UNION OF INDIA Vs. GEM INTERNATIONAL

JUDGEMENT

(1.) THIS appeal and seven other appeals filed by the Union of India and Chief Controller of imports and Exports from group and the dispute involved in all these appeals is identical, and the issues raised by the appellants are decided by this judgment and in respect of remaining seven appeals only consequential orders will be passed. This appeal is directed against the judgment dated Sept. 5, 1985 recorded by the learned Single Judge granting relief of the respondents on certain terms and conditions. The facts giving rise to the passing of this judgment are not in dispute and are required to be briefly stated to appreciate the grievance made in the appeal.

(2.) THE respondents are the sole proprietary concern and carry on business of exporting diamonds. The respondents are recognised export house within the meaning of Import Policy from April to March 1982-83 issued by the Government of India. Under the Import Policy various kinds of licences known as replenishment licence, advance licence and imprest licence are issued to the exporters. The replenishment licences are issued for the purpose of replenishment of imported items against exports already made. An advance licence is issued where the import is allowed under the duty exemption scheme, while the imprest licence is issued when the import is allowed outside the duty exemption scheme. Under the relevant policy the export houses were given facility of importing OGL items against replenishment licences without debit to the value of the licence. As far as the advance and imprest licences are concerned, the same were issued for the import of certain items meant for export. Paragraph 185 (4) of the Import-Export Policy April 1982 to March 1983, inter alia, provided that the facility for import of OGL items available in sub-para (3) may also be allowed to Export Houses against their advance/imprest licence to the extent to which they are rendered ineligible to obtain rep licence. It further provides that in such cases the value upto which the OGL import would be allowed was not to exceed the value to which the Export House would have been eligible to obtain the REP licence, had it not obtained advance/imprest licence in question. The facility was allowed to the export house only after he discharges the export obligations imposed on the advance/imprest licence. The Policy further provided that if by the time the export house becomes eligible to avail of the facility, the advance/imprest licence had expired or if the original validity left unused by that time is less than six months, then the licensing authority would revalidate the licence simultaneously so as to give the licence holder a time of six months for the purpose of importing OGL items under this facility. Paragraph 185 (5) provides that export houses who wish to take advantage of the facility of import of OGL items should get the licences concerned endorsed by the licensing authority as under :

(3.) THE respondents applied for and granted imprest licence dated February 7, 1983 for c. i. f. value of Rs. 35,67,000/- for the import of uncut and unset diamonds against which the respondents had to effect exports of the total FOB value of Rs. 54,88,769/ -. Pursuant to the grant of imprest licence the respondents imported uncut and unset diamonds and then fulfilled their export obligations on August 14, 1983. There respondents then sought redemption certificate from the Joint Chief Controller of Imports and Exports, Bombay and the certificate was issued on October 20, 1983. The respondents were required to apply for revalidation of the licence and the requisite endorsement for the import of OGL items in accordance with provisions of paragraph 185 (4) of the Import-Export Policy. The respondents made the requisite application on November 30, 1984 but the Joint Chief Controller turned down the application by order dated december 14, 1984 on the ground that there is no provision for making OGL endorsement on advance/imprest licence during the policy period of April to March 1984-85. The respondents thereupon addressed letter dated January 9, 1985 to the authority pointing out that the endorsement is permissible under the Import-Export Policy of 1982-83 and the ground given was not correct. The authorities sent a reply on January 21, 1985 reiterating the rejection of the endorsement. The two grounds on which the authority placed reliance for refusing the application were :