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Judgment
Ferdino I. Rebello, J.—The petitioners held an Industrial Licence for setting up a plant in Bharuch District in the State of Gujarat for the manufacture of Alpha Olefins and its precursors and derivatives with a capacity of 35,000 Tonnes per annum, which hereinafter is referred to as "Industrial Plant". For the purpose of setting up the Industrial Plant, the petitioners required various capital goods, raw materials, components, instruments, tools, consumables, packing material etc. At the relevant time, such imports were eligible for concessional custom duty under Ch. SH 98.01 of the Customs Tariff Act 1975 read with Notification. 131/85 dated 19th April 1985 and the Project Imports Regulations 1986 (hereinafter referred to as "Regulations").
Under the Regulation, the petitioners were required to get the contracts entered into with the foreign suppliers, registered with the Customs House through which said goods were to be imported in the manner stipulated in the said Regulations. The petitioners accordingly on or about 29th January 1991 submitted 18 such contracts to the 2nd Respondent for registration. Imports in respect of ten subcontracts are to be covered by REP licences procured by the petitioners in the normal course of business under which the goods covered by those ten contracts are eligible to be imported. The petitioner, furnished the necessary details as required under the Regulations to the 2nd Respondents so as to enable 2nd Respondent to take steps to register the contracts. The respondent No. 2 refused to register the ten contracts on the ground that the said goods require specific licence for availing benefit of project imports in terms of Regulations 5(4) of the said Regulations and further that the REP licence produced by the petitioners were not specific.
According to the petitioners, the said Regulations do not require any such specific licence to avail of the benefit of project import. Refusal therefore on the part of the respondent is arbitrary without jurisdiction and ultra vires the provisions of the said Regulations.
Reply has been filed on behalf of the respondent by Mr. Paul Fernandes, Dy. Commissioner of Customs, Contract Cell, New Customs House, Mumbai. Contention of the Respondents is that the Petitioner sought clearance of the reported goods under the flexibility provision of I.T.C Policy applicable for REP licence at concessional rate. The petitioner applied for registering the contract, was not allowed as the goods require specific ITC licence. The petitioners were bound to comply with the requirements of Regulations 5(4) of the Project Import Regulations 1986 viz. That the petitioners had to import licence. In the instant case, petitioners instead of having an import licence were having an REP licence. It is the stand of the respondent that it is not possible considering the language of Regulation 5(4) to use an REP licence for registering the contract considering the specific language of the Regulation. An additional affidavit filed by Respondent in Writ Petition No. 2335 of 1991 in the case of Videocon International Ltd. v. Union of India was relied upon. In that affidavit, it was set out that the imports have been claimed under flexibility provisions of the ITC provisions. It is further set out that for Import Trade Control purposes the REP licence produced is valid. It is however further clarified that the said goods imported may be allowed to be cleared on payment of usual Customs duty under the respective Tariff Heading on the strength of the same REP licence under the flexibility provisions. However for grant of concessional rate of duty under Project Import and for seeking assessment of imported goods under Tariff Heaing 98.01 of CTA, the tariff provisions are relevant as the imported goods require Import Trade licence. The import licence has to be produced by the importers for claiming assessment under Heading 98.01 of CTA at concessional rate of duty. It is the stand of the Respondent that consequently they were right in informing the petitioner that benefit cannot be allowed under REP licence.
The short question therefore that we are called upon to consider is whether considering Regulation 5(4), was it open to an importer to import capital goods and other goods for setting out a Project Import Scheme and in such an event whether the same would be covered by tariff entry 98.01.
To answer the issue we may gainfully refer to the Regulations of 1986 which are known as the Project Import Regulations 1986. Section 2 of the Regulations sets out that these regulations apply for the assessment and clearance of goods falling under Heading No. 98.01 of the First Schedule of the Customs Tariff Act 1975. Regulation 4 sets out that assessment under Heading 98.01 shall be available only to those goods which are imported against one or more specific contracts which have been registered to the appropriate Customs House in the manner specified in Regulation 5 and such contracts have been registered before any order is made by the proper Officer of Customs permitting the clearance of Customs and the other requirements setout therein. As Regulation 5 is the relevant regulation for our consideration, we must gainfully reproduce the relevant portion there of.
Registration of contracts: (1) Every importer claiming assessment of the goods falling under the said heading No. 98.01 on or before their importation shall apply in writing to the proper officer at the port where the goods are to be imported or where the duty is to be paid for registration of the contract or contracts, as the case may be:
Provided that in the case of consignment sought to be cleared through a Customs House other than the Custom House at which the contract is registered, the importer shall produce from the Customs House of registration such information as the proper officer may require.
(2) The importer shall apply, as soon as may be, after he has obtained the Importer trade control licence wherever required for the import of articles covered by the contract and in case of imports covered by the Open General Licence or imports made by Central Government, any state Government, statutory corporation, public body or Government undertaking run as a joint stock company (hereinafter referred to as "Government Agency") as soon as clearance from the Directorate General of Technical Development or the concerned sponsoring authority, as the case may be, has been obtained.
The application shall specify
(a) the location of plant or project
(b) the description of the articles to be manufactured, produced mined or explored
(c) the installed or designed capacity of the plant or project and in the case of substantial expansion of an existing plant or project the installed capacity and the proposed addition thereto;
(d) Such other particulars as may be considered necessary by the proper officer for purposes of assessment under the said heading.
The application shall be accompanied by the original deed of contract together with a true copy thereof, the import trade control licence wherever, required specifically describing the articles licensed to be imported or an approved list of items from the Director General of Technical Development or the concerned sponsoring authority, in the case of imports covered by Open General Licence or imports made by Central Government, any State Government, statutory Corporation, public body or Government undertaking run as a joint stock company.
The respondents for the purpose of import frame the policy extending the availing benefit of flexibility in importation of goods against REP licence. We may extract the relevant portion of that policy. Paragraph 177 of the Import Policy AM 198891:
(1) Within the above flexibility, the REP license scan be utilised for import of items listed in Appendices 3 Part A, 3 Part B and 5 Part A of this policy subject to the following conditions:
(i) Import of a single item shall not exceed 10% of the overall flexibility, subject to a maximum of Rs. 10 Lakhs;
(ii) In case 10% of the flexibility, as per subpara (i) above, works out to an amount less than Rs. 1 Lakh, import of a single item may be allowed for a value upto Rs. 1 Lakh within the value of the license, provided this value of Rs. 1 Lakh is otherwise covered by the overall flexibility permitted as above.
(iii) Where the total flexibility allowed itself works out to an amount which is less than Rs. 1 Lakh, the full flexibility can be availed of for import of a single item.
(2) Within the value of the flexibility allowed as above, the REP license can also be utilized for import of capital goods without the recommendation of the sponsoring authority and without indigenous clearance, subject to the following conditions:
(i) the total value of import shall not exceed Rs. 10 Lakhs;
(ii) import of capital goods included in Appendix I Part A, instruments included in Appendix B, and Office Machines as specified in para 118 shall not be allowed:
(iii) import of tools (including consumable tools) and instruments (other than these in Appendix B) or any combination thereof, shall not exceed 100 in numbers, subject to a maximum of Rs. 2 Lakhs ; and
(iv) import of secondhand capital gods shall not be allowed.
(3) Within the value of the flexibility allowed, the REP licenses can also be utilized for import of technical designs, drawings or other technical documentations and/or facilities for type testing abroad.
(b) Paragraph 192 of the Import Policy AM 199093 reads as under:
(1) REP licences issued against export of products listed in Appendix 17 Part I and licenses issued under para 184(4) of this book, are also valid for import of any other items of raw materials, components, tools, consumables and packing materials listed in Appendices 3 and 5 Part A and instruments (other than those included in Appendices 1 Part A, 2 Part B and 8) in this policy provided import of single item of components and tools does not exceed Rs. 10 lakhs. However, import of raw materials, consumables and packing materials listed in Appendix 3 and 5 Part A and Instruments will not be subject to any single item value restrictions....
If we examine the policy behind the regulation it would be clear that the object of the policy is to register the contract to enable the importer who is setting up a Project under the Import Scheme to import goods under Tariff Entry 98.01 against the rate of duty as set out thereto. The said policy was necessitated as can be seen from the Budged Speech of 1965 of the Minister of Finance. We may gainfully reproduce the relevant portion of that speech
There have often been complaints that the Import of equipment by the project is impeded as a result of meticulous assessment at the appropriate rates of each constituent item required for setting up the project. I now propose to introduce a new tariff item to cover the import of equipment needed for the initial setting up of new projects or for undertaking substantial expansions of existing projects, in the fields of industry, power, mining and prospecting for minerals oil. Not only complete equipment but also component parts and raw materials imported specifically for fabricating equipment within India for a project, and some quantity of initial stock of spare parts and other stores needed for the maintenance of the project can be imported under this item. The contract or contracts would have to be registered in advance with the Customs authorities and a provisional assessment will be made immediately, obviating to the maximum possible extent the need for detailed assessment of individual lots, after the goods arrive. The equipment imported under the item will be charged to duty at the general machinery rate and I am confident that the administrative improvement will facilitate the smooth import of such equipment and also give some encouragement to the manufacture within the India as much as possible of the equipment needed for these projects.
Considering this object the Regulation sets out that the contract must be registered with the appropriate Customs House. Regulation 5 deals with registration of said contracts and requires that this application shall be accompanied by the original contract along with the true copy thereof. The further requirement is that it shall also be accompanied by the Import Trade Control licence "wherever required," specifically describing the articles licensed to be imported. An Import Trade Control licence is normally required in respect of goods which are prohibited. The latter part of Regulation 5(4) is in respect of goods which are covered by Open General Licence or imports by Central Government, any State Government, statutory corporation, public body or Government undertaking. We are really not concerned about the same.
The only question which we are called upon to answer is whether considering the language or Regulation 5(4), can goods which are to be imported under Heading 98.01 be imported under a REP licence. That goods can be imported under REP licence is not disputed by the respondents. Their contention is that if an importer wants to import goods under Tariff Entry 98.01, under R.E.P licence the regulation 5(4) would not be attracted as the contract which has to be registered can only be done in a case where where there is an Import Trade Control licence.. The Import Trade Policy contemplates Import pursuant both to a licence issued by the relevant authority as also under REP licence which is also issued by the same authority. If this aspect is understood which the respondent themselves have understood then some meaning will have to be assigned to the expression "wherever required" in Regulation 5(4). If in this context, the said Regulation is read, it would mean that in those cases whether goods can be imported under REP licence, then there is no requirement of an importer requiring an Import Trade Control licence. If it is so read, then the expression "wherever required" has a meaning otherwise it would be rendered superfluous or otiose. The language whether any primary or secondary legislation normally should not be treated as superfluous. The intent of the legislature must be given its due meaning. The object is import under the policy. The contract has to be registered. The licence is a requirement. Both REP licence and Import licences are licences issued by the same authority. The only distinction is in the import licence. The various items would be described as seen in the annexures annexed by the respondent to their reply. In so far as REP licence is concerned, no such description is given as that licence is issued under different circumstances and is transferrable and can be used either as replenishment licence or for import of any other capital goods and the like. Obviously in such circumstances, REP licence can never include any item. That is why under paragraph No. 177 Reference is made to items listed in Appendices 3 Part A, 3 Part B and 5 Part A. If so seen the expression "wherever required" would have to be read in the context that in a case where a person seeks to import licence or a REP licence then there is no need for Import Trade Control Licence. The expression "specifically describing the article licenced to be registered" must be read in the context of the Import Trade Control Licence and not of "REP licence". In our opinion, considering the language of Regulation 5(4) the said regulation will have to be read to mean that if contracts entered into are registered with then the import can be done either under an Import Trade Control licence or R.E.P. Licence so long as the importer has a contract in which the goods sought to be imported are specified and the import is based on the Import Policy. Once we so hold, it would be clear that the appropriate Customs House Officer had the jurisdiction to register the contract as long as the application was made to him along with the accompanying contract entered into between importer and the person from whom the goods are to be imported. In the instant case, the fact that the importer entered into a contract has not been disputed. The fact that the importer had REP licence were not disputed. In that context, in our opinion, the relief sought for would have to be granted.
Our attention was also invited to the notification issued by the Government of India framed in the matter of what is known as Open General Licence issued u/s 3 of the Imports & Exports (Control) Act 1947. By such notification, Central Government has granted general permission for the imports of goods as set out in the notification which are issued from time to time.
For the aforesaid reasons, in our opinion, this petition will have to be allowed and rule made absolute in terms of prayer Clause (a). By interim order of this Court, the respondents have been directed to register the contract on complying with the requirements set out therein. That order is made absolute. The bank guarantee furnished, pursuant to the order for 20% of differential duty is directed to be returned duly cancelled.
In the circumstances of the case, there shall be no order as to costs.