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TMI Blog2024 (8) TMI 1419X X X X Extracts X X X X X X X X Extracts X X X X ..... parts such as firing pin , extractor and hammer which, as per the appellants, required a separate license. Nor did the appellants insist on Syndicate obtaining a separate license for these pre-fitted parts. The objections raised by the appellants were only in respect of some of the parts that were pre-fitted in the frames and slides imported by Syndicate, i.e., hammer , extractor and firing pin . Concededly, the appellants did not raise any objection in respect of other sub-components such as catch magazine , safety lock , safety lock support pin , trigger , trigger action mechanism part , spring of firing pin and lock of firing pin , which were pre-fitted inside the frames and slides and also mentioned in the communication dated 21st June, 2022 sent by the Delhi Police to the DGFT. The issuance of the aforesaid Form X would also nullify the objection taken by the appellants that Syndicate, as an importer had to compulsorily apply for an import license with the MHA in terms of Rule 88 (2) - the power to issue licenses for import and export of arms and ammunitions under the Act were delegated by the MHA to the DGFT via notification dated 1st November, 2018. This would show that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t dated 7th October, 2022, passed by the learned Single Judge in W.P.(C)10143/2022. By the said judgment, the aforesaid writ petition has been allowed and the consignment of the writ petitioner comprising inter alia, frames and slides of handguns, which had been seized by the respondents in the writ petition, has been ordered to be released. BRIEF FACTS AND LITIGATION HISTORY 2. Brief facts relevant for the determination of the issues in the present appeal are set out below: 2.1. The writ petitioner/respondent no. 1 herein, Syndicate Innovations International Limited (hereinafter referred to as Syndicate ) is a public limited company engaged in the manufacture of firearms and ammunitions. Syndicate had obtained a manufacturing license issued by the Ministry of Home Affairs (in short MHA )/appellant no. 1 herein on 12th March, 2018. 2.2. Section 10 of the Arms Act, 1959 (hereinafter referred to as the Act ), prohibits the import and export of arms and ammunitions without a license. Via notification dated 1st November, 2018 issued by the MHA, the powers and functions under Section 10 of the Act with regard to issuance of licences for import and export of arms and ammunitions were del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e MHA. The Delhi Police was advised to directly seek further information from the MHA. 2.9. Accordingly, the Delhi Police approached the MHA for appropriate clarifications via communication dated 21st July, 2022. 2.10. The MHA, vide communication dated 3rd August, 2022, issued an advisory wherein it was stated that: i. The definition of parts and components under Rule 2 (37) of the 2016 Rules was an inclusive one; ii. Slides and Frames cannot be pre-fitted with other licensable parts for the purpose of manufacturing as well as import. Since, the license issued to Syndicate was with respect to import of frames and slides alone, Syndicate could not have imported the additional operational parts, viz hammer , firing pin and extractor . iii. Additionally, import of arms and ammunitions is also subject to Rule 57 (4) of the 2016 Rules. 2.11. In light of the aforesaid advisory issued by MHA, the import consignment of Syndicate was not released. 2.12. At the hearing before the writ court on 30th August, 2022, it was submitted on behalf of the appellants that in terms of Rule 88 (2) of the 2016 Rules, an importer would require a license under Form X and Syndicate had failed to obtain such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench, the aforesaid appeal was disposed of, with liberty to the Intervenor to make submissions in the present appeal. 8. An application (C.M.No. 61953/2023) was filed on behalf of Syndicate seeking modification of the order dated 6th February, 2023, and permission of the Court was sought to utilise the imported items in manufacturing finished products, i.e., handguns. In the meanwhile, the MHA vide communication dated 12th February, 2024 permitted Syndicate to commence commercial production. 9. In the aforesaid backdrop, submissions of the parties in the present appeal were heard on several dates. Written submissions have also been filed by the parties in support of their respective arguments. SUBMISSIONS ON BEHALF OF THE PARTIES 10. Mr. Kirtiman Singh, learned CGSC appearing on behalf of the appellant no. 1/MHA has made the following arguments to assail the impugned judgment: I. The interpretation given to Rule 2 (37) of the 2016 Rules in the impugned judgment is erroneous insofar as parts and components are held to be limited to the extent of the items mentioned in the second part of Rule 2 (37). It is submitted that Rule 2 (37) provides an inclusive definition of parts and comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been placed on record to show that frames and slides come with pre-fitted parts. III. Form VII and Form X-A prescribed in the 2016 Rules cannot be relied by the appellants to submit that Syndicate ought to have obtained a license in respect of the sub-components that were pre-fitted with the import license as the aforesaid forms are in respect of manufacture and export respectively. Import of arms and ammunitions is governed by Form X which does not mention the aforesaid pre-fitted parts, as is correctly observed in the impugned judgment. IV. Form-X license issued ex-post facto to Syndicate on 14th September, 2022, which gave permission to Syndicate to import frames and slides , without any exclusions or qualifiers is an admission on behalf of the appellants that import of frames and slides pre-fitted with firing pin , extractor and hammer is permissible. V. Rule 57 (4) would not be applicable in the present case as Syndicate has been granted a licence under Form X. Notwithstanding the above, it is stated that 57 (4) would only apply in those cases where the parts to be imported cannot be manufactured in India, in line with the observations in the impugned order. 12. Mr Pradeep Kan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Import, place where article imported are to be stored or deposited Syndicate Innovations International Limited, Plot No. E 14, Sahibabad, Industrial Area, Site IV, Ghaziabad, Uttar Pradesh 201010. 8. Place of despatch and route NA 9. Place of destination NA 10. Name, description and address of the consignee NA 11. Period of validity of Licence 22.10.2022 16. A perusal of the aforesaid Form clearly demonstrates that Syndicate was issued an unqualified and unconditional license to import frames and slides , which are parts of handguns, along with other parts and components. The Form neither provides a definition for frames or slides , nor does it state that frames and slides cannot be imported with pre-fitted sub components. The Form also does not mention that there was a further requirement of the importer/Syndicate obtaining separate import licenses in respect of the embedded parts. 17. Pertinently, the aforesaid Form X was issued when there was already a lis pending before the Writ Court wherein a specific issue was raised whether a separate import license is required for import of embedded sub-components. Furthermore, the Delhi Police had inspected the import consignments of Synd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants objected to hammer , extractor and firing pin only because these found mention in the Explanation given in Form VII and Form X-A, whereas the other components were not mentioned therein. The Explanation given in both the forms, being identical, is reproduced hereunder: Explanation . This Form shall apply to firearms and their following parts, namely: (a) Barrel; (b) Cylinder; (c) Bolt; (d) Breech Block; (e) Slide; (f) Firing Pin; (g) Frame or Receiver; (q) Extractor; (h) Hammer/Striker. 22. In our view, reliance placed by the appellants on the Explanation provided in the aforesaid Forms is completely misplaced. It is pertinent to note that the aforesaid Forms VII and X-A are for the purposes of manufacture and export respectively. The learned Single Judge has correctly held that the aforementioned components were added in Form VII which is the license issued to a manufacturer, as there could be a manufacturer specific to the aforesaid components. The relevant paragraph has been set out below: 56. The MHA then proceeds to record that the declarations which were made by the petitioner here while seeking permission to import Slides and Frames cannot be said to encompass the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rer being engaged in the manufacture of only certain sub-components, it necessarily follows that such a manufacturer would also be given the liberty to export the manufactured sub-components. It is in this backdrop that the aforesaid Explanation has been added to Form X-A, which is the form prescribed for exports. 26. Significantly, the aforesaid components such as firing pin , extractor and hammer are conspicuously absent in Form X, which is the requisite form for the purpose of import. This would imply that it was not the intention of the appellants that an importer should separately obtain an import license in respect of the aforesaid components. 27. Another aspect that needs to be highlighted is that the appellants have not placed on record any evidence to show that frames and slides are standalone components and do not envisage pre-fitted sub-components. This has been specifically recorded in the impugned judgement. In this regard, the observations made in the impugned judgment are set out below: 50. Tested on the aforesaid principles, it was incumbent upon the respondents to have placed material on the record to establish that a Frame or a Slide is, in an industrial or commer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised objection in respect of other components such as catch magazine , safety lock , safety lock support pin , trigger , trigger action mechanism part , spring of firing pin and lock of firing pin , which were found pre-fitted in the frames and slides imported by Syndicate, as reflected in the communication dated 21st June, 2022 sent by the Delhi Police to the DGFT. Therefore, the issue whether the definition of parts and components under Rule 2 (37) of the 2016 Rules is exhaustive or not, need not detain us. Similarly, we also need not go into the issue whether the pre-fitted components are to be treated as separate components in terms of the Foreign Trade Policy 2015-20, Indian Trade Classification based on Harmonized System Classification and the Harmonised Commodity Description and Coding System. 30. The issuance of the aforesaid Form X would also nullify the objection taken by the appellants that Syndicate, as an importer had to compulsorily apply for an import license with the MHA in terms of Rule 88 (2). As noted above, the power to issue licenses for import and export of arms and ammunitions under the Act were delegated by the MHA to the DGFT via notification dated 1st Nove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to them. Such a requirement cannot be brought at a stage when the import consignments have already arrived in India in terms of the import license granted. It is a matter of record that the requirement of permission under 57 (4) of the 2016 Rules was raised for the first time in the advisory issued by the MHA on 3rd August, 2022. Admittedly, there is no separate application prescribed for availing permission under Rule 57 (4) of the 2016 Rules. 35. Even otherwise, the learned Single Judge has rejected the interpretation of Rule 57 (4) of the 2016 Rules as canvassed by the appellants. In this regard, the observations of the learned Single Judge are set out below:- 58. It is pertinent to observe that neither the MHA nor the DGFT have asserted that the import of firearms is prohibited. It was also not their case that the Act and the 2016 Rules permit the import of only such arms or parts thereof which cannot be manufactured locally. Although the MHA in its advisory has alluded to Rule 57 (4), it has not taken the stand that the Act and the 2016 permit import of only such parts of arms which are not being manufactured locally. As this Court views Rule 57 (4) it appears to place an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s relevant to note that Syndicate has also filed an affidavit on 1st July, 2023, giving details of imports made by various manufacturers of main firearm components, without obtaining any import license in Form X. Significantly, the appellants have not rebutted the contents of the said affidavit. 38. Therefore, in our considered view, both the objections taken by the respondent with regard to requirement of a Form X as well as permission under Rule 57 (4) of the 2016 Rules were taken as an afterthought. The ex post facto issuance of the aforesaid Form X amounts to a clear admission on the part of the appellants that as long as an importer held an import license for frames and slides , the importer was not required to apply for a separate license under Rule 88 (2), nor did it require a permission under Rule 57 (4) of the 2016 Rules. 39. On behalf of the Intervenor, Sial Manufacturers Private Limited, it has been strenuously argued that appellants could not have issued Form X to Syndicate on ex-post facto basis. 40. Our attention has been drawn to Rule 88 (2) of the 2016 Rules which requires that an importer who wants to import a fire arm or parts of firearm has to file an application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government regulations in relation to the arms and ammunition industry. The appellants themselves are not clear about the applicability of different rules in different situations, thereby resulting in the regulatory regime being operated in an arbitrary and ad hoc manner. As highlighted above, there is a complete lack of clarity between the different agencies such as the DGFT, MHA and the Delhi Police with regard to the application of the regulatory regime. 50. In our view, this state of confusion is detrimental to the interest of the entire arms industry. Admittedly, the Government of India is seeking to encourage and promote manufacture of arms in India through the Make in India initiative, for which it is imperative that there is complete clarity with regard to the regulatory regime. 51. In the note handed over by the learned CGSC on 15th May, 2024, it has been specifically stated that the appellants are taking steps for enhancing efficiency and streamlining the processes for the aforesaid purpose. The relevant extracts from the said note are set out below: In pursuit of enhancing efficiency and streamlining processes, the harmonisation of application procedure for import licens ..... X X X X Extracts X X X X X X X X Extracts X X X X
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