2023 (2) TMI 902 - HC - Customs

Court Upholds Entitlement to DFIA License Revalidation, Rejects Retrospective Application

M/s. Kawarlal & Co. Versus The Director General of Foreign Trade, The Deputy Director General of Foreign Trade, New Delhi And The Commissioner of Customs (DFIA), Chennai

The court held that the Public Notice and Policy Circular would not apply retrospectively to DFIA licences issued before their dates. The petitioner's ... DFIA (Duty Free Import Authorisation) scheme - revalidation of the DFIA licences - whether actual user of the licence can use the licence for import of goods mentioned in the licence or not? - whether the Public Notice No.84/2009-14, dated 23.07.2010 and the Policy Circular No.13, dated 31.01.2011, issued by the first respondent are prospective or retrospective in operation? HELD THAT:- Admittedly, no stay of the judgment, passed by the Division Bench of the Punjab and Haryana High Court in the matter of Pushpanjali Floriculture Pvt. Ltd. vs. Union of India, [2016 (7) TMI 628 - PUNJAB & HARYANA HIGH COURT], has been granted by the Hon'ble Supreme Court. It is also not in dispute that the decision rendered by a learned Single Judge of this Court in the case of Hoewitzer Organic Chemical Co. vs. D.G.F.T., New Delhi [2013 (6) TMI 303 - MADRAS HIGH COURT], which is relied upon by the learned counsel for the petitioner, has attained finality as the department has not filed any Appeal as against the said order. In the said decision, the learned Single Judge, after following the judgments of the Hon'ble Supreme Court in the case of S.B.International Ltd. vs. Assistant Director General of F.T. [1996 (1) TMI 125 - SUPREME COURT] as well as the Jain Exports (P) Ltd. vs. Union of India [1988 (5) TMI 50 - SUPREME COURT], has held that the import policy prevalent at the time of issuance of the licence would apply to goods covered by imports made under that licence and the subsequent change in policy will be of no consequence. In the instant case also, only based on the Public Notice No.84/2009-14 dated 23.07.2010, the clarification dated 23.09.2010 and the Policy Circular No.13 dated 31.01.2011, the petitioner's request for revalidation of the DFIA licences, which are the subject matter of the writ petition, have been rejected under the impugned order. Though the petitioner's DFIA licence came into effect on 15.04.2010 itself, the petitioner has been able to utilise the DFIA licence only for few months and thereafter, due to the aforementioned Public Notice dated 23.07.2010, Clarification dated 23.09.2010 and Policy Circular No.13 dated 31.01.2011, they have been unable to get the benefit of DFIA licences - Admittedly, no stay has been obtained from the Hon'ble Supreme Court and only a S.L.P. is pending as against the Division Bench judgment of the Punjab and Haryana High Court in Pushpanjali Floriculture Pvt. Ltd. case. Further the order of the learned Single Judge of this Court in Hoewitzer case, has also attained finality and therefore, the petitioner must be given the benefit in accordance with the said decision. In view of the fact that the respondents have arbitrarily and by total non application of mind has rejected the petitioner's request for revalidation of the subject DFIA licences, the impugned order has to be quashed and the writ petition has to be allowed - Petition allowed. Issues Involved:1. Whether the Public Notice No.84/2009-14, dated 23.07.2010, and the Policy Circular No.13, dated 31.01.2011, are prospective or retrospective in operation.2. Whether the petitioner is entitled to the revalidation of DFIA licences issued on 15.04.2010.3. Whether the delay in seeking revalidation of the DFIA licences is justified.Issue-wise Detailed Analysis:1. Prospective or Retrospective Operation of Public Notice and Policy Circular:The core issue is whether the Public Notice No.84/2009-14 and Policy Circular No.13 are prospective or retrospective. The petitioner purchased DFIA licences on 15.04.2010, which were initially transferable. However, the Public Notice dated 23.07.2010 and Policy Circular dated 31.01.2011 imposed a condition that only the actual user could use the licence. The petitioner contended that the import policy at the time of licence issuance should apply, and subsequent changes should not affect the licences already issued. The respondents did not rebut this contention in their counter affidavit. The court referred to previous judgments, including the case of Hoewitzer Organic Chemical Co. vs. D.G.F.T., which established that the import policy at the time of licence issuance would apply, and subsequent changes would not affect existing licences. The court concluded that the Public Notice and Policy Circular would not apply retrospectively to licences issued before their dates.2. Entitlement to Revalidation of DFIA Licences:The petitioner sought revalidation of DFIA licences issued on 15.04.2010, which were affected by the subsequent Public Notice and Policy Circular. The court noted that similar cases had been decided in favor of the petitioner, including the Division Bench judgment of the Punjab and Haryana High Court in Pushpanjali Floriculture Pvt. Ltd. vs. Union of India. The court held that the petitioner's DFIA licences, issued before the Public Notice and Policy Circular, should not be affected by these subsequent changes. The court found the respondents' rejection of the petitioner's revalidation request to be arbitrary and illegal.3. Justification of Delay in Seeking Revalidation:The petitioner argued that the delay in seeking revalidation was due to the ongoing challenges against the Public Notice and Policy Circular. The court acknowledged that the petitioner had been actively pursuing the matter through various representations and legal proceedings. The court found that the delay was not due to the petitioner's fault and was justified. The court criticized the respondents for not considering the petitioner's explanations and for rejecting the revalidation request without proper application of mind.Conclusion:The court quashed the impugned order dated 08.11.2019, rejecting the petitioner's request for revalidation of the DFIA licences. The court directed the respondents to revalidate the three DFIA licences for the unused period within four weeks from the date of receipt of the order. The court emphasized that the Public Notice and Policy Circular could not retrospectively affect licences issued before their dates and that the petitioner was entitled to the benefits of the licences as initially issued.