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2010 DIGILAW 147 (CAL)

Dindayal Gupta v. UNION OF INDIA

2010-02-17

I.P.MUKERJI

body2010
JUDGMENT 1. THE writ petitioner carries on business by the style 'Bhawani Textiles'. It made some exports. Under the extant policy of the Government of India, on 16th July, 2004 he was granted a DEPB-Post Export licence. THE initial period of its validity was 12 months. THEreafter, in accordance with a public notification issued by the Government of India this licence was renewed till August, 2007. 2. NOW, this licence was transferable. This could be transferred by the writ petitioner to any person provided the customs authorities issued a "telegraphic release advice". This "telegraphic release advice", as I have understood, is nothing but a confirmation or a no objection by them regarding such transfer. This licence entitles the writ petitioner to duty benefit to the extent of Rs.9.47,615/- for importation of goods specified in the licence itself. It appears from the records that duty benefit initially granted was Rs.10.04,307/-. Thereafter, at the intervention of the customs, it was reduced to Rs.9.47,615/-. 3. THE writ petitioner intended to transfer this licence in favour of Telco Construction Equipment Company Ltd. This company, upon transfer, would have the same entitlement. For this, the writ petitioner needed that "telegraphic release advice" from the customs. THE petitioner applied for it by his letter dated 29th June, 2005. THE customs authorities replied by their letter dated 1st July, 2005. THEy raised serious disputes about the entitlement to this duty benefit saying that the goods actually exported were different in classification or description to the goods described in the shipping bills. THErefore, the "telegraphic release advice" could not be issued. 4. THE effect of this is revocation of licence or benefits thereunder. Mr. Ramesh Choudhury, learned Counsel appearing for the petitioner in support of his contention has cited a judgment of the Bombay High Court in Pradip Polyfils Pvt. Ltd. vs. Union of India, reported in 2004(173) ELT 3 (Para- 3) which says that once the licensing authorities have held that the export product was covered under the DEPB Scheme, it was not open to the customs authorities to hold that the said export product was not covered under the DEPB Scheme. Mr. Vinay Misra, learned Counsel appearing for respondents has said that when the said letter dated 1st July, 2005 was issued by the customs authorities, the licence was valid. Thereafter the licence remained valid till 2007. Mr. Vinay Misra, learned Counsel appearing for respondents has said that when the said letter dated 1st July, 2005 was issued by the customs authorities, the licence was valid. Thereafter the licence remained valid till 2007. The writ petitioner took no steps and allowed the licence to expire. So, there is no question of renewal of that licence because that licence has expired because of the fault of the writ petitioner. Further, Clause-4.50 of the Handbook of Procedures (1.9.2004 to 31.3.2009) of the Ministry of Commerce and Industries, Government of India says that no revalidation of licence could be made unless it expires in the custody of the licensing/customs authorities. Hence, according to him, there is no question of revalidation of the licence. He has also referred to two cases, i) Sheshank Sea Foods Pvt. Ltd. vs. Union of India, reported in 1996(88) ELT 626 (SC) (Paragraphs-9 and 10) and (ii) Collector of Customs vs. Pankaj V. Sheth, reported in 1997(90) ELT 31 (Paragraphs-23 and 24). According to him, on a reading of the decisions when an import or export has been made wrongfully, the customs authorities do have the power to investigate such wrongful import or export and in doing so they have the power to go into the question of duty entitlement under a DEPB Scheme based on such investigation. Therefore, the action of the customs authorities by their letter of 1st July, 2005 is justified. 5. I have considered the rival contentions of the parties. As held in the case of Pradip Polyfils Pvt. Ltd. vs. Union of India (supra), once a particular export or import product is held by the licensing authority being the Director General of Foreign Trade, to entitle an exporter or importer to issuance of a DEPB licence, that situation or position cannot be altered by the customs authorities. However, the decision of the Supreme Court in Sheshank Sea Foods Pvt. Ltd. (supra) and the decision of the Division Bench of our Court in Collector of Customs vs. Pankaj V. Sheth (supra) make it absolutely plain that when the import or export is wrongful or illegal, the customs authorities do have the power to adjudicate the issue including the issue of duty entitlement based on such import or export. Here, I would like to add my own views on the judgment of Pradip Polyfils Pvt. Ltd. (supra). Here, I would like to add my own views on the judgment of Pradip Polyfils Pvt. Ltd. (supra). It is true that export product i.e. classification or description of the goods on which the DEPB licence has been granted by the above licensing authority cannot be questioned by the customs authorities, but when the question as to whether such description of goods has been exported or imported or whether there has been, at all, any import or export, such question can be gone into by the customs authorities as held by the decision of the Supreme Court and our High Court, discussed earlier to determine, inter alia, duty entitlement. If viewed in this light, the decision of the Division Bench of Bombay High Court fits very harmoniously with the other two decisions of our Division Bench and the Supreme Court. 6. BUT here, the facts are very important. This licence was granted on 16th July, 2004. Thereafter, some enquiry was made by the above licensing authority and the customs, as would appear from a communication of the licensing authority dated 16th July, 2004 being Annexure P/3 of the writ petition. Further, it appears that the customs made an enquiry on 15th October, 2004 and reduced the entitlement from above Rs.10 lakhs to about Rs.9.5 lakhs. Therefore, this is not a question of any licence having been issued by mistake or the duty entitlement having been allowed on the basis of any mistake. Apparently, the above documents do not show that any fraud was involved. The customs authorities duly applied their minds and reduced the duty entitlement to Rs. 9.47,615/- from Rs. 10,04,307/-. 7. THEREFORE, when the writ petitioner applied for issue of "telegraphic release advice" by their letter dated 29th June, 2005, the customs authorities should normally have issued such advice. However, they chose not to do so and raised the objection in their letters dated 1st July, 2005. 8. SUCH refusal to issue the "telegraphic release advice" tantamounts to revocation of licence or the benefits thereunder. Now, if the licence is sought to be revoked, it ought to have been done not in the fashion in which it was done, but by a procedure established by law. It was open to the licensing authority or custom authorities to initiate appropriate proceedings in that behalf, even after the letter dated 1st July, 2005. Nothing was done. Now, if the licence is sought to be revoked, it ought to have been done not in the fashion in which it was done, but by a procedure established by law. It was open to the licensing authority or custom authorities to initiate appropriate proceedings in that behalf, even after the letter dated 1st July, 2005. Nothing was done. Therefore, I hold that no proper procedure has been adopted by the respondent authorities in denying the benefit of the licence to the writ petitioner. 9. THE writ petitioner wanted to transfer this licence to Telco Construction Equipment Company Ltd. subject to obtaining this "telegraphic release advice" from the customs' authorities. By reason of this action of the customs authorities, this transfer could not be made. 10. THE licence expired sometime in 2007. If a governmental or statutory authority has to take any action against a particular person, it has to take it within the time stipulated by law or if no time is stipulated, in that event, within a reasonable time. Such action has to be taken in such time, adopting the correct procedure, otherwise, the action becomes bad and is wrongful in the eye of law. In those circumstances, the action of the customs authorities in denying "telegraphic release advice" is, thus, wrongful. But the licence has expired and as rightly pointed out by Mr. Vinay Mishra, learned Advocate appearing for the respondent, this licence cannot be revalidated. Further, this fact has to be taken note of that after the letter of 1st July, 2005. The writ petitioner waited about one and half years before filing this writ which was filed in January, 2007. It is common ground that at that time the licence was valid. 11. IF the licence cannot be validated, it does not mean that the writ petitioner is without remedy. I hold that the customs authorities are responsible for preventing the writ petitioner from utilising the licence, the value of which was Rs. 9.47,615/- Since the licence cannot be revalidated, the respondent No.1 has to compensate the writ petitioner for loss of its value. Hence, the respondent No.l is directed to pay to the writ petitioner a sum of Rs.9,47,615/-. I hold that the customs authorities are responsible for preventing the writ petitioner from utilising the licence, the value of which was Rs. 9.47,615/- Since the licence cannot be revalidated, the respondent No.1 has to compensate the writ petitioner for loss of its value. Hence, the respondent No.l is directed to pay to the writ petitioner a sum of Rs.9,47,615/-. Being fully aware of the monetary value of the licence and the income that the petitioner was likely to make out of such licence, the respondent No. I is also liable to pay to the writ petitioner simple interest at the rate of 10% per annum from the date of the letter of the customs authorities being 1st July, 2005 till the above sum of Rs. 9.47,615/- is paid by them to the writ petitioner. However, for the delay of the writ petitioner in preferring this writ application in calculation of interest, the period from 1st July, 2005 till the date of filing of the writ application being 11th January, 2007 has to be excluded. 12. WITH the above directions, this writ is allowed and disposed of. All parties concerned are to act on a signed photocopy of the minutes of this order on the usual undertakings. Appeal allowed.