Oswal Woollen Mills Ltd. & ANR Vs.
Union of India & Ors [1983] INSC 77 (11 July 1983)
VARADARAJAN, A. (J) VARADARAJAN, A. (J)
FAZALALI, SYED MURTAZA
CITATION: 1983 AIR 969 1983 SCR (3) 362 1983
SCC (4) 345 1983 SCALE (1)680
ACT:
Import Policy, 1981-82-Paragraph 138
(1)-Replenishment Licence acquired by transfer by a Trading House-Whether
endorsement can be refused on the ground that Replenishment Licence had not
been issued against export of its own products ?
HEADNOTE:
The appellant which was a manufacturer-exporter
as well as a recognised Trading House acquired a Replenishment Licence by
transfer from another manufacturer-exporter and, desiring to import raw
materials, components, etc., required for use in its factories under that
Licence, sent it to the third respondent requesting that the transfer of the
Licence in its name be recognised and an endorsement made thereon to make it
valid for import of items permitted under paragraph 138 (1) of the Import
Policy, 1981-82. The third respondent rejected the request on the basis of an
office Circular dated 31-8-1981 issued by the second respondent which directed
the licensing authority not to grant endorsement under paragraph 138 (1) unless
the Replenishment Licence had been issued to the applicant against export of
its own products.
The appellant's writ petition challenging the
validity of the circular dated 31-8-1981 as well as the order made on its
application for endorsement of the licence was rejected by the High Court.
Allowing the appeal,
HELD: Paragraph 140 of the import Policy,
1981-82 clearly states that Replenishment Licence will be issued in the name of
the Registered Exporter only and will not be subject to 'Actual User' condition
and that except for cases covered by paragraphs 136 (2), 185 (2) and 186 (1)
the licence holder may transfer the licence in full or in part in favour of any
other person and that the licence holder or such transferee may import the
goods permitted therein but the facility of paragraphs 136,137 and 146 shall
not be available to any transferee unless the transferee is himself a
Registered Exporter and can satisfy the Custom Authorities at the time of
clearance of the goods of his bona fides. The goods sought to be imported by
the appellant of the basis of the Replenishment Licence in question do not fall
under paragraphs 136 (2),137,146,185 (2) and 186 (1) mentioned in paragraph
140. Recognised Trading Houses like the appellant are entitled to certain
facilities under paragraph 195 (4) and one of them mentioned in paragraph 195
(4) (ii) is import replenishment licences transferred to them by others. Thus,
the appellant is entitled under paragraphs 140 and 195 (4) (ii) to the facility
of the Import Policy as a transferred of the Replenishment Licence issued in
the name of the actual manufacturer-exporter against exports made by that
manufacturer-exporter. [370 B-E] The contention of the respondents that under
paragraph 138 (1) the facility to import raw materials, etc., under the
Replenishment Licence is available only to the actual manufacturer-exporter
against whose exports the Replenishment Licence was issued amounts to reading
into paragraph 138 (1) the words "against the exports of products
manufactured by them" after the words "manufacturer- exporters"
and before the words "will be valid...".That is what is sought to be
done by the impugned Circular dated 31- 8-1981. The High court was right in
saying that the Circular appears to change the Import Policy but it erred in
saying that the condition mentioned in the impugned order is found in paragraph
138 (1). No such condition is to be found in paragraph 138 (1). It is
significant that paragraph 138 (1) was not mentioned in paragraph 140. It is
also significant that in the Import Policy for the subsequent year 1982-83 the
words "against their exports of products manufactured by them" have
been actually inserted in paragraph 138 (1) after the words "Replenishment
Licences issued to manufacturer- exporter" and before the words "will
be valid." [370 E-H, 371 A-B]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 591 of 1982 Appeal by Special leave from the Judgment and Order dated the
18th November, 1981 of the Delhi High Court in Civil Writ Petition No. 2581 of
1981.
WITH
Writ Petition No. 802 of 1982:
(Under article 32 of the Constitution of
India).
Soli J. Sorabjee and Rajiv Dutta for the
Appellant.
M.M. Abdul Khader, Girish Chandra & Miss
A. Subhashini, for the Respondent.
V.M. Tarkunde and Rajiv Dutta for the
Petitioner in WP.
The Judgment of the Court was delivered by
VARADARAJAN, J. This appeal by special leave is directed against the judgment
of a Division Bench of Delhi High Court dismissing the Civil Writ Petition No.
2581 of 1981 in limine, with the obser- 364 vation that the Circular dated
31.8.1981 issued by the second respondent, the Joint Chief Controller of
Imports and Exports, New Delhi appears to change the Import Policy, that the
contention that the condition mentioned in the order impugned in the Writ
Petition is not found in paragraph 138 of the Import Policy for 1981-82 is not
acceptable, that a reading of paragraph 138 (1) of the Import Policy shows that
the Import Replenishment (REP) Licence, if transferable and an endorsement is
sought thereon, must be with regard to the materials mentioned in the (REP)
Licence and not any other material and that the contention of the first
respondent, the Union of India that the endorsement could only be against the
export by the applicant himself is correct.
The appellants have filed the Writ Petition
No. 802 of 1982 under Article 32 of the Constitution against the same three
respondents and for the same reliefs prayed for in the Civil Appeal, viz. (1)
quashing the Circular dated 31.8.1981 issued by the Joint Chief Controller of
Imports and Exports, New Delhi as being ultra vires and null and void, (2)
directing withdrawal of the order dated 7.12.1981 of the third respondent, the
Deputy Chief Controller of Imports and Exports, Amritsar, refusing to make the
endorsement on the (REP) Licence, (3) issuing a direction to respondents 2 and
3 to make the endorsement contemplated in paragraph 138 of the Import Policy
1981-82 on the (REP) Licence and (4) restraining respondents 2 and 3 from
implementing the Circular dated 31.8.1981 and the order dated 7.12.1981.
The parties will be referred to in the Civil
Appeal as arrayed in the Writ Petition before the High Court for the sake of
convenience.
No copy of the Writ Petition filed before the
High Court has been produced in this Appeal. The case of the petitioners as set
out in the special leave petition is this: The first petitioner M/s Oswal
Woollen Mills Ltd., Ludhiana was originally a registered Export House within
the meaning of paragraph 5 (7) of the Import Policy, 1981-82, and has been a
manufacturer-exporter since 1971 and is now also a recognised Trading House as
the first petitioner's Export House Certificate has been converted into a
Trading House Certificate in terms of paragraph 195 (1) of the Import Policy,
1981-82. Recognised trading houses are entitled to certain facilities under
paragraph 195 (4) of the Import Policy, 1981-82, and one of them 365 mentioned
in paragraph 195 (4)(ii) is import replenishment (REP) Licences transferred to
them by others. Paragraph 195(4) (ii) reads as under:
"Trading Houses will be granted the
following facilities under the Import Policy:- Import replenishment (REP)
Licences transferred to them by others." For obtaining the said facility
the first petitioner acquired by transfer the Replenishment (REP) Licence, viz.
"Import Licence No.
PW/2941/669/C/XX/78/Z/80 dated 27th February, 1981 for total value of
Rs.2,02,781" from the licence holder who was himself a
manufacturer-exporter under a transfer letter dated 8.7.1981 and sent it to the
third respondent for the purpose of obtaining endorsement thereon.
Paragraph 140 of the Import Policy, 1981-82
provide for transfer of (REP) Licences and reads as under:
"The REP Licence will be issued in the
name of a Registered Exporter only and will not be subject to 'Actual User'
condition. Except for cases covered by paragraphs 136(2), 185(2) and 186(1), a
licence holder may transfer the licence in full or in part in favour of any
other person. The licence holder or such transferee may import the goods
permitted therein but the facility of paragraphs 136(2), 137 and 146 shall not
be available to any transferee unless the transferee is himself a Registered
exporter and can satisfy the Custom Authorities at the time of clearance of the
goods, of his bonafides".
Thus the (REP) Licence holder and the
transferee of the same are in the same position as regards the right to import
on the basis of the licence, but the transferee of the licence has to satisfy
certain other conditions, viz. that he should himself be a Registered Exporter
and should satisfy the Custom Authorities of his bona fides at the time of
clearance of the goods in regard to the facilities provided in paragraphs 136
(2), 137 and 146 of the Import Policy, 1981-82. The first petitioner is a
manufacturer- exporter holding a valid Registration Certificate
No.FIED/TD-E3(153)/78-132 dated 21.7.1978 and was keen to Import under the
(REP) Licence acquired by transfer on 8.7.1981 raw materials, components,
consumables and packing materials required for use in its factories in terms of
Paragraph 138(1) of the Import Policy, 1981-82 which reads as under:
366 "REP Licence issued to
manufacturer-exporters will be valid for import of any other items of raw
materials components, consumables and packing materials required by them for
use in their factories. However, import of banned items will be allowed only
upto 20% of the face value of the REP Licence subject to the condition that the
value of 'single' item should not exceed Rs. 1 lakh. REP Licences issued to
manufacturer-exporters, who want to avail of this facility will be issued with
an 'Actual User' condition and such licences will not be transferable. It is
also open to the manufacturer- exporter to make use of this facility only for a
part of his REP entitlement and to get for the remaining part a freely
transferable REP Licence".
The first petitioner requested the third
respondent by his letter dated 23.9.1981 that the (REP) Licence in question may
be transferred to him and suitable endorsement may be made thereon to make it
valid for import of the items permitted under paragraph 138 with 'Actual User'
and non- transferable conditions. But the third respondent refused that request
by his letter No. O-33/Q/OO80/EPT/ASR/85 dated 15.10.1981 on the basis that the
endorsement in paragraph 138 is admissible only for the manufacturer-exporters
against their own exports. This refusal is based on a total misconstruction of
paragraph 138 of the Import Policy, 1981-
82. That decision is based on an office
Circular dated 31.8.1981 issued by the second respondent, which, in substance,
directs the Licensing Authority not to grants endorsement under paragraph 138
of the Import Policy, 1981- 82 unless the (REP) Licence had been issued to the
applicant against the export of his own products. The Circular dated 31.8.1981
reads as under:
"Attention is invited to para 2 (iii) of
REP Circular No. 10/80 dated the 4th August, 1980 regarding endorsement to be
made by the Licensing Authorities on REP Licence sought to be utilised under
para 138 of the Import Policy, 1981-82. The said para 138 is meant for REP
Licence issued to manufacturers on the exports of the products manufactured by
them. Therefore, before making endorsement of the REP Licence under the said
para 138 the Licensing Authority concerned should make sure that the REP
Licence, in question was issued to the applicant against export of his own
products; i.e. 367 for which the licencee was registered as a
manufacturer-exporter, as per the relevant registration-cum-membership
certificate held by him.
Similarly, the facility under para 138 (7) is
meant for those manufacturers only whose product was actually exported and not
for other manufacturers of the same product." The Circular is without the
authority of law and cannot amend or modify paragraph 138 of the Import Policy,
1981-82.
The petitioners filed the Writ Petition in
the High Court after the third respondent failed to send a reply to their
notice dated 2.11.1981 by which he was called upon to withdraw the decision
contained in his letter dated 15.10.1981 and to make the necessary endorsement
under paragraph 138 of the Import Policy, 1981-82 on the (REP) Licence
mentioned above. The Writ Petition was dismissed by the High Court in limine.
The respondents have filed a
counter-affidavit for meeting the averments made in the special leave petition.
They have admitted that (REP) Licences issued
on exports made on or after 1.4.1978 are not subject to 'Actual User' condition
and are freely transferable to any person without any necessity for endorsement
or permission from the Licensing authority except for certain cases as provided
in paragraph 140 of the Import Policy, 1981-82. The facility was extended to
manufacturer-exporters and manufacturers who exported their goods through
others by permitting them to utilise the import replenishment (REP) licence
accruing to them on the export of the products manufactured by them for
importing not only the items utilised by them in the products exported but also
other items of raw materials, components, consumables and packing materials
required by them for use in their factories. But it is evident from paragraph
138 of the Import Policy, 1981-82 that the facilities provided in that
paragraph can be availed against (REP) Licences issued to
manufacturer-exporters only on their own exports or against (REP) Licences
issued to manufacturers whose products are exported through another exporter.
This facility is, therefore, not available to manufacturer-exporters against
(REP) Licences acquired by them by transfer from other Registered Exporters
even if the latter is a manufacturer-exporter.
The Circular dated 31.8.1981 was issued only
in order to ensure that the manufacturer-exporter avails of this facility only
368 against (REP) Licence issued on exports of his own products in terms of the
policy stated in paragraph 138 and to clarify that the facility is available
only to those manufacturers whose products were actually exported through
another exporter and that the facility was not available to other manufacturers
of the same products. The special facility was given and is intended to
strengthen the production of the units whose products were exported by allowing
them to import by the (REP) Licence not only the items utilised in the products
exported but also other items of raw materials, components, consumables and
packing materials required by the same unit. For obvious reasons, this facility
has not been extended to (REP) Licences which were transferred by exporters to
a unit which did not contribute to the product exported against which the
licence was issued.
Paragraph 138 (1) of the Import Policy,
1981-82 is clear enough and admits of no other interpretation than the one
contained in the impugned Circular dated 31.8.1981. The Circular has neither
amended nor modified the Import Policy, 1981-82 contained in paragraph 138. The
special benefits referred to in paragraph 138 are not transferable and,
therefore, the transferees of the (REP) Licences like the petitioners cannot
validity import the said items. The decision of the Licensing Authority
refusing to make the endorsement asked for by the letter dated 23.1.1981 on the
(REP) Licences acquired by the petitioners was in accordance with the policy
mentioned in paragraph 138. The grounds urged by the petitioners are without substance
and amount to distortions of the contents of paragraphs 136, 138 and 140 of the
Import Policy, 1981-82. The Writ Petition was rightly dismissed by the High
Court in limine.
As the same reliefs which are sought in the
Civil Appeal are sought even in the Writ Petition also it is not necessary to
refer to the petitioners' contentions raised in the Writ Petition and those
raised by the respondents in the counter-affidavit filed by them in this
judgment. Our findings in the Civil Appeal will suffice to dispose of the Writ
Petition one way or the other.
The first petitioner was originally a
Registered Export House within the meaning of paragraph 5 (7) of the Import
Policy, 1981-82 and has been a manufacturer-exporter since 1971. It has become
a recognised Trading House as its Export House Certificate has been converted
into a Trading House Certificate in terms of paragraph 195 (1) of the Import
Policy, 1981-82. Recognised Trading Houses are entitled to certain facilities
under paragraph 195 (4), and one of 369 them mentioned in paragraph 195 (4)
(ii) is import replenishment (REP) Licences transferred to them by others.
The import replenishment (REP) licence
mentioned above was issued to a manufacturer exporter against his actual
export.
The first petitioner got that licence
transferred to it by a letter dated 8.7.1981 as provided for in paragraph 140
of the Import Policy, 1981-82 for obtaining the facility under paragraph 195
(4) (ii). Thereafter an application dated 23.9.1981 was made by the first petitioner
for recognition of that transfer and for an endorsement being made on the said
licence forwarded with that letter to the third respondent to enable the first
petitioner to import raw materials, components, consumables and packing
materials required by it for use in its own factories as per the first part of
paragraph 138 (1) of the Import Policy, 1981-82. In that letter it is stated
that the first petitioner proposes to utilise the licence for the import of raw
materials, components, consumables and packing materials required by it for use
in its own factories in terms of paragraph 138 (1) of the Import Policy,
1981-82 and that the licence may, therefore, be transferred in the name of the
first petitioner and an endorsement may be made on it to make it valid for
import of the items permitted under paragraph 138 with the 'Actual User' and
non-transferable conditions. This request was rejected by the third respondent
by his letter dated 15.10.1981 on the ground that the (REP) Licence in question
was issued to the licencee against the export of his own products, i.e. for
which the licencee was registered as a manufacturer-exporter as per the
relevant registration- cum-membership certificate held by him. There is no
dispute about these facts.
The petitioners' contention is that the first
petitioner is entitled to import the raw materials, components, consumables and
packing materials required by it for use in its own factories in terms of
paragraph 138 (1) of the Import Policy, 1981-82 as the transferee of the (REP)
Licence permitted by paragraph 140 of the Import Policy, 1981-82
notwithstanding the fact that the first petitioner is not the
manufacturer-exporter against whose exports the (REP) Licence in question was
issued but a Trading House who got the said licence transferred by the letter
dated 8.7.1981 as per paragraph 195 (4) (ii) of the Import Policy, 1981-82. The
respondents' contention is that as the first petitioner is not the
manufacturer-exporter to whom the (REP) Licence was issued against his export
it is not entitled to import the raw materials etc. mentioned in the first
petitioner's 370 letter dated 23.9.1981 under paragraph 138 (1) of the Import
Policy, 1981-82. The question is which of these contentions is correct.
Paragraph 140 clearly states that (REP)
Licence will be issued in the name of the Registered Exporter only and will not
be subject to 'Actual User' condition and that except for cases covered by
paragraphs 136(2), 185(2) and 186 (1) the licence holder may transfer the
licence in full or in part in favour of any other person and that the licence
holder or such transferee may import the goods permitted therein but the
facility of paragraphs 136,137 and 146 shall not be available to any transferee
unless the transferee is himself a Registered Exporter and can satisfy the
Custom Authorities at the time of clearance of the goods of his bonafides. The
goods sought to be imported by the first petitioner on the basis of the (REP)
Licence in question do not fall under paragraphs 136 (2), 137, 146, 185 (2) and
186 (1) mentioned in paragraph 140 of the Import Policy, 1981-
82. Paragraph 195(4)(ii) grants to Trading
Houses like the first petitioner the facilities under Import Policy, viz., the
import replenishment (REP) Licences transferred to them by others. Thus the
first petitioner is entitled under paragraphs 140 and 195 (4) (ii) to the
facility of the Import Policy as a transferee of the (REP) Licence issued in
the name of the actual manufacturer-exporter against exports made by that manufacturer-exporter.
The contention of the respondents that under paragraph 138(1) the facility to
import raw materials etc. under (REP) Licence is available only to the actual
manufacturer-exporter against whose exports the (REP) Licence was issued
amounts to reading in to paragraph 138 (1) the words "against the exports
of products manufactured by them" after the words
"manufacturer-exporters" and before the words "will be
valid...". That is what is sought to be done by the impugned Circular
dated 31.8.1981. The present contention of the respondents is that the Circular
dated 31.8.1981 only clarifies paragraph 138 (1) of the Import Policy, 1981-82
and does not amend or modify that paragraph. That is not how the learned Judges
of the High Court have under stood the Circular in their judgment under appeal.
The learned Judges have stated in their judgment that the Circular dated
31.8.1981 appears to change the Import Policy and that the contention of the
petitioners before them that the condition mentioned in the impugned order
dated 15.10.1981 is not found in paragraph 138 of the Import Policy, 1981-82 is
not acceptable to them. The learned Judges were right in saying that the
Circular appears to change the Import Policy but they have erred in saying that
the condition mentioned in the impugned order dated 15.10.1981 is found in
paragraph 138 (1) of the Import Policy, 1981-82. We are unable to find any such
371 condition in paragraph 138 (1) of the Import Policy, 1981-
82. It is significant to note that paragraph
138 (1) was not mentioned in paragraph 140 of the Import Policy, 1981-82. It is
also significant to note that in the Import Policy for the subsequent year
1982-83 the said words "against their exports of products manufactured by
them" have been actually inserted in paragraph 138 (1) after the words
"REP Licences issued to manufacturer-exporter" and before the words
"will be valid within the overall value for import of any items of raw
materials, components, consumables, spares and packing materials required by
them for use in their factories subject to 'Actual User' condition". In
view of the respondents' contention that the Circular dated 31.8.1981 is only
clarifactory of paragraph 138 (1) of the Import Policy, 1981-82 and does not
amend or modify that paragraph it is unnecessary for us to go into the question
whether the Circular issued by the Joint Chief Controller of Imports and
Exports can validly amend the Import Policy, 1981-82. On a perusal of the
relevant paragraphs of the Import Policy, 1981-82 mentioned above we agree with
Mr. Soli J. Sorabjee, Senior Advocate for the appellants that the condition
mentioned in the third respondent's impugned letter dated 15.10.1981 is not
there in paragraph 138 (1) of the Import Policy, 1981-82, that the Circular dated
31.8.1981 is invalid and that the rejection of the petitioners' request made in
the letter dated 23.9.1981 by the third respondent in the letter dated
15.10.1981 is unwarranted, and the request should have been complied with. We
are unable to agree with Mr. M.M. Abdul Khadar, Senior Advocate for the
respondents that the condition mentioned in the letter dated 15.10.1981 is to
be found in paragraph 138 (1) of the Import Policy, 1981-82. Accordingly, we
allow the appeal with costs and the Writ Petition without costs.
H.L.C. Appeal & Petition allowed.
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