C. Hari Shankar, J.
1. The Union of India seeks, by means of the present petition, review of our order dated 4th September, 2019, which reads thus:
“1. Before the learned Senior Counsel appearing for the petitioner argues in detail about the re-export of Gold Dore Bars which was initially not allowed by the respondents, it is fairly submitted by the learned Counsel for the respondents No. 2 to 5, upon instructions from her client, that the respondents are allowing the petitioner to re-export the Gold Dore Bars, on their furnishing shipping bills and in accordance with law.
2. In view of the aforesaid submission by the learned Counsel for the respondents No. 2 to 5, the main grievance of the petitioner has been brought to an end. This writ petition is accordingly disposed of along with the pending application.
3. Liberty is, however, granted to the petitioner to challenge the action to be initiated by the respondents with regard to payment of demurrage charges etc. before the appropriate forum in accordance with law.”
2. An application for review, even in a writ petition, it is well settled, can rely only on the grounds envisaged by Order XLVII Rule 1 of the Code of Civil Procedure, 1908 (CPC). Order XLVII Rule 1 permits an applicant to apply for review where
(i) from the discovery of new and important matter of evidence which even after the exercise of due diligence was not within his knowledge or could not be produced by him at the time when the decree was passed or order made, or
(ii) on account of some mistake or error apparent on the face of the record, or
(iii) for any other sufficient reason, the applicant desires to obtain a review of the order made against it.
3. The interpretation of the words "for any other sufficient reason", in the decision of the Privy Council in Chhajju Ram v. Neki, AIR 1922 PC 112, as meaning "a reason sufficient on grounds at least analogous to those specified in the rule" was expressly approved by the Supreme Court in Moran Mar Basselios Catholicos v. Most Rev. Mar Poulose Athanasius, 1954 (SLT SOFT) 85=AIR 1954 SC 526; Kamlesh Verma v. Mayawati, IX (2013) SLT 299=(2013) 8 SCC 320 and Kantaru Rajeevaru v. Indian Young Lawyers Association, 2020 (SLT SOFT) 38=(2020) 2 SCC 1.
Facts, Grounds for seeking review and response of petitioner thereto
4. In order to understand the grounds on which the Union of India ("the Revenue", in short) seeks review of our order dated 4 th September, 2019, which was clearly passed on a concession extended by learned Counsel for the Revenue, it is necessary to briefly appreciate the case of the petitioner in the writ petition.
5. The petitioner is an importer of Gold Dore Bars. It was also the holder of Warehouse License No. 147/2016, dated 30th March, 2016, issued under Section 58 of the Customs Act, 1962 ("the Act") [“58. Licensing of private warehouses.—The Principal Commissioner of Customs or Commissioner of Customs may, subject to such conditions as may be prescribed, licence a private warehouse wherein dutiable goods imported by or on behalf of the licensee may be deposited”], for a vault of dimensions 3.3' x 2.4' x 1.6'. The license, as granted, initially permitted the petitioner to stock Gold of value upto Rs. 30 crores, which was later enhanced to Rs. 120 crores.
6. Provisions for grant of Special Warehouse License were introduced in the Customs Act by the Finance Act, 2016, by way of Section 58A [58-A. Licensing of special warehouses.—(1) The Principal Commissioner of Customs or Commissioner of Customs may, subject to such conditions as may be prescribed, licence a special warehouse wherein dutiable goods may be deposited and such warehouse shall be caused to be locked by the proper officer and no person shall enter the warehouse or remove any goods therefrom without the permission of the proper officer.
(2) The Board may, by notification in the Official Gazette, specify the class of goods which shall be deposited in the special warehouse licensed under Sub-section (1)]. vide Notification 66/2016-Cus dated 14th May, 2016, gold, silver, other precious metals and semi-precious metals and articles thereof were notified as goods for which Special Warehouse License under Section 58A was required. The procedure for grant of license was provided in the Special Warehouse Licensing Regulations, 2016 ("the Licensing Regulations", in short), notified vide Notification 72/2016-Cus dated 14th May, 2016, and the procedure for removal and export of goods from such Special Warehouses was provided in the Special Warehouse (Custody and Handling of Goods) Regulations, 2016 ("the Handling of Goods Regulations", in short), notified vide Notification 69/2016-Cus dated 14th May, 2016.
7. The petitioner surrendered Warehouse License No. 147/2016, issued to it under Section 58 of the Act, and applied for grant of a Special Warehouse License under Section 58A, which was allowed. Consequently, the petitioner was granted Special Warehouse License No. 25/2016 dated 1st November, 2016, with the stipulation that the petitioner was permitted to store dutiable gold and silver jewellery worth up to Rs. 300 crores. This Special Warehouse License was also surrendered by the petitioner on 12th July, 2018.
8. Subsequently, the petitioner again applied, on 8th July, 2019 to Respondent No. 2 [the Commissioner of Customs (Export), New Customs House, New Delhi] for grant of a fresh Special Warehouse License under Section 58A. The petitioner specified a vault, taken on lease in the premises of M/s Securitrans India Pvt. Ltd ("Securitrans", hereafter), as the warehouse.
9. In the interregnum, 11 consignments of Gold Dore Bars of the petitioner landed at the Customs Port in New Delhi. Before they could be cleared for home consumption, the rate of Customs duty payable on gold increased, w.e.f. 6th July, 2019. The petitioner contends that, with this increase, clearance of the consignments for home consumption was no longer economically viable and that, therefore, the only options available with the petitioner were to either warehouse the goods and export them under Section 69 of the Customs Act [69. “Clearance of warehoused goods for export.—(1) Any warehoused goods may be exported to a place outside India without payment of import duty if:
(a) a shipping bill or a bill of export or the form as prescribed under Section 84 has been presented in respect of such goods;
(b) the export duty, fine and penalties payable in respect of such goods have been paid; and
(c) an order for clearance of such goods for export has been made by the proper officer.
Provided that the order referred to in clause (c) may also be made electronically through the customs automated system on the basis of risk evaluation through appropriate selection criteria.
(2) Notwithstanding anything contained in Sub-section (1), if the Central Government is of opinion that warehoused goods of any specified description are likely to be smuggled back into India, it may, by notification in the Official Gazette, direct that such goods shall not be exported to any place outside India without payment of duty or may be allowed to be so exported subject to such restrictions and conditions as may be specified in the notification.”], or re-export the goods to a country outside India.
10. The petitioner avers that repeated representations were addressed by the petitioner to the respondents, for grant of Special Warehouse License under Section 58A. It was also pointed out that, in the meanwhile, the landed consignments of Gold Dore Bars were incurring demurrage. It is further averred, in the writ petition, that the petitioner was made to understand that the hesitation, on the part of the respondent, in granting a Special Warehouse License to the petitioner under Section 58A was only because of a doubt as to whether a vault could qualify as a "site" or "building" and, therefore, a "warehouse", for the purposes of Section 58A. The petitioner claims to have addressed the further communications, dated 12th August, 2019, to Respondent 2, clarifying that a vault was also a "site" within the meaning of Section 58A. The fact that similar Special Warehouse Licenses had been granted to other applicants was also emphasised.
11. vide communication dated 13th August, 2019, Respondent No. 2 rejected the petitioner's application for Special Warehouse License under Section 58A. The reasons cited were that (i) the petitioner, while surrendering its earlier licenses No. 147/2016 (under Section 58) and 25/2016 (under Section 58A), had not followed due procedure and (ii) small lockers did not qualify as "sites" or "buildings", for the purposes of the Licensing Regulations.
12. The petitioner responded on 14th August, 2019, with the request to Respondent No. 2 to reconsider its decision. It was pointed out, by the petitioner, that it had duly surrendered its earlier licences on 11 th July, 2016 and 12th July, 2018 under specific covering letters, and that the Bank Guarantee furnished by the petitioner in respect of License No. 147/2016 was returned to the petitioner. Asserting that small lockers also qualified as "sites" for the purposes of the Licensing Regulations, the petitioner pointed out that other similarly placed exporters had been granted Special Warehouse Licenses for similar vaults.
13. As a stalemate had been reached in respect of the petitioner's application for grant of Special Warehouse License under Section 58A, the petitioner applied, on 14th August, 2019, to Respondent No. 5 [the Principal Commissioner of Customs (Imports), New Delhi], for permission to re-export the goods to another country.
14. On 23rd August, 2019, Respondent No. 2 rejected the petitioner's request for reconsideration of its earlier decision not to grant the petitioner a Special Warehouse License under Section 58A.
15. It is in these circumstances that the petitioner approached this Court, under Article 226 of the Constitution of India, essentially for a writ of mandamus, to the respondents, to either grant a Special Warehouse License to the petitioner under Section 58A or to permit the petitioner to re-export the Gold Dore Bars to another country.
16. As already noted at the commencement of this order, learned Counsel for Respondent Nos 2 to 5, on instructions, stated, on 4th September, 2019, that the respondents were willing to allow the petitioner to re-export the Gold Dore Bars. Observing that, by this concession, the prayer in the petition stood satisfied, we had disposed of the petition on the said date.
17. The respondents contend, in the present Review Petition, that, "in compliance of the Court's directions dated 4th September, 2019, the Bills of Entry, relating to the imported Gold Dore Pass were examined, "wherein additional information was brought to the notice of the Department". As to what this "additional information" was, the Review Petition is somewhat ambiguous. What is contended, in para 4 of the Review Petition is, however, that the petitioner had imported the Gold Dore Bars under an Import Licence issued by the Director General of Foreign Trade (DGFT), which permitted such import only for refinery, subject to actual user condition. Further, it is contended that the Import Licence was subject to Notification 12/2012-Cus, dated 17th March, 2012, as superseded by Notification 50/2017-Cus dated 30th June, 2017. The latter Notification permitted import of Gold Dore Bars (which fell under S. No. 354 thereof) only subject to compliance, by the importer, of the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 ("the 2017 Rules"). Further, Condition 40(d) of Notification 50/2017-Cus supra required the import to be by an actual user for the purpose of refining and manufacturing of strict standard gold bars of purity 99.5% and above. Any import, which did not comply with these conditions, it is sought to be contended, would violate the Import Licence issued to the petitioner by the DGFT as also the conditions of Notification 50/2017-Cus.
18. The Review Petition further reiterates the stand, of the respondents, that a vault in the premises of Securitrans would not qualify as a "site" or "building" within the meaning of Regulation 2(1)(d) of Notification 72/2016-Cus (NT). However, this aspect is not of particular relevance for the purposes of the present Review Petition, as the order, of which review is sought, had allowed re-export, by the petitioner, of the Gold Dore Bars, based on the statement made by learned Counsel for the respondents. Indeed, no arguments were addressed, before us, in the present Review Petition, regarding the issue of whether the vault in the premises of Securitrans was, or was not, a "site" or "building" and, therefore, whether a Special Warehouse License, under Section 58A, could be issued in respect of the said vault. In any case, such a contention is not available to the respondent in a review petition. We, therefore, refrain from expressing any opinion on this aspect.
19. A counter-affidavit stands filed, by the petitioner, in reply to the Review Petition. It has been pointed out, in the said counter-affidavit, that, as a result of the delay that had been occasioned, the petitioner had no option but to clear 10 out of the 11 consignments of Gold Dore Bars sought to be imported by it. Apropos the grounds urged by the respondents, to support their stand that the imported Gold Dore Bars were not eligible for re-export, the petitioner has pointed out that the Gold Dore Bars were still lying in the Customs port. It has been further pointed out that the communications dated 13th and 23rd August, 2019, against which the petitioner had filed the writ petition, never raised any objection to the re-exportability of the imported Gold Dore Bars on the ground that they were restricted for import. Such a contention, therefore, it was submitted, could not be urged in the pleadings before the Court, opposing the petition of the petitioner, least of all in a review petition, for which purpose reliance has been placed, by the petitioner, on the well-known decision in Mohinder Singh Gill v. Chief Election Commissioner, 1977 (SLT SOFT) 370=(1978) 1 SCC 405. On merits, the petitioner points out that import of the Gold Dore Bars is yet to be completed, as they are still lying in the Customs port, the question of their violating any actual user condition which, by its very nature, is a post-import condition cannot, therefore, it is contended, arise at all. Reliance has also been placed, by the petitioner, on para 2.46 of the Foreign Trade Policy, 2015-2020, specifically on clauses (b) and (c) thereof, read with a clarification obtained from the DGFT vide email dated 24th January, 2020, to the effect that, gold being free exportable, there were no restrictions on export. It is worthwhile to reproduce the clarification, sought from the DGFT, as well as the response of the DGFT thereto, thus:
We have Gold Refinery and we have valid DGFT license (actual user license) to import gold Dore bar. We regularly import Gold Dore Bars in India. Recently, due to the adverse market conditions we want to export some of the Gold Dore bars from the port/Customs bond itself. As and when the market conditions improve, we will clear the goods for home consumption.
B. Issue For Clarification:
Whether Export of Gold Dore Bars which is restricted item under the ITC (HS) is permissible in terms of Para-2.46(i)(b)
C. Our Understanding:
As per para 2.46(i)(b) of FTP, there are 3 conditions mentioned as under:
1. Imported Goods clear from Customs Bond: We will fulfil this condition;
2. Goods are free exportable: We fully comply as Gold Dore Bars are freely exportable.
3. Export is against freely currency (sic freely convertible currency): We fully comply as our export will be in USD.
As per clause (c) of Para-2.46 (i) goods in Para (b) above includes restricted imported goods also. In our case our goods, i.e. Gold Dore Bars are restricted. Hence, the imported Gold Dore Bars should be allowed to be exported as per Para-2.46.”
Clarification by DGFT
“Dear Mr. Deepak,
With regards to the clarification sought by you, you may note that the as per the existing export policy, Gold is free for export and there is no restriction in its export. For further procedures and other conditions specific to the export, you are requested to check with the local Customs authorities.
You may write to email@example.com in case you have further query.
20. The petitioner has also filed written submissions, in which it is pointed out that the factum of import of the Gold Dore Bars into India is as yet not complete, the goods still being within the Customs Port, for which proposition reliance has been placed on the judgments of the Supreme Court in Garden Silk Mills Ltd. v. U.O.I., X (1999) SLT 8=(1999) 8 SCC 744 and Kiran Spinning Mills v. Collector of Customs, (2000) 10 SCC 228. Further, relying on M.J. Exports Ltd. v. C.E.G.A.T., 1993 Supp (1) SCC 169 ("M.J. Exports-I", hereinafter), State of Kerala v. Fr. William Fernandez, III (2018) SLT 563=2017 SCC OnLine SC 129 and U.O.I. v. Sampat Raj Dugar, 1992 (SLT SOFT) 611=(1992) 2 SCC 66, the petitioner contends that Notification 50/2017-Cus supra would not apply to goods which are yet to be imported into India. Reliance has also been placed, in the written submissions, on Clauses (b) and (c) of para 2.46 of the Foreign Trade Policy, 2015-2020 ("the FTP", in short) and the clarification, dated 24th January, 2020, provided by the DGFT.
21. We have heard, at length, Mr. Arvind Datar, learned Senior Counsel for the petitioner and Mr. Zoheb Hussain, learned Standing Counsel for the respondent/review petitioner.
22. Mr. Zoheb Hussain relies on the following passages from M. J. Exports-I11:
“21. We have considered this aspect of the matter carefully. The relevant OGL is the one dated May 20, 1988 covered by Order No. 15 of 1988-91 which refers in its schedule to "Life- saving equipment appearing in List 2 of Appendix 6 of Import and Export Policy, 1988-91 (Vol. I) and their spares". It also set out a number of conditions of grant of the OGL, the very first of which is that, except in the case of "teaching aids" covered by serial No. 1, "all other items covered by the schedule annexed to it may be imported by any person for stock and sale purposes". Prima facie, there appears to be no reason to confine this only to sales in India and as prohibiting the re-export of the imported goods from India. The interpretation of a condition in these terms came up for consideration, though not finally decided, in the case of Janak Photo Enterprises (P) Ltd. v. Union of India, (1990) 49 ELT 339 (Del), relied upon for the appellant. In that case, the assessee had imported photographic colour films from Japan, cleared them for home consumption, and then presented them for export to Singapore. The Customs authorities, relying upon a certificate of the CCIE analogous to the one in the present case, confiscated the goods under Section 113(d) but allowed them to be re-exported on payment of a huge redemption fine, a penalty and payment of appropriate duty for ex-bond clearance. The assessee filed a writ petition challenging this order. Pending disposal of the writ, the High Court permitted the export of the goods subject to certain conditions. In doing so, the Court made certain observations, which, learned Counsel for the appellant says, are equally apposite in the present case:
“5. The goods in question, being the photographic films (colour), fall under Appendix 7, List 8, Part II, Serial No. 41 of the Import and Export Policy, 1988- 91, and their import is allowed by all persons for actual use/stock and sale. The contention of Mr Aggarwal is that since the goods were imported for stock and sale, these could not be re-exported. We are unable to agree with the contention of Mr Aggarwal or with the view taken by the respondents. Again, to us, the goods do not appear to be prohibited goods. We may usefully refer to para 4 of Section I, dealing with Export Control, in Import and Export Policy, 1988-91, Vol. II, in respect of Export Control and Procedures, which is as follows:
‘Only items included in Schedule I to the Exports (Control) Order, 1988 are under control. No such item can be exported unless it is covered by a valid licence issued by a licensing authority competent to grant an export licence for that item. Goods which are not included in this Schedule can be shipped without any export licence unless their export is controlled under any other law for the time being in force.’
Thus, the Exports (Control) Order, 1988 is not applicable to photographic film (colour).
6. If reference is made to Section 74 of the Act, it appears that when any goods capable of being easily identified which have been imported into India upon which any duty has been paid on importation, are to be re-exported and the goods are not prohibited goods, then clearance for exportation can be given by the proper officer (Section 51) and on such exportation 98% of the duty paid on importation is to be re-paid as drawback. We have not been shown which are those goods which can thus be re-exported and where import duty already paid is to be claimed as drawback. We have also not been shown any provision of law stating that the goods which have been imported could be sold only in the country itself. The clarification given by the CCI & E does not appear to be appropriate. We may also note that under Section 18 of the Foreign Exchange Regulation Act, 1973 and various other provisions thereof, there are sufficient safeguards to see that proper sale price on export of goods is realised. It is not the case of the respondents that there is dearth of photographic film (colour) in the country, and export of the goods in question would certainly result in earning of some foreign exchange for the country.
8. We would like to add that the view which we have taken above is only a prima facie view and is subject to final determination in the petition. All the CMs stand disposed of.”
We have no information as to whether the said writ petition has since been disposed of by the High Court and become final. We are inclined to agree with the prima facie view expressed by the High Court that the words "stock and sale" may be, generally speaking, wide enough to comprehend sales inside as well as outside the country and that their scope should not be restricted unless such a restriction can be read into the terms of the OGL itself. That, we think, is where the present case essentially differs from the one before the Delhi High Court. We are clearly of opinion that whatever may be the position in regard to the other lists in Appendix 6, the items of goods enumerated in List 2 of that Appendix stand in a class of their own. There is sufficient indication in the heading given to the list to show that the import of these items into India is permitted only because such life-saving equipment is required for use in the country. The use of the words "stock and sale" shows only that the items are not restricted to use by the importer but can be transferred by him to another. But we do not think it proper to read them as permitting a sale of the goods outside the country. Note (44) in Appendix 6 reads thus:
“Importers of Life-Saving Equipment appearing in List 2 of this Appendix shall be eligible to import spares of such equipment either along with the machines or separately.”
This also carries a mild indication that the equipment permitted to be imported is only for purposes of use in the country. The circumstance that these items are also exempted from customs duty at the time of import — although the list of such exempted items is not identical with List 2 of Appendix 6 — also lends support to the conclusion that the goods so permitted are not meant for re-export. An indication to a similar effect is also seen in the foreword issued by the Government while publishing Vol. I of the Import-Export Policy (1988-91), Vol. I. Para 3 of the foreword says:
“The Open General Licence lists have been expanded by inclusion of more items. In particular, the lists of life- saving equipment and drugs have been substantially enlarged to facilitate easy access to imported equipment and drugs which are not available in the country.”
22. We are, therefore, of the opinion that, although there is no express prohibition, the re-export as such of items of goods specified in List 2 and imported into India is prohibited by necessary implication by the language of, and the scheme underlying, the grant of OGL in regard to them. It is difficult to agree that the import-export policy envisages the re-export of goods belonging to this category. The opinion of the CCIE is also to the same effect. This opinion also derives some binding effect from para 24(1) of the Import Policy read with paras 22 and 23 of the Export Policy, which say:
“Para 24(1): The interpretation given by the Chief Controller of Imports and Exports, New Delhi in the matter of interpretation of Import Policy and procedures shall be final and will prevail over any clarification given by any other authority and person in the same matter.
Para 22: Cases for relaxation of existing policy and procedures where it creates genuine hardship or where a strict application of the existing policy is likely to affect exports adversely may be considered by the Chief Controller of Imports and Exports.
Para 23 : In matters relating to export, as well as the interpretation of export policy and procedures, the person concerned may address the Chief Controller of Imports and Exports, New Delhi for necessary advice. Any interpretation of the export policy given in any other manner or by any other person will not be binding on the Chief Controller of Imports and Exports, or in law.
24. Taking into account all the above considerations, we hold that the goods in question were "prohibited" goods within the meaning of Section 2(33) and that their confiscation under Section 113(d) and the penalty under Section 114 were fully justified."
He also cites the following passage, from Collector of Customs v. M.J. Exports, V (2001) SLT 875=(2001) 6 SCC 756, (referred to hereinafter, for ease of reference, as "M.J. Exports-II"):
“9. It is, therefore, clear that if on construction it necessarily follows that the goods though imported under OGL were to be used only in India then such a construction could be properly placed. In this regard, it will be useful to refer to the observations of this Court in M.J. Exports case (supra) ...”
Further, Mr. Zoheb Hussain has reiterated the contentions advanced in the Review Petition.
23. Responding to Mr. Hussain, Mr. Datar submits that an importer, who is not in need of the consignment imported by him is entitled to re-export the consignment before the factum of import is complete, i.e. before filing of Bill of Entry. That the goods may otherwise be "restricted" for import, submits Mr. Datar, is no impediment against re-export. In this context, Mr. Datar places especial reliance on para 2.46 of the FTP, which reads as under:
“2.46 Import for export I.
(a) Goods imported, in accordance with FTP, may be exported in the same or substantially the same form without an Authorisation provided that item to be imported or export it is not restricted for import or export in ITC (HS).
(b) Goods, including capital goods (both new and second-hand), may be imported for export provided:
(i) Importer clears goods under Customs Bond;
(ii) Goods are freely exportable, i.e., are not " Restricted"/"Prohibited"/subject to "exclusive trading through State Trading Enterprises " or any conditionality/requirement as may be required under the Schedule 2 - Export Policy of the ITC (HS);
(iii) Export is against freely Convertible currency.
(c) Goods in (b) above will include 'Restricted' goods for import (except 'Prohibited' items).”
24. Mr. Datar further drew attention to Condition 9 in Notification 50/2017-Cus supra, which required the importer to follow the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017. He submits that there is no allegation of violation, by the petitioner, of this condition. Insofar as Condition 40(d) of the said Notification is concerned, Mr. Datar submits that the condition only requires that the Gold Dore bars are imported by the actual user for the purpose of refining and manufacturing of standard gold bars of purity 99.5% and above. Inasmuch as the Gold Dore bars, of which the petitioner was desiring import, were intended for the said purpose, Mr. Datar submits that there is no infraction of the said condition.
25. Mr. Datar further points out that there is no bar to re-export of the Gold Dore bars, either under the Customs Act or the FTP.
26. M.J. Exports-I (supra), submits Mr. Datar, dealt with import of life- saving equipment duty free. He invites our attention to paras 15 to 17 and 24 of M.J. Exports-I (supra). Relying on the said passages, Mr. Datar submits that as the petitioner had yet to clear the consignment of Gold Dore Bars for home consumption, there is no prohibition on re-export of the bars. Para 19 of the said decision, on which Mr. Zoheb Hussain relies, points out Mr. Datar, deals with the second category of imports in M.J. Exports-I (supra), which is not of any relevance insofar as the present case is concerned.
27. Mr. Datar has also placed reliance on para 17 and 18 of the decision in Garden Silk Mills (supra), especially on para 18 thereof.
28. In rejoinder, Mr. Zoheb Hussain merely relies on para 4.4 of a rejoinder filed by the respondent in the present review petition, which reads as under:
“That the contents of Para 5 are denied for being incorrect as the petitioner was directed to file Bills of Entry for the landed consignments and the delay occurred was on the part of the petitioners. In respect of the consignments covered under AWB No. 724-0341-0455 dated 11.07.2019, the petitioner has not filed any Bill of Entry till date. The remaining 10 consignments have been cleared on payment of duty at concessional rate taking the benefit of the Notification No. 50/2017-Customs dated 30.06.2017. Furthermore, the petitioner has in fact cleared 306 consignments totally weighing 16,232.194 kgs valued at Rs. 4604.35 crores, on payment of duty of Rs. 545.61 Cr. Therefore the excuse put forward in letter dated 16.08.2019 of high duty after the last budget as a reason for re-export is ex facie false and clearly an afterthought.”
Analysis and decision
29. At the cost of repetition, we may state that, if we have extended an opportunity of hearing to the revenue in the present review petition on merits, it is by straining, beyond its normally acceptable limits, Order XLVII Rule 1 of the CPC. The review petition does not make out any case of either of an error apparent on the record of the impugned order - which merely records the consent of learned Counsel for the respondent and disposes of the petition on that basis - or of the order meriting a re-consideration owing to any new material which has come to the notice of the respondent, i.e. the petitioner in the present review petition. Nonetheless, given the fact that the matter involves public revenue, we have deigned to hear the review petitioner, invoking, for the said purpose, the "any other sufficient reason" clause in Order XLVII Rule 1 CPC.
30. Having done so, we find no ground, whatsoever, to review our order or to accede to the submissions advanced by the review petitioner.
31. The contention, of Mr. Zoheb Hussain, that re-import of the Gold Dore Bars could not be permitted as they have been imported in violation of the conditions in Notification 50/2017-Cus supra, merely requires to be stated to be rejected. Mr. Hussain's contention is that the notification, whereunder the Gold Dore Bars were imported, contained an actual user condition, which the imports effected by the petitioner failed to fulfil.
32. The submissions of Mr Zoheb Hussain cannot sustain legal scrutiny, for several reasons.
33. The opening words of Notification 50/2017-Cus supra read thus:
“In exercise of the powers conferred by Sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962) and Sub-section (12) of Section 3 of Customs Tariff Act, 1975 (51 of 1975), and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 12/2012-Customs, dated the 17th March, 2017 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 185(E) datged the 17th March, 2017, except as respects things done or omitted to be done before such supersession, the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the goods of the description specified in column (3) of the Table below or column (3) of the said Table read with the relevant List appended thereto, as the case may be, and falling within the Chapter, heading, sub-heading or tariff item of the First Schedule to the Customs Tariff Act, as are specified in the corresponding entry in column (2) of the said Table, when imported into India ...”
Notification 50/2017-Cus, therefore, clearly applies only to goods when imported into India. The exact position, in law, regarding the point at which goods could be regarded as having been "imported into India" stands clarified by the Supreme Court, with no equivocation whatsoever, in Garden Silk Mills Ltd. (supra). Paras 17 and 18 of the report in Garden Silk Mills Ltd. (supra) read thus:
“17. It was further submitted that in the case of Apar (P) Ltd., (1999) 6 SCC 117 this Court was concerned with Sections 14 and 15 but here we have to construe the word "imported" occurring in Section 12 and this can only mean that the moment goods have entered the territorial waters the import is complete. We do not agree with the submission. This Court in its opinion in Bill to Amend Section 20 of the Sea Customs Act, 1878 and Section 3 of the Central Excises and Salt Act, 1944, Re, AIR 1963 SC 1760 : (1964) 3 SCR 787 [sub nom Sea Customs Act (1878), S. 20(2), Re] SCR at p. 823 observed as follows:
“Truly speaking, the imposition of an import duty, by and large, results in a condition which must be fulfilled before the goods can be brought inside the customs barriers, i.e., before they form part of the mass of goods within the country.”
18. It would appear to us that the import of goods into India would commence when the same cross into the territorial waters but continues and is completed when the goods become part of the mass of goods within the country; the taxable event being reached at the time when the goods reach the customs barriers and the bill of entry for home consumption is filed.”
(Italics and underscoring supplied)
No Bill of Entry having been filed in respect of the Gold Dore Bars in the present case, and as they still remained within Customs bond, the factum of import of the bars is, as yet, incomplete. It cannot be said that the import of the Gold Dore Bars into India is completed at this point of time. They cannot, therefore, be said to be in the nature of "imported" goods, for the purposes of enforcing the actual user condition contained in Notification 50/2017-Cus.
34. The second reason is that the question of compliance with the actual user condition would arise only if the goods were released for home consumption, as it was obviously impossible for the importer to comply with the actual user condition when the goods were still in Customs bond. Admittedly, the Bill of Entry, in respect of one remaining consignment, is yet to be filed. The consignment is yet, therefore, to be released for home consignment. There can be no question, therefore, of the importer having to comply with any actual user condition at this point of time.
35. M.J. Exports-I (supra)
35.1 In this context, we may advert to M.J. Exports-I (supra), especially as both learned Counsel before us placed reliance thereon. The decision is a recognized watershed in the development of export- import law, as it traces the history of export-import regulation and penetratively analyzes the applicable law. The appellant in that case (to whom we would refer, hereinafter, as "MJE") was importing haemodialysers from Germany and exporting them to the USSR shortly thereafter. One such consignment, which had been cleared for home consumption, brought to MJE's factory, repacked and thereafter attempted to be exported, was detained prior to export on the ground that re-export was permissible only with the prior approval of the Chief Controller of Exports and Imports (later rechristened the Director General of Foreign Trade, or "DGFT"). MJE expressed willingness to furnish cash deposit and a bank guarantee for being permitted to export the haemodialysers. The Customs authorities, however, felt that the haemodialysers had violated the conditions of the OGL (Open General Licence) as well as the Notification whereunder their import had been permitted. Alleging, therefore, that the haemodialysers were liable to confiscation under Section 113(d) of the Customs Act, and MJE to penalty under Section 114 thereof, MJE was visited with a Show Cause Notice dated 25th March, 1989, proposing accordingly. The Collector of Customs held the haemodialysers to be liable to confiscation but, as they had already been exported, penalized MJE and directed appropriation of the bank guarantee furnished by it. MJE appealed to the Customs, Excise and Gold (Control) Appellate Tribunal ("the CEGAT"). The CEGAT dismissed the appeal. MJE appealed, further, to the Supreme Court.
35.2 Before the Supreme Court, the Revenue contended that the haemodialyser were "prohibited goods" within the meaning of Section 113(d) of the Customs Act, which included "any goods attempted to be exported or brought within the limits of any customs area for the purposes of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force". This, it was contended, was because (i) the OGL, whereunder the import of the haemodialyzers had been permitted, specifically provided that the goods be used in India and not exported and (ii) import clearance had been granted, similarly, for "home consumption", and not for export. In appreciating the rival submissions of learned Counsel, before us, predicated on M.J. Exports (supra), the distinction between these two submissions - with which the Supreme Court dealt, individually - is of stellar significance.
35.3 The Supreme Court chose to examine, first, the second contention of the Revenue, regarding re-export of the haemodialyzers being prohibited as they were permitted to be cleared, consequent on import, for home consumption. Paras 15 to 18 of the report dealt with - and rejected - this contention, thus:
“15. The second point may be considered first. Section 45 of the Act provides that all imported goods unloaded in a customs area shall remain in the custody of such person as may be approved by the Collector of Customs until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII. The third of these cases is dealt with in Chapter VIII. It is one in which there is, in substance, no import of the goods into India for, though technically the goods enter Indian territory, such entry is only by way of transit through this country to their real destination. Such goods are mentioned by the transporter in his 'import manifest' and may be transitted in the same vessel or aircraft or transhipped by a different vessel or aircraft to their actual destination: (vide, Sections 53 and 54). Except in the above case, the goods are actually imported into India and have to be cleared from the customs area for home consumption or warehousing and this is done by presenting a bill of entry under Section 46. The terms of this Section read with Regulation 3 and Form I, II or III appended to the Bill of Entry (Forms) Regulations, 1976, make it clear that there are three forms of the bill of entry: for home-consumption, for warehousing and for ex-bond clearance for home consumption. Imported goods can, therefore, be cleared only for home-consumption or warehousing and, in this case, there is no dispute that they were cleared by the appellant under a bill of entry for home consumption. The argument for the Revenue is that the enactment, understandably, does not envisage the entry of goods into India for the mere purpose of being exported again from India in the same form and without any change. The appellant had purchased the goods from Germany admittedly for their sale to Russia. It could have effected the transaction by asking its vendors to consign the goods to some Russian destination directly or, if it considered it necessary, via an Indian port and, in the latter case, it could have had them transitted or transhipped (without actual clearance in India) under the provisions of Chapter VIII. The law, however, does not permit, says State Counsel, an import just for the purposes of export. Even otherwise, the appellant has cleared the goods for home consumption and so they are to be used or utilised in India; it is not permissible for the appellant to export goods cleared for home consumption.
16. We do not think that this contention of the Revenue is sound. The contrast that finds emphasis in the Sections as well as the forms above referred to is of clearance for home consumption as opposed to clearance for warehousing. The presentation of a bill of entry for home consumption only means that the importer does not intend to warehouse the goods; in the latter case, he is not required to pay the import duties, if any, immediately (Sections 59 and 59-A). The form of the bill of entry prescribed under the Act does not require any declaration from the importer as to the purpose for which the imported goods are required or that they will be used or sold only in India. The expression 'home consumption' has also, in the context, no clear or definite meaning and raises a lot of conundrums if literally interpreted to mean that imported goods should always be consumed in India. Is it home consumption if the importer does not use the goods himself but sells them? At what point of time should the importer make up his mind whether he proposes to sell the imported goods in India or wishes to export them outside? Is the condition infringed if a purchaser of goods from the importer sells it to a buyer in a foreign country? Will it be permissible for the importer to use the imported goods in the manufacture of other goods which he proposes to export? All these uncertainties in the connotation of the expression 'home consumption' preclude one from giving an interpretation to this expression that the imported goods cannot be at all exported and incline one to hold that, in the context, it is only used in contrast to the expression 'for warehousing'.
17. The above general consideration apart, there are other indications in the statute which show that the Act does not prohibit the export of imported goods. The Act provides that goods which are cleared from the customs area for warehousing can be cleared from the warehouse for home consumption (Section 68) or exportation (Section 69). At first blush, this may seem to support the Revenue's interpretation that clearance for exportation and clearance for home consumption are two different things. It is indeed suggested by State Counsel that, if an importer intends to export the imported goods, he should clear them for warehousing and then proceed in terms of Section 69. But a little thought would show that interpretation cannot be correct. In the first place, where an importer, even at the time of the import purchase has decided to sell the goods in another country (as in the present case), he may, as pointed out earlier, easily ask the goods to be transitted or transhipped to the country of sale and thus avoid any necessity for their being at all cleared in India. But where, for one reason or other, he wants to import the goods into India and then sell them to the foreign country or where the importer decides on an export sale only after he has arranged for the import of the goods into India, the Act prescribes no form of a bill of entry under which he can clear such goods intended for re-export. It would not be correct to insist that he must clear them for warehousing and then export them by clearing from the warehouse. Whether to deposit the goods in a warehouse or not is an option given to the importer. If he is able to pay the import duties and has his own place to stock the goods, he is entitled to take them away. But, where he has either some difficulty in payment of the duties or where he has no ready place to stock the goods before use or sale, he cannot clear the goods from the customs area. The warehouse is only a place which the importer, on payment of prescribed charges, is permitted to utilise for keeping the goods where he is not able to take the goods straightaway outside the customs area. There is nothing in the provisions of the Act to compel an importer even before or when importing the goods, to make up his mind whether he is going to use or sell them in India or whether he proposes to re-export them. Again, there may be cases where he has imported the goods for use or sale in India but subsequently receives an attractive offer which necessitates an export. It would make export trade difficult to say that he cannot accept the export offer as the goods, when imported, had been cleared for home consumption. Section 69, therefore, should be only read as a provision setting out the procedure for export of warehoused goods and not as a provision which makes warehousing an imperative pre-condition for exporting the imported goods. The second reason for not reading Sections 68 and 69 as supporting the Revenue's interpretation is even more weighty. That interpretation would mean that imported goods can be re-exported after being warehoused for sometime (even a day or a few hours) but that they cannot be exported otherwise. Such an interpretation has no basis in logic or sense and makes mincemeat of the broader principle contended for by the Revenue that imports are intended for use in the country and not for export. Incidentally, we may observe that even this principle contended for by Revenue may itself be of doubtful validity as it is based on an erroneous assumption that a re-export of imported goods will always be detrimental to the country. It is true that, in the present case, the appellant has been criticised for having utilised valuable hard currency for the purchases and reselling the goods only for rupee consideration. But, conceivably, there may be cases where an importer is able to import goods from a soft-currency area and sell them in a hard-currency area earning foreign exchange for the country. It is also possible to think of cases where, though economically unremunerative, the re-exports can be justified on considerations of international amity and goodwill such as for example, where the goods are exported to a country which is in dire need of help and assistance. The principle is also non- acceptable on the ground of vagueness as to the extent of its application to exports made after an interval or after changing several hands inside the country by way of sale. We are, therefore, unable to read Sections 68 and 69 as supporting the Revenue's contention.”
18. On the other hand, there are provisions which indicate that export of imported goods is very much envisaged under the statute. The provisions contained in Section 74 fully reinforce this interpretation. Indeed Section 74 would be redundant if the department's stand that imported goods cannot be exported were to be accepted as correct. As pointed out by Counsel for the appellant, para 174(1) of the policy which reads:
“No REP benefits are admissible in the case of imported goods which are re-exported in the same State without undergoing any processing or manufacturing operations in India.”
also impliedly recognises that imported goods can be re- exported as such; only the exporter thereof cannot claim REP benefits.”
(Italics and underscoring supplied)
35.4 Thus, the right of the importer to re-export the imported goods, even after clearance and removal to its factory premises, for bona fide grounds, stands acknowledged by the Supreme Court. One such permissible consideration is the fact that the use and sale of the goods in India, has become financially unremunerative. We may add, here, that every businessman works, axiomatically, for profit and that, if the tax authorities impose unrealistic restrictions, unsupported by statutory prescription or proscription, in the way of legitimate trade, it would, in the ultimate eventuate, discourage international trade and commerce, and would, therefore, be detrimental to the national economic interest.
35.5 Paras 21, 22 and 24 of M.J. Exports-I (supra), on which Mr Zoheb Hussain placed reliance, dealt with the first contention of the Revenue, as advanced before the Supreme Court. It is not necessary to dwell, in detail, with the findings in the said paras. We need only notice that (i) Order 15 of 1988-91, under which the haemodialysers were imported into India, covered "life-saving equipment appearing in List 2 of Appendix 6 of Import and Export Policy, 1988-91 (Vol. I) and their spares", and that (ii) one of the conditions specified in the OGL, for import of the goods covered by List 2 was that they "may be imported by any person for stock and sale purposes". The Revenue sought to contend that the expression "for stock and sale purposes" impliedly excluded export. The Supreme Court, significantly, rejected this contention of the Revenue, holding that, "prima facie, there (appeared) to be no reason to confine this only to sales in India and as prohibiting the re-export of the imported goods from India". This was reiterated by the following words, which find place in para 21 of the report, and which we reproduce once again
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: “We are inclined to agree with the prima facie view expressed by the High Court that the words "stock and sale" may be, generally speaking, wide enough to comprehend sales inside as well as outside the country and that their scope should not be restricted unless such a restriction can be read into the terms of the OGL itself.” (Emphasis supplied) Taking the matter forward from the concluding caveat, italicized by us above, the Supreme Court held thus: “21. We are clearly of opinion that whatever may be the position in regard to the other lists in Appendix 6, the items of goods enumerated in List 2 of that Appendix stand in a class of their own. There is sufficient indication in the heading given to the list to show that the import of these items into India is permitted only because such life-saving equipment is required for use in the country. The use of the words "stock and sale" shows only that the items are not restricted to use by the importer but can be transferred by him to another. But we do not think it proper to read them as permitting a sale of the goods outside the country. Note (44) in Appendix 6 reads thus: “Importers of Life-Saving Equipment appearing in List 2 of this Appendix shall be eligible to import spares of such equipment either along with the machines or separately.” This also carries a mild indication that the equipment permitted to be imported is only for purposes of use in the country. The circumstance that these items are also exempted from customs duty at the time of import - although the list of such exempted items is not identical with List 2 of Appendix 6 - also lends support to the conclusion that the goods so permitted are not meant for re-export. An indication to a similar effect is also seen in the foreword issued by the Government while publishing Vol. I of the Import-Export Policy (1988-91), Vol. I. Para 3 of the foreword says: “The Open General Licence lists have been expanded by inclusion of more items. In particular, the lists of life-saving equipment and drugs have been substantially enlarged to facilitate easy access to imported equipment and drugs which are not available in the country.” 22. We are, therefore, of the opinion that, although there is no express prohibition, the re-export as such of items of goods specified in List 2 and imported into India is prohibited by necessary implication by the language of, and the scheme underlying, the grant of OGL in regard to them. It is difficult to agree that the import-export policy envisages the re-export of goods belonging to this category.” 35.6 It needs no great legal insight to see that these findings of the Supreme Court - on which Mr Zoheb Hussain places considerable reliance - are rendered in the specific context of the nature of the goods being imported by MJE, viz. life-saving equipment, and the specific dispensations, in respect thereof, as found place in the OGL and the Export-Import Policy itself. We fully agree with the submissions of Mr Datar in that regard. 35.7 M.J. Exports-I (supra), therefore, does not help the Revenue. Rather, it supports Mr Datar's stand. M.J. Exports-II (supra) merely followed M.J. Exports-I (supra)and does not, therefore, advance the case sought to be set up by Mr Zoheb Hussain. 36. There is a third reason why the submissions of Mr. Zoheb Hussain cannot be accepted. The objection of the respondent relates to the license issued to the petitioner by the DGFT. Mr. Hussain's contention was that the import of the Gold Dore Bars was in violation of the license and that, therefore, their re-export could not be allowed. The license having been issued by the DGFT, the views of the DGFT regarding the scope thereof are entitled to pre-eminent consideration over the views of the Customs authorities. Para 22 of the judgement in M.J. Exports-I (supra), on which Mr Hussain relies and which stands reproduced hereinbefore, itself endorses this position. The Supreme Court has clearly held, in Atul Commodities Pvt. Ltd. v. Commissioner of Customs, (2009) 5 SCC 46, that, in matters of interpretation of the FTP and the handbook of procedures, the DGFT is the final authority and the Customs cannot take a view contrary to the view held by the DGFT. To the same effect is the judgement of a Division Bench of this Court, authored by Hon'ble Dr Justice S. Muralidhar (as he then was) in Greatship (India) Ltd. v. U.O.I., 2016 (338) ELT 545, with which we respectfully concur. 37. The petitioner sought a clarification from the DGFT. We have reproduced the query raised by the petitioner specifically to indicate that, in raising the query, the petitioner was candid regarding the real factual position. The petitioner disclosed the fact that the import was made against a license which contained an actual user condition and that the goods still remained in Customs bonded area. The nature of the objections raised by Customs authorities were also disclosed to the DGFT. Despite this, the DGFT clearly clarified that export of gold not being prohibited, the petitioner was entitled to re-export of the Gold Dore Bars. 38. No justifiable reason, for the Customs authorities to contend otherwise, commends itself to us. 39. For all the aforesaid reasons, we do not feel that, in acceding to the request of the petitioner to re-export the Gold Dore Bars, the learned Standing Counsel, on 4th September, 2019 committed any error apparent from the record. 40. No case for review of our decision, in our view, is made out. 41. The review petition is dismissed. Review Petition dismissed.