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2020 (10) TMI 598 - HC - CustomsRefusal of grant a P5 licence to the Appellant - Section 6 F of the Explosives Act, 1884 (the Explosives Act) read with Rule 121 of the Explosives Rules, 2008 (the Explosives Rules) - whether the Appellant was entitled to import ammonium nitrate? - HELD THAT - It is clear that an existing importer is entitled to apply for a licence within six months from the date of entry into force of the Ammonium Nitrate Rules and to comply with the provisions of the Rules within one year from the date of publication thereof. In the case on hand, the Appellant applied for a P5 licence on 05.08.2015, and the said application was rejected on 19.08.2015. Once the application for a licence was rejected, in our view, the Appellant is not entitled to rely upon the proviso to Rule 5, which provides for additional time during the transitional period to enable persons dealing with ammonium nitrate, as of the date of entry into force of the Ammonium Nitrate Rules, to apply for a licence and to comply with the Rules. In fact, the proviso to Rule 5 was deleted by a subsequent amendment with effect from 27.09.2018. Even otherwise, on facts, the time limits in the proviso do not apply - the undisputed position is that the Appellant imported 740 MT of ammonium nitrate under bill of entry No.2704255 dated 24.09.2015 from Korea. Thus, it is clear that the import of ammonium nitrate was subsequent to the rejection of the application for a licence. Consequently, there is no doubt that the Appellant violated Rule 6(4)(a) of the Ammonium Nitrate Rules which prohibits a person from importing ammonium nitrate without a valid licence and without complying with the conditions of such licence. The ammonium nitrate having the chemical formula NH4NO3 or any combination containing more than 45% of ammonium nitrate by weight shall be deemed to be an explosive as per the Explosives Act. This position emerges from the notification dated 21.07.2011 of the Ministry of Commerce and Industry which was issued under Section 17 of the Explosives Act. Keeping in mind the fact that ammonium nitrate is an explosive in any combination containing more than 45% of ammonium nitrate by weight and the admitted fact that the application for import licence was rejected, we conclude that the Appellant was not entitled to import 740 MT of Ammonium Nitrate on 24.09.2015 and, consequently, the detention and subsequent auction of the consignment of ammonium nitrate by the Customs authorities cannot be faulted. Whether the application for an import licence can be rejected on the ground that the Appellant is a trader? - HELD THAT - Upon perusal of the Ammonium Nitrate Rules, we do not find any provision that prohibits the grant of licence to a trader. However, it needs to be borne in mind that ammonium nitrate is an explosive. The learned counsel for the first and second Respondents pointed out that the import licence has not been granted to any trader so far on the ground of national security. She explained that ammonium nitrate is used in the manufacture of explosives and, therefore, it would be difficult to track the end use and end users of ammonium nitrate if traders are permitted to import ammonium nitrate for sale to their customers. Upon perusal of Rules 34 and 35 of the Ammonium Nitrate Rules, we find that Rule 34 provides that the District Authority shall verify the antecedents of the applicant including the genuineness of the purpose before granting a no objection certificate. Appeal dismissed.
Issues Involved:
1. Entitlement to import ammonium nitrate. 2. Validity of rejection of P5 licence application on the ground that the appellant is a trader. 3. Compliance with the Ammonium Nitrate Rules and the Explosives Act. 4. Detention and auction of imported ammonium nitrate by Customs authorities. Issue-wise Detailed Analysis: 1. Entitlement to Import Ammonium Nitrate: The appellant's entitlement to import ammonium nitrate was examined under the Ammonium Nitrate Rules, 2012, which came into force on 11.07.2012. Rule 6(4)(a) explicitly prohibits the import of ammonium nitrate without a licence: "No person shall import or export any Ammonium Nitrate except under and in accordance with the conditions of license granted under these rules." The appellant's application for a P5 licence was rejected on 19.08.2015, and despite this, the appellant imported 740 MT of ammonium nitrate on 24.09.2015, violating Rule 6(4)(a). The court concluded that the appellant was not entitled to import ammonium nitrate without a valid licence, and the subsequent detention and auction by Customs authorities were justified. 2. Validity of Rejection of P5 Licence Application: The rejection of the P5 licence application was based on the appellant being a trader, with the authorities asserting that national security concerns necessitate restricting the import of ammonium nitrate to users and not traders. The court noted that while the Ammonium Nitrate Rules do not explicitly prohibit the grant of licences to traders, considerable discretion is vested in the Licensing Authority under Rules 34 and 35. The court found that the Licensing Authority's decision to reject the application was consistent with the national security policy, which aims to prevent the unregulated distribution of ammonium nitrate, an explosive substance. 3. Compliance with the Ammonium Nitrate Rules and the Explosives Act: The court examined Rule 5, which allows existing importers to apply for a licence within six months and comply with the Rules within one year from the date of publication. However, since the appellant's application was rejected, the appellant could not rely on this transitional provision. Furthermore, the court noted that ammonium nitrate is classified as an explosive under Section 17 of the Explosives Act, and the appellant's actions were in violation of both the Ammonium Nitrate Rules and the Explosives Act. 4. Detention and Auction of Imported Ammonium Nitrate by Customs Authorities: The appellant's import of ammonium nitrate without a valid licence led to the detention of the consignment by Customs authorities. The court found that this action was in compliance with the Customs Act, 1962, which prohibits the import of goods without adhering to relevant restrictions and prohibitions. The subsequent auction of the detained goods was also deemed lawful, given the appellant's violation of import regulations. Conclusion: The court dismissed the appeal, upholding the rejection of the P5 licence application and the actions taken by Customs authorities. The court found that the appellant's import of ammonium nitrate without a valid licence was in violation of the Ammonium Nitrate Rules and the Explosives Act, and that the rejection of the licence application on national security grounds was justified. The court also noted that the learned single Judge had duly considered all relevant provisions and documents before rejecting the writ petition, and thus, no interference with the impugned order was warranted. Consequently, the appeal was dismissed, and connected miscellaneous petitions were closed.
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