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2018 (10) TMI 1160 - HC - CustomsImport of Ethylene Di-chloride (EDC) - Restricted item or not - exemption under Section 38 of the Insecticides Act - whether for the import of EDC for the purpose of manufacturing Poly Vinyl Chloride (PVC) an import permit is required from the Central Insecticides Board (CIB) and Registration Committee (RC) constituted under the Insecticides Act 1968? Held that - There is absolutely no provision under the Act or prescription under the Rules for issuance of an import permit or an application in that respect wherein import is made of a substance included under the Schedule to the Act for non-insecticidal purpose. The mere prescription of a proforma for issuance of an import permit by the RC under the Insecticides Act cannot be termed to be a requirement under the statute. Neither the Act nor the Rules provide for any import permit under the Insecticides Act for the purpose of import of insecticides included in the Schedule under the Act; when such import is for non-insecticidal purposes. The exemption under Section 38 takes any goods imported for non-insecticidal purposes even if included in the Schedule to the Act out of the coverage of the Act and Rules prescribed thereunder. In Maliakkal Industrial Enterprises 2015 (11) TMI 1027 - KERALA HIGH COURT the issue dealt with was import of Boric Acid admittedly an insecticide requiring a permit even if it is for non-insecticidal purposes. However there a notification was issued by the Central Government under the Foreign Trade Act insisting on an import permit from the RC constituted under the Insecticides Act - The requirement for an import permit in Maliakkal Industrial Enterprises was upheld only in the context of a statutory requirement having been made under the Foreign Trade Act which is absent in the present case. The object of the Insecticides Act though salutary there is not enough safeguards provided by the Act or power conferred on the executive government to deal with substances coming under the Schedule of the Insecticides Act; used for non-insecticidal purposes. Any import of the subject substance for non-insecticidal purpose shall be released as per the procedure prescribed by the Customs Authorities by trade notices without insisting for registration under the Insecticides Act or an import permit - appeal dismissed - decided against Revenue.
Issues Involved:
1. Requirement of an import permit for Ethylene Di-chloride (EDC) under the Insecticides Act, 1968. 2. Applicability of Section 38 of the Insecticides Act for non-insecticidal purposes. 3. Interpretation of the Foreign Trade (Development and Regulation) Act, 1992 concerning the import of insecticides. 4. Powers and functions of the Central Insecticides Board (CIB) and Registration Committee (RC). 5. Legal precedents and their applicability to the current case. Detailed Analysis: 1. Requirement of an Import Permit for EDC under the Insecticides Act, 1968: The primary question addressed in the judgment is whether an import permit from the Central Insecticides Board (CIB) and Registration Committee (RC) is required for importing Ethylene Di-chloride (EDC) used in manufacturing Poly Vinyl Chloride (PVC). The appeals were filed by the Deputy Commissioner of Customs and the Secretary, CIB, arguing that EDC, being listed as an insecticide under the Schedule to the Insecticides Act, necessitates an import permit. However, the importer contended that EDC imported for non-insecticidal purposes is exempted under Section 38 of the Insecticides Act, and thus, no import permit is required. 2. Applicability of Section 38 of the Insecticides Act for Non-Insecticidal Purposes: The court examined Section 38 of the Insecticides Act, which exempts the import of insecticides for non-insecticidal purposes from the provisions of the Act. The learned Single Judge found that the importer had been importing EDC for non-insecticidal purposes for many years, with the goods being cleared from the port based on an undertaking and an end-use certificate issued by the Excise authorities. The court concluded that the RC's decision to require an import permit for non-insecticidal purposes was beyond its powers, as Section 38 exempts such imports from the Act's provisions. 3. Interpretation of the Foreign Trade (Development and Regulation) Act, 1992: The appellants argued that a notification issued under Section 3 of the Foreign Trade Act required an import permit for importing insecticides, even for non-insecticidal purposes. However, the court noted that the EXIM Code 3808 under the Indian Trade Classification (ITC) refers to insecticides in forms or packings for retail sale, which did not apply to the importer's case as the EDC was imported for industrial use. The court found no argument or evidence suggesting a requirement for an import permit under the Foreign Trade Act for EDC. 4. Powers and Functions of the CIB and RC: The court analyzed the powers and functions of the CIB and RC under the Insecticides Act and the Insecticides Rules, 1971. It was determined that the RC's role is advisory and does not extend to enforcing import permits for substances exempted under Section 38. The RC's decision at Exhibit P10 was found to be a mere prescription of a proforma for issuing import permits and not a mandate for requiring an import permit for non-insecticidal purposes. The court emphasized that the RC did not have the authority to impose such requirements beyond the scope of the Act. 5. Legal Precedents and Their Applicability: The court referred to the precedent set in Union of India & Others v. Maliakkal Industrial Enterprises, where the import of Boric Acid for non-insecticidal purposes required an import permit due to a specific notification under the Foreign Trade Act. However, the court distinguished the current case, noting that no such notification or statutory requirement existed for EDC. The court also considered the Constitution Bench decision in Commissioner of Customs (Import), Mumbai v. M/s. Dilip Kumar and Company, which emphasized strict interpretation of exemption notifications. The court found no ambiguity in the exemption provided under Section 38 and concluded that the provisions of the Insecticides Act did not apply to EDC imported for non-insecticidal purposes. Conclusion: The court dismissed the appeals, affirming that the import of EDC for non-insecticidal purposes is exempted under Section 38 of the Insecticides Act and does not require an import permit. The judgment clarified that the RC's decision did not mandate an import permit for such purposes and that the Customs Authorities' procedure for clearance should be followed without insisting on registration or an import permit under the Insecticides Act.
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