Case Note & Summary
These appeals and transfer case arose from writ petitions filed by Oswal Agro Furane Ltd., a 100% export oriented unit, challenging export control restrictions and licence conditions. The Government of India had formulated a scheme for 100% export oriented units in 1980, and the Punjab State Industrial Development Corporation applied for an industrial licence in 1982 to manufacture furfural and edible rice bran oil. An industrial licence was granted on 19 May 1986, later amended on 18 May 1987 to include conditions such as condition No.(vi) requiring export of rice bran oil. The rice shelling plant condition was successfully challenged in Punjab and Haryana High Court, which held by judgment dated 20 June 1989 that import of the plant was permitted without customs duty. The Export (Control) Order, 1988 was issued under Section 3 of the Imports and Exports (Control) Act, 1947, and Clause 15(j) exempted products manufactured in and exported from Free Trade Zones and approved 100% Export Oriented Units. An amendment on 14 October 1991 included non-basmati rice in Schedule I, Part C, List II, requiring registration-cum-allocation certificate. APEDA issued a Trade Notice fixing minimum export price of US $231 per MT. On 7 January 1991, Oswal Agro filed a writ petition in Punjab and Haryana High Court challenging condition No.(vi) regarding edible rice bran oil. On 12 January 1992, it filed another writ petition in Delhi High Court seeking to export non-basmati rice without restrictions. Customs authorities had stopped export on 7 January 1992 because Oswal Agro lacked registration-cum-allocation certificate and priced rice at US $213 per MT below minimum. Delhi High Court on 15 January 1992 passed interim order allowing export of 13,200 MT subject to security. By judgment dated 31 March 1992, Delhi High Court allowed the writ petition, holding that Clause 15(j) exempted the unit from the 1991 amendment and Trade Notice, and that no minimum price provision existed in the Export Control Order; it granted three months to export balance 83,800 MT. The High Court later extended time till 8 September 1992. The Supreme Court on 15 May 1992 permitted export on undertaking, and on 14 March 1996 transferred the Punjab writ petition to itself. The legal issues before the Supreme Court included construction of Clause 15(j), validity of minimum price fixation, validity of condition No.(vi), and whether non-basmati rice export required registration-cum-allocation certificate. The provided judgment extract does not include the final decision or reasoning of the Supreme Court.
Headnote
A) Export Control - Interpretation of Saving Clause - Clause 15(j) of Export (Control) Order, 1988 - Exemption for 100% Export Oriented Units - The saving clause provided that nothing in the Order shall apply to products manufactured in and exported from Free Trade Zones and approved 100% Export Oriented Units except textile items covered by agreements. The Delhi High Court held that the amendment notification dated 14 October 1991 and the Trade Notice dated 15 October 1991 did not apply to the respondent's unit because it was admittedly a 100% export oriented unit. The Supreme Court was seized of the appeal against this finding. Held by Delhi High Court that exemption applied.
B) Export Control - Power to Fix Minimum Export Price - Export (Control) Order, 1988 - Section 3 of Imports and Exports (Control) Act, 1947 - The respondent challenged the fixation of minimum export price of US $231 per MT by APEDA. The Delhi High Court held that there was no provision in the Export (Control) Order, 1988 for fixing minimum price for non-basmati rice, and thus the Trade Notice condition was invalid. The Supreme Court was to examine whether the Central Government or APEDA had authority to impose minimum export price.
C) Export Control - Edible Rice Bran Oil Condition - Condition No.(vi) of Licence Amendment - Imports and Exports (Control) Act, 1947 - The condition required the 100% export oriented unit to export rice bran oil produced, unless required by Government to supply to nominated agency at international prices. The respondent challenged this condition and sought permission to sell edible rice bran oil in domestic tariff area. The matter was pending before Supreme Court after transfer.
D) Export Control - Canalized Item and Registration-Cum-Allocation Certificate - Non-Basmati Rice - Export (Control) Order, 1988, Schedule I, Part C, List II - The amendment included non-basmati rice as an item requiring registration-cum-allocation certificate. The respondent contended that as a 100% export oriented unit, it was exempt from this requirement. The Delhi High Court accepted this contention. The Supreme Court was to decide the legality of export without such certificate.
Issue of Consideration
Whether Clause 15(j) of the Export (Control) Order, 1988 exempts approved 100% export oriented units from export restrictions imposed by the 1991 amendment; whether APEDA or Central Government had power to fix minimum export price for non-basmati rice; whether condition No.(vi) requiring export of edible rice bran oil was valid or allowed domestic sale; whether non-basmati rice export required registration-cum-allocation certificate.
Law Points
- Clause 15(j) of Export (Control) Order
- 1988 exempts products manufactured in and exported from Free Trade Zones and approved 100% Export Oriented Units except textile items covered by agreements
- Clause 3 of Export (Control) Order
- 1988 restricts export of scheduled goods to licence granted by Central Government or specified officer
- Section 3 of Imports and Exports (Control) Act
- 1947 empowers Central Government to issue Export (Control) Order
- Amendment of 14 October 1991 added non-basmati rice to Schedule I Part C List II requiring registration-cum-allocation certificate
- APEDA Trade Notice fixed minimum export price of US $231 per MT
- condition No.(vi) required export of rice bran oil unless government nominated agency at prices not higher than international prices
- High Court held Clause 15(j) exempts 100% export oriented units from 1991 amendment and there is no minimum price provision in Export Control Order
Case Details
1996 LawText (SC) (04) 43
Civil Appeal Nos. 3785-3787 of 1992 and Transfer Case (Civil) No. 15 of 1996
B.N. Kirpal, Jagdish Saran Verma
1996 AIR 1947, 1996 SCC (4) 297, JT 1996 (5) 48, 1996 SCALE (4)109
Agricultural and Processed Food Products Export Development Authority (APEDA); Union of India
Oswal Agro Furane Ltd. & Ors.
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Nature of Litigation
Writ petitions challenging export restrictions and licence conditions imposed on a 100% export oriented unit, involving interpretation of the Export (Control) Order, 1988 and Imports and Exports (Control) Act, 1947, now in appeals and transfer case before the Supreme Court.
Remedy Sought
Oswal Agro Furane Ltd. sought declaration that Export (Control) Order, 1988 as amended did not apply to its unit and permission to export non-basmati rice without registration-cum-allocation certificate or minimum price compliance; also sought quashing of condition No.(vi) and permission to sell edible rice bran oil in domestic market. APEDA and Union of India sought to enforce export restrictions and reverse High Court orders.
Filing Reason
Customs authorities stopped export of non-basmati rice on 7 January 1992 because Oswal Agro lacked registration-cum-allocation certificate and priced rice below minimum export price; Oswal Agro also challenged condition requiring export of edible rice bran oil imposed by licence amendment.
Previous Decisions
Punjab and Haryana High Court on 20 June 1989 allowed writ petition, holding import of rice shelling plant was permitted without customs duty; decision became final. Delhi High Court on 31 March 1992 allowed writ petition No.42 of 1992, holding Clause 15(j) exempted 100% export oriented units from the Export (Control) Order 1988 and that no minimum price provision existed; granted three months to export balance rice. Delhi High Court on 9 July 1992 extended time till 8 September 1992. Supreme Court on 15 May 1992 permitted export on undertaking; on 14 March 1996 transferred Punjab writ petition to Supreme Court.
Issues
Whether Clause 15(j) of the Export (Control) Order, 1988 exempts approved 100% export oriented units from export restrictions imposed by the 1991 amendment including non-basmati rice.
Whether APEDA or the Central Government had power under the Export (Control) Order, 1988 to fix a minimum export price for non-basmati rice.
Whether condition No.(vi) in licence amendment letter dated 18 May 1987 validly required export of edible rice bran oil or allowed domestic sale.
Whether non-basmati rice export required registration-cum-allocation certificate and compliance with canalized item procedure.
Submissions/Arguments
Oswal Agro argued that as a 100% export oriented unit, it was exempt from all trade restrictions under Clause 15(j) of the Export (Control) Order, 1988, including the 1991 amendment and Trade Notice.
Oswal Agro contended that fixation of minimum export price by APEDA was without legal power and authority.
Oswal Agro argued that it had entered into export contracts and the authorities were estopped from stopping export due to promissory estoppel.
Oswal Agro contended that condition No.(vi) requiring export of edible rice bran oil was invalid and it should be allowed to sell in domestic tariff area.
APEDA and Union of India contended that export of non-basmati rice was permissible only with registration-cum-allocation certificate and at price above minimum export price, and that the unit was not exempt from the amendment.
Judgment Excerpts
Save as otherwise provided in this Order no person shall export any goods of the description specified in Schedule I, except under and in accordance with a licence granted by the Central Government or by an officer specified in Schedule II.
Nothing in this Order shall apply to -- (j) products manufactured in and exported from the respective Free Trade Zones and approved 100 per cent Export Oriented Units except textile items covered by agreements arrangements;
The contentions of Mr. Banerjee, the learned counsel for the petitioner appears to have force. As stated hereinabove, in terms of clause 15 (j) of the Export (Control) Order 1988, nothing in this order shall apply to the 100 per cent export oriented Unit.
Procedural History
On 31 December 1980, the Government of India issued a notification formulating a scheme for 100% export oriented units. On 9/22 July 1982, the Punjab State Industrial Development Corporation applied for an industrial licence to manufacture furfural and edible products. On 19 May 1986, industrial licence was granted to M/s Punjab Agro Furane Ltd. with condition that entire production shall be exported. The licence was amended on 18 May 1987 to include additional conditions including condition No.(vi) regarding export of rice bran oil and recognition of Oswal Agro Furane Ltd. as implementing entity. Oswal Agro challenged the rice shelling plant condition in Punjab and Haryana High Court via Civil Writ Petition No.3622 of 1987; High Court allowed it on 20 June 1989, holding import of rice shelling plant was permitted without customs duty, and decision became final. The Export (Control) Order, 1988 was issued on 30 March 1988 under Section 3 of Imports and Exports (Control) Act, 1947. On 14 October 1991, the Order was amended to include non-basmati rice in Schedule I Part C List II, subject to registration-cum-allocation certificate. APEDA issued Trade Notice on 15 October 1991 fixing minimum export price of US $231 per MT. On 7 January 1991, Oswal Agro filed Writ Petition No.561 of 1991 in Punjab and Haryana High Court challenging condition No.(vi). On 12 January 1992, Oswal Agro filed Writ Petition No.42 of 1992 in Delhi High Court seeking permission to export non-basmati rice without restrictions. On 7 January 1992, Assistant Collector of Customs, Kandla stopped export and directed unloading of rice. On 15 January 1992, Delhi High Court passed interim order allowing export of 13,200 MT subject to security. On 31 March 1992, Delhi High Court allowed the writ petition, holding Clause 15(j) exempted the unit and no minimum price provision existed; granted three months to export balance 83,800 MT. On 15 May 1992, Supreme Court in SLP (C) No.6854 of 1992 (later Civil Appeal No.3785 of 1992) permitted export on undertaking. On 9 July 1992, Delhi High Court extended time till 8 September 1992. On 14 March 1996, Supreme Court transferred the Punjab writ petition (T.C. (Civil) No.15 of 1996) to itself.
Acts & Sections
- Imports and Exports (Control) Act, 1947: Section 3
- Export (Control) Order, 1988: Clause 3, Clause 15(j)
