TaxTMI 
TaxTMI 
2010 (3) TMI 201
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....for import of rough marble blocks/slabs. A conspectus of the DGFT Circulars on import of marble 3. In order to appreciate the challenge to the impugned circular, it is necessary to refer to the background in which it came to be issued. On 14th March 2002 the DGFT issued guidelines for import of rough marble slabs. It was clarified that the EXIM Facilitation Committee ('EFC') which was an Inter-Ministerial Committee comprising of representatives from various Ministries/Departments, would be considering the applications for import license in the DGFT, New Delhi. The eligible categories included those who had set up manufacturing and processing units in the country and those who were already importing marble in the preceding years when marble was being imported under Special Import Licence ('SIL'). The said circular dated 14th March 2002 also fixed the floor price for rough marble blocks at US$ 300 per metric tonne (PMT) and for slabs at US$ 450 PMT. The floor price for crude and roughly trimmed marble was fixed at US$ 300 PMT. In case of the importers of marble who were operating when marble was included in the SIL list, the value of the licence to be issued in one year was lim....
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....re consolidated and finally heard and disposed of by a judgment of the Supreme Court in Hindustan Granites v. Union of India, 2007 (211) E.L.T. 3 (S.C.) = (2007) 12 SCC 178. The Supreme Court rejected the challenge by the 100% EOUs to the aforementioned circular and notification. 7. On 30th November 2005 by a Circular No. 34/2005-09, it was stipulated that the entitlement was to be calculated on only the basis of the turnover of marble imported under Chapter 25 of the ITC (MS) Classification of Export Import Items 2004-09. The companies which had been importing under Chapter 25 were also allowed to add their complete turnover for imported marble for the preceding year i.e. 2004-05. The same circular also introduced the eligibility criteria that the manufacturing/processing unit must have been established when marble was under SIL List or before. 8. On 26th July, 2007 the following amendments were made by Circular No. 01(RE-07)/2004-2009: floor prices were revised: for crude or roughly trimmed marble - US $350 PMT, for rough marble blocks - US $350 PMT and for slabs - US $500 PMT. The total import of rough marble blocks was subject to a ceiling of 1.85 lakh MT per licensing ye....
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....restriction of 140,000 tonnes per annum, but grant import licence to all persons who meet the following criteria: "(i) Marble processing units having their own gang saw, would be eligible. (ii) The processing units should have been in operation for a minimum of three years as on 1-10-2007. (iii) The processing units should have a minimum sales turnover of Rupees one crore per annum." 11. Pursuant to the above recommendation, a dual policy was notified on 27th June 2008 and 30th June 2008. The circular dated 27th June 2008 introduced guidelines for import of rough marble blocks/slabs for the year 2008-09 permitting both groups i.e. SIL category as well as domestic processors to obtain import licence. The SIL category was entitled to a maximum import of 1.40 lakh MT per annum and the domestic category was also entitled to an equivalent amount. For the domestic units the eligibility was to be decided on the basis of the following two criteria: (a) Units which have installed marble gang saw machine [except 100% EOUs, units in SEZ and units which have been granted marble block import licences under previous licencing years or are eligible to avail licence in the current l....
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....The eligibility of the units was to be decided based on the following two criteria: (a) Units which have installed marble gang saw machine (except 100% EOUs, units in SEZ and units which have been granted marble block import licences under previous licensing years or are eligible to avail licence in the current licensing year (2008-09) under SIL category). The units should have been in operation since prior to 31-3-2001. (b) All eligible units as per (a) above should have indigenous sales turnover of marble slabs/tiles only, of Rs. Two Crore and above in each of the three financial years 2004-05, 2005-06 and 2006-07. 15.2 The floor prices were revised as under: (i) For rough/unprocessed blocks of agglomerated/artificial stones - US $300 per MT for goods of Chinese origin and $400 per MT for others; and (ii) For rough/unprocessed slabs of agglomerated/artificial stones US $22 per square meter for goods of Chinese origin and $28 per square meter for others. 15.3 The total ceiling was reduced to 40,000 MT while the individual units were to be entitled for an import licence pro rata on the basis of average indigenous sales turnover of marble slabs/tiles only, in the f....
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....prior to 1st April of the eurrcnt licencing year." 19. Pursuant to the above notification dated 23rd October 2009 the DGFT issued a policy circular on the same date. Para 3(a) of the said circular read as under: "Para 3(a) The established gang saw in the unit should be in the name of the unit as on date of this circular, as certified by the State Industry Department (District Industry Centre). The gang saw should also not be 'on lease' from any other party." 20. The Petitioner states that it was severely prejudiced by the introduction of the above conditions since the last date for receipt of the application for renewal of licence after fulfilling the conditions of the above policy circular dated 23rd October 2009 was to 2nd November 2009 i.e. barely seven days before the closing date. It is stated that there was no way the Petitioner could, within 17 days' time, establish a gang saw machine in its own name. Such condition could have helped only those importers who had already installed gang saw machines and were using them for processing and sale of marble. In para 8 of the grounds in the writ petition it is submitted as under: "8. Because the policy has been framed in....
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.... Notice is accepted by Mr. Sachin Datta, Advocate on behalf of the respondents. Counter affidavit will be filed within four weeks. Rejoinder affidavit, if any, will be filed within four weeks after counter is served." 24. According to the Petitioner, as on 30th October 2009 its application had not been rejected as was evident from the DGFT's letter dated 5th November 2009 informing the Petitioner that its application for import license was under scrutiny. The defect pointed out in the Petitioner's application was that it had not submitted "DIC certificate indicating number of gang saws installed and operational as on 30-9-2009." 25. The Petitioner contends that its application could not be rejected in view of the order dated 11th November 2009 passed by this Court. However, the Petitioner was sent a rejection letter dated 16th November 2009 which reads as under: "File No. 03/27-008/00246/AM19/234 30-10-2009 To, Sophisticated Marble & Granite Industries, Plot No. 17, Panchal Indl. Est. Bhimpur, Daman. UT 396210 Sub: Rejection letter Sir/Madam, Your application has been rejected due to following reasons: This has reference to your application for ....
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....28. Relying on the decision in Bacchhitar Singh v. State of Punjab AIR 1963 SC 395 Mr. Bhushan points out that till a decision is communicated, it does not become effective. Since the rejection of the Petitioner's application for import license had not been communicated to the petitioner till 21st November 2009 as far the Petitioner is concerned that was the date of rejection which was subsequent to the interim order dated 11th November 2009 passed by this Court. Therefore the Respondents had wrongly informed this court on 17th November 2009 that the Petitioner's application had been rejected since as on that date the decision was yet to be communicated to the Petitioner. It is urged that the Respondents should be held to have wilfully disobeyed the order dated 11th November 2009 which enjoined them from rejecting the petitioner's application. 29. Mr. A.S. Chandhiok, learned Additional Solicitor General appearing for the Respondent first submits that the impugned policy circular dated 15th October 2009 and the subsequent notification dated 23rd October 2009 have been issued to operationalise the earlier decision taken by the COS on 11th September 2007 itself. It is submitted tha....
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....on of India - (1984) 3 SCC 465, M.P. Oil Extraction v. State of M.P. - (1997) 7 SCC 592, Secretary to Government of Madras v. P.R. Sriramulu - (1996) 1 SCC 345, P.T.R. Exports (Madras) (P) Limited v. Union of India, 1996 (86) E.L.T. 3 (S.C.) = (1996) 5 SCC 268 and Ugar Sugar Works Limited v. Delhi Admn. (2001) 3 SCC 635 to urge that the High Court will not, in exercise of its power of judicial review under Article 226, ordinarily interfere with a policy decision of the executive unless the policy is shown to be vitiated on the grounds of mala fide, unreasonableness, arbitrariness or unfairness. However, the mere fact that it would hurt the business interests of a party would not justify invalidating a policy. Is the unified policy and the gang saw requirement unreasonable? 33. The principal question that arises for consideration is whether the Petitioner has been able to persuade this Court to hold that the impugned policy circular and notification are arbitrary or irrational. In particular, the question is whether the condition requiring the ownership and installation of a gang saw machine by an importer of rough marble blocks/slabs, who does not further process such marble ....
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....prising the Cabinet Secretary, Secretary, Commerce in consultation with the Secretary, Ministry of Micro, Small and Medium Enterprises (MSME) to consider one of the two options i.e. removal of the quantitative restrictions on imports of marbles and allow imports freely under OGL but at higher floor prices or the second option of continuing the present quantitative restriction system but grant licenses without restriction on the number of imports "so as to do away with monopoly of a few, and prescribe suitable objective criteria for granting the same." 36. Pursuant to the above decision the COS, the sub-committee met on 22nd October 2007 and took a decision to continue with the quantitative restriction of 140,000 tonnes per annum but grant import license to all persons who meet the other criteria i.e. marble processing units should have their own gang saw machines; the processing units should have been operational for a minimum of three years as on 1st October 2007 and should have had a minimum sales turnover of Rs. 1 crore per annum. This was when the requirement first emerged. It is another matter that it was not actually introduced till June 2008. What is pertinent is that the....
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.... Chotans Importers and Users' Association v. Union of India [1962J 1 SCR 862 . There must also be a considerable number of other factors which go into the making of an import policy. Expertise in public and political, national and international economy is necessary before one may engage in the making or in the criticism of an import policy. Obviously courts do not possess the expertise and are consequently incompetent to pass judgment on the appropriateness or the adequacy of a particular, import policy. But we may venture to assert with some degree of accuracy that our present import policy is export oriented. Incentives by way of import licences are given to promote exports....." 39. In M.P. Oil Extraction v. State of M.P. it was held (SCC, p.611): "41.......The executive authority of the State must be held to be within its competence to frame policy for the administration of the State. Unless the policy framed is absolutely capricious and, not being informed by any reason whatsoever, can be clearly held to be arbitrary and founded on mere ipsi dixit of the executive functionaries thereby offending Article 14 of the Constitution or such policy offends other constitutional p....
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.... interests and the claims as the legislature possesses the greatest freedom in such areas. It is also well settled that lack of perfection in a legislative measure does not necessarily imply its unconstitutionality as no economic measure has so far been discovered which is free from all discriminatory impact and that in such a complex area in which no fool proof device exists, the Court should be slow in imposing strict and rigorous standard of scrutiny by reason of which all local fiscal schemes may be subjected to criticism under the Equal Protection clause." (emphasis supplied) 41. In P.T.R. Exports (Madras) P Limited v. Union of India, the Supreme Court observed: "5. It would, therefore, be clear that grant of licence depends upon the policy prevailing as on the date of the grant of the licence. The Court, therefore, would not bind the Government with a policy which was existing on the date of application as per previous policy. A prior decision would not bind the Government for all times to come. When the Government are satisfied that change in the policy was necessary in the public interest, it would be entitled to revise the policy and lay down new policy. The Court....
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....ableness in the issuance of the impugned circular and notification has been made out by the petitioner. No doubt the criterion of ownership of a gang saw machine was introduced at a late stage thus rendering it impossible for the petitioner to get licences for the last two quarters of 2009-2010. However, in the considered view of the court, that by itself cannot render the requirement arbitrary when viewed in the overall context of a unified policy requiring the fulfilment of uniform criteria by all applicants. Any policy change is bound to adversely affect some marble trader or the other and perhaps some more than the others. If one were to go only by that yardstick, then every imperfect policy that does not cater to every description of a marble trader will fall foul of Article 14. Our Supreme Court has time and again emphasised that "imperfect" policies are not necessarily arbitrary or unreasonable policies. What has to be seen is whether the object of encouraging domestic industry, while not discouraging imports, is advanced by the impugned measure. In the context of the present case, the answer to that question has to be in the affirmative. 45. The Respondents need not have....