Industrial Cables India Ltd. And Anr. v. Union Of India Uoi And Ors

1. Petitioner No. 1, a Public Limited Company, is carrying on business of manufacturing and export of power cables and petitioner No. 2 is its Chairman and Managing Director. The petitioner-Company is stated to be entirely dependant upon imported materials to carry on its manufacturing activities. The major items which it manufactures are PILC Cables and for this 85% of the raw materials are imported. It is a recognised Export House since 1.3.1972. In accordance with the relevant import policies from time to time, being the holder of an Export House Certificate, it was issued several R.E.P. licences including Annexures P.7 to P.14 detailed hereunder :

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2. In terms of the relevant import policy as in force, it appointed Letter of Authority holders to operate upon the aforesaid Licences and import such goods as may be permissible. In accordance with para 382 of the Hand Book of Import and Export Procedure, the persons to whom it issued the Letters of Authority with details of the same are inter-alia the following :

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4. The Letters of Authority holders and the transferee in accordance with the established practice adopted by the Customs authorities and accepted by the Import Trade Control Authorities regarding the scope and ambit of the aforesaid R.E.P. licences imported various consignments of inedible beef tallow from time to time, which reached the ports and the Customs authorities in accordance with law examined the beef tallow and the relevant documents under which it was imported and after being satisfied that the aforesaid imports were legal unconditionally cleared the same after requiring the importers to pay the stipulated duty. No controversy was raised by either the Customs authorities or by the office of the Chief Controller, Imports and Exports, with regard to the said imports. Respondent No. 2, however, later on issued show-cause notices dated 29.12.1983, 14.1.1985 and 31.1.1985 Annexures P.16, P.18 and P.2Q respectively to the petitioners alleging that since the tallow of animal origin ceased to be an open general licence item (O.P.G.L. item) with effect from 5.6.1981, when its import was canalised and the State Trading Corporation alone was allowed to import it, import of this item by the Letter of Authority holders and the transferee of the Import Licence mentioned above was in violation of the Import (Control) Order, 1955 (hereinafter called the Control Order). They were required to show cause as to why action should not be taken against them under Clause 8 of the Control Order. The petitioners furnished their reply to their respective show-cause notices vide letters dated 8.2.1984, 30.1.1985 and 12.2.1985, Annexures P.17, P.19 and P.21 respectively.

5. After considering their replies respondent No. 2 vide order dated 20.5.1985 Annexure P.22 concluded that the importation of the above item was unauthorised, in contravention of the conditions of the licence and in violation of the provisions of Clause 8(1)(f) and (g) of the Control Order, for which the petitioners as also the Letter of Authority holders from them and the transferee mentioned above were held liable and imposed upon the petitioners the penalty of "debarment" to the effect that from 9.11.1983 (when investigation into violation of the provisions of Clause 8 of the Control Order started) to 31.3.1987 excepting issue of advance import licences/imprest licences against confirmed orders from 1.1.1986 onwards, they (the petitioners) would be debarred from importing any goods, receiving import licences/CCI and allotment of imported goods through S.T.C./M.M.T.C. or any other similar canalising agency. Since the petitioners' manufacturing operations as also the marketing of the end products is mostly dependant on the import, of the raw materials and export of the finished goods, they made representations against the impugned order Annexure P.22 to respondent No. 2 and also issued several reminders including Annexures P.23 to P.23/5. Several petitions filed by them in this regard are detailed in the compilation Annexure P.24. They also moved an application dated 13.6.1985 Annexure P.25 for staying the operation of the "debarment order" Annexure P.22, but to no effect. They consequently filed the present writ petition in this Court wherein they challenged the vires of Clause 8 of the Control Order, prayed for issuance of a writ of certiorari to quash the impugned order Annexure P.22 and restrain the respondents from implementing the same.

6. Mr. K.K. Venu Gopal, the learned Senior Advocate for the petitioners, while addressing arguments stated that the import of beef tallow, an item canalised on 5.6.1981, was unauthorised. It may be mentioned here that in M/s. Oswal Woollen Mills' case (supra) the beef tallow imported by the Letter of Authority holders had been cleared by the Customs authorities at Calcutta port. Though it was alleged in the show-cause notice issued to the petitioner therein that the clearance of the beef tallow by the Collector of Customs at Calcutta was conditional, no plea in this regard had been specifically taken in the written statement. Neither the order passed under Clause 8(1 Kg) of the Control Order therein was based on any such conditional order nor during the arguments before the Division Bench the learned counsel for the Union of India could produce the record of the Collector of Customs so as to enable the Bench to find out whether the clearance of the goods was conditional. In the case in hand, there is absolutely no controversy in this regard. It is in fact admitted without reservation that the beef tallow imported was cleared by the Customs authorities and the respective importers paid the requisite duty as assessed. The learned counsel for the Union of India could not distinguish in any manner the import of the beef tallow under the R.E.P. licences and its clearance by the Customs authorities in the present case from the import of this very item and its clearance by the Customs authorities in M/s. Oswal Woollen Mills' case, wherein the Division Bench held that once the Collector of Customs under the Customs act had cleared the goods which necessarily implied that no provision of the Control Order and the Import and Export Policy was violated in the import of such goods, respondent No. 2 or any other subordinate authority would not be competent to review the matter and pass a contrary order. Referring to the elaborate machinery provided for appeal, review, reference of questions of law, it was held that the remedies so provided under the Customs Act culminated in getting the questions involved relating to import of goods determined by the highest Court of the land. On the other hand, in the Control Order power is given to the Central Government/Chief Controller of Imports and Exports to suspend or cancel the licence under the circumstances enumerated in sub-clause (1) of clause 8 after giving reasonable opportunity of being heard to the concerned person under Clause 10(1) prior to the suspension or cancellation of the licence. It was, therefore, concluded that if the Collector under the Customs act arrived at the finding that the provisions of the Imports and Exports Control Act or the Control Order have been violated, there would be no obstacle in the way of the authorities under the Control Order to take proceedings for the suspension or cancellation of the Import Licence but if the former had cleared the goods which necessarily meant that by their import no provision of the Imports and Exports (Control) Act or the instructions issued thereunder had been violated, it cannot be said that its finding would be open to review by the authorities under Clause 8 of the Control Order. It was, therefore, observed that no one can be made to suffer because of the fault of the statutory authority.

7. The learned counsel for the Union of India made a vain attempt to persuade me to differ with the ratio of the law laid down in M/s. Oswal Woollen Mills case, which being a Division Bench Judgment I am bound to follow. I may, however, in passing refer to the argument of the learned counsel. He contended that an order under the Customs Act which is passed after due adjudication can alone be binding on the authorities under the Control Order. The clearance of the imported goods by the Customs authorities, thus, proceeded the argument, may be without due application of mind. The lack of substance in this argument would be evident when reference is made to some of the relevant provisions of the Customs act, 1962 (hereinafter called the Act). Sub-section (1) of Section 2, of the Act defines "adjudicating authority" to mean "any authority competent to pass any order or decision under this act, but does not include the Board, Collector (Appeals) or Appellate Tribunal." Sub-section (33) thereof defines "prohibited goods" to mean "any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with. Sub-section (34) of Section 2 defines "proper officer" in relation to any functions to be performed under this Act to mean "the officer of Customs who is assigned those functions by the Board or the Collector of Customs." Section 17 of the Act lays down that after an importer has entered any imported goods under Section 46- or an exporter has entered any export goods under Section 50, the imported goods or the exported goods as the case may be or such part thereof as may be necessary may, without undue delay, be examined and tested by the proper officer. After such examination and testing the duty, if any, leviable on such goods shall, save as otherwise provided in Section 85, be assessed. For the purpose of assessing duty, the proper officer may require the importer, exporter or any other person to produce any contract, broker's note, policy of insurance, catalogue or other document whereby the duty leviable on the imported goods or export goods, as the case may be, can be ascertained, and to furnish any information required for such ascertainment, which it is in his power to produce or furnish and thereupon the importer, exporter or such other person shall produce such document and furnish such information. Section 18 of the Act makes provision for provisional assessment of duty by the proper officer, while Section 19 thereof provides for the determination of duty where goods consist of articles liable to different rates of duty. Section 47 of the Act provides that where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty, if any, assessed thereon and any charges payable under the Act in respect of the same, the proper officer may make an order permitting clearance of the goods for home consumption. Reference to the above provision of the Act leaves no manner of doubt that the clearance of the goods in the present case, which is admitted by the respondents, was under Section 47 of the Act and the order permitting the clearance of the goods by the proper officer must be presumed to be after due adjudication firstly with regard to the fact whether or not the import of the goods is prohibited by the Act or any other law for the time being in force within the meaning of Sub-section (33) of Section 2 ibid and the proper officer was an "adjudicating authority" within the meaning of Sub-section (1) thereof. It is not at all necessary that some infraction of law which brings the imported goods within the fold of "prohibited goods" must be pointed out by the adjudicating authority before its ultimate order of clearance of the goods and payment of duty thereon can be cloathed with the character of an order "after due adjudication."

8. Respectfully following the Division Bench judgment in M/s. Oswal Woollen Mills' case (supra), I hold that respondent No. 2, in view of the clearance of the imported goods by the authorities under the Act, could not exercise the powers under Clause 8 of the Control Order to pass the impugned order Annexure P.22 and the same is thus without jurisdiction.

9. I, therefore, allow this petition and quash the order dated 20.5.1985 Annexure P. 22 of respondent No. 2. There shall, however, be no order as to costs.