SILVE IMPEX PRIVATE LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner No. 1 is a Private Limited Company incorporated and registered under the provisions of the Companies Act and carries on business of import and export. The Government of India published Notification dated June 9, 1978 in exercise of the powers conferred by sub-section (1) of Sec. 25 of the Customs Act, 1962. (hereinafter referred to as the "Act") exempting the goods specified in the First Schedule of the Notification and imported goods against advance licence issued under Import (Control) Order, 1955 or obtained against the advance release order on canalising agency for release of goods already imported. The goods exempted in the notification were materials required to be imported for the purpose of manufacture of goods or replenishment of the materials used in the manufacture of goods or both for execution of one or more export orders. The exemption prescribed was for the whole of the duty of customs leviable thereon as specified in the First Schedule to the Customs Tariff Act and the whole of the additional duty leviable thereon under Section 3 of the Customs Tariff Act. Item No. 38 in the First Schedule is "Iron and Steel and Articles thereof". Appendix 19 of Import Policy for April 1981 - March 1982 deals with Duty Exemption Scheme. It reproduces the Notification issued by the Ministry of Finance (Department of Revenue) relating to the grant of Duty Exemption benefits against Advance Licences. Annexure V to Appendix 19 sets out the input-output norms of wastage as approved by the Advance Licensing Committee and prescribes that the applications of the parties whenever received for the grant of advance licences are cleared on the basis of these norms. At Serial No. 2 of this annexure is the description of the Export Product of Stainless steel pattern. The raw-material which can be imported under Advance Licence is stainless steel sheets/strips/bars and rods and the norms prescribed are in respect of 1 kilogramme of export product, 1.80 kg. will be allowed to be imported and out of that, there would be duty exemption benefit in respect of 1.60 kg.

(2.) On the basis of the norms, the petitioners secured export orders for stainless steel goods weighing 82,250 kgs. of F.O.B. value of Rs. 63,19,000/-. In accordance with these export orders, the petitioners became entitled to import 148.05 Metric Tonnes of stainless steel sheets and out of this quantity, duty exemption benefit was available, as per the policy, for a quantity of 131.6 kgs. The petitioners applied for Advance Licence on August 19, 1981 and on September 11, 1981, received a letter from the Joint Chief Controller stating that the exports made from August 28, 1981 will be exempted towards discharge of export obligation. The Joint Chief Controller of Imports forwarded the Advance Licence to the petitioners on September 17, 1981 and the Advance Import Licence, copy of which is set out at Ex. "E" to the petition, provides that 148 Metric Tonnes can be imported and out of which 131.6 Metric Tonnes would be duty free. The licence further sets out that the export obligation imposed on the petitioners was for Rs. 82,250 Metric Tonnes of F.O.B. value of Rs. 63,19,000/-. The petitioners also received Duty Exemption Entitlement Certificate dated September 18, 1981 setting out the quantity of import which would be duty free. In pursuance of this licence and the certificate, the petitioners opened three irrevocable letters of credit in favour of the foreign suppliers for import of raw-material of 148 Metric Tonnes of value of Rs. 27,43,462/-. The three irrevocable letters of credit were opened on October 5, 1981, October 15, 1981, and October 19, 1981 respectively. On November 19, 1981, the Import Licence for Exchange Control was duly endorsed and was fully utilised. On November 22, 1981, the petitioner No. 1 and M/s. Silver Steel Industries, who are the manufacturers of the goods to be exported executed a joint bond for export obligation for Rs. 62,18,100/- and furnished Bank guarantee for 25% of the said sum. On November 19, 1981, the Joint Chief Controller of Imports addressed a letter to the petitioner calling upon to submit the licence for carrying out necessary amendment. The petitioners made enquiries as to what are the proposed amendments and learnt that the Joint Chief Controller was desirous of reducing the quantity of import on the basis of alteration of norms, set out under Annexure V to Appendix 19 of the Import Policy. The petitioners thereupon addressed letter to the Joint Chief Controller on December 1, 1980 complaining that the norms cannot be altered. The Chief Controller thereafter called upon the petitioners to furnish bond with Bank guarantee and sought amendment of the earlier bond given by the petitioners. The petitioners had no objection to give further Bank guarantee and to amend the bond. On January 26, 1982, the Joint Chief Controller, Import, amended the Advance Licence and Duty Exemption Entitlement Certificate setting out that the total quantity of import would be only 109.4 Metric Tonnes of C.I.F. value of Rs. 22,97,400/- and out of which duty free quantity would be 94.6 Metric Tonnes. The petitioners imported two consignments of 32 Metric Tonnes and 50 Metric Tonnes and the same were cleared on February 1, and February 4, 1982 respectively. In March 1982, the consignment of 26 Metric Tonnes arrived in Bombay. On March 26, 1982, the Chief Controller of Imports addressed letter to the petitioners permitting import of 108 Metric Tonnes instead of 94.6 Metric Tonnes under Duty Exemption benefit but the letter did not give any indication of increase in the total quantity of permissible import. Thereafter, large correspondence transpired between the petitioners and the Joint Chief Controller, as well as the Chief Controller, but the request of the petitioners to restore the quota provided initially in the Advance Licence was turned down. The petitioners were informed that as the petitioners were exporting spoons, the wastage permissible is less and, therefore, Advance Licencing Committee had decided to alter the norms.

(3.) On July 14, 1982, the petitioners filed the present petition complaining against the action of the respondents and the petitioners were permitted to clear the goods on furnishing Bank guarantee for the differential amounts. The petitioners were required to furnish Bank guarantee of Rs. 10,00,000/- as well as Rs. 15,54,525/-. In pursuance of the interim order passed by this Court, the petitioners were ultimately able to import the entire quantity of 148 Metric Tonnes of stainless steel sheets as originally mentioned in the Advance Import Licence. The petitioners applied for extension of the period for fulfillment of the export obligations but the respondents informed that extension cannot be granted as the matter is sub-judice. The Joint Chief Controller of Imports and Exports on January 27, 1983 issued order of forfeiting the bond amount of Rs. 51,59,150/- on the ground of failure of the petitioners to carry out the obligation of export. The authorities also placed the petitioners on the list of defaulters and directed adjustment of replenishment licence to the extent of Rs. 22,97,400/-. The authorities also proceeded to enforce the Bank guarantees and thereupon the petitioners amended the petition and sought appropriate interim reliefs.