2006 Supreme(SC) 833

2006(7) Supreme 359
SUPREME COURT OF INDIA
(From Andhra Pradesh High Court)
Ashok Bhan and Marakandey Katju, JJ.
M/s. Baraka Overseas Traders—Appellant
versus
Director General of Foreign Trade & Anr.—Respondents
Civil Appeal No. 1426 of 2001
Decided on 11-9-2006
Counsel for the Parties :
For the Appellant : R. Thyagarajan, Sr. Advocate, V. Balachandran, Advocate.
For the Respondent : Mohan Parasaran, ASG, Harish Chandra, Sr. Advocate, Shreekant N. Terdal, Advocate.

IMPORTANT POINT
Under the Duty Exemption Scheme, whether licence is in the “norms category” or no ‘‘norms category’’ in either case it is transferable.

Headnote:Foreign Trade (Development and Regulation) Act, 1992—Section 5—EXIM POLICY 1997-2002—Petitioner obtained three advance licences for export of “Fresh Frozen Sea Foods” under policy—Licences were issued for import of items—Petitioner appellant applied for endorsement of transferability after fulfilment of stipulated export obligation—Authority (DGFT) refused the request—Petitioner had applied for licences under the “no norms category” for export of Fresh Frozen Sea Foods—High Court dismissed writ petition filed by appellant against order of DGFT holding that norms did exist for export of product ‘‘Frozen Marine Products’’ and appellant should have applied in the ‘‘norms category’’ and not the “no norms category”—Appeal—In either case whether issued under the “norms category” or “no norms category” licences were transferable—DGFT wrongly refused appellant’s request for endorsement of transferability of licences in question—Impugned judgment and order were liable to be set aside.

       Held : There is no dispute that whether the advance licences were issued under the ‘norms category’ or ‘no norms category’, in either case the said licences were transferable under the EXIM POLICY 1997-2002, which was issued under Section 5 of the Foreign Trade (Development & Regulation) Act, 1992.(Para 10)

       Clause 7.19(a) of the Duty Exemption Scheme contained in the aforesaid EXIM POLICY for the period 1.4.1997 to 31.3.2002 provided that “a duty free licence except Special Imprest Licence and/or materials imported against it is transferable after the completion of export obligation and endorsement of transferability by the licensing authority”.(Para 11)

       Thus, from a reading of the above Scheme it is evident that duty free licenses are transferable whether they are in the ‘norms category’ or ‘no norms category’. The only difference between the ‘norms category’ and ‘no norms category’ as per clause 7.4 of the Duty Exemption Scheme is that where the SION norms have been published the application is to be given to the Licensing Authority, and where they have not been published the application is to be given to the Committee which functions as a recommending authority to the Licensing Authority.(Para 12)

       By the order dated 19.2.1999 the DGFT rejected the application for endorsement of transferability on the ground that the description of the export items was wrongly shown in the ‘no norms category’, whereas it should have been shown in the ‘norms category’, as it was Frozen Marine Products/Frozen Meat packed in packing material made out of LDPE/HDPE/PP Card Board other than Ivory Board.(Para 15)

       The DGFT was of the view that the license was granted to the appellant contrary to the Circular dated 31.3.1997 whereby the Licensing Authority was advised to issue advance licenses strictly as per the standard input output norms (SION) in respect of fish and marine products.(Para 16)

       In our opinion, the view taken by the High Court as well as the DGFT was clearly erroneous in law and liable to be set aside. There is no dispute that the appellant was granted the advance licenses which were applied for. If there was any complaint that the licenses were not validly granted, then a show cause notice should have been issued to the appellant to show cause why the said licenses should not be cancelled, and thereafter cancellation order could have been passed. However, in the present case, neither was any show cause notice issued to the appellant nor the licenses were actually cancelled.(Para 17)

       As already stated above, under the Duty Exemption Scheme, whether the licence is in the ‘norms category’ or ‘no norms category’, in either case it is transferable. Hence, in our opinion, the DGTF wrongly refused the appellant’s request for endorsement of transferability of the licences in question.(Para 19)