1994 (2) TMI 70 - HC - Customs

Summary

Issues Involved:
1. Validity of the public notice and Import Trade Control Order.
2. Jurisdiction of the Central Government under Section 3 of the Imports and Exports (Control) Act, 1947.
3. Discrimination and violation of Article 14 of the Constitution.
4. Impact on the appellants' fundamental rights under Article 19(1)(g) and Article 301 of the Constitution.
5. Applicability of the restrictions to Additional Licences.

Detailed Analysis:

1. Validity of the Public Notice and Import Trade Control Order:
The appellants challenged the validity and legality of a public notice dated 26th April 1989 and an Import Trade Control Order dated 28th April 1989 issued by the Ministry of Commerce, Government of India. These amendments restricted the importation of woollen rags, synthetic rags, and shoddy wool through only two ports: Bombay and Delhi ICD. The appellants contended that these restrictions were arbitrary, mala fide, illegal, and without jurisdiction.

2. Jurisdiction of the Central Government under Section 3 of the Imports and Exports (Control) Act, 1947:
The court examined Section 3 of the Imports and Exports (Control) Act, 1947, which provides the Central Government with the power to prohibit, restrict, or control the import or export of goods. The appellants argued that the power under Section 3 is general and pertains to goods only, not to the selection of specific ports for importation. The court agreed, stating that the power under Section 3 cannot be construed to allow the Central Government to pick and choose specific ports for importation. The restriction must apply to the entire country to be valid.

3. Discrimination and Violation of Article 14 of the Constitution:
The appellants argued that the impugned public notice and control order were discriminatory and violated Article 14 of the Constitution. The court found that the restrictions resulted in discrimination against factory owners in the Eastern and North-Eastern parts of the country, who would incur additional transportation costs from Bombay or Delhi. There was no intelligible basis or rational nexus for distinguishing between Delhi and Bombay ports and other major ports like Calcutta, Madras, Cochin, or Vizagapatnam. The court held that the restrictions were unreasonable and violated Article 14.

4. Impact on the Appellants' Fundamental Rights under Article 19(1)(g) and Article 301 of the Constitution:
The court noted that the restrictions imposed by the impugned public notice and control order adversely affected the appellants' fundamental rights to carry on trade and commerce. The restrictions created a geographical barrier against trade, commerce, and intercourse throughout the territory of India, violating Article 301 of the Constitution. The court emphasized that the freedom of trade cannot be restricted by mere executive action and must be justified under Articles 302 to 305 of the Constitution.

5. Applicability of the Restrictions to Additional Licences:
The appellants argued that the restrictions imposed by the impugned control order and public notice did not apply to imports under Additional Licences. The court examined the Import Policy (1988-91) and found that the conditions governing imports under Open General Licence (OGL) did not automatically apply to Additional Licences. The court held that the amendments to the OGL conditions could not affect the importation of goods under Additional Licences unless the conditions of grant of Additional Licences were also amended.

Conclusion:
The court allowed the appeal, quashed the impugned public notice and control order, and directed the Customs Authorities to issue a wharf rent exemption certificate for the consignment in question. The court found that the restrictions were without jurisdiction, discriminatory, and violated the appellants' fundamental rights under Articles 14, 19(1)(g), and 301 of the Constitution. The court emphasized that the Central Government's power under Section 3 of the Imports and Exports (Control) Act, 1947, does not extend to selecting specific ports for importation.