2017 (12) TMI 733 - HC - Customs

Whether any vested right is accrued on the basis of the extended licences obtained by the petitioners? - whether the subsequent policy will affect the additional licences which were valid on 1st April 1990 when the subsequent policy came into force? Held that - In this case, the licence in question was issued on 29th June 1981 when import policy of 81 82 was in force. On the basis of the public notice dated 5th June 1981, a notice was issued by the Department to the assessee. Notice was issued on the basis of the contention that after 5th June 1981 import of beef tallow was not permissible. An order of confiscation was passed by the Collector of Customs on the ground that import of beef tallow was not permissible. Accordingly, the assessee preferred an Appeal. The Tribunal held that right to import the goods under OGL is a statutory right and cannot be overruled by a public notice and that the import of beef tallow which ceased to be OGL item when it was canalized by the public notice is governed by the import policy when the licence was issued and not by the public notice. We have already referred to the subsequent policy which came into force on 1st April 1990. Sub-clauses 1 of both clauses 223 and 224 thereof provide that additional licences issued to export/trading houses prior to 1st April 1990 shall cease to be valid on or after 1st April 1990. In these petitions under Article 226 of the Constitution of India, there is no challenge to sub-clauses 1 of clause 223 and 224 of the subsequent policy. However, sub clauses 2 of clauses 223 and 224 protect imports made after 1st April 1990 subject to the conditions mentioned therein. Both the clauses, provided that the restriction imposed by sub clauses 1 of clauses 223 and 224 will not apply to those licence holders who have already made firm commitments by irrevocable Letters of Credit opened and established through authorised dealers in foreign exchange on or before 31st March 1990 - the petitioners are entitled to relief in respect of the cases which are governed by the sub clauses 2 of clauses 223 and 224 of the subsequent policy (1990 93). In view of sub-clause 2, the import under the additional licences could have been permitted after 1st April 1990 only if the petitioners had made confirmed commitment by irrevocable Letters of Credit opened and established through authorised dealers in foreign exchange prior to 1st April 1990. However, if an extension thereafter is made after 31st March 1990, the same shall be treated as a fresh commitment to which protection under sub clause 2 will not apply. In these writ petitions, we cannot go into the question of fact whether the petitioners had already made confirmed commitments by irrevocable Letters of Credit opened and established through authorised dealers in foreign exchange prior to 1st April 1990. Petition disposed off.

Issues Involved:
1. Validity of additional licences for import under the Import and Export Policy 88-91.
2. Impact of ITC Public Notice No.109 of 1989 on the validity of additional licences.
3. Application of policies prevailing at the time of licence issuance versus the time of import.
4. Legal precedents regarding the retrospective application of public notices and policies.

Detailed Analysis:

1. Validity of Additional Licences for Import Under the Import and Export Policy 88-91:
The petitioners were manufacturers importing Video Tape Deck Mechanism (VTDM) and Colour Picture Tubes (CPTs) under additional licences issued pursuant to the Import and Export Policy 88-91. These items were listed as Open General Licence (OGL) items at the time of import. The petitioners argued that their imports were valid as they were made under licences issued before the changes in the policy.

2. Impact of ITC Public Notice No.109 of 1989 on the Validity of Additional Licences:
The ITC Public Notice No.109 of 1989, issued on 21st March 1989, shifted VTDMs and CPTs from the list of OGL items to the list of restricted items. The Customs authorities contended that the imports made by the petitioners after this date were invalid. The petitioners argued that the public notice did not invalidate the additional licences issued prior to its date and that vested rights accrued under one policy could not be taken away by another.

3. Application of Policies Prevailing at the Time of Licence Issuance Versus the Time of Import:
The court examined whether the import policy at the time of licence issuance or at the time of import should apply. The petitioners relied on various judicial precedents to argue that the policy prevailing at the time of licence issuance should govern the imports. The respondents cited cases to argue that the policy at the time of import should apply.

4. Legal Precedents Regarding the Retrospective Application of Public Notices and Policies:
The court referred to several decisions, including:
- M/s. Bharat Barrel and Drum Mfg. Co. Ltd. vs. The Collector of Customs, Mumbai: Public notices cannot apply retrospectively to licences issued before their date.
- M/s. Jain Exports (P) Ltd. vs. Union of India: The import policy at the time of licence issuance governs the imports.
- Union of India vs. Loksons Pvt. Ltd.: Public notices cannot affect applications made and rejected before the new policy.
- Jayant Vegoils & Chemicals (P) Ltd. vs. Union of India: Licences are governed by the policy prevailing at the time of issuance, not by subsequent changes.

Court's Findings:
- The court held that the additional licences issued before the public notice dated 21st March 1989 were valid for the import of VTDMs and CPTs, as the public notice did not retrospectively invalidate these licences.
- The subsequent Import and Export Policy 1990-93 provided that additional licences issued prior to 1st April 1990 remained valid if irrevocable Letters of Credit were opened before this date.
- The court directed that the validity of imports under additional licences must be assessed based on the policy at the time of licence issuance, not the policy at the time of import.

Court's Orders:
1. Writ Petition Nos. 2117, 2834, 1805 of 1990, and 485 of 1992: Authorities were directed to issue show cause notices and pass appropriate orders within four months.
2. Writ Petition Nos. 2109, 2110, and 2111 of 2002: Directed the concerned authority to adjudicate upon the show cause notices in light of the judgment.
3. Rest of the Writ Petitions: The impugned orders of the Collector of Customs were quashed and the matters were remanded for fresh adjudication.
4. General Directions: Fresh orders to be passed within four months, bonds furnished by the petitioners to be kept alive for five months, and no adverse action to be taken in cases covered by sub-clauses 2 of clauses 223 and 224 of the import and export policy 1990-1993.

The court made the rule partly absolute with no order as to costs.

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