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TMI Blog2019 (11) TMI 739X X X X Extracts X X X X X X X X Extracts X X X X ..... tter of routine or right, when national security is projected by the respondents 1 and 2 for refusing to grant the P5 license to persons other than the user of the same -Perusal of the order of the Original Authority in refusing to grant license and the order of the Appellate Authority in rejecting the appeal would undoubtedly indicate that there is no scope for the writ petitioner to seek indulgence of this Court to interfere with those orders, more particularly, when the rejection was made in the interest of national security and based on a policy decision. It is seen from the order of the Original Authority, issuance of license in Form P5 for import of Ammonium Nitrate will be considered only in favour of Ammonium Nitrate user and not to a person, who is a trader of the same. It is not the case of the petitioner that it is the user of Ammonium Nitrate. On the other hand, admittedly, it is only a trader. Under Rule 16 of the Ammonium Nitrate Rules, 2012, it is stated that no license for import or export of Ammonium Nitrate by land shall be granted without the previous sanction of the Central Government in each case, wherein the Central Government may impose conditions and rest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been in the business of trading in Ammonium Nitrate falling under Chapter 31 of both Customs and Central Excise Tariff Acts. Apart from sourcing the goods indigenously, the firm also imported the goods on payment of appropriate duties of customs duty. The petitioner sell the subject goods mostly to buyers who are basically engaged in agricultural operations/activities. The petitioner started importing the goods from the year 2012 both through the Port of Vishakhapatnam and Chennai. The goods were assessed and cleared by the customs by classifying the same under Customs Tariff Heading 3102 and extended the benefit of Nil rate of Basic Customs Duty and full exemption from payment of the Countervailing Duty in terms of Notification No.12/2012-CE dated 17.03.2012. The Government of India had introduced a new rule known as Ammonium Nitrate Rules. For storing and trading Ammonium Nitrate, one should possess a license in form P3. Accordingly, the petitioner made necessary application before the second respondent. The petitioner was granted P3 license dated 03.12.2014. For any import of Ammonium Nitrate, one should be in possession of P5 license granted by the second r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of P5 license. On 30.03.2017, the second respondent revoked the suspension of P3 license and accordingly, allowed the petitioner to continue with P3 license. However, the appeal filed before the first respondent was dismissed on 08.02.2017 without considering any of the grounds raised by the petitioner. Thus, the petitioner filed another writ petition in W.P.No.28851 of 2017, challenging the order of the first respondent dated 08.02.2017. By order dated 05.09.2018, the Writ Court allowed the writ petition and set aside the order of the first respondent and remitted the matter back to him for considering the appeal once again on merits and pass orders in accordance with law after giving due opportunity of personal hearing to the petitioner. Accordingly, the first respondent heard the petitioner in person on 23.10.2018. However, the first respondent passed the present impugned order once again recording the same finding that the petitioner is a trader and not an actual user. Hence, the present writ petition. 3. The respondents 1 and 2 filed counter affidavit, wherein it is stated as follows: Initially Ammonium Nitrate or a combin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose. The investigation by the fourth respondent brought out the entire list of sale of imported Ammonium Nitrate made by the petitioner to various individuals and firms and not holding Form P3 license for possession and use/sale of Ammonium Nitrate under Ammonium Nitrate Rules, 2012. From these facts, it is clear that petitioner had imported Ammonium Nitrate but also indulged in sale of imported Ammonium Nitrate to unauthorized persons. The proposal on import of Ammonium Nitrate by the petitioner was not considered by this respondent for issuance of Form P-5 under Ammonium Nitrate Rules, 2012 and the same was conveyed vide letter No.P-5 (AN) Ports /2014 (A1743) Ammonium Nitrate Rules, 2012 dated 19.08.2015. Despite of this letter on a later date, the petitioner had imported 740 MT of Ammonium Nitrate through Chennai Port vide Bill of Entry No.2704255 dated 24.09.2015 as reported by the Principal Commissioner of Customs, Chennai vide letter No.ENQ/56/2015-SIIB dated 08.10.2015. Since inception of Ammonium Nitrate Rules, 2012, License for import of Ammonium Nitrate is being granted by PESO only to the bonafide users viz., Catridge Bulk Explosives ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by all parties and grounds for rejection of the appeal of the petitioner in the speaking order which briefly stated that: (i) A licence in Form P-5 was required to import ammonium nitrate, which the petitioner did not possess and despite refusal to grant import licence by CCE, Nagpur on 19th August 2015, the appellant had imported the aforesaid AN consignment of 740 MT through Chennai Port on a later date i.e. 24th September 2015, which amounts to violation of Rules 4 and 6(4)(a) of the Ammonium Nitrate Rules, 2012. ii) Bill of Lading is prepared in advance and is not a valid document and explanation offered by the appellant is not satisfactory. iii) Further the petitioner knowing his application for grant of P-5 license has been refused by the Chief Controller of Explosives, did not stop dispatch of consignment from Korea. iv) Special Intelligence Investigation Branch (SIIB), Principal Commissioner of Customs informed that appellant had earlier cleared 696 MT of Ammonium Nitrate through Chennai Port and 500 MT through Vishakapatnam Port without a valid license. It revealed that the appellant had sold the entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... license No.A/HQ/TN/P3/18(A1100) dated 03.12.2014 in Form P-3 under the Ammonium Nitrate Rules, 2012 for possession and sale of 1000 Metric Tonnes of Ammonium Nitrate at any one time at the approved store house and it was also mentioned in the said letter that the petitioner was not granted license for import of Ammonium Nitrate in Form P-5 as required under the Ammonium Nitrate Rules, 2012. Hence, the said consignments imported vide Bill of Entry No.2704255 dated 24.09.2015 was seized under a mahazar on 12.11.2015 as only holders of P-5 license are entitled to import and admittedly the petitioner do not possess such P-5 license. It is also pertinent to mention that upon investigation into the actual use of traders/firms to whom M/s.Sri Amman Chemicals, Karur sold Ammonium Nitrate, it was found that some of them were explosive dealers (S.No.1-9 below) and others are quarry owners (S.No 10-15 below): 1. R.Krishnan Explosives Dealers, Eriyodu 2. Matha Explosivests, Pudukottai 3. Sakthi Chemicals, Vadamadurai 4. Swamy Traders, Dharampuram 5.Srirajalakshmi Fertilizers and Chemicals, Paramathi Velur. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from importing Ammonium Nitrate. Relevant protection is provided under the Ammonium Nitrate Rules 2012 under Rule 2(b)(j), 6(4), 6(6)(c) Rule 14, 18(3), 25(1), 27, 34 and 35 to regulate and check the import. Therefore, the apprehension of misuse is not well founded. If the Authorities are justified in their apprehension, there is no meaning in their action to sell the seized goods to P3 licensees by way of auction. Therefore, their apprehension is without any basis. Reliance of notification dated 21.07.2011 is not correct. 6. Per contra, learned counsel appearing for the respondents 1 and 2 submitted as follows: While P3 license is for storing Ammonium Nitrate, P5 license is for import. A policy decision has been taken not to give P5 license to traders. Therefore, such policy decision cannot be questioned by the petitioner. In this case, the petitioner imported the subject matter goods even before getting P5 license. Therefore, his conduct is without any bonafide. While Section 6B of the Explosives Act, 1884 deals with grant of license, Section 6C deals with power of the Licensing Authority to refuse to issue license under the cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erce and Industry, Ammonium Nitrate is deemed to be an explosive within the meaning of the Explosives Act, 1884, when it has the chemical formula as stipulated in the said notification. For better appreciation, the said Notification is extracted as hereunder: MINISTRY OF COMMERCE AND INDUSTRY (Department of Industrial Policy and Promotion) NOTIFICATION New Delhi, the 21st July, 2011 S.O.1678(E)- In exercise of the powers conferred by Section 17 of the Explosives Act, 1884 (IV of 1884), the Central Government hereby declares that Ammonium Nitrate having the chemical formula NH4 NO3 or any combination containing more than 45 per cent of Ammonium Nitrate by weight including emulsions, suspensions, melts or gels (with or without inorganic nitrates) shall be deemed to be an explosive within the meaning of the said Act: Provided that such Ammonium Nitrate or any combination thereof shall not include those fertilizers from which Ammonium Nitrate cannot be extracted by any physical or chemical process. Note: The Explosives Rules, 2008 shall not be applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned in the impugned order stating that application for licence in Form P-5 will be considered only in favour of Ammonium Nitrate users is not one of the restrictions, as contemplated under the Rules and the reasons stated in the impugned order is extraneous and contrary to the provisions contained in the Ammonium Nitrate Rules and hence, unsustainable. 33. Prior to July 2012, there was no specific Rule to regulate the use of Ammonium Nitrate and after the Rules came into force, Ammonium Nitrate or any combination containing more than 45% of the Ammonium Nitrate by weight including emulsions, suspensions, melts or gels was declared as an explosives substance within the meaning of Explosives Act. 34. This Court can take judicial notice of the fact from various news reports that the presence of Ammonium Nitrate in the bombs, which exploded in various parts of the country, raised a debate on the availability of the substance, primarily who used to make explosives and fertilisers. The report reveals that though the Government enacted the Rules to regulate the sale of Ammonium Nitrate, it was still easily available and is being used by terror groups ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of ingredients like fuel etc., Hence, it is necessary to regulate the use of Ammonium Nitrate for which the Ammonium Nitrate Rules, 2012 have been framed. Q. Where does AN find its maximum usage? A. Ammonium Nitrate find its maximum usage in Explosives Industry. 36. Thus, the use of Ammonium Nitrate having been regulated, the petitioner cannot, as a matter of right, claim that except for the circumstances set out in Rule 6(4), there can be no restriction on import or export of Ammonium Nitrate, and it cannot be a ground to interfere with the impugned order, as the Rule 6 only postulates general restrictions. Thus, while rejecting the application submitted by the petitioner for grant of licence in Form P- 5, bearing in mind the interest of the National Security, thought fit to restrict issuance of licence in favour of the Ammonium Nitrate users and the petitioner being a trader, rejected their application. 37. In my view, the restriction imposed is a reasonable restriction in the light of the fact, separate Rules were framed for regulation of the use of Ammonium Nitrate, which has been specifically bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court have not been set aside. Of course, the Appellate Authority was directed to dispose the appeal uninfluenced by the view expressed by the Writ Court. Therefore, insofar as this Court is concerned, such findings rendered by the Writ Court having not been set aside in the writ appeal, cannot be brushed aside as the one without substance. On the other hand, a detailed analysis made by the Writ Court in the above extracted paragraphs would show that granting import license for Ammonium Nitrate will certainly have a direct bearing on the national security if the importer is not the user himself and therefore, such reasons and findings touching upon the very security of the nation cannot be ignored or considered as irrelevant, while considering the very same issue once again by this Court. At the same time, it is to be noted at this juncture that the Appellate Authority, while passing the present impugned order, has applied his mind and given independent reasons, certainly not influenced by the above observations made by the Writ Court. 15. It is true that the Appellate Authority previously passed an order on 08.02.2017, rejecting the appeal and this court in W.P.No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat Section 6C of the Explosives Act, 1884 specifically contemplates that the Licensing Authority shall refuse to grant license, where he deems it necessary for the security of the public peace or public safety, notwithstanding anything contained in Section 6B, which deals with grant of license. In other words, though Section 6B mandates the Licensing Authority to grant license under the circumstances stated therein, Section 6C mandates such Licensing Authority also to refuse to grant a license under the circumstances stated therein. 18. For brevity, Section 6B and 6C of the Explosives Act, 1884 are extracted hereunder: 6-B.Grant of licenses: (1) Where a person makes an application for licence under section 5, the authority prescribed in the rules made under that section for grant of licences (hereinafter referred to in this Act as the licensing authority), after making such inquiry, if any, as it may consider necessary, shall, subject to the other provisions of this Act, by order in writing cither grant the licence or refuse to grant the same. (2) The licensing authority shall grant a licence-- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns and restrictions while granting such sanction. Now, it is stated that the Government has taken a policy decision not to permit import of Ammonium Nitrate to a person, who is not a user. Therefore, I find that in view of the above Rule 16 position as well, the petitioner's claim was rightly rejected. 20. It is further seen that the Petroleum and Explosives Safety Organisation, Government of India, through its proceedings dated 16.09.2016, addressed to the Ministry of Commerce and Industry, has discussed in detail as to why the Ammonium Nitrate license should be granted only to the users and not to traders. The relevant conclusions arrived therein is extracted as hereunder: Conclusions:- At present, Licenses for import of Ammonium Nitrate is being granted by PESO only to the bonafide users viz., Cartridge Bulk Explosives Manufacturers for their captive consumption, and not to the Traders; though there is no specific provision for such restriction under Ammonium Nitrate Rules, 2012. Owing to the reported misuse of Ammonium Nitrate in the country, the new set of Rules viz., Ammonium Nitrate Rules 2012 we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort of Ammonium Nitrate only for bonafide own use by the importer and not for sale in Rule 6 of the Draft Ammonium Nitrate Rules, 2017 notified vide Notification No.G.S.R.127(E) dated 13.10.2017. As such, the practice of issuing AN import license only to Users and not to Traders by PESO is not hampering the business or commercial interest of the country, other than the business interest of a very few traders. Dropping the above discussed provision on 'Restricting import of Ammonium Nitrate only for bonafide own use by the importer and not for sale proposed for amendment of Ammonium Nitrate Rules 2012, would not only become impediment in the Rules implementation, but also defeat the very purpose of the Ammonium Nitrate Rules, 2012, compromising the National Security. Section 6C of Explosives Act, 1884, empowers the licensing authority to refuse grant of license; where the licensing authority deems it necessary for the security of the public peace or for public safety. 21. Further, in this case, the Licensing Authority has found that for the security of the nation, grant of import license in Form P5 can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in taking such decision by the authorities. 23. In this case, the very act of the petitioner in disposing the earlier imported Ammonium Nitrate to various third parties, who are not possessing valid P3 license, would clearly indicate that the petitioner is undoubtedly not the user of Ammonium Nitrate and on the other hand, it is only interested in trading the same, that too, by selling it to several individuals, who are stated to be the persons without P3 license. The counter affidavit filed by the Customs also states that explosive dealers purchased Ammonium Nitrate from the petitioner and used the same in their blasting operations at the quarries and they also sold small quantities to individuals and that the end users of the same is not known. It is further stated that statements have been recorded to that effect from authorized person of the firms mentioned in the counter affidavit. Therefore, it is seen that end users of the small quantities of the Ammonium Nitrate is unidentifiable. Needless to say that accumulating small quantities of Ammonium Nitrate periodically would result in gathering larger quantity in the hands of unknown and unidentifiable pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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