TaxTMI 
TaxTMI 
2019 (11) TMI 739
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....cts. Apart from sourcing the goods indigenously, the firm also imported the goods on payment of appropriate duties of customs duty. The petitioner sell the subject goods mostly to buyers who are basically engaged in agricultural operations/activities. The petitioner started importing the goods from the year 2012 both through the Port of Vishakhapatnam and Chennai. The goods were assessed and cleared by the customs by classifying the same under Customs Tariff Heading 3102 and extended the benefit of Nil rate of Basic Customs Duty and full exemption from payment of the Countervailing Duty in terms of Notification No.12/2012-CE dated 17.03.2012. The Government of India had introduced a new rule known as Ammonium Nitrate Rules. For storing and trading Ammonium Nitrate, one should possess a license in form P3. Accordingly, the petitioner made necessary application before the second respondent. The petitioner was granted P3 license dated 03.12.2014. For any import of Ammonium Nitrate, one should be in possession of P5 license granted by the second respondent. The petitioner was advised that they are entitled to get P5 license, since they are already holding P3 license. Accordingly, an....
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....owever, the appeal filed before the first respondent was dismissed on 08.02.2017 without considering any of the grounds raised by the petitioner. Thus, the petitioner filed another writ petition in W.P.No.28851 of 2017, challenging the order of the first respondent dated 08.02.2017. By order dated 05.09.2018, the Writ Court allowed the writ petition and set aside the order of the first respondent and remitted the matter back to him for considering the appeal once again on merits and pass orders in accordance with law after giving due opportunity of personal hearing to the petitioner. Accordingly, the first respondent heard the petitioner in person on 23.10.2018. However, the first respondent passed the present impugned order once again recording the same finding that the petitioner is a trader and not an actual user. Hence, the present writ petition. 3. The respondents 1 and 2 filed counter affidavit, wherein it is stated as follows: Initially Ammonium Nitrate or a combination thereof was notified as a "special category explosive substance" for the purpose of Explosives Substances Act 1908 (Act 6 of 1908); vide Notification No.S.O.2899(E) dated 10th December 2008 by the Gover....
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....r possession and use/sale of Ammonium Nitrate under Ammonium Nitrate Rules, 2012. From these facts, it is clear that petitioner had imported Ammonium Nitrate but also indulged in sale of imported Ammonium Nitrate to unauthorized persons. The proposal on import of Ammonium Nitrate by the petitioner was not considered by this respondent for issuance of Form P-5 under Ammonium Nitrate Rules, 2012 and the same was conveyed vide letter No.P-5 (AN) Ports /2014 (A1743) Ammonium Nitrate Rules, 2012 dated 19.08.2015. Despite of this letter on a later date, the petitioner had imported 740 MT of Ammonium Nitrate through Chennai Port vide Bill of Entry No.2704255 dated 24.09.2015 as reported by the Principal Commissioner of Customs, Chennai vide letter No.ENQ/56/2015-SIIB dated 08.10.2015. Since inception of Ammonium Nitrate Rules, 2012, License for import of Ammonium Nitrate is being granted by PESO only to the bonafide users viz., Catridge & Bulk Explosives Manufacturers for their captive consumption, not for sale purpose, in the interest of national security, on the following grounds. i) Explosives Manufacturers are only permitted to import Ammonium Nitrate for their captive con....
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....agpur on 19th August 2015, the appellant had imported the aforesaid AN consignment of 740 MT through Chennai Port on a later date i.e. 24th September 2015, which amounts to violation of Rules 4 and 6(4)(a) of the Ammonium Nitrate Rules, 2012. ii) Bill of Lading is prepared in advance and is not a valid document and explanation offered by the appellant is not satisfactory. iii) Further the petitioner knowing his application for grant of P-5 license has been refused by the Chief Controller of Explosives, did not stop dispatch of consignment from Korea. iv) Special Intelligence & Investigation Branch (SIIB), Principal Commissioner of Customs informed that appellant had earlier cleared 696 MT of Ammonium Nitrate through Chennai Port and 500 MT through Vishakapatnam Port without a valid license. It revealed that the appellant had sold the entire AN imported earlier by them to various individuals and to companies involved in stone quarrying, construction and mining activities and the same was not used for agricultural purpose. 4. The respondents 3 and 4 filed separate counter affidavit, wherein it is stated as follows: The petitioner M/s.Sri Amman Chemicals, Karur, Tamilna....
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....ce, the said consignments imported vide Bill of Entry No.2704255 dated 24.09.2015 was seized under a mahazar on 12.11.2015 as only holders of P-5 license are entitled to import and admittedly the petitioner do not possess such P-5 license. It is also pertinent to mention that upon investigation into the actual use of traders/firms to whom M/s.Sri Amman Chemicals, Karur sold Ammonium Nitrate, it was found that some of them were explosive dealers (S.No.1-9 below) and others are quarry owners (S.No 10-15 below): 1. R.Krishnan Explosives Dealers, Eriyodu 2. Matha Explosivests, Pudukottai 3. Sakthi Chemicals, Vadamadurai 4. Swamy Traders, Dharampuram 5.Srirajalakshmi Fertilizers and Chemicals, Paramathi Velur. 6. Srivinayaga Agencies, Koduvai Thirupur 7.Suthakar, Poramathi, Aravai 8.Vasan Chemicals, Uthkuli 9.Thriveni Earth Movers Pvt Ltd., Hosur 10. Balur Blue Metals, Pavithiram, Aravai, Karur 11. Pon Vinayaka Blue Metals, Karudaiyam Palayam, Aravai, Karur 12. Sree Navaladi Blue Metals, Karur 13. Sri Vetrivelan Blue Metals, Kodanthur, Karur 14. VRG Blue Metals, ....
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....ng for the respondents 1 and 2 submitted as follows: While P3 license is for storing Ammonium Nitrate, P5 license is for import. A policy decision has been taken not to give P5 license to traders. Therefore, such policy decision cannot be questioned by the petitioner. In this case, the petitioner imported the subject matter goods even before getting P5 license. Therefore, his conduct is without any bonafide. While Section 6B of the Explosives Act, 1884 deals with grant of license, Section 6C deals with power of the Licensing Authority to refuse to issue license under the circumstances stated therein. In proceedings dated 16.09.2016, the Petroleum and Explosives Safety Organisation of Government of India has extensively discussed the reason for permitting the import of Ammonium Nitrate and granting license to such import only to users and not to traders. Granting of P5 license is not an automatic merely because the applicant is holding P3 license. Even the petitioner's P3 license had already expired on 31.03.2019 and thus as on date, the petitioner is not having the P3 license. The petitioner has sold Ammonium Nitrate to various third parties who are not agriculturist, as ....
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.... suspensions, melts or gels (with or without inorganic nitrates) shall be deemed to be an explosive within the meaning of the said Act: Provided that such Ammonium Nitrate or any combination thereof shall not include those fertilizers from which Ammonium Nitrate cannot be extracted by any physical or chemical process. Note: The Explosives Rules, 2008 shall not be applicable to Ammonium Nitrate or any combination thereof, as referred to in opening portion of this notification, except for the materials or mixtures classified as explosives under said Explosives rules, 2008 and there shall be framed separate rules for regulating the Ammonium Nitrate, or combination thereof under Section 5 and Section 7 of Explosives Act, 1884. [F.No.17(19)/2010-Explosives] CHAITANYA PRASAD, Jt. Secy." 11. Originally, the application filed by the petitioner for grant of P5 license for import of Ammonium Nitrate was rejected by an order dated 19.08.2015, on the ground that the issue of P5 license is considered only in favour of Ammonium Nitrate users in the interest of national security. The said order was put to challenge by the writ petitioner in W.P.No.20826 of 2....
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....ebate 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 that Ammonium Nitrate has been used in every blast case in the recent past and although the police have arrested several persons they have not been able to trace the origin of the chemical in even a single case. It is further reported that the Police say that large quantity of Ammonium Nitrate has gone missing, since the past four years (2013) and at an average, there has....
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....n 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 subject to the reasonable restrictions and the petitioner cannot contend that he has a fundamental right to trade in explosives. national security is of paramount importance and an individual interest shall be subservient to the interest of the Nation. Therefore, this Court finds that even if ....
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....rity previously passed an order on 08.02.2017, rejecting the appeal and this court in W.P.No.28851 of 2017 set aside the said order and remitted the matter back to the Appellate Authority. The said remittal was for the reason that the Appellate Authority had not dealt with the merits of the facts and circumstances and that he has to give his independent reasons and findings for rejecting the appeal. This Court while remitting the matter back to the Appellate Authority also made it very clear that it was not expressing any view on the merits of the matter and that the appeal should be reconsidered once again on merits and in accordance with law. Thereafter, the First Appellate Authority passed the present impugned order dated 02.11.2018. 16. Perusal of the order of the Original Authority in refusing to grant license and the order of the Appellate Authority in rejecting the appeal would undoubtedly indicate that there is no scope for the writ petitioner to seek indulgence of this Court to interfere with those orders, more particularly, when the rejection was made in the interest of national security and based on a policy decision. It is seen from the order of the Original Authorit....
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.... where it is required for the purpose of manufacture of explosives if the licensing authority is satisfied that the person by whom licence is required-- (i) possesses technical know-how and experience in the manufacture of explosives; or (ii) has in his employment or undertakes to employ a person or persons possessing such technical know-how and experience; or (b) where it is required for any other purpose, if the licensing authority is satisfied that the person by whom licence is required has a good reason for obtaining the same. 6-C. Refusal of licenses:- (1) Notwithstanding anything contained in section 6B, the licensing authority shall refuse to grant a licence-- (a) where such licence is required in respect of any prohibited explosives; or (b) where such licence is required by a person whom the licensing authority has reason to believe- (i) to be prohibited by this Act or by any other law for the time being in force to manufacture, possess, sell, transport, import or export any explosive, or (ii) to be of unsound mind, or (iii) to be for any reason unfit for a licence under this Act; or ....
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....ertain minute regulatory measures pertaining to export/import of AN could not be envisaged, while the Ammonium Nitrate Rules, 2012 were framed. When the rules were implemented, based on the experience gained by PESO, such missed out regulatory measures were identified and addressed now by way of amending the rules and incorporating new provisions and that is how every new set of Rules getting evolved, over a period of time. 2. In the year 2016-17, Explosives manufacturers imported 3.17 MT (28.7% of their requirement) of AN for their captive consumption, which was only to meet the gap between the demand & supply of AN in the country. When the AN demand & supply gap increases with the increase in the explosives production, the explosives manufacturers are at ease to meet the gap by way of import of AN by themselves. This practice ensures non-dumping of unwarranted AN in the country. This is in line with the directives of the Hon'ble Commerce and Industry Minister in the meeting held on 03/07/2017 on 'Strengthening Regulatory Framework for Global Leadership". 3. Import of AN by Traders will not have such balancing mechanism and would lead to excess dumping of....
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.... without a valid license in Form P5 under Ammonium Nitrate Rules 2012 and investigation of the Special Intelligence and Investigation Branch of Customs revealed that the appellant had sold the entire Ammonium Nitrate imported to various individuals and to Companies involved in stone quarrying, construction and mining activities and the same was not used for agricultural purpose. The Appellate Authority also found that the writ petitioner/appellant has sold Ammonium Nitrate to various individual firms not holding P3 license for possession, use/sale of Ammonium Nitrate. Therefore, it is evident that the petitioner has earlier imported huge quantity of Ammonium Nitrate and sold it to various third parties, who are not possessing P3 license and the usage by such third parties was also not for agricultural purpose. Therefore, the petitioner has evidently dealt with the imported Ammonium Nitrate by selling to various third parties, who are not having the valid P3 license to possess the same. 22. No doubt, under Article 19(1)(g) of the Constitution of India, right to trade is a fundamental right. However such right is not an unfettered right and on the other hand, it is always subject ....