TaxTMI 
TaxTMI 
1984 (9) TMI 304
X X X X Extracts X X X X
X X X X Extracts X X X X
....licence which was transferred in his favour after complying with the required formalities. For some time the petitioner imported the aforesaid materials under REP licence. The said REP licence permitted import of raw materials, components, consumables, stores and packing materials in accordance with paragraph 30(1) of Part B, Section I of Volume II of the Import Policy 1977-78. 2. The said paragraph 30(1) of Part B, Section I of Volume II of Import Policy of 1977-78 is set out hereinbelow for the sake of convenience: 30(1).--If a manufacturer-exporter obtains the REP licence in his own name against his own exports the licence will be valid for import of any raw materials, components, consumables, stores and packing materials required for use in the licence holder's factory. The licence shall be subject to 'actual user' condition. The import shall be subject to the following restrictions: (a) Annexure I to this part contains a list of banned items. The list is in two parts, viz., Part I and Part II. Items appearing in Part I of the list can be imported for a total value not exceeding 10 per cent of the value of the licence, and, within this lim....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he exports made after the said date, would not be subject to actual user condition and would be freely transferable as provided in the Import Policies from the year 1978-79 and also clarified by the Chief Controller of Imports and Exports as stated hereinbefore. 5. The grievance of the petitioner in this application is that the customs authorities all on a sudden have changed their stand and five consignments of tetracycline hydrochloride imported by the petitioner from the foreign suppliers had not been allowed clearance. The said five consignments were imported by the petitioner from Hongkong between 26th June, 1984, and 26th July, 1984. All the aforesaid five consignments have been sold by the petitioner on high seas sale basis to M/s. Deys Medical Stores (Manufacturing) Ltd. The said goods have been imported by the petitioner under import licence bearing No. P/L/2966519 dated 31st May, 1983, issued in favour of Messrs. Braithwaite and Company, a Government of India Undertaking. The said licence was transferred by Messrs. Braithwaite and Company to Messrs. C.V. Enterprises who in turn transferred the same in favour of the petitioner. Upon such transfer, the petitioner entered....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nged in this writ application the withholding of the said consignments by the respondents as being arbitrary and illegal. The petitioner has given various instances where the identical item was cleared by the customs authorities. 8. This application was moved on 24th August, 1984, upon notice to the Collector of Customs, Calcutta and Deputy Collector of Customs, Air Cargo-Complex (Import), Dum Dum Airport. The respondents were directed to produce the records. The records have been produced. It appears from the records that on 16th July, 1984, the Appraiser has given a note to the following effect: The licence has been issued against registration of contract dated 15th October, 1976. The policy applicable for import of items is as were prevailing on the date of the firm contract, i.e., 15th October, 1976, Tetracycline HCL was included in export-linked-import item on 27th September, 1977, vide PN. 78-ITC(PN)-77 dated 27th September, 1977. Therefore, it appears that the imported item tetracycline HCL BP is covered within the validity of import licence submitted by the party. For opinion and order please. 9. A note was thereafter given by the Assistant Collector....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lector, Appraiser, Group I, gave the following note: Appraiser's note above may please be seen. M/s. Hansmukh Kundalia, Calcutta, have imported 100 cartons tetracycline HCL CIF Rs. 2,00,507.61. The party has produced licence No. P/L/2983496 dated 1st December, 1982, issued in the name of M/s. Tata Engineering and Locomotive Company Limited with L/A in favour of the importer. The licence is also endorsed for the import policy AM 81. The licence is also endorsed with the following remarks: The licence issued against registered contract will however, not be available for OGL imports of the item under OGL on the date of contract. (The licence is transferable in terms of paragraph 140 and 141 of AM 83 Policy Book)'. Party has sought clearance of tetracycline in terms of import policy period AM 78 as per registration of contract entered into during AM 78. According to ITC Policy, Volume I, Section III, page 94 tetracycline HCL was a canalised item. Tetracycline HCL is also not an OGL item. According to the extract of the contract registered with the Bank produced by the party indicates that the contract was registered on 5th August, 1977. On the date of contract the good....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e correct. 15. The then Collector approved the said note and directed the release of the goods. It appears from the records that the licensing, authorities by their letter dated 31st August, 1983, informed that prior to 27th September, 1979, tetracycline HCL was canalised and in terms of paragraph 33(1) manufacturer-exporters, nominee manufacturers, export houses holding REP licences were allowed to import the items in question though canalised as per the terms and conditions laid down in the said paragraph. Accordingly the then Collector allowed clearance of tetracycline HCL against identical licence. 16. In respect of another consignment the following notes appear in the file. While going through the records of the case, it is seen however that Shri T. S. Swaminathan, the then Collector of Customs has already accepted these licences allowing clearance of a consignment of tetracycline HCL on the basis of the above decision, it appears that a few more consignments of tetracycline HCL were allowed clearance against identical licences. In one of the last meetings Collector informed me that no case of canalised goods should be allowed clearance without the noti....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the restriction contained in the Public Notice No. 78/79 was imposed on 27th September, 1977, whereas the licence was issued on 31st May, 1983. The importers were therefore well aware of the restrictions and as such have intentionally infringed the provisions of the ITC Policy by importing wrong goods. Further, the licence has been issued on 31st May, 1983, and policy period applicable is AM 1983-84. As already mentioned, the licence has been issued against the registration of export contract. The details of policy and procedure are available under Appendix 20 of the aforesaid policy book. Paragraph 7 of appendix 20 is very much relevant. It has been clarified in that paragraph that protection against registered contracts is only with regard to the rate of imports replenishment and items of import allowed as replenishment in column 4 against the relevant export products of appendix 17. No such protection is available for import of any other items which may be allowed to be imported against REP licences by way of flexibility. As already mentioned the licence in question has been issued against the export of engineering goods the importation of drugs cannot be allowed by ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ers. Once a contract has been registered, the registered exporters will be eligible for claiming import replenishment at the same percentage and for the import of same items as were prevailing on the date of the firm contract. In the instant case it is seen from the endorsement on the face of the licence in question that the contracts were dated 2nd August, 1977. Hence the policy applicable to the licence in question is the policy in force on 2nd August, 1977. Now the question is whether the goods in question, namely, tetracycline HCL BP imported by the importers is a permissible item against the licence in question. The licence is endorsed as valid for import of raw materials, etc., in accordance with the provisions made in paragraph 30(1) of the Part B Section 1 of Import Policy Book, Volume II for 1977-78. Goods in question are raw materials not falling under Clause (a), (b) and (c) of sub-paragraph 1 of paragraph 30 of AM 1978 Policy Book, Volume II. Hence the licence in question is valid to cover the goods in question. Tetracycline HCL BP was included in the export-linked-import list only on 27th September, 1977, whereas the contract in question is dated 2nd August, 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es, I am of the opinion that the licence in question is valid to cover the goods in question and accordingly they may be released. (if otherwise in order) Sd/- Illegible (D.C. (N)) 1st September, 1983. 22. It appears that the Assistant Collector of Customs did not agree with the view of the Deputy Collector. After discussing, the Deputy Collector gave a note on 7th September, 1978. Discussed with DC (P), ACA Gr IV AO Gr I and AC/ACC I. It is brought to my notice that the practice followed by the Customs House hitherto has been to accept such licence especially in view of the fact that 'all' conditions are withdrawn vide paragraph 140 of AM 83 Policy. This is also endorsed on the reverse of the licence. In the C.H. and Air Cargo-complex we had allowed clearance of a number of consignments accepting such licence. Once the licence is made transferable, the 'licence holder' is the person in whose name the licence is transferred and not the original licence holder who had sold it absolutely to the present holder. When there is no 'all' condition, he is free to import goods covered by paragraph 30(1) of AM 1977-78 Polic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....77-78 Policy Volume II and not by way of any flexibility. Moreover during AM 77-78 Policy period, there was no system of allocating items of import to such licences as are done in AM 17 of the recent Import Policies. This clarification is furnished as desired by the Collector. The importers want ph also, Re-submitted. Sd/-Illegible 26th October, 1983. In such an event where is the case of adjudication? Let the goods be released against the licence produced. Sd/-Illegible Collector 27th October, 1983. 25. Thereafter, the goods were released. It appears from the records of that case that in the case of another transfer of a REP licence, (Hansmukh Kundalia, Calcutta) the identical article was released by the customs authorities. In the case of Natvarlal & Co. the licence was dated 31st March, 1983, and in the case of Hansmukh Kundalia the licence is dated 1st December, 1982. The petitioner's licence is dated 31st May, 1983. In the case of Natvarlal & Co., Bombay and Hansmukh Kundalia, Calcutta where the identical goods were released, the endorsements made in the said licences as regards the description of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... replenishment and other benefits under the Import Policy for registered exporters, as were permissible on the date of such contract with overseas buyers. Under paragraph 46 of the said Policy once a contract has been registered, the registered exporters will be eligible for claiming import replenishment at the same percentage and for the import of same items as were prevailing on the date of the firm contract. In this case, the contract was registered on 15th October, 1976. The licence is endorsed for raw materials, components, etc., subject to the restrictions contained in paragraph 30(1) of Part B, Section 1 of Volume II of the Import Policy 1977-78. The licence holder, therefore, is entitled to import items and is entitled to the rate of replenishment in accordance with the policy of 1977-78. If there is any restriction for import of any items such restriction must be on the basis of the Policy of 1977-78. 29. Paragraph 30(1) provides that the raw materials, etc., to be imported are required in the use of the licence holder's factory and the licence would be subject to "actual user" condition. However, the said restriction is no longer there and since 1st April, 1978, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....78 Policy makes it quite clear that the policy applicable therein would be that in force on the date of registration of the contract. The item tetracycline hydrochloride was neither banned nor restricted or export-linked-import item prior to 27th September, 1977. The 1977-78 policy came into effect on 27th April, 1977, and the restriction of import of tetracycline was imposed on 27th September, 1977. The question therefore is when such restriction will be operative in respect of the item permitted to be imported under the policy of 1977-78. It is now well-settled that the restriction imposed by notification cannot have any retrospective operation. Hence an importer will be eligible to the benefit of 1977-78 Policy as it stood on date of policy for the purpose of import of an item under paragraph 30(1) of 1977-78 Policy. It is also the case of the customs department as would appear from the note that the crucial date during 1977-78 Policy which should be applicable for determining the validity of the import of the item is the first day of the issue of the policy, i.e., 27th April, 1977, and on that day. The Assistant Collector of Customs who issued the show cause notice has himself ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....following terms: 7. Against contracts under the scheme, a registered exporter will be eligible to claim import replenishment at the same rate and for the same items as were permissible on the date of contract, under the relevant import policy for registered exporters. If the rate/items of replenishment, as per the policy in force on the date of contract, are different from those on the date of export, he may claim the benefit as on either date only, i.e., both the rate and items must relate to the same date. It is clarified that protection against registered contracts is only with regard to the rate of import replenishment and the items of import allowed as replenishment to column 4 against the relevant export product in appendix 17. No such protection is available for import of any other items which may be allowed to be imported against REP licence by way of flexibility. 35. Appendix 17 of 1983-84 Policy specifies import policy for registered exporters. In Appendix 17 at column 2 the export product is mentioned, at column 3 import replenishment percentage is mentioned and at column 4 the materials permitted for import against the export of the product are mentioned. It....
X X X X Extracts X X X X
X X X X Extracts X X X X
....considered the implication of such licences and also obtained clarification of the Chief Controller of Imports and Exports. If, on the same facts, they purport to take a different view or different stand or if there is any doubt whether the licence is covered for import of the goods in question or not, it cannot be said that the import of such goods was in contravention of the provision of Section 111(d) of the Customs Act, 1962, or is liable to confiscation. In the case of the petitioner, earlier several consignments of this item were released more than once. Several consignments have been released in other cases. The importer can certainly rely on the stand taken by the customs authorities in releasing various consignments of the identical item in several cases and can reasonably believe that such item is permitted for import. If that be the position, then it cannot be said that the goods are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported contrary to any provision imposed by or under Customs Act, 1962, or any other law for the time being in force. Neither the customs authorities nor the Chief Controller of Im....