2006 (9) TMI 304 - SC - Customs

EXIM - Duty exemption scheme - Advance licences - Interpretation of statute - Natural justice hearing - EXIM

Summary

Issues:
Challenge to refusal of transferability of advance licenses under Duty Exemption Scheme.

Analysis:
The appeal was filed against the order of the Andhra Pradesh High Court challenging the refusal by the Director General of Foreign Trade (DGFT) to endorse the transferability of three advance licenses. These licenses were obtained for the export of various items under the Duty Exemption Scheme of the EXIM Policy 1997-2002. The appellant's request for transferability was denied by the DGFT, leading to the writ petition and subsequent appeal.

The Duty Exemption Scheme allowed for duty-free licenses to be transferable after the completion of export obligations and endorsement by the licensing authority. The licenses in question were issued under the 'no norms category' for the export of Fresh Frozen Sea Foods. The High Court observed that the appellant should have applied under the 'norms category' due to existing norms for the export product.

The key contention revolved around the transferability of licenses, irrespective of whether they were issued under the 'norms category' or 'no norms category'. The relevant clause in the Duty Exemption Scheme clearly stated that all duty-free licenses were transferable, subject to certain conditions and time limits.

The DGFT rejected the transferability request based on the misclassification of the export items under the 'no norms category'. However, the Court found this reasoning flawed as no show cause notice was issued to the appellant for cancellation of licenses. Granting of a license confers certain rights to the licensee, and any deprivation of such rights should follow due process.

The Court emphasized that under the Duty Exemption Scheme, all licenses were transferable, and the refusal by the DGFT was incorrect. The subsequent argument regarding the new EXIM Policy 2002-2007 was dismissed as there was no material inconsistency with the previous policy. Citing precedent, the Court held that accrued rights under the old policy continued under the new policy.

Ultimately, the appeal was allowed, setting aside the judgments of the High Court and the DGFT. The DGFT was directed to endorse the transferability of the licenses as requested by the appellant, with no order as to costs.