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TMI Blog1988 (9) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... zip fasteners is one of the items which has been reserved in the small scale industries sector. It is averred in the affidavit filed by the President of the Petitioner-Association that the basic raw materials required for the manufacture of non-metallic zip fasteners are petro-chemical based and petro-chemical products are costlier in India than those in foreign countries. The cost of production of such zip fasteners, therefore, is higher than that of the foreign made zip fasteners. This has given rise to an illegal influx of the zip fasteners from outside the country and has resulted in crippling the indigenous industry. As a step to end this problem, the Government of India, by Notification No. 205/84, dated 20-7-1984, invoked the provisions of Section 11-B of the Customs Act, 1962, and declared zip fasteners as a notified item thereby putting a ban on illegal importation of zip fasteners. The Petitioner-Association further asserts that the imports under REP licences issued by the 2nd respondent-Chief Controller of Imports and Exports, New Delhi, is operating to the detriment of the indigenous industry. 3.The object of this writ petition is to challenge the import policy for r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplete description of the import items for which the licence is transferred." The main grievance of the Petitioner-Association is that Para 183 (1) of Chapter XV of the Import and Export Policy, quoted above, provides for free transferability of REP licences and is not restricted to the actual users alone. The transfer of REP licences to "any other person" is resisted by the petitioners on the ground that this entails free transferability of licences in favour of persons who are not Registered Exporters and who have made a regular trade of their own by importing zip fasteners on the strength of their being transferees of the REP licences. In other words, the case of the Petitioner-Association is that the transferability of REP licences should be restricted only to actual users and not to other persons who are not connected with the manufacture of export products or diversification of export products. This argument is further elucidated by the point that the term "any other person" should be read in consonance with the object of the policy and must be construed in a manner which would not result in the negation of the policy propounded by the Central Government. When the zip faste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ementary licences which are issued on the basis of specific decisions taken in a meeting headed by the Chief Controller of Exports and Imports. However, as a matter of general practice, supplementary import licences for the item in Appendix 2 Part-B are not normally issued and over a period of three years no such supplementary licences had indeed been issued in the case of zip fasteners. The Government of India has regulated the policy for registered exporters on the basis of various considerations, such as balance of payments situation, domestic and international market conditions, the competition and acceptability of the indigenous products etc. The import of zip fasteners is allowed only against export of garments, leather and leather goods, leather garments and sports goods etc., which have a turn over of hundreds of crores in fetching foreign exchange. Out of the total turn over, the import of zip fasteners constitutes only a very small fraction of the total value of the exports of the aforesaid items. The provision for import of zip fasteners on the basis of REP licence has been made with a view on the quality control of the export products and to ensure their excellence and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own. The object of the scheme is to provide to the Registered Exporters by way of Import replenishment the essential inputs required in the manufacture of the products exported and also to allow certain flexibilities to enable diversification of the export products. In Para 167 the categories of Registered Exporters are given, viz., (1) Merchant-exporters, (2) Manufacturer-Exporters and (3) Export Houses (including Trading Houses). The extent of import replenishment permissible against each product is enumerated in Col. 2 of Appendix 17 as set out in Col. 3 thereof. In Appendix 17, which deals with import policy for registered exporters, there are several items dealing with import entitlement of zip fasteners and parts. A glance at the above reveals the fact that the import of zip fasteners is allowed upto a certain percentage of the imported replenishment entitlement of the said product in regard to several items like PVC purses, bags and travel goods, foot-wear, heavy leather goods like saddlery items, leather garments, cotton textiles, woollen textiles, ready-made garments, hosiery and knitwear etc. In Appendix 17 in Col. 3 the import replenishment percentage is given and in Col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be used on a comparatively lavish scale to render the leather goods, hand bags etc., saleable in the foreign competitive market. Any way, nothing can turn out on the technicality of this argument as it can safely be presumed that the authorities have imposed a condition of actual use of 2% of the imported zip fasteners in case of textile goods, taking into consideration the modalities of the trade prevalent in case of such goods. Furthermore, it must be kept in view that the import REP entitlement is in many cases only upto a small percentage of the total user of the zip fasteners in a particular product and the percentage of import entitlement is further cut down because it allows the licensee to import only a small percentage of the REP entitlement quota. 8. Mr. T. Anantha Babu, learned counsel for the Petitioner-Association has relied upon the decisions reported in Ramana v. I.A. Authority of India - A.I.R. 1979 Supreme Court 1628, M/s. Kasuri Lal v. State of J K- A.I.R. 1980 Supreme Court 1992 and Maneka Gandhi v. Union of India - A.I.R. 1978 Supreme Court 597 in support of his general proposition that an executive authority cannot exercise its discretion in an arbitrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eby facilitating the export of manufactured the goods after utilising the zip fasteners in the products. It is also urged that the Government of India has allowed only a small percentage of the total REP entitlement by way of entitlement quota of import under the REP licences and a check is maintained on all such products which are exported to ensure that they come up to the required standards from the point of quality, control and excellency of goods. The foreign market being a competitive one, it is essential that the goods exported by us should be comparable in quality and utility to the best as available in the market. The zip fasteners of these products form a vital component to ensure the excellence of the goods on which they are used. There may be ready made garments made out of textiles or leather goods like hand bags, foot-wear, sadlery etc. It is for this purpose that the REP licences have been made freely transferable under Para 183 of the Import and Export policy. He further emphasised the fact that this policy has been in vogue since 1978 and has been functioning smoothly uptil now. When a question was raised by the Zipper Association of India with the Ministry of comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with by courts unless compelled by glaring unconstitutionality." A dictum of Frankfurter J in Morey v. Dond (354 US 457) is worth reading here to indicate the parameters of interference by the courts in matters of this nature. It reads as follows: "In the utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial deference to legislative judgment. The legislature after all has the affirmative responsibility. The courts have only the power to destroy, not to reconstruct. When these are added to the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the experts and the number of times the judges have been overruled by events - self-limitation can be seen to be the path to judicial wisdom and institutional prestige and stability." In State of M.P. v. Nandlal Jaiswal - (1986) 4 S.C.C. 566 the Supreme Court was dealing with the question of grant of licences for construction of distilleries for manufacture and supply of country liquor which was alleged to be in violation of Articles 14,19(l)(g) of the Constitution. It was observed by the Supreme Court that having regard to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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