TaxTMI 
TaxTMI 
1986 (3) TMI 230
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....ffice at Bombay. It is engaged in the manufacture of acrylic ester monomers (Butyl Acrylate, Ethyl Acrylate, 2 Ethyl Hexyl Acrylate and Methyl Acrylate) at its factory in Tarapur, Maharashtra. These items are used by various industries engaged in the manufacture of binders required in textiles, leather paint and paper industries. The second appellant is the Managing Director and a shareholder of the appellant-company. In February 1975, the appellants were granted an industrial licence for manufacturing acrylic ester monomers in a total quantity of 3,000 tonnes per annum. The installed capacity of the factory is, however, 1,000 tonnes per month. It commenced manufacture in December, 1980, and was until then the only manufacturer in India of acrylic ester monomers. In the year 1981 the Indian Petrochemicals Corporation Limited, a public sector organisation, also entered the market and began to manufacture acrylic ester monomers at its factory at Baroda, which possesses a capacity of 10,000 tonnes per year. 3. In the period before 1980 in the absence of any indigenous manufacture of acrylic ester monomers, the Government of India permitted the import of those items on Open Gen....
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....nsidered a vital document by foreign countries in the formation of their fiscal policies. The change in the nomenclature did not alter the principle underlying the grouping of items under the various heads. Each grouping was determined and continued to be so determined in accordance with two major objectives of import policy, the conserving of foreign exchange by limiting the total imports to a level ensuring that payment for them could be met by the available foreign exchange resources or by maintaining a minimum deficit in the balance of trade, and the further objective of giving impetus to, and protecting, the development of indigenous industries by limiting the import of corresponding manufactured products. The items in Appendix 3 (List of Limited Permissible Imports) were those whose import was not permissible ordinarily but could be permitted by the Government if their import was necessary and justified on the merits of the relevant consideration mentioned in the Import Policy, while the import of items Absolutely Banned (and later simply described as "Banned") was not permissible at all. 4. The Import Policy 1978-79 incorporated scheme under which Registered Exporter....
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....Taking the orders seriatim passed by the High Court of Bombay there is first the order dated November 26, 1982 by Pendse, J. in Writ Petition No. 1458 of 1979 filed by Narendra Mafatlal Mehta, whereby the learned Judge directed the grant of an Export House Certificate under Import Policy 1978-79 to the Petitioner, but while extending the time for making application for an Additional Licence he held the petitioner entitled to those facilities only which were provided by paragraph 174 of that Import Policy. Thereafter, the same learned Judge passed an order dated November 11, 1983 in Writ Petition No. 1293 of 1979 filed by D. Navinchandra & Co. in which, while directing the grant of an Export House Certificate under the Import Policy 1978-79 to the petitioner, Pendse, J. noted the objection on behalf of the Government that some of the items which could have been imported under the Import-Policy 1978-79 could have been banned under the Import Policy 1983-84, and the learned Judge observed that if any item was banned under the Import Policy 1983-84, the petitioner would not be entitled to import that item even though it was not banned under the Import Policy 1978-79. Another objection ....
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....e mean items which are 'banned' and 'absolutely banned'. 3. The petitioners will take out a separate Motion for Import Replenishment (REP) Licence transferred to them by others, if any. 4. No other order on the present Motion and the Motion stands disposed of as above with no order as to cost." 7. Adverting to the orders passed by the High Court of Delhi in the several Writ Petitions filed before it, we find that the High Court by its order dated July 15, 1980 in Writ Petition No. 250 of 1979 filed by Jayantilal Mangalji Mehta held the petitioner entitled to an Export House Certificate under the Import Policy 1978-79, and observed that the Certificate would operate with effect from the "original entitlement keeping in view the date of the application and the year for which it was applied." On September 3, 1982 the High Court directed in Civil Writ Petition No. 251 of 1979 filed by Vijay Trading Company that an Export House Certificate for the year 1978-79 should be issued to the petitioner and declared it entitled to all the consequential Replenishment and Additional Licences, and further directed, on a concession made by the petitioner that he would be satisfied....
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....hall be granted within 3 months from this date. Save and except items which are specifically banned under the prevalent import policy at the time of import, the respondents shall be entitled to import all other items whether canalised or otherwise in accordance with the relevant rules. The appeals are disposed of accordingly with no order as to costs." 9. Pursuant to the orders of this Court and of the High Court of Bombay and the High Court of Delhi, the diamond exporters have been issued Additional Licences which permit them to import items such as acrylic ester monomers. 10. The appellants are aggrieved by the grant of such additional Licences and see in the import of items under those Licences grave danger to their indigenous industry. Moreover, they say, valuable foreign exchange will unnecessarily go out of the country. In the circumstances, the appellants filed Writ Petition No. 11676 of 1985 in this court complaining that the order dated April 18, 1985 of this Court was being misinterpreted and, in consequence, the import of acrylic ester monomers was being allowed. On August 1, 1985, this Court dismissed the Writ Petition with liberty to the appellants to m....
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....ntion is drawn to the orders mentioned earlier of Pendse, J. and Bharucha, J. of the High Court of Bombay, wherein the same expression, "specifically banned", also appears, and which orders were the subject matter of the appeals disposed of by the order dated April 18, 1985 of this Court. It is submitted further that the order passed by Sawant, J., which constitutes the format for the endorsements made on the Additional Licences granted to the diamond exporters, must be construed in line with the earlier order of Pendse, J. in spelling out the intent of the word "banned". It is also pointed out that Sawant, J. used two expressions in his order, "banned" and "absolutely banned" as indicating the scope of the word "banned" used earlier in his order. This, learned counsel says, clearly means that diamond exporters were prohibited from importing even those items, such as acrylic ester monomers, which suffered a qualified ban that is to say "banned" although not "absolutely banned". In his submissions, Shri Tarkunde initially refuses to attach significance to the headings of the Appendices to the Import Policy but, he urges, even if they are taken into account the result would be the sa....
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....tional right to them, because in all the years after 1978-79 diamond exporter were not entitled to any additional licence. In the circumstances, it is said, when construing the scope of those orders, regard must be had to the observations of this Court in Deputy Asstt. Iron & Steel Controller v. L. Manickchand, (1972) 3 S.C.R. 13. The Union of India has made common cause with the Appellant company, and Shri B. Datta, the learned Additional Solicitor General of India, who appears on its behalf urges that the Export House entitlement under the Import Policy 1978-79 has to be reconciled with the entitlement and facilities available under the Import Policy 1985-88. He urges that the expression "specifically banned" in the order dated April 18, 1985 of this Court must be given a meaning consistent with the changed Import Policy now prevailing at the time of import, and that what is impermisable for import against Additional Licences under the current Import Policy cannot be allowed to be imported now. In the first place learned counsel points out that the High Courts and this Court have already permitted a departure from the current Import Policy in holding the diamond exporters....
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....e Import Policy 1985-88, including items in Appendix 3 Part A (List of Limited Permissible Items), but not items absolutely banned under the Import Policy 1985-88. He contends that the rights of such diamond exporters must be considered in the context of the Import Policy 1978-79 and not of the Import Policy 1985-88. The applications for Export House Certificates were made under the Import Policy 1978-79 and were denied by the Chief Controller of Imports on a wholly untenable ground, and consequently the intent of the orders of the Courts was to entitle such diamond exporters to restitution. Such restitution could be effected only if the diamond exporters could, notwithstanding the passage of time occasioned by the pendency of the proceeding in Court for relief against the wrongful order, be placed back in the position which they would have occupied had Export House Certificates been granted. As regards the items which such diamond exporters were entitled to import, he has referred to material on the record indicating how respondents 1 to 3 themselves understood the orders of the Court. Our attention has been invited to paragraph 5 of the counter-affidavit of Dr. R.K. Dhawan, Deput....
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....nt Licences is entitled to import the item under paragraph 195(1) of the Import Policy inasmuch as Ethyl Acrylate Monomer and Butyl Acrylate Monomer appear as item B. 36 in Appendix 17 of the Import Policy. Under paragraph 204(1) of the Import Policy, a special facility has been given to a manufacturer exporter holding a valid Replenishment Licence issued in his name against exports of select products manufactured by him to import the item specified in Appendix 3. It is contended by Shri Venugopal that the word "Banned" in the order dated April 18, 1985 of this Court should be interpreted in a manner consistent with Joint Chief Controller of Imports & Exports, Madras v. M/s Aminchand Mutha, (1966) 1 S.C.R. 262 and Union of India v. Indo-Afghan Agencies Ltd., (1968) 2 S.C.R. 366, and it should, therefore, be construed as referring to the import of goods into the country and not in relation to the bar placed on an individual to import goods which can otherwise be imported into the country. Even if the goods covered by the Licences issued under the Import Policy 1978-79 were found to be canalised under the Import Policy 1985-88 and, therefore, excluded from import directly by private ....
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....oints out that the ban on the import of goods into India is to be found not only under the Imports and Exports Act, but under other enactments, such as the Customs Act, the Foreign Exchange Regulation Act, the Drugs and Cosmetics Act, and the Insecticides Act. Learned counsel contends that the objective of the orders of the High Courts and of this Court was to effect restitution to aggrieved diamond exporters, who were victims of an unlawful denial of their applications for Export House Certificates. It is urged that they are entitled to full and complete restitution, and they have suffered already a diminution of their rights in the additional fetter imposed by the Courts in excluding items which were banned under prevalent Import Policy at the time of import. There is no justification, learned counsel contends, in further reducing the scope of the restitution to which the diamond exporters were entitled and the orders of the Courts should be construed against any further reduction of their entitlement. It is asserted that the entitlement of the diamond exporter flows from the Import Policy 1978-79 and not from the Import Policy 1985-88. There are several items which can be import....
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....port under the Import Policy 1978-79, cannot operate as a restriction. It is said that the ban against direct import by private importers imposed by canalisation was thus removed, and the intention of the Court always was that only the items "specifically banned" fell within the exception to the rights of the diamond exporters, "specifically banned" items being those absolutely banned and appearing in Appendix 2A of the Import Policy 1985-88. 17. Shri Anil Dewan, who appears for Messrs. Hiralal Chaganlal and Shrijee Sales Corporation, Interveners in this civil appeal, has also been heard by us. He contends that the expressions used by the Courts in their orders must be understood in the sense in which those involved in the import of goods and in import licensing understand such expressions, and that if the construction suggested by the appellant-Company and the Union of India is accepted the diamond exporters would be wholly prohibited from obtaining an Additional Licence under the Import Policy 1985-88. The expression "specifically banned" must, according to learned counsel, refer to items the import of which is banned not by reference to the person importing, but because ....
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....erms in which the order has been made appear simple on the surface, and yet as the range and depth of the contentions at the Bar have demonstrated, they embody a certain complexity. At the outset, it is necessary to examine the context in which the order was made. Diamond exporters, who had been denied Export House Certificates under the Import Policy 1978-79, filed writ petitions in the High Court of Bombay and the High Court of Delhi. The High Courts ruled that the ground on which the Export House Certificates had been refused was wholly untenable. They directed the issue of such Certificates as well as the consequent Additional Licences, but while defining the right of the diamond exporters to import items under the Additional Licences they also took into account the Import Policy prevailing at the time of import in regard to the items which could not be imported. The pendency of the litigation had inevitably occupied time, and meanwhile events had not remained stationary. The contextual framework determining the import structure had altered. Considerations pertaining to current economic and fiscal needs had led to the periodic reorientation of the country's Import Policy. Indig....
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....t should be enhanced. In other words, the terms of the High Court orders determined the outer limit of the rights of the diamond exporters. As this Court dismissed the appeals and affirmed those orders, the meaning and scope of this Court's order dated April, 18, 1985 must be discovered from the terms of the High Court orders. And that would plainly be so because the language in which the order of this Court is couched bears close comparison with one or other of the High Court orders. 21. In construing the order dated April 18, 1985 of this Court, it is necessary to note that the real controversy between the parties centres on the meaning of the words "specifically banned". They are the key words, and indeed the principal submissions made by the arrary of learned counsel before us have been devoted to ascertaining the significance of those words. They are words which were used by Pendse, J. and Bharucha, J. in the orders made by them, and our task is to find out what they were intended to mean. Now, all the appeals before this Court were disposed of by the order dated April 18, 1985. It was a single order in respect of the different appeals, and what it intended to say in o....
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....ier, that is the meaning which we think must also be given to the terms of the order dated April 18, 1985 of this Court. Where the Import Policy prevailing at the time of import is the Import Policy 1985-88, the items excluded are those enumerated in the corresponding Appendix 3 and Appendix 2 Part A of that Import Policy. That conclusion follows irresistibly on the analysis attempted by us and in the context in which the order was made. 22. We are mindful of the submissions made before us by learned counsel for the different diamond exporters that the word "banned" in the import trade should mean items which are absolutely banned and cannot be imported under any circumstance whatever, and that an import of items subject to restrictions respecting to category of importer should not fall within the expression "banned". Reliance has been placed on Aminchand Mutha's case (supra) as well as Indo-Afghan Agencies Limited case (supra). Goods can be banned, it is urged, only by an order under Section 3 of the Imports and Exports Act, 1947, and we are referred to Jagannath Aggarwal v. B.N. Dutta (Civil Appeal No. 801 of 1964 decided on January 10, 1967) (supra). It seems to us that ....
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....nvisaged under the Import Policy 1978-79. But for the purpose of granting relief in their favour the Courts took into account the conditions prevailing at the time of import, and therefore the provisions of the Import Policy 1985-88 become relevant. They are relevant for the purpose of construing the terms in which relief has been granted by the Courts. They do not constitute the source of those rights. 25. Great emphasis has been laid by learned Counsel on the overriding consideration that the intent of the High Courts and of this Court was to effect restitution to the diamond exporters, who had been denied Export House Certificates to which they were clearly entitled, and there is no justification, it is said, for so construing the order dated April 18, 1985 that the extent of restitution stands attenuated. We think it necessary to point out that the diamond exporters cannot, upon our construction of the order, be regarded as denied restitution. But the restitution available to them has been reduced by the express direction of the Court that they are not entitled to import items excluded under the Import Policy prevailing at the time of import in addition to those exclude....
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....which the petitioner diamond exporter would be entitled on the issue of an Export House Certificate. The orders continued all the way up to January, 1985. Appeals filed by the Union of India in the High Court of Bombay against the orders of the respective learned Single Judges were dismissed by a Division Bench of the High Court and those orders were affirmed. In the writ petition filed by Messrs. Vijay Trading Company in the High Court of Delhi, the High Court had directed that although the petitioner was entitled to an Export House Certificate for the year 1978-79 it would be entitled to import those items only which were not banned in the year 1980-81, the writ petition having been taken up for hearing during that year. A Special Leave Petition by the Union of India against that order was dismissed by this Court on April 18, 1983. An application by the Union of India for review of that order was dismissed by this Court on May 4, 1984. Meanwhile the Union of India appealed to this Court against the orders of the High Court of Bombay and of the High Court of Delhi made in favour of the diamond exporters in the writ petitions filed by them and it has not been shown that any stay or....