TaxTMI 
TaxTMI 
1991 (2) TMI 218
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....f an Additional licence in terms of para 176 of the said Policy for an amount to be calculated at one third the f.o.b. value of the exports of select products made by the Export House in the year 1977-78. The petitioners submitted application for registration as Export Houses and for grant of Export House Certificate which would have entitled them to the grant of such Additional licence. The said applications of the petitioners were rejected by the authorities on the view that petitioners had failed to diversify their export of "Other Products" during the year 1977-78. The said order refusing the Export Certificate was challenged by the petitioners by filing writ petitions under Article 226 of the Constitution before the Bombay High Court. One of those writ petitions (filed by the petitioners in writ petition No. 460 of 1988 herein) was dismissed by a learned Single Judge of the High Court and the said petitioners filed an appeal before a Division Bench of the High Court. While the said appeal and the other writ petition (filed by the petitioners viz. writ petition No. 459 of 1988 herein) were pending in the Bombay High Court, this Court decided Civil Appeal No. 1423 of 1984, Union....
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....e to directly import items which are 'non-canalised' and also items which are 'canalised' could not be ruled out and it was in this light that the Court can be said to have used the words "whether canalised or otherwise" in the order dated April 18,1985. The matter was further clarified by this Court in D. Navinchandra & Co., Bombay &Anr. etc. v. Union of India & Ors. 1987 (29) E.L.T. 492 (S.C.) [1987 (2) S.C.R. 989], wherein this Court has observed: "Analysing the said order, it is apparent, (1) that the importation that was permissible was of goods which were not specifically banned, (2) such banning must be under the prevalent import policy at the time of import, and (3) whether items which were canalised or un-canalised would be imported in accordance with the relevant rules. These conditions had to be fulfilled. The Court never did and could not have said that canalised items could be imported in any manner not permitted nor it could have given a go-bye to canalisation policy." (P.1000) 4. In accordance with the directions given by the Bombay High Court the petitioners in writ petition No. 459 of 1988 herein were granted the Export House Certificate and were also granted....
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....lue of a 'single item' shall not exceed 10% of the flexibility in value terms of Rs. 10 lakhs, whichever is less; (b) where the value for import of a 'single item' on the basis of 10% as at (a) above, works out to less than Rupees one lakh, import would be permitted upto a value of Rs. 1 lakh, provided it is within the overall flexibility allowed on the licence; and (iii) import of non-OGL capital goods (other than those appearing in Appendices 1 Part-A and 8) without indigenous clearance, subject to the same conditions as stipulated at (ii) above, within the overall flexibility allowed to Export/Trading Houses." Paragraphs 217 and 218 of the said Policy provide for transitional arrangements. In para 217, it is prescribed that Export/Trading House Certificates issued prior to April 1,1988 would continue to be valid till the date of the expiry and the Export House/Trading House can apply for fresh certificates, if they fulfil the eligibility conditions laid down in the policy and in cases where these Certificates are expiring on 31st March, 1988, and the applicants do not fulfil the eligibility conditions for recognition laid down under the revised Policy, recognition wo....
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....apital goods now covered by Appendix 1, Part-B of this Policy within their overall value. (8) REP licences held by Export Houses/Trading Houses and already endorsed prior to 1-4-1988 shall cease to be valid for import of any items which could be imported under Open General Licence under the Import-Export Policy, 1985-88 but are no longer so in this Policy. (9) Additional licences issued to Export Houses/Trading Houses after 1-4-1988 on exports made during 1986-87 or earlier periods, will be 'non-transferable'. These licences will be valid for import of the items appearing in Part-1 of List 8, Appendix 6 of this Policy. These licences when issued to Trading Houses, will also be valid for import of the items appearing in Appendices 3 and 5 Part-A of this Policy, subject to the conditions laid down in this regard, in the Import-Export Policy, 1985-88. (10) Additional licences issued to Export Houses/Trading Houses prior to 1-4-1988, or issued after 1-4-1988 on exports made during 1986-87 or earlier periods, will not be eligible for the flexibilities in the import of items of raw materials, components and consumables covered by Appendices 3 and 5 Part-A and items of non-OGL ca....
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....986-87. It has been submitted that all Export Houses who have been granted Additional licences constitute a single class and that there is no basis for classifying such Export Houses into two different categories on the basis of the date of issuance of the Additional licences or on the basis of the period of the exports against which such licences have been issued and that such a classification has no connection whatsoever with the object sought to be achieved by the Import & Export Policy 1988-91. 7. On behalf of the respondents it has been submitted by the learned Additional Solicitor General that there is no similarity between the petitioners who have been granted Additional licences on the basis of their exports made during the period 1977-78 in accordance with the Import Policy 1978-79 and the Export Houses who would be granted Additional licences on or after April 1,1988, under the Import & Export Policy 1988-91 inasmuch as the conditions of eligibility for grant of such licences and the value of licences under the Import & Export Policy 1978-79 were quite different from those contained in the Import & Export Policy 1988-91. It has been urged that under the Import & Export....
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....the other was the basis for issuing the Additional licences to Export Houses which had been granted Export House Certificates. In para 165 of the said Policy the eligibility for grant of Export House Certificates was to be determined on the basis of the exports actually made in the three year base period 1975-76,1976-77 and 1977-78 and in para 166 it was laid down that the annual average f.o.b. value of exports in the prescribed base period of select products should not be less than Rs. one crore or those of non-select products Rs. five crores, but in the case of a small scale unit or a consortium of small scale units, the said minimum limit was reduced to Rs. 25 lakhs for select products and Rs. 2 crores for non-select products. In para 176 of the said Policy it was laid down that the value of the Additional licences to be granted for 1978-79 would be calculated at one third of the f.o.b. value of the exports of select products made in 1977-78 and manufactured by the small scale and cottage industries plus 5% of the f.o.b. value of other exports of select products made in the same year. In other words, under the Import & Export Policy of 1978-79 the basis tor grant of Export House....
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....ven the value of the Additional licences which can be issued under the Import & Export Policy 1988-91 on the basis of NFE earnings is much less viz. 10% as against 33.33% of f.o.b. value under the Import & Export Policy 1978-79. The said 10% value can be increased to 12% in cases where the Export House is able to achieve a minimum growth of 10% in terms of realisation in the previous year, over and above the year preceding the same. 12. The aforesaid examination of the provisions contained in the Import & Export Policy 1978-79 and the Import & Export Policy 1988-91 shows that while in the Import & Export Policy 1978-79 the emphasis was only on the f.o.b. value of exports without taking into account the outgo of foreign exchange in importing the goods required for achieving the exports by an Export House and Additional licences were granted for a much larger amount at a higher percentage on the basis of the f.o.b. value of the exports, in the Import & Export Policy 1988-91 there is a more realistic appraisal of actual benefit to the country's economy by the exports by taking into account the net foreign exchange earnings after deducting the value of the imports and additional lic....
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....ted April 18, 1985, was passed, has observed: "It has to be borne in mind that the basic background under which the Rajnikant's decision was rendered, the Export Houses had been refused Export House Certificates because it was insisted that they should have diversified their export and that was a condition for the grant or entitlement of an export house certificate. It was found and it is common ground now that that was wrong. Therefore, the wrong was undone. Those who had been denied Export House Certificates on that wrong ground were put back to the position as far as it could be if that wrong had not been done. To do so, the Custom authorities and Govt. authorities were directed to issue necessary Export House certificates for the year 1978-79 though the order was passed in April, 1985. This was a measure of restitution, but the Court while doing so, ensured that nothing illegal was done." (P.1000) After referring to the decision in Raj Prakash Chemicals Ltd. (supra) this Court has stressed: "The items had to pass to two tests, firstly, they should have been importable under the import policy 1978-79 and secondly they should also have been importable under the import po....
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....g Dry Fruits. It was held that the Export Houses could not import Dry Fruits in view of the said restriction placed in the Import Policy 1985-88. The decision of this Court in D. Navinchandra & Co. case (supra) reiterates that the rights of the petitioners under the Additional licences issued to them would be governed by the terms of the import policy prevailing at the time of import. 14. Here we find that in the Import & Export Policy 1988-91 there has been relaxation to a limited extent in respect of imports by Export Houses who are granted Additional licences under the said Policy on the basis of their exports during that period 1987-88 and subsequent periods. Since the basis for the grant of Additional licences which are entitled to this relaxation is different from the basis on which Additional licences were granted to the petitioners, the petitioners cannot claim the benefit of the same relaxation and assail the validity of sub-para (10) of para 218 of the Import & Export Policy 1988-91. 15. Shri Salve has invited our attention to the Import Licence dated November 21,1988 issued in favour of M/s. Suraj Diamonds Industries Pvt. Ltd. wherein it is stated that this licence....