TaxTMI 
TaxTMI 
2023 (2) TMI 1468
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....20-2021 dated 18.12.2020 this petition has been preferred. The challenge is to the notification No. 32/2015-2020 dated 20.01.2016 vide which the Natural Rubber is allowed for import only from the ports of Chennai and Nhava Sheva. 2. Brief facts in a capsulized form are as follow: 2.1 A Special Economic Zone ( 'the SEZ' hereinafter) unit was set up by the petitioner for manufacture of tyres based on letter of approval granted by the respondent No. 4-The Zonal Development Commissioner, Kandla SEZ, Gandhidham, Kutch vide letter dated 02.08.2018 at Plot No.B, HBS-SEZ, GIDC, Panoli, Bharuch and the commercial operations were commenced in September 2020. 2.2 The petitioner being the SEZ unit, it is averred that the import of the goods is required for the purpose of manufacture of its finished goods without payment of Customs Duty in terms of Section 26 of the SEZ Act, 2005 (to be referred to hereinafter as 'the Act'), a unit is also entitled to procure all the goods and services, which are required for its authorised operations duty free. To make them export from India competitive, the Government of India has contemplated the SEZ as the centres of their excellenc....
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....7 Crore for the year 2020-2023, which is a needless expense. There is an additional grievance of burning of the fossil fuels without any real contribution to the value of the goods to the economy. 2.10 The exemption given to the holders of Advance Authorisation have not been given to the petitioner or other similarly situated hence, this petition. As according to the petitioner, this affects the fundamental right of the citizen and therefore, the following prayers: "9 ... (A) To issue a Writ, Order or Direction, in the nature of a WRIT OF CERTIORARIFIED MANDAMUS to call for the records leading to issuance of Notification No.31/2015-2020 dt.20.01.2016 by the 2nd Respondent and QUASH the same. (B) In the alternate, direct the 2nd Respondent to clarify that the restrictions imposed vide Notification No.31/2015-2020 dt.20.01.2016 regarding the sea port from which Natural rubber can be cleared be exempted for SEZ units. (C) Pending admission, hearing and final disposal of this petition, to stay the operation of Notification No.32/2015-2020 dt.20.01.2016. (D) Pending admission, hearing and final disposal of this petition, to direct the 5th ....
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....zette for the development and regulation of the foreign trade. Section 3(2) also permits prohibition, restriction or other regulations in all cases or in specified classes of cases and subject to such exception as may be made or under the Order. 3.5 Section 3 of the said Act also empowers the Central Government to regulate the export as well as import. Reliance is placed on the decision of the Apex Court rendered in case of Union of India vs. M/s.Asian Food Industries, reported in AIR (2007) SC 750 to hold that, the purport and object for enacting the Foreign Trade Act, 1992 was to make provision for development and regulation of foreign trade by augmenting the export from India. 3.6 It is urged that the notification which is impugned is dated 20.01.2016 made by respondent No.2 restricting the import of Natural Rubber in exercise of the powers conferred on the Central Government. Such an action cannot be held either arbitrary or irrational. The interest of the Domestic Natural Rubber producers and the workmen is paramount for the Government and the object behind the notification which is under challenge falls within the four corners of FTP 2015-2020 and the Act. 3.7 The no....
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....Natural Rubber from domestic market and thereby, promoting the marginal /small rubber growers to get a fair and a reasonable price. 3.11 The respondents-authorities has not filed Rejoinder affidavit. 4. On 13.12.2019, an application had been moved by the original writ applicant to allow the Natural Rubber instead of Natural Rubber Latex and also sought the interim relief by bringing to the notice of the Court that the very same notification has been stayed from its implementation, operation and execution by the High Court of Kerala. The Court allowed it by way of interim direction and provisionally permitted the petitioner to import Natural Rubber Latex through Hazira port pending consideration of this notification. It also permitted the word 'Latex' to be deleted from para 4. 5. This Court has heard extensively the learned senior advocate, Mr. J. V. Niranjan with learned advocate, Mr. Chetan Pandya for the petitioner. Learned ASG, Mr. Devang Vyas with Ms. Maithili Mehta, learned senior standing counsel for respondent No.1 and Mr. Nikunt Raval, learned senior standing counsel. Both the sides have argued along the lines of their pleadings and have also relied on var....
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.... Arunachal Pradesh 360 478 428 450 North east Total 71800 87535 90630 94430 Karnataka 29400 38800 38300 38200 A&N Islands 240 240 240 275 Goa 640 645 575 625 Maharashtra 925 1185 1185 1250 Odisha 315 400 450 480 West-Bengal 325 335 335 380 Andhra Pradesh 230 320 400 400 Others Total 32075 41925 41485 41610 Non Traditional Total 103875 129460 132115 136040 Grand Total 562000 691000 694000 648000 7. The Extract from Foreign Trade Policy ('the FTP' hereinafter) 2015-2020 provides that the Central Government in exercise of powers conferred by Section 5 of the FT (D&R) Act, 1992, as amended from time to time, reserves the right to make any amendment to the FTP by means of notification in public interest. Under Chapter 2 General Provisions Regarding Imports and Exports para 2.01 under the heading of "Exports and Imports" provides for free export and import with exception. "2.01 Exports and Imports-'Free', unless regulated (a) Exports and Imports shall be 'Free' except ....
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....t supply; p. for the protection of country's essential security interests: i. relating to fissionable materials or the materials from which they are derived; ii. relating to the traffic in arms, ammunition and implements of war; iii. Taken in time of war or other emergency in international relations; q. in pursuance of country's obligations under the United Nations Charter for the maintenance of international peace and security." 7.1 Para 9.41 says that "Prohibited" indicates the import/export policy of an item, as appearing in ITC whose import or export is not permitted. 7.2 Para 9.47 defines the term "Restricted" which indicates the import or export policy of an item, which can be imported into the country or exported outside, only after obtaining a an authorisation from the offices of DGFT. 8. The Madras High Court in case of M/s. ATC Tyers Private LTD. vs. The Secretary and others was considering the matter where the petitioner in a SEZ unit was located at Gangaikondan, Tirunelveli District engaged in manufacture of offroad tyres. One of the raw materials required was the Natural Rubber. As per Notification No.31/201....
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....liciter. The Court also held that as regard the imports in question, the personal interests of importers are pitted against the interest of national economy and more particularly, the interest of farmers. This factor alone is sufficient to find the direction in which discretion ought to be exercised in these matters. When personal business interests of importers clash with public interest, the former has to, obviously, give way to the latter. 9.2 Relevant findings and observations of the Apex Court are as follow: "67. The applicable principles of law relating to the categorisation of goods as 'prohibited' or 'other than prohibited' have been clearly enunciated by this Court in the decisions referred by the learned ASG. 67.1. In the case of Sheikh Mohd. Omer (supra), a particular mare was found to be not a 'pet animal' and, therefore, its import was found to be violative of the Imports Control Order. It was, however, an admitted position that the import of horses or mares was not prohibited as such. The question was as to whether by making such import, the appellant contravened Section 111(d) read with Section 125 of the Customs ....
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....alf of one of the respondents that the order ultimately passed in the case of Om Prakash Bhatia operates against the stand of the appellants. It is true that in that case, redemption fine and penalty was imposed but, the exercise of discretion in a particular manner related to the facts of that case. These aspects relating to the exercise of discretion shall be considered a little later, while dealing with the question as to whether the goods in question are liable to absolute confiscation or could be released on redemption fine. Suffice it to notice for the present purpose that the export attempted in violation of the conditions was held to be taking the goods in the category of 'prohibited' goods. 67.3. In the case of Brooks International (supra), the market value of goods under export was found to be less than the amount of drawback claimed. The question was whether such goods could be confiscated for violation of the provisions of the Customs Act? While considering the import of the definition of "prohibited goods" in Section 2(33) and of Section 11 of the Customs Act, this Court referred to the following exposition in the case of Om Prakash Bhatia (supra): ....
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.... on payment of redemption fine. 67.4.2. The factual aspect of Atul Automations (supra) makes it clear that the imported Multi-Function Devices, Photocopiers and Printers (MFDs) involved in that case were restricted items, importable against authorisation under Clause 2.31 of the Foreign Trade Policy. Thus, the MFDs were found to be restricted items for import and not prohibited items. That had not been the case where import was restricted in terms of quantity in the manner that the goods were importable only up to a particular extent of quantity and that too against a licence. It was also found therein that the Central Government had permitted the import of used MFDs having utility for at least five years, keeping in mind that they were not being manufactured in the country. 67.4.3. The present case is of an entirely different restriction where import of the referred peas/pulses has been restricted to a particular quantity and could be made only against a licence. The letter and spirit of this restriction, as expounded by this Court earlier, is that, any import beyond the specified quantity is clearly impermissible and is prohibited. This Court has highlighted the....
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....udging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit: xxx xxx XXX". 69.1. A bare reading of the provision aforesaid makes it evident that a clear distinction is made between 'prohibited goods' and 'other goods". As has rightly been pointed out, the latter part of Section 125 obligates the release of confiscated goods (i.e., other than prohibited goods) against redemption fine but, the earlier part of this provision makes no such compulsion as regards the prohibited goods; and it is left to the discretion of the Adjudicating Authority that it may give an option for payment of fine in lieu of confiscation. It is innate in this provision that if the Adjudicating Authority does not choose to give such an option, the result would be of absolute confiscation. The Adjudicating Authority in the present matte....
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....ng with the case of non-exercise of discretion by the authority, this Court expounded on the contours of discretion as also on limitations on the powers of the Courts when the matter is of the discretion of the competent authority, in the following terms: - "12. The High Court was equally in error in directing the Corporation to offer alternative job to drivers who are found to be medically unfit before dispensing with their services. The court cannot dictate the decision of the statutory authority that ought to be made in the exercise of discretion in a given case. The court cannot direct the statutory authority to exercise the discretion in a particular manner not expressly required by law. The court could only command the statutory authority by a writ of mandamus to perform its duty by exercising the discretion according to law. Whether alternative job is to be offered or not is a matter left to the discretion of the competent authority of the Corporation and the Corporation has to exercise the discretion in individual cases. The court cannot command the Corporation to exercise discretion in a particular manner and in favour of a particular person. That would be beyond ....
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....ious judgment of what is correct and proper by differentiating between shadow and substance as also between equity and pretence. A holder of public office, when exercising discretion conferred by the statute, has to ensure that such exercise is in furtherance of accomplishment of the purpose underlying conferment of such power. The requirements of reasonableness, rationality, impartiality, fairness and equity are inherent in any exercise of discretion; such an exercise can never be according to the private opinion. 71.1. It is hardly of any debate that discretion has to be exercised judiciously and, for that matter, all the facts and all the relevant surrounding factors as also the implication of exercise of discretion either way have to be properly weighed and a balanced decision is required to be taken. 72. It is true that the statutory authority cannot be directed to exercise its discretion in a particular manner but, as noticed in the present case, the exercise of discretion by the Adjudicating Authority has been questioned on various grounds and the Appellate Authority has, in fact, set aside the orders-in-original whereby the Adjudicating Authority had exerc....
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....onferred on the officer to give the option to pay fine in lieu of confiscation in cases of goods, the importation or exportation whereof is prohibited under the Act or under any other law for the time being in force but in respect of other goods the officer is obliged to give such an option. In the present case, having regard to the facts and circumstances in which the goods were said to be imported and the patent fraud committed in importing the goods, the Additional Collector has found that the goods had been imported in violation of the provisions of the Import (Control) Order, 1955 read with Section 3(1) of the Import and Export (Control) Act, 1947. In the circumstances he considered it appropriate to direct absolute confiscation of the goods which indicates that he did not consider it a fit case for exercise of his discretion to give an option to pay the redemption fine under Section 125 of the Act. The Tribunal also felt that since this was a case in which fraud was involved, the order of the Additional Collector directing absolute confiscation of the goods did not call for any interference. We do not find any reason to take a different view." (emphasis in bold supplied) ....
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....ds to be redeemed on payment of fine in lieu of confiscation. After referring to the judgment of this Court in the case of Atul Automations (supra) and the order passed by the Bombay High Court in the case of M/s. Harihar Collections (impugned herein), the Tribunal directed redemption of impugned goods on payment of Rs. 12 lakhs as fine and confirmed the penalty of Rs. 4 lakhs imposed by the Commissioner. 75.1. In cross-appeals by the importer and by the revenue, the Kerala High Court consciously took note of the decision of this Court in Agricas (supra) and also the fact that the order so passed by the Bombay High Court in the case of M/s. Harihar Collections had been stayed by this Court in the present appeals. Thereafter, the High Court proceeded to disapprove the order passed by the Appellate Tribunal for release of goods, with the following amongst other findings and observations: - "25. We hasten to add, that if in every case goods are released on payment of redemption fine, by the primary or appellate Tribunal, then such decisions are unsustainable in law and judicial review. In our considered view, exercise of power and discretion under Section 125 of Cust....
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.... confirmed by the Appellate Tribunal. In appeal to this Court, three questions were raised by the appellants, namely, on validity of the order confiscating the goods; on validity of the orders imposing penalty; and failure on the part of the customs authority to give an option to them for redeeming the goods on payment of fine in lieu of confiscation. This Court rejected the first two contentions after finding that the order directing confiscation was unassailable in facts or in law and that the order levying penalty was also justified. However, this Court found substance in the third part of the submissions because the Collector of Customs had passed the order for absolute confiscation without giving the appellants an option to redeem the goods on payment of fine. This Court observed that the said Adjudicating Authority, undoubtedly, had the discretion to give an option of payment of fine in lieu of confiscation but omitted to consider such a discretion available with him. In the given circumstances, this Court remitted the matter to the Adjudicating Authority to the limited extent as to whether or not to give an option to the importers to redeem the confiscated goods on payment o....
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.... is invested with discretion, the same deserves to be left for exercise by that authority but the significant factors in the present case are that the Adjudicating Authority had exercised the discretion in a particular manner without regard to the other alternative available; and the Appellate Authority has found such exercise of discretion by the Adjudicating Authority wholly unjustified. In the given circumstances, even the course adopted in the case of Hargovind Das K. Joshi (of remitting the matter for consideration of omitted part of discretion) cannot be adopted in the present appeals; and it becomes inevitable that a final decision is taken herein as to how the subject goods are to be dealt with under Section 125 of the Customs Act. 79. As noticed, the exercise of discretion is a critical and solemn exercise, to be undertaken rationally and cautiously and has to be guided by law; has to be according to the rules of reason and justice; and has to be based on relevant considerations. The quest has to be to find what is proper. Moreover, an authority acting under the Customs Act, when exercising discretion conferred by Section 125 thereof, has to ensure that such exerc....
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....he matter is that as regards the imports in question, the personal interests of the importers who made improper imports are pitted against the interests of national economy and more particularly, the interests of farmers. This factor alone is sufficient to find the direction in which discretion ought to be exercised in these matters. When personal business interests of importers clash with public interest, the former has to, obviously, give way to the latter. Further, not a lengthy discussion is required to say that, if excessive improperly imported peas/pulses are allowed to enter the country's market, the entire purpose of the notifications would be defeated. The discretion in the cases of present nature, involving far-reaching impact on national economy, cannot be exercised only with reference to the hardship suggested by the importers, who had made such improper imports only for personal gains. The imports in question suffer from the vices of breach of law as also lack of bona fide and the only proper exercise of discretion would be of absolute confiscation and ensuring that these tainted goods do not enter Indian markets. Imposition of penalty on such importers; and rather....
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.... in the State of Gujarat defies the logic. 10. We have noticed that the emphasis on the part of the State all along is of promoting the marginal or small rubber growers to get a fair and reasonable price by restricting the import from those ports. From the State-wise production of natural rubber upto 2018-2019, it has been rightly pointed out to this Court that the State of Gujarat does not figure anywhere. The total production of the natural rubber is estimated to 6,48,000 tonne. It is also culling out from the details provided by the Ministry of Commerce and Industry on production of natural rubber that natural rubber prices are determined by the market forces which include range of factors and it also follows the world market with occasional divergence. It further provides that the domestic natural rubber price is sensitive to import of the natural rubber and hence, to regulate the import, the Government has increased the duty on the import of the dry rubber. The period of utilization of imported dry rubber also had been reduced. The Government has also reduced the period of utilization of imported dry rubber in January 2015 under advance licensing scheme from 18 months to 6 ....