2015 (12) TMI 742 - SC - Customs

Denial of benefit of advance license -import of Natural rubber which is a major raw material - activity of manufacturing and exporting heat resistant latex rubber threads - Vide circular dated 10.10.2003, the embargo imposed on the import of natural rubber was lifted and it was stated that fresh advance licenses are issued as per normal EXIM policy. The old licenses can be revalidated up to 31.12.2003 - HC quashed the circular Held that - View taken by the High Court is without any blemish and the High Court has given cogent reasons while holding that the circulars in question suffer from bias and arbitrariness and were discriminatory in nature. This aspect of classification is without any rational nexus between the differentia and the object which was sought to be achieved and the differentia is discussed by the High Court - No merit in appeal - Decided against Revenue.

Summary

Issues:
1. Validity of circulars dated 10.10.2003 and 11.12.2003 shortening the revalidation period of licenses.
2. Discrimination between new licensees and old licensees in the context of advance licenses under the Export-Import Policy.

Analysis:
1. The respondent, engaged in manufacturing and exporting heat resistant latex rubber threads, faced restrictions on importing natural rubber under advance licenses due to a circular issued on 20.02.1999. Despite completing export obligations, the respondent was denied the benefit of advance licenses. The High Court initially held that fixing time periods falls under executive jurisdiction. However, the Division Bench later overturned this decision citing arbitrariness and discrimination between new and old licensees.

2. The Supreme Court analyzed the High Court's decision and found the circulars to be biased, arbitrary, and discriminatory. The Court highlighted the lack of rational nexus between the differentiation in revalidation periods for old and new license holders and the policy objectives of optimizing exports. It criticized the policy for singling out affected parties for further differentiation without a public policy imperative. The Court concluded that the respondent should be allowed revalidation of licenses on par with fresh licensees, emphasizing equal treatment under the law.

3. The Supreme Court dismissed the appeal, upholding the High Court's decision to set aside the impugned circulars dated 10.10.2003 and 11.12.2003. The Court directed the respondents to process the appellant's application for revalidation within four weeks and declared that the discrimination in revalidation periods was arbitrary. The judgment emphasized fair treatment for all license holders, irrespective of the time constraints imposed by past policies.