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High Court Of Delhi
ALL INDIA GARMENT EXPORTERS COMMON CAUSE - Appellant
Versus
UNION OF INDIA - Respondent
Civil 3431 of 1987
Decided On : 02/22/1989
EXPORT ENTITLEMENT DISTRIBUTION POLICY - Validity of para 7 of the Export Entitlement Distribution Policy (policy) relating to export of certain categories of readymade garments for the year 1988, 1989 and 1990 issued by public Notice No. 28 ETC (PN)/87 dated 15th October, 1987 and effective from 1st January, 1988 - Challenged - Whether the impost levied under the policy is of the nature of a fee (or "sort of a fee") levied or leviable on the export of garments of super fast category (OTS) - Whether the impost is illegal and violative of Article 19 (1) (g) of the Constitution.
Fact of the Case:
Petitioners, an association of garment exporters and an individual exporter, challenged the validity of para 7 of the Export Entitlement Distribution Policy (policy) relating to export of certain categories of readymade garments for the year 1988, 1989 and 1990 issued by public Notice No. 28 ETC (PN)/87 dated 15th October, 1987 and effective from 1st January, 1988. The challenge was limited to the Open Tender System (OTS) and the policy thereto is contained in para-7 of the policy. Under OTS, quantities were allotted on the basis of sealed tenders. Exporters had to submit sealed tenders indicating the premium offered to the Government on the quantities applied for. Allotments were determined on the basis of the premium offered and on a day when the available quantities were over-subscribed the eligibility was decided on the basis of higher premium bid. Exporters were required to export the goods on a minimum export price which would be the upset price plus the premium paid by the Exporters. The upset price was determined by the Textile Commissioner on the basis of the average unit value realisation in these categories during the previous year.
Finding of the Court:
The Court held that the impost levied under the policy was not of the nature of a fee (or "sort of a fee") levied or leviable on the export of garments of super fast category (OTS). The Court found that the impost was illegal and violative of Article 19 (1) (g) of the Constitution.
Issues: 1. Whether the impost levied under the policy is of the nature of a fee (or "sort of a fee") levied or leviable on the export of garments of super fast category (OTS)? 2. Whether the impost is illegal and violative of Article 19 (1) (g) of the Constitution?
Ratio Decidendi: 1. The Court held that the impost levied under the policy was not of the nature of a fee (or "sort of a fee") levied or leviable on the export of garments of super fast category (OTS). The Court observed that the element of quid pro quo was totally absent. There was no co-relation whatsoever between the fee charged by way of premium and the services rendered. The premium was not authorised by the Act and the Exports Order. It was not uniform. It depended upon the capacity of the person to pay and had to pay the maximum in order to be entitled to the quota. The schemes which the State proposed to take up after having collected the premium and which were mentioned during the course of arguments did not justify the impost and it did appear to the Court that these schemes have been thought of only now in order to justify the levy which is not legal. 2. The Court held that the impost was illegal and violative of Article 19 (1) (g) of the Constitution. The Court observed that the levy of premium was clearly outside the Act and the Export Order and was not authorised. Export Order unlike Import Order has not been issued under Section 3 read with Section 4a of the Act. Licence under the Export Order means an export licence granted under the Order. This definition of licence is different than that contained in the Export Order of 1977 where a Quota for the export of goods allocated under the Order was also included within the meaning of licence, but the allocation was to be made by a licensing authority or by any agency authorised by the licensing authority in that behalf. AEPC could not be said to be a licensing authority or agency authorised by the licensing authority under the Export Order of 1977. Export licence is required only in respect of the goods specified m Schedule-1 to the Order. No such export licence is required for the goods specified in Schedule-111 (OGL) and the goods specified therein could be exported on fulfilment of the terms and conditions specified therein.
Final Decision: The Court allowed the writ petition and struck down Clauses (i), (ii) and (iii) of para 7 of Public Notice No. 28-ETC (PN)/87 dated 15th October, 1987 issued by the Government of India, Ministry or Commerce.
( 1 ) THE petitioners who are two in number have challenged by this petition the validity of para 7 of the Export Entitlement Distribution Policy ( policy for short) relating to export of certain categories of readymade garments for the year 1988, 1989 and 1990 issued by public Notice No. 28 ETC (PN)/87 dated 15th October, 1987 and effective from 1st January, 1988.
( 2 ) THE first petitioner is an association of garment exporters and the second petitioner is himself an exporter of garments. The respondents are the Union of India both through the Ministry of Commerce and Ministry of Textiles, Chief Controller of Imports and Exports and the Apparel Export Promotion Council (for short the AEPC ).
( 3 ) EXPORT of garments is regulated under the Import and Exports Control Act, 1947 and Export (Control) Order, 1977 issued under this Act. An Import (Control) Order, 1955 has also been issued under the Act. The lmport/export Policy is announced by the Government of India by means of public notices in the Gazette of India (Extraordinary ). The primary object of Export Policy is to promote export to the maximum extent but in such a manner that the economy of the country is not affected by unregulated exports of items essentially needed within the country. Export Control is, therefore, exercised with respect to a limited, number of items whose supply position demands that their exports should be regulated in the larger interest of the country. The object is also to ensure the maximum benefit by way of the highest foreign exchange realisation made by the country.
( 4 ) AEPC is a company registered under the Companies Act. Its objects include, inter alia. the registration and distribution of quotas for the export of garments to foreign countries with the approval of the Ministry of Commerce and in accordance with the policy laid by the Government of India. AEPC has been organised with sponsorship of the Ministry of Commerce in the Government of India.
( 5 ) LICENCE under the Act means a licence granted and includes customs clearance permit issued, under any Control Order. Under Section 4-A, the Central Government may, by order levy, subject to such exceptions, if any, in respect of a. ny person or class of persons as may be specified in the order, any fee in respect of any application or in respect of any licence granted or renewed under any order made or deemed to have been made under the Act. Imports (Control) Order, 1955 has been issued in the exercise of powers conferred by Sections 3 and 4-A of the Act. Export (Control) Order. 1988 has, however, been issued in the exercise of powers conferred only by Section 3 of the Act. Under the Export Order licence means an export licence granted under that Order and "licensing authority" means an authority competent to grant licence under the Order. AEPC is not such authority. Clause 3 or the Export Order is as under :-
"3. Restriction on export of certain goods:-
(1) Save as otherwise provided in this Order, no person shall export any goods of the description specified in Schedule I,. except under and in accordance with a licence granted by the Central Government or by an officer specified in Schedule IT. (2) Not withstanding anything contained in sub-clause (1) goods specified in Schedule III may be exported on fulfilment of the terms and conditions specified therein. (3) If in any case, it is found that the value, sort. specification, quality and description of the goods to be exported arc not in conformity with the declaration of the exporter in those respects or the quality and specification of such goods are not in accordance with the terms of the export contract, the export of such goods shall be deemed to be prohibited. "
WHILE the Imports Order by Clause-4 prescribes for fees on application of licence, there is no such clause in the Exports Order. Now, if reference is made to Schedule III (OGL- No. 3), as mentioned in Clause-3 of the Exports Order under which any person may
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