Actual User condition under Form ANF2B for import authorization whether mandatory or not to be decided afresh

Shah Nanji Nagsi Exports Pvt. Ltd. Vs Joint Directorate General of Foreign Trade (Bombay High Court)

Conclusion: The order in respect of the core issue was the insertion of ‘actual user’ condition stipulated under Application Form ANF2B for import authorization in the two licences, whether such insertion was legally permissible or without entering into this aspect, whether such condition was directory or mandatory were issues which were required to be gone into by respondent. Failure to do so had occasioned non-exercise of jurisdiction, therefore, the matter required to be heard afresh on all issues as directed by Court.

Held:  Assessee-company was basically engaged in the business of export of rice, oil seed, food grains and pulses. It had been granted trading house certificate by the appropriate authority. It was also engaged in the import of green peas, yellow peas and corn directly as well as canalized through public sector undertakings.  The ‘actual user’ condition stipulated under application form ANF2B as appearing in the two licenses for import of maize (corn) was challenged by assessee besides demanding refund of customs duty paid by assessee under protest. During pendency of the writ petition, show cause notices were issued by the respective authority under section 13 of the Foreign Trade (Development and Regulation) Act, 1992 alleging breach of the ‘actual user’ condition in both the licenses. Directorate of Revenue Intelligence also issued show cause notice contending that assessee was not entitled to benefit of customs notification No.21/2002 – Customs dated 01.03.2002 in view of breach of ‘actual user’ condition in the licenses and thus demanding customs duty of Rs.3,05,70,953.00, besides calling upon assessee to show cause as to why the paid amount of Rs.2,96,80,536.00 should not be adjusted towards the demand. It was held that the  Court had directed Respondent No.1 to adjudicate the show cause notices dated 30.08.2013 on all issues after giving assessee an opportunity of personal hearing. ‘All issues’ would include validity of the ‘actual user’ condition in the licences or whether such a condition was mandatory or non-mandatory. This was because this Court had noted that the show cause notices had emanated from the ‘actual user’ condition which was impugned in the said writ petition. Validity of the ‘actual user’ condition or whether it was mandatory or not was the central issue. Refusal of respondent No.1 to adjudicate on this issue was not only violative of the directions of this Court as contained in the order dated 20.11.2013 but also amounted to non-exercise of jurisdiction vested in him. As rightly pointed out by this Court in the order dated 20.11.2013 the core issue was the insertion of ‘actual user’ condition in the two licences – whether such insertion was legally permissible or without entering into this aspect, whether such condition was directory or mandatory were issues which were required to be gone into by respondent No.1. Failure to do so had occasioned non-exercise of jurisdiction. Thus upon thorough consideration of all relevant aspects, the impugned order passed by respondent No.1 could not be sustained in law and was required to be set aside and quashed. The matter required to be heard afresh on all issues as directed by Court earlier and as indicated above.

FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT

Heard Mr. Vikram Nankani, learned senior counsel for the petitioner and Mr. Rajshekhar Govilkar, learned counsel for the respondents.

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