TaxTMI 
TaxTMI 
2024 (8) TMI 1419
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....T BANSAL, J.: 1. The present appeal is directed against the impugned judgment dated 7th October, 2022, passed by the learned Single Judge in W.P.(C)10143/2022. By the said judgment, the aforesaid writ petition has been allowed and the consignment of the writ petitioner comprising inter alia, 'frames' and 'slides' of handguns, which had been seized by the respondents in the writ petition, has been ordered to be released. BRIEF FACTS AND LITIGATION HISTORY 2. Brief facts relevant for the determination of the issues in the present appeal are set out below: 2.1. The writ petitioner/respondent no. 1 herein, Syndicate Innovations International Limited (hereinafter referred to as "Syndicate") is a public limited company engaged in the manufacture of firearms and ammunitions. Syndicate had obtained a manufacturing license issued by the Ministry of Home Affairs (in short "MHA")/appellant no. 1 herein on 12th March, 2018. 2.2. Section 10 of the Arms Act, 1959 (hereinafter referred to as the 'Act'), prohibits the import and export of arms and ammunitions without a license. Via notification dated 1st November, 2018 issued by the MHA, the powers and functions under Section 10 of ....
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....ign Trade Policy, 2015-2020 (hereinadter the 'FTP'). It also stated that the imported consignments have to be considered subject to the provisions of the Arms Act, 1959 and the Arms Rules, 2016 and the manufacturing license granted by the MHA. The Delhi Police was advised to directly seek further information from the MHA. 2.9. Accordingly, the Delhi Police approached the MHA for appropriate clarifications via communication dated 21st July, 2022. 2.10. The MHA, vide communication dated 3rd August, 2022, issued an advisory wherein it was stated that: i. The definition of 'parts and components' under Rule 2 (37) of the 2016 Rules was an 'inclusive' one; ii. 'Slides' and 'Frames' cannot be pre-fitted with other licensable parts for the purpose of manufacturing as well as import. Since, the license issued to Syndicate was with respect to import of 'frames' and 'slides' alone, Syndicate could not have imported the additional operational parts, viz 'hammer', 'firing pin' and 'extractor'. iii. Additionally, import of arms and ammunitions is also subject to Rule 57 (4) of the 2016 Rules. 2.11. In light of the aforesaid advisory issued by MHA, the import c....
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....ma as an interim measure, albeit, with the condition that Syndicate shall not dispose of any of the items therein. 7. The intervener before the Writ Court i.e., SIAL Manufacturers Pvt. Ltd. had also filed an appeal being, LPA 25/2023 against the impugned judgment. Vide order dated 18th January, 2024, passed by this Bench, the aforesaid appeal was disposed of, with liberty to the Intervenor to make submissions in the present appeal. 8. An application (C.M.No. 61953/2023) was filed on behalf of Syndicate seeking modification of the order dated 6th February, 2023, and permission of the Court was sought to utilise the imported items in manufacturing finished products, i.e., handguns. In the meanwhile, the MHA vide communication dated 12th February, 2024 permitted Syndicate to commence commercial production. 9. In the aforesaid backdrop, submissions of the parties in the present appeal were heard on several dates. Written submissions have also been filed by the parties in support of their respective arguments. SUBMISSIONS ON BEHALF OF THE PARTIES 10. Mr. Kirtiman Singh, learned CGSC appearing on behalf of the appellant no. 1/MHA has made the following arguments to assail ....
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..... 'Frames' and 'slides' are not defined either in the Arms Act, 1959 or the Arms Rules, 2016. In the absence of such a definition, it cannot be said that 'frames' and 'slides' cannot be pre-fitted with other parts. Further, the appellants have failed to provide any evidence to prove to the contrary. Reliance has been placed on the Additional Affidavit filed on behalf of Syndicate wherein industry practice in the form of expert opinions has been placed on record to show that 'frames' and 'slides' come with pre-fitted parts. III. Form VII and Form X-A prescribed in the 2016 Rules cannot be relied by the appellants to submit that Syndicate ought to have obtained a license in respect of the sub-components that were pre-fitted with the import license as the aforesaid forms are in respect of manufacture and export respectively. Import of arms and ammunitions is governed by Form X which does not mention the aforesaid pre-fitted parts, as is correctly observed in the impugned judgment. IV. Form-X license issued ex-post facto to Syndicate on 14th September, 2022, which gave permission to Syndicate to import 'frames' and 'slides', without any exclusions or qualifiers is an ....
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....aziabad, Uttar Pradesh - 201010 2. Name, description and address of agent (if any) authorised for the purpose of this consignment NA 3. Number of packages NA 4. Arms, Description & Quantity SI. No. Description Quantity (nos) 1. Parts of handgun - Frame 68,500 2. Parts of Handgun - Slides 68,500 3. Parts of Handgun - Cylinder 68,500 4. Parts of Air Weapon - Cylinder (Drum) 28,000 5. Parts of Air Weapon - Slide with Barrel 6,500 5. AMMUNITION NA Description NA Weight (in Kgs) or Number NA 6. Purpose for which required Actual User - for Manufacturing of Arms 7. In case of Import, place where article imported are to be stored or deposited Syndicate Innovations International Limited, Plot No. E - 14, Sahibabad, Industrial Area, Site - IV, Ghaziabad, Uttar Pradesh - 201010. 8. Place of despatch and route NA 9. Place of destination NA 10. Name, description and address of the consignee NA 11. Period of validity of Licence 22.10.2022 ....
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.... these sub-componets are being imported only for the purpose of manufacture of finished products and coupled with the fact that these components are pre-fitted to 'frames' and 'slides', there would be no rationale for obtaining separate licenses qua them. 20. It is pertinent to note that the objections raised by the appellants were only in respect of some of the parts that were pre-fitted in the 'frames' and 'slides' imported by Syndicate, i.e., 'hammer', 'extractor' and 'firing pin'. Concededly, the appellants did not raise any objection in respect of other sub-components such as 'catch magazine', 'safety lock', 'safety lock support pin', 'trigger', 'trigger action mechanism part', 'spring of firing pin' and 'lock of firing pin', which were pre-fitted inside the 'frames' and 'slides' and also mentioned in the communication dated 21st June, 2022 sent by the Delhi Police to the DGFT. 21. It seems that the appellants objected to 'hammer', 'extractor' and 'firing pin' only because these found mention in the Explanation given in Form VII and Form X-A, whereas the other components were not mentioned therein. The Explanation given in both the forms, being identical, is reproduced h....
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....hat the import of Frames and Slides must necessarily be understood to mean that they would not be embedded with any additional parts and components of a firearm. That contention, for reasons aforenoted, the Court has been unable to countenance or accept." 23. This reasoning also finds support from the definition of "manufacturing" given in Rule 2(31), which has been set out below: "(31) "manufacturing" means making, producing or assembling- (i) a complete firearm; (ii) a pressure-bearing part or component of a firearm (e.g. barrel, slide, cylinder, bolt, breech lock, firing pin, etc.); ..." 24. A perusal of the above definition reflects that "manufacturing" includes manufacturing of parts and components of firearms as well. What follows is that if any manufacturer in India is desirous of manufacturing 'firing pin', 'extractor', 'hammer' or any other components mentioned in the Explanation of Form VII on a stand alone basis, he would require a separate manufacturing license for the same. 25. Since there can be a possibility of a manufacturer being engaged in the manufacture of only certain sub-components, it necessarily follows that such ....
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....ner: i. The sub-components such as 'firing pin', 'extractor' and 'hammer', in respect of which the appellant raised objections were specifically mentioned only in the 'Explanation' in Form VII and Form X-A, which were in respect of 'manufacture' and 'export' respectively. These sub-components do not find a mention in Form X, which is the relevant Form in the present case in respect of imports made by Syndicate. ii. Form X, which was subsequently issued by the appellant to Syndicate, gave specific permission to Syndicate to import 'frames' and 'slides' without any qualification or reservation to the effect that such 'frames' and 'slides' are not pre-fitted with other sub-components. iii. The appellants have failed to place any evidence or material on record to demonstrate that 'frames' and 'slides' are not commercially known to exist with pre-fitted sub-components. 29. In light of the aforesaid findings, we are of the view that the objection of the appellants did not stem from Rule 2 (37) of the 2016 Rules. If the definition of 'parts and components' provided in Rule 2 (37) of the 2016 Rules was the basis of objection, the appellants would have also rai....
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....ber, 2018, it would defy logic as to why MHA would require an importer to approach it for issuance of import license. 32. It is also worth noting that the absence of a license under Form X was never raised by the appellants as one of the reasons for not clearing the import consignments of Syndicate. It was not even raised in the advisory sent by the MHA to the DGFT on 3rd August, 2022. The said ground was raised for the first time as an oral submission on behalf of the appellant before the writ court on 30th August, 2022. 33. In view of the issuance of Form X to Syndicate, the requirement of permission under Rule 57 (4) of the 2016 Rules would also not survive. The Form X license granted to Syndicate was unconditional and unqualified and did not refer to any permission that may be required under Rule 57 (4) of the 2016 Rules. Once Form X has been issued by the competent authority, it would amount to a deemed clearance of the competent authority under Rule 57 (4) of the 2016 Rules. 34. We also find force in the submission on behalf of Syndicate that if permission under Rule 57 (4) of the 2016 Rules was required, the same would be required right at the inception, i.e., when ....
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....powers comprised in Section 10 of the Act to the DGFT also does not introduce any such prohibition. In fact, if Rule 57 (4) were to be read in the manner as suggested by and on behalf of the Intervener, there would exist no justification for the MHA delegating its powers of licensing comprised in Section 10 read with Rule 88. This since if the parts of arms were such as were not being manufactured locally, the importer would still be obliged to follow the route of Rule 57 (4). Quite apart from the fact that the aforesaid view was neither advocated by the MHA nor the DGFT and is not the stand reflected in their orders or the affidavits filed in these proceedings, the acceptance of this line of argument would give rise to an irreconcilable conflict between Rule 57 (4) and Rule 88 of the 2016 Rules and be contrary to the letter of the delegation notifications issued by the MHA. In any case the act of the respondents in granting the Form X license subsequently and during the pendency of the writ petition is clear evidence that they do not view the import in question being prohibited on lines as suggested by and on behalf of the Intervener." 36. We see no reason to interfere with the....
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.... appearing on behalf of Syndicate had handed over a list of imports made by an associate company of the Intervenor, i.e., Lucknow Arms Corporation giving details of the parts of the fire arms imported by the said entity without any approval under Rule 57 (4) of the 2016 Rules or Form X. This has not been refuted by the Intervener. Clearly, the Intervenor cannot be heard to canvass a regulatory regime in respect of Syndicate which itself is not being followed by the intervenor or its associate companies. 45. In any event, all the aforesaid issues raised on behalf of the Intervener have been considered above and have been found to be devoid of merits. CONCLUSION AND RELIEF 46. In view of the above discussion, we see no grounds to interfere with the impugned judgment. Accordingly, the appeal is dismissed. 47. Consequently, the limitation imposed on Syndicate via order dated 6th February, 2023, restraining them from disposing of the goods imported by them via Bill of Entry No.9037350 dated 9th June 2022 and Bill of Entry No.9038081 of even date, shall stand dissolved. 48. The present appeal, along with all pending applications, stands disposed of. POSTSCRIPT 49. Th....