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TMI Blog1987 (7) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... 79 Policy Book . The customs objected to the clearance, firstly, on the ground that the goods imported are not covered by items appearing in Appendices 5 and 7; secondly on the ground that goods are imported are canalised falling under Item 4 under the heading drugs of Appendix 9 and it can be imported only by the State Chemicals and Pharmaceuticals of India Ltd., thirdly, that the importers had not entered into a firm commitment with the foreign suppliers by opening an irrevocable letter of credit before 1.5.1979. Show cause notice was issued to the Appellants as to why the goods should not be confiscated and why penalty should not be levied under Section 112. They replied to the show cause. In this the Appellants inter alia contended that as early as on 15.3.1979 orders were placed with M/s. Mitsui Company for the supply of 6 Amine Pencillinic Acid and the said company had agreed to supply the material within the validity period of the licence and the remittances will be made within 60 days from the date of Airway Bill. Due to scarcity of material in international market the suppliers requested to extend the validity of the licence to give effect to the contract and the licen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came canalised only during the Policy 80. Shri Sheth further contended that the Public Notice 27 of 79, dated 21.5.1979 stipulating the condition regarding opening of irrevocable letter of credit cannot govern the licence to the Appellants as it has no retrospective effect and it cannot override the 1979 Policy. Shri Sheth submitted that the Board committed an error in observing that the revalidation was obtained by suppressing material facts. All the necessary facts were placed before the licensing authority and once the licensing authority had revalidated the licence, the customs authorities are not competent to question the revalidation or can they go into the competence of the licensing authority to issue revalidation. If there was any intention on the part of the licensing authority to curtail the rights conferred under the licence, the licensing authority would have imposed conditions at the time of revalidation. In the absence of imposition of conditions the licence should be valid for import of items permissible under the 1979 policy. (ii) In support of his contention that the public notice has no retrospective effect and that it cannot apply to the licence issued earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs in value as per para 176 of AM 79 Policy. In the licence, the licensing period is mentioned as AM 79. By reason of para 176 of the Policy AM 79 the additional licences became valid for import of raw materials, components and spares which have been placed on open general licence for actual users (Industrial). But then the export houses are required to dispose of the goods imported against their additional licence to eligible actual users (see para 176 ended upto 31.10.78). The appellants placed orders with M/s. Mitsui Co. Ltd., Japan, for the supply of 5,000 kgs. of 6 A.P.A. The said company vide its letter dated 15.3.1979 accepted to supply the quantity in respect of which order was placed. The contract so entered into required that the shipment should take place during the validity of the licence and payment should be made within 60 days from the date of airway bill. It is stated that due to scarcity the suppliers could not make the shipment within the validity period and therefore the licence-holders got revalidated the licence for a further period of six months, thereby the shipment that are effected within 18 months from the date of issue of licence would be valid. The act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it was, however, urged that since the actual shipment had taken place on and after coming into force of the Policy AM 80 and since no irrevocable letter of credit had been opened before 1.5.1979 and since 6 A.P.A. came to be canalised during the Policy AM 80, the additional licence against which the clearance of the goods was sought, was not valid, because during the Policy AM 79 6 A.P.A. could not be imported as OGL items. 10. The question regarding the retrospective effect of the Public Notice came to be considered by the Supreme Court in M/s. Bharat Barrel and Drum Manufacturing Co Pvt. Ltd. v. Collector of Customs, Bombay and Another 1983 E.L.T. page 1342. According to the facts of that case, the clearance of the steel sheets imported by M/s Bharat Barrel and Drum Manufacturing Co. Pvt. Ltd. (for short the company ) was objected to by the Customs on the ground that they are not of prime quality as required by the Iron and Steel Controller s Public Notice No.l/l-8/62, dated 6.12.62. The order of confiscation Of the steel sheets made by the Collector and confirmed by the Board was set aside by the Govt. of India in revision holding that the Public Notice dated 6.12.1962 had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g valid import licences issued prior to this Public Notice. The Board answered the above question by observing the Board observes that the licence has been issued subject to the condition that this licence will be subject to the conditions in force relating to goods covered by the licence as described in the Import Trade Control Policy Book for the period during which the licence has been issued or any amendments thereof made upto and including the date of issue of the licence, unless otherwise specified". The licence was issued admittedly on 25.8.1977 and in terms of the conditions of the licence the licence will be subject only to any amendment upto 25.8.1977". The Board further observed the ITC Public Notice No.67/77 dated 2.9.77 was issued subsequent to the issue of the licence and this being so the answer to the first question will have to be in the negative . The above view was further reiterated by the Board in its Order No.721-Aof 1982, dated 23,12.1981, in the case of M/s. Arvind Exports Pvt. Ltd. and in Order No.179A.189A and 190-B of 1982, dated 28.5.1982 in the case of M/s. Oswa; Agro Mf s Ltd., M/s. Oswal Woo/ten Mills Ltd., M/s. Jai Hind Oil Mills Co., M/s. Vf no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been done in para 185(7) of 1982-83 Policy. If within the time prescribed the goods are imported under a licence covered by import policy of a particular year, the Customs Authorities cannot withhold the release of the goods on the ground that when the goods have arrived at the port, the import policy has been amended making the item in question a canalised item. The Customs Authorities have to ascertain whether the items were allowed to be imported under the import policy governing the licence and whether such goods have been imported within the time prescribed by the import policy . Finally, the Calcutta High Court held the material in question can be imported under the licence and the restrictions contained in the 1984-85 Policy will not apply. The licence for import was issued on 13.4.1980 and the restrictions if any till the date of issuance of the licence and imposed at the time of revalidation of the licence will only apply . Similar view was taken by the Calcutta High Court in the case of Arora International and another v. Collector of Customs and others 1985 (5) E.L.T. 360, In this case the Caicutta.High Court held that the policy in force at the time of issue of lice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion or instruction which seeks to control such right must necessarily have its foundation in one or other provisions of the said Act and Order. Mr. Dalai did contend that such a public notice has its foundation in Section 3 of the Act and in Clause 6, 7, 8, 8A, 10B and 10C of the Order and in the conditions of the licence itself. The particular condition which Mr. Dalal relied on is the condition mentioned on the face of the licence to the effect that the licence is without prejudice to the application of any other prohibition or regulation affecting the importation of goods which may be in force at the time of their arrival. The prohibition or regulation referred to in this condition must necessarily mean prohibition or regulation imposed by law or having force of law. It cannot mean something done by mere change in policy or by public notice, which may or may not be published or brought to the notice of a person affected adversely. An officer may issue such a public notice and keep it in his own pocket and it will still be effective as a public notice or an amendment or change in the policy but it cannot have the force of law. However, a right was acquired, and it is beyond disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue of the licence. The Public Notice is admittedly issued after the issue of the licence. The public notice was not given any retrospective effect. It comes into operation if at all from the date of its publication, which according to the Board took place on 16.8.1978 the date on which Trade Notice No. 85/78 was published. The licences that were issued after 26.8.1978 (16.8.78) would alone be governed by the Public Notice and not the licences which were issued earlier to the date of Public Notice. The above proposition was settled by the decision of the Supreme Court in M/s Bharat Bare Drums Mfg. Co. Pvt. Ltd. v. Collector of Customs, Bombay and another AIR 1971 S.C. page 704". 14. The question as to whether public notice and the import policy is statutory or non-statutory came up for consideration before the Supreme Court in the case of East India Commercial Company Ltd., Calcutta v. Collector of Customs, Calcutta; 1983 E.L.T. page 1542 (S.C.). Before the Supreme Court, it was argued that the public notice was an order issued in exercise of the power conferred on the Central Government under Section 3(1) of the Imports and Exports (Comrol) Act, 1947. The Supreme Court con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore 1.5.1979. It is also admitted that goods imported do not appear in Appendices 5 and 7. It is further admitted that during the Policy AM 80 the goods imported appeared in Appendix 9 and therefore the agency that could import is only the State Chemicals and Pharmaceuticals Corporation of India Ltd. But then the appellants contention has been that there was a firm contract with the foreign supplier on 15.3.1979 and since the Policy AM 79, during which period the licence was issued, did not require opening of an irrevocable letter of credit this condition which was imposed subsequent to the issue of the licence would not be applicable to the licence and further during the Policy AM 79 the goods imported was not a canalised item and the subsequent canalisation by the subsequent Policy cannot take away the right conferred under the licence issued during the Policy AM 79. Shri Pal had, however, contended that since the actual shipment of the goods had taken place during the Policy AM 80, and since the goods imported has been canalised by the time the shipment took place, the additional licence would not be valid to clear the imported goods. The Government has every right to effect ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Export Control Order was challenged on the grounds that it was violative of articles 19(1)(g) and 14 of the Constitution of India. The Supreme Court, however, repelled the contention. From the facts of the case it is clear the canalisation was done by a statutory notice and not by policy or public notice which are non-statutory. Therefore, this case is also distinguishable on facts. 21. In the case of Super Traders and another v. Union of India and others, 1983 E.LT. 258 (Del.), among other questions, the question asto the competency of the Govern-ment and legislature to change the rate of duty for tax during the financial year in the matter of import or export came up for consideration. The subject matter of the amendment in that case also is a statutory amendment made to the Customs Tariff Act. Therefore, this decision also is distinguishable on facts. 22. The next decision relied upon by Shri Pal is the one reported in 1983 E.C.R. page 1607D (SC), Bhatnagar Co. and another v. Union of India and others. This decision also has no application to the facts of the present appeal. The facts are : The Petitioners M/s. Bhatnagar Co. had obtained a licence for the import o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice the Supreme Court observed it is difficult to entertain the argument from the present petitioner that the alleged monopoly has affected his right to carry on trade. In substance no monopoly has been created and the petitioner s application is entirely misconceived. The result is the petition fails and must be dismissed with costs . 23. Second contention urged was that appropriate writ should be issued to forbear the authorities from giving effect to the order of confiscation and sale of the seized goods. It was contended before the Supreme Court that the licences granted to him were to be alive for one year from the 13th February 1952, the illegal seizure of the licences and the unauthorised confiscation of the consignment in question caused considerable prejudice to him. The return of the licences was poor consolation to the petitioner because th3 period during which the licences were to operate had already expired. It was prayed that the licence should be revalidated in the sense that the period during which he can operate upon the licences should be suitably extended. The Supreme Court observed it is true that the relevant authorities were inclined to revalidate the li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articular licence, but the clearance was sought against another licence. But in the meantime, there was a change in the policy effected by means of a public notice which prohibited import of the goods imported and in the said circumstances the bench held that it was not open to the appellants to offer an alternative licence from another export house and as such a licence would not be valid to cover the import of the goods in question. 26. The last decision relied on by Shri Pal is the decision of the Delhi High Court in Suit No.C.W.4037 C.W.4038/82 Mis Jain Exports (P) Ltd. v. Union of India and others. The licences which were the subject matter of Delhi High Court judgment had the following endorsements: (i) This licence is granted under the Government of India order 17.9.1985 as subsequently amended issued under the Import and Export Act, 1947 and is without prejudice to the application of any other prohibition or regulations affecting the importation of goods which may be in force at the time of their arrival; (ii) The licence is valid for import of items appearing in Appendices 5 and 7 excluding, however, the item appearing in Appendix 26 of 1980-81 policy subject to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1982 issued by the Central Government in exercise of the powers conferred by Section 3 of Imports Exports (Control) Act, 1947, by which it gave general permission to import into India from any country raw materials, components, consumables by Actual Users (Industrial), subject amongst others to the following conditions: Condition No. 1 : The items to be imported are not covered by Appendices 3, 5, 6, 7, 8, 9 and 15 of the Import Policy 1980-81; Condition No. 15 : Such goods are shipped on through consignment to India on or before 31.3.1981 or on before 30..6.1984 against firm orders for which irrevoable. letters of credit are opened on or before 28.2.1981, without any grace period whatsoever; Condition No. 16 : Nothing in this licence shall affect the application to any goods, or any other prohibition or regulation affecting the import thereof, in force at the time when such goods are imported". The same conditions are to be found in 1982, 1983 OGL order, while the dates correspondingly changed to the year in question. It is clear that in view of OGL order actual users (Industrial) though assuming that they could have imported coconut oil during the currency of 1980-81 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is case. It was not contended before us that there was any statutory OGL order imposing-the conditions similar to the conditions referred to by His Lordship Mr. Justice Sachar in the Delhi High Court case. No statutory OGL order had been produced before us. The public notice and the policy, as has been observed by the Supreme Court, in the case of East India Commercial Co.Ltd. are non-statutory and they contain policy statements administratively made by the Government for public information. The judgment of the Bombay High Court in Lokesh Chemical Works clearly laid down that the policy statements or public notice cannot confer or create any right, cannot have force of law. The Bombay High Court further held that the licences which were issued by virtue of the policy cannot be altered or taken away by change of policy by mere executive action. The Bombay High Court further held that the prohibition or regulation referred to in the condition of the licences must necessarily mean prohibition or regulation imposed by law or having force of law. It cannot mean something done by mere changes in policy or by public notice. This decision of the Bombay High Court is binding on this Bench. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he licensees like the petitioners who had, acting on the earlier policy and on the basis of the licences issued, made large commitments, invested funds, and entered into contractual obligations...... Such a change of policy could also not be given retrospective effect so as to deprive the importers, who had already imported palm oil specifically for the purpose of refining in their refineries, of their right to carry on the trade of manufacture and refining of imported palm oil and to market the s.ime in accordance with law". Finally, the Court observed it would, therefore, be sufficient to declare that for the aforesaid reasons, the rights of the petitioners flowing from the imoortation of palm oil on the basis of the licences granted to the company would not in any way be affected by the impugned Public Notice and the impugned order, and the company having dealt with the goods in accordance with law, would not in any way be liable to any adverse action by virtue of the aforesaid notice and the order . 31. We have come across a judgment of the Supreme Court reported in 1986 (26) E.L.T.465 (S.C.) Union of India v. Godrej Soaps Pvt. Ltd. and another. The facts of the case as set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licy for 1978-79 excluding those items which were banned in the Policy for the period 1978-79 and which have been banned in the Import Export Policy volume!, 1985-88. The additional licence category import shall be subject to the provisions of para 176 of the Import Policy for 1978-79". 34. The scope of this licence came up for consideration before the Supreme Court in Writ Petition No.199 of 1986 in Indo Afghan Chambers of Commerce case. The Supreme Court held that the items imported should pass through two tests. They should have been importable under the Import Policy 1978-79 and they should have been importable under the Import Policy 1985-88 in terms of the order dated 18th April, 1985. Thus it is seen that the licence issued, though allowed import of items permissible under the policy 1978-79 though fell under the additional licence category of the policy 1978-79 further contain a restriction regarding the import of items which were banned in the policy for the period 1985-88. The ratio of the decision of the Supreme Court would not be applicable to the facts of the present case. The licence, as originally issued or at the time of revalidation, did not contain any restricti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be set aside and accordingly we set aside the same. The fine, if any, paid .shall be refunded to the Appellants. 37. [Order per: K.S. Dilipsinhji, Member (T)]. -I have given the careful thought to the draft Order proposed by Brother Hegde. However, 1 am not in agreement with his conclusions and hence this dissenting order. The facts of the case and the arguments of the appellants and the respondent have been set out in Brother Hegde s draft order and therefore I am riot reproducing them hereunder for the sake of brevity. 38. The appellants imported 6 Amino pencillanic Acid (6 APA) valued at Rs. 36;45,4027- under Bill of Entry No.A 3931/26A dated 31.3 1980 and claimed crearance of this consignment under licence No. PW 2863338 dated 19.1.1979 issued in favour of M/s. Sawhney Bros., New Delhi-. They produced a letter of authority dated 11.3.1980 from M/s. Sawhney Bros. to dear the imported consignment. The description of the goods permitted import under the licencewas for items appearing in Appendices 5 7 ofthe 1978-79 Policy excluding items"appear1ng in Appendix 26, and subject to the condition that import of single one itemshall not exceed Rs.2 lakhs in vafce as per para 176 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 947 (XVIII of 1947) and is without prejudice to the application of any other prohibition or regulation affecting the importation of the goods which may be in force at the time of arrival". The aforesaid condition clearly stipulates that If there Is any prohibition affecting the importation of goods in force at the time of their arrival, the grant of the licence Is subject to such a condition. The floods in question were imported and the Bill of Entry was noted withthe Customs on 7.4.1980. This fe the date when the Bill of Entry had been filed with the Custom House and hence the date of import of the goods. On this day, the Policy 1980-81 had come into effect. But since the Addl. Collector in his impugned Axler has accepted that the Bill of Entrywas dated 30.3.1980 he has confined his orderto the provisions of 1979-80 Policy and hence I am also taking the provisions of this Policy into account in my present order, though I find from the copy of the Bill of Entry that the aircraft arrived at Bombay on 31.3.1980 and the B/E was noted on 7.4.1980. As per the provisions of the 1979-80 Policy, the goods were canalised as held in the Addl. Collector s order and they were not allowed imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Godrej Soaps Ltd. The Supreme Court thus consistently held that the additional licences should be valid not only in terms of the Policy during which they were issued but could be utilised for importing those items which were permissible to be imported when the goods actually arrive in India. In view of the aforesaid decisions of the Supreme Court, there is not an iota of doubt that the licence .of M/s Sawhney Bros. submitted by the appellant was not valid to cover the imported goods when the import was made. 41. The further argument which has been advanced by the appellant is that the Public Notice No.27 1TC(PN)/79 daterf-21.7.1979 could not take away their right to import the goods under the licence in question. This Public Notice permitted an Export House to import any item during 1979-80 Policy which was under OQL during the 1978-79 policy provided a firm commitment had been made by the Export House by opening an irrevocable Letter of Credit before 1.5.1979. Therefore a reading of the Public Notice shows that if confers the advantage of importing an item which waSpermitted in the earlier policy provided therewasafirm commitment by opening an irrevocable i/C before 1^5:19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following point of difference : Whether in the facts and circumstances of the case the appeal of M/s. Raj Copper Cable Industries should be allowed as held by Member (Judicial) or should be rejected as held by Member (Technical). ON DIFFERENCE OF OPINION BETWEEN MEMBER (T) MEMBER (J) OPINION 45. Hon ble President of the Tribunal has referred the matter to me, in terms of Section 129-C(5)ofthe Customs Act, to decide the following point of difference : Whether in the facts and circumstances of the case the appeal of M/s. Raj Copper Cab)(r) Industries should be allowed as held byMemtoer (Judicial) or should be rejected as-held by Member (Technical). 46. Facts of the case have been set out in detail in the order of learned Brother Hegde - Member Judicial These facts have been adopted in the order of the learned brother Dilipsinhji-Member (Technical). 47. Summing up his order learned Brother Hegde has found as follows :- As the licence in this case was governed by the policy AM 79 and in that policy goods imported was not canalised and since the firm contract for supply of goods was made on 15.3.1979 and since the pubticsnotice whteh required opening of irrevoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 52. Judgments of the Supreme Court in the cases of Raj Prakash Chemicals and Godrej Soaps Ltd. have been distinguished by the learned Brother Hegde on the ground that scope of the licences was governed by the specific endorsements made on the licences considered in those cases. This distinction, in my view, with. respect, is not correct because the endorsement had to be made, as rightly observed by the learned Brother Dilipsinhji, in view of the long delay in issuing the additional licences to which the exporters /parties were entitled. These judgments of the Supreme Court, settled the controversy in question that the imports against additional licences must satisfy the dual criteria:- (0 these imports must be valid during the policy period for which the licence was issued and (ii) these imports must be valid during the policy period when the actual imports have taken place. It is to be noted here that the arguments were advanced before the Hon ble Supreme Court in the case of Raj Prakash Chemicals that statutory orders/notifications under Section 3 of the Imports and Export (Control) Act, 1947 can wntt-tie down the rights acquired under a licence and not the non-statutory poli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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