Bombay High Court
P. Ripalkumar And Company, Bombay vs Union Of India And Others on 1 January, 1800
Equivalent citations: 1988(15)ECC101, 1988(19)ECR172(BOMBAY), 1987(32)ELT668(BOM)
JUDGMENT 1. The Petitioners had an imprest licence under AM 82- 82 for import of diamonds unset and uncut . The petitioners carry on business of exporting polished diamonds and importing rough diamonds. AS per the imprest licence they imported the goods mentioned therein and further they exported polished diamonds. After they completed their export oblligations the Petitioners were entitled to revalidation of the said imprest licence for a period of six months with an endorsement for the purpose of importing OGL items as per para 185 sub-para 4 of the said policy AM 82-83. The Respondents would not make such an endorsement. In the result the Petitioners had to file a petition in this Court being Writ Petition No. 2477 of 1984. Pratap, J. after hearing the parties directed the respondents to make such an endorsement. The terms of the endorsement as set out by the Judge, are as follows : "(i) revalidate for period of six months from the date of revalidation the Petitioners' imprest licence and (ii) endorse the said licence to be valid for import of OGL items under paragraph 185 (excluding sub-para 7 thereof) of the AM' 83 Policy except any items the import of which has been specifically banned under the current Policy. (iii) This licence will be non-transferable." 2. lt appears that as aginst this Judgment, the respondents filed an appeal before the Divisional Bench. The Division Bench by its its order dated December 19, 1985 rejected the said appeal and confirmed the order as passed by the learned Single Judge. As aginst this the respondents preferred an S.L.P. which also has been dismissed. 3. Thereafter, the respondents had no choice but to make the endorsement. But instead of making the endorsement as directed by the learned Judge, the respondents made the endorsement as follows : "Items as per OGL of 1982-83 excluding items not permitted to Export Houses under the Import Policy for 1985-88 i.e. excluding items appearing in lists of Restricted items, Limited Permissible items and canalized items. The endorsement has been made in terms condition laid down in para 185(6) and the licence shall not be transferable." The Petitioners pointed out that this endorsement was not in compliance of the order of the Court and, therefore, the petitioner took out a notice of motion for judging the respondents guilty of contempt of this Court. The said notice of motion came to be decided by Bharucha, J. by his order dated November 7, 1986. It appears that when the matter was argued on the previous occasion, the respondents agreed to make the endorsement as directed by the learned Judge. Accordinly, they made the correct endorsement as directed by this Court on November 6, 1986. However, the learned Judge held that contempt had already been committed and that, therefore, the respondents were liable for punishment and he imposed a certain punishment. As against this judgment of Bharucha, J., it appears, that the respondents have filed an appeal in the Supreme Court and the appeal is still pending and the order passed by Bharucha, J., has been stayed. 4. Thereafter pursuant to his endorsement the petitioners imported marble slabs some time in March, 1987. They filed the bill of entry. But soon the respondents issued a show cause notice dated April 9, 1987 which is being challenged in the present petition. In that show cause notice, the respondents have purported to proceed under Sec. 111 clause (d) and or clause (1) OR (M) of the Customs Act, 1962 read with Section 3 of the Imports & Exports (Control) Act, 1947. The respondents have pointed out that the import licence produced is not valid to cover the goods imported for reasons mentioned in the annexure and the reasons are as follows : "The clearances is sought against import licence No. P/K/L 0470508/C/XX/83/B/82, dated 29.4.1983 revalidated for a period of six months on 6.11.1986 and is valid for import of OGL items under para 185 (excluding sub-para thereof) of AM 83 policy except any item the import of which has been specifically banned under the Current Policy, The meaning of term banned or specifically banned items of the current policy has been settled in the Hon'ble Supreme Court's judgment in Civil Appeal No. 4978 of 1985 M/s. Raj Prakash Chemicals v. Union of India 1987 (30) ELT 45; W.P. No. 604 of 1986 M/s. Indo Afghan Chamber of Commerce v. Union of India and Civil Appeal No.3418 of d1986 Union of India v. M/s. Godrejl Soaps Pvt. Ltd. - According to the aforesaid judgment the items of Appx. 2B, Appx. 3A and Appx. 5 are covered by the term "banned or specifically banned." In the present case the goods imported are appearing in Appx. 2B Sr. No. 50 of Am 85-88 policy and accordingly covered by the term `specifically banned items are not allowed to import as per endorsement on the Licence, the said licence does not appear to be valid." 5. The Petitioners thereafter filed the present Petition on April 20, 1987 and the learned Judge while admitting the petition set out the scope of enquiry in the present as follows : "According to Mr. Bulchandani, leaned Counsel for the respondents, the Supreme Court has interpreted the words "items the import of which has been specifically banned under the Current policy" and including inter alia, Restricted items under Appendix 2B of Import Policy for 1985-88. In fact, that is the reason why the respondents' endorsement was, however, considered as not in accordance with the orders passed in this particular case by Bharucha, J. In view thereof, some interim relief is required to be given to the petitioners pending a decision on the question of the exact meaning of the endorsement which is now made on the said licence of the Petitioners. The Petitioners, however, cannot be allowed to clear the goods at this stage since the Supreme court has held that banned items under the Import Policy of 1985-88 include restricted items under Appendix 2B. The items imported by the Petitioners in the present case fall under the restricted list. The licence of the petitioners, however, is imprest licence and not an additional licence. Whether this makes any deference to the interpretation of the order of Pratap J. will be examined at the final hearing of the petition. Clearance of goods, however, cannot be allowed at this stage on this ground." Therefore, the question is as to what is the meaning of the order passed by Pratap, J., when he directed the respondemts to make the endorsement to the effect that the petitioners would be entitled to import OGL items under para 185 (excluding sub-para 7 of the AM 82-83 policy) except any items the import of which has been specifically banned under the current policy. Left to myself, I would have accepted the submission of Mr. Ashok Desai tht the meaning of the words, in the order, in that the items, in specie which are banned, cannot be imported under this order. But my work has been simplified inasmuch as these very specific words have been interpreted in four judgments, all of the Supreme Court, all arising out of similar orders initially passed on April 18, 1985. 6. The issue pertaining to grant of an endorsement in terms of para 185(4) of AM 82-83 policy came up for consideration for the first time before our High Court in Writ Petition No. 1465 of 1984 H.M. Patel & Co.v. Union of India & Others. Pendse, J., allowed the petition and directed the respondents therein to grant an endorsement in terms of the said para 185(4) of the said Import Policy of AM 82-83. This matter went upto the Supreme Court and the Supreme Court rejected the S.L.P. filed by the Union of India but recorded the statment of Mr. F.S. Nariman the learned Counsel for H.M. Patel & Co., that while applying for OGL endorsement and revalidation for the year 1982-83 his client would not insist upon any relief in respect of any items the import of which is "currently banned specifically." This statement as also the earlier order came to be constructed by the Supreme Court firstly in the case of Raj Prakash Chemicals Ltd. v. Union of India, . The argument restricting the scope of enquiry to the items which are banned in specie, was rejected by the Supreme Court. The Supreme Court took into account that the expression connoted something more than what was "banned." The Court took into account the fact that the right to import under the licence depends on the terms of the current Policy and, therefore, even though the item could not fall within the list of items which are specifically banned, still, if the item falls within the lists of restricted items or limited permissible items, the same cannot to be imported. In other words, the import can only be as per the current Policy. The relevant portion wherein the scope of enquiry was enlarged reads, as follows : "To appreciate then what is intended by the words "specifically banned" it is necessary to have recourse also to the order made by Sawant, J.
He directed that the Additional Licence were valid for the imoprt of items permissible to Export Houses under such licence according to paragraph 176 of the Import Policy 1978-79 "excluding those items which are banned for the period 1978-79 and which have been banned during the Import Policy for the period 1984-85," and then explained that "banned items referred to above mean items which are `banned' and `absolutely banned.' The word "banned in that order has been used for the period d1978-79,and it has also been used in relation to the period 1984-85. It is obvious that in the light of the explanation appended by the learned Judge when he spoke of items which were banned for the period 1978-79, he had in mind items which were "banned" and items which were "absolutely banned" and he was clearly referring to Appendix 3 (List of Banned Items) and Appendxi 4 (List of Absolutely Banned Items).
Appendix 3, it will be recalled, is the list of items which could not be imported by an Export House on an Additional Licence. It was a ban with reference to the category of importer. Appendix 4 is the list of items which could not be imported by anyone whosoever. When regard is had to the Import Policy 1984-85, reference must necessarily be made to the corresponding Appendix 3, formerly decribed as the list of Banned Items, and now described as the List of Limited Permissible Items, and Appendix 2 Part A which is now the List of Banned Items replacing Appendix 4 (List of Absolutley Banned Items). In other words, the Additional Licence to be issued to diamond exporters entitled then to import items permissible to Export House under such Licence under the Import Policy 1978-79 excluding those items which fell within Appendices 3 and 4 of the Import Policy 1979-79 and also excluding items which fell in Appendix 3 and Appendix 2 Part A of the Import Policy 1984-85. Upon what we have said earlier, that is the meaning which we think must also be given to the terms of the order dated April 18, 1985 of this Court."
More specifically the same expression came to be considered in the next of M/s. Indo Afghan Chambers of Commerce v. Union of India, , and the relevant passage is at para 11 and it reads as follows:
"On the reasoning which found favour with this Court in its judgment dated March 5, 1986 we hold that diamond exporters holding Additional Licences were not entitled to import goods enumerated in Appendix 2 Part-B of the Import Policy 1985-88. On that ground also the respondents diamond expertise are not entitled to take advantage of Item 121 of Appendix 2 Part-B for the purpose of importing dry fruits. As held by this Court in its judgment dated March 5, 1986, holders of Additional Licences are entitled to import lonely those goods which are included in Appendix 6 Part 2 List 8 of the Import Policy 1985-88. Dry fruits are not included in that List and therefore they cannot be imported under Additional Licences."
7. In the case of Union of India v. M/s. Godrej Soaps Pvt. Ltd., , the Supreme Court further clarified that in all such cases the items have to pass through two tests, firstly that the items should be importable under the earlier import Policy and secondly they should also be importable under the current Import Policy. Thereafter again on the same lines as set out in the earlier two judgments the Supreme Court observed in particular as follows :
"In respect of Palm Kernel Fatty Acid which is a canalized item listed as Item 9(v) in Appendix V Part B of the Import Policy 1985-88, there in no provision in that Policy which permits the import of such item by an Export House holding an Additional Licence. Therefore, the claim of the diamond exporters, or, as in this case a purchaser from the diamond exporter must fail because it is not open to import by the diamond exporter under any provisions of the import Policy 1986-88."
"We have seen that diamond exporters could import the items which they were entitled to import under the Import Policy 1978-79 provided they were importable also under the Import Policy ruling at the time of import. These are item which were open to import by Export Houses holding Additional Licences for sale to the Actual Users (Industrial). These are items which were directly imported, for example, items in Part 2 List B of Appendix 6 of Import Policy 1985-88. These are items which are not canalized. Canalized items are those items which are ordinarily open to import only through a public sector agency. Although generally these are importable through public sector agencies, it is permissible for any import policy to provide an exception to the rule and to declare that an importer high import a canalized item directly. It is in that sense and that sense only that the Court could have intended to define the entitlement of diamond d exporters. They would be entitled to import items which were canalized or not if the import policy prevailing at the time of import permitted them to import items falling under such category. This was also viewed in that light in the case of Indo--- Afghan Clhambers of Commerce (supra)."
8. Mr. Desai appearing for the petitioners vehemently argued and pointed out that all the cases decided by the Slupreme Court related to Additional Licences and not to any imprest licence. He submitted that additional licence and imprest licences are distinct and different types of slicesces. He submitted that additional licences are grtanted only to an export house while the imprest licences are grtanted to all registered exporters. The additional Licences are granted after attaining a certain level of export performance whreeas the imprest licences are granted with value added export obligation. He also submitted that additional licences can be used or operatted from the date of issue whereas the imprest licences can be used for import of OGL items only after discharge of export obligation. He also pointed out that additional licences are granted in additonal to all other types of licence like REP, impreser etc., whereas the imprest licence render the registered exporter ineligible for REP licences. He also submitted that additional licence are always subjected to the provisions of transitional arrangements whereas the imprest licences are not so subjected.
9. He drew my attention to paragraph 35(1) & (2) of the current Import and Export Policy of AM 85-88. He pointed out that para 35(1) and (2) apply to only additional licences and REP licences but they do not apply to imprest licence. He submitted that under under para 35(2) as a transitional arrangement REP licence and additional licences held by Export Houses/Trading Houses cease to be valid for import of any item which could be imported under OGL during they preceding licensing year or earlier but is no longer in this Import-Export Policy. He pointed out that imprest licences have been excluded from the scope of para 35(2). He submitted that it could be said that the respondents are objecting to import to these items mainly on the basis that the items did not fall under the current OGl items and in any case because of para 35(2). But according to Mr. Desai since para 35(2) did not apply to imprest licence, the Supreme Court judgments cannot be considered as relevant as far as this case is concerned.
10. As against this Mr. Bulchandani submitted that there is no different between an imprest licence and a REP licence. He submitted that imprest licence is a form of REP licence only. Its modalities differ. In REP Licence, exports are first and replenishment by way of imports follows, while in the case of imprest licence, imports are first by way of providing inputs and exports follow thereafter. He also submitted that replenishment percentages/benefits in both REP and imprest licences are the same and according to him both facilities are co-extensive. In the case of REP licence, replenishment entitlement is on the basis of atcual FOB value of already exported goods, whereas in the case of an imprest licence FOB value is decided on the basis of imports requirements and subsequently adjusted against replenishment available against actual exports pursuant to Appendix 17 in respect of concerned product. He also submitted that additional licences are granted to Export Houses by way of special facilities based on FOB value of exports of select products of foreign exchange earned on total exports. He, therefore, submitted that REP, imprest and additional licences are,therefore, linked to exports, modalities only differ. He, therefore ,submitted that even though the Supreme Court judgments, all related to additional licences they can be said to be applicable to the present case, inasmuch as the Court had construed the words "Specifically banned", in the context of items which can be imported under the Current Policy.
11. One things appears to be clear that the judgment given by Pratap, in the first Writ Petition No. 2477 of 1984 pursuant to which the endorsement was made in the present case, does not appear to have been reversed at all. In the judgment, the learned Judge has clearly set out that para 185(4) is an exception to para 187(7) of Import Export Policy A.M. 82-83. Therefore, if the petitioners are getting the endorsement, it is by virtue of para 185(4) and not otherwise. In the current Policy of AM 82-83. Mr. Desai, therefore, submitted that the endorsement made on the imprest licence should have some meaning and therefore, the Petitioners should be allowed to import what is permitted under AM 82-83. He also submitted that there does not appear to be only OGL item which can be imported by virtue of any endorsement made on the imprest licence. He, therefore, submitted as if the ratio of Supreme Court is made applicable to the present case,t the Petitioners would not be able to import anything and they would not have the benefit of the said endorsement and of the earlier policy of AM 82-83.
12. IT was true that there is no provision under the current policy for import OGL items pursuant to the endorsement made on the imprest licence. But still the question is as to what is the meaning of the words "specifically banned" as contemplated by Pratap, J. The Supreme Court might have dealt with cases which have all arisen in respect of additional licences. But in my view the principle is the same. It is not enough to say that the items are not "specifically banned". The importers must have a further right to import what is permitted under the Current Import Export Policy. The two test laid down by the Supreme Court have not been challenged in the present case at all. The two tests still hold the field. Therefor, the import of any item must firstly comply with the requirement of the earlier policy viz. AM 82- 83 [that is how the petitioners got the necessary endorsement as directed under para 185(4). But at the same time it must also satisfy the requirement of the Current Policy AM 85-88. If the Current Policy does not permit for an import of OGL items by virtue of an endorsement made on the imprest licence I cannot question the wisdom of the Current Policy. If the items are allowed to be imported even though there is no specific provision for import of such an item, that would be construing the order against the recruitment of the current policy, and also, in substance against the interpretation put up by the Supreme Court in the above referred cases.
13. Mr. Desai submitted that the present case stands on its own facts and circumstances. He pointed out that after the learned Judge directed the respondents to make the endorsement and when the respondents chose to make the incorrect endorsement as set out above, they did so relying on the above first order in the case of Raj Prakash Chemicals came to be made by the Supreme Court on March 5, 1986. This first order of the Supreme Court related to additional licence, and particularly confined to appendix 3 which are limited permissible items. The second order of the Supreme Court related to additional licence, and particularly confined to appendix 3 which are limited permissible Chambers of Commerce came on May 16, 1986 and that again related to additional licence and dealt with appendix 2B i.e. restricted items. The third case as Godrej Soaps came to be decided on September 12, 1986 and that related to additional licence and it confined itself to appendix 5, i.e., chemical items. Relying on these Supreme Court cases the respondents added their own interpretation and modified the endorsement by "excluding item bearing in the list of restricted items, limited permissible items and canalised items." However, when the contempt motion was taken out Bharucha, J. expressly held that was not proper and it was not in compliance with the order passed by Pratap, J., and as a result of his order, the respondents had to make the endorsement as directed by Pratap J. Mr. Desai, therefore, submitted that it could be said that in the present case, the Court had already considered that the endorsement as sought to be made by the respondents relying on the Supreme Court Judgments has been rejected by this Court and that, therefore, it is not necessary again to rely on the Supreme Court Judgment to construe the meaning of the word "specifically banned." In other words, his submission is that as far as this question is concerned that stands concluded by virtue of the judgment of Bharucha, J. and that, therefore, that becomes binding on the respondents, leaving aside the large question of interpretation of these words or whether this question would fall within the scope of para 35(1) and (2) of the Current Policy of AM 85-88.
14. I am afraid that cannot be the correct interpretation of the situation. It is true that the respondents were required to make the endorsement as directed by the learned Judge. The respondents in their wisdom thought that would not be a proper endorsement as according to them the Supreme Court had construed the meaning of the words "specifically banned" and therefore, they could add their own interpretation. I may mention that while making such an endorsement which has been described in these proceedings as "incorrect", the respondents had said that they made this endorsement in terms of para 185 of the import policy AM 82-83 etc. Therefore, the respondents had to make the correct endorsement. That does not mean that Bharucha, J., had construed the meaning of the words "specifically banned." He had not dealt with that part of the order at all. He wa only concerned with the order of the Court and non-compliance thereof.
15. In the ultimate analysis, it comes to this whether it is an additional licence or whether it is a REP or imprest licence, essentially all these relate to certain facilities whereby the importer can import certain items. When importers have to import those items, naturally, current policy becomes relevant. If, under the Current Policy,o it is not possible or the importers to import items which they want to import though the same may be permissible under the early policy, the importers have no choice. I, therefore, hold that the Petitioners cannot find fault with the show cause notice issued by the respondents.
16. In the result, the petition will have to be dismissed. I, therefore, pass the following order :
"The petition stand dismissed. Rule discharged. However, in the circumstances of the case, there will be no order as to cost."*
17. At this stage, at the request of the petitioners, the statute quo, s envisaged in the interim order dated April 28, 1987, to continue for a period of four weeks from today.