Supreme Court grants refund of fines, cancels bank guarantee, and issues Detention Certificates to petitioners.

The Supreme Court allowed Writ Petition No. 337 of 1986, overturning the Deputy Collector of Customs' order and instructing the refund of fines paid by the petitioners. The respondents were directed to issue a Detention Certificate for the detention period. Additionally, Writ Petition No. 1146 of 1986 was also allowed, with the rule made absolute, requiring the cancellation of the bank guarantee and its return to the petitioners, along with issuing a Detention Certificate similar to the first petition. No costs were ordered in either petition.

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Issues Involved:

1. Entitlement to Export House Certificate and additional licences under the Import Policy of 1978-79.
2. Refusal by respondents to grant additional licences.
3. Compliance with court orders regarding issuance of Export House Certificate and additional licences.
4. Validity of import through letters of authority under the Import Policy of 1978-79.
5. Confiscation of goods imported under letters of authority due to changes in Import Policy 1985-88.

Detailed Analysis:

1. Entitlement to Export House Certificate and additional licences under the Import Policy of 1978-79:

The petitioners were engaged in importing rough diamonds and exporting cut and polished diamonds. Under the Import Policy of 1978-79, they were entitled to an Export House Certificate and consequential benefits, including additional licences. The Supreme Court in Raj Prakash Chemicals Ltd. v. Union of India, AIR 1986 Supreme Court 1021, affirmed that Export Houses were granted special facilities to strengthen their capacity in foreign trade.

2. Refusal by respondents to grant additional licences:

The respondents, including the Union of India and customs officials in Bombay, refused to grant the certificates and additional licences on the grounds that the petitioners had not diversified their exports. This refusal was challenged by the petitioners through a writ petition, which resulted in a court order directing the issuance of the Export House Certificate and additional licences.

3. Compliance with court orders regarding issuance of Export House Certificate and additional licences:

Despite the court order dated 23rd November 1983, the respondents did not comply, leading to contempt proceedings. Subsequently, a further order on 12th February 1985 directed the issuance of the Export House Certificate and additional licences, which was eventually complied with, albeit with an unusual endorsement stating it was issued pursuant to the court order.

4. Validity of import through letters of authority under the Import Policy of 1978-79:

The petitioners issued letters of authority to various parties, including Bharat Oxygen, to import goods under the additional licences. The Hand Book of Import-Export Procedures for 1978-79 allowed licence-holders to appoint agents for arranging imports, subject to certain conditions. This facility was challenged by the respondents based on the Import Policy of 1985-88, which did not permit such letters of authority.

5. Confiscation of goods imported under letters of authority due to changes in Import Policy 1985-88:

The Deputy Collector of Customs held that imports made under letters of authority were in contravention of the Import Policy of 1985-88 and ordered the confiscation of goods. The petitioners argued that the facility to issue letters of authority was not withdrawn under the Import Policy of 1978-79. The court held that the right to import under the additional licence included the facility of using letters of authority as per the 1978-79 policy. The court found the respondents' view incorrect and quashed the action taken against the petitioners.

Judgment:

Writ Petition No. 337 of 1986 was allowed, setting aside the order of the Deputy Collector of Customs and directing the refund of the fine paid by the petitioners. The respondents were also directed to issue a Detention Certificate for the period of detention.

Writ Petition No. 1146 of 1986 was also allowed, with the rule made absolute in terms of the prayer clauses. The respondents were directed to cancel the bank guarantee and return it to the petitioners, along with issuing a Detention Certificate similar to the one in Writ Petition No. 337 of 1986.

There were no orders as to costs in both petitions.

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