TESTEELS LTD. v.

UNION OF INDIA

FEBRUARY 6, 1989

[G.L. OZA AND K.N. SAIKIA, JJ.) ...

Imports and Exports-Import Trade Control Policy 1972-197~ Export of Transmission Towers-Cash Assistance Scheme-Subsequent amended scheme prescribing time-bound period-making exports ~- ineligible for cash assistance beyond that period-Validity of c In 1969, the Govt. of India announced, through public notice a scheme for registration of contracts involving deUveries extending over .. a period of not less than 12 months for cash assistance m respecf of certain ei<pOrts. The scoiie oftbe scheme was extended in 1970, aUowing Cl!Sh assistance at thesame percentage as was prevailing on the date of D the firm contract so registered provided the.inwice was attested by the Banks concerned. It was also provided that even if the rate of cash assistance is reduced by Govt. the higher rate that existed on the date of the Firm contract would be admissible. And in case of increase in the rate, exports made during the contract would normaUy be eUgible for ,... the benefit of the increased rate. It was also made clear that If the rate is E likely to affect an exporter adversely, Govt. would consider its matter on merits.

In 1972 the cash assistance scheme on export of engineering goods was modified aUowing additional cash assistance of 5% of the f.o.b. value on all exports effected during 1.4.72 to 30.9.72 to certain -) F countries. It was further announced that in respect of transmission towers exported from 1st Oct. 1972 till 31st March, 1973 cash assistance would be at the rate of 25% of the f.o.b. value.

The appellant company entered into contracts with the National Electricity Board of Malaysia and in respect of some of the exports of

G transmission towers, the appellant received cash assistance and in respect of others, it was denied on the ground that the exports made during the extended delivery period of the contract were not covered under the Import Trade Control Policy and as such no cash assMance could be granted on exports made after March, 1974.

H The appeal preferred by the appellant was rejected by the Deputy

-~ :;02

TESTEELS LTD. v. U.O.l. 503

Chief Controller of Imports and Exports on the groond that the benefit of registration on export in execution of the supplementary contract was additional qoantity at increased rates and could not be allowed under Govt. policy. The second appeal was rejected by the Chief Controller of Imports & Exports, stating that after execution of the supplementary order there was increase in quantity of goods to be supplied as also price on the date of execotioo of the supplementary order and the import policy did not provide for protection of benefits where there was increase in the value of contract. The review petition filed by the appel laot was also rejected.

Thereafter the appellant moved the High Court onder Article 226 of the Constitution. The High Court partly allowed the petition restraining the respondents from enforcing the demand for the refund of the cash assistance Biready paid and rejected the appellant's claim in respect of contracts, entered into in the context of the offers made subsequent to April 1972, since the cash assistance declared_ as on April 1, 1972 and thereafter was in terms made available opto a specific date.

This appeal by special leave is against the High Court's judgment.

On behalf of the appellant, it was contended that at different stages, the respondents gave different reasons for refusing to pay cash assistance.

Dismissing the appeal,

HELD: 1.1 There could arise no question of granting cash assistance to different exports under the original scheme and the prevalent amended scheme at the same time. [508E]

1.2 Paragraph 10 in the 1970 scheme made it quite clear that exports effected after the specified date would not be eligible for cash assistance. Consistently with this paragraph, in the subsequent schemes

the periods were prescribed. The amended scheme dated 20th April, 1972 prescribed the period from 1.4. 72 to 30.9. 72 and the amended G scheme dated 16th Jone 1973 applicable to this case, prescribed the period from 1st October 1972 npto and including 31st March 1973. Io other words, exports of Transmission Towers made after the prescribed period would not be eligible to assistance under the prevalent scheme.

The word 'amendment' would imply that the scheme of 1969 stood amended. [508C-E] H

A 1.3 In view of the unequivocal language of paragraph 10 of. the 1970 scheme and clear prescription of the different periods during the subsequent amended schemes and the admitted facts that the export in respect of these two contracts were made only alter July 1974, there is no reason to allow the appellant's claim. Whether the Government's policy was conducive to maximisation of exports and foreign exchange B earning is entirely a different matter. [508F-G] ~

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3482 of1987.

From the Judgment and Order dated 10.3.1983 of the High C Court of Gujarat in Special Civil Application No. 1294 of 1977

S.K. Dholakia, P.C. Kapur and R.C. Bhatia for the Appellant.

A. Sobba Rao, C.V. Sobba Rao and Mrs. Sushma Suri for the Respondents.

The Judgment of the Court was delivered by

K.N. SAIKIA, J. This appeal by special leave is from the judg-

)-' '

ment of the High Court of Gujarat in Special Civil Application No. •

E 1294 of 1977 under Article 226 of the Constitution of India.

The Government of India Ministry of Foreign Trade announced through public notice No. 196-ITC(PN)/69 dated 8th December, 1969 a scheme for registration of contracts involving deliveries extending over a period of not less than 12 months for cash assistance, hereinafter referred to as 'the scheme'. The Government decided to extend F the scope of the scheme as was announced by letter No. 12 (22/67- EAC) dated 4th February, 1970, hereinafter referred to as 'the 1970 scheme', stating inter-alia, in paragraph 3 that the registered exporter of export products under a contract involving deliveries extending over a period of not less than 12 months, registered by the banks in terms of paragraph 3 of the public notice dated 8th December, 1969 will be G eligible for claiming cash assistance at the same percentage as was prevailing on the date of the Firm contract so registered provided that the bank attested invoice which is normally produced for the purpose of claiming cash assistance, bears a further attestation from the negotiating bank to the effect that exports effected in this invoice is against a contract registered with them giving the Registration number H and date. If during the currency of the registered contract the rate of

TE~TEELS m:' v. u:o.I. [SAIKI~, J.J .

' 505

cash assistance is {educed by Government, th~ higher rate of cash A assistance existing on the date of the Firm contract would be admissible on exports under the said contract. If, on the other hand.there is an increase in the rate of cash assistance percentage during the currency of the registered contract, exports made during the contract would not normally be eligible for the benefit of the increased rate; in speci'!J . B cases where the operation of this rule is likely to affect an exporter adversely, Government would be prepared to cousider the matter on merits. It was also stated in paragraph 5 that the reiistered exporter would be entitled to claim cash assistance as and when the exports are made against the registered contracts and the application would be submitted to the disbursing authority in accordance with the i)olicy and procedure announced from time to time by that Ministry. By letter C No. U(4)72-EAC dated 20th April, 1972 on the subject of.Amendment No. 53 the cash assistance scheme on export of engineering goods was modified to the effect that a~ additional cash assistance of 5% of the f.o.b. value will be allowed on all exP:<>rts made to North ..

American and.South American countries and t~ New Zealand and D these facilities of normal cash assistance and additional cash assistance will be allowed on exports effected during the period from 1.4.1972 to 30.9.72, the later date being included. By letter No. 12(13)n3-EAC dated 16th June, 1973 referring to Amendment No. 59 it was announced that cash assistance on transmission towers will be .made admissible on exports thereof made during the period from 1st October 1974 E upto and including 31st March, 1973 at the rate of 25% of the f.o.b. value.

The appellant is a company registered or deemed to be registered under the Companies Act, 1956 for exporting Line Towers Galvanised; Mild Steel Towers,· hereinafter called 'Transmission F Towers', (Item No. A. 27.1)° by entering into rontracts With the National Electricity Board of the State of Malaysia, a public utility service ot Malaysian Governm<:!nt, briefly called 'the N.E.B.' which had invited a global tender in October 1971 for design, fabrication and supply of Transmission Towers, and the appellant's tender submitted on January 29, 1972 was accepted bi them, and pursuance thereto a' G contract was entered into on May 17, 1972. The said contract was duly:

registered witli the Central Bank 9f I11dia, Lal Darwa2a, ,\hemdabad on May 30, 1972 and was allotted registration No. 50/1. Subsequently; the N.E.B. having needed more Transmission Towers more contracts were entered into and the same were.registered as follows: ' . - ,. . . ., ~· - . ..

A S. No. Date of Offer Date of acceptance of the offer Date of registration of the contract

1 2

1. 29.1.1972

2A. 29.1.1972

2B. 31.8.1972 3. 28.4.1973

17.5.1972 20.6.1972 27.10.1972 5.6.1973 (Tefox 31.5.1973)

with the bank.

30.5.1972 26.7.1972 13.11.1972 15.6.1973

In respect of the exports made pursuant to two of the aforesaid contracts, namely No. 1 and2(A), the respondents paid to the appellants a cash assistance of Rs.3,48,555 but refused to pay the claimed amount of s.4,10,784.93p in respect of the exports made pursuant to the other two contracts and instead demanded refund of aforesaid D Rs.3,48,555 already received by the appellant. By let_ter datecl

10.3.1975 to the appellant the Controller of Imports and Exports informed that the exports made during the extended delivery period of the contract were not covered under the provisions of paras 56-64 of Part B of Import Trade Control Policy Volume-II, April 1972-March 1973 and as such no cash assistance could be granted on exports made

E after March, 197 4. ·

The Deputy Chief Controller of Imports and Exports rejecting the appellant's appeal vide his letter dated 30.6.1976 informed the appellant that the benefit of registration on export in execution of the supplementary contract was additional quantity at increased rates and could not be allowed under Government Policy. The appellant's F second appeal was also rejected by the Chief Controller of Imports and Exports vide his letter dated 8th January, 1977 stating that after execution of the supplementary order there was increase in quantity of goods to be supplied as well as price as on the date of execution of the supplementary order, and the import policy did not provide for protection of benefits under the scheme for registration of contracts on the G cases where there was increase in the value of contract. The appellant's review petition was also rejected by letter dated 19th July 1977 stating that as per provision of the policy contained in the relevant Policy Book, if there was an increase in the value of contract on account of price escalation clause or renegotiation on the ground of increase in prices of raw-materials, protection to registered contract H was not available.

.A,..,.

TESTEELS LID. v. U.O.J. ISA!KIA, J.] 507

~· The appellants thereafter moved an application under Article A 226 of the Constitution of India in the Gujarat High Court which partly allowed the petition restraining the respondents from enforcing the demand for the refund of the amount already paid by way of cash assistance and rejecting the appellant's claim in so far as the contracts entered into in the context of the offers made subsequent to April 1972 .. because the cash assistance declared as on April 1, 1972 and thereafter B was in terms made available upto a specific date. The exports under the two concerned contra€ts namely No. 2-B and 3 were admittedly made after July 1974, though in case of contract No. 2-B the date of ,-

offer was 31.8.1972 and the date of acceptance was 27 .10.1972 and the date of registration 13.11.1972, and in the case of contract No. 3 date of offer was 28.4.1973 and date of acceptance of 5.6.1973 and date of c registration was 15.6.1973. ,.

Learned counsel for the appellant, Mr. S.K. Dholakia, first, submits, that the appellants are entitled to cash assistance in respect of . these two contracts also inasmuch as the scheme of registration of contracts for cash assistance dated 8th December, 1969 as also thatof D 4th February, 1970 were not time-bound and did not prescribe any period for export to be eligible under.the scheme; that it was only t.he subsequent scheme that prescribed a period; and that the appellant

~ exported Transmission Towers pursuant to the contracts entered into during the earlier period but due to increased demand subsequent supplementary contracts had to be entere~ into, and for price escala- E tion and other difficulties actual exports were delayed. He relies on Section 1, Part-B of Import Control J>olicy Volume-II April 1972- March 1973, "Import Policy for Registered Exporters, Registration of Export Contracts," contained in paragraph 56-64 thereof. Secondly, •

the learned counsel submits that cash assistance scheme of 1969 as well as that of February 1970 were based on the Government's policy of F long term assistance to , exporters and it was with that end in view that the scheme of registration of contracts with the banks was introduced.

Relying on paragraph 3 of the 1970 scheme, he emphasises that it was the date of the Firm contract which was to be reckoned and not the date of export of the products. Relying on paragraph 6 of the scheme he submits that it envisaged contracts involving deliveries extending G

-} overz period.of not less than 12 months and contracts for export were to be registered by the banks in the manner prescribed. As regard the Government's policy of assisting the exports for the purpose of augmenting foreign exchange earnings of the country he submits that the deprivation of cash assistance to the exporter who registered their contrac!s would defeat the very purpose of the scheme.

A Mr. C. V. Subba Rao learned counsel for the respondents demurs j

submitting that it could not be said that once the contracts were registered cash assistance would be available irrespective of the date of the exports.

We are inclined to agree with this submission. Pagraph 10 of the scheme dated 4th February, 1970 reads: -

"Cash assistance is sometimes announced upto a specified date. Exports effected after the specified date even though the contract has been got registered in terms of the provision of this letter will not be eligible for cash assistance."

This paragraph made it quite clear that exports effected after the specified date would not be eligible for cash assistance, Consistently with this paragraph in the subsequent schemes the periods were prescribed. The amended scheme dated 20th April 1972 prescribed the period from 1.4.1972 to 30.9.1972 and the amended scheme dated 16th June 1973 applicable to this case, prescribed the period from 1st October, 1972 upto and including 31st March, 1973. In other words, exports of Transmission Towers made after the prescribed period would not be eligible to assistance under the prevalent scheme. The word 'amendment' would imply that the scheme of 1969 stood amended. If that be so, there could arise no question of granting cash assistance to different exports under the original scheme and the prevalent amended scheme at the same time.

In reply Mr. Dholakia submits that at different stages the respondents gave different reasons for refusing to pay cash assistance to the appellants. However, in view of the unequivocal language of paragraph 10 of the 1970 scheme and clear prescription of the different periods during the subsequent amended schemes and the admitted facts that the export in respect of these two contracts were made only after July 1974, we see no reason to allow the appellant's claim.

Whether the Government's policy was conductive to maximisation of exports and foreign exchange earning is entirely a different matter.

In the result we find no merits in this appeal and it is accordingly rejected, leaving the parties to bear their own costs.

G.N.

Appeal dismissed.

...