2020 (10) TMI 598 - HC - Customs

Court upholds rejection of P5 licence application for ammonium nitrate import; appeal dismissed on national security grounds.

M/s. Sri Amman Chemicals Versus The Additional Secretary & Appellate Authority, The Chief Controller of Explosives Petroleum & Explosives Safety Organization, The Commissioner of Customs, The Additional Commissioner of Customs (SIIB)

M/s. Sri Amman Chemicals Versus The Additional Secretary & Appellate Authority, The Chief Controller of Explosives Petroleum & Explosives Safety ... Issues Involved:1. Entitlement to import ammonium nitrate.2. Validity of rejection of P5 licence application on the ground that the appellant is a trader.3. Compliance with the Ammonium Nitrate Rules and the Explosives Act.4. Detention and auction of imported ammonium nitrate by Customs authorities.Issue-wise Detailed Analysis:1. Entitlement to Import Ammonium Nitrate:The appellant's entitlement to import ammonium nitrate was examined under the Ammonium Nitrate Rules, 2012, which came into force on 11.07.2012. Rule 6(4)(a) explicitly prohibits the import of ammonium nitrate without a licence: 'No person shall import or export any Ammonium Nitrate except under and in accordance with the conditions of license granted under these rules.' The appellant's application for a P5 licence was rejected on 19.08.2015, and despite this, the appellant imported 740 MT of ammonium nitrate on 24.09.2015, violating Rule 6(4)(a). The court concluded that the appellant was not entitled to import ammonium nitrate without a valid licence, and the subsequent detention and auction by Customs authorities were justified.2. Validity of Rejection of P5 Licence Application:The rejection of the P5 licence application was based on the appellant being a trader, with the authorities asserting that national security concerns necessitate restricting the import of ammonium nitrate to users and not traders. The court noted that while the Ammonium Nitrate Rules do not explicitly prohibit the grant of licences to traders, considerable discretion is vested in the Licensing Authority under Rules 34 and 35. The court found that the Licensing Authority's decision to reject the application was consistent with the national security policy, which aims to prevent the unregulated distribution of ammonium nitrate, an explosive substance.3. Compliance with the Ammonium Nitrate Rules and the Explosives Act:The court examined Rule 5, which allows existing importers to apply for a licence within six months and comply with the Rules within one year from the date of publication. However, since the appellant's application was rejected, the appellant could not rely on this transitional provision. Furthermore, the court noted that ammonium nitrate is classified as an explosive under Section 17 of the Explosives Act, and the appellant's actions were in violation of both the Ammonium Nitrate Rules and the Explosives Act.4. Detention and Auction of Imported Ammonium Nitrate by Customs Authorities:The appellant's import of ammonium nitrate without a valid licence led to the detention of the consignment by Customs authorities. The court found that this action was in compliance with the Customs Act, 1962, which prohibits the import of goods without adhering to relevant restrictions and prohibitions. The subsequent auction of the detained goods was also deemed lawful, given the appellant's violation of import regulations.Conclusion:The court dismissed the appeal, upholding the rejection of the P5 licence application and the actions taken by Customs authorities. The court found that the appellant's import of ammonium nitrate without a valid licence was in violation of the Ammonium Nitrate Rules and the Explosives Act, and that the rejection of the licence application on national security grounds was justified. The court also noted that the learned single Judge had duly considered all relevant provisions and documents before rejecting the writ petition, and thus, no interference with the impugned order was warranted. Consequently, the appeal was dismissed, and connected miscellaneous petitions were closed.