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Delhi High Court
Ganesh Rolling Mills vs Union Of India on 1 January, 1800
Equivalent citations: 1990 (45) ELT 403 Del
Author: S Chadha
Bench: S Chaddha

JUDGMENT

S.S. Chadha, J.

1. The two writ petitions, namely, C. W. Ps. 1974 and 2133 of 1984 under Article 226 of the Constitution of India challenge the fact of respondents 2 and 3 in not granting and/or disposing of the applications of the petitioners for grant of permission to direct import of carbon steel re-rollable scrap, in terms of para 73(2) of Import Export Policy of AM – 1984 read with paragraph 155(1) of Hand Book of Import Export Procedure AM – 1984.

2. I will take the facts from C. W. P. 1974/84. The petitioner is engaged in the manufacturing of M. S. Rounds, Flats Angles, Challans etc. The raw material for the manufacturing of the aforesaid of the aforesaid is carbon steel re-rollable scrap. It is alleged in the writ petition that to know the requirement, an Assessing Committee was appointed and assessed the capacity for a consumption of each of the units and was certified. The petitioner’s in C. W. P. 1974/84, capacity of consumption was assessed to the tune of 16,700 M. Ts. per annum and this was the decision of the Technical Committee appointed by the Central Government. The same was published and the name of the petitioner appears at page 201 at the said publication whereas the assessed capacity for consumption has been shown as 16700 M. Ts. per annum. In case of petitioner, in C. W. P. 2133/84, the capacity was assessed to the tune of 2900 M. Ts. per annum. He has filed a copy of the capacity certificate dated May 26, 1982 which states that based on the capacity assessed by the Technical Committee on re-rolling industry, the capacity of the firm is assessed as 2900 metric tones only per annum.

3. During the policy periods up to AM – 1983, re-rollable scrap was under O. G. L. by means of public notice dated November 17,1982 the said item was canalised agency which was specified as Metal Scrap Trading Corporation The import and export policy for the year AM-1984 was announced. The provision relating to canalisation of imports are contained in paras 66 to 76. Under para 68 of the policy, the eligible actual users had to register their twelve months months requirements with the concerned canalising. They had to furnish earnest money calculated at 2% of the sale valve of the quantity so registered or Rs. 50,000/- whichever is less. Under para 70, in case of such items as are produced indigenously, the canalising agency had to try to meet the registered requirements from indigenous supplies, partly or wholly, instead of imports, Under para 73(2) the importers would be allowed to have import of license to the extent of 25% of the c.i.f. value of their actual consumption of that item imported during the year 1982-83, Para 155(1) of the Hand Book of Import – Export Procedures, AM-1984 is the relevant para for my purpose and reads as under :-

“An Actual User, while registering his requirements for allotment of a canalised item, should indicate to the canalising agency the phased programme of delivery on a quarterly basis or monthly if so laid down by the canalising agency. The canalising agency will scrutinies such registration and indicate within a period of 90 days, the arrangements it would be able to make for effecting supplies. In case, the canalising agency does not (a) give any such indication for a period of delivery at least three months ahead from the date of registration or (b) effect deliveries as registered with it and for which it has or could have taken financial cover as laid in the Import-Export Policy 1983-84, the Actual User may approach the CCI & E (monitoring Committee), New Delhi, for appropriate relief by way of direct imports, Direct Imports may also be allowed to Actual Users with the permission of C. C. I. & E., New Delhi on the basis of No Objection Certificate issued by the canalising agency where C. C. I & E is satisfied that the canalising agency has not been or may not be able to supply the material for no the part of the Actual User.

4. In terms of the Import – Export policy AM – 1984 the petitioner made an application in the prescribed form of June 30, 1983 along with necessary annexures for registering its requirements with Metal Steel Trading Corporation (for short called MSTC) The petitioner had also given its demand of the phased requirements as 4000 M. Ts per quarter The application of the petitioner was acknowledged by MSTC and certain clarifications were sought which were later supplied

5. By letter dated september 12, 1983; MSTC wrote to the petitioner that they had studied petitioner’s phased requirement for the current year of 16,000 tonnes and stated that the materials sought to be imported by the petitioner were than available with the following steel plants of the Steel Authority of India Ltd.

1. M/s. Rourkela Steel Plant.

2. M/s. Durgapur Steel Plant.

3. M/s. Bokaro Steel Plant.

The petitioner was directed to approach the above mentioned steel plants for his requirements of re re-rollabl scrap of carbon steel The petitioner wrote identical letters to the aforesaid three steel plants giving the requirements of re-rolled scrap and sought information regarding the allotment of the same type; price and quantity of material proposed to be allotted The petitioner also wrote to MSTC informing them of the requisition made with the three steel plants of the Steel Authority of India Ltd. (for short called SAIL) and at the same time requesting MSTC to consider the issue of No objection Certificate at least 50% of the petitioners capacity in order to enable the delay/scarcity in the procurement of indigenous raw material. The petitioner also in formed the Ministry of steel and Mines of these facts and seeking import of at least 75% of the capacity.

6. SAIL by their letter dated September 28, 1983 informed the petitioner that re-rollable scrap is canalised through M/s. India Re- Rollers’ Association (Chatterjee International Center) and M/s. Steel RE-rolling Mills’ Associations for his requirement. The petitioner wrote to MSTC that the SAIL had directed the petitioner to approach AISRA regarding the allotment of annual demand and at at the same time pointing out that AISRA had not allotted even a single wagon material of re-rollable scrap for past 12 months to the petitioner. The petitioner, however, registered its claim with the AISRA also in the letter dated October 7, 1983. AISRA wrote to the petitioner in the letter dated November 2, 1983 expressing their inability to recommended the name of the petitioner to any plant for allotment. They pointed out that RSP offered them approximately 39,874 M. Ts. of defective and re-rollable against the future risings during the period 1983-85 and this quantum of bulk allotment from RSP was too meager to meet the requirement of the re- rolling mills enlisted with that Association.

7. The petitioner again approached MSTC reiterating all these facts and prayed for the grant of `No Objection Certificate’ for 50% at least of their capacity in order to enable them to start to its bookings. Representations were also made in the letters to the Hon’ble Minister of Steel and Mines and Hon’ble Minister of Commerce in the letters dated November 11, 1983 and November 14, 1983 respectively. A representation dated November 5, 1983 was also addressed to the Secretary, Commerce and Industries Department. In each of the representations, the petitioner detailed the facts the facts of the application for registration giving phased requirements, the petitioner being directed to approach SAIL for requirement of re- rollable scrap, the SAIL directing the petitioner of AISRA, AISRA expressing inability to recommend the allotment of any material to the petitioner and the petitioner ultimately approaching MSTC for ‘No Objection Certificate’ for 50% at least of the capacity. By letter dated November 23, 1983, the petitioner also approached the Monitoring Committee of the Government of india in the Ministry of Commerce for direct import of re-rollable scrap on actual user condition as para the provision of para 155(1) of the Hand Book of Import Export Procedure of AM – 1984. The petitioner also sent a reminder on February 1, 1984 to the Monitoring Committee and a detailed representation in the letter dated February 15, 1984 to Shri P. C. Jain, Chief Controller of Imports & Exports.

8. It now appears from the material produced by the respondents that the case of the petitioners in both the writ petitions came up for consideration before the Monitoring Committee’s meeting of direct import of canalised items held on March 21, 1984. Case No. 29 related to M/s. Ganesh Steel Rolling Mills, Madras and Case No. 30 related to M/s. Raj Laxmi Enterprises, Madras. The minutes record that SAIL informed the Committee that these two parties had registered their demand with their Branch Office at Madras but had not lifted any material from them during the last one year, that the SAIL further informed that they are in a position to supply to these parties re- rollable scrap, that on a query from the Chairman, SAIL affirmed that the material offered by them is covered by the definition of re- rollable scrap as given in the current import policy and that the Committee decided to reject the request of the parties as SAIL was in a position to supply the material.

9. The Chief Controller of Imports & Exports (for short CCI & E) by letter dated April 12, 1984 informed the petitioner that as SAIL was in a position to supply the re-rollable scrap, the petitioner was advised to approach SAIL for his requirement. The petitioner by his letter dated April 18, 1984 approached SAIL for direct dispatch of R & SM cuttings from Bhilai Steel Plant to Korukkupet Goods shed. By letter dated May 8, 1984, SAIL informed the petitioner that they would be able to supply R&SM cuttings as a direct dispatch to Korukkupet. The petitioner was advised to make necessary financial arrangement by making confirmed irrevocable without recourse with automatic revolving limit letter of credit for 500 M. Ts. at one time. The petitioners was also informed that in order to cover possibilities of the plant dispatching from wagons L/c should cover dispatches either in piecemeal or in a rake form. The petitioner was directed to make the financial arrangement based on the price of the material which was mentioned as Rs. 2,905/- per M. T. as direct dispatch of R&SM cuttings. The petitioner got opened a revolving L/c dt. May 11, 1984 for an amount of Rs. 20 lacs covering the price of about 600 MT through its Bankers Indian Overseas Bank favoring SAIL. The SAIL with their office at Madras by their advice dated May 28, 1984 acknowledged the letter of credit. An advice was sent for the expected dispatch of 600 MT of rolls and structural cuttings from Bhilai Steel Plant directly to Korukkupet Goods shed.

10. In spite of all these steps being taken by the petitioner, no supply was made. The petitioner approached CCI&E in the letter dated June 13, 1984 requesting for an appropriate for direct import of re- rollable scrap as actual user as per the provision of Chapter VI, Para 155 (1) of the Hand Book of Import-Export Procedures AM – 1984. A similar representation was addressed to the Ministry of Steel praying for direct import of re-rollable scrap. Apart from acknowledging the representations, no action was taken. The petitioner then filed the present writ petition on August 14, 1984.

11. Subsequent to the filing of the writ petition, the case of the petitioner was again placed before the Monitoring Sub-Committee on direct of canalised items in the meeting held on October 15, 1984. In case of Shri Ganesh Steel Rolling Mills, Madras, the minutes record that it was pointed out by the Chairman that the party has gone to the Court on account of non-supply of material by SAIL and CCI&E and Monitoring Committee has also been imp leaded as one of the respondents, that the case was discussed earlier by the Monitoring Committee in its meeting held on March 21, 1984, that as SAIL WAS reported to be in a position to supply the material, it was decided to reject the party’s request for direct import and the party was accordingly advised to contact SAIL for supply of the material and that since SAIL are not in a position to meet the full requirement of the party, it was decided by the Committee to grant a direct import license to the party for import of re-rollable scrap.

We may record here that during the tendency of the writ petition, SAIL had made a supply to the tune of about 548 MT against L/c dated May 11, 1984. The petitioner has also been granted an import license for direct import of 600 MT though due to some clerical mistake in the license, the same has been surrendered to the CCI & E for making correction therein, but no import has been effected against that import license.

12. As pointed out earlier MSTC is under an obligation to indicate within 90 days of the registration with the canalising agency, the arrangement it would be able to make for effecting supply. In case the canalising agency does not give any such indication for a period of delivery of at least three months ahead from the date of registration or effect deliveries as registered with it and for which it has or could have taken financial cover as laid down in the Import-Export Policy for AM-1984, the actual user may approach the CCI&E (Monitoring Committee) for appropriate relief by way of direct imports. In these cases, not only MSTC did not give any indication for period of delivery but it failed to effect the supply through SAIL. SAIL and then AISRA and again SAIL ultimately expressed their inability to meet the requirements of the petitioner of the rerollable scrap required by it as an actual user. The petitioner then approached in the letter dated November 23, 1983 CCI & E (Monitoring Committee) for direct import of the re-rollable scrap to the tune of its capability. When the matter came up before the Monitoring Committee on March 21, 1984, in my opinion, SAIL mislead the Monitoring Committee by making a statement that these two parties had registered their demand with their Branch Office at Madras but had not lifted any material from them during the last 12 months. In spite of my repeated questions to the learned counsel for the respondents, he has not been able to show me either from the record of the case or from the original files whether any arrangements were made for effecting supplies to the two petitioners or any allotments of any material was made in the relevant period or any intimation was sent to the petitioners to lift that material and the petitioner failed to do so. Apart from it the refusal to grant license for direct import by the Monitoring Committee is not for the alleged reason that the petitioner did not lift any material but is on the ground that SAIL is in position to supply the material.

13. Immediately the petitioner received letter dated February 12, 1984 from CCI&E directing the petitioner to go to SAIL for requisition to supply re-rollable scrap, the petitioner again approached the SAIL. The SAIL authorities desired by their letter dated May 8, 1984 that a confirmed L/C for about 500 MT be opened at one time and the value was shown to the tune of Rs. 2,905/- per MT. The petitioner immediately opened a confirmed revolving L/C of Rs. 20 lacs to cover the price of about 600 MT at one point of time. There was no further requirement or duty of the petitioner. He was entitled to receive the allotments and dispatch of the re-rollable scrap periodically. Except for the supply made in January, 1985 during the pendency of the writ petition of a quantity of 540 MT, no material has been delivered to the petitioner.

14. One of the contentions raised at Bar by the learned counsel for the respondents in that capacity of the petitioner (C. W. P. 1974/84) of consumption was never assessed to the tune of 16,700 MT per annum. Except for the bald statement at the Bar, there is no foundation for this argument. The petitioner had clearly made averment in para 5 of the writ petition that to know the requirements, Assessing Committee was appointed and assessed the capacity of the petitioner. The decision of the Technical Committee appointed by the Central Govt. is stated to have been published and the name of the petitioner appears on page 201 of the said publication whereas the assessed capacity for consumption has been shown as 16,700 M. T. per annum. In the counter- affidavit in the corresponding paragraph, the averment is that the respondents have no comments to offer regarding the same. It has not been demonstrated by the production of the publication that the statements made by the petitioner in the writ petition are incorrect.

15. So far as the case of the petitioner in C. W. P. 2133/84 is concerned, there is no counter-affidavit. The averments made by that petitioner are not controverter and would be deemed to be admitted by the doctrine of non-traverse. Besides that, the petitioner has placed a photostat copy of the capacity certificate dated May 26, 1982 issued by the General Manager, District Industries Center, Madras stating that based on the capacity assessed by the Technical Committee, the capacity of the firm is assessed at 2,900 M. T. only per annum. In my view, a decision has already been taken by the Technical Committee appointed by the Central Government for assessing the capacity for consumption of the two petitioners. If there is any decrease in the capacity for consumption, it would be open to the Government to make a fresh assessment but that should not stand in the way of making allotments to the petitioner to meet its requirement of industries.

16. The policy behind the provisions laid down in para 155(1) of the Hand book of Import-Export Policy AM-1984 is that the actual user should not be deprived of the right to receive any material. A period of 90 days is prescribed after the date of registration for making arrangements for effecting the supply. If the canalising agency is unable to make arrangements for effecting supplies within the period of 90 days and sits over the matter, then the very purpose of fixing of time in para 155(1) would be defeated. If the period of 90 days expired, then it gives a cause to the petitioner to approach CCI&E (Monitoring Committee) for appropriate relief by way of direct import. This procedure laid down is meant to expedite the provision of the raw material to the actual users and not defeat to starve the industry of the raw material. The sequence of events pointed out above by me shows that the petitioners in the two cases had a raw deal by the respondents. The canalising agency after receiving the requirements of the petitioner directed them to SAIL who in turn directed them to AISRA who ultimately expressed their inability to make any recommendation in case of the petitioner for allotment of the raw material. The petitioner then approached the Monitoring Committee for direct import of re-rollable scrap to the tune of its capacity when again the SAIL made a tall claim of being in a position to supply re- rollable scrap to the petitioner. Even after registration and completing all formalities on May 11, 1984, all that the petitioner has been able to produce is only 540 MT against its assessed capacity of 16,700 MT. The Import Export Policy of AM-1984 in para 71 says that the period for delivery of the quantities so registered may extend beyond the period of the policy. It is conceded by the respondents that the import of the raw material required by the petitioner is not a banned item even now and its import is only canalised. Some difficulty was expressed by the learned counsel for the respondents about the availability of the foreign exchange but that cannot stand scrutiny. The foreign exchange is always limited to this country as was in the year AM – 1984. despite that, the Government announced the policy of canalising of import of these items. If the foreign exchange resources are limited, it would be open to the respondents to make a prorata reduction of the quantities but that is no ground to make a total refusal of the grant of import license.

17. For the above reasons, the writ petitions succeed and are allowed. It will be open to the respondents to re-assess the capacity for consumption of the petitioner per annum by a duly appointed Technical Committee for the purpose after affording an opportunity of hearing to the petitioner. The respondents shall within 90 days of the passing of this order make arrangements for the supply of the carbon steel re- rollable scrap required by the petitioner in his industries from indigenous sources either through SAIL or through one of the steel plants of SAIL. The arrangement for the supply of the indigenous raw material should be communicated to the petitioner within 90 days for the supplies for the next one year as compensatory for the period AM- 1984. If the respondents are unable to effect the supplies from the indigenous sources in this country, then the respondents shall issue a direct import license within two months after 90 days to the petitioner for carbon steel re-rollable scrap to the extent of the assessed capacity of the consumption of the petitioner less the quantity already received by the petitioner. The import license for 600 MT already issued to the petitioner be returned within two weeks from today. On the facts and circumstances of the case, I make no order as to costs.


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