Actual User’ Condition Stipulated under Application Form ANF2B for
Import Authorization not Mandatory: Bombay HC Quashes DGFT Orders
The Bombay High Court while quashing DGFT orders ruled
that the ‘Actual User’ condition stipulated under Application Form ANF2B for
import authorization is not mandatory.
The Petitioner, Shah Nanji Nagsi Exports Pvt. Ltd. is engaged in the business of
export of rice, oil seed, food grains and pulses. In this connection, the petitioner
has been granted a trading house certificate by the appropriate authority.
Petitioner is also engaged in the import of green peas, yellow peas and corn
directly as well as canalized through public sector undertakings. Petitioner
has its registered office at Nagpur in the State of Maharashtra.
The petitioner sought a direction to respondent authority
to delete the condition of ‘actual user’ in the two licenses issued for
importing maize (corn) for and on behalf of the petitioner.
During pendency of the writ petition, show cause notices
were issued by respondent alleging breach of the ‘actual user’ condition in the
licences by the petitioner. The Directorate of
Revenue Intelligence also issued a show cause notice as to why customs duty of
Rs.3,05,70,953 should not be recovered on the ground that the import of maize
(corn) was in breach of the ‘actual user’ condition.
Mr. Nankani, senior counsel for
the petitioner submitted that the core issue is insertion of the condition of
‘actual user’ in the two licences. He submits that
the said condition is without jurisdiction as the parent statute i.e., the
Foreign Trade (Development and Regulation) Act, 1992 does not provide for such
a condition so also the Foreign Trade (Regulation) Rules, 1993.
Mr. Govilkar, learned counsel
for the respondents on the other hand submits that petitioner was fully aware
of this particular condition present in the two licences.
As a matter of fact, while making the application form for import of maize
(corn) petitioner gave a declaration that it would abide by the provisions of
the Foreign Trade (Development and Regulations) Act, 1992 and the rules and
orders framed thereunder as well as provisions of the Foreign Trade Policy.
The division bench of Justices Milind
N. Jadhav and
Ujjal Bhuyan 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 is the
central issue. Refusal of respondent to adjudicate on this issue is not only violative of the directions of this Court as contained in
the order but also amounts to non-exercise of jurisdiction vested in him.
The court held that order in respect of the core issue is
the insertion of ‘actual user’ condition in the two licences,
whether such insertion is legally permissible or without entering into this
aspect, whether such condition is directory or mandatory are issues which are
required to be gone into by respondent. Failure to do so has occasioned
non-exercise of jurisdiction.
Consequently the court quashed the impugned orders of
DGFT and remanded the matter back to respondent for a fresh decision in
accordance with law after giving due opportunity of hearing to the petitioner.