Civil Appeal No 591 of 1982 Appeal by Special leave from the Judgment and Order dated the 18th November 1981 of the Delhi High Court in Civil Writ Petition No 2581 of 1981
WITH Writ Petition No 802 of 1982 Under article 32 of the Constitution of India
Soli J Sorabjee and Rajiv Dutta for the Appellant
MM Abdul Khader Girish Chandra  Miss A Subhashini for the Respondent
VM Tarkunde and Rajiv Dutta for the Petitioner in WP
The Judgment of the Court was delivered by VARADARAJAN J
This appeal by special leave is directed against the judgment of a Division Bench of Delhi High Court dismissing the Civil Writ Petition No 2581 of 1981 in limine with the obser 364 vation that the Circular dated 3181981 issued by the second respondent the Joint Chief Controller of Imports and Exports New Delhi appears to change the Import Policy that the contention that the condition mentioned in the order impugned in the Writ Petition is not found in paragraph 138 of the Import Policy for 1981 82 is not acceptable that a reading of paragraph 138 1 of the Import Policy shows that the Import Replenishment REP Licence if transferable and an endorsement is sought thereon must be with regard to the materials mentioned in the REP Licence and not any other material and that the contention of the first respondent the Union of India that the endorsement could only be against the export by the applicant himself is correct
The appellants have filed the Writ Petition No 802 of 1982 under Article 32 of the Constitution against the same three respondents and for the same reliefs prayed for in the Civil Appeal viz 1 quashing the Circular dated 3181981 issued by the Joint Chief Controller of Imports and Exports New Delhi as being ultra vires and null and void 2 directing withdrawal of the order dated 7121981 of the third respondent the Deputy Chief Controller of Imports and Exports Amritsar refusing to make the endorsement on the REP Licence 3 issuing a direction to respondents 2 and 3 to make the endorsement contemplated in paragraph 138 of the Import Policy 1981 82 on the REP Licence and 4 restraining respondents 2 and 3 from implementing the Circular dated 3181981 and the order dated 7121981
The parties will be referred to in the Civil Appeal as arrayed in the Writ Petition before the High Court for the sake of convenience
No copy of the Writ Petition filed before the High Court has been produced in this Appeal
The case of the petitioners as set out in the special leave petition is this The first petitioner Ms Oswal Woollen Mills Ltd Ludhiana was originally a registered Export House within the meaning of paragraph 5 7 of the Import Policy 1981 82 and has been a manufacturer exporter since 1971 and is now also a recognised Trading House as the first petitioner s Export House Certificate has been converted into a Trading House Certificate in terms of paragraph 195 1 of the Import Policy 1981 82
Recognised trading houses are entitled to certain facilities under paragraph 195 4 of the Import Policy 1981 82 and one of them 365 mentioned in paragraph 195 4ii is import replenishment REP Licences transferred to them by others
Paragraph 1954 ii reads as under Trading Houses will be granted the following facilities under the Import Policy Import replenishment REP Licences transferred to them by others
 For obtaining the said facility the first petitioner acquired by transfer the Replenishment REP Licence viz Import Licence No PW2941669CXX78Z80 dated 27th February 1981 for total value of Rs202781 from the licence holder who was himself a manufacturer exporter under a transfer letter dated 871981 and sent it to the third respondent for the purpose of obtaining endorsement thereon
Paragraph 140 of the Import Policy 1981 82 provide for transfer of REP Licences and reads as under The REP Licence will be issued in the name of a Registered Exporter only and will not be subject to Actual User  condition
Except for cases covered by paragraphs 1362 1852 and 1861 a licence holder may transfer the licence in full or in part in favour of any other person
The licence holder or such transferee may import the goods permitted therein but the facility of paragraphs 1362 137 and 146 shall not be available to any transferee unless the transferee is himself a Registered exporter and can satisfy the Custom Authorities at the time of clearance of the goods of his bonafides
Thus the REP Licence holder and the transferee of the same are in the same position as regards the right to import on the basis of the licence but the transferee of the licence has to satisfy certain other conditions viz that he should himself be a Registered Exporter and should satisfy the Custom Authorities of his bona fides at the time of clearance of the goods in regard to the facilities provided in paragraphs 136 2 137 and 146 of the Import Policy 1981 82
The first petitioner is a manufacturer exporter holding a valid Registration Certificate No
FIEDTD E315378 132 dated 2171978 and was keen to Import under the REP Licence acquired by transfer on 871981 raw materials components consumables and packing materials required for use in its factories in terms of Paragraph 1381 of the Import Policy 1981 82 which reads as under 366 REP Licence issued to manufacturer exporters will be valid for import of any other items of raw materials components consumables and packing materials required by them for use in their factories
However import of banned items will be allowed only upto 20 of the face value of the REP Licence subject to the condition that the value of single  item should not exceed Rs 1 lakh
REP Licences issued to manufacturer exporters who want to avail of this facility will be issued with an Actual User  condition and such licences will not be transferable
It is also open to the manufacturer exporter to make use of this facility only for a part of his REP entitlement and to get for the remaining part a freely transferable REP Licence
The first petitioner requested the third respondent by his letter dated 2391981 that the REP Licence in question may be transferred to him and suitable endorsement may be made thereon to make it valid for import of the items permitted under paragraph 138 with Actual User  and non transferable conditions
But the third respondent refused that request by his letter No O 33QOO80EPTASR85 dated 15101981 on the basis that the endorsement in paragraph 138 is admissible only for the manufacturer exporters against their own exports
This refusal is based on a total misconstruction of paragraph 138 of the Import Policy 1981 82
That decision is based on an office Circular dated 3181981 issued by the second respondent which in substance directs the Licensing Authority not to grants endorsement under paragraph 138 of the Import Policy 1981 82 unless the REP Licence had been issued to the applicant against the export of his own products
The Circular dated 3181981 reads as under Attention is invited to para 2 iii of REP Circular No 1080 dated the 4th August 1980 regarding endorsement to be made by the Licensing Authorities on REP Licence sought to be utilised under para 138 of the Import Policy 1981 82
The said para 138 is meant for REP Licence issued to manufacturers on the exports of the products manufactured by them
Therefore before making endorsement of the REP Licence under the said para 138 the Licensing Authority concerned should make sure that the REP Licence in question was issued to the applicant against export of his own products ie 367 for which the licencee was registered as a manufacturer exporter as per the relevant registration cum membership certificate held by him
Similarly the facility under para 138 7 is meant for those manufacturers only whose product was actually exported and not for other manufacturers of the same product
 The Circular is without the authority of law and cannot amend or modify paragraph 138 of the Import Policy 1981 82
The petitioners filed the Writ Petition in the High Court after the third respondent failed to send a reply to their notice dated 2111981 by which he was called upon to withdraw the decision contained in his letter dated 15101981 and to make the necessary endorsement under paragraph 138 of the Import Policy 1981 82 on the REP Licence mentioned above
The Writ Petition was dismissed by the High Court in limine
The respondents have filed a counter affidavit for meeting the averments made in the special leave petition
They have admitted that REP Licences issued on exports made on or after 141978 are not subject to Actual User  condition and are freely transferable to any person without any necessity for endorsement or permission from the Licensing authority except for certain cases as provided in paragraph 140 of the Import Policy 1981 82
The facility was extended to manufacturer exporters and manufacturers who exported their goods through others by permitting them to utilise the import replenishment REP licence accruing to them on the export of the products manufactured by them for importing not only the items utilised by them in the products exported but also other items of raw materials components consumables and packing materials required by them for use in their factories
But it is evident from paragraph 138 of the Import Policy 1981 82 that the facilities provided in that paragraph can be availed against REP Licences issued to manufacturer exporters only on their own exports or against REP Licences issued to manufacturers whose products are exported through another exporter
This facility is therefore not available to manufacturer exporters against REP Licences acquired by them by transfer from other Registered Exporters even if the latter is a manufacturer exporter
The Circular dated 3181981 was issued only in order to ensure that the manufacturer exporter avails of this facility only 368 against REP Licence issued on exports of his own products in terms of the policy stated in paragraph 138 and to clarify that the facility is available only to those manufacturers whose products were actually exported through another exporter and that the facility was not available to other manufacturers of the same products
The special facility was given and is intended to strengthen the production of the units whose products were exported by allowing them to import by the REP Licence not only the items utilised in the products exported but also other items of raw materials components consumables and packing materials required by the same unit
For obvious reasons this facility has not been extended to REP Licences which were transferred by exporters to a unit which did not contribute to the product exported against which the licence was issued
Paragraph 138 1 of the Import Policy 1981 82 is clear enough and admits of no other interpretation than the one contained in the impugned Circular dated 3181981
The Circular has neither amended nor modified the Import Policy 1981 82 contained in paragraph 138
The special benefits referred to in paragraph 138 are not transferable and therefore the transferees of the REP Licences like the petitioners cannot validity import the said items
The decision of the Licensing Authority refusing to make the endorsement asked for by the letter dated 2311981 on the REP Licences acquired by the petitioners was in accordance with the policy mentioned in paragraph 138
The grounds urged by the petitioners are without substance and amount to distortions of the contents of paragraphs 136 138 and 140 of the Import Policy 1981 82
The Writ Petition was rightly dismissed by the High Court in limine
As the same reliefs which are sought in the Civil Appeal are sought even in the Writ Petition also it is not necessary to refer to the petitioners  contentions raised in the Writ Petition and those raised by the respondents in the counter affidavit filed by them in this judgment
Our findings in the Civil Appeal will suffice to dispose of the Writ Petition one way or the other
The first petitioner was originally a Registered Export House within the meaning of paragraph 5 7 of the Import Policy 1981 82 and has been a manufacturer exporter since 1971
It has become a recognised Trading House as its Export House Certificate has been converted into a Trading House Certificate in terms of paragraph 195 1 of the Import Policy 1981 82
Recognised Trading Houses are entitled to certain facilities under paragraph 195 4 and one of 369 them mentioned in paragraph 195 4 ii is import replenishment REP Licences transferred to them by others
The import replenishment REP licence mentioned above was issued to a manufacturer exporter against his actual export
The first petitioner got that licence transferred to it by a letter dated 871981 as provided for in paragraph 140 of the Import Policy 1981 82 for obtaining the facility under paragraph 195 4 ii
Thereafter an application dated 2391981 was made by the first petitioner for recognition of that transfer and for an endorsement being made on the said licence forwarded with that letter to the third respondent to enable the first petitioner to import raw materials components consumables and packing materials required by it for use in its own factories as per the first part of paragraph 138 1 of the Import Policy 1981 82
In that letter it is stated that the first petitioner proposes to utilise the licence for the import of raw materials components consumables and packing materials required by it for use in its own factories in terms of paragraph 138 1 of the Import Policy 1981 82 and that the licence may therefore be transferred in the name of the first petitioner and an endorsement may be made on it to make it valid for import of the items permitted under paragraph 138 with the Actual User  and non transferable conditions
This request was rejected by the third respondent by his letter dated 15101981 on the ground that the REP Licence in question was issued to the licencee against the export of his own products ie for which the licencee was registered as a manufacturer exporter as per the relevant registration cum membership certificate held by him
There is no dispute about these facts
The petitioners  contention is that the first petitioner is entitled to import the raw materials components consumables and packing materials required by it for use in its own factories in terms of paragraph 138 1 of the Import Policy 1981 82 as the transferee of the REP Licence permitted by paragraph 140 of the Import Policy 1981 82 notwithstanding the fact that the first petitioner is not the manufacturer exporter against whose exports the REP Licence in question was issued but a Trading House who got the said licence transferred by the letter dated 871981 as per paragraph 195 4 ii of the Import Policy 1981 82
The respondents  contention is that as the first petitioner is not the manufacturer exporter to whom the REP Licence was issued against his export it is not entitled to import the raw materials etc
mentioned in the first petitioner s 370 letter dated 2391981 under paragraph 138 1 of the Import Policy 1981 82
The question is which of these contentions is correct
Paragraph 140 clearly states that REP Licence will be issued in the name of the Registered Exporter only and will not be subject to Actual User  condition and that except for cases covered by paragraphs 1362 1852 and 186 1 the licence holder may transfer the licence in full or in part in favour of any other person and that the licence holder or such transferee may import the goods permitted therein but the facility of paragraphs 136137 and 146 shall not be available to any transferee unless the transferee is himself a Registered Exporter and can satisfy the Custom Authorities at the time of clearance of the goods of his bonafides
The goods sought to be imported by the first petitioner on the basis of the REP Licence in question do not fall under paragraphs 136 2 137 146 185 2 and 186 1 mentioned in paragraph 140 of the Import Policy 1981 82
Paragraph 1954ii grants to Trading Houses like the first petitioner the facilities under Import Policy viz the import replenishment REP Licences transferred to them by others
Thus the first petitioner is entitled under paragraphs 140 and 195 4 ii to the facility of the Import Policy as a transferee of the REP Licence issued in the name of the actual manufacturer exporter against exports made by that manufacturer exporter
The contention of the respondents that under paragraph 1381 the facility to import raw materials etc
under REP Licence is available only to the actual manufacturer exporter against whose exports the REP Licence was issued amounts to reading in to paragraph 138 1 the words against the exports of products manufactured by them after the words manufacturer exporters and before the words will be valid 
That is what is sought to be done by the impugned Circular dated 3181981
The present contention of the respondents is that the Circular dated 3181981 only clarifies paragraph 138 1 of the Import Policy 1981 82 and does not amend or modify that paragraph
That is not how the learned Judges of the High Court have under stood the Circular in their judgment under appeal
The learned Judges have stated in their judgment that the Circular dated 3181981 appears to change the Import Policy and that the contention of the petitioners before them that the condition mentioned in the impugned order dated 15101981 is not found in paragraph 138 of the Import Policy 1981 82 is not acceptable to them
The learned Judges were right in saying that the Circular appears to change the Import Policy but they have erred in saying that the condition mentioned in the impugned order dated 15101981 is found in paragraph 138 1 of the Import Policy 1981 82
We are unable to find any such 371 condition in paragraph 138 1 of the Import Policy 1981 82
It is significant to note that paragraph 138 1 was not mentioned in paragraph 140 of the Import Policy 1981 82
It is also significant to note that in the Import Policy for the subsequent year 1982 83 the said words against their exports of products manufactured by them have been actually inserted in paragraph 138 1 after the words REP Licences issued to manufacturer exporter and before the words will be valid within the overall value for import of any items of raw materials components consumables spares and packing materials required by them for use in their factories subject to Actual User  condition
In view of the respondents  contention that the Circular dated 3181981 is only clarifactory of paragraph 138 1 of the Import Policy 1981 82 and does not amend or modify that paragraph it is unnecessary for us to go into the question whether the Circular issued by the Joint Chief Controller of Imports and Exports can validly amend the Import Policy 1981 82
On a perusal of the relevant paragraphs of the Import Policy 1981 82 mentioned above we agree with Mr Soli J Sorabjee Senior Advocate for the appellants that the condition mentioned in the third respondent s impugned letter dated 15101981 is not there in paragraph 138 1 of the Import Policy 1981 82 that the Circular dated 3181981 is invalid and that the rejection of the petitioners  request made in the letter dated 2391981 by the third respondent in the letter dated 15101981 is unwarranted and the request should have been complied with
We are unable to agree with Mr MM Abdul Khadar Senior Advocate for the respondents that the condition mentioned in the letter dated 15101981 is to be found in paragraph 138 1 of the Import Policy 1981 82
Accordingly we allow the appeal with costs and the Writ Petition without costs
HLC Appeal  Petition allowed


Summary:
The appellant which was a manufacturer exporter as well as a recognised Trading House acquired a Replenishment Licence by transfer from another manufacturer exporter and desiring to import raw materials components etc required for use in its factories under that Licence sent it to the third respondent requesting that the transfer of the Licence in its name be recognised and an endorsement made thereon to make it valid for import of items permitted under paragraph 138 1 of the Import Policy 1981 82
The third respondent rejected the request on the basis of an office Circular dated 31 8 1981 issued by the second respondent which directed the licensing authority not to grant endorsement under paragraph 138 1 unless the Replenishment Licence had been issued to the applicant against export of its own products
The appellant s writ petition challenging the validity of the circular dated 31 8 1981 as well as the order made on its application for endorsement of the licence was rejected by the High Court
Allowing the appeal  HELD Paragraph 140 of the import Policy 1981 82 clearly states that Replenishment Licence will be issued in the name of the Registered Exporter only and will not be subject to Actual User  condition and that except for cases covered by paragraphs 136 2 185 2 and 186 1 the licence holder may transfer the licence in full or in part in favour of any other person and that the licence holder or such transferee may import the goods permitted therein but the facility of paragraphs 136137 and 146 shall not be available to any transferee unless the transferee is himself a Registered Exporter and can satisfy the Custom Authorities at the time of clearance of the goods of his bona fides
The goods sought to be imported by the appellant of the basis of the Replenishment Licence in question do not fall under paragraphs 136 2137146185 2 and 186 1 mentioned in paragraph 140
Reco 363 gnised Trading Houses like the appellant are entitled to certain facilities under paragraph 195 4 and one of them mentioned in paragraph 195 4 ii is import replenishment licences transferred to them by others
Thus the appellant is entitled under paragraphs 140 and 195 4 ii to the facility of the Import Policy as a transferred of the Replenishment Licence issued in the name of the actual manufacturer exporter against exports made by that manufacturer exporter
370 B E The contention of the respondents that under paragraph 138 1 the facility to import raw materials etc under the Replenishment Licence is available only to the actual manufacturer exporter against whose exports the Replenishment Licence was issued amounts to reading into paragraph 138 1 the words against the exports of products manufactured by them after the words manufacturer exporters and before the words will be valid 
That is what is sought to be done by the impugned Circular dated 31 8 1981
The High court was right in saying that the Circular appears to change the Import Policy but it erred in saying that the condition mentioned in the impugned order is found in paragraph 138 1
No such condition is to be found in paragraph 138 1
It is significant that paragraph 138 1 was not mentioned in paragraph 140
It is also significant that in the Import Policy for the subsequent year 1982 83 the words against their exports of products manufactured by them have been actually inserted in paragraph 138 1 after the words Replenishment Licences issued to manufacturer exporter and before the words will be valid 370 E H 371 A B