2016 (2) TMI 577 - HC - Customs

Import of poppy seeds from Turkey - change in the procedure and policy for import of poppy seeds from free import to import on first come first served basis - Held that - it is an admitted fact that the petitioner is not an applicant seeking registration of any sale contracts for the import of poppy seeds from Turkey as against the impugned notification. The mala fides urged against the respondents in relation to the earlier public notifications are no longer relevant as the respondents have abandoned the said notifications. This would only require the limited questions of whether the policy now sought to be adopted by the respondents of categorization of importers lacks a rational basis. As has been demonstrated by the respondents in relation to the actual figures as to the number of applicants and the quantity available for allocation it cannot be said that it leads to any imbalance or is arbitrary. It may not be the best policy that could have been adopted by the respondents but it cannot be characterized as illegal or arbitrary. The explanation offered by the respondents as to the reason and rationale in adopting a prescription of a provisional cap and a country cap in so far as the imports from Turkey is concerned is also acceptable. Hence the petition lacks merit and is hereby dismissed.

Summary

Issues Involved:
1. Legality of the "first come first served" basis for import registration.
2. Alleged favoritism and procedural irregularities in the registration process.
3. Categorization of importers into Category-A and Category-B.
4. Fixation of provisional country cap for Turkey and its absence for China and the Czech Republic.
5. Petitioner's standing and compliance with previous import regulations.

Issue-wise Detailed Analysis:

1. Legality of the "first come first served" basis for import registration:

The petitioner contended that the procedure of accepting the earliest applications on a "first come first served" basis is held to be bad in law by the Supreme Court in the case of Centre for Public Interest Litigation v. Union of India, (2012) 3 SCC 1. The petitioner argued that the respondents had not provided sufficient time for applicants to submit their applications in respect of imports from Turkey, unlike in respect of the imports from China and the Czech Republic.

2. Alleged favoritism and procedural irregularities in the registration process:

The petitioner highlighted that a public notice dated 10.8.2015 was issued after office hours, and applications were shown to have been received within 18 hours from various distant locations, leading to a presumption of prior information and favoritism. The petitioner's application was not listed among the received applications, raising further suspicion of procedural irregularities.

3. Categorization of importers into Category-A and Category-B:

The public notice dated 14.9.2015 sought to apportion the provisional country cap of 14875 MT of poppy seeds for import from Turkey based on two categories of applicants: Category-A, defined as applicants who have imported poppy seeds from Turkey to India in at least three financial years during the last five years, and Category-B, which was not explicitly defined but referred to new or less frequent importers. The petitioner argued that this categorization would encourage cartels and monopolies, disadvantaging new entrants.

4. Fixation of provisional country cap for Turkey and its absence for China and the Czech Republic:

The respondents explained that the provisional country cap was necessary for Turkey due to the limited availability of poppy seeds, unlike China and the Czech Republic, where the availability was higher than the demand. The categorization aimed to ensure that regular importers do not suffer while providing opportunities for new entrants.

5. Petitioner's standing and compliance with previous import regulations:

The respondents contended that the petitioner had not chosen to participate in the exercise of filing any application for the period 2015-16 but had filed the petition to stall the proceedings. It was also pointed out that the petitioner was a defaulter in submitting details of imports against their registered sale contracts for the year 2014-15, complying only after issuance of a notice.

Judgment:

The court found that the petition lacked merit and dismissed it. It was determined that the policy of categorization of importers did not lack a rational basis and was not arbitrary or illegal. The explanation for the provisional country cap for Turkey was accepted. However, the court suggested that the respondents consider the options proposed by the petitioner for future application and implementation in regulating the trade.