IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 20.04.2010 CORAM THE HONOURABLE Mr. JUSTICE T.RAJA W.P.Nos.23722 to 23726 of 2004 and W.P.M.P.Nos.28746 to 28749 of 2004 Sundaram Textiles Ltd., Rep. By its Vice Chairman cum Managing Director, Lakshmi Building, Usilampatti Road, Kochadai, Madurai – 625 016. ... Petitioner in all petitions Vs. 1.The Union of India, Rep. By the Secretary, Ministry of Commerce, (Government of India), Udyog Bhavan, New Delhi – 110 011. 2.The Union of India, Rep. By the Secretary, Ministry of Finance, (Government of India), North Block, New Delhi – 110 011. 3.Director General of Foreign Trade, Ministry of Commerce, (Government of India), Udyog Bhavan, New Delhi – 110 011. 4.The Commissioner of Customs, Customs House, Rajaji Salai, Chennai – 600 001. 5.The Asst. Commissioner of Customs, Customs House, Rajaji Salai, Chennai – 600 001. ... Respondents in all petitions PRAYER IN W.P.No.23722 OF 2004: Writ Petition filed under Article 226 of Constitution of India praying to issue a writ of mandamus directing the respondents 3, 4 and 5 to refund the total sum of Rs.28,24,764/- with interest as stipulated in Customs Act, 1962 covered in Bill of Entry No.08173 dated 23.02.1991 paid in excess of 25% Advalorem duty that is payable in accordance with Public notice https://hcservices.ecourts.gov.in/hcservices/ No.59/ITC(PN) 90-93 dated 07.09.1990 and Notification No.169/90 Customs dated 03.05.1990. PRAYER IN W.P.No.23723 OF 2004: Writ Petition filed under Article 226 of Constitution of India praying to issue a writ of mandamus directing the respondents 3, 4 and 5 to refund the total sum of Rs.26,71,653/- with interest as stipulated in Customs Act, 1962 covered in Bill of Entry No.21680 dated 23.11.1990 paid in excess of 25% Advalorem duty that is payable in accordance with Public notice No.59/ITC(PN) 90-93 dated 07.09.1990 and Notification No.169/90 Customs dated 03.05.1990. PRAYER IN W.P.No.23724 OF 2004: Writ Petition filed under Article 226 of Constitution of India praying to issue a writ of certiorarified mandamus quashing the order passed in File No.01/36/18/291 AM90/EPC G-I 6038 dated 22.03.2002 by the 3rd respondent and direct him to issue a certificate under para 197 of the Import-Export Policy 1990- 93, that the export obligation relating to the imported machineries have been completed by the petitioner and pass such further orders. PRAYER IN W.P.No.23725 OF 2004: Writ Petition filed under Article 226 of Constitution of India praying to issue a writ of mandamus directing the respondents 3, 4 and 5 to refund the total sum of Rs.22,03,316/- with interest as stipulated in Customs Act, 1962 covered in Bill of Entry No.05983 dated 15.02.1991 paid in excess of 25% Advalorem duty that is payable in accordance with Public notice No.59/ITC(PN) 90-93 dated 07.09.1990 and Notification No.169/90 Customs dated 03.05.1990. PRAYER IN W.P.No.23726 OF 2004: Writ Petition filed under Article 226 of Constitution of India praying to issue a writ of mandamus directing the respondents 3, 4 and 5 to refund the total sum of Rs.22,03,316/- with interest as stipulated in Customs Act, 1962 covered in Bill of Entry No.05988 dated 15.02.1991 paid in excess of 25% Advalorem duty that is payable in accordance with Public notice No.59/ITC(PN) 90-93 dated 07.09.1990 and Notification No.169/90 Customs dated 03.05.1990. For Petitioner in all the petitions :Mr.S.D.S.Philip For Respondents :Mr.P.Bhuvaneswari, CGSC For R1 to R3 Mr.A.P.Peter Gunasekaran, CGSC For R4 and R5 COMMON ORDER As the facts leading to all the writ petitions are almost identical, they are disposed of by this common order. https://hcservices.ecourts.gov.in/hcservices/ 2. The petitioner's company is doing business for the last 40 years by manufacturing cotton yarn with 40,000 spindles from 1988 after expanding its textile mill. The Government of India, in order to boost the exports of textile goods from India, introduced a scheme for liberalising the import of capital goods with export obligation and the Notification in Public Notice No.59/ITC (PN)/90-93 dated 07.09.1990 was issued by the Director General of Foreign Trade/3rd respondent herein, to facilitate the import of capital goods by manufacturers, who do not fulfil the export performance criteria for the past 3 years as laid down in sub paragraph 2 in paragraph 197 of Import and Export Policy, April 1990-March 1993 Volume I, subject to such conditions as may be prescribed by the Government. The conditions stipulate that they should export in the subsequent 4 years about 3 times the CIF value of the capital goods, for which a legal agreement and a bond towards the exempted duty has to be executed by the importer to the Director General of Foreign Trade / 3rd respondent herein, the licensing authority as per paragraphs 196 and 197 of the Handbook of Procedures April 1990-March 1993 Volume I. The petitioner's company, by application dated 20.08.1990, applied for 2 nos. of auto-coner, 2 nos. of Toyoda-Comber, 2 nos. of Cherry Combers amounting to 6 nos. and by another application dated 17.09.1990, the petitioner's company applied for another 2 nos. of Toyoda comber and 2 nos. of Cherry Combers. The total value of 10 nos. of machineries was about Rs.187.30 lakhs. But, the Director General of Foreign Trade/3rd respondent herein, without looking into the Public notice dated 07.09.1990, rejected the petitioner's application for import license by two letters dated 15.11.1990. But, in the meanwhile, anticipating the grant of import licenses, the petitioner opened irrevocable Letters of Credit for import of all the machineries, except one auto coner, and the goods were also shipped from Japan and the same also arrived. The petitioner approached the respondents 4 and 5 to clear the goods under paragraph 197 of the Import & Export Policy – Volume I for the period April 1990 to March 1991. But, the Customs Authorities refused to clear the goods and directed the petitioner to pay full duty. Therefore, the petitioner filed W.P.No.16596/1990 before this Court, seeking for release of one auto coner, which arrived at the Madras Port during October 1990, which is kept in bonded warehouse. This Court by order dated 31.10.1990, ordered to release of the Auto coner on the following conditions:- a) Payment of 25% of the basic duty as assessed by the respondent. b) The furnishing of Bank Guarantee for 50% of the differential amount to the satisfaction of the 1st respondent. https://hcservices.ecourts.gov.in/hcservices/ c) Execution of personal bond for the balance of 50% of the differential amount to the satisfaction of the 1st respondent. The auto coner was cleared on 28.11.1990 in Bill of Entry No.21680 by the petitioner on payment of duty of 25% advalorem, and after furnishing of Bank Guarantee and personal bond for Rs.26,71,653/-. 3. Subsequently, since the Director General of Foreign Trade / 3 rd respondent herein, refused to issue import license by order dated 15.11.1990, the petitioner once again took up the matter before this Court in W.P.No.2243/1991, seeking a direction to the Government of India, Ministry of Commerce and the Chief Controller of Imports and Exports to grant the petitioner's company the facility of import of capital goods under concessional rate of duty as per Import Policy of 1990-93. Subsequently, the petitioner filed W.P.Nos.2859 and 2860 of 1991 seeking to direct respondents 4 and 5 to clear 4 nos. of Cherry Combers, two each, in Bill of Entry Nos.05983 and 05988 dated 15.02.1991 and W.P.No.2924 of 1991 filed to clear 4 nos. of Toyoda Combers in Bill of Entry No.08173 dated 23.02.1991 with reference to paragraph 197 of the Import Policy, Volume I. This Court by order dated 11th and 12th March 1991 in W.P.No.2243/1991 observed that the goods can be cleared under the following conditions, pending disposal of the above said writ petitions. a) The petitioner shall pay the admitted duty in cash. b) The petitioner shall also pay 50% of the differential duty in cash. C) The petitioner shall furnish a Bank Guarantee for the balance 50% of the differential duty. 4. As per the order passed by this Court in W.P.Nos.2859, 2860 and 2924 of 1991, the petitioner remitted the admitted duty amount of 25% Advalorem duty and 50% of the differential duty and furnished the Bank guarantee for the balance 50% of the differential duty. The Bank Guarantees were accepted by the Assistant Commissioner of Customs/5th respondent herein on 21.03.1991 and two combers in Bill of Entry No.05983 dated 15.02.1991, 2 combers in Bill of Entry No.05988 dated 15.02.1991 and 4 combers in Bill of Entry No.008173, dated 28.03.1991, were cleared by the Customs authorities on 22.03.1991. In the meanwhile, M/s.Canara Bank demanded the petitioner's company to pay 100% cash margin towards the bank guarantee given by them to the Customs Department due to financial crisis. Therefore, the petitioner's company paid the customs duty towards bank guarantee and personal bond under protest by stating that the payments are made without prejudice to the final outcome of the writ petition pending before this Court. Similarly, during December 1992 for the other three Bank Guarantees given as per orders in W.P.Nos.2859 and 2860 of 1991 and 2924 of 1991, the Bank demanded 100% cash margin and https://hcservices.ecourts.gov.in/hcservices/ accordingly, the petitioner company came forward to pay the amount of customs duty by demand draft to the Collector of Customs by letter dated 22.12.19912 and cleared the duties under protest without prejudice to the final outcome of the pending writ petition. Subsequently, the Customs Department also returned all the Bank Guarantees to the petitioner's company by duly cancelling all of them. But, the personal bond given by the petitioner's company relating to clearance of one Auto coner was not given back and the Customs Department informed the petitioner company that the same would be returned on the production of the certificate in terms of Notification No.169/90 Cus dated 03.05.1990. This Court by order dated 09.11.1998, while dealing with the rejection order of the 3rd respondent, has held as follows:- "A reading of the impugned order shows that the Government while passing the impugned has not taken into consideration the letter dated 07.09.1990 above cited. In view of the above, it could be said that the action of the respondents in rejecting the applications dated 20.08.1990 and 17.09.1990 made by the petitioner herein for the grant of facility for import of capital goods under concessional rate of customs duty as per the Import Policy 1990-93 cannot be held to be valid and directed the respondents to pass orders afresh takinginto consideration the Public Notice No.59/ITC/PN/90-93 dated 07.09.1990 within a period of three months". But, the order was not complied with by the 3rd respondent. However, the petitioner placed full particulars before the Committee as required to show as to how the export obligation has been fulfilled 100% by the petitioner company with reference to import of the subject capital goods. Again, no orders were passed. Therefore, the petitioner made a representation to the 3rd respondent for early orders by requesting the import of 9 nos. of machineries. But, surprisingly, the petitioner received a letter in File No.01/36/18/291 /AM/90/EPCG-1/6038, dated 22.03.2002, rejecting the request for issue of EPCG Licence, as the licence under 25% duty scheme as per the policy prevailing during 1990-91 cannot be issued under the current policy. Challenging the rejection order, the present writ petition has been filed on the ground that there was total non application of mind by the 3rd respondent in rejecting the original Import Applications dated 20.08.1990 and 17.09.1990, on 15.11.1990 by ignoring the Public Notice No.59/ITC (PN) 90-93, dated 07.09.1990. 5. Learned counsel appearing for the petitioner submits that when all the conditions under paragraph 197 of the Import Policy towards export and the Notification No.169/90-Cus dated 03.05.1990 were fully satisfied with by the petitioner, the Director General of Foreign Trade / 3rd respondent herein took up the matter for https://hcservices.ecourts.gov.in/hcservices/ regularising the import of machineries as directed by this Court in W.P.No.2243 of 1991 dated 09.11.1998. But, the Director General of Foreign Trade / 3rd respondent herein has got no authority to refuse regularising the import by the petitioner under paragraph 197 of the Import Policy, particularly, when this Court directed the 3rd respondent to consider the same with reference to Public Notice No.59/ITC (PN) 90-93 dated 07.09.1990. On that basis, it was pleaded that the order of rejection of 3rd respondent is arbitrary, illegal and unconstitutional. 6. Refuting the submissions made by the learned counsel appearing for the petitioner, learned counsel appearing for the respondents submits that this Court, by order dated 09.11.1998, had quashed the rejection letter dated 20.11.1990 and directed the respondent to pass order afresh taking into consideration the new provisions incorporated in the Public Notice No.59/ITC/90-93 dated 07.09.1990. Subsequently, the petitioner made a representation on the basis of above said order, which was carefully considered by the EPCG Committee by keeping in mind the policy provisions including the provisions of Public Notice No.59 dated 07.09.1990. Since there is no provision in the Exim Policy, which permits a licence to be considered as "Deemed to have been issued during 1990-1991", this Court also has not passed any order for issuance of licence, but, only a direction was given to the respondents to pass orders afresh after review. Therefore, the Director General of Foreign Trade / 3rd respondent herein, in accordance with provisions of the FT(DR) Act, 1992, and the Rules and the procedures made thereunder, rejected the request of the petitioner by its letter No.1/36/18/291/AM-90/EPCG- I/6038 dated 23.03.2002, stating that the request for issuance of EPCG licence under 25% duty scheme as per the policy prevailing during 1990-1991 cannot be considered, since the same could not be issued under the policy provisions applicable with different export obligations. In fact, the Director General of Foreign Trade / 3rd respondent herein, has considered the application of the petitioner dated 20.08.1990 and 17.09.1990 as per the then existing policy provisions and the same was rejected. The case was reviewed by the 3rd respondent and decision was taken on 28.02.2002 only in pursuant to the order passed by this Court on 09.11.1998, by keeping in mind the provisions of the Public Notice No.59/ITC/90-93 dated 07.09.1990. Therefore, the petitioner is not entitled to take shelter under false pretext instead of accepting under EPCG Scheme. 7. Heard the learned counsel appearing on either side and perused the materials available on record. 8. It is relevant to keep in mind that the petitioner is aware that he is not entitled for issuance of licence, as the concession facility was extended to manufacturers, who do not fulfill past 3 years export performance criteria. But, in the petitioner's case, not only number of years of export performance was not fulfilled, but https://hcservices.ecourts.gov.in/hcservices/ also in view of their meagre exports only during one year at the time of submitting their application for issue of EPCG licence for a large value, was considered on the basis of the order passed by this Court in W.P.No.2243 of 1991, dated 09.11.1998. Keeping in view the policy provisions including the Public Notice No.59 dated 07.09.1990 in pursuant to the order passed by this Court, wherein direction has been given to pass orders afresh and not to regularise the imports effected without a valid licence issued under EPCG Scheme. The petitioner company, by importing the goods, cleared the items by payment of duty to the Customs without a license issued to that effect by the licensing authority. Therefore, the question of export obligation upon the Union of India comes into picture only when a licence is issued to the petitioner company as per the eligibility. When the petitioner's company is not eligible for not meeting the conditions as per the existing policy, the same cannot be claimed by visualising the new conditions in the policy like one "Deemed to have been issued during 1990-1991" without fulfilling the conditions required for issuance by the competent authority, as the policy specifies certain export performance and number of years of such performance as a criteria for such licence, during AM-90-91. Subsequently, the amendment brought out through Public Notice No.59 dated 07.09.1990 stipulated that this facility may also be allowed, on merits, to other manufacturers who do not fulfill the past 3 years of Export Performance criteria, as laid down in Sub para (2) of para 197 of Import Export Policy for Registered Exporters, subject to such conditions as may be prescribed by the Government. The petitioner, without complying the criteria as laid down in the above Import Export Policy, cannot ask for issuance of licence, because, the import licence is pre-requisite document for release of goods by Customs at concessional rate of customs duty, if the same was issued under the relevant policy provisions read with relevant customs notification. 9. In the present case, the Bank Guarantee was executed before issuance of the licence and goods were released for home consumption, subject to the conditions that the entire Bank Guarantee would be paid if no import licence is issued. But, unfortunately, the petitioner has not complied with the conditions. Therefore, the 3rd respondent refused to issue the import certificate as the petitioner company was not found eligible for the certificate. Therefore, the Customs authorities are entitled to collect the entire duty liability involved in import of capital goods. 10. Now the other ancillary question that arises is whether the petitioner has complied with the Import Export Policy. Para 197 of Import Export Policy provides for import of capital goods at concessional rate of customs duty. Para 197(2) states that the above facility would be available to registered manufacturers-exporters, who had been regularly exporting for a period of not less than 3 years. The above said paragraph again states that only direct https://hcservices.ecourts.gov.in/hcservices/ exports of the products manufactured through capital goods permitted for import, shall be counted for fulfillment of the obligation. The claim of the petitioner that Public Notice No.59 dated 07.09.1990, by way of an amendment, permitted even a new industry to apply for a licence to import capital goods under EPCG Scheme vide Para 197 of Exim Policy cannot be accepted. The amendment brought out at para 197 in Public Notice No.59 dated 07.09.1990 states that "this facility may also be allowed, on merits, to the other manufactures who do not fulfill the past three years export performance criteria, as laid down in sub-para(2) subject to such conditions as may be prescribed by the Government". Here, it is important to bear in mind that para 197 never said that the cases with no export performance or little export performance shall also be considered. The question of fulfilling the export obligations within a given period, arises only when import licence certificate is issued by the licensing authority. Further, the question of fulfilling export obligations, does not arise in this case, since the licence was not issued to the petitioner, as the petitioner company failed to satisfy the requirement for import as per the existing policy provisions. 11. Therefore, the orders impugned in the present writ petitions does not call for any interference, and accordingly, the writ petitions are dismissed. No Costs. Sd/- Asst. Registrar //true copy// Sub Asst.Registrar rkm To 1. The Secretary, Union of India, Ministry of Commerce, (Government of India), Udyog Bhavan, New Delhi – 110 011. 2.The Secretary, Union of India, Ministry of Finance, (Government of India), North Block, New Delhi – 110 011. 3.Director General of Foreign Trade, Ministry of Commerce, (Government of India), Udyog Bhavan, New Delhi – 110 011. https://hcservices.ecourts.gov.in/hcservices/ 4.The Commissioner of Customs, Customs House, Rajaji Salai, Chennai – 600 001. 5.The Asst. Commissioner of Customs, Customs House, Rajaji Salai, Chennai – 600 001. 5 cc to Mr.S.D.S.Phillip, Advocate, Sr.No.25783 1 cc to Mr.P.Buvaneshwari, Advocate, Sr.No.25606 W.P.Nos.23722 to 23726 of 2004 RB {CO} TP/26.4.2010. https://hcservices.ecourts.gov.in/hcservices/