‘Actual User’ condition stipulated under Application Form ANF2B for Import Authorization not mandatory: Bombay HC quashes DGFT orders [Read Order]

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.

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