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Suwidhi Enterprises and Another Vs. Union of India and Others - Court Judgment

LegalCrystal Citation
SubjectCustoms
CourtMumbai High Court
Decided On
Case NumberWrit Petition No. 2665 of 1984
Judge
Reported in1985(5)ECC226; 1989(39)ELT369(Bom)
AppellantSuwidhi Enterprises and Another
RespondentUnion of India and Others
Excerpt:
.....17 restricting import of each item in note to 5 per cent of value of licence--zip fasteners and snap fasteners separately enumerated in column 4 of table--each could be imported for 5 per cent of value of licence--petitioner importing zip fasteners for 5 per cent of value of licence--subsequent import of snap fasteners for 5 per cent of value of licence--objection by authorities--not legal--jurisdiction--nature of chief controller's clarification--not binding on courts--clarification cannot amend policy--amendment to policy can only be done through public notice--imports and exports policy 1983-84, paragraph 245 ; appendix 17. - - 3. in order the appreciate the controversy it is necessary to allude to the following preliminary facts :appendix 17 in which the said note appears..........that the petitioners had placed on their foreign suppliers messrs sugano brothers and order for snap fasteners of the value of 5 per cent of the face value their import licence under the registered exporters policy scheme (rep). before that the petitioners had already imported zip fasteners on the very same licence to the extent of 5 per cent of the value of the said licence. the respondent - customs authorities disputed the right of the petitioners to import the fresh consignment of snap fasteners on the ground that under the said note (3), the snap and zip fasteners taken together which could be imported here no more than 5 per cent of the face value of the licence and therefore the present import of the snap fasteners which amounted to an additional 5 per cent of the value of the.....
Judgment:

1. The short question that falls for consideration in the present petition depends upon the interpretation of General Note (3) of 'O. Readymade Garments, Hosiery and Knitwear Products' of Appendix 17 of the Import and Export Policy for April 1983 to March 1984 (hereinafter referred to as the said Note).

2. The undisputed facts are that the Petitioners had placed on their foreign suppliers Messrs Sugano Brothers and order for Snap Fasteners of the value of 5 per cent of the face value their import licence under the Registered Exporters Policy Scheme (REP). Before that the Petitioners had already imported Zip Fasteners on the very same licence to the extent of 5 per cent of the value of the said licence. The respondent - Customs authorities disputed the right of the Petitioners to import the fresh consignment of Snap Fasteners on the ground that under the said note (3), the Snap and Zip Fasteners taken together which could be imported here no more than 5 per cent of the face value of the licence and therefore the present import of the Snap Fasteners which amounted to an additional 5 per cent of the value of the said licence was impermissible. The Petitioners have therefore filed the present petition challenging the interpretation placed by the Customs authorities on the said Note and contending that the Note permits import of each of the item of the Snap Fasteners and the Zip Fasteners to the extent of 5% of the value of the licence and not of both taken together. Hence the only question involved in the Petition is of the correct interpretation to be placed on the said Note.

3. In order the appreciate the controversy it is necessary to allude to the following preliminary facts :-

Appendix 17 in which the said Note appears contains the description of Export Products covered by the Import Policy for Registered Exporters, the percentage of import replenishment, and the materials allowed for import against each product as well as other conditions relating thereto. The Statement of import replenishment is given in the form of a table in the Appendix. The table has five columns. Column No. 1 gives the classification of the export products in various groups. Some of the products have been sub-divided into broad categories and in products in various groups. Some of the products have been sub- divided into broad categories, and in product groups/categories the product have been mentioned with their serial numbers or sub-serial numbers. Column No. 2 gives the description of the specific export product. Column No. 3 gives the import replenishment percentage. Column No. 4 not only mentions the materials of import but also in certain cases gives the percentage of the licence value (i.e. REP entitlement) upon which import of the concerned materials is allowed. The export products have been given alphabetical numbering e.g. 'A' for Engineering Goods, etc. I am concerned in the present case with 'O Products' viz. Readymade Garments, Hosiery and Knitwear. Some of these material have General Notes in Column No. 5 which is meant for remarks. In some cases the General Notes also mention the figure of percentage of the licensed value upto which import of the material concerned is allowed. In the case with which I am concerned viz. that of Snap Fasteners and Zip Fasteners, there are General Notes at the beginning of 'O Products' governing the percentage of Import entitlement. Hence there is no percentage of import entitlement mentioned in Column No. 4 where Snap and Zip Fasteners are at Item (xii) and (xiv) respectively. That is why the importance of the General Note (3) in the present case.

4. It is also necessary to note the next preliminary fact viz. that the Import and Export Policy for 1983-84 of which Appendix 17 forms a part, is pronounced by the Central Government and any amendment to this policy which may become necessary in the course of the year is to be made by means of the public notice issued by the Chief Controller of Imports and Exports. The Handbook of Import & Exports Procedures 1983-84 is a supplement to the Import and Exports Policy and contains the relevant procedures and other details. It is against this background that we may now consider the said Note (3) so far as it is applicable to Snap Fasteners and Zip Fasteners.

5. The Snap Fasteners and Zip Fasteners are enumerated specifically as separate items in Column 4 of the table if the said Appendix at Serial Nos. (xiii) and (xiv) respectively under the broad heading '(a) Trimmings and embellishment' against the export product 'Cotton Readymade Garments, Hosiery and Knitwear'. Column 3 gives the total import replenishment percentage as 15 against the said export product. As stated earlier in neither of the items 'Snap Fasteners' and 'Zip Fasteners' the entitlement percentage is mentioned. However, General Note (3) mentions the import entitlement of the said items in the following words :-

'3. In the case of Trimmings and Embellishments, import of each of the following items :-

(i) Snap Fasteners and Zip Fasteners (including zips in coils and its components); and

(ii) Pearls headed pins-stapling pins/industrial Stapling machines,

shall not exceed 5% of the value of the licence subject to a maximum of Rs. 50,000/-. For other items, the import shall not exceed Rs. 1 lakh per item with in the over all value of the licence.'

6. The wording of the said Note shows that the import of each of the items mentioned under its Clauses (i) and (ii) is not to exceed 5% of the value of the licence subject to a maximum of Rs. 50,000/-. In the case of other items of trimmings and embellishments, the value is not exceed Rs. 1,00,000/- per item within the overall value of the licence read with the percentage of import entitlement mentioned against some of the said individual items in Column 4. This shows that the said items cannot be imported exceeding the percentage entitle mentioned there subject to a maximum of Rs. 1,00,000/-. We are really not concerned in the present case with the maximum value in terms of rupees of Snap Fasteners and Zip Fasteners since that is not in dispute. What is in dispute is whether on the wording of the said Note, it can be said that the import of the Snap Fasteners and Zip Fasteners together is not to exceed 5% of the value of the licence or whether the import of each of the items of Snap Fasteners and Zip Fasteners is not to exceed the said value of 5 per cent. A plain reading of the Note as well as the items mentioned in Column 4 of the table shows that the Snap Fasteners and Zip Fasteners have been all along treated as separate and distinct items. It is not the case of the respondents that Snap Fasteners and Zip Fasteners constitute one item nor indeed can such a case be made out. This is also obvious for the fact that the two items have been separately enumerated at Serial Nos. (xiii) and (xiv) in Column 4 of the table. If this is so, then a plain reading of Note (3) would undoubtedly suggest that each of the said two items viz. Snap Fasteners and Zip Fasteners are permitted to be imported to the extent of 5% of the value of the licence. If that were not so, then a simple clarifying word such as 'jointly' or 'together' after two items would have sufficed to bring out the clear intent. Such words however have not been used. On the other hand, the Note clearly says that 'import of each of the following items' is not to exceed 5% of the value of the licence, and after saying so, follow the two items of Snap Fasteners and Zip Fasteners. The situation does not improve merely because the two items are mentioned in the same clause viz. Clause (i) of the Note. Clauses (i) and (ii) are not intended to serve as serial numbers of the items as they do in Column 4 of the Table. Clauses (i) and (ii) merely give the description of the items to which the Note applies. These clauses further show that the items belonging to the same family are clubbed together in the same clause. Since Snap Fasteners and Zip Fasteners belong to the family of fasteners, they have been described together in the same clause along with zips in coils and its components. The other items such as pearl headed pins - stapling pins/industrial stapling machines belonging to the same family are described in the other clause viz. Clause (ii) of the said Note. The respondents however have tried to make much out of the fact the two items, Snap Fasteners and Zip Fasteners are described and placed in the same clause to strengthen their argument that the import of both of them together is not to exceed 5% of the value of the licence. This argument is in the nature of beginning a question. The argument presumes firstly that the two clauses in question are intended to serve as the serial numbers of the items which is believed by the specific enumeration of the said items at different serial numbers in Column 4 of the table. The argument further proceeds on the footing that the two items are one for the purpose of the said Note but separate for the purposes of Column 4. In the first instance, this does violence to the items themselves for admittedly the two items are not one but distinct and separate. Secondly, it does not take note of the fact that the Note begins by saying that the import of each of the items is not to exceed 5% of the value of the licence and that there is nothing in the said Note to suggest that the items were to be treated as one.

7. Shri Bhulchandani for the Respondents relied upon the fact that in the Joint Weekly Meeting held on 14.10.1983 it was decided, pending the decision of the Chief Controller of Imports and Exports, to treat the said items separately, and subsequently the Chief Controller of Imports and Exports clarified that the two items were to be read as one and the import of both the items together was not to exceed 5% of the value of the licence. According to him, the Chief Controller of Imports and Exports being the highest authority to make such a clarification under Paragraph 245 of the Imports & Exports Policy of 1983-84, his clarification should be taken as final in the matter.

8. I am afraid this argument cannot be accepted. In the first instance, under Paragraph 245 of the Imports & Export Policy, the clarification given by the Chief Controller is to prevail only over any other clarification in the same matter given by any other authority or person. If this is read in the context of the said paragraph, the expression 'any other authority or person' there means the authority or person in the Department. The said paragraph does not intend to and cannot lay down a proposition that the clarification given by the Chief Controller is final and binding even on the Courts of Law. The said provision has been made to ensure uniformity and discipline internally in the Department. It has not the effect of making the clarification binding and final outside the Department. Further, although the Chief Controller has been given the power to amend the Import and Export Promotion Policy by issuance of public notices, he has not been given power to amend the said policy by way of clarification. The clarification issued by the Chief Controller amounts to the amendment of the policy and that he can do only by issuing a public notice. This has admittedly not been done. Hence, it will have to be held that under the Import & Export Policy as is propounded for 1983-84 and also for 1984-85 the import of each of the items viz. Snap Fasteners and Zip Fasteners is permitted to be imported to the extent of 5% of the value of licence and the respondents cannot prohibit the petitioners from importing Snap Fasteners to the extent of 5% of the value of the licence although they have already imported Zip Fasteners of the same value in the past.

9. The petition is therefore allowed and the rule is made absolute in terms of prayer (a). I am not inclined to award costs to the Petitioners because I am informed that the trade had always understood the said Note to mean that the import of items together was not to exceed 5% of the value of the import licence. It was only when a particular importer at Calcutta had tried to interpret it in the manner which is interpreted in this judgment and the Customs authorities there had allowed the import as per the said interpretation that the parties such as the petitioners started importing the two items individually to the extent of 5% of the value of the licence. Hence there is no need to award costs in their favour.

10. It is made clear that where in the licence both the items Snap Fasteners and Zip Fasteners have been bracketed to indicate that both of them together are permitted to be imported only upto 5% of the C.I.F. value of the licence, the petitioner-importer will not be permitted to import Snap Fasteners and Zip Fasteners together of the value exceeding 5% of the value of the licence. The aforesaid decision only interprets the policy for 1983-84 and 1984-85 and will govern cases where the licence does not specifically restrict the import of both the items together to 5% of the value of the import licence.

11. On the request of Shri Bhulchandani for the respondents, the operation of this order stayed for a period of two weeks. However, it is made clear that this stay will not have the effect of staying the interim order passed in this petition at the time of admission and the respondents will clear the petitioners' goods on the basis of the said interim order.


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