TMI Blog1986 (3) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... to such Letters of Credit should be deemed to have been legally and properly made, and should entail no adverse consequences whatsoever. In taking this view we are impressed by the broad principles of justice, equity and fair play and by the need to avoid undeserved hardship, and we are not persuaded to the contrary by legal technicalities. We may point out that the validity of principle has been recognised in Paragraph 35(3) of the Import Policy 1985-88 itself, where while declaring that Additional Licences issued to Export Houses in the preceding licencing year or earlier shall cease to be valid for the import of items of spares appearing in certain Appendices, including Appendix 3, of the Import Policy for the licencing year an exception has been carved out insofar that “these restrictions will not apply to the extent the licence holders have made firm commitments by irrevocable Letters of Credit opened and established.....before 1st April, 1985”, the date when the Import Policy 1985-88 came into force. Also diamond exporters who pursuant to the issue of Additional Licences under the Import Policy 1978-79 have opened and established irrevocable Letters of Credit on or after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Items), and in July, 1981 Ethyl Acrylate was taken from Appendix 5 to Appendix 3 (List of Banned Items). A public notice dated July 7, 1981 announced that Export Houses which were eligible to import Ethyl Acrylate would be allowed to import it only to the extent of irrevocable Letters of Credit opened before the date of the notice. Under Import Policy 1982-83, the nomenclature of the headings of the Appendices was altered, and the heading List of Banned Items of Appendix 3 was changed to List of Limited Permissible Items . Likewise, the heading Absolutely Banned List of Appendix 4 was altered to List of Non-permissible Items (Banned) . And the heading List of Restricted Items of Appendix 5 became the List of Automatic Permissible Items . Ethyl Acrylate remained in Appendix 3, and all other acrylic ester monomers remained in Appendix 5. Under Import Policy 1983-84, the headings of Appendices 3, 4 and 5 remained as they were, and all four acrylic ester monomers were placed in Appendix 3 (List of Limited Permissible Items). Under Import Policy 1984-85 there was another change in the nomenclature of the headings of the Appendices. Appendix 2 Part A became the List of Banned I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re eligible for the grant of Export House Certificates on the basis of the exports actually made in the three-year base period 1975-76, 1976-77 and 1977-1978. Export Houses were entitled to the following facilities :- (i) Import replenishment licences eligible to them as Registered Exporters, (ii) Import replenishment licences transferred to them by others, (iii) Import of items placed on Open General Licence, and (iv) Additional Licences. Replenishment Licences issued in the names of Export Houses, or transferred to them by others, entitled them to import capital goods placed on Open General Licence subject to actual users condition, and raw materials, components, and spares placed on Open General Licence for Actual Users (Industrial). The Additional Licence granted for 1978-79 would be valid for the import of items appearing in Appendix 5 (List of Restricted Items) and Appendix 7 (Restricted List - Iron and Steel Items) excluding, however, the items appearing in Appendix 26. An Additional Licence would also be valid for import of raw materials, components and spares placed on Open General Licence for Actual Users (Industrial), the Export House being obliged to dispose o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be compelled to approach the canalising agency for the import of items which were not canalised items under the Import Policy 1978-79. He directed that the petitioner would not be entitled to import only those items which were specifically banned under the Import Policy 1983-84 prevalent at the time of import. On December 23, 1983, Pendse, J. passed an order in Writ Petition No. 761 of 1983 filed by Messrs. N. Nayankumar and Company where he directed the issue of an Export House Certificate to the petitioners under the Import Policy 1978-79 and held the petitioner entitled to an Additional Licence for the import of items in the same terms as was set forth in the order dated November 11, 1983 in the earlier case. The fourth order in the series was passed on January 25, 1984 by Bharucha, J. in Writ Petition No. 1048 of 1983 filed by Messrs. Mehts Gems., and that learned Judge taking note of the orders passed earlier by Pendse, J. in similar cases, also directed the issue of an Export House Certificate to the petitioners and while granting time to the petitioners for applying for an Additional Licence he directed :- Save and except items which are specifically banned under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court, while disposing of Writ Petition No. 1501 of 1981 filed by Rajnikant Brothers, ordered the renewal of their Export House Certificate for the year 1978-79 and directed that as they had filed the Writ Petition on May 11, 1981 they would be entitled to the consequent licences for the import of those items only which were open to import under the Import Policy 1981-82. The High Court went on to observe :- It may be that some of the items, which were permitted to the imported in the year 1981-82 may now have been absolutely banned under the Policy for the current year, i.e., 1983-84. In such a case the petitioner, of course, cannot be permitted to import those items. If, for example, an item which could be freely imported under the Policy for the year 1981-82 is now only canalised, then the petitioner may still be entitled to import that item because merely canalising an item cannot be regarded as import of that item being absolutely banned. 8. It has been mentioned earlier that the Union of India appealed against the orders of the High Court of Bombay and the High Court of Delhi, the appeals being Civil Appeal No. 1423 of 1984 (Union of India v. Rajanikant Brothers) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on August 16, 1985. The appeal was dismissed on the ground, inter alia, that the withdrawal or cancellation of the additional endorsement made on the Additional Licences would conflict with the order of this Court and would amount to modifying or nullifying it. Thereafter, the appellant filed a special leave petition in this Court, and on special leave being granted, this appeal is now before us. 11. It is admitted between the parties in this appeal that the fundamental question for consideration is the true meaning and scope of the order dated April 18, 1985 made by this Court. There is no dispute that the diamond exporters enjoying the benefit of the order are entitled to the issue of Export House Certificates under Import Policy 1978-79 and to the facilities flowing from such grant. There can also be no dispute that the consideration whether the items sought to be imported by such diamond exporters are canalised cannot act as an impediment to the import directly by them. The order declares further that such diamond exporters shall be entitled to import all items save and except items which are specifically banned under the prevalent import policy at the time of import. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndix 3 (Banned List). As acrylic ester monomers did not appear in that list nor were excluded by the other terms of Item 1 of Appendix 10 they could, under the Import Policy 1978-79, be imported under Open General Licence by the holder of an Additional Licence, who was under paragraph 176 of the Import Policy, obliged to dispose them of to Actual Users (Industrial) only. But now under the Import Policy 1985-88, prevalent at the time of import, the holder of an Additional Licence is no longer entitled to import acrylic ester monomers because that item is now inserted in Appendix 3 Part A, which by a change of nomenclature, is currently described as the List of Limited Permissible Items. Further, learned counsel contends, inasmuch as the purpose of issuing Additional Licences is to satisfy the needs of small scale manufacturers who are unable to import directly the small quantities of raw materials required by them, and therefore the holder of an Additional Licence is obliged to supply the imported item to Actual Users (Industrial), regard must be had to the circumstance that under the Import Policy 1985-88 even Actual Users are debarred from importing acrylic ester monomers because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y became eligible for a total import licence to the extent of Rs. 108/- against an export valued at Rs. 100/-. The Replenishment Licences entitled them to import on an average of 75% of the F.O.B. value of exports while Additional Licences entitled them to another 33%. With the development of the national economy and the availability of indigenous products the policy was changed from the year 1979-80 onwards, and for the purpose of calculating the entitlement for an Additional Licence the value of exports of select products carrying an import replenishment rate of more than 50% in Appendix 17 of the Import Policy 1979-80 was not to be taken into account, and the value of such exports was not to be included by an Export House while applying for an Additional Licence. In the result, the year 1978-79 was the only year for which diamond exporters could be granted Additional Licences. Learned counsel emphasises the need in the circumstances, to ensure that further departure from the current Import Policy should not be permitted. He invites our attention to paragraph 35(1) of the Import Policy 1985-88 which provides that Replenishment Licences and Additional Licences held by Export House ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction, reference may also be made to the affidavit of Kanayalal J. Chellani, Deputy Chief Controller of Imports and Exports filed before the High Court of Bombay in Writ Petition No. 1686 of 1985 (Reliance Industries Limited v. Union of India), a copy of which has been included as exhibit 19 to the affidavit of N. Nayankumar and Company in reply to Civil Miscellaneous Petitions 43000 and 43001 of 1985 in Civil Appeal No. 3233 of 1984 (Union of India and Ors. v. Nayankumar Ors.): paragraph 9 states :- 9. I say that it is significant to note that the subject item has not been banned or restricted (Appendix 2 of 1985-88 Policy). It has only been shifted from O.G.L. to L.P.L. The petitioners after receiving a licence for import of the said item can very well still import the item. Shri Venugopal has attempted to demonstrate that there is need for importing acrylic ester monomers and that in fact the Government of India envisages such import notwithstanding that the item is no longer on the O.G.L. list but finds place now in Appendix 3 of the Import Policy 1985-88. He invites our attention to the counter affidavit of Nikhal Premchand Shah filed on behalf of N. Nayankumar Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and does not govern the entitlement to import the goods. 15. Shri S.J. Sorabjee, appearing for N. Nayankumar and Company, a respondent in Civil Appeal No. 3233 of 1984 filed by the Union of India against the order of the High Court of Bombay, urges that there is a fundamental qualitative difference between the goods the import of which is prohibited and goods the import of which is restricted or controlled. The goods of which import is prohibited cannot lawfully cross the customs frontiers of India and enter the stream of trade and commerce in the country. The expression banned goods or banned items , he says, as understood in the discourse of the import and export trade, means prohibited goods. Restricted or controlled goods whose import is permitted into the country subject to the fulfilment of certain conditions, learned counsel submits, cannot be described as banned goods. The feature of non-importablity is a characteristic or an attribute of the goods themselves and does not depend upon the person who imports the goods. Our attention is drawn to the distinction between the prohibition or prescription of certain goods, for example, narcotics, counterfeit coins, obscene and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the worst under both Import Policies and even the partial restitution accorded by the order dated April 18, 1985 of this Court would be nullified. Finally, learned counsel contends that assuming there is an ambiguity in the matter we should choose such a construction as would not subject the party to pains and penalties under various statutes besides the loss and hardship which would be inevitable. That two views are possible, it is pointed out, is evident from the fact that the Import Control authorities have taken the view that the expression specifically banned in the orders of the Courts does not include items placed on the Limited Permissible List of the Import Policy 1985-88. 16. Shri Ashok Desai, appearing for Rajnikant Brothers, Respondent No. 5, relies on considerations somewhat parallel to those placed before us by Shri Sorabjee and urges in particular that the right of the importer to an Export House Certificate and to a consequential licence does not alter with variations effected in the Import Policy during the passing of time when litigation was pending and is not dependent on the exact point of time at which the benefits were made available. In construing the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h were banned are now regarded as open to restricted import. Besides this, learned counsel has adverted to the particular facts of his case, and asserts that while his case was not one of those in appeal before this Court and therefore not directly covered by its order dated April 18, 1985, no appeal had been filed by the Government against the grant of licence in the case of these two diamond exporters, and that the said diamond exporters had opened Irrevocable Letters of Credit before the writ petition was filed by the appellant company, full payment had been made and foreign exchange had left the country, and shipments had been effected in June, 1985, and the Customs authorities had interpreted the order in their case to mean that the goods imported were not banned. It is pointed out that only a small quantity of 32 tonnes had been detained at the port, that the insurance cover of the shipper or seller no longer covered the goods, that the goods were of a hazardous nature and were lying uninsured, and he prayed that the goods should be allowed to be cleared. 18. We think it necessary to keep in the forefront the limits of the enquiry before us. We are not concerned with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclature of the Headings of different Lists, but that change was effected merely by way of clarification in order to promote a clearer comprehension among foreign countries of India s import policy. It was a change essentially in nomenclature, and for the most part effected no alteration in the basis governing the classification reflected in the Lists. The basis of the classification was supplied by the principle which determined the constitution of each group. That principle bound the group together. It was a principle which along with others formed the network of principles constituting the current Import Policy. It is in this light that we must understand the order dated April 18, 1985. The High Courts were confronted with the problem that items which were open to import under Open General Licence to an Export House holding an Additional Licence were no longer included in that List and had meanwhile been transferred to a List not accessible to the holders of Additional Licences. The dictates of reality rendered it necessary for the Courts to take into account the altered situation, and this they attempted to do by framing their respective orders in appropriate terms. They took i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te then what is intended by the words specifically banned it is necessary to have recourse also to the order made by Sawant, J. He directed that the Additional Licences were valid for the import of items permissible to Export Houses under such Licence according to Paragraph 176 of the Import Policy 1978-79 excluding those items which are banned for the period 1978-79 and which have been banned during the Import Policy for the period 1984-85, and then explained that banned items referred to above mean items which are banned and absolutely banned . The word banned in that order has been used for the period 1978-79, and it has also been used in relation to the period 1984-85. It is obvious that in the light of the explanation appended by the learned Judge when he spoke of items which were banned for the period 1978-79, he had in mind items which were banned and items which were absolutely banned , and he was clearly referring to Appendix 3 (List of Banned Items) and Appendix 4 (List of Absolutely Banned Items). Appendix 3, it will be recalled, is the list of items which could not be imported by an Export House on an Additional Licence. It was a ban with reference to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltogether and also items which he, as the holder of an Additional Licence, was banned from importing. If the more liberal interpretation suggested by learned counsel for the diamond exporters was given to the words specifically banned , we would be enlarging the scope of relief granted by Sawant, J., and such a construction is clearly impermissible when no diamond exporter had appealed against the order before this Court. It may be of some relevance to note that when this Court made the order dated April 18, 1985, when the Import Policy 1985-88 was in force, there were only two items which were absolutely banned; and they were animal tallow and animal rennet. That was also substantially the position under the Import Policy 1984-85. 23. It has been urged on behalf of the respondent diamond exporters that if the order dated April 18, 1985 is construed in the manner suggested by the appellants it will result in nullifying the relief envisaged by the Court in making the order. We are unable to subscribe to that view. In the Import Policies of 1984-85 and 1985-88 the items open to import under Open General Licence are now set forth in Appendix 6. A perusal of Part II of List 8 in App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omy of the country which has to be the supreme consideration; and an applicant has no absolute vested right to an import licence in terms of the policy in force at the time of his application. 26. It seems to us that the construction placed by us on the order dated April 18, 1985 is consistent with the principle that the Court must be presumed to have given effect to the law. That presumption can be rebutted only upon evidence showing a clear intention to the contrary, either expressly or by necessary implication. We see no such evidence before us. En passant, we may refer to Paragraph 35(1) of the Import Policy 1985-88, which declares :- 35(1). REP licences and Additional licences held by Export Houses/Trading Houses will cease to be valid for import of any item which could be imported under Open General Licence during the preceding licensing year or earlier but is no longer so in this Import Export Policy. 27. But while the construction suggested by the appellant-company and the Union of India of the order dated April 18, 1985 of this Court has found favour with us, the scope of the relief to be granted remains to be considered. The interim orders passed by the Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12, 1985. Meanwhile, Additional Licences had been issued to some of the diamond exporters by the Import Control Authorities, and it appears clearly from the affidavit of Dr. R.K. Dhawan, Deputy Chief Controller of Imports and Exports and the affidavit of Shri Kanayalal J. Chellani, Deputy Chief Controller of Imports and Exports that the Import Control Authorities themselves considered that the diamond exporters holding Additional Licences were entitled to import all the items accessible to them under Open General Licence under the Import Policy 1978-79 except those placed in Appendix 2 Part A of the Banned List under the Import Policy 1985-88. It also appears that some of those diamond exporters who had been granted Additional Licences pursuant to the orders of the High Courts have already fully utilised those Licences and in some cases have partly utilised them. Throughout this period any diamond exporter granted an Additional Licence under the Import Policy 1978-79 could bona fide believe having regard to the consistent orders made by the Courts and the equally consistent manner in which the Import Control Authorities had construed those orders, that he was entitled to effect imp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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