2015 (11) TMI 1027 - HC - Customs

Import of boric acid - Violation of Article 19(1) (g) - refund claim - Whether an insecticide, which has non-insecticidal uses, can be regulated in view of Section 38 of the Insecticides Act 1968 - violation of condition of notification issued under Section 5 of the Foreign Trade Act - Held that - It is certainly open to the government to put in place sufficient safeguards to ensure that actually only insecticides which are genuinely intended for non insecticidal purposes are taken out of the purview of the Act and the restrictions and controls are which are provided therein. It is in this context when the importer of boric acid is not able to establish the end use it is not open to the trader to say that he should be allowed to import boric acid ostensibly for non insecticidal purposes. It is fraught with the danger that the imported quantity is diverted for insecticidal purposes. If such diversion happens, certainly it could lead to a situation where the purpose of the Act itself would be defeated as there could be large quantities of insecticides having multiple uses being imported in the guise of being employed for non insecticidal purposes but falling into the hands of those who use it as insecticides. Insecticides being used as insecticides forms the subject matter of the Act. Governor is not empowered to make any order in regard to that matter in exercise of its executive power nor can the Governor exercise such power in regard to that matter through officers subordinate to that authority cannot apply to the situation at hand. What is involved is not grant of Registration under Section 9 or discharge of any other function assigned to the statutory authorities under the Act through any subordinate authorities. Equally , it is not a case where the Executive power in this case has been exercised in relation to the matter which is the subject matter of Section 9 - we cannot even say that it is bad for reasons which would invalidate a piece of subordinate legislation viz. there is conferment of uncanalised power. We must proceed on the basis that the officers called upon to decide the issue on merit being experts in their field would not only act on the basis of the information which is available objectively in the application forms but also in a fair manner as every member associated with the activities of the State are enjoined to. If there is any exercise of power illegally or arbitrarily, certainly any such aggrieved person can always seek legal redress if a genuine claim is rejected without warrant in law and facts. The possibility of abuse by itself cannot persuade us to hold procedure for issuance of permit is bad. We would also expect the officers to bear in mind that it has a duty not to harass any applicants, but process their application with needed speed and to grant import permit where requirements are fulfilled and without any bureaucratic hassles. Constitutional validity of requirement of seeking Import permit - Held that - Essentially the purport of import permit is to ensure that import is genuinely intended for catering to non-insecticidal purposes alone. This result would appear to be inescapable having regard to the form of application for grant of import permit. Therefore, we cannot even say that it is bad for reasons which would invalidate a piece of subordinate legislation viz. there is conferment of uncanalised power. - The possibility of abuse by itself cannot persuade us to hold procedure for issuance of permit is bad. We would also expect the officers to bear in mind that it has a duty not to harass any applicants, but process their application with needed speed and to grant import permit where requirements are fulfilled and without any bureaucratic hassles. Whether the condition is unworkable or unreasonable? - It would appear, from the document produced, that import permits have been granted not only for boric acid but for other chemicals/insecticides. What would have been unworkable would have been insistence of registration when it is sought in respect of insecticide not intended for insecticidal purposes. But, that is not the case here. When boric acid is sought to be imported for non insecticidal purposes under the Foreign Trade policy, no registration under the Act is required. The learned Single Judge was in error in thinking otherwise. That appears to be basis for finding that the condition imposed is on impossible condition and it involves directing the authority under the Act to do something which they are not obliged to do. It is a case of the local manufacturers that they applied for registration. But, the Act appears to prohibit carrying out the activities without getting registration if intended to be used as insecticides. According to us, no further investigation into this matter is necessary for by finding that there is illegality committed by the local manufactures which is being condoned by the authorities may not advance the case of the writ petitioners. The case of the writ petitioner is to quash the of condition in Ext.P5 relating to boric acid. We are of the view that there is no basis for the learned Single Judge to have quashed Ext.P5. Even in respect of Sodium cyanide there is a requirement of import permit and also the end use element govern the import of sodium cyanide which apparently is multiple use pesticide. No doubt the writ petitioner would point out that there are such requirements in an executive order in relation to other insecticides . It is pertinent to note that there is no such requirement in the statutory policy in regard to other insecticides. Discrimination and arbitrary conditions are imposed only in regard to the boric acid in the statute. - No doubt, if the restriction had not been imposed by law (the amendment on 7/4/2006to the statutory policy), the question would arise as to what is the effect of executive instructions on the right to import boric acid as per the statutory policy till the date of the amendment that is 7/4/2006. An executive order cannot impinge on a legal right. There was a right available under the extant statutory policy before the amendment. It could be said that an executive order could not have imposed a restriction on the right available under the policy. But, after the amendment with effect from 7/4/2006 the issue is purely academic as restriction is placed by statutory amendment. Writ petition is against the circular. Since the circular placed restriction on the legal right under the unamended statutory policy to import, the circular, in so far as it prohibited traders from import of boric acid for non insecticidal purposes, cannot be supported. But, at the same time, the direction to refund the duty cannot be sustained, as it has no connection at all to the question relating to the circular being illegal. Therefore, the direction to refund the duty can only be set aside. We uphold the quashing of the circular to the extent it effected the trader s right to import boric acid without registration. We, however, delete the direction to refund the amount. - Decided partly in favour of revenue.

Summary

Issues Involved:
1. Regulation of insecticides with non-insecticidal uses under Section 38 of the Insecticides Act, 1968.
2. Validity of government policy under the Foreign Trade (Development and Regulation) Act, 1992.
3. Workability of the import permit condition for non-insecticidal purposes.
4. Alleged discrimination against petitioners and similar importers.

Comprehensive, Issue-wise Detailed Analysis:

1. Regulation of Insecticides with Non-Insecticidal Uses:
The primary issue was whether insecticides with non-insecticidal uses, such as boric acid, could be regulated under Section 38 of the Insecticides Act, 1968. The court noted that boric acid is included in the schedule to the Act but is exempted under Section 38 if intended for non-insecticidal purposes. The court emphasized that Section 38 exempts such insecticides from the Act's provisions, but this exemption does not prevent the government from imposing regulations to ensure that these insecticides are not misused for insecticidal purposes. The court concluded that the government could regulate the import of such insecticides to prevent misuse.

2. Validity of Government Policy under the Foreign Trade Act:
The court examined whether the policy requiring import permits for non-insecticidal uses of boric acid was ultra vires the Insecticides Act. It was argued that the policy was a subordinate legislation under the Foreign Trade Act and thus had the force of law. The court upheld the policy, stating that the Foreign Trade Act allows the Central Government to regulate imports, including imposing conditions like import permits. The court found that the policy was not ultra vires as it did not contradict the Insecticides Act but rather complemented it by ensuring that insecticides intended for non-insecticidal uses were not diverted for insecticidal purposes.

3. Workability of the Import Permit Condition:
The court addressed the contention that the requirement to obtain an import permit was unworkable. It was argued that the Act did not provide for such permits, making the condition arbitrary and unreasonable. The court disagreed, noting that the import permit system was a simplified process compared to full registration under the Act. The court found that the import permit condition was a reasonable measure to monitor the use of insecticides and prevent their misuse, thus making it workable and not arbitrary.

4. Alleged Discrimination Against Petitioners:
The petitioners argued that the policy discriminated against them by imposing conditions on boric acid imports not applied to other insecticides. The court examined whether there was hostile discrimination violating Article 14 of the Constitution. The court found that the policy was not discriminatory as similar conditions were imposed on other multi-use insecticides. The court noted that the regulation aimed at preventing misuse of insecticides and ensuring public safety was a legitimate governmental objective. The court left open the possibility for further examination of discrimination claims in properly constituted proceedings.

Conclusion:
The court upheld the government's policy requiring import permits for boric acid intended for non-insecticidal uses, finding it consistent with the Insecticides Act and the Foreign Trade Act. The court concluded that the policy was neither ultra vires nor unworkable and did not constitute discrimination against the petitioners. The appeals were allowed, setting aside the learned Single Judge's judgment that quashed the policy condition.