2024 (8) TMI 1419 - HC - Customs

Release of consignment of the writ petitioner comprising inter alia, frames and slides of handguns, which had been seized by the respondents - Whether the import license granted to Syndicate for frames and slides would include other parts that are pre-fitted into the said frames and slides under the provisions of the Act and the 2016 Rules? HELD THAT - Form X was issued when there was already a lis pending before the Writ Court wherein a specific issue was raised whether a separate import license is required for import of embedded sub-components. Furthermore, the Delhi Police had inspected the import consignments of Syndicate as they had already arrived in India and the appellants were aware that the frames and slides were pre-fitted with sub-components. Yet, while issuing Form X, the appellants did not object to the fact that the imported frames and slides were pre-fitted with other parts such as firing pin , extractor and hammer which, as per the appellants, required a separate license. Nor did the appellants insist on Syndicate obtaining a separate license for these pre-fitted parts. The objections raised by the appellants were only in respect of some of the parts that were pre-fitted in the frames and slides imported by Syndicate, i.e., hammer , extractor and firing pin . Concededly, the appellants did not raise any objection in respect of other sub-components such as catch magazine , safety lock , safety lock support pin , trigger , trigger action mechanism part , spring of firing pin and lock of firing pin , which were pre-fitted inside the frames and slides and also mentioned in the communication dated 21st June, 2022 sent by the Delhi Police to the DGFT. The issuance of the aforesaid Form X would also nullify the objection taken by the appellants that Syndicate, as an importer had to compulsorily apply for an import license with the MHA in terms of Rule 88 (2) - the power to issue licenses for import and export of arms and ammunitions under the Act were delegated by the MHA to the DGFT via notification dated 1st November, 2018. This would show that there was no mandatory requirement for an importer to separately apply to DGFT for an import license under Rule 88 (2) of the Rules, once an import license has already been granted by the DGFT, as the issuing authority was the same. In view of the issuance of Form X to Syndicate, the requirement of permission under Rule 57 (4) of the 2016 Rules would also not survive. The Form X license granted to Syndicate was unconditional and unqualified and did not refer to any permission that may be required under Rule 57 (4) of the 2016 Rules. Once Form X has been issued by the competent authority, it would amount to a deemed clearance of the competent authority under Rule 57 (4) of the 2016 Rules. Both the objections taken by the respondent with regard to requirement of a Form X as well as permission under Rule 57 (4) of the 2016 Rules were taken as an afterthought. The ex post facto issuance of the aforesaid Form X amounts to a clear admission on the part of the appellants that as long as an importer held an import license for frames and slides , the importer was not required to apply for a separate license under Rule 88 (2), nor did it require a permission under Rule 57 (4) of the 2016 Rules. The limitation imposed on Syndicate via order dated 6th February, 2023, restraining them from disposing of the goods imported by them via Bill of Entry No.9037350 dated 9th June 2022 and Bill of Entry No.9038081 of even date, shall stand dissolved. Appeal disposed off.

Issues Involved:
1. Validity of import license for 'frames' and 'slides' with pre-fitted operational parts.
2. Requirement of separate licenses for pre-fitted parts.
3. Applicability of Rule 57(4) of the Arms Rules, 2016.
4. Ex post facto issuance of Form X.
5. Intervener's objections regarding regulatory compliance.

Detailed Analysis:

1. Validity of Import License for 'Frames' and 'Slides' with Pre-Fitted Operational Parts:
The core issue was whether the import license granted to Syndicate for 'frames' and 'slides' included other parts pre-fitted into these components under the Arms Act, 1959 and the Arms Rules, 2016. The Delhi Police found that the 'frames' and 'slides' imported by Syndicate were pre-fitted with operational parts like the hammer, catch magazine, safety lock, trigger, and firing pin. The appellants argued that separate licenses were required for these pre-fitted parts. However, the court noted that the Form X issued to Syndicate was unconditional and did not specify that 'frames' and 'slides' could not be pre-fitted with other parts. The court concluded that the import license granted to Syndicate included the pre-fitted parts, and no separate licenses were required.

2. Requirement of Separate Licenses for Pre-Fitted Parts:
The appellants contended that 'frames' and 'slides' with pre-fitted parts required separate licenses, citing Rule 2(37) of the 2016 Rules and the Harmonised Commodity Description and Coding System. However, the court found that the appellants failed to provide evidence that 'frames' and 'slides' are standalone components without pre-fitted parts. The court also noted that the appellants did not object to other pre-fitted components like the catch magazine and safety lock. The court held that the objection to specific parts like the hammer and firing pin was not justified and that the import license covered all pre-fitted parts.

3. Applicability of Rule 57(4) of the Arms Rules, 2016:
The appellants argued that permission under Rule 57(4) was required for importing parts that could be manufactured locally. The court found that Rule 57(4) applies only when parts cannot be manufactured locally and that the appellants failed to prove that the parts imported by Syndicate could not be manufactured in India. The court held that the requirement of permission under Rule 57(4) did not apply in this case, especially since the Form X license was unconditional and did not refer to Rule 57(4).

4. Ex Post Facto Issuance of Form X:
The court noted that the ex post facto issuance of Form X to Syndicate on 14th September 2022 was an acknowledgment that no separate license was required for the pre-fitted parts. The Form X license was identical to the initial import license granted on 23rd October 2020, and the court found that it was a mere reiteration of the earlier license. The court concluded that the issuance of Form X nullified the appellants' objections regarding the need for a separate import license under Rule 88(2).

5. Intervener's Objections Regarding Regulatory Compliance:
The intervener, SIAL Manufacturers Pvt. Ltd., argued that Syndicate could not have been granted a license on an ex post facto basis and that permission under Rule 57(4) was mandatory. The court found that the intervener was a competitor of Syndicate and had not complied with the regulatory requirements it was advocating. The court rejected the intervener's objections, noting that they were devoid of merit and that the appellants' objections were taken as an afterthought.

Conclusion and Relief:
The court dismissed the appeal, upheld the impugned judgment, and dissolved the limitation imposed on Syndicate regarding the disposal of the imported goods. The court directed the appellants to streamline the regulatory processes and publicize the changes widely to stakeholders in the arms and ammunitions industry.

← Previous Next →