Posted On by &filed under Delhi High Court, High Court.


Delhi High Court
Northern Plastics Limited vs Union Of India on 1 January, 1800
Equivalent citations: 1990 (45) ELT 538 Del
Bench: S Sapra


ORDER

1. By this order, I propose to dispose off an application, being C. M. No.2481 of 1989, filed by M/s. Hindustan Photo Films Mfg. Co. Ltd., respondent No.4, thereby claiming for following reliefs:

(a) The Customs Authorities should be directed to take into its control and seize the goods illegally cleared by the petitioners forthwith and they should not be permitted to remove the goods from Bombay and the Customs authorities should be directed not to release the balance quantities of the material;

(b) The petitioners should be restrained from removing the goods from Bombay Part and/or clear the goods from the customs authorities and if the goods are already removed, the petitioners should be directed to hand over the same to the customs authorities and should not utilise the goods and/or dispose off the goods in any manner whatsoever;

(c) Ex-parte order in terms of prayer (a) hereinabove; and

(d) Appropriate action should be taken against the petitioners as well as against the customs authorities for violation of the orders of this Hon’ble Court.

2. Vide order dated June 9, 1989, P. N. Nag, J. restrained the petitioner from removing the goods from Bombay Port or clearing the goods from the Customs Authorities. It was further directed that in case the goods had already been removed, then the same would be taken possession by the Bombay Customs Authorities and same be put in joint custody of the Customs Authorities and petitioner.

3. Petitioners have filed reply to the application and have prayed that the stay be vacated and the application, filed by respondent No.4, be dismissed.

4. For better appreciation of the respective contentions, made by learned counsel for parties, it will be useful to refer to in brief the facts of the case.

5. Petitioners filed a writ petition No.2021 of 1988, thereby praying the grant of following reliefs;

(i) This Hon’ble Court be pleased to issue appropriate writ, order or directions while directing the respondents to produce and/or cause to produce all relevant record in relation to issuance of Press Note dated 8-7-1986 and Notification dated 18-7-1986 and all relevant record pertaining and relating to the grant of COB license to the petitioner and for grant of necessary permission to petitioner to avail the benefit of the exemption notification dated 7-7-1988 or any other Notification which may be issued thereafter. Respondent Authorities be further directed to produce or cause to produce all relevant record relating to the grant of license and the industrial activities which are in progress and may be carried out by M/s. Hindustan Photo Films, Madras and to produce all record as to under what circumstances the said Public Undertaking is being benefited by notification dated 7-7-1988. Further the respondent authorities to produce all record, relating to issuance of exemption Notification No. 216/88 – Cus., dated 7-7-1988;

(ii) This Hon’ble Court be pleased to issue writ of Mandamus or any other appropriate writ order or directions while directing the respondent to issue COB license in favor of the petitioner No. 1 for all the aforesaid items & Industrial activities for which application has been made by the petitioner vide application dated 8-12-1986 and was acknowledged by means of the respondents receipt[t dated 16-12- 1986 as per Annexure P. 15 effective from 8-12-1986 (dated of application); and

(iii) This Hon’ble Court be pleased to issue writ of Mandamus or any order appropriate writ or directions while quashing condition No. 2 Of the Customs Notification No. 216/88 – Cus., dated 7-7-1988 being ultra vires and unconstitutional”.

6. After the filing of the writ petition and on December 7, 1988, respondent No. 1 issued COB (Carry on business) license to petitioners in respect of Photographic colour paper only. Petitioners moved an application for amendment of the writ petition, so as to include the challenge to the refusal of respondents to grant COB license in respect of the other three items, viz jumbo role of X-ray films, graphic arts film, cinematographic colour films. It was further prayed after amendment that respondents be directed to issue COB license for all the four photographic items.

7. Petitioners also in their application, being C. M. No. 5218 of 1988, filed under Order 6 Rule 17 read with Section 151 C. P. C., Prayed that the Collector of Customs, Bombay, be added as respondent. Application was allowed vide order dated December 8, 1988.

8. In the writ petition, it is alleged that petitioner No. 1 is public limited company and has all specified know-how and all expertise at its disposal to carry on confectioning/slitting of jumbo rolls and related industrial activities. Petitioner No. 1 is engaged in confectioning/slitting of jumbo rolls of the following:

(a) Photographic colour paper;

(b) Graphic art films;

(c) Cinematographic colour films (unexposed) positive;

(d) X-Ray films (medical and industrial).

As per the statutory requirements, petitioner No. 1 approached the Authorities concerned and after making full investigation and satisfying themselves, the Authorities had granted Small Scale Industries Permanent Registration, in its name vide certificate dated August 24, 1985. Petitioner NO. 1 was also ready to go into production for X-Ray films (Medical and Industrial) and cinematographic colour (unexposed) positive by May 22, 1986. Petitioners applied for grant of Carry on Business license on December 8, 1986. Government of India had announced on July 18, 1986 that six months after the notification importation of photo sensitised material would not be allowed except under a license under the I. D. R. Act. Since the application of petitioners was still pending for consideration, petitioners had imported some photographic material and made an application on April 4, 1987 for its clearance as an interim measure. On April 4, 1987, Mr. K. C. Kapoor, Desk Officer in the Department of Industrial Development, informed the petitioners that pending disposal of their application for grant of license, they might carry on business with small scale registration of manufacture of slitting/confectioning of photo-sensitized material and that the Ministry had no objection to the Customs Department clearing the consignment of the jumbo rolls as per prescribed rules.

9. During the pendency of the writ petition, petitioners filed three applications, being C. Ms. No. 4405 of 1988, 5180 of 1988 and 252 of 1989, thereby praying that petitioners be permitted to clear the photographic colour paper, Graphic art films and medical X-Ray films on the payment of concessional rate of duty, under notifications dated July 7, 1988 and September 16, 1988.

10. Vide order dated October 12, 1988, Sunanda Bhandare, J disposed off the application, being C. M. No. 4405 of 1988 and respondents were directed to release graphic art films, imported by petitioners, in terms of the notification dated July 7, 1988. Again, vide order dated December 8, 1988, sunanda Bhandare, J. disposed off the petitioners application, being C. M. No. 5180 of 1988 and directed that the goods, which had already been imported before December 7, 1988, be cleared on payment of duty in terms of notification dated July 7, 1988 and September 16, 1988. These goods were to be cleared under the aforesaid notification, on the payment of concessional rate of customs duty.

11. Vide order dated February 9, 1989, B. N. Kirpal, J. disposed of the application being C. M. No. 252 of 1989 and allowed the reliefs, as prayed for in paragraph 17 (iii) and (iv). In other words, petitioners were allowed to get the release for the goods on payment of concessional rate of customs duty .

12. All the aforesaid three orders were set aside by the Division Bench, vide order dated May 8, 1989, passed in L. P. A. No. 28 of 1989. The Division Bench, while setting aside the orders, requested the learned Single Judge to dispose off the writ Petition itself within a fortnight. The Division Bench further observed that it was not necessary to pass any order for the release of the petitioners goods till the disposal of the writ petition.

13. The present applicant, namely, M/s Hindustan Photo Films Mfg. Company Ltd., a Government of India Undertaking was added as one of the parties by the Division Bench, vide order dated May 8, 1989.

14. It appears that petitioners obtained and purchased the additional licenses from the other export houses in the open market under paragraphs 215 and 215 (6) of the Import and Export Policy for the April 1988 – March, 1991 and cleared the goods from the Customs Authorities, Bombay, after paying the full customs duty.

15. Mr. Mukul Rohtagi, learned counsel for applicant/respondent No. 4, contends that under Section 29-B of the Industrial Development and Regulation Act, petitioners could not import the goods in question and also could not manufacture the goods unless and until petitioners obtain an industrial license under the Act. In the present case, petitioner No. 1 does not have the industrial license for Graphic art films and X- Ray films (medical and Industrial). Hence the import itself was illegal. Even, petitioners do not hold any license to carry on business.

16. In the second place, Mr. Rohtagi contends that in view of the order dated May 8, 1989, passed by the Division Bench in L. P. A. No. 29 of 1989, the goods should not be cleared under any circumstance, till the writ petition is disposed off. Learned counsel has further contended that the release of the goods by the Collector of Customs at Bombay, is illegal and respondent No. 4 has the right to challenge the same by the present application.

17. Mr. C. Ramaswamy, Additional Solicitor General of India, appearing for respondent No. 1 contends that as petitioner No. 1 did not hold the license, either as the actual user or as COB, so the import of the goods in question was illegal and as such,m the goods could not be released by the Collector of Customs, Bombay.

18. Mr. D. Pal, learned counsel for petitioners, contends that in the present writ petition, petitioners have raised the primary issue that they be issued COB license in respect of all the industrial activities, viz (a) Photographic colour paper, (b) Graphic Art Films, (c) Cinematographic colour films (unexposed) positive and (d) X-Ray Films (Medical and Industrial). Petitioners, without waiting for the result of the writ petition, and to get the benefit of clearance of goods on the payment of concessional rate of duty, acquired additional licenses in respect of the goods imported and have cleared the same on Paid of full duty in terms of paras 215 and 216 of the Import-Export Policy, 1988- 1991. He has further contended that assuming for the sake of argument, that petitioner No. 1 is not an actual user (Industrial) within the meaning of para 6 (iii) of the Import Export Policy, 1988-1991 and that petitioners were not entitled in view of the order of the Division Bench to clear the goods at the concessional rate of duty, because the issue as to whether COB license should be allowed to petitioners in respect of all the four industrial activities is still pending before the Court. Then, the question, according to Dr. Pal is whether petitioners, without having COB license or without being an actual user (Industrial), could clear the goods imported on the basis of additional license, which petitioners had acquired and on payment of full Customs Duty.

20. With regard to the observations of the Hon’ble Division Bench, in the order dated May 8,1989, Dr. Pal urges that the controversy in the appeal was whether petitioners could be allowed to clear the goods at the concessional rate of duty. In that context, it was observed that if petitioners were allowed to clear the goods at the concessional rate of duty, then, respondent, No. 4 would be faced with severe competition. If no concessional rate of duty was availed of, any one on the strength of additional license could import the aforesaid articles on payment of full Customs Duty and there was no cut throat competition. According to Dr. Pal, if petitioners had been permitted to clear the goods on concessional rate of duty, then, petitioners would have paid Rs. 58 lacs only as duty. Now, petitioners have paid a sum of Rs. 196 lacks on account of additional customs duty. Thus, substantial amount has been paid in excess of the concessional rate of duty for the clearance and if there is anybody under disability, it is the petitioners.

21. With regard to the orders of the Division Bench, Dr. Pal has further contended that Division Bench was only considering the interim orders passed by the learned Single Judges from time to time, thereby allowing petitioners to clear the goods on payment of concessional rate of duty, in terms of notifications dated July 7, 1988 and September 16, 1988. The Division Bench in its order, nowhere directed that the goods could not be cleared under any circumstances, till the disposal of the writ petition.

22. Dr. Pal submits that petitioners have got cleared the goods independent of the writ petitions. The order of the Collector of Customs at Bombay, in clearing the goods is in no way concerned with the writ petition and that order was passed after considering the telegram, sent by respondent No. 4.

23. The relevant paras of the Import and Export Policy for the year April, 1988 – March, 1991 read as under:

“Additional licenses

215 (1) The Export Houses/Trading Houses will be eligible to Additional licenses on the basis of the admissible exports made in the preceding licensing year. The value of these licenses will be calculated at 10% of the NFE earnings on the total eligible exports made in the preceding licensing year. This percentage shall be 12% in cases where as Export/Trading House is able to achieve a minimum growth of 10% in terms of NFE realisation in the previous year, over and above the year preceding the same. The NFE earnings for this purpose, would have the same meaning as defined in the Note below para 212 (2) (a) above.

(2) The additional licenses will be valid for the import of the following items up to the full value of the license:

(i) Items appearing in Part 1 of List 8, Appendix 6 of this policy; and….

(5) The Export/Trading Houses may also be permitted the clubbing of the flexibility allowed on Additional licenses as per sub-para (4) above, for the import of Non OGL capital goods (other than those in Append is 1 Part A and 8) for import of single integrated plant/machinery including accessories thereof , up to a c.i.f. value not exceeding Rs. 1 crore.

Utilisation of Additional licenses

216. The Additional licenses will be issued in the name of the Export Houses/Trading Houses only and will not be subject to “Actual User” conditions. Except for cases covered by sub-paras (3) and (5) of para 215 above, a license holder may transfer the license in full or in part in favor of any other person.

The transfer of the license will not require any endorsement or permission from the licensing authority. Accordingly, clearance of the goods covered by an additional license issued under this Policy, will be allowed by the Customs Authorities on production by the transfer on only the documents of transfer of the license concerned in his name. Whenever an Additional license is transferred, the transferor should give a formal letter to the transfer, giving full particulars regarding No., Date and Value of the license transferred and the name and address of the transferee.”

24. It is clear that the aforesaid items are appearing in Part 1 of List 8, Appendix 6 of the aforesaid policy. It appears that petitioners purchased/obtained the additional license from the other export houses in the open market, and the goods were cleared by the Collector of Customs at Bombay after the payment of full customs duty. Presumably, this has been done under paras 215 and 216 of the aforesaid policy. Petitioners paid approximately a sum of Rs. One Crore & Ninety lakhs as customs duty. If petitioners were allowed to get clearance of the goods on payment of concessional rate of duty, then, in that event, a sum of Rs. 58 lakhs approximately was to be paid as customs duty. Thus, a sum of Rs. One Crore & thirty eight lakhs has been paid more by petitioners.

25. In the writ petition, petitioners, have claimed various reliefs relating to the grant of COB license and for grant of necessary permission to petitioners to avail the benefit of the exemption notification dated July 7, 1988. Thus, the primary issue, raised by petitioners in the writ petition, is that petitioners be granted COB license in respect of four Industrial activities, as mentioned above. If petitioners succeed in the writ petition, then, petitioners will be liable to import goods on the payment of concessional rate of duty. Thus, in my view, the order of release by the Collector of Customs is independent paras 215 and 216 of the aforesaid policy, is outside the scope of the present writ petition. Whether the order of Collector is legal or not, it is not for this Court to express any opinion on the same, because in my view, that order cannot be challenged in the present writ petition.

26. In L. P. A. No. 28 of 1989, the three orders, dated October 12, 1988, December 8, 1988 and February 9, 1989 were under challenge. Under these order, respondents were directed to clear the goods on the payment of concessional rate of duty under Notifications dated July 7, 1988 and September 16, 1988. The Division Bench, was thus considering these three orders and set aside the same vide order dated May 8, 1989. The Division Bench thus held that it was not necessary to pass any order for the release of the goods, till the disposal of the writ petition. No order of release has been passed by the Court. What has happened is that the Collector of Customs has released the goods, presumably under paras 215 and 216 of the aforesaid policy, on the payment of full customs duty, I am not expressing any opinion on the legality or otherwise of the order, passed by the Collector of Customs, Bombay.

27. Under the circumstances, I am of view that the present application, filed by respondent No. 4 is not maintainable. C. M. 2481 of 1989 is dismissed. The order dated June 9, 1989 is vacated.

CMS 2628 to 2633 of 1989

28. These applications have been filed today in the Court with leave of the Court. The same have been take non record. The common prayer in these applications is that the judgment in C. M.2481/89 be not pronounced. The application No C. M. 2481 of 1989 was listed for arguments on 21st June 1989. The arguments were commenced by the learned counsel for respondent No. 4 The present applications have been filed by respondent No. 4. Arguments were concluded on 23rd June, 1989. All the counsel addressed the arguments at length and the case is listed in the Cause List for pronouncement of judgment for today. I do not find any reason to withhold the judgment. List these application on 3rd July, 1989.

29. After I pronounced the judgment, Mr. Sanghi requests that the order I pronounced today be suspended. I find no reason.


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