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TMI Blog1984 (9) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... alities. For some time the petitioner imported the aforesaid materials under REP licence. The said REP licence permitted import of raw materials, components, consumables, stores and packing materials in accordance with paragraph 30(1) of Part B, Section I of Volume II of the Import Policy 1977-78. 2. The said paragraph 30(1) of Part B, Section I of Volume II of Import Policy of 1977-78 is set out hereinbelow for the sake of convenience: 30(1).--If a manufacturer-exporter obtains the REP licence in his own name against his own exports the licence will be valid for import of any raw materials, components, consumables, stores and packing materials required for use in the licence holder's factory. The licence shall be subject to 'actual user' condition. The import shall be subject to the following restrictions: (a) Annexure I to this part contains a list of banned items. The list is in two parts, viz., Part I and Part II. Items appearing in Part I of the list can be imported for a total value not exceeding 10 per cent of the value of the licence, and, within this limit, the import of a single item should not exceed Rs. One lakh in value within the overall value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s provided in the Import Policies from the year 1978-79 and also clarified by the Chief Controller of Imports and Exports as stated hereinbefore. 5. The grievance of the petitioner in this application is that the customs authorities all on a sudden have changed their stand and five consignments of tetracycline hydrochloride imported by the petitioner from the foreign suppliers had not been allowed clearance. The said five consignments were imported by the petitioner from Hongkong between 26th June, 1984, and 26th July, 1984. All the aforesaid five consignments have been sold by the petitioner on high seas sale basis to M/s. Deys Medical Stores (Manufacturing) Ltd. The said goods have been imported by the petitioner under import licence bearing No. P/L/2966519 dated 31st May, 1983, issued in favour of Messrs. Braithwaite and Company, a Government of India Undertaking. The said licence was transferred by Messrs. Braithwaite and Company to Messrs. C.V. Enterprises who in turn transferred the same in favour of the petitioner. Upon such transfer, the petitioner entered into a contract on 21st December, 1983, with the foreign suppliers Messrs. Unico and Company, Hongkong, for import o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal. The petitioner has given various instances where the identical item was cleared by the customs authorities. 8. This application was moved on 24th August, 1984, upon notice to the Collector of Customs, Calcutta and Deputy Collector of Customs, Air Cargo-Complex (Import), Dum Dum Airport. The respondents were directed to produce the records. The records have been produced. It appears from the records that on 16th July, 1984, the Appraiser has given a note to the following effect: The licence has been issued against registration of contract dated 15th October, 1976. The policy applicable for import of items is as were prevailing on the date of the firm contract, i.e., 15th October, 1976, Tetracycline HCL was included in export-linked-import item on 27th September, 1977, vide PN. 78-ITC(PN)-77 dated 27th September, 1977. Therefore, it appears that the imported item tetracycline HCL BP is covered within the validity of import licence submitted by the party. For opinion and order please. 9. A note was thereafter given by the Assistant Collector (CCI) to the following effect: (1) Few months back similar consignment was allowed clearance as per order of the DC(N). Pleas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 2,00,507.61. The party has produced licence No. P/L/2983496 dated 1st December, 1982, issued in the name of M/s. Tata Engineering and Locomotive Company Limited with L/A in favour of the importer. The licence is also endorsed for the import policy AM 81. The licence is also endorsed with the following remarks: The licence issued against registered contract will however, not be available for OGL imports of the item under OGL on the date of contract. (The licence is transferable in terms of paragraph 140 and 141 of AM 83 Policy Book)'. Party has sought clearance of tetracycline in terms of import policy period AM 78 as per registration of contract entered into during AM 78. According to ITC Policy, Volume I, Section III, page 94 tetracycline HCL was a canalised item. Tetracycline HCL is also not an OGL item. According to the extract of the contract registered with the Bank produced by the party indicates that the contract was registered on 5th August, 1977. On the date of contract the goods imported were a canalised item and not an OGL item and also not a linked item as per annexure II, Part B of ITC Policy Volume II of 77-78 Policy. According to paragraph 33 of ITC Policy, Vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, informed that prior to 27th September, 1979, tetracycline HCL was canalised and in terms of paragraph 33(1) manufacturer-exporters, nominee manufacturers, export houses holding REP licences were allowed to import the items in question though canalised as per the terms and conditions laid down in the said paragraph. Accordingly the then Collector allowed clearance of tetracycline HCL against identical licence. 16. In respect of another consignment the following notes appear in the file. While going through the records of the case, it is seen however that Shri T. S. Swaminathan, the then Collector of Customs has already accepted these licences allowing clearance of a consignment of tetracycline HCL on the basis of the above decision, it appears that a few more consignments of tetracycline HCL were allowed clearance against identical licences. In one of the last meetings Collector informed me that no case of canalised goods should be allowed clearance without the notice of the Collector. In the circumstances, the file is submitted for Collector's orders as to whether we should go for review of the orders of Shri T.S. Swaminathan and issue show cause notice for the good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITC Policy by importing wrong goods. Further, the licence has been issued on 31st May, 1983, and policy period applicable is AM 1983-84. As already mentioned, the licence has been issued against the registration of export contract. The details of policy and procedure are available under Appendix 20 of the aforesaid policy book. Paragraph 7 of appendix 20 is very much relevant. It has been clarified in that paragraph that protection against registered contracts is only with regard to the rate of imports replenishment and items of import allowed as replenishment in column 4 against the relevant export products of appendix 17. No such protection is available for import of any other items which may be allowed to be imported against REP licences by way of flexibility. As already mentioned the licence in question has been issued against the export of engineering goods the importation of drugs cannot be allowed by extending the flexibility as provided under sub-paragraph 7 of appendix 20. The importation is not covered by the licence tendered on this ground also. In view of the aforesaid it appears that the goods valued at ₹ 3,21,891.90 for three consignments (Rs. 1,07,297.30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce in question that the contracts were dated 2nd August, 1977. Hence the policy applicable to the licence in question is the policy in force on 2nd August, 1977. Now the question is whether the goods in question, namely, tetracycline HCL BP imported by the importers is a permissible item against the licence in question. The licence is endorsed as valid for import of raw materials, etc., in accordance with the provisions made in paragraph 30(1) of the Part B Section 1 of Import Policy Book, Volume II for 1977-78. Goods in question are raw materials not falling under Clause (a), (b) and (c) of sub-paragraph 1 of paragraph 30 of AM 1978 Policy Book, Volume II. Hence the licence in question is valid to cover the goods in question. Tetracycline HCL BP was included in the export-linked-import list only on 27th September, 1977, whereas the contract in question is dated 2nd August, 1977. Hence on the date of registration of the contract, i.e., 2nd August, 1977, the goods in question were not under the export-linked-import list. It has already been held in a series of decisions of the Board and the Ministry that any amendment made in the policy cannot have retrospective application. Hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cussing, the Deputy Collector gave a note on 7th September, 1978. Discussed with DC (P), ACA Gr IV AO Gr I and AC/ACC I. It is brought to my notice that the practice followed by the Customs House hitherto has been to accept such licence especially in view of the fact that 'all' conditions are withdrawn vide paragraph 140 of AM 83 Policy. This is also endorsed on the reverse of the licence. In the C.H. and Air Cargo-complex we had allowed clearance of a number of consignments accepting such licence. Once the licence is made transferable, the 'licence holder' is the person in whose name the licence is transferred and not the original licence holder who had sold it absolutely to the present holder. When there is no 'all' condition, he is free to import goods covered by paragraph 30(1) of AM 1977-78 Policy Volume II subject to the restriction contained therein. Similarly paragraph 33(1) of AM 78 Policy Volume II permits import of canalised items against such licences. Restrictions (a), (b) and (c) in paragraph 30(1) do not cover import of canalised items. In the above circumstances and considering the practice in vogue, there is difference in opinion be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication? Let the goods be released against the licence produced. Sd/-Illegible Collector 27th October, 1983. 25. Thereafter, the goods were released. It appears from the records of that case that in the case of another transfer of a REP licence, (Hansmukh Kundalia, Calcutta) the identical article was released by the customs authorities. In the case of Natvarlal Co. the licence was dated 31st March, 1983, and in the case of Hansmukh Kundalia the licence is dated 1st December, 1982. The petitioner's licence is dated 31st May, 1983. In the case of Natvarlal Co., Bombay and Hansmukh Kundalia, Calcutta where the identical goods were released, the endorsements made in the said licences as regards the description of the goods were as follows: Raw materials, components, consumable, stores and packing materials required for use in the licence holders' factory contained in paragraph 30(1) of Part B, Section 1 of Import Policy of 1977-78, Volume II. 26. The petitioner's licence also contains identical endorsement as regards the description of the goods. The aforesaid licences in the cases of Natvarlal Co. and Hansmukh Kundalia were also issued against the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licence is endorsed for raw materials, components, etc., subject to the restrictions contained in paragraph 30(1) of Part B, Section 1 of Volume II of the Import Policy 1977-78. The licence holder, therefore, is entitled to import items and is entitled to the rate of replenishment in accordance with the policy of 1977-78. If there is any restriction for import of any items such restriction must be on the basis of the Policy of 1977-78. 29. Paragraph 30(1) provides that the raw materials, etc., to be imported are required in the use of the licence holder's factory and the licence would be subject to actual user condition. However, the said restriction is no longer there and since 1st April, 1978, the REP licence is freely transferable and such REP licence is not subject to actual user condition. 30. The provisions in this regard are contained in all the Import Policies for the year 1978-79. Licensing authority issued clarification from time to time on the licences (REP) issued to registered exporters. If the REP licence issued against exports made in pursuance of registered contracts entered into prior to 1st April, 1978, but the exports are made after 1st April, 1978, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the item permitted to be imported under the policy of 1977-78. It is now well-settled that the restriction imposed by notification cannot have any retrospective operation. Hence an importer will be eligible to the benefit of 1977-78 Policy as it stood on date of policy for the purpose of import of an item under paragraph 30(1) of 1977-78 Policy. It is also the case of the customs department as would appear from the note that the crucial date during 1977-78 Policy which should be applicable for determining the validity of the import of the item is the first day of the issue of the policy, i.e., 27th April, 1977, and on that day. The Assistant Collector of Customs who issued the show cause notice has himself admitted the said fact in his following note in the file: In respect of the crucial date during AM 77-78 which should be applicable for the item tetracycline hydrochloride, it was held that in such cases, the Policy in force on the first date of AM 77-78 is the Policy applicable to the licence. In that event, the restrictions imposed under ITC P/N 78 (PN)/77 dated 27th September, 1977, are not applicable in view of the fact that the item tetracycline hydrochloride was included ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t relate to the same date. It is clarified that protection against registered contracts is only with regard to the rate of import replenishment and the items of import allowed as replenishment to column 4 against the relevant export product in appendix 17. No such protection is available for import of any other items which may be allowed to be imported against REP licence by way of flexibility. 35. Appendix 17 of 1983-84 Policy specifies import policy for registered exporters. In Appendix 17 at column 2 the export product is mentioned, at column 3 import replenishment percentage is mentioned and at column 4 the materials permitted for import against the export of the product are mentioned. It is true that the licence in this case was issued against the export of engineering goods and column 4 of the said appendix does not permit import of any drugs. But what the respondents deliberately ignored is that the rate of replenishment and items of import allowed as replenishment must be in terms of paragraph 30(1) of 1977-78 Policy. 1977-78 Policy did not have any column 4 in the relevant appendix in respect of the items not otherwise export-linked-import item. As a matter of fact para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arlier several consignments of this item were released more than once. Several consignments have been released in other cases. The importer can certainly rely on the stand taken by the customs authorities in releasing various consignments of the identical item in several cases and can reasonably believe that such item is permitted for import. If that be the position, then it cannot be said that the goods are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported contrary to any provision imposed by or under Customs Act, 1962, or any other law for the time being in force. Neither the customs authorities nor the Chief Controller of Imports and Exports made any public notification that such an item cannot be imported by REP licence endorsed under 1977-78 Policy. An importer is entitled to know where his right and obligation stand under the licence. It involves international trade and before the importer can enter into a contract or open a letter of credit he must know the exact position regarding the import of the particular item. If the policy interpretation and the stand of the department changed with the change in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same Assistant Collector could issue a show cause notice saying that the importation of the goods under the licence is not valid. This is how the customs authorities are proceeding and it is a fit case where the Court should interfere and prevent the abuse of power or colourable exercise of power by certain officers of the department. The right of a citizen to carry on business cannot be taken away by some ipse dixit of certain officers and the Court cannot overlook such over-zealousness on the part of certain officers to act without caring for consequences at the behest of superior officers. 38. In that view of the matter this application succeeds. The respondents are directed to forthwith assess the said five bills of entry and to allow clearance of the said goods covered under the import licence dated 31st May, 1983, subject to the petitioner's paying the assessed customs duties. All formalities shall be completed and the goods shall be released within 48 hours from the date of communication of this order. The respondents Nos. 1, 2 and 3 are directed to issue full wharfage and/or demurrage rent exemption certificates formalities in respect of said consignments from t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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