2019 (11) TMI 739 - HC - Customs

Seizure of import of goods without licence - Refusal to to grant P5 license under Ammonium Nitrate Rules 2012 - special category explosive substance - Countervailing Duty in terms of N/N.12/2012-CE dated 17.03.2012 - whether this Court while exercising the discretionary jurisdiction under Article 226 of the Constitution of India needs to interfere with the orders passed by the respondents 1 and 2 in refusing to grant P5 license to the petitioner under the Ammonium Nitrate Rules 2012? HELD THAT - Though the petitioner claims that the Ammonium Nitrate is also a fertilizer it is seen that by virtue of the Notification dated 21.07.2011 issued by the Union of India through its Ministry of Commerce and Industry Ammonium Nitrate is deemed to be an explosive within the meaning of the Explosives Act 1884 when it has the chemical formula as stipulated in the said notification. The petitioner is not entitled to seek P5 license either as a matter of routine or right when national security is projected by the respondents 1 and 2 for refusing to grant the P5 license to persons other than the user of the same -Perusal of the order of the Original Authority in refusing to grant license and the order of the Appellate Authority in rejecting the appeal would undoubtedly indicate that there is no scope for the writ petitioner to seek indulgence of this Court to interfere with those orders more particularly when the rejection was made in the interest of national security and based on a policy decision. It is seen from the order of the Original Authority issuance of license in Form P5 for import of Ammonium Nitrate will be considered only in favour of Ammonium Nitrate user and not to a person who is a trader of the same. It is not the case of the petitioner that it is the user of Ammonium Nitrate. On the other hand admittedly it is only a trader. Under Rule 16 of the Ammonium Nitrate Rules 2012 it is stated that no license for import or export of Ammonium Nitrate by land shall be granted without the previous sanction of the Central Government in each case wherein the Central Government may impose conditions and restrictions in consultation with the Chief Controller - Therefore it is evident that even for issuing the license for import by the Licensing Authority previous sanction from the Central Government in each case is necessary and that the Central Government may impose conditions and restrictions while granting such sanction. Now it is stated that the Government has taken a policy decision not to permit import of Ammonium Nitrate to a person who is not a user. Therefore in view of the above Rule 16 position as well the petitioner s claim was rightly rejected. The very act of the petitioner in disposing the earlier imported Ammonium Nitrate to various third parties who are not possessing valid P3 license would clearly indicate that the petitioner is undoubtedly not the user of Ammonium Nitrate and on the other hand it is only interested in trading the same that too by selling it to several individuals who are stated to be the persons without P3 license - Needless to say that accumulating small quantities of Ammonium Nitrate periodically would result in gathering larger quantity in the hands of unknown and unidentifiable persons and hence allowing such trade to go on will not be the interest of national security. Therefore the Authorities have rightly rejected the claim of the petitioner for P5 license with which this Court finds no reasons or grounds to interfere more particularly while exercising its discretionary jurisdiction under Article 226 of the Constitution of India. Petition dismissed.

Summary

Issues Involved:
1. Rejection of P5 license application under Ammonium Nitrate Rules, 2012.
2. Validity of P3 license and its implications.
3. National security concerns related to the import and trade of Ammonium Nitrate.
4. Legal and procedural compliance regarding the import of Ammonium Nitrate.
5. The petitioner’s right to trade under Article 19(1)(g) of the Constitution of India.

Detailed Analysis:

1. Rejection of P5 License Application:
The petitioner challenged the refusal of the P5 license, necessary for importing Ammonium Nitrate, by the second respondent. The application was initially rejected on 19.08.2015, and subsequent appeals were also dismissed. The primary reason for the rejection was that the license for import is granted only to users of Ammonium Nitrate and not to traders, citing national security concerns.

2. Validity of P3 License:
The petitioner held a P3 license, allowing storage and sale of Ammonium Nitrate, which expired on 31.03.2019. The court noted that holding a P3 license does not automatically entitle the petitioner to a P5 license. The P3 license's validity and the petitioner’s compliance with its terms were scrutinized, revealing that the petitioner sold Ammonium Nitrate to various unauthorized individuals and firms.

3. National Security Concerns:
The court emphasized national security as a paramount concern. Ammonium Nitrate, classified as an explosive under the Explosives Act, 1884, poses significant risks if not regulated strictly. The court cited instances of misuse and the potential threat posed by the substance falling into the wrong hands. The policy decision to grant import licenses only to users and not traders was upheld as a reasonable restriction to prevent misuse and ensure public safety.

4. Legal and Procedural Compliance:
The petitioner was found to have imported 740 MT of Ammonium Nitrate without a valid P5 license, violating Rules 4 and 6(4)(a) of the Ammonium Nitrate Rules, 2012. The investigation revealed that the petitioner sold the imported Ammonium Nitrate to entities involved in non-agricultural activities such as stone quarrying and mining, further justifying the refusal of the P5 license.

5. Right to Trade:
While the petitioner argued their fundamental right to trade under Article 19(1)(g) of the Constitution, the court highlighted that this right is subject to reasonable restrictions. The court found no arbitrariness or discrimination in the authorities' decision to prioritize national security over individual trade interests. The petitioner's actions in selling Ammonium Nitrate to unauthorized parties further weakened their case.

Conclusion:
The court dismissed the writ petition, finding no grounds to interfere with the respondents' decision to refuse the P5 license. The decision was deemed justifiable, given the national security implications and the petitioner’s non-compliance with regulatory requirements. The court upheld the policy restricting import licenses to users of Ammonium Nitrate, reinforcing the need for stringent controls over explosive substances.