2022 (10) TMI 271 - HC - Customs

Seeking release of withheld consignments - imported Frames and Slides - case of respondent is that the import license stood restricted to a Slide and Frame only - requirement of separate import permission for the additional operational components found fitted thereto - violation of the import permission which was granted to the petitioner - whether the stand taken by the respondents that since the Frame and the Slide had various identifiable components of a firearm embedded to it, the terms of the import permission stood violated is sustainable in law? - whether the petitioner was obliged to have obtained the prior permission of the MHA as contemplated under Rule 57(4)? HELD THAT - The principal objection which is taken by the respondents and which was firstly noticed in the communication of the Delhi Police dated 21 June 2022 was with respect to the imported Slides and Frames being fitted with pre-installed operational parts. The objection essentially was that the operational parts which were found to be fitted to the Slides and Frames were liable to viewed as independent components of a firearm and for which a separate import permission was liable to be obtained. This submission was addressed in the backdrop of the definition of main firearm component set out in Rule 2(29) and the phrase parts and components as defined by Rule 2(37). The respondents also sought to draw sustenance from the Explanation appended to Form VII which, according to them, is an additional indicator of the petitioner being placed under an obligation to have made requisite declarations that additional parts and components of a firearm were also proposed to be imported. This Court finds itself unable to interpret Rules 2(29) and 2(37), in a manner which may lend credence to the submission that a Frame or a Slide must, for the purposes of import, be understood to mean an article which does not have any other component or part of a firearm embedded in them. It must at the outset be noted that the expression main firearm component has been defined in Rule 2(29) to mean the barrel, frame or receiver, slide, bolt or breach block of a firearm. Rule 2(37) while defining the expression parts and components does not independently notice or classify any other part or component of a firearm other than the four components which are also spelt out in Rule 2(29). The Court also bears in mind that Rule 2(37) uses the both the words mean and includes . Both those Rules are therefore liable to be interpreted and understood as being exhaustive. This Court is thus of the considered opinion that merely because some of the sub-parts or components of a firearm are separately chronicled in the Explanation to Form VII, that would not lend credence to the contention that a Slide or a Frame when imported cannot be one which may come fitted with an additional component or part of a firearm - the Court thus finds itself unable to sustain the contention of the respondents that since those components were found fitted onto the Frames and Slides which were imported, the permission granted by the DGFT stood violated or flouted in any manner. As this Court views Rules 2(29) and 2(37) read with the other relevant provisions of the Act and the 2016 Rules, it finds itself unable to countenance the submission that a Frame or a Slide must be understood to mean a component of a firearm which should not or cannot be pre-fitted with other parts thereof. On an overall consideration of the above, the Court reaches the conclusion that the objection that is taken by the respondents is untenable. In summation it may only be noted that the components which are mentioned in the letter of 21 June 2022 of the third respondent and are described as operational parts are neither classified as a main firearm component nor as parts and components under Rules 2(29) and 2(37) of the 2016 Rules - neither the provisions made in the FTP nor those contained in the ITC (HS) or the HS lend support to the objection raised at the behest of the respondents. They do not appear to prohibit the import of a composite part of a firearm in the sense of the imported article bearing more than one component embedded and fitted as a combined product. The respondents have also failed to establish that under the prevalent import policy, the operational parts which were found fitted to the Frames and Slides required permissions being obtained separately and independently. Viewed in the context of the relevant statutory provisions governing the import of parts of firearms, the 1992 Act, the FTP and the ITC(HS), this Court finds itself unable to hold that the restrictive regime relating to import of firearms comprehends a prohibition in respect of items which are being manufactured locally. The respondents are directed to release the consignments - Petition allowed.

Summary

Issues Involved:
1. Whether the import of Frames and Slides fitted with additional components violated the import permission granted by the DGFT.
2. Whether the petitioner was required to obtain prior permission from the Ministry of Home Affairs (MHA) under Rule 57(4) of the Arms Rules, 2016.
3. The applicability of Rule 88(2) regarding the requirement of an import license in Form X.
4. The liability for demurrage charges due to the delay in the release of the consignment.

Detailed Analysis:

Issue 1: Violation of Import Permission
The core issue revolved around whether the import of Frames and Slides with additional components like hammers, firing pins, and extractors violated the import permission granted by the DGFT. The petitioner contended that these parts are not separately classified for import purposes and that the import license for Frames and Slides should cover them. The respondents argued that these additional components are independent parts requiring separate import permissions.

The Court analyzed the definitions of "main firearm component" and "parts and components" under Rules 2(29) and 2(37) of the Arms Rules, 2016, and concluded that these definitions are exhaustive. The Court found no justification for interpreting these rules to mean that Frames and Slides must be devoid of any additional components. The Court also noted that the relevant provisions in the Foreign Trade Policy (FTP) and the Indian Trade Clarification based on Harmonized System (ITC (HS)) do not prohibit the import of composite parts. Therefore, the Court held that the import of Frames and Slides with additional components did not violate the import permission granted by the DGFT.

Issue 2: Requirement of Prior Permission from MHA
The respondents argued that the petitioner should have obtained prior permission from the MHA under Rule 57(4) of the Arms Rules, 2016, which requires such permission for importing parts that cannot be manufactured locally. The Court noted that Rule 57(4) applies only to parts that are not possible to be manufactured locally. Since it was not contended that the imported Frames and Slides could not be manufactured locally, the Court found that Rule 57(4) did not apply in this case.

Issue 3: Applicability of Rule 88(2) and Form X
Initially, the respondents raised the issue of the petitioner not obtaining an import license in Form X as required under Rule 88(2). However, they later conceded that this was an inadvertent procedural lapse on their part, and the petitioner was subsequently granted the license. The Court clarified that the DGFT, having been delegated the power to issue import permissions, must ensure compliance with both the Foreign Trade (Development and Regulation) Act, 1992, and the Arms Act, 1959, along with the Arms Rules, 2016.

Issue 4: Liability for Demurrage Charges
The petitioner sought relief from demurrage charges due to the delay in the release of the consignment. The Court noted that Rule 88(6) shifts the liability for demurrage charges to the licensing and customs authorities if there is a delay in inspection. However, since the Delhi Police conducted the inspection within the stipulated time, they could not be held liable for the demurrage charges. Given the contentious nature of the issues raised, the Court declined to grant relief for demurrage charges.

Conclusion:
The Court allowed the writ petition, directing the respondents to release the consignments imported under the specified Bills of Entry, subject to the petitioner complying with other statutory formalities and paying the due demurrage charges. The Court found no violation of the import permission and ruled that Rule 57(4) did not apply to the imported items.