2010 (3) TMI 201 - HC - Customs

Court affirms gang saw machine import license requirement, dismisses contempt petition, petitioner to pay costs.

SOPHISTICATED MARBLES & GRANITE INDUSTRIES Versus UNION OF INDIA

The court upheld the requirement for gang saw machines for import licenses, deeming it reasonable and aimed at promoting domestic industry. The court ... EXIM- Marble Import- The petitioner, an importer of rough marble blocks/slabs, challenges in this writ petition a circular dated 23rd October 2009 as well as notification dated 15th October 2009 issued by the Director General of Foreign Trade (‘DGFT’) imposing a condition that for the purposes of securing an import licence the Petitioner would have to install a gang saw machine in its unit. The Petitioner is a sister concern of the Litoller Group which was a pioneer in importing Italian marble into India. The petitioner was issued an import license for the import of marble slabs/blocks on 12th October 1999. On 22nd January 2003 the DGFT renewed the Petitioner’s license for import of rough marble blocks/slabs. Held that- . It appears that the decision to reject the Petitioner’s application was taken on 10th November 2009 itself, prior to this court’s order dated 11th November 2009. Although this decision was communicated to the petitioner in writing later, there is nothing to doubt that the decision was itself taken on 10th November 2009. In the circumstances it is not possible to hold that the Respondents were in contempt of this Court’s order dated 11th November 2009 when they communicated the decision of rejection to the Petitioner by the letter dated 16th November 2009. There is no merit in the contempt petition and it is dismissed as such. Issues Involved:1. Challenge to DGFT circular and notification imposing gang saw machine requirement for import license.2. Reasonableness and arbitrariness of the gang saw machine requirement.3. Compliance with judicial orders and alleged contempt of court.Issue-wise Detailed Analysis:1. Challenge to DGFT Circular and Notification:The petitioner, an importer of rough marble blocks/slabs, challenged a circular dated 23rd October 2009 and a notification dated 15th October 2009 issued by the DGFT. The petitioner argued that the requirement to install a gang saw machine to secure an import license was unreasonable and impractical. The petitioner contended that this condition was introduced with insufficient notice, making compliance within the stipulated time frame impossible.2. Reasonableness and Arbitrariness of the Gang Saw Machine Requirement:The court examined whether the gang saw machine requirement was arbitrary or irrational. It noted that the policy shift from a dual to a unified policy was a well-deliberated decision aimed at curtailing monopoly in the marble trade and encouraging domestic industry. The court emphasized that policy decisions involve complex evaluations and balancing of various interests, and judicial review should not extend to questioning the wisdom of such decisions unless they are shown to be mala fide, arbitrary, or unreasonable.The court found that the requirement for gang saw machines had a basis in the deliberations of the Committee of the Secretaries (COS) and was part of a broader strategy to regulate the marble trade. It acknowledged that the policy change did not happen overnight and that traders were aware of the evolving criteria. The court held that the policy was not arbitrary or unreasonable, as it aimed to promote investment and equitable distribution of import entitlements.3. Compliance with Judicial Orders and Alleged Contempt of Court:The petitioner argued that the rejection of its application for an import license violated a court order dated 11th November 2009, which directed the respondents not to reject the application. The court examined the records and found that the decision to reject the application was taken on 10th November 2009, prior to the court's order. The rejection letter dated 16th November 2009 was issued based on this decision. The court concluded that there was no contempt of court, as the decision to reject the application predated the court's order.Conclusion:The court dismissed the writ petition, finding no case of mala fides or unreasonableness in the issuance of the impugned circular and notification. It upheld the policy requiring the installation of gang saw machines for import licenses, emphasizing the need to balance various interests and promote domestic industry. The court also dismissed the contempt petition, concluding that the respondents did not wilfully disobey the court's order. The petitioner was ordered to pay costs of Rs. 10,000 to the respondents.