M SHASHIKANT AND CO Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners are a firm carrying on business of dealing in diamonds and since the year 1981 have been recognised as an Export House. The petitioners Nos. 2 to 6 are partners of the firm. The petitioners, as a registered Export House, are issued various licences such as Additional Licence, R.E.P. Licence and Imprest Licences. Under Paragraph 183 of the Import Policy for the period AM-81 and AM-82, a facility was granted to Export Houses to import CGL goods against such licences subject to the condition that such goods should be sold to actual users. Paragraph 382 of the relevant Hand Book prescribes that the licence holders could grant a letter of authority in favour of persons who arrange import of goods.

(2.) The petitioners were issued Imprest Licence bearing No. 0449345 dated May 12, 1981 for the import of uncut and unset diamonds of the value of Rs. 3,59,34,782/- subject to an export obligation of Rs. 5,52,84,280/-. One of the conditions of the licence was that it would be subject to the conditions in force relating to the goods covered by the licence as described in the Import Trade Control Policy Book for the period during which the licence has been issued or any amendments thereto made upto and including the date of issue of the licence, unless otherwise specified. The petitioners gave letter of authority in favour of M/s Mangla Brothers on January 14, 1982 to import permissible O.G.L. items under the said licence. The petitioners were at pains to ensure that only permissible items would be imported and M/s Mangla Brothers undertook to indemnify the petitioners in respect of any liability arising from the imports. M/s Mangla Brothers imported 791.10 metric tonnes of beef tallow by entering into contract with foreign concern at New Zealand and had also agreed to sell the same to M/s Aron Chemicals Private Limited, Bombay who represented themselves as being actual users of beef tallow. The goods were confiscated on import by an order of Collector of Customs but were allowed to be cleared against a redemption fine of Rs. 13 lakhs. M/s Mangla Brothers filed Writ Petition No. 1734 of 1983 in this Court and interim relief was granted permitting M/s Mangla Brothers to clear the goods against furnishing a Bank guarantee of Rs. 13 lakhs. In pursuance of the interim order, the goods were cleared.

(3.) On June 5, 1981, a public notice was issued whereby Appendix 8 to the Import Policy was amended and instead of existing Item 44 which was restricted to mutton tallow, the Item substituted was tallow of any animal origin including mutton tallow. Even after June 5, 1981, import of beef tallow was made by various persons and the same was duly cleared by the Customs authorities. In July 1983, it was discovered that some unscrupulous people had adulterated vanaspati by using beef tallow in its manufacture and that discovery led to the uproar in the country. The petitioners were then placed under abeyance by secret circular issued on November 9, 1983.