1987 (9) TMI 226 - HC - Customs

Court Orders Issuance of NOC for Import License of Scrap: Emphasizes Statutory Compliance

SHREE GANESH STEEL ROLLING MILLS AND ANOTHER Versus UNION OF INDIA AND OTHERS

SHREE GANESH STEEL ROLLING MILLS AND ANOTHER Versus UNION OF INDIA AND OTHERS - 1988 (34) E.L.T. 509 (Cal.) Issues Involved:1. Issuance of 'No Objection Certificate' (NOC)2. Compliance with the Import & Export Procedure Handbook3. Statutory duty of the canalising agent4. Availability of raw materials from indigenous sources5. Petitioner's right to importDetailed Analysis:1. Issuance of 'No Objection Certificate' (NOC):The petitioner sought a Writ of Mandamus commanding the respondent to issue a 'No Objection Certificate' (NOC) in the form prescribed in Appendix IV-B of the Hand Book of Import & Export Procedure for the year 1985-88. The petitioner argued that the canalising agent, Metal Scrap Trade Corporation Ltd., failed to supply the requested 7700 MT of Carbon Steel Re-rollable Scrap or issue the NOC within 30 days as mandated by Para 223(1)(a) of the Handbook. The court found that the respondent did not register the demand or ask for the deposit of earnest money within the stipulated time, nor did it issue the NOC, thus failing to comply with statutory obligations.2. Compliance with the Import & Export Procedure Handbook:The petitioner contended that the canalising agent did not follow the procedures laid down in the Handbook, specifically Paras 218 and 223. Para 218 requires the canalising agent to attempt to meet the registered requirements from indigenous supplies if available. Para 223 mandates the issuance of an NOC within 30 days if the canalising agent cannot supply the materials. The court observed that the respondent neither attempted to meet the demand from indigenous sources nor issued the NOC, thereby violating the Handbook's provisions.3. Statutory Duty of the Canalising Agent:The court held that the canalising agent had a statutory duty to either supply the materials or issue an NOC. The respondent's failure to act according to the Handbook's procedures was deemed arbitrary and unreasonable. The court emphasized that public authorities must act reasonably and cannot exercise unfettered discretion. The respondent's shifting stand and failure to communicate clearly about the availability of materials from indigenous sources further demonstrated a breach of statutory duty.4. Availability of Raw Materials from Indigenous Sources:The respondent claimed that the materials were available from indigenous sources, which would negate the need for import. However, the court found no evidence or communication from the respondent indicating efforts to procure the materials indigenously. The Steel Authority of India also confirmed that it was not involved in canalising the said materials. The court concluded that the respondent failed to fulfill its statutory duty under Para 218 to meet the registered requirements from indigenous sources.5. Petitioner's Right to Import:The court acknowledged the petitioner's right to carry on trade or business as guaranteed under Article 19(1)(g) of the Constitution of India. The respondent's arbitrary actions and failure to issue the NOC infringed upon this right. The court ruled that the petitioner's legitimate claim to import the materials could not be denied due to the respondent's inaction and arbitrary conduct.Conclusion:The court directed the respondent to issue the 'No Objection Certificate' within 10 days, enabling the petitioner to obtain an import license for 7700 MT of Re-rollable Scrap. The ruling emphasized the importance of adhering to statutory procedures and the duty of public authorities to act reasonably and transparently. The writ petition was thus allowed, and the rule was made absolute, with no order as to costs.