Supreme Court of India
OSWAL WOOLLEN MILLS LTD. & ANR.versusUNION OF INDIA & ORS.
- Citation
- 1983 INSC 76
- Decided
- 11 July 1983
- Disposal
- Case Allowed
- Bench
- S MURTAZA FAZAL ALI
Holding
The circular’s condition is not found in paragraph 138(1); it is invalid, and the transferee is entitled to endorsement and import under the transferred REP licence.
Summary
The appellant, a recognised trading house, had acquired a Replenishment (REP) licence by transfer from a manufacturer‑exporter and sought endorsement to import raw materials under paragraph 138(1) of the Import Policy, 1981‑82. The licensing authority refused, relying on a circular dated 31‑Aug‑1981 which required that such endorsement be granted only if the licence was issued against the applicant’s own exports. The Supreme Court examined whether the circular validly altered the Import Policy and whether a transferee of a REP licence could import under paragraph 138(1) without the ‘actual user’ condition. It held that the circular introduced a condition not present in paragraph 138(1) and was therefore ultra vires; the appellant, as a transferee permitted by paragraphs 140 and 195(4)(ii), is entitled to the endorsement and to import the permitted items. Consequently, the refusal was unwarranted. The appeal and the writ petition were allowed.
Issues considered
- Whether the circular dated 31‑Aug‑1981, restricting endorsement of REP licences, is ultra vires and amends the Import Policy, 1981‑82.
- Whether a recognised trading house, as transferee of a REP licence, can import raw materials, components, consumables and packing materials under paragraph 138(1) without the ‘actual user’ condition.
- Interpretation of paragraphs 138(1), 140 and 195(4)(ii) of the Import Policy, 1981‑82 regarding transferability and endorsement of REP licences.
Subjects
Import Policy 1981‑82Replenishment licenceLicence transferEndorsementActual user conditionCircular ultra viresTrading houseStatutory interpretation
Judgment
362
OSWAL WOOLLEN MtLLS LTb. & ANR.
A
v.
MNION OF INDIA & ORS.
B July 11, 1983
(S. MURTAZA FAZAL ALI AND A. VARADARAJAN, JJ.]
Import Policy, 1981·82-Paragraph 138 (1)-Replenishment Licence
c acquir~d by transfer by a Tradihg House-Whether endorsement can be refused on
the fround that Replenishment Licence had· not been issued against export of its
own products 1
The appellant which was a manufacturer-exporter as well as a recognised
Trading House acquired a Replenishn:_ient Licence by transfer from another
D manufacturer-exporter and, desiring to import raw materials, components, etc.,
requir~d for use in its factories under that Licence, sent it to the third respon-
dent requesting that the transfer of the Licence in its name be recognised and
an endorsement made thereon to make it valid for import·· of items permitted
under paragraph 138 (1) of the Import Policy, 1981-82. The third respondent
fc,iCcted the request on the basis of an office Circular dated 31-8-1981 issued by
the second respondent which directed the licensiqg authority not to grant
E ·endorsement under paragraph 138 (1) unless the Replenishment Licence had
been issued to the applicant against export of its own products.
The appe1lant's writ petition challenging the validity of the circular dated
31-8-1981 as well as the order made on its application for endorsement of the
licence was rejected by the High Court.
F
Allowing the appeal,
HELD: Paragraph 140 of the Import Policy, 1981·82 clearly states that
Replenishment Licel).ce will be issued in the name of the Registered
G Ex.porter only and will not be subject to 'Actual User• condition
and that except for cases covered by paragraphs 136 (2), 185 (2) and
t 86 (1) the licence holder may transfer the licence in full or in part
in favour of any other person and that the 1icence holder or such transferee may
import the goods permitted therein but the facility of. paragraphs 136, 137 and
146 shall not be available to any transferee unless the transferee is himself a Re-
H gistered Exporter and can satisfy the Custom Authorities at th~ time of clearance
of the goods of his bonafides. The goods sought to be imported by the appellant
on .the basis of the Replenishment Licence in question do not fall under parag-
raphs 136 (2), 137, 146, 185 (2) and 186 (I) mentioned in paragraph 140. Reco-
OSWAL MILLS v, UNION (Varadarajan, i.) 363
gnised Trading Houses like the aPpellant are entitled to certain facilities under
paragraph 195 (4) and one of them mentioned in paragraph 195 (4) (ii) is import A
replenishment licences transferred to them by others. fhus, the appellant is
entitled under paragraphs 140 and 195 (4) (ii) to the facility of the Import
Policy as a transferred of the Replenishment Licence issued in the name of the
actual manufacturer-exporter against exports made by that manufacturer~
exporter. [370 B-El · ·
The contention of the respondents that under paragraph 138 (1) the faci- B
lity to import raw materials, etc., under the Replenishment Licence is available
only to the actual manufacturer-exporter against whose exports the Replenish-
ment Licence was issued amounts to reading into paragraph 138 (1) the words
"against the exports of products manufactured by them" after the words
"manufacturer-exporters'' and before the words "will be valid ... ".That is what
is sought to be done by the impugned Circular dated 31-8-1981. The High court
was right in saying that the Circular appears to change the Import Policy but it
c
erred in saying that the condition mentioned in the impugned order is found in
paragraph 138 (1). No such conditionJs to be found in paragraph 138 (1). It
is significant that paragraph 138 (1) was not mentioned in paragraph 140. It
is also significant that in the Import Policy for the subsequent year 1982·83 the
words "against their exports of products mannfactured by them" have been
actually inserted in paragraph 138 (1) after the words "Replenishment Licences D
issued to manufacturer-exporter" and before the words "will be valid .. ".
[370 E-H, 371 A-BJ
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 591of1982
Appeal by Special leave from the Judgment and Order dated
the 18th November, 1981 of the Delhi High Court in Civil Writ · E
Petition )'lo. 2581 of 1981.
WITH
Writ Petition No. 802 of 1982:
(Under article 32 of the Constitution of India).
F
So/i J. Sorabjee and Rajlv Dutta for the Appellant.
M.M. Abdul Khader, Girish Chandra & Miss A. Subhashini, for
the Respondent.
G
V.M~ Tarkunde and Rajiv Dutta for the Petitioner in WP.
The Judgment of the Court was delivered by
B
VARADARAJAN, J. This appeal by special leave is directed against
the judgment of a Division Bench of Delhi High Court dismissing
the Civil Writ Petition No. 2581 of 1981 in /imine, with the obsero
364 SUPREME COURT REPORTS [1983) 3 S.C.R
vation that the Circular dated 31.8.1981 issued by the second res-
A pondent, the Joint Chief Controller of Imports and Exports, New
Delhi appears to change the Import Policy, that the contention that
the condition mentioned in the order impugned in the Writ Petition
is not found in paragraph 138 of the Import Policy for 1981-82 is not
acceptable, that a reading of paragraph 138 (1) of the Import Policy
shows that the Import Replenishment (REP) Licence, if transferable
and an endorsement is sought thereon, must be with regard to the
'
.materials mentioned in the (REP) Licence a.nd nofany other material
and that the contention of the first ·respondent, the Union of India
that the endorsement could only be against the export by the applicant
himself is correct. ·
c
The appellants have. filed the Writ Petitio.n No. 802 of 1982
under Artic)e 32 of the Constitution against the same three . res-
pondents and for the same reliefs prayed for in the Civil Appeal, viz.
(I) quashing the. Circ_ular dated 31.8.1981 issued by the Joint ·chief
D Controller of Imports and Exports, New Delhi as being ultra vires
and null and void, (2) directing withdrawal of the order dated
7.12.1981 of the third respondent, the Deputy Chief Controller of
Imports and Exports, Amritsar, refusing to make the endorsement
onhhe (REP) Licence, (3)_ issuing a direction to respondents 2 and
3 to make the endorsement contemplated in paragraph 138 of the
E Import Policy 1981-82 on the (REP) Licence and (4) restraining
respondents 2 and 3 from implementing the Circular dated 31.8.1981
and the order dated 7.12.1981. ·
The parties will be referred to in the Civil Appeal as arrayed
F · in the Writ Petition before the High Court for the sake of
convenience.
No copy of the Writ Petition filed before the High Court has
been produced in this Appeal. The case .of the petitioners as ·set out
in the special leave petition is this : The first petitioner M/s Oswal
G Woollen Mills Ltd., Ludhiana was orjginally a registered Export
House within the meaning of paragraph 5 (7) of the Import Policy,
1981-82 · and has been a manufacturer-exporter since 1971 and is
now als~ a recognised Trading House as the first petitioner's Export
House Certificate has been converted into a Trading House Certi-
H ficate in terms of paragraph !95 (J) of the Import Policy, 1981-82.
Recognised trading houses are entitled to certain facilities_ under
paragraph 195 (4) of the Import Policy, 1981-82, and one of them
OSWAL MILLS v. UNION (Varadarajan, J.) 365
mentioned in paragr•ph 195 (4)(ii) is import replenishment (REP)
Licences transferred to them by others. Paragraph 195(4) (ii) reads A
as under:
"Trading Houses will be granted the following facil-
ities under the Import Policy:- Import replenishment
(REP) Licences transferred to them by others;" B
For obtaining the said facil!ty the first petitioner. acquired by
transfer the Replenishment (REP) Licence, viz. "Import Licence No.
PW/2941/669/C/XX/78/Z/80 dated 27th February, 1981 for total
value of Rs.2,02,781" from the licence holder who was him·self a
manufacturer-exporter under a transfer letter dated 8.7.1981 and c
sent it to the third respondent for the purpose of obtaining endorse-
ment thereon. Pragraph 140 of the Import Policy, 1981-82 provide
for transfer of (REP) Licences and reads as under:
'"The REP Licence will be issued in the name of a D
Registered Exporter only and. will not be subject to 'Act-
ual User' condition. Except for cases covered by para-
graphs 136(2), 185(2) and 186(1), a licence holder may
transfer the licence in full orin part in favour of any
other person. The licence holder or such transferee may
import the go_ods permitted therein but the facility of E
paragraphs 136(2), 137 and 146 shall not be available to
any transferee unless the transferee is himself a Registered
exporter and can satisfy the Custom Authorities at the
time of clearance of the goods, of his bonafides".
F
Thus the (REP) Licence holder and the transferee of the same
are in the same position as regards the right to import on the basis
of the licence, but the transferee of the licence has to satisfy certain
other conditions, viz. that he should himself be a Registered Exporter'
and should satisfy the Custom Authorities .of his bona fides at the G
time of clearance of the goods in regard to the facilities provided in
paragraphs 136 (2); 137 and 146 of the Import Policy, 1981-82. The
first petitioner is a manufacturer-exporter holding a valid Registration
Certificate No.FIED/TD-E3(153)/78-D2 dated 21.7 1978 and was
keen to Import under the (REP) Licence acquired by transfer on
H
8.7.1981 raw materials, components, consumables and packing mate-
rials required for use in its factories in terms of pragraph 138(1) of
the Import Policy, 1981-82 which reads as under:
366 SUPRilMll cOuRT REPORTS b983j 3 s.c.R.
"Ri:iP Licence issued to manufacturer-exporters will
A be valid for import of any other items of raw materials
componeuts, consumables and packing materials required
by'them for use in their factories. However, import of
banned items will be allowed only upto 20% of the face
vaJue of the REP Licence subject to the condition that·
the vlue of 'single' item should not exceed Rs. I lakh.
B
REP Licences issued to manufacturer-exporters, who want.
to· avail of this facility will be issued with an 'Actual
User' condition and such licences will not be transferable.
Jtifa also open to the manufacturer-exporter to make use
of\ this facility only for a part of his REP entitlement
c aild to get for the remaining part a freely transferable
REP Licence".
The first petitioner requested the third respondent by his ·letter
dated 23.9.1981· that the (REP) Licence in question may be trans-
ferred to him and suitable endorsement may be made thereon to
D maJ(e it valid for import of the items permitted under paragraph
138 wiith 'Actual User' and non-transferable conditions. But the ,.
.•
third respondent refused I.hat request by his letter No.0-33/Q/OO
80/EPT/ASR/85 dated 15.10.1981 on the basis that the end~rsement
ill' paragraph 138 is admssible only for the manufacturer-exporters
E against their own exports. This refusal is based on a total miscon-
struction of paragraph i38 ofthe Import Policy, 1981-82. That
decision is based on an office Circular dated 31.8.1981 issued by the
second repondent, which, in substance, directs the Licensing Autho-
Sity not to grants endorsement under paragraph 138 of the Import
Policy, 1981-82 unless the (REP) Licence had been issued to the
F applicant against the export of his own products. The Circular dated
31.8. 1981 reads as under:
"Attention is invited to para 2 (iii) of REP Circular
No. 10/80 dated the 4th August, 1980 regarding endorse-
ment to be made by the Licensing Aut.horities on REP
G Licence sought to be utilised under para 138 of the
Import Policy, 1981-82. The said para 138 is meant for
REP Licence issued to manufacturers on the exports of
the products manufactured by them. Therefore, before •
H making endorsement of the REP Licence under the said
para 138 the Licensing Authority concerned should make
sure that the REP· Licence, in question was issued to
the applicant against export of his own products, 1.e.
~·
OSWAL MILLS v. UNION (Vatadarajan, J.) 367
I
for which the licencee was registered as a:manufacturer-
exporter, as per the relevant registratfon·cum·lnember· A
ship certificate held by him.· Similarly, the facility under
para 138 (7) is meant for those. manufacturers only
whose product was actually exported and not for
other manufacturers of the same product."
B
The Circular is without the authority of law and cannot amend
or modify paragraph 138 of the Import Policy, 1981·82. The
peiltioners filed the Writ Petition in the High Court after the third
respondent failed to send a reply to their notice dated 2.11.1981
by which he was called upon to withdraw the decision contained in
his letter dated 15.10.1981 and to make the necessary. endorsement c
under paragraph 138 of the Import Policy, 1981·82 on the (REP)
Licence mentioned above. The Writ Petition was dismissed by the
High Court in limine.
The respondents have filed a counter-affidavit for meeting the D
avennents made in the special leave petition. They have admitted
that (REP) Licences issued on exports made on or after 1.4.1978
are not subject to 'Actual User' condition and are freely transferable
to any person withoui any necessity for endorsement or permission
from the Licensing authority except for certain cases as provided
in paragraph 140 of the Import Policy, 1981-82. The facility was E
extended to manufacturer-exporters and manufacturers who exported
their goods through others by permitting them to utilise the import ·
replenishment (REP) licence accruing to them on the export of the
products manufactured by them for importing not only the items
utilised by them in the products exported but also other items of F
raw materials, components, consumables and packing materials
required by them for use in their factories. But it is evident from
paragraph 138 of the Import Policy, 1981·82 that the facilities
provided in that paragraph can be availed against (REP) Licences
issued to manufacturer-exporters only on their own exports or against
,,._A (REP) Licences issued to manufacturers whose products are exported G
through another exporter. This facility is, therefore, not available to
manufacturer-exporters against (REP) Licences acquired by them
by transfer from other ·Registered Exporters even if the latter is a
manufacturer-exporter.
u
The Circular dated 3 J.8.1981 was issued only in order to
ensure that the manufacturer-exporter avails of this facility only
368 SUPREME COURT REPORTS (1983) 3 s.c.ii.. y
I
against (REP) Licence issued on exports of his own products in terms
A of the policy stated in paragraph 138 and to clarify that the facility
is available only to those manufacturers whose products were actually
exported through another exporter and that the facility was not
available to other manufacturers of the same products. The special
facility was given and is intended to strengthen the production of the
units whose products were exported by allowing them to import by
the (REP) Licence not only the items utilised in the products exported
· but also other items of raw materials, components, consumables and
packing materials required by the same unit. For obvious reasons,
. this facility has not been extended to (REP) Licences which were
transferred by exporters to a unit which did not contribute to the
c product exported against which the licence was issued.
Paragraph 138 (I) of the Import Policy, 1981-82.is clear enough
and admits of no other interpretation than the one contained in the
impugned Circular dated 31.8.1981. The Circular has neither
amended nor modified the Import Policy, 1981-82 contained in para-
D graph 138. The special benefits referred to in paragraph 138 are
not transferable and, therefore, the transferees of the (REPJ Licences
like the petitioners cannot validily import the said items. The
decision of the Licensing Authority refusing to make the endorse-
ment asked for by the letter dated 23.1.1981 on the (REP) Licences
E acquired by the petitioners was in accordance with the policy.men-
tioned in paragraph 138. The grounds urged by the petitioners are
without substance and amount to distortions of the contents of
paragraphs 136, 138 and 140 of the Import Policy, 1981-82. The
Writ Petition was rightly dismissed by the High Court in limine.
F As the same reJ.iefs which are sought in the Civil Appeal are
sought even in the Writ Petition also it is not necessary to refer to
the petitioners' contentions raised .in the Writ Petition and those
rai<cd by the respondents in the counter-affidavit filed by' them in
this judgment. Our findings in the Civil Appeal wili' suffice to dispose
G of the Writ Petition one way or the other.
•
The fir;t petitioner was originally a Registered Export House.
within the meaning of paragraph 5 (7) of the Import Policy, 1981-82
and has been a manufacturer-exporter since 197 J. H has become a
H recognised Trading House as its Export House Certificate has been
converted into a Trading House Certificate in terms of paragraph
195 (I) of the Import Policy, 1981-82. Recognised Trading Houses
are entitled to certain facilitici under paragraph 195 (4), and one of
OSWAL MILLS v. UNION (Varadarajan, J.) 369
· them mentioned in paragraph 195 (4) (ii) is import replenishment
(REP) Licences transferred to them by others. The import replenish-
A
ment (REP) licence mentioned above was· issued to a manufacturer-
exportcr against his actual export. The first petitioner got that licence
transferred to it by a letter dated 8.7.1981 as provided for in
paragraph 140 of the Import Policy, 1981-82 for obtaining the
facility under paragraph 195 (4) (ii). Thereafter an application dated B
23.9.1981 was made by the first petitioner for recognition of that
transfer and for an enliorsement being made on ·.the said licence for-
warded with that letter to the third respondent to enable the first
petitioner to import raw materials, components, consumables ~nd
packing materials required by it for use in its own factories as per the
first part of paragraph 138 (I} of the Import Policy, 1981-82. In that
c
letter it is stated that the first petitioner proposes to utilise the licence
for the import of raw materials, components, consumables and
packing materiais required by it for use in its own factories in terms
of paragraph 138 (I) of the Import Policy, 1981-82 and that the
licence may, therefore, be transtcrred in the name of 'the fir.st peti- D
:l tioner and an endorsement may be made on it to make it valid for
import of the items permitted under paragraph 13 8 with the 'Actual
User' and non-transferable conditions. This request was rejected by
the third respondent by his letter dated 15.10.1981 on the ground
that the (REP) Licence in question was issued to the· licencee against
the export of his own products, i.e. for which the licencee was E
registered. as a manufacturer-exporter as per the relevant r'egistration-
cum-membership certificate held by .him. There is no dispute about
_ __,- these facts.
F
The petitioners• contention is that the first petitioner is entitled
to import the raw materials, components, consumables and packing
materials required by it for use in its own factories in terms of
paragraph 138 (I) of the Import Policy, 1981-82 as the transferee of
the (REP) Licence permitted by paragraph 140 of the Import Policy,
1981-82 nothwithstanding the fact that the first petitioner is not the G
manufacturer-exporter again~t whose exports the (REP) Licence in
question was issued but a Trading House who got the said licence
transferred by the letter dated 8.7.1981 as per paragraph 195 (4) (ii:)
of the Import Policy, 1981-82. The respondents' contention is that
H
as the first petitioner is not the manufacturer-exporter to whom the
(REP) Licence was issued against his export it is not entitled to
iiirport the raw mate~ials etc. mentioned in the first petitioner'~
-
370 SUPREME COURT REPORTS (1983] 3 s.c.R.
letter dated 23.9.1981 under paragraph 138 (I) of the Import Policy,
A 1981·82. The question is which of these contentions is correct.
Paragraph 140 clearly states that (REP) Licence will be issued
in the name of the Registered Exporter only and· will not be subject
•
to 'Actual User' condition and that except for cases covered by
paragraphs 136(2), 185(2) and 186 (I) the licence holder may transfer
B ·the licence in full or in part in favour of any other person and that
the licence holder or such transferee may import the goods permitted
therein but the facility ·or paragrgphs 136, 137 and 146 shall not be
available to any transferee unless the transferee is himself a Registered
Exporter and can satisfy the Custom Authorities at the time of
clearance of the goods of his bonafides. The goods sought to be
c imported by the first petitioner on the basis of the (REP) Licence in
question do not fall under paragraphs 136 (2), 137, 146, 185 (2) and
186 (I) mentioned in paragraph 140 of the Import Policy, 1981-82.
Paragraph ·195(4)(ii) grants to Trading Houses like the first petitioner
the facilities under Import Policy, viz., the import replenishment (REP)
D Licences transferred to them by others. Thus the first petitioner is
entitled under paragraphs 140 and 195 (4) (ii) to the facility of the
Import Policy as a transferee of the (REP) Licenceissued in the name
of the actual manufacturer:exporter against exports made
by that , manufacturer-exporter. The contention of the re-
spondents that under paragrph 138(1) the facility to import raw
E materials etc. under (REP) Licence is available . only to
the actual manufacturer-exporter against whose exports the (REP)
Licence was issued amount• to reading in to paragraph 138 (I) the
words "against the exports of products manufactured by them" after
the words "manufacturer-exporters" and before the words "will be
F valid ... ". That is what is sought to be done by the impugned Circular
dated 31.8.1981. The present contention of the respondents is that the
Circular dated 31.8.1981 only clarifies paragraph 138 (I) of the
Import Policy, 1981-82 and does not amend or modify that paragraph.
That is not how the learned Judges of the High Court have under·
sto9d the Circular in their judgment under appeal. The learned
G Judges have stated i.n their judgment that the Circular dated 31.8.1981
appears .to change the Import Policy and that the contention of the
petitioners before them,that the condition mentioned in.the impugned
order dated 15.10. 1981 is not found in paragraph 138 of the Import
Policy, 1981-82 is not '\CCepfable to tqem. The learned Judges were
H right in saying that the Circular appears to change the Import Policy
but they h.ave erred in .saying that the condition mentioned in the
impugned oroer dated 15.10.1981 is found in paragraph 138 (I) of
the Import Policy, 1981 ·82. We are 11nable to fi.nd any s11ch
.OSWAL MILLS v. UNION (Varadarajan, J.) 371
condition in paragraph 138 (1) of the Import Policy, 1981-82. It is
significant to note that paragraph 138 or was not mentioned in
paragraph 140 of the Import Policy, 1981-82. It is also signjlil(ant
to note that in the Import Policy for the subsequent year 1982-83 the
said words "against their exports of products manufactured by them"
have been actually inserted in paragraph 138 (I) after the words
"REP Licences issued to manufacturer-exporter" and befor~ the B
words "will be valid within the overall value for import o~ any *ms
of raw materials, components, consumables, spares and packing
materials required by them for use in their factories subject· to
'Actual User' condition". In view of the respondents' contention
that the Circular dated 31.8.1981 is only clarifactory of paragraph
138 (I) of the Imort Policy, 1981-82 and does not amend or modify c
... that paragraph it is unnecessary for us to go into the question
whether the Circular issued by the Joint Chief Controller of Imports
and Exports can validly amend the Import Policy, 1981-82. On a
perusal of the relevant paragraphs of the Import Policy, 1981-82
mentioned above we ·agree with Mr. Soli J. Sorabjee, Senior
D
Advocate for the appellants that the condition mentioned in the third
respondent's impugned letter dated 15.10.1981 is not.the;e in para-
graph 138 (I) of the Import Policy, 1981-82, that the Circqlar dated
31:8.1981 is invalid and that the rejection of the petitioners' request
made in the letter dated 23.9.1981 by the third respondent in the
Jetter dated 15.10.1981 is unwarranted, and the request, should have E
been complied with. We are unable to agree with Mr. ~.tJ,•J,\.bdul
Khadar, Senior Advocate for the respondents that the; condition
mentioned in the letter dated 15.10.1981 is to be found in, par~graph
138 (1) of the Import Policy, 1981-82. Accordingly, we allow the
appeal with costs and the Writ Petition witout costs. ,., .
F
H.L.C. Appeal & Petition allowed.
J: -·
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "Import Policy 1981‑82"Sign in to search