Supreme Court directs rational allocation of Raw Pet Coke quota, emphasizes fair distribution

The Supreme Court set aside the allocation of unutilised Raw Pet Coke (RPC) quota by the Directorate General of Foreign Trade (DGFT) and directed a re-computation based on the shortfall between the quantity applied for and allocated. The Court found the allocation method based on production capacity irrational and emphasized reallocating the surrendered quantity based on actual requirements. The decision aimed to ensure fair distribution among manufacturers and highlighted the importance of a rational apportionment method.

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Issues Involved
1. Apportionment of unutilised quota of Raw Pet Coke (RPC) among various applicants.
2. Rationality of the allocation method based on production capacity versus actual requirements.

Detailed Analysis

1. Apportionment of Unutilised Quota of Raw Pet Coke (RPC) Among Various Applicants
The petitioner challenged the decision of the Directorate General of Foreign Trade (DGFT) regarding the allocation of unutilised RPC quota. The Supreme Court had restricted the import of RPC to 1.4 million metric tonnes per annum, necessitating a proportional distribution among manufacturers. The DGFT's minutes from a meeting held on 08.02.2019 detailed the allocation process, which included a table showing the distribution among various manufacturers. However, 73,516.661 metric tonnes of RPC remained unutilised because some manufacturers did not import the allocated material. The respondents decided to allocate this surrendered quantity to three manufacturers, including the petitioner, whose demands were not fully met.

2. Rationality of the Allocation Method Based on Production Capacity Versus Actual Requirements
The petitioner argued that the allocation method was flawed as it pegged additional quantities to half of the annual production capacity without considering the actual input requirements. The petitioner contended that RPC, as a raw material, is required in larger quantities than the final product (CPC) manufactured. The Court found this contention merited, noting that the allocation based on production capacity was irrational. The production capacity of CPC manufacturers is significantly lower than the input (RPC) required to meet that capacity.

The Court highlighted that the allocation did not exhaust the surrendered quantity, as only 2903.79 MT of RPC was allocated out of the 73,516.661 MT available. The Court emphasized that the allocation should be based on the shortfall between the quantity applied for and the quantity allocated, rather than the production capacity. A tabular statement was provided to illustrate the shortfall for the three applicants:

| S. No. | Name of the Firm | Quantity Applied for Import | Quantity Allocated on 27.12.2018 | Shortfall |
|--------|------------------|-----------------------------|----------------------------------|-----------|
| 1. | Rain CII Carbon (Vizag) Ltd. | 3,52,145 | 2,53,338.65 | 98,806.35 |
| 2. | Sanvira Industries Ltd. | 1,83,746 | 99,154.07 | 84,591.93 |
| 3. | Petro Carbon and Chemicals (P) Ltd. | 1,40,616 | 46,475.49 | 94,140.51 |

The Court directed that the shortfall should be the basis for reallocating the surrendered quantity, ensuring that the total allocated quantity does not exceed the half-yearly input capacity. The Court noted that the input-output ratio for the petitioner is approximately 1.5:1, as confirmed by the Andhra Pradesh Pollution Control Board, indicating that the petitioner's intake capacity is 7,05,600 MT, which is one and a half times the annual production capacity of 5,11,000 MT.

Conclusion
The Court set aside the allocation made in the impugned minutes and directed the respondents to re-compute the allocation based on the shortfall between the quantity of RPC applied for and the quantity allocated. The petition was disposed of with these directives, and all pending applications were also disposed of. The Court emphasized the need for a rational method of apportioning the surrendered quantity to ensure fair distribution among the manufacturers.

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