AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (10) TMI 564
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....te users, in the interest of National Security. This order dated 19.08.2015, is challenged in W.P.No.20826 of 2016. By an earlier order dated 20.05.2016, the licence granted to the petitioner in Form P-3, dated 03.12.2014, to possess for sale of Ammonium Nitrate from a store house exceeding 30MT, was suspended as an interim measure, as per the provisions of Section 6E of the Act read with Rule 42 of the Rules. By the same order, the petitioner was directed to show cause within 21 days as to why the licence should not be cancelled. This order of suspension as an interim measure, is challenged in W.P.No.20827 of 2016. 2. The learned Senior counsel appearing for the petitioner advanced submissions, firstly, on the correctness of the order dated 20.05.2016 and thereafter, made submissions on the correctness of the order dated 19.08.2015, rejecting the application of the petitioner for issue of licence in Form P-5. Therefore, this Court proceeds to consider the Writ Petitions in the said order. 3. The petitioner is a partnership firm, which was established in the year 2008 and engaged in the business of trade in Ammonium Nitrate. The petitioner has been sourcing the goods indigenously....
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.... wherein among other things, they stated that the representation may be considered and it may be ordered either for storage of the goods at the petitioner's licenced premises or in the alternate to grant provisional release of the goods subject to requisite conditions that may be imposed under Section 110A of the Customs Act, pending adjudication. Subsequently, the petitioner submitted a representation to the Assistant Commissioner of Customs (Group-3), Chennai on 19.05.2016, requesting for bonding of the goods under Section 49 of the Customs Act, 1962. These requests made by the petitioner before the Customs Authorities were pending, and while so, by the impugned order, dated 20.05.2016, the petitioner's licence in Form P-3 was suspended as an interim measure. As mentioned earlier, the order dated 20.05.2016, apart from placing the petitioner's licence in Form P-3 under suspension as an interim measure, called upon the petitioner to show cause as to why his licence should not be cancelled. The petitioner has submitted his reply dated 01.06.2016 to the second respondent. 5. Mr.Vijay Narayan, learned Senior counsel assisted by Mr.N.Viswanathan, learned counsel appearing....
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....the petitioner in that regard in the explanation. 7. The learned Senior counsel, with regard to the challenge to the order dated 19.08.2015, by which the petitioner's application for issue of licence in Form P-5 for import of Ammonium Nitrate was rejected, submitted that the order of rejection is illogical and arbitrary causing grave prejudice to the petitioner. The reason assigned in the impugned order that licence could be considered only in favour of Ammonium Nitrate users, is contrary to the statutory provisions and violates the petitioner's fundamental right guaranteed. 8. Referring to Rule 5 of the Rules, deals with the pre-requisite for grant to licence and stated that no licence shall be granted unless all the relevant provisions laid down under the Rules and all conditions contained in the licence forms under Part-2 of schedule II are complied with and the Rules nowhere state that licence will be restricted to only actual users. Referring to Rule 6, which deals with general restrictions, it is submitted that sub-rule 4 of Rule 6 deals with restriction on imports and the restrictions are as mentioned in clauses (a) to (d), under Rule 6(4) and the reason assigned i....
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....erence was made to Section 17A, which deals with power to delegate and the authority namely, the first respondent is entitled to delegate his powers to the second respondent. Further, by referring to Schedule I under Rule 28 of the Rules, which prescribes the authority for issuing licences, the Licencing Authority for issuing licence in Form P-5 is the Chief Controller and the Licencing Authority for issuing licence in Form P-3 is the Chief Controller or Controller authorised by the Chief Controller. In this regard, a tabulated statement attested by the Chief Controller was produced before this Court to show that the second respondent was authorised by the Chief Controller for the purposes of interim suspension and issuance of show cause notice. At this juncture, the learned Senior counsel appearing for the petitioner objected to the said document stating that it is only a tabulated statement and it cannot be taken as an authorisation. Referring to the order of interim suspension and the reasons contained therein, it is submitted that the subjective satisfaction of the second respondent is evident from the reasons stated therein and the product namely, the Ammonium Nitrate having b....
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....o the proviso under sub-rule (1) of Rule 42, it is submitted that before suspending or cancelling a licence under the said rule, the holder of the licence shall be given an opportunity of being heard. It is further submitted that the respondent by invoking sub-rule (5) of Rule 42, the opportunity of being heard may not be given to the licencee, if the licence is suspended as an interim measure for violation of any provisions of the Act and such power could have been invoked only if in the opinion of the Licencing Authority, such violation is likely to cause imminent danger to public and from the impugned order, it is clear that the authority has not recorded his opinion as to under what circumstances, the alleged violation is likely to cause imminent danger to the public. 15. To examine this contention, we may look into the relevant provisions of the Act and the Rules. The Act was enacted to regulate the manufacture, possession, use, sale, transport, import and export of explosive. In exercise of power conferred under Section 18(1) of the Act, the Government of India vide notification, dated 16.09.2011 invited objections and suggestions on the draft of the Ammonium Nitrate Rules, ....
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.... or direct the Licencing Authority to do so under sub-section (8). On such suspension or revocation, the licencee shall surrender the licence without delay in terms of sub-section (9). 17. Chapter II of the Rules, deals with General Provisions under which Rule 6 specifies the 'General Restrictions'. For the purposes of this case, Rule 6(4) would be relevant which deals with restriction on import or export. The said Rule mandates that no Ammonium Nitrate shall be imported or exported except at its ports notified by the Central Government; shall not be imported into India by sea except through the ports, which are duly approved for this purpose by the Government of India; Ammonium Nitrate imported into India by sea shall not be stored in the port. Chapter VII of the Rules deal with grant or refusal of approval, licence, amendment, transfer and renewal. 18. Under the said Chapter, Rule 42, deals with suspension and revocation or cancellation of licence. Sub-rule (1) of Rule 42, deals with the circumstances under which the licence stand cancelled or suspended and the proviso provides that before suspending or cancelling a licence under sub-rule (1) of Rule 42, the holder of t....
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....the public interest or in the interest of the security of the State, such opportunity should not be given. 19. Thus, as per the scheme of the Rule, there is a clear distinction drawn to the power exercised by the competent authority while exercising the powers under Rule 42(1) and 42(5). Thus, the power under Rule 42(1) is a power granted to the competent authority to suspend or cancel a licence and before doing so, the licencee shall be given an opportunity of being heard. However, in contra distinction, the power under sub-Rule (5) could be exercised without an opportunity of being heard. Therefore, a holder of a licence under the Act and Rules cannot claim an opportunity of being heard when the suspension is made resorting to power under sub-Rule (5) of Rule 42. 20. On a plain reading of the said sub-rule, it is seen that this power is a power exercisable as an interim measure. Rule 42(5)(i), is exercisable by a Licencing Authority to suspend a licence as an interim measure for the violation of any of the provisions of the Act or the Rules or any conditions contained in such licence. While doing so, the Licencing Authority is required to form an opinion that such violation is ....
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....nion that licence granted to the petitioner requires to be placed under suspension as an interim measure and the reasons for exercising the power of interim suspension is vivid on a reading of the impugned order. Therefore, the petitioner is not correct in contending that the Licencing Authority has not recorded his opinion, while exercising the power of the interim suspension. If ultimately, the allegations are established, it is a serious matter especially when, Ammonium Nitrate has been declared as a explosive substance for which the Ammonium Nitrate Rules were framed and came into force on 11.07.2012. That apart, in terms of proviso in Rule 42(5), the respondent has granted an opportunity to the petitioner to show cause as to why the Licence should not be cancelled. Therefore, the impugned order cannot be stated to be devoid of reasons nor it can be stated that the competent authority did not form an opinion before passing the order of interim suspension. Thus, the contention raised by the petitioner in this regard does not merit acceptance. 24. The next contention raised was that the Joint Chief Controller of Explosives, South Circle is not the competent authority to exercise....
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....roof to show that the Joint Chief Controller of the Explosives, who had passed the order of interim suspension, was entitled to exercise the powers to suspend a licence in Form P-3 as an interim measure and to issue show cause notice. The document having been attested by the Joint Controller of the Explosives cannot be disbelieved or discarded as contended by the petitioner. Therefore, the order passed by the Chief Controller of the Explosives suspending the petitioner's P-3 licence as an interim measure, does not suffer from lack of jurisdiction. Therefore, the contention that the impugned order suffers from the vice of lack of jurisdiction deserves to be rejected. 28. It was further contended that though the petitioner had submitted their reply to the show cause notice with regard to proposal to cancel the petitioner's licence on 01.06.2016, till date no orders have been passed, would show that the authorities are biased against the petitioner. 29. On the allegations made by the petitioner, there can be no inference of bias and in the absence of any specific allegation and without naming those individuals, such vague averments cannot be taken to infer bias and therefore....
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....containing more than 45% of the Ammonium Nitrate by weight including emulsions, suspensions, melts or gels was declared as an explosives substance within the meaning of Explosives Act. 34. This Court can take judicial notice of the fact from various news reports that the presence of Ammonium Nitrate in the bombs, which exploded in various parts of the country, raised a debate on the availability of the substance, primarily who used to make explosives and fertilisers. The report reveals that though the Government enacted the Rules to regulate the sale of Ammonium Nitrate, it was still easily available and is being used by terror groups to make bombs and a report of the Intelligence Bureau suggested that during 2012 alone, 4000Ts of Ammonium Nitrate had gone missing. It is further reported that in 2013, there were around 20000 consumers of Ammonium Nitrate and all these persons had applied for licence after the Ammonium Nitrate Rules were framed, the reason being classification of the Ammonium Nitrate changed from an innocuous fertiliser ingredients to the Explosive device. The report further states that it has been a matter of concern for investigating agencies, as they have found ....
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....he application submitted by the petitioner for grant of licence in Form P-5, bearing in mind the interest of the National Security, thought fit to restrict issuance of licence in favour of the Ammonium Nitrate users and the petitioner being a trader, rejected their application. 37. In my view, the restriction imposed is a reasonable restriction in the light of the fact, separate Rules were framed for regulation of the use of Ammonium Nitrate, which has been specifically brought within the definition of an explosive substance. In such circumstances, this Court is not inclined to interfere with the impugned order. 38. The learned Additional Solicitor General submitted that as against the impugned order refusing to grant licence, the petitioner has an alternate remedy of preferring an appeal before the Appellate Authority. The reason for rejection of the licence for import is on the ground that the same will be considered only for Ammonium Nitrate users and such decision has been taken in the interest of National Security. The bonafides of the reason assigned in the impugned order, as being in the interest of National Security cannot be doubted. The right to trade in explosives is s....
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....ust and the findings rendered by the Hon'ble Supreme Court could at best be construed as a finding with particular reference to the fact in issue and cannot be taken to be a laying down a general principle nor could it be applied to the facts of the present case, where the correctness of orders passed under the Explosive Act and the Rules are being tested. 41. An argument was advanced that the petitioner had been earlier importing large quantities of Ammonium Nitrate and he has been a trader and carrying on business without any compliants from 03.12.2014, can hardly be a ground to interfere with the impugned orders. The allegation in the impugned order, dated 20.05.2016 is unauthorised illegal activities in the matter of sale and supply of Ammonium Nitrate, which the petitioner had imported prior to the Rules coming into force. Thus, the earlier imports effected by the petitioner prior to coming into force, can hardly have any impact while testing the correctness of the impugned proceedings. 42. Further, it has to be pointed out that the denial of right of the petitioner to redeem the goods under Section 125 of the Customs Act does not flow from the relief sought for in these....