Case Note & Summary
The dispute arose from the import of goods under a duty free licence originally granted to Tata Iron and Steel Company Limited (TISCO). The licence became transferable and was eventually purchased by the respondent, Shree Ganesh Steel Rolling Mills Limited. Customs authorities refused clearance of the imported goods on the ground that the import was made beyond six months from the date of endorsement of transferability. The respondent approached the Delhi High Court and obtained an interim order staying the operation of clause (iii) of para 2 of the circular dated 19.4.94, which had clarified that the six-month validity period should be calculated from the date of endorsement. The Union of India appealed to the Supreme Court against that interim order. TISCO was granted an advance duty free licence on 28.4.93. After complying with all conditions, it applied for endorsement of transferability, which was done on 6.9.93. TISCO transferred the licence to M/s Ferro Alloys Limited on 17.12.93, which in turn transferred it to M/s Mohan Ferro Alloys Private Limited, from whom the respondent purchased it on 11.2.94. The respondent imported goods on the basis of the licence. At that stage, customs authorities objected that the import was beyond six months from 6.9.93, the date of endorsement, and refused to clear the goods. The respondent filed a writ petition in the Delhi High Court, which passed the impugned interim order on 30.5.94. The core legal issues were whether the circular dated 19.4.94 was a valid clarification under Para 20 of the Export and Import Policy or an amendment requiring a public notice under Para 16, and whether the High Court should have imposed safeguards for revenue while granting an unconditional stay. The Union of India, represented by Mr. A. Subba Rao, argued that the circular was a valid clarification because Para 20 empowered the Director General of Foreign Trade to interpret any provision of the policy, and that Para 16 allowed the D.G.F.T. to specify and amend procedure. The respondent's contentions were not separately recorded, but it had obtained the interim order to clear the goods. The Court examined Para 16 of the Export and Import Policy, which empowered the D.G.F.T. to specify procedure by public notice and amend it in like manner. Since the circular dated 19.4.94 was not issued by public notice, it could not be treated as an amendment. The Court held that the power of clarification under Para 20 could not extend to amending the policy; replacing the words 'date of transfer' with 'date of endorsement' was a substantive change, not a clarification. Therefore, the circular was invalid. The Court also noted that it was unnecessary to decide whether the six-month period should be calculated from the first or last transfer because the import occurred within six months of the first transfer, and it left open whether the subsequent public notice dated 28.7.94 could apply retrospectively to imports made on or after 28.9.94 under earlier licences. Regarding the interim order, the Court observed that unconditional stays may prejudice revenue and advised that courts should impose necessary safeguards for revenue while granting such relief. The Supreme Court dismissed the appeal with no costs. The writ petition was withdrawn from the High Court to the Supreme Court with consent of both parties and allowed, making the rule absolute in terms of the order.
Headnote
A) Foreign Trade Regulation - Import Policy - Clarification vs Amendment - Export and Import Policy, paras 16 and 20; Handbook of Procedures 1992-97, para 127(v) - The Director General of Foreign Trade issued circular dated 19.4.94 clarifying that 'automatic extension and validity shall be available with reference to the date on which transferability is endorsed' under para 127(v). Court held that this changed 'date of transfer' to 'date of endorsement', which amounts to amendment of procedure, not mere clarification. Such amendment required public notice under para 16, but the circular was not issued by public notice. Held that power of clarification under para 20 cannot amend the policy; circular invalid. (Paras Not mentioned) B) Interim Relief - Writ Proceedings - Safeguards for Revenue - Not mentioned - High Court had granted unconditional stay of clause (iii) of circular dated 19.4.94. Court observed that unconditional stay may cause prejudice to revenue; while making interim orders, court should provide necessary safeguards for revenue in eventuality of failure of petitioner. Held that appeal dismissed; writ petition withdrawn to Supreme Court and allowed; rule absolute. (Paras Not mentioned) C) Import Policy - Validity of Duty Free Licences - Calculation of six months' validity period - Handbook of Procedures 1992-97, para 127(v) - Court noted that it need not decide whether six months should be calculated from date of first transfer or last transfer because even if calculated from first transfer, import was within six months. Also left open whether amended procedure by public notice dated 28.7.94 could apply to imports on or after 28.9.94 under earlier licences. Held left open; not necessary for decision. (Paras Not mentioned)
Issue of Consideration
Whether the circular dated 19.4.94 issued by Director General of Foreign Trade clarifying 'date of transfer' as 'date of endorsement' was valid as clarification under Para 20 of Export and Import Policy or required public notice under Para 16; and whether High Court erred in granting unconditional interim stay without revenue safeguards.
Final Decision
Appeal dismissed with no costs. Writ Petition No.2112 of 1994 was withdrawn to the Supreme Court from the High Court with consent of both parties and allowed, making the rule absolute in terms of the order.
Law Points
- Power of clarification under Para 20 of Export and Import Policy cannot amend policy
- amendment of procedure requires public notice under Para 16
- D.G.F.T. circular interpreting 'date of transfer' as 'date of endorsement' invalid
- interim orders should include safeguards for revenue
