Diamond exporters with Additional Licences restricted from specific imports under Import Policy 1985-88

The Supreme Court upheld that diamond exporters with Additional Licences could not import items listed in specific sections of the Import Policy 1985-88. However, those with irrevocable Letters of Credit before October 18, 1985, were allowed to clear their imports to prevent undue hardship. The court emphasized fairness in balancing the impact of changing import policies on exporters. The appeal was disposed of without costs.

---

---

Issues Involved:
1. Import Policy and its changes over time.
2. Grant of Export House Certificates and Additional Licences.
3. Interpretation of the term "specifically banned" in the context of the Import Policy.
4. Restitution for diamond exporters who were denied Export House Certificates.
5. The impact of judicial orders on the rights to import under different Import Policies.

Detailed Analysis:

1. Import Policy and its Changes Over Time:
The case revolves around the changes in India's Import Policy from 1978-79 to 1985-88. Initially, acrylic ester monomers were allowed to be imported under Open General Licence due to the absence of indigenous production. Over the years, the Government of India moved these items to restricted and banned lists to protect domestic industries and conserve foreign exchange. The Import Policy 1981-82 placed acrylic ester monomers in Appendix 5 (List of Restricted Items) and later moved Ethyl Acrylate to Appendix 3 (List of Banned Items). Subsequent policies continued to reclassify these items, reflecting changes in economic and fiscal needs.

2. Grant of Export House Certificates and Additional Licences:
Several diamond exporters applied for Export House Certificates and Additional Licences under the Import Policy 1978-79 but were denied on the grounds of not diversifying their exports. The High Courts of Bombay and Delhi ruled that the denial was invalid and directed the issuance of the certificates and licences. The Supreme Court, in its order dated April 18, 1985, confirmed these High Court judgments, directing the issuance of Export House Certificates for the year 1978-79 and allowing the import of items, except those "specifically banned" under the prevalent import policy at the time of import.

3. Interpretation of the Term "Specifically Banned":
The core issue in this appeal is the interpretation of the term "specifically banned" as used in the Supreme Court's order dated April 18, 1985. The appellants argued that under the Import Policy 1985-88, Export Houses with Additional Licences could only import items listed in Part II of List 8 of Appendix 6, and since acrylic ester monomers were not listed, their import was "specifically banned." The respondents, however, contended that "specifically banned" should only refer to items absolutely prohibited from import, not those merely restricted or canalised.

4. Restitution for Diamond Exporters:
The diamond exporters argued that they were entitled to full restitution, meaning they should be allowed to import items as per the Import Policy 1978-79, notwithstanding changes in subsequent policies. The Supreme Court noted that the High Courts had taken into account the altered import policy framework while granting relief, balancing the need for restitution with current economic realities.

5. Impact of Judicial Orders:
The Supreme Court's order dated April 18, 1985, was interpreted in light of the High Court orders, which aimed to grant relief to diamond exporters while considering the prevailing import policies. The Court concluded that the term "specifically banned" included items listed in Appendix 3 and Appendix 2 Part A of the Import Policy 1985-88, which replaced the earlier Appendices 3 and 4 (List of Banned and Absolutely Banned Items).

Conclusion:
The Supreme Court upheld the interpretation that diamond exporters holding Additional Licences could not import items listed in Appendix 3 and Appendix 2 Part A of the Import Policy 1985-88. However, it allowed those who had opened irrevocable Letters of Credit before October 18, 1985, to clear their imports, recognizing the need for fairness and to avoid undue hardship. The appeal was disposed of with no order as to costs.

---