ANIL KUMAR, J.

1. The petitioner, M/s. RK machine tools, has sought the quashing of the order dated 14th May, 1986 passed by Respondent No.2, the Chief Controller of Imports and Exports, New Delhi and a declaration that ‘deemed exports’as defined in the Government notifications covers the cases of advance licenses in the same manner as they cover the case of duty replenishment licenses in the facts and circumstances of the petitioner.

2. The brief facts as contended by the petitioners are that the petitioner No.1 is a company duly registered under the Indian Companies Act and is also a member of the Engineering Export Promotion Council since 1974, while petitioner no. 2, is a shareholder and one of the directors of petitioner no.1.

3. Petitioner No.1 was manufacturing and trading company of Northern India and Asia and was engaged in the business of making metallic goods, including defense equipment, machine tools, textile machinery, stainless steel utensils etc. for over two decades.

4. According to the petitioner by letter dated 2nd August 1981, an order was placed for the supply of stainless steel utensils and cutlery of special specifications of the value of Rs1,38,02,000/- by M/s V. K. Topline of 40, Thomas Street, Manchester, England and in order to execute the supply order the petitioners had applied to respondent no.2 for the grant of an „advance license?under the Duty Exemption Scheme as detailed in the Revised Import Policy for the year 1981- 82, for the import of 425 metric tons of stainless steel of the CIF value of the Rs 90, 86,560/-. The intent of the petitioners was to export the utensils made out of the imported stainless steel against foreign currency with a view to fulfill the export obligation arising out of the grant of the advance license. However, despite fulfilling all the requirements for the grant of the advance license, the respondents had issued an import license to the petitioner on 5th January, 1982 for only half the quantity applied for by the petitioners i.e. license was given for the import of 212.8 metric tonnes of stainless steel or the CIF value of Rs. 45,43,280/- only. One of the conditions for the issuance of the advance license was that a bank guarantee for the sum of Rs 90, 86,500/-was to be given by petitioner no.1 and also that the goods exported against the Advance License were to be utilized in accordance with the provisions of the customs notifications, as amended from time to time. It was further stipulated that in case the petitioner failed to export the utensils manufactured out of the imported steel, then it would be liable to pay to the customs authorities the amount of duty which otherwise would have been payable on the imported material of which the corresponding export was not made. The petitioners were, however, not liable to pay any duty on the stainless steel imported by them against the above-mentioned license for the manufacture of utensils etc. if such utensils/ cutlery of the value of Rs. 45,43,289/- were actually exported and consequently, foreign-exchange was earned by the country. The petitioners however, clarified that they imported only 180 metric tons of stainless steel of the CIF value of Rs.35, 50,192.70/-, against the quantity of 212.8 metric tons of CIF value of Rs. 45,43,280/-allowed under the advance license and thus, as per the entry in Appendix 5 to Schedule 19 of the Import Export policy, for 1 Kg of the finished product to be exported, the actual user was permitted to import 1.33 KG of steel, which meant that 33% in wastage was permitted. The quantity allowed for the purposes of duty exemption was fixed at 1 to 1.125. According to the petitioner on applying the same principle, the petitioner was required to export only 135 metric tons of finished goods as against the import of 180 MT of steel. The export liability under the license, as well as, under the scheme was confined to and corresponded to the extent of the raw material actually impor