Prem Chand
Somchand Shah & Anr Vs. Union of India
& Anr [1991] INSC 22 (5 February 1991)
Agrawal, S.C. (J) Agrawal, S.C. (J) Rangnathan, S. Kasliwal, N.M. (J)
CITATION:
1991 SCR (1) 232 1991 SCC (2) 48 JT 1991 (1) 340 1991 SCALE (1)128
ACT:
Constitution
of India, 1950: Article 14 -Equality- Reasonable classification-ExportHouses-Additional
Import Licences-Classification of Licences for the purpose of benefit of
flexibilities of import items under Para 215(4) of 1988-91 Imports and Exports
Policy-Held Export Houses granted Additional Import Licences prior to 1.4.1988
on the basis of f.o.b. value of Exports and Exports Houses granted Additional
import Licences after 1.4.88 on the basis of the net foreign exchange earnings
on exports do not constitute a single Class-Held classification of licences
valid since basis and conditions of grant of licences under 1978-79 Policy and
1988-91 policy were different.
Import
and Export Policy, 1978-79: Paras 165,166, 174 & 176 Import and Export
Policy, 1988-91: Paras, 212, 214, 215 and 218-Appendices 3 and 5 Part-A-Export
Houses-Additional Export Licences-Benefit of flexibilities in import items
under Para 215(4)-Benefit extended to grantees of Additional Import Licences
issued after 1.4.1988 i.e. under 1988-91 Policy and denied to grantees of
Additional Import Licences issued prior to 1.4.1988 i.e. under 1978-79 Policy,
Para 218(10)-Held Export Houses granted Additional Import Licences prior to
1.4.88 cannot claim the benefit of relaxation of import under Para 215(4)-Para
218(10) of 1988- 91 Policy held valid.
HEAD NOTE:
The
petitioners, carrying,on import-export of diamonds, field applications for
registration as Export Houses and grant of Additional Import Licences under
Para 174 and 176 of the Import and Export Policy 1978-79 which were rejected by
the authorities on the ground that they have failed to diversify their exports
of "other products" during the year 1977-78. They challenged the
order of the authorities by filing writ petitions before the Bombay High Court under
Article 226 of the Constitution. One of the petitions was dismissed by a
learned single judge of the High Court and the said petitions filed an appeal
before a Division Bench of the High Court.During the pendency of the appeal 233
and the writ petition,the Supreme Court by its order dated April 18, 1985
decided the case of Union of India v.
Rajnikant
Bros. holding that there was no requirement of diversification of exports as a
condition for the grant of Export Houses Certificates in the Import Export
Policy for the year 1978-79 but the grantee of Additional Licences were not
only prohibited from importing items which were excluded in the Export Policy
1978-79 but also from importing items excluded under the Import Policy
prevailing at the time import. The High Court decided the cases of the
petitioners in accordance with the decision of this Court in Union of India v. Rajnikant
Bros. Purusant to the decision of the Bombay High Court petitioners were
granted Export House Certificates and Additional Import Licences which were
valid for 12 months, with the same condition as provided by this Court in its
order dated April18, 1985 in the case of Rajnikant. However, the petitioners
were not able to make imports under the said licences till 31st March,1988.On
1.4.1988, the Government of India issued a revised Export and Import Policy for
the period 1988-91.Under Para 215 of the said revised policy certain
flexibilities were granted in the matter of imports to the grantees of
Additional Import Licences. However, under para 218(10) of the said revised
Policy the holdersof the Additional Import Licences issuedprior to 1.4.1988
were made ineligible for the benefit of flexibilities in import as contained in
para 215(4). Since ,the petitioners were holding licences issued prior to
1.4.1988 they could not avail the flexibilities in import as contained in Para 215 of the 1988-91 Policy. Consequently, they filed
writ petitions in this Court challenging the validity of para218(10) of the
1988-91 Policy contending
(i)
that all the Export Houses who were granted Additional Licences constitute at
single class and their classification on the basis of date or on the basis of
period of exports has no connection with the object sought to be achieved by
the 1988-91 policy;
(ii) that
Para 218(10) of 1988-91 Policy arbitrarily discriminates between Export Houses
who were issued Additional Licences prior to 1.4.1988 since the benefits ofPara
214 of 1988-91 Policy were conferred only on the latter;
(iii)
that in view of the judgement of this Court in C.Naveenchandra and Co. v. Union
of India, [1987] 2 S.C.R. 989 the petitioners should be treated at par with the
grantees of Additional Licences under the Export Policy for the subsequent
years and since there has been relaxation in the matter of policy of canalisation
of imports under Para 215(4) in respect Additional Licences granted to Export
Houses under the 1988-91 Policy, the petitioners were also entitled to a
similar relaxation.
Dismissing
the petitions, this Court, 234
HELD:
1. The right to equality guaranteed under Article 14 ensures equality amongst
equals and its aim is to protect persons similarly placed against
discriminatory treatment. It means that all persons similarly circumstance
shall be treated alike both in privileges conferred and liabilities imposed.
Conversely discrimination may result if persons dissimilarily situate are
treated equally. Even amongst persons similarly situate differential treatment wouldbe
permissible between one class and the other. In that event it is necessary that
the differential treatment should be founded on an intelligible differentia
which distinguishes persons or things that are grouped together from others
left out of the group and that differentia must have a rational relation tothe
object sought to be achieved by the statute in question. [242H, 243A-B]
2. A
close examination of the Import & Export Policy 1978-79 and the Import
& Export Policy 1988-91 shows that there is material difference between the
conditions for grant of Additional licences under Import Policy 1978-79 and the
conditions for grant of such licences under the Import Policy 1988-91. While in
the Import & Export \policy 1978- 79 the emphasis was only on the f.o.b.
value of exports without taking into account the outgo of foreign exchange in
importing the goods required for achieving the exports by an Export House and
Additional licences were granted for a much larger amount at a higher
percentage on the basis of the f.o.b. value of the exports, where as in the
Import & Export Policy 1988-91 there is a more realistic appraisal of
actual benefit to the country' economy by the exports by taking into account
the net foreign exchange earnings after deducting the value of the imports and
additional licences are issued on the basis of the net foreign exchange
earnings for a much lesser value on a smaller percentage.Therefore, the basis
for the grant of Additional Licences which are entitled to relaxation in import
under the 1988-91 Policy is different from the basis on which Additional Licences
were granted under the 1978-79 policy. [243C, 245B-C,248A]
3. The
petitioners were not granted Additional Licences on the basis of net foreign
exchange earnings and they have secured the Additional Licences on the basis of
f.o.b. value of the exports, without taking into account the value of goods
imported by them for achieving the exports.
It
cannot be said that the petitioners who have been granted Additional Licences
under the 1978-79 Policy and the Export Houses who were granted Additional Licences
under the 1988- 91 Policy are persons similarly circumstanced. Therefore the
petitioners cannot claim the same facilities that have been provided to Export
Houses who are granted Additional Licences under the 1988-91 Policy. Hence they
have failed to make out a case for interference by this Court under 235 Article
32 and consequently they cannot assail the validity of Para 218(10) of the Import & Export Policy 1988-91.[245E,
243D, 245F, 249C, 248B]
4.
Export Houses, like the petitioners, who were granted Additional Licences on
the basis of order of this Court dated April 18, 1985 are not to be treated at
par with Export Houses who are granted Additional Licences under the Import
& Export Policy prevalent at the time of import.
Import
of canalised items under Additional Licences issued to the petitioners would be
permissible if the import policy prevailing at the time of import permits them
to import such items. Therefore the rights of the petitioners under the
Additional Licences issued to them would be governed by the terms of the Import
Policy prevailing at the time of import.[246A-B, 247E, 247H] D. Naveenchandra
& Co. Bombay & Anr. v. Union of India
Raj Prakash
Chemicals Ltd. & Anr. v. Union of India
& Ors., [1986] 1 S.C.R. 448; Union
of India v. Godrej Soaps Pvt . Ltd., [1986]3
S.C.R. 771; Union of India v. Rajnikant Bros., Civil Appeal No. 1423 of 1984
decided on 18.4.1985;
Indo
Afghan Chamber of Commerce v. Union of India, [1986] 3 S.C.R 88, referred to.
B.
Vijay Kumar & Co. etc. etc. v. Collector of Central Excise and Customs,
[1991] 1 Scale 33; held inapplicable. & ORIGINAL JURISDICTION: Writ
Petition No. 459 & 460 of 1988.
(Under
Article 32 of the Constitution of India).
Harish
N. Salve, S.V. Kamdar and M.N. Shroff for the Petitioners.
P.K. Goswami,
Additional Solicitor General, Kailash Vasdev and Ms. A Subhashini for the
Respondents.
The Judgement
of the Court was delivered by S.C. AGRAWAL, J. These petitions under Article 32
of the Constitution raise a common question as to the validity of sub-para (10)
of para 218 of the Import & Export Policy for the period April, 1988 to
March, 1991.
236
The petitioners in both these writ petitions are partnership firms carrying on
business of import of rough diamonds and export of cut and polished diamonds.
The Import & Export Policy for the period April 1978 to March 1979, in para
174, made provision for grant of certain import facilities to Export Houses
which were registered in accordance with the provisions of the said Policy. One
of the said facilities was grant of an Additional licence in terms of para 176
of the said Policy for an amount to be calculated at one third the f.o.b. value
of the exports of select products made by the Export House in the year 1977-
78.
The petitioners submitted application for registration as Export Houses and for
grant of Export House Certificate which would have entitled them to the grant
of such Additional licence. The said applications of the petitioners were
rejected by the authorities on the view that petitioners had failed to
diversify their export of "Other Products" during the year 1977-78.
The said order refusing the Export Certificate was challenged by the
petitioners by filing writ petitions under Article 226 of the Constitution
before the Bombay High Court.One of those writ petitions (filed by the
petitioners in writ petition No. 460 of 1988 herein) was dismissed by a learned
Single Judge of the High Court and the said petitioners filed an appeal before
a Division Bench of the High Court. While the said appeal and the other writ
petition (filed by the petitioners viz. writ petition No. 459 of 1988 herein)
were pending in the Bombay High Court, this Court decided Civil Appeal No. 1423
of 1984, Union of India v. Rajnikant Brothers, and other connected matters by
order dated April 18, 1985, wherein it was observed that there was no
requirement of diversification of exports as a condition for the grant of
Export House Certificates in theImport Policy for the year 1978-1979, and the
authorities were directed to issue necessary Export Certificates for the year
1978-79.
In
that order this Court laid down the following conditioned:
"Save
and except items which are specifically banned under the prevalent import
policy at the time of import, the respondents shall be entitled to import all
other items whether canalised or otherwise in accordance with the relevant
rules".
The
writ petition and the appeal were decided by the Bombay High Court in
accordance with the aforesaid decision of this Court in the case of Union of
India v. Rajnikant Brothers, (supra) and the High Court directed the
authorities to grant Export House Certificates to the petitioners under the
Import-Policy 1978-79 within three months. While giving the said direction the
High Court imposed a condition in 237 the same terms as laid down by this Court
in its order dated April
18, 1985, referred to
above.
While
construing the aforesaid direction contained in its order dated April 18, 1985,
in Rajnikant Brothers case (supra) this Court has held that the grantees of the
Additional licences were not only prohibited from importing items which were
excluded under the Export Policy 1978-79 but also from importing items excluded
under the Import Policy prevailing at the time of import and that the word
"banned" was intended to take in terms which were banned altogether
as well as items which were banned for import by the holder of an Additional licence.
(See: Raj Prakash Chemicals Ltd. & Anr. v. Union of India & Ors. [1986] 1 S.C.R. 448. In Union of India v. M/s. Godrej
Soaps Pvt. Ltd. & Anr., [1986] 3 S.C.R. 771 this Court construed the words
'whether canalised or otherwise' contained in the order dated April 18, 1985,
passed in Rajnikant Brothers case (supra) and it was observed that the Court
would not know whether in the future certain canalised items could be imported
directly by an Export House holding an Additional licence and that the
possibility of a policy being framed in the future enabling an Export House
holding an Additional licence to directly import items which are `non-canalised'
and also item which are `canalised' could not be ruled out and it was in this
light that the Court can be said to have used the words "whether canalised
or otherwise" in the order dated April 18, 1985. The matter was further
clarified by this Court in D.Navinchandra & Co. Bombay & Anr. Etc. v.
Union of India & Ors., [1987] 2 S.C.R. 989, wherein this Court has
observed:
"Analysing
the said order, it is apparent,
(1) that
the importation that was permissible was of goods which were not specifically
banned,
(2) such
banning must be under the prevalent import policy at the time of import, and
(3) whether
items which were canalised or uncanalised would be imported in accordance with
the relevant rules.
These
conditions had to be fulfilled. The Court never did and could not have said
that canalised items could be imported in any manner not permitted nor it could
have given a go-bye to canalisation policy". (P. 1000) In accordance with
the directions given by the Bombay High Court the petitioners in writ petition
No. 459 of 1988 herein were granted the Export House Certificate and were also
granted an Additional licence dated November 16, 1987.
Similarly,
the petitioners in 238 writ petition No. 460 of 1988 herein were granted the
Export House Certificate and an Additional licence dated August 31, 1987. These licences were valid for a
period of 12 months and they contained the following endorsement:
"This
licence in valid for import of items permissible to Export Houses under the
Additional Licence category as per para 176 of Import Policy for the period
1978-79 excluding those items which were banner in the policy for the period
1978-79 and those which have been specifically banned in the prevailing Import
Policy, 1985-88, pursuant to and subject to the decision of the Supreme Court
dated 5.3.1986 in M/s. Raj Prakash Chemicals case civil appeal No. 4978 of
1985; the decision dated 15.5.1986 in the case of M/s. Indo-Afghan Chamber of
Commerce writ petition No. 199 of 1986, the decision dated 12.9.86 in the case
of M/s Godrej Soap Pvt. Ltd. civil appeal No. 3418/1986; the decision dated
12.9.1986 in the case of M/s Star Diamonds Company of India in civil misc.
petitions No. 20021-22 of 1986 in civil appeal No. 2924/1984; and the decision
dated 15.4.1987 in the writ petition No. 1483 of 1987 filed by M/s. D. Naveen
Chandra & Company. xxx" It appears that the petitioners were not able
to make imports under the said Additional licences till March 31, 1988. With
effect from April 1, 1988, the Government of India issued the revised Import
& Export Policy for the period April, 1988 to March 1991. The Import &
Export Policy 1988-1991 also contains in para 214 and 215 provisions for grant
of Additional licences to Export Houses. In para 215 of the said Policy certain
additional facilities have been given in the matter of imports by Export Houses
under Additional licences issued to them. In sub-para(4) 215 it has been
provided as under:
"(4)
Additional licences issued to Export Houses will also be valid for the import
of the following items upto 10% (upto 15% in the case of Trading Houses) of the
value of the licence for:- (i) Import of technical designs, drawings and other
technical documentation for a value not exceeding Rs. 10 lakhs in the case of
Export Houses, and Rs. 25 lakhs in the case of Trading Houses;
239
(ii) import of items appearing in Appendices 3 Part-A,3 Part-B and 5 Part-A
subject to the following conditions:
(a) that
the c.i.f. value of a `single item' shall not exceed 10% of the flexibility in
value terms of Rs.10 lakhs, whichever is less:
(b)
where the value for import of a `single item' on the basis of 10% as at (a)
above, works out to less than Rupees one lakh, import would be permitted upto a
value of Rs. 1 lakh, provided it is within the overall flexibility allowed on
the licence: and (iii) import of non-OGL capital goods (other than those
appearing in Appendices 1 Part-A and 8) without indigenous clearance, subject
to the same conditions as stipulated at (ii) above, within the overall
flexibility allowed to Export/Trading Houses".
Paragraphs
217 and 218 of the said Policy provide for transitional arrangements. In para
217, it is prescribed that Export Trading House Certificates issued prior to
April 1, 1988 would continue to be valid till the date of the expiry and the
Export House Trading House can apply for fresh certificates, if they fulfil the
eligibility conditions laid down in the policy and in cases where these
Certificates are expiring on 31st March, 1988, and the applicants do not fulfil
the eligibility conditions for recognition laid down under the revised Policy,
recognition would be granted for one year only if they fulfil conditions for
renewal of these Certificates as laid down in the Import Policy, 1985-88. Para
218 of the said Policy reads as under:
"218.
(1) Where the applications from Export Houses/Trading Houses for Additional licences
have not been disposed of by 31st March of the proceeding licensing year, the
rate of entitlement will be the same as permissible during the licensing year
to which the application pertains, but the items to be allowed will be as per
the Import Policy in force on the date of issue of the licence.
(2)
Additional licences already issued prior to 1.4.1988 shall continue to be
`non-transferable'.
(3)
The Additional licences issued prior to 1.4.1988 240 shall cease to be valid
for import of items of raw materials, components and spares which appeared in
Parts I and II of List 8, Appendix 6 of Import Export Policy, 1985-88, but are
not now covered by Part I of List 8, Appendix 6 of this Policy. These licences
will also cease to be valid for the import of items of capital goods which
appeared in Appendix 1 Part-B of Import Export Policy, 1985-88 but are now
covered by Appendix 1 Part-B of this Policy.
(4)
The Additional licences issued to Trading Houses prior to 1.4.1988 will cease
to the valid for the import of items which appeared in Appendices 3 and 5
Part-A of the Import-Export Policy, 1985-88 but do not appear in Appendices 3
and 5 Part-A of this Policy.
(5)
Additional licences issued to Export Houses/Trading Houses prior to 1.4.1988
shall cease to be valid for import of items of spares appearing in Appendices
2,3, 5 Part-A, 8 and 10 of this Policy.
(6)
Notwithstanding the provisions contained in sub paras (3), (4) and (5) above,
the restrictions will not apply to the extent the licence holders have already
made firm commitments by irrevocable Letters of Credit opened and established
through authorised dealers in foreign exchange before 1st April, 1988 but any
extension of these letters of credit made after 31st March, 1988 shall be
treated as `fresh commitments'.
(7)
Additional licences issued to Export Houses/Trading Houses prior to 1.4.1988
will also be valid within their overall value, for import of raw materials,
components, consumables and spares appearing in Appendix 6, List 8, Part -A of
this Policy. Similarly, such licences will also be valid for import of items of
capital goods now covered by Appendix 1, Part-B of this Policy within their
overall value.
(8)
REP licences held by Export Houses/Trading Houses and already endorsed prior to
1.4..1988 shall cease to be valid for import of any item which could be
imported under Open General Licence under the Import-Export Policy, 1985-88 but
are no longer so in this Policy.
241
(9) Additional licences issued to Export Houses/Trading Houses after 1.4.1988
on exports made during 1986-87 or earlier periods, will be `non-transferable'.
These licences will be valid for import of the items appearing in Part-I of
List 8, Appendix 6 of this Policy. These licences when issued to Trading Houses,
will also be valid for import of the items appearing in Appendices 3 and 5
Part-A of this Policy, subject to the conditions laid down in this regard, in
the Import-Export Policy, 1985-88.
(10)
Additional licences issued on Export Houses/Trading Houses prior to 1.4.1988,
or issued after 1.4.1988 on exports made during 1986-87 or earlier periods,
will not be eligible for the flexibilities in the import of items of raw
materials, components and consumables covered by Appendices 3 and 5 Part-A and
items of non-OGL capital goods (other than those covered by Appendices 1 Part-A
and 8) available under this Policy. However, these licences will be eligible
for the endorsement (if not already endorsed) for the import of non-OGL capital
goods (other than those covered by Appendices 1 Part-A and 8) as allowed
against such licences in the Import Policy.
1985-88,
subject to the conditions laid down therein provided the items sought to be
imported against such licences continued to be non OGL (other than those
covered by Appendices 1 Part A and 8) under this Policy".
The
grievance of the petitioners is confined to sub- para (10) of para 218 which
lays down that Additional licences issued to Export Houses/Trading Houses prior
to April, 1, 1988, or issued after April 1, 1988, on exports made during
1986-87 or earlier periods, will not be eligible for the flexibilities in the
import of items of raw materials, components and consumables covered by
Appendices 3 and Part-A, and items of non-OGL capital goods (other than those
covered by Appendices 1 Part-A 8) available under the revised Policy. Appendix
3 Part-A relates to raw materials, components, consumables, tools and spares
(other than Iron and Steel and Ferro-Alloys) and part-B of the said Appendix
deal with raw materials (Iron and Steel and Ferro-Alloys).
Part-A
of Appendix 5 contains the list of items import of which is canalised through
public sector agencies. As a result of the aforesaid provision contained in
sub-para (10) of the para 218, the petitioners who were granted Additional licences
prior to April 1, 1988, cannot avail the flexibilities in import of items
granted under 242 clauses (ii) and (iii) of sub para (4) of para 215 of the
Import Policy 1988-1991.
On
behalf of the petitioners it has been urged by Shri Salve that sub-para (10) of
para 218 of the Import & Export Policy 1988-1991 arbitrarily discriminates
between Export Houses who were issued Additional licences prior to April, 1
1988, and Export Houses who were issued Additional licences on or after April
1, 1988 in as much as the Export Houses who were issued Additional licences
prior to April 1, 1988, on the basis of exports made during 1986-87 or earlier
periods have been denied the facilities which have been given to Export Houses
who were issued Additional licences on or April 1, 1988, on the basis of
exports made during the period subsequent to 1986-87. It has been submitted
that all Export houses who have been granted Additional licences constitute a
single class and that there is no basis for classifying such Export Houses into
two different categories on the basis of the date of issuance of the Additional
Licences or on the basis of the period of the exports against which such licences
have been issued and that such a classification has no connection whatsoever
with the object sought to be achieved by the Import & Export Policy
1988-91.
On
behalf of the respondents it has been submitted by the learned Additional
Solicitor General that there is no similarity between the petitioners who have
been granted Additional licences on the basis of their exports made during the
period 1977-78 in accordance with the Import Policy 1978-79 and the Export
Houses who would be granted Additional licences on or after April 1, 1988,
under the Import & Export Policy 1988-91 inasmuch as the conditions of
eligibility for grant of such licences and the value of licences under the
Import & Export Policy 1978-79 were quite different from those contained in
the Import & Export Policy 1988-91. It has been urged that under Import
& Export Policy 1978-79 Additional licences were to be given on the basis
of one third of the f.o.b. value of the exports made in 1977-78 whereas under
Import & Export Policy 1988-91 Additional licences are to be given on the
basis of not foreign exchange earnings from the exports actually made and the
value of such Additional licence is only 10 to 12% of the net foreign exchange
earnings.
As
regards the right to equality guaranteed under Article 14 the position is well
settled that the said right ensures equality amongst equals and its aim is to
protect persons similarly placed against discriminatory treatment.
It
means that all persons similarly circumstan- 243 ced shall be treated alike
both in privileges conferred and liabilities imposed. Conversely discrimination
may result if persons dissimilarly situate are treated equally. Even amongst
persons similarly situate differential treatment would be permissible between
one class and the other. In that event it is necessary that the differential
treatment should be founded on an intelligible differentia which distinguishes
persons or things that are grouped together from others left out of the group
and that differential must have a rational relation to the object sought to be
achieved by the statute in question.
The
petitioners, in order to successfully invoke the right guaranteed under Article
14 of the Constitution, will have to establish that they and the Export Houses
which were issued Additional licences under the Import Policy 1988-91 are
similarly situate. A close examination of the Import & Export Policy
1978-79 under which the petitioners have been granted the Additional licences
and the Import & Export Policy 1988-91 shows that there is material
difference between the conditions for grant of Additional licences under Import
Policy 1978-79 and the conditions for grant of such licences under the Import
Policy 1988-91 and it cannot be said that the petitioners who have been granted
Additional licences under the Import & Export Policy 1978-79 and the Export
& Import Policy 1988-91 are persons similarly circumstanced.
Under
the Import & Export Policy 1978-79, there were two requirements for grant
of Additional license: one was the condition as to eligibility for registration
as an Export House and grant of Export House Certificates; and the other was
the basis for issuing the Additional licences to Export House which had been
granted Export House Certificates. In Para 165 of the said Policy eligibility
for grant of Export House Certificates was to be determined on the basis of the
export actually made in the three year base period 1975-76, 1976-77 and 1977-78
and in para 166 it was laid down that annual average f.o.b. value of exports in
the prescribed base period of select products should not be less than Rs. One crore
or those of non-select products Rs. Five crores, but in the case of a small
scale unit or a consortium of small scale units, the said minimum limit was
reduced to Rs. 25 lakhs for select products and Rs. 2 crores for non select
products. In para 176 of the said Policy it was laid down that the value of the
Additional licences to be granted for 1978-79 would be calculated at one third
of the f.o.b. value of the export of select products made in 1977-78 and
manufactured by the small scale and cottage industries 244 plus 5% of the
f.o.b. value of other exports of select products made in the same year. In
other words, under the Import & Export Policy of 1978-79 the basis for
grant of Export House Certificate as well as grant of Additional licences to
Export Houses was the f.o.b. value of the exports.
Under
the Import & Export Policy 1988-91 provision with regard to eligibility for
the grant of Export House/Trading House Certificate is contained in para 212
which prescribed that the said eligibility shall be determined on the basis of
the net foreign exchange (NEF) earnings from the export actually made in
preceding three licensing years termed as 'the Base period'. The expression
'net foreign exchange earnings' has been defined as the total f.o.b. value of
admissible exports minus the c.i.f. value of Advance/Imprest (including Diamond
Imprest/DTC Imperest) Licences/Import- Export Pass Books (excluding Special-Imprest
Import-Export Pass Book) if any issued, and the REP licences issued or the
eligibility thereto, during the preceding three licensing years. Among the
conditions for eligibility for grant of such Certificates are that the annual
average NFE earnings in the prescribed base period should not be less than Rs.
2 crores in the case of Export House and Rs. 10 crores in the case of Trading
Houses and the NEF earnings in none of the three years of the base period
should be less than 25% of the minimum average NFE earnings prescribed. For
determining the eligibility of the products manufactured by small scale and
cottage sector industries are to be reckoned at twice the actual NFE earnings.
In para 215 of the said Policy, it is providedthat the Export House/Trading
House would be eligible to Additional licences on the basis of the admissible
exports made in the preceding licensing year and that the value of these licences
will be calculated at 10% of the NFE earnings on the total eligible exports
made in the preceding licensing year and that this percentage shall be 12% in
cases where an Export/Trading House is able to achieve a minimum growth of 10%
in term of NFE realisation in the previous year, over and above the year preceding
the same. This indicates that under the Import & Export Policy 1988-91 for
the purposeof grant of Export House Certificate as well as Additional licences
the emphasis is on the net foreign exchange earnings made by the Export House,
which means that the value of the imports made by the Import House for the
purpose of exporting goods is to be excluded from the f.o.b. value of exports.
That apart even the value of the Additional licences which can be issued under
the Import & Export Policy 1988-91 on the basis of NFE earnings is much
less viz. 10% as against 33.33% of f.o.b. value under the Import & Export
Policy 1978-79. The said 10% value can be 245 increased to 12% in cases where
the Export House is able to achieve a minimum growth of 10% in terms of realisation
in the previous year, over the above the year preceding the same.
The
aforesaid examination of the provisions contained in the Import & Export
Policy 1978-79 and the Import & Export Policy 1988-91 shows that while in
the Import & Export Policy 1978-79 the emphasis was only on the f.o.b.
value
of exports without taking into account the outgo of foreign exchange in
importing the goods required for achieving the export by an Export House and
Additional licences were granted for a much larger amount at a high percentage
on the basis of the f.o.b. value of the exports, in the Import & Export
Policy 1988-91 there is a more realistic appraisal of actual benefit to
country's economy by the exports by taking into account the net foreign
exchange earnings after deducting the value of the imports and additional licences
are issued on the basis of the net foreign exchange earnings for a much lesser
value on a smaller percentage.
The
petitioners who were granted Additional licences to the extent of 33.33% of the
f.o.b. value of the exports made them during the year 1977-78 cannot,
therefore, be said to be persons similarly circumstanced as Export House who
exported goods in the year 1987-88 and in subsequent years and obtain
Additional licences for a much lesser value under the Import Policy 1988-91 on
the basis of the net foreign exchange earnings.
The
provisions conferring flexibility in the matter of imports contained in sub-para
(4) of para 215 of the Import & Export Policy 1988-91 are intended to give
an incentive to Export Houses to increase the exports in a way as to enhance
the net foreign exchange earnings of the country. The petitioner were no
granted Additional licences on the basis of net foreign exchange earnings and
they have secured the Additional licences on the basis of the f.o.b. value of
the exports, without taking into account the value of the goods imported by
them for achieving the exports. They cannot claim to be entitled to the same
facilities that have been provided to Export Houses who are granted Additional licences
under the Import & Export Policy 1988-91.
Shri
H.N. Salve, has, however, urged that in view of the decision of this Court in
D. Navinchandra & Co. case (supra) the Export Houses who were granted
Additional licences under the Import & Export Policy 1978-79 have to be
treated at par with Export Houses who have been granted Additional licences
under the Import & Export Policy for the subsequent years and since there
has been relaxation in the matter of policy of canalisation of imports under
sub-para (4) of 246 para 215 in respect of Additional licences granted to
Export Houses under the Import & Export Policy 1988-91, the petitioners are
also entitled to a similar relaxation. We are unable to agree with this
contention. In D. navinchandra & Co.
case (supra) this Court has not laid down that Export Houses, like the
petitioners, who are granted Additional licences on the basis of the order
Dated April 18, 1985, are to be treated at par with
Export Houses who are granted Additional licences under Import & Export
Policy prevalent at the time of import. In that case this Court, while
explaining the background in which the order dated April 18, 1985, was passed,
has observed:
"It
has to be borne in mind that basic background under which the Rajnikant's
decision was rendered, the Export Houses had been refused Export House
Certificates because it was insisted that they should have diversified their
export and that was a condition for the grant or entitlement of an export house
certificate. it was found and it is common ground now that was wrong.
Therefore, the wrong was undone. Those who had been denied Export House
Certificates on that wrong ground were put back to the position as far as it
could be if that wrong had not been done. To do so, the Custom authorities and
Govt. authorities were directed to issue necessary Export House Certificates
for the year 1978-79 though the order was passed in April, 1985. This was a
measure of restitution, but the Court while doing so, ensured that nothing
illegal was done." (P.1000) After referring to the decision in Raj Prakash
Chemicals Ltd. (supra) this Court has stressed:
"The
items had to pass to two tests, firstly, they should have been importable under
the import policy 1978-79 and secondly they should also have been importable
under the import policy 1985-88 in terms of the Order dated 18th April, 1985,
and if one may add, in such terms 'in accordance with the import rules' whether
canalised or not canalised." (P. 1001) This Court has gone on to emphasise:
"It
must be emphasised that in the Order dated 18th April, 1985, this Court did not
do away with canalisation. That 247 was not the issue before this Court. The
expression 'whether canalised or not canalised' was to include both. This Court
did not say that canalised items could be imported directly by the importers
ignoring the canalisation process. We are of the opinion that this Court did
not say that canalisation could be ignored. That was not the issue. High public
policy, it must be emphasised, It involved in the scheme of canalisation."
(Pages 1001-2) Shri Salve has placed reliance on the following observations of
this Court in this case:
"
Canalised items are those items which are ordinarily open to import only
through a public sector agency. Although generally these are importable through
public section agencies, it is permissible for any import policy to provide an
exception to the rule and to declare that an importer might import a canalised
item directly.
It is
in that sense and that sense only that the Court could have intended to define
the entitlement of diamond exporters. They would be entitled to import items
which were canalised or not if the import policy prevailing at the time of
import permitted them to import items falling under such category. This was
also viewed in that light in the case of Indo Afghan Chambers of Commerce
(supra)." These observations only indicate that import of the canalised
items under Additional licences issued to Export Houses, like the petitioners, would
be permissible if the import policy prevailing at the time of import permits
them to import such items. In other words it would depend on the terms of the
import policy prevailing at the time of import.
The
decision in Indo Afghan Chambers of Commerce v. Union of India, [1986] 3 S.C.R.
88 to which reference has been made, is also to the same effect. In fact case
Export Houses, like the petitioners, wanted to import to Dry Fruits under the
Additional licences issued to them. Under the Import POLIcy 1985-88 prevailing
at the time of such import, the import of Dry Fruits was permissible only by
dealers engaged in the trade of stocking and selling Dry Fruits. It was held
that the Export Hoses could not import Dry Fruits in view of the said
restriction placed in the Import Policy 1985-88. The decision of this Court in
D. Navinchandra & Co. case (supra) reiterates that the rights of the
petitioners under the Additional licences issued to them would be governed by
the terms of the import policy prevailing at the time of import.
248
Here we find that in the Import & Export Policy 1988-91 there has been
relaxation to a limited extent in respect of import by Export Houses who are
granted Additional licences under the said Policy on the basis of their exports
during that period 1987-88 and subsequent periods. Since the basis for the
grant of Additional licences which are entitled to this relaxation is different
from the basis on which Additional licences were granted to the petitioners,
the petitioners cannot claim the benefit of the same relaxation and assail the
validity of sub-para (10) of para 218 of the Import & Export Policy
1988-91.
Shri
Salve has invited our attention to the Import Licence dated November 21, 1988
issued in favour of M/s. Suraj Diamonds Industries Pvt. Ltd wherein it is
stated that this licence is valid for import of items as per para 215 of Import
& Export Policy 1988-91 subject to restrictions/conditions laid down
therein. It has been submitted that this licence has also been issued under the
Import & Export Policy 1978-79 on the basis of the f.o.b. value of exports.
It has been urged that the petitioners as well as the said license, namely,
M/s. Suraj Diamonds Industries Pvt. Ltd. are persons similarly situate and
whereas M/s. Suraj Diamonds Industries Pvt. Ltd. have been granted an
Additional licence whereunder, it is permissible to import items as per para
215 of the Import & Export Policy 1988-91, the said facility has been
denied to the petitioners and that the petitioners have been subjected to
arbitrary and hostile discrimination. The learned Additional solicitor General
had pointed out the said licence to M/s. Suraj Diamonds Industries Pvt. Ltd.
was used under a mistake and the said mistake has been rectified on 2nd
December, 1988, i.e., within 10 days of the issue of the said licence. In view
of the fact that the licence issued in favour of M/s. Suraj Diamonds Industries
was issued under a mistake and the said mistake has been rectified, it cannot
be said that the petitioners have been subjected to hostile discrimination vis-a-vis
other Export House similarly situate.
Before
we conclude, we may take note of the recent decision of this Court in B. Vijay
Kumar & Co. etc. v. Collector of Central Excise and Customs, [1991] 1 Scale
33.
The
appellants therein had been granted Additional Import licence in pursuance of
this Court's order dated April 18, 1985 in Rajnikant Brothers, case (supra) and
had imported canalised items under the said licence. The goods were not cleared
by the customs authorities and the Collector of Customs imposed penalty and
passed orders for confiscation of the goods and permitted the appellants to
take delivery of good on payment of redemption fine. The Customs, Excise &
Gold (Control) Appellate Tri- 249 bunal (hereinafter referred to as 'the
Appellate Tribunal') on appeal, while upholding the order of imposition of
redemption fine, set aside the order of Collector imposing penalty. In view of
the special facts and circumstances of the case and specially having regard to
the findings of the Appellate Tribunal that the appellants imported canalised
items bona fide, this Court set aside the orders of the Collector and the
Appellate Tribunal with regard to confiscation of goods and imposition of
redemption fine without dealing with the submissions of learned counsel for the
parties with regard to the interpretation and the effect of the earlier
judgments of this Court in Raj Prakash Chemicals case (supra), Indo-Afghan case
(supra), Godrej Soap case (supra) and D. Navinchandra & Co. case (supra).
This
decision is, therefore, a decision based on the facts of that particular case
only.
As a
result of the aforesaid discussion it must be held that the petitioners have
failed to make out a case for interference by this Court under Article 32 of
the Constitution.
As
indicated earlier, the licences issued to the petitioners were valid for a
period of twelve months and the said period has expired during the pendency of
these writ petitions. By order dated may 3, 1988, this Court, whiledirecting
that notice be issued had further directed that the matter be listed on July
20, 1988, and in these circumstances this Court did not pass any interim order
for stay. The writ petitions could not, however, be heard as per the aforesaid
directions. Since the matter has been pending in this Court and the Additional licences
issued to the petitioners have expired in the meanwhile we consider it
appropriate that the period of validity of the said licences should be extended
so that the petitioners can avail the same and are able to import the goods
which can be so imported under the prevailing Import Policy. It is, therefore,
directed that the period of validity of the Additional licences that have been
granted to the petitioners under Import & Export Policy 1978-79 may be
extended by six months from the date of such extension.
Subject
to the aforesaid observations, the writ petitions are dismissed. The parties
are left to bear their own costs.
T.N.A.
Petitions dismissed.
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