Singhal Industries PVT Limited vs. Union Of INDIA

Held

The Court held that the pre-import condition contained in paragraph 4.14 of the Foreign Trade Policy, 2015-2020, inserted via Notification No. 33/2015-2020 dated October 13, 2017, and clause (xii) in Notification No. 18/2015-Cus inserted via Notification No. 79/2017-Cus dated October 13, 2017, are ultra vires the Advance Authorisation Scheme as contained in the Foreign Trade Policy, 2015-2020, and the Handbook of Procedures. The Court relied on a previous judgment by a Division Bench of the same High Court in Messrs Maxim Tubes Company Pvt. Ltd. vs. Union of India. The reasoning was that for years, the Government did not find a nexus between the pre-import condition and the objective of the Advance Authorisation Scheme, rendering the condition unreasonable. Consequently, all proceedings initiated for violation of this 'pre-import condition' would no longer survive. The Court allowed the petition and made the rule absolute, with no order as to costs.

Facts

The petitioner, Singhal Industries Pvt Limited, filed a writ application challenging the pre-import condition imposed under Notification No. 79/2017-Cus dated October 13, 2017, and paragraph 1 of DGFT Notification No. 33/2015-20 dated October 13, 2017. The petitioner argued that this condition, added as condition (xii) under para 1 of Notification 18/2015-Cus dated April 1, 2015, was arbitrary, unconstitutional, and violative of Article 14 of the Constitution. The petitioner also challenged notices and summons issued by the DRI, Kolkata, based on these provisions. The petitioner sought quashing of these notices, a refund of IGST paid under duress, and a stay on recoveries. The High Court had previously stayed proceedings arising from a summons dated September 5, 2018.

Key Issues

1. Whether the pre-import condition imposed under Sr. No. 2(c) of Notification No. 79/2017-Cus dated October 13, 2017, and paragraph 1 of DGFT Notification No. 33/2015-20 dated October 13, 2017, and condition (xii) under para 1 of Notification 18/2015-Cus dated April 1, 2015, are arbitrary, unconstitutional, and ultra vires Article 14 of the Constitution, as they impose a 'pre-import' condition on imports made under Advance Authorization Licenses issued to the petitioner. Petitioner's contention: The pre-import condition is arbitrary, unconstitutional, and violative of Article 14 of the Constitution. The petitioner also argued that the meaning of 'pre-import' was unclear and that the notices issued by DRI were based on unconstitutional provisions. Revenue/State's contention: Not recorded in the judgment.