1973 (8) TMI 155 - SC - Customs

Trade Notice dated 29 January 1972 challenged - Held that - For the reason of the changed pattern of export steamers were not availed or shipment was delayed the traders would suffer loss for non-shipment of the goods and incur railway demurrage and Port Commissioners demurrage and storage charges. The Association therefore asked for relief in the matter of export in accordance with the contractual terms of existing contracts. The Andhra Pradesh Chamber of Commerce added that there were contracts prior to 24 January 1972 stating shipment date subsequent to 24 January 1972 for which letters of credit were to be established in due course. Certain contracts were executed in part and for the remaining part letters of credit were to be established in due course prior to the stipulated time of shipment. There were contracts prior to 24 January 1972 for which letters of credit originally established had expired. Therefore the Andhra Chamber of Commerce asked for extension of last date for registration of contracts up to 29 February 1972. In this background it cannot be said that the Government authorities acted mala fide in extending the date of the opening of the letter of credit from 24 January 1972 to 31 March 1972. The relaxation was to minimise hardships to the traders. The relaxation was to prevent dislocation of trade on a large scale. The Association gave instances of traders who could not succeed in opening letters of credit for reasons beyond their control. Appeal dismissed.

Issues Involved:
1. Validity of the canalisation scheme under the Imports and Exports Act, 1947.
2. Alleged violation of Article 19(1)(g) of the Constitution.
3. Alleged violation of Article 14 of the Constitution.
4. Alleged arbitrary fixation of the date for the canalisation scheme.
5. Alleged unreasonable restriction and imposition of service charges.
6. Alleged discrimination between exporters of different mica products.
7. Alleged mala fide extension of the date for opening letters of credit.

Issue-wise Detailed Analysis:

1. Validity of the Canalisation Scheme:
The canalisation scheme for the export of mica was implemented under Section 3(1)(a) of the Imports and Exports Act, 1947, and Clause 6(1) of the 1968 Order. The court upheld the scheme, referencing previous rulings such as Davason of Bhimji Gohil v. Joint Chief Controller of Imports & Exports and Glass Chatons Importers & Users' Association v. Union of India, which supported the canalisation of exports through specialized agencies as a reasonable restriction in the interest of the general public.

2. Alleged Violation of Article 19(1)(g):
The petitioner argued that the canalisation scheme imposed unreasonable restrictions on their right to carry on business. The court found that the scheme did not amount to an acquisition of the petitioner's business or goodwill but was a method to regulate exports through a specialized agency, which is permissible under the law. The scheme was intended to ensure uniform quality and increase export volume, thus serving the public interest.

3. Alleged Violation of Article 14:
The petitioner claimed discrimination against exporters of mica scrap and waste compared to exporters of mica powder. The court held that the exclusion of mica powder from the scheme was based on an intelligible differentia aimed at developing the nascent mica powder industry in India. Therefore, there was no violation of Article 14.

4. Alleged Arbitrary Fixation of Date:
The fixation of 24 January 1972 as the date for the canalisation scheme was challenged as arbitrary. The court found that fixing a date was necessary to prevent the creation of specious contracts and to ensure the smooth implementation of the scheme. The date had a rational relationship with the scheme's objectives, and thus, there was no arbitrariness.

5. Alleged Unreasonable Restriction and Imposition of Service Charges:
The petitioner argued that the 1% service charge imposed by the Corporation was an unreasonable restriction and amounted to a tax. The court held that the service charge was not a tax but a fee for the services rendered by the Corporation in facilitating exports. Therefore, it did not violate Article 265 of the Constitution.

6. Alleged Discrimination Between Exporters of Different Mica Products:
The petitioner contended that excluding mica powder from the canalisation scheme would lead to its conversion from mica scrap and waste, resulting in a loss of foreign exchange. The court found that the exclusion aimed to develop the mica powder industry and was based on a reasonable classification, thus not violating Article 14.

7. Alleged Mala Fide Extension of the Date for Opening Letters of Credit:
The extension of the date for opening letters of credit from 24 January 1972 to 31 March 1972 was alleged to benefit influential people. The court found that the extension was made to minimize hardships faced by traders due to the sudden implementation of the scheme. Representations from various trade associations highlighted the difficulties faced by traders, justifying the relaxation.

Conclusion:
The court dismissed the petition, finding no merit in the contentions raised by the petitioner. The canalisation scheme was upheld as a valid exercise of regulatory power under the Imports and Exports Act, 1947, and did not violate Articles 14 or 19(1)(g) of the Constitution. The service charges were deemed reasonable, and the extension of the date for opening letters of credit was found to be a bona fide measure to alleviate traders' hardships. The parties were directed to bear their own costs.

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