MAHARAJA EXPORTS INDIA Vs. UNION OF INDIA

JUDGEMENT

(1.) Under a Scheme announced by the Govt. of India categories were granted Special Import Licences (for short SIL). The basis for grant of SIL could be Net Foreign Exchange (for short NFE) earned during the previous year or the Free on Board (for short FOB) value of the exports during the previous year. The petitioner has challenged the refusal of the respondents to issue SIL for the licencing year 1993-94 in favour of the petitioner on the basis of NFE According to the petitioner it is entitled to the SIL on the basis of NFE instead of on the basis of FOB.

(2.) Briefly the facts are that the petitioner at all material times enjoyed the status of a "Trading House" in terms of the Import-Export Policy of the Government. The petitioner is carrying on the business of exporting hand knotted carpets of staple/rayon synthetic yarn, silk and other categories. Earlier it enjoyed the status of "Export House" which was upgraded to the status of Trading House with effect from 1st April 1989. It continued to enjoy the same status of Trading House up to the material time. According to the Import-Export Policy effective from 1st April 1992 to 31st March 1997, the status of Export House, Trading House, Star Trading House was granted to the exporters on the basis of their average Annual Net Foreign Exchange earnings during the three preceding years. According to the said Policy the Export Houses, Trading Houses and Star Trading Houses were entitled to Special Import Licence for such value or bearing such portion to the NFE earned during the previous licencing year as shall be fixed by a Scheme to be notified under the Policy for the particular year. As per public notice No. 64/(PN)/92-97 dated 21st October 1992 the Scheme was set out for the licencing year AM 93 for grant of SILs to various categories of exporters. For Trading Houses the maximum value of SILs was fixed at 7.5% of the NFE earned in the previous licencing year. Even prior to the said public notice the practice used to be that SILs were granted on the basis of net NFE earned during the preceding year.

(3.) A public notice No. 120/(PN)/92-97 dated 31st March 1993 brought about a sudden change in the basis of grant of SILs. FOB value of exports in the preceding licencing year became the basis for grant of SILs instead of NFE. Under the public notice the maximum value for which SILs were to be granted for various categories of exporters was fixed on the basis of FOB value of exports in the preceding licencing year. This change in the Policy placed the petitioner in a disadvantageous position. The petitioner had an advantage in the NFE system because the commodities exported by the petitioner there was no expense involved by way of use of Foreign Exchange in the inputs. The raw material comprised of local yarn available in India. Therefore, the content of Foreign Exchange earnings was quite substantial. However, in view of the public notice dated 31st March 1993 the petitioner had no option but to file its application for grant of SIL for the licencing year 1994 on the basis of FOB value of exports affected by the petitioner during the year 1993. The last date for submission of the applications as per the public notice was 30th September 1993. The petitioner filed its application on 23rd September 1993.