1961 (8) TMI 27 - SC - Customs

Does the fact that the petitioners have been granted licence approximately for 45% of the total value of the goods exported amount to discrimination entitling them to protection of Art. 14 of the Constitution ? Held that - On the materials placed before the Committee.-.there. evidence to show that the record produced by the petitioners was unsatisfactory ; they were not satisfied that the prices which the petitioners said they had paid for purchasing the goods were in truth paid. If there was evidence to show that in respect of other persons who were in the opinion of the Committee found also to have inflated the prices in the manner adopted by the petitioners and still the Controller had granted import licences to those persons for the full amount of the export value or a percentage substantially in excess of the percentage for which import licence was granted to the petitioners, a case of discrimination could have been made out ; but in the absence of such evidence, we do not think that any case of discrimination is made out. Appeal dismissed.

Issues Involved:
1. Authority of the Controller of Imports to grant or refuse import licenses.
2. Alleged arbitrary reduction of import licenses.
3. Alleged infringement of fundamental rights under Article 19(1)(g) of the Constitution.
4. Alleged discrimination under Article 14 of the Constitution.
5. Reasonableness of restrictions imposed by the State.

Issue-wise Detailed Analysis:

1. Authority of the Controller of Imports to Grant or Refuse Import Licenses:
The Imports and Exports (Control) Act, 1947, authorized the Central Government to control the import and export of goods. By the Imports (Control) Order, 1955, the Central Government imposed restrictions on the import of certain goods, requiring licenses or customs clearance permits. The Export Promotion Scheme allowed import licenses based on the value of goods exported, but the Controller of Imports had the discretion to grant licenses up to 100% of the export value. This power was not uncanalized or arbitrary, as it was governed by the Import Trade Control Policy and detailed provisions in the Imports (Control) Order.

2. Alleged Arbitrary Reduction of Import Licenses:
The petitioners claimed that their import licenses were arbitrarily reduced to approximately 45% of the value of the goods exported, infringing their right to carry on business. However, the court found that the Controller of Imports had the discretion to grant licenses up to 100% of the export value, and this discretion was exercised reasonably. The reduction was based on the Committee's findings that the petitioners had inflated the invoice values of the exported goods. The Committee recommended a lower value for the import license based on reasonable market rates.

3. Alleged Infringement of Fundamental Rights under Article 19(1)(g):
The petitioners argued that the reduction of their import licenses imposed an unreasonable restriction on their fundamental right to carry on business. The court held that the right to carry on business under Article 19(1)(g) is subject to reasonable restrictions in the interest of the general public. The scrutiny of applications and the reduction of import licenses were justified to prevent malpractices and protect the foreign exchange position. Therefore, the restriction was not unreasonable.

4. Alleged Discrimination under Article 14:
The petitioners claimed discrimination, stating that other importers received licenses for 85-100% of their exports. The court found that the Committee's decision was based on specific findings of inflated invoice values and lack of satisfactory evidence linking the goods exported to the purchase vouchers. The Committee's recommendations were not arbitrary, and there was no evidence that other similarly situated exporters who inflated prices were treated differently. Thus, no discrimination under Article 14 was established.

5. Reasonableness of Restrictions Imposed by the State:
The State's imposition of restrictions on import licenses was found to be reasonable. The Export Promotion Scheme was suspended due to malpractices, and a Committee was appointed to scrutinize pending applications. The State's actions aimed to prevent speculative imports and protect the foreign exchange position. The court held that these measures were in the larger interest of the general public and did not impose unreasonable restrictions.

Conclusion:
The petition was dismissed, and the court upheld the reduction of the import license value based on the Committee's findings. The restrictions imposed by the State were deemed reasonable and justified in the interest of the general public. The petitioners' claims of arbitrary action and discrimination were not substantiated. The application for intervention by M/s. M. Shaams and Company was also dismissed.

← Previous Next →