1994 (1) TMI 103 - HC - Customs

Summary

Issues:
Interpretation of Import and Export policies - Validity of circular issued by Director General of Foreign Trade - Transitional arrangements under 1992 Policy - Import of raw silk against REP Licences/Exim Scrip.

Analysis:

1. The petitioners, a private limited company engaged in trading and manufacturing silk cloth, imported raw silk under the 1990 Policy. However, the 1992 Policy placed silk in the negative list, requiring import only with a license. The Customs authorities refused to clear the goods based on a circular issued by the Director General of Foreign Trade, prompting the petitioners to file a writ petition under Article 226 of the Constitution seeking to quash the circular and release their imported goods.

2. The petitioners argued that the 1992 Policy allowed for a transitional period, permitting import under licenses issued before the new policy's commencement. They contended that since they purchased REP Licences/Exim Scrip before the circular's issuance and entered into a contract with the foreign seller, the circular could not override the clear provisions of the 1992 Policy.

3. The respondents, on the other hand, maintained that under the 1992 Policy, silk was listed in the negative category, necessitating import only with a license. They relied on a Supreme Court judgment to support the position that items could be imported under the new policy only if they were importable under the existing policy. The circular, in their view, was a clarification of the 1992 Policy and did not permit import of raw silk under REP Licences/Exim Scrip.

4. The Court acknowledged that under the 1990 Policy, raw silk import was allowed under REP Licences/Exim Scrip. The key issue was whether, under the 1992 Policy, import of raw silk against previously issued licenses was permissible. The Court examined Clause 4 of the 1992 Policy, which provided for the continuation of licenses issued before the new policy's commencement for import/export of permitted items.

5. Upon analyzing Clause 4 of the 1992 Policy, the Court found that the transitional arrangement allowed for the validity of licenses issued before the new policy's commencement. The Court emphasized that the circular issued by the respondents could not override the clear provisions of the policy. The Court noted that the circular contradicted the transitional arrangement specified in the 1992 Policy and was not gazetted, rendering it legally unsustainable.

6. Consequently, the Court allowed the writ petition, quashed the circular dated 17th December 1992, and directed the respondents to release the imported goods covered under the Bills of lading against REP Licences/Exim Scrip upon payment of customs duty, emphasizing that no costs were to be awarded in the matter.