1980 (4) TMI 121 - HC - Customs

Import licence - Criteria for grant - Prohibited goods - Approbation and reprobation - Applicability of

Issues Involved:
1. Validity of Import Licenses
2. Interpretation of Import Trade Policy
3. Role and Responsibility of Licensing Authorities
4. Role and Responsibility of Customs Authorities
5. Jurisdiction under Clause 10C of the Imports (Control) Order, 1955
6. Legal Effect of Public Notices and Executive Instructions
7. Principles of Approbation and Reprobation
8. Determination of Price under Clause 10C
9. Compliance with Bond Conditions

Detailed Analysis:

1. Validity of Import Licenses:
The petitioner, a small-scale industry, was granted import licenses in 1971 to import various items, including niacinamide. The licenses were actual user licenses, meaning the imported goods must be used by the importer and not sold in the market. The petitioner applied for an amendment to include niacinamide in the licenses, which was granted by the Drug Controller and the Joint Chief Controller of Imports and Exports (J.C.C.I.E.). However, the Customs Authorities later alleged that niacinamide was the same as nicotinamide, a banned item, and questioned the validity of the licenses.

2. Interpretation of Import Trade Policy:
The Import Trade Control Hand Book of Rules and Procedure (1971 Edition) and the Import Trade Policy for April 1971 to March 1972 were examined. The policy listed drugs and medicines that could not be imported against general licenses but did not explicitly ban specific items. The court found that the licensing authorities should have known whether niacinamide was a banned item before issuing the license. The court held that the Import Control Policy did not have statutory force and that a license issued by the licensing authority for any item, even if banned, would be valid until canceled or rendered ineffective in accordance with the Imports (Control) Order, 1955.

3. Role and Responsibility of Licensing Authorities:
The court emphasized that it was the duty of the Drug Controller and the licensing authorities to ascertain whether an item was licensable before issuing a license. The petitioner could not be faulted for applying for a license to import niacinamide. The court criticized the licensing authorities for attempting to shift the blame to the petitioner for their own failure to properly interpret the import policy.

4. Role and Responsibility of Customs Authorities:
The Customs Authorities were found to have acted beyond their jurisdiction by interpreting the import policy and refusing to clear the goods despite valid licenses being produced. The court held that the Customs Authorities should only verify whether the goods matched the description in the license and whether the conditions of the license were met. They had no authority to question the validity of the license or interpret the import policy.

5. Jurisdiction under Clause 10C of the Imports (Control) Order, 1955:
The court examined the show cause notice issued under Clause 10C, which alleged that the petitioner had imported a banned item and sought to direct the petitioner to sell the goods to Indian Drugs and Pharmaceuticals Ltd. (IDPL). The court found that Clause 10C only applied to validly imported goods and required a physical inability to use the goods, which was not the case here. The court held that the licensing authority had no jurisdiction to issue directions under Clause 10C based on the alleged ban on niacinamide.

6. Legal Effect of Public Notices and Executive Instructions:
The court held that public notices and executive instructions issued under Article 73 of the Constitution could not override the provisions of the Imports (Control) Order, 1955. The public notice dated 21-9-1972, which sought to prevent the use of imported niacinamide, was found to be ineffective as it attempted to alter the terms of the already granted licenses without following the procedure for cancellation under Clause 9.

7. Principles of Approbation and Reprobation:
The court rejected the respondents' contention that the petitioner was barred from challenging the order under Clause 10C based on the principles of approbation and reprobation. The court found no evidence of a concluded agreement or acquiescence by the petitioner to submit to the jurisdiction of the licensing authority under Clause 10C.

8. Determination of Price under Clause 10C:
The court found that the order fixing the price of niacinamide under Clause 10C was invalid as it did not take into consideration all relevant charges, including demurrage and interest on blocked capital. The court emphasized that the price should be reasonable and not exceed the market price.

9. Compliance with Bond Conditions:
The court noted that the goods were allowed to be cleared beyond the Customs barrier under an interim order, and the bond given by the petitioner would stand canceled and discharged upon the final decision of the petition.

Conclusion:
The court ruled in favor of the petitioner, making the rule absolute in terms of prayers (a) and (a-1), and directed the Customs authorities to comply with the agreement recorded in the minutes dated 2-8-1973. The bond given by the petitioner was canceled and discharged, and the respondents were ordered to pay the costs of the petition. The court stayed the order for eight weeks to allow for any potential appeal.

← Previous Next →