj Copper & Cable Industries should be allowed as held by Member (Judicial) or should be rejected as held by Member (Technical).
46. Facts of the case have been set out in detail in the order of learned Brother Hegde - Member Judicial. These facts have been adopted in the order of the learned brother Dilipsinhji - Member (Technical).
47. Summing up his order learned Brother Hegde has found as follows :-
"As the licence in this case was governed by the policy AM 79 and in that policy goods imported was not canalised and since the firm contract for supply of goods was made on 15.3.1979 and since the public notice which required opening of irrevocable letter of credit before 1.5.1979 cannot take away the right acquired under the licence and since the changes effected in the policy AM 80 can not govern the licences issued during the policy AM 79, the order of confiscation passed by the Addl. Collector and confirmed by the Board requires to be set aside and accordingly we set aside the same. The fine, if any, paid shall be refunded to the Appellants".
48. Learned Brother Dilpsinhji, on the other hand, has observed as follows :-
"In the foregoing view, I find that the import policy for the year 1979-80 cannot be ignored in judging the validity of the licence and that there was no firm commitment on the part of the licence holder before 1.5.1979 to give them the benefit of the previous years policy for the import of the goods and that the importers were not the licence holders or the actual users. Accordingly, I find that the order of the Addl. Collector of Customs, as confirmed by the Board, is correct. I uphold the same and reject the appeal".
49. Now, Shri B.K. Seth, learned Consultant for the appellant has mainly relied on the order of learned Member (Judicial). He has in addition relied on the decision of Hon'ble Bombay High Court in the cases of Jayant Vegoils & Chemicals Pvt. Ltd. (1987 (30) ELT 134(Bom.) (paras 9 and 10) and Bharat Oxygen and Acetylene Co. (1987 (29) ELT 858 - para 12). Learned Consultant's reliance on the decision of Bombay High Court in the case of Shiv Shankar Tilak Raj (1987 (28) ELT 342 - paras 1 to 6) is not relevant because this decision relates to delay of six days in applying for notified number for notified goods under Chapter IVA; it does not deal with the question of validity of licence vis-a-vis the date of its issue and the import policy governing the licence which is the question in the instant case.
50. Learned Senior Departmental Representative, Shri G.D. Pal appearing for the department, has, on the other hand, relied upon (i) para 213 of 1979-80 Import Policy; (ii) 1987 (30) ELT 45 (SC) (Raj Prakash Chemicals), (iii) 1986 (26) ELT 465 S.C. (Union of India v. Godrej Soaps Pvt. Ltd.), (iv) AIR 1985 Punjab and Haryana 88 (para 5) (Oswal Woollen Mills v. Union of India) and (v) 1987 (29) ELT 753 (Jain Exports Ltd. - paras 3 and 171A).
51. I have very carefully considered the pleas advanced on both sides and perused the order of the learned Brothers.
52. Judgments of the Supreme Court in the cases of Raj Prakash Chemicals and Godrej Soaps Ltd. have been distinguished by the learned Brother Hegde on the ground that scope of the licences was governed by the specific endorsements made on the licences considered in those cases. This distinction, in my view, with respect, is not correct because the endorsement had to be made, as rightly observed by the learned Brother Dilipsinhji, in view of the long delay in issuing the additional licences to which the exporters'/parties were entitled. These judgments of the Supreme Court, settled the controversy in question that the imports against additional licences must satisfy the dual criteria:- (i) these imports must be valid during the policy period for which the licence was issued and-(ii) these imports must be valid during the policy period when the actual im-ports;have taken place. It is to be noted here that the arguments were advanced before the Hon'ble supreme court in the case of Raj Prakash Chemicals that statutory orders/notifications under Section 3 of the Imports and Export (Control) Act, 1947 can whittle down the rights acquired under a licence and not the non-statutory policy or public notices (Reference paras 14 and 15 of A. 1987(30) ELT 45), yet the Supreme Court con-cluded that the licences must satisfy the twin criteria referred to above.
53. Ratio of the Supreme Court's judgment in the case of Godrej Soaps Pvt. Ltd. mentioned supra, fits most appropriately to the facts and circumstan-ces of this case, inasmuch as the goods were canalised in the subsequent policy period when they were imported whereas in the policy period for which licence was issued, the goods could be imported directly by a private party, as in the instant case. Learned Con-sultant, however, refers to the subsequently reported judgments of Bombay High Court in mentioned supra and one of these judgments refers to the judgment of Supreme Court in the case of Raj Prakash Chemicals but makes a distinction. On close scrutiny, I observe, that these judgments of Bombay High Court, though reported later in ELT, were ordered much earlier than the judgment of the Supreme Court in the case of Godrej Soaps Pvt. Ltd. Learned Consultant's reliance on the Bombay High Court judgments in the cases of Jayant Vegoils and Bharat Oxygen has, therefore, to be turned down in view of the Supreme Court's latest and most apposite (to the facts of this case) judgment in the case of Godrej Soaps Pvt. Ltd.
54. In view of the foregoing discussion, I respectfully agree with the view of the learned Member (Technical) that the appeal of the appellant M/s. Raj Copper and Cable Industries should be rejected.
FINAL ORDER
55. The point of difference between the 2 Members of this Bench was referred by the President in terms of Section 129-C(5) of the Customs Act to the third Member Shri P.C. Jain. Shri Jain has now recorded his order on the point of difference. As per the provisions of Section 129-C the appeal is to be disposed of on the basis of the majority opinion. In majority view, the order of the Addl. Collector as upheld by the order of the Board is con-firmed and the appeal of . Raj Copper and Cable Industries is rejected.