Case: Steel Authority Of India Ltd Vs. Shri Ambica Mills Ltd. &amp; Ors

in thinking that SAIL was a department of the Union of India and most of the reasons given in the judgment are based on this wrong premise. 19. The importer in this case, it is an admitted fact, is a registered exporter of steel pipes entitled to priority allotment of steel either through imports or from indigenous plants like the appellant. The allotment of steel was for manufacture of steel pipes for export against advance licence granted to the importer from time to time. During the relevant period, hot rolled strips in coils manufactured by plants under SAIL were available in sufficient quantity and hence the direct imports of the raw materials were banned and the manufacturers were required to obtain the supplies of the raw materials from the appellant against the import licences with them and/or release orders issued by the licensing authority, namely, the Chief Controller of Imports and Exports. 20. Various categories of licences are granted for the purpose of imports to the manufacturers. One such licence was advance licence. Para 149 of the import policy provided for grant of advance licence/imprest licences and the relevant part of para 149 reads. "the term advance licence refers to cases where the import is allowed under the Duty Exemption Scheme whereas the term imprest licence will be used where the import is allowed outside the Duty Exemption Scheme. The advance licences, it is stated, which include release orders are intended to supply import input or inputs in short supply for export production. It is also stated that the licensing authority issuing the advance licences will simultaneously issue the collected Duty Exemption Entitlement Certificate. The policy does not provide for issuance of advance licence without duty exemption" * 21. Bearing the abovesaid facts in mind, let us now consider the issue raised before us. 22. Admittedly when the importer wanted to register the indent for supply of hot rolled strips in coils, the licences/release orders produced lacked in material particulars and relevant enclosures. In other words, the licence did not mention that it was an advance licence and no Duty Exemption Entitlement Certificate was enclosed and legal undertaking/exemption of export bond was also not enclosed. It was on this admitted position, the appellant declined to register the indent of the importer. No doubt, the mistake was committed by the licensing authority. Does that mean that the appellant can ignore the lacuna in the documents and register the indent placed by the importer in contravention of the requirements of the Scheme ? The High Court held that the licensing authority and the appellant being two different wings/departments of the Union of India, the appellant on receipt of rectified documents on 26-8-1983 must register the indent as if it was presented on 20-8-1983. We are afraid, we cannot accept the above reasoning of the High Court as we have pointed out that the basic error committed by the High Court was in assuming that the appellant was a department of the Union of India. We have already noticed that there are number of judgments of this Court taking the view that a company though fully owned by the Union of India when incorporated takes its own entity/identity and cannot be considered as department of the Union of India. Further, it is seen from the records that the importer in this case is not a new entrant to plead ignorance though that may not be an excuse. He has presented applications for registration before and after the application in question and, therefore, it must be taken that the importer knew fully well about the requirements for registering the indent. It is also relevant to note that the appellant on receipt of the application for registration expressly and in writing replied not only pointing out the defects but also stated that they are not taking any action on the Letter of Credit enclosed along with the licence. It is also an admitted fact that the indent was registered only on 26-8-1983 when all the relevant documents after curing the defects was presented on that date. Under these circumstances and in the light of the Scheme published by the appellant, we hold that the importer (Ambica Tubes) cannot claim as of right that its order must be deemed to have been registered for supply of raw materials on 20-8-1983 when the documents with all defects were presented. 23. We cannot agree with the contention of Mr. Parekh that mere presentation of an irrevocable Letter of Credit covering the value of requirement of raw materials is sufficient for registering the indent. We have already set out para 2.3. Para 2.3 of the Scheme announced an 10-6-1983 decides the price to be paid for the indent. Mr. Parekh placed reliance on the last part of para 2.3 to contend that the date of presentation of irrevocable Letter of Credit will be relevant for fixing the price. We have seen that it says price chargeable shall be the price ruling on the date on which acceptable and operative financial arrangements are made in favour of SAIL by import licence-holders eligible to get supplies under this Scheme. Mr. Parekh wants us to ignore the portion italicised above. Mere production of Letter of Credit will not be sufficient to determine the price ruling on the date. It must be given by an import licence-holder eligible to get the supplies under the Scheme. In this case, we have seen that the importer will not fall under the category of "import licence-holder eligible to get supplies under the Scheme" as on the date when the Letter of Credit was presented, the licence/release order was defective. Therefore, we cannot agree with Mr. Parekh that the importer having produced the Letter of Credit well before 25-8-1983, the price payable for the supplies must be a pre-revised one. 24. In view of our above conclusion, it is not necessary for us to consider and decide the other points raised by learned counsel for the appellant.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]16. Coming to the merits of the case, we accept the contention of the learned counsel for the appellant that the High Court went wrong in holding that SAIL was a department of the Union of India.In Western Coalfields case this Court held as follows : (SCC p. 136, 7 parais contended by the Attorney General that since the appellant Companies are wholly owned by the Government of India, the lands and buildings owned by the Companies cannot be subjected to property tax. The short answer to this contention is that even though the entire share capital of the appellant Companies has been subscribed by the Government of India, it cannot be predicated that the Companies themselves are owned by the Government of India. The Companies which are incorporated under the Companies Act have a corporate personality of their own, distinct from that of the Government of India. The lands and buildings are vested in and owned by the Companies, the Government of India only owns the share capital."In view of the above decisions of this Court, we have no hesitation to hold that the High Court erred in thinking that SAIL was a department of the Union of India and most of the reasons given in the judgment are based on this wrongare afraid, we cannot accept the above reasoning of the High Court as we have pointed out that the basic error committed by the High Court was in assuming that the appellant was a department of the Union of India. We have already noticed that there are number of judgments of this Court taking the view that a company though fully owned by the Union of India when incorporated takes its own entity/identity and cannot be considered as department of the Union of India. Further, it is seen from the records that the importer in this case is not a new entrant to plead ignorance though that may not be an excuse. He has presented applications for registration before and after the application in question and, therefore, it must be taken that the importer knew fully well about the requirements for registering the indent. It is also relevant to note that the appellant on receipt of the application for registration expressly and in writing replied not only pointing out the defects but also stated that they are not taking any action on the Letter of Credit enclosed along with the licence. It is also an admitted fact that the indent was registered only on 26-8-1983 when all the relevant documents after curing the defects was presented on that date. Under these circumstances and in the light of the Scheme published by the appellant, we hold that the importer (Ambica Tubes) cannot claim as of right that its order must be deemed to have been registered for supply of raw materials on 20-8-1983 when the documents with all defects wereWe cannot agree with the contention of Mr. Parekh that mere presentation of an irrevocable Letter of Credit covering the value of requirement of raw materials is sufficient for registering the indent. We have already set out para 2.3. Para 2.3 of the Scheme announced an 10-6-1983 decides the price to be paid for theproduction of Letter of Credit will not be sufficient to determine the price ruling on the date. It must be given by an import licence-holder eligible to get the supplies under the Scheme. In this case, we have seen that the importer will not fall under the category of "import licence-holder eligible to get supplies under the Scheme" as on the date when the Letter of Credit was presented, the licence/release order was defective. Therefore, we cannot agree with Mr. Parekh that the importer having produced the Letter of Credit well before 25-8-1983, the price payable for the supplies must be a pre-revised one