[Order per : K. Sankararaman, Member (T)]. - These are two reference applications filed by the Commissioner of Customs, Mumbai in respect of a combined order bearing numbers 1899-1902/96-WRB, dated July, 1996 rejecting two appeals filed by the Commissioner and holding that the import by two importers M/s. Carpet House and M/s. ABC Hitkari Enterprises, Jaipur of “Supranol Green BW Dyes” and “Acid Green GS Dyes” respectively against import licences and DEEC Pass Book, had been rightly held to be in order by the Commissioner (Appeals). The present reference applications have been filed by the Commissioner of Customs, Mumbai seeking the reference to the High Court of the following questions :-
“1. Whether the Hon’ble Tribunal was right in relying upon the clarification given by Jt. DGFT whereas in terms of Para 20 of the EXIM Policy 1992-97 only DGFT is competent to issue clarification regarding interpretation of Policy.
2. Whether the Hon’ble Tribunal was right in ignoring the fact that EXIM Policy has statutory force; the Central Govt. can make amendments in the Policy in the Public Interest; and the Policy prevailing at the time of import could be relevant for governing import as held by Hon’ble Supreme Court in the case of M/s. Darshan Oils P. Ltd. v. U.O.I. - (S.C.)
3. Whether the Hon’ble Tribunal was right in ignoring that the licence holder does not have any vested right merely by acquiring licence as held by Hon’ble Delhi High Court in the case of Jain Export (P) Ltd. v. U.O.I. - and no clearance of goods can be claimed if there are restrictions/prohibitions subsequent to issue of licence, at the time of import.
4. Whether the Customs Authorities have to blindly grant benefit of exemption merely because there is an advance licence or they can examine whether the conditions of the exemption notification are fulfilled.
5. Whether the Customs Authorities can refer the licence prima facie issued in contravention of the provisions of EXIM Policy to the licensing authority for suitable rectification or they are duty bound to blindly accept the licence and ignore the illegality.”
2. Shri V.K. Puri, learned Senior Departmental Representative argued in support of the reference applications. He submitted that the questions of law as framed in the applications have arisen out of the order of the Tribunal. He cited the Supreme Court judgment in Darshan Oils Pvt. Ltd. v. Union of India - (S.C.), and Delhi High Court judgment in Jain Exports Pvt. Ltd. v. Union of India - . He contended that where the licences in question had not been issued as per the relevant policy and the limiting factor of quantity in addition to value was not incorporated in the licences, the exemption from duty as per Notification No. 203/92, dated 19-5-1992 as subsequently amended was not admissible and the Tribunal’s decision to the contrary has raised questions of law as framed in the application. He pleaded that the reference applications be allowed and a statement of the case drawn up and referred to the High Court.
3. The submissions were resisted by Shri H.R. Shetty, learned Counsel for the respondents. He supported the Tribunal’s order which, he stated, were based on a correct appreciation of the legal position involved. Both before and after the imports forming the subject matter of the present reference applications, the Custom House has allowed the import and the benefit of exemption for similar goods against such import licences. The Collector (Appeals) has considered the clarification received from the Dy. Director General of Foreign Trade regarding the validity of the licences and the non-endorsement of quantity as limiting factor and orders have been rightly upheld by the Tribunal. He cited Tribunal decision in - Jayant R. Patel v. Commissioner of Customs, Hyderabad in paragraph 4 of which the relevant provisions of Chapter I of EXIM Policy 1992-97 have been extracted. This would support the present order of the Tribunal, he contended and pleaded for the dismissal of the reference applications.
4. We have considered the submissions of both the sides. We have perused the record. We have perused the judgments and orders cited before us. The main thrust in the reference applications is that the import licences in question had been issued in a deficient manner inasmuch as quantity had not been shown therein as limiting factor in addition to value and such deficiency has the effect of disentitlement of duty exemption. It has been stated in the reference application that imposition of quantity restriction against the subject items in the licences which were specified in Sensitive List I of EXIM Policy 1992-97 was a mandatory requirement and the absence of such an endorsement on the body of the licence had the effect of making such licences void ab initio for grant of the benefit of duty free clearances for the goods imported against them.
5. We have examined the questions posed for reference to the High Court. As stated in the reference application, the issue decided by the original authority was not actually the importability of the subject goods against the licences produced but the admissibility of exemption under Notification 203/92, dated 19-5-1992 as subsequently amended. It is contended that the benefit of exemption is not admissible as the licence has not been issued as per the Export and Import Policy. The Tribunal has examined this question in paragraphs 10 and 11 of its order and held that the objection raised by the Department is not based on any of the grounds incorporated in the subject notification. The said paragraphs are extracted below for easy reference :-
“10. Going by the text of the said Notification for granting the benefit under the said Notification, the Customs authority has merely to satisfy as to whether the requirements laid down for availment of benefit thereunder have been duly complied with, and the conditions laid down thereunder are, (i) material imported are covered by a value based Duty Exemption Entitlement Certificate issued by the licensing authority in the form specified in Schedule attached, (ii) importer at the time of clearance of imported material (a) produces proof of having executed bond or legal undertaking before the licensing authority, and (b) makes a declaration before the Asstt. Collector binding himself to pay on demand, amount equal to the duty leviable but for exemption, if the imported material is not used as per the condition laid down. Thus, the customs authority has been empowered to examine only those two conditions and have not been empowered to otherwise examine the validity of the said licences, and cannot object to grant of benefit of the Notification on any other extraneous ground.
11. The objection raised by the customs authority on the subject import is not based on any of the grounds incorporated in the subject notification and plea that the benefit should be denied only because the licences are not in confirmity with the conditions laid down for import of items figuring in Sensitive List I cannot be raised and when raised, cannot be upheld.”
6. We agree with the above reasoning. The opening paragraphs of the notification refers to exemption for materials imported against a value based advance licence issued in terms of Para 49 of Export and Import Policy 1992-97 from duty. The respondents in these cases had made the subject imports against such licences. If the licences did not have incorporated in them quantity as an additional limiting factor, it cannot be said that the licences had not been issued as per the Policy. Even if such limiting factor (quantity) were there, it can only mean that the quantity imported in excess of the limit imposed was not eligible for the benefit of exemption. The non-endorsement of quantity as a limiting factor has also been explained by the Dy. Director of Foreign Trade vide his letter dated 7-2-1995. If the Custom House was not prepared to go by this clarification and wanted that such a clarification should have been issued only by the DGFT, the matter could have been taken up with that authority. The reliance placed in the reference application on the judgment of the Supreme Court in the Darshan Oils (P) Ltd. case is not relevant to the issue. That judgment related to a case where the subsequent amendment in the Policy by making certain items canalised and importable only by State Trading Corporation was made applicable even to licences issued already unless the goods had been shipped before the amendment. The Policy as applicable at the time of shipment was held to be applicable. Such a situation is not there in the present case as these imports have been effected against licences valid for dyes specifically and issued in terms of the Export & Import Policy 1992-97. The non-mention of quantity as a limiting factor for import of goods does not invalidate the licences or negate the fact that the licences were issued under the relevant policy and scheme. The contention raised that no clearance of goods can be claimed if there are restrictions/prohibitions subsequent to the issue of the licence at the time of import is a correct proposition but, it is not correct to say that the policy governing the licences in question had become restrictive/prohibiting and hence, the imports were not covered by the licence and hence not eligible for exemption. Also, as stated earlier the objection was that the licence had been issued without applying the quantity limiting factor and hence it was not valid. This proposition has been rejected by the Tribunal under the order in question and as further observed by us, the effect of applying quantity as a limiting factor would also not be to deprive the entire quantity imported of the benefit of exemption. It could, arguably, be limited to only the excess. No indication is there in the adjudication/assessment order or the present reference about such differential quantity.
7. The questions at serial numbers 4 and 5 are academic and do not affect the present matter disposed of by the Tribunal with reference to the provisions of the relevant notification. The questions do not merit reference to the High Court.
8. For the foregoing reasons, we are not satisfied that the questions proposed in the applications are questions of law arising out of Tribunal’s subject order requiring a reference to the High Court. We, accordingly, dismiss the reference applications. In view of such dismissal, the stay applications seeking stay of operation of the Tribunal’s order get automatically dismissed.