TaxTMI 
TaxTMI 
2015 (12) TMI 477
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....IN WRIT PETITION (L)NO.2962 OF 2014, WRIT PETITION (L)NO.2963 OF 2014 S.C. DHARMADHIKARI AND A.A. SAYED, JJ. Mr. Vikram Nankani, Senior Counsel, a/w Mr. Aqbel Sheerazi, Sushanth Murthy, Sparsh Prasad i/b. Economic Laws Practice for the Petitioners. Mr. Anil C. Singh, Additional Solicitor General of India, with Dr. G. R. Sharma with Mr. D.P. Singh, Dhanesh Shah, Ajay Patil and Dhiren Shah, Mr. Pradeep S. Jetly Mr. Rafiq Dada, D. B. Shroff, Senior Counsels, a/w Mr. Vipin Jain, Vishal Agarwal and P. K. Shetty, Mr. Venkatesh Dhond, Senior Advocate, a/w Rashmin Khandekar, Prateek Pai i/b. Keystone Partners , Ms. Pooja Thorat a/w Mr. Sejal Yadav for Steel Authority of India, Intervenors, Mr. Anjal Amin i/b. B. Amin & Co. for the Respondent JUDGMENT (PER S. C. DHARMADHIKARI, J.) Rule. The Respondents waive service. By consent, Rule made returnable forthwith. 2] By this Writ Petition under Article 226 of the Constitution of India, the Petitioners pray for the following reliefs:"( a) that this Hon'ble Court be pleased to declare that the impugned Circular No.450/176/2014CustIV dated 7th November, 2014 is unconstitutional and ultra vires Articles 14, 19(1)(g) and ....
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....teel and PartIV covers alloy steel. Admittedly, the said goods are alloy steel and classifiable under Heading 7228 of CTA. As per General Note 2A of ITC (HS), all quality conditions imposed under the BIS Act have to be complied with by the steel imported into India. 6] The Petitioners further state that in exercise of powers conferred by section 14 of the BIS Act, the Central Government issued the Steel Quality Control Order dated 12th March, 2012 which, inter alia, provides that no person shall by himself, or through any other person manufacture or store or sell or distribute any steel and steel products specified in the Schedule which do not conform to the specified standards and do not bear standard marks of the Bureau of Indian Standard on obtaining certification marks license as provided for in paragraph 4 thereof. The Schedule contains a list of steel products under mandatory Bureau of Indian Standards Certification and is divided into 3 columns. Column 1 covers the relevant Indian standard numbers. Column 2 refers to the corresponding heading/subheading of ITC (HS). The Schedule to this order was amended vide order dated 31st March, 2014. The said goods are covered by ser....
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....held up the clearance of the consignments covered by Commercial Invoice dated 18th September, 2014. 9] It is this Circular which is challenged in the Writ Petition on several grounds. The Writ Petition was filed on 14th November, 2014. An affidavit in reply has been filed by the Respondent No.4 in which the Respondent No.4 has clarified in para 11 as under; "I also say that the 4th Respondent has further issued Steel and Steel Product (Quality Control), Amendment Order, 2014 on 4th December, 2014 wherein it is clearly set out that ITC (HS) codes are generic and merely indicative in nature. It is not exhaustive. Thus ITC (HS) codes are not the guiding criteria for the BIS Act. The said ITC (HS) codes are only used as a point of reference. The said order clears all the confusion pertaining to inclusion of alloy and nonalloy steel in the Schedule. In view of the said order, the Petitioner cannot raise such allegations as the same are contrary to the statute. 10] Mr. Nankani, learned Senior Counsel, submits that the controversy in the Writ Petition is now restricted to the position prevailing prior to 7th November, 2014. Though the Petitioner is partially satisfied with ....
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....th October, 2014 as well as the email dated 30th September, 2014 (Exhibits "F" and "G" respectively). It is, therefore, submitted that the impugned Circular, to the extent, it is based on irrelevant consideration, is without and/or in excess of jurisdiction and, therefore, violative of Article 14 of the Constitution of India. The impugned Circular has been issued with a malafide intention to favour some of the manufacturers and/or rerollers of steel, who have vested interests and discriminate against persons like the Petitioners. The impugned Circular is a clear case of bias against the Petitioners and reveals the case of nepotism in relation to some of the manufacturers and/or rerollers of steel. The impugned Circular, is therefore, arbitrary, unreasonable and violative of Article 14 and Article 19(1)(g) of the Constitution of India. 13] Mr. Nankani has further submitted that the impugned Circular ignores relevant facts and provisions of law. The explanation to the amended schedule, on a plain reading, confirms that in order that the provisions of the Steel Quality Control Order are made applicable, the goods must fall under both the relevant BIS standards a well as ITC (HS) Co....
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....ses 171. 16] On the other hand, the learned Additional Solicitor General, who has appeared on behalf of Respondent No.1, 4, 5 and 6 submitted that in the affidavit in reply the matter has been clarified amply. Mr. Singh submits that there are three different statutes and contemplating three different authorities. The standard and quality of goods (BIS) is for the purposes of safety and preserving and protecting public health. Those standards and qualities are evolved and every country is free to prescribe its own standards and qualities of goods. Mr. Singh has relied upon para 9 of the affidavit in reply to submit that the goods imported by the Petitioners are meant for consumption of construction industries that is for concrete reinforcement purposes. Further, it is not disputed that the manufacturer or exporter overseas/abroad has not applied for a BIS license and the goods imported do not bear the standard mark of BIS. 17] Mr. Singh has relied upon para 10, 11 and 15 of the affidavit in reply which read as under:" 10. I say that the Schedule to the Steel and Steel Products Quality control in column 3 thereof gives ITC (HS) Code which has been defined in Clause 2(d....
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....actice or clearance of allowing import of alloy steel as alleged or at all." 18] He, therefore, submits that by Steel and Steel Product (Quality Control) Amendment Order, 2014 passed by the 4th Respondent on 4th December, 2014, it is reaffirmed that ITC (HS) Codes are merely indicative and not exhaustive. That is not a guiding criteria for the BIS Act. For all these reasons, it is submitted that there is no violation of the mandate of Article 14 or 21 of the Constitution of India. He submits that there is no merit in the Writ Petition particularly when the allegations of malafide and discrimination are patently false. 19] Mr. Rafiq Dada and Mr. D. B. Shroff, learned Senior Counsel, appearing for some of the Associations have supported the stand taken by Mr. Singh. 20] For properly appreciating the rival contentions, a reference is necessary to the statutes in the field. The Bureau of Indian Standards Act, 1986 is an Act to provide for the establishment of a Bureau for the harmonious development of the activities of standardisation, marking and quality certification of goods and for matters connected therewith or incidental thereto. Section 2 contains the definitions. The t....
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....escription of an article or process as far as practicable by reference to its nature, quality, strength, purity, composition, quantity, dimensions, weight, grade, durability, origin, age, material, mode of manufacture or other characteristics to distinguish it from any other article or process; 2(t) "Standard Mark" means the Bureau of Indian Standards Certification Mark specified by the Bureau to represent a particular Indian Standard and also includes any Indian Standards Institution Certification Mark specified by the Indian Standards Institution." 23] Then, Mr. Nankani has relied upon section 11 and to urge that no person shall use, in relation to any article or process, or in the title of any patent, or any trade mark or design the Standard Mark or any colourable imitation thereof, except under a licence. 24] Mr. Nankani has also invited our attention to section 14 of this Act which reads as under:" 14. Compulsory use of Standard Mark for articles and processes to certain scheduled industries.- If the Central Government, after consulting the Bureau, is of the opinion that it is necessary or expedient so to do, in the public interest, it may, by order pub....
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....at the provisions of this subsection shall be applicable, in case of import or export of services or technology, only when the service or technology provider is availing benefits under the foreign trade policy or is dealing with specified services or specified technologies.] (3) All goods to which any Order under subsection (2) applies shall be deemed to be goods the import or export of which has been prohibited under section 11 of the Customs Act, 1962 (52 of 1962) and all the provisions of that Act shall have effect accordingly. [(4) without prejudice to anything contained in any other law, rule, regulation, notification or order, no permit or licence shall be necessary for import or export of any goods, nor any goods shall be prohibited for import or export except, as may be required under this Act, or rules or orders made thereunder.] 6. Appointment of Director General and his functions. - (1) The Central Government may appoint any person to be the Director General of Foreign Trade for the purposes of this Act. (2) The Director General shall advise the Central Government in the formulation of the [foreign trade policy] and shall be r....
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....ase, the classification of export and import items with effective rates of customs duty for each item has been relied upon. Para 2.2 of the Foreign Trade Policy indicates as to how all imported goods shall also be subject to domestic laws, acts, rules, orders, regulations, technical specifications, environmental and safety norms as applicable to domestically produced goods. The general notes laid down in Part 1 Schedule 1 - Import Policy ITC (HS) Classification for Imports apply to imported goods. Note 2 is important and reads as under:" 2. Indian Quality Standards : (A) Mandatory Indian Standards of Bureau of Indian Standards (BIS) : Quality of the products that are subject to mandatory Indian Standards, as applicable to domestic goods, shall be required to comply with quality specified for the product as per same Indian Standards. For compliance of this requirement, all manufactures/exporters of these products to India, shall be required to obtain BIS license for using Standards mark on their product. The present list of 'Items under mandatory BIS certification' is given in AppendixIII of this Schedule. As and when BIS notifies the quality speci....
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....r is the essential argument. We are of the opinion that this argument is entirely misconceived. 35] The, impugned circular dated 7th November, 2013 AnnexureH to the Writ Petition No.2909 of 2014 reads as under:" The matter has been examined by the Board. It is seen that in few imports at Chennai the imported goods contained more than 0.0008% and fell under CTH 7228 while said Steel Products Quality Control Order, 2012 mentions goods falling under CTH 72131090 and 72142090 (Sr. No.5 of the said Order refers). Sine CTH 7228 was not mentioned in the said Steel Products Quality Control Order, 2012 the Commissioner of Customs (Imports), Chennai referred the matter to Bureau of Indian Standards for clarification. The Board also made a reference to Ministry of Steel to align the Steel Products Quality Control Order, 2012 with the correct CTH. In this regard, Ministry of Steel has informed that the Steel Products Quality Control Order, 2012 is strictly based on the relevant Indian Standard though ITC (HS) Code has been provided for reference purposes. This is also clarified in the "Explanation" to the said Steel Products Quality Control Order, 2012. Ministry of Steel has concluded that ....
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...., Government of India, Ministry of Finance, Department of Revenue and it also made a reference to the Ministry of steel to align the Steel Products Quality Control Order, 2012 with the correct CTH and we do not find that the import of the goods being permitted strictly in accordance with the legal provisions mentioned in this circular including that of BIS certification is in any way contrary to law. The reference made therein to the Board of Indian Standards and to ITC (HS) Code and, inter alia, to the goods brought in by parties like the Petitioner in India confirming to the standards and quality devised by the Board is to caution that no violation of the quality standards is permissible. We do not see how such a stand taken in the circular can be said to be violating the mandate of Article 14 of the Constitution of India. Chapter 72 of the ITC (HS) is dealing with Iron and Steel and contains Notes and Supplementary Notes. That is classification of Export and Import items with Customs Tariff Rates and Exemptions. The code is to facilitate ImportExport and referable to section 7 of the Foreign Trade (Development and Regulation) Act, 1992. 37] We are in agreement with Mr. Singh,....
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.... any provision thereunder is ultra vires the Constitution of India and particularly Article 14 thereof. They are not contending that every single act on their part after the goods reach India cannot be subjected to the domestic laws. In such circumstances and when all the laws and dealing with different matters and covering separate areas and field have to be interpreted and construed in harmony with each other that we are of the opinion that there is no merit in the contentions of Mr. Nankani. He would rely upon section 40 of the Bureau of Indian Standards Act, 1986 to urge that this Act shall not affect operation of certain Acts. However, a perusal of section 40 would indicate that the operation of the Agricultural Produce (Grading and Marketing ) Act, 1937 or the Drugs and Cosmetics Act, 1940 or any other law for the time being in force, and which deals with any standard or quality control of any article or process alone is not affected by the Bureau of Standard Acts, 1986. 40] We do not find anything in the provisions and which are relied upon as indicative of the fact that the standards and which are devised so as to take care of the quality and specification of the article....
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....the Central Government to prohibit importation or exportation of goods and for achieving the purpose set out in sub section(2). The power under subsection( 1) can be exercised to prohibit importation or exportation of goods so as to maintain the standards for the classification, grading or marketing of goods in international trade. The prohibition can also extend for the purpose of protection of human, animal or plant life or health and for compliance of imported goods with any laws which are applicable to similar goods produced or manufactured in India. Last but not the least, the power can also be exercised to prevent the contravention of any law for the time being in force or any other purpose conducive to the interest of the general public. In such circumstances, we are not in agreement with Mr. Nankani that the Board lacked the power to issue the impugned circular. 42] Similarly, we are not in agreement with Mr. Nankani that the ITC (HS) is code by itself. His argument overlooks the fact that the same is only to identify the goods which are permitted to be imported or exported. That is a code devised in terms of the Foreign Trade (Development and Regulation)Act, 1992 so ....