O R D E R

Challenge in this Writ Petition is to the orders of the first respondent dated 28.11.2016 rejecting the request of the petitioner for release of subsidy for imported Di-Ammonium Phosphate that was with held by the Department on account of quality issues.

2. The petitioner is an Importer and Trader in fertilizer. The petitioner was favoured with a contract for supply of imported fertilizer to various States at a subsidised price. Upon the petitioner distributing the fertilizer at a subsidised price, the loss incurred by the petitioner by sale of fertilizer at a subsidised price would be recouped by the Central Government by grant of subsidy to the petitioner. The petitioner has imported fertilizer during the years 2011 and 2012 through two ships M.V.Citrus Venus and J.S.Comet. The ship M.V.Citrus Venus arrived at the Visakhapatnam Port on 22.08.2011, after unloading the fertilizer, the ship was released on 24.08.2011. The samples of the fertilizer were drawn on 27.08.2011 and the same was tested by the fertilizer Control Order Laboratory at Tadepalligudem.

3. The Laboratory Report issued on 19.09.2011 shows that the fertilizer imported is according to the specifications. However, when the fertilizer was tested at the Regional fertilizer Control Laboratory, Kalyani, Nadia at West Bengal, it was found that the Water Soluble Phosphate content was in excess by .76% and therefore, the Laboratory reported that the sample is not according to specifications. The very same sample was tested at the fertilizer Control Laboratory, Aurangabad, which certified that the sample was according to specifications. Similarly while the samples tested at Faridabad and Kanpur were found to be in accordance with the specifications the samples tested at Bangalore failed the test.

4. The second vessel J.S.Comet arrived at the Kandla Port on

13.10.2012 and samples were drawn from the imported quantity on 19.10.2012. These samples were tested at Faridabad, Junagadh and Kolkata. While Faridabad reported that Water Soluble content was less, the Lab at Junagadh reported that the sample was according to specifications. However, the Referee Lab at West Bengal reported that Nitrogen level which was required to be above 18% was at 17.3% and the water soluble content which is required to be at 41% was at 42.9.%. Therefore, while the Faridabad Laboratory pointed out that the Nitrogen content was in accordance with the specifications and the water soluble content was less, the Referee Lab at West Bengal found that the water soluble content was according to specifications but the Nitrogen content was less by .7%.

5. However, as per the scheme which provides for payment of subsidy on arrival, 85% of subsidy was released to the petitioner on the self certification made by the petitioner regarding the delivery of the quantity. The remaining 15% was also released to the petitioner on the acknowledgement from the respective States as per the fertilizer Policy. The Policy also provides for deduction along with penal interest on the quantity of the fertilizer which the State Governments have reported to be non-

standard. The relevant provision in the fertilizer Policy reads as follows:

“The Department of fertilizers make deductions along with penal interest on the quantity of the fertilizers for which the State Governments have reported to be Non-

standard.”

6. As per the above Policy, the entire subsidy was released to the petitioner at various dates upon certification of the quantity and quality by the respective State Governments which had received the fertilizer. However, the Department started recovering the subsidy paid to the petitioner from the subsequent payments that were due to the petitioner. The orders of recovery were passed on the ground that the fertilizer was reported to be non- standard. The recoveries were made from the subsidy amount due to the petitioner for supplies effected for the subsequent period. It is these orders of recovery that are sought to