Writ Petition No. 10001 of 2014. Case: Riddhisiddhi Bullions Limited and Ors. Vs Union of India and Ors.. High Court of Bombay (India)
| Case Number | Writ Petition No. 10001 of 2014 |
| Counsel | For Appellant: I.M. Chagla, Senior Counsel, Prakash Shah, Riyaz Chagla, H.K. Sudhakara, Sanjay Agarwal and Neha Ahuja i/b Prompt Loyal and For Respondents: Rafiq Dada, Senior Counsel, Pradeep S. Jetly and S.V. Bharucha, Advs. |
| Judges | S. C. Dharmadhikari and B. P. Colabawalla, JJ. |
| Issue | Constitution of India - Article 226; Customs Act, 1962 - Sections 11, 2(23), 3; Foreign Exchange Management Act, 1999 - Sections 10, 11, 12, 13, 10(1), 10(4), 11(1), 13(1), 13(2), 2, 2(c), 3, 4(1), 5, 8; Foreign Exchange Regulation Act, 1973 - Sections 13, 14, 15, 16, 17, 18, 23, 33, 34, 40; Foreign Trade Development and Regulation Act, 1992 - ... |
| Judgement Date | December 23, 2015 |
| Court | High Court of Bombay (India) |
Judgment:
S. C. Dharmadhikari, J.
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In view of the earlier orders, we proceed to admit this petition. Hence, Rule. The respondents waive service. Since all pleadings are complete, by consent of both sides, the Writ Petition is disposed of finally by this judgment.
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This Writ Petition under Article 226 of the Constitution of India questions the legality and validity of the Circulars, namely, Circular No. 15 dated 22nd July, 2013, Circular RBI/201314/187//A.P. (DIR Series), Circular No. 25 dated 14th August, 2013 and RBI/2013-14/600//A.P. (DIR Series) and Circular No. 133 dated 21st May, 2014, issued by the second respondent and proceedings consequent thereto initiated vide show-cause notice dated 14th October, 2014 so also the order passed in furtherance thereof dated 14th January, 2015. It is prayed that these be quashed and set aside.
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The facts lay in a narrow compass. The petitioners claim to be one of the largest bullion dealers and petitioner No. 1 is an Associate Member of the London Bullion Market Association and a member of the Bombay Bullion Association. It claims to be recognized as a Premier Trading House by the Government of India, Ministry of Commerce and Industry through the Office of the Zonal Joint Director General of Foreign Trade, which is valid till 31st March, 2016. On the basis of this certificate of recognition, a certificate as 'Nominated Agency' is also granted every year to the petitioners by the authorities under the Foreign Trade (Development and Regulation) Act, 1992 (for short "Act of 1992"). All this enables the petitioners to import precious metals in terms of paragraph 4A.4 of the Foreign Trade Policy. The Nominated Agency certificate (for short "NAC") is also claimed to be valid and subsisting.
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The petitioners, namely, the company, its Vice President and Directors have sued the Union of India, the Reserve Bank of India, Foreign Exchange Department, Central Office, Mumbai and the Additional Director General of Foreign Trade, Mumbai Zonal Unit, DGFT, Mumbai. The reliefs mentioned above are sought in the following background.
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On or about 7th August, 1992, Foreign Trade (Development & Regulation) Act, 1992 was enacted to provide for the development and regulation of foreign trade by facilitating imports into, and augmenting exports from India and for matters connected therewith or incidental thereto. The Act confers powers upon Central Government for the development and regulation of foreign trade, by, inter alia, making provisions for prohibiting, restricting or otherwise regulating the import or export of goods. Section 5 of the Act permits Central Government to formulate and notify Foreign Trade Policy, and also to amend the same by issuing notifications in the Official Gazette. Section 6(3) of the Act permits conditional delegation of powers conferred under Sections 3 and 5, upon the Director General or any other Officer subordinate to the Director General. Section 9(4) empowers the Director General or an Officer authorised by him, to suspend or cancel any licence granted under the Act, for good and sufficient reason, to be recorded in writing, and subject to such conditions as may be prescribed. Section 11 (2) of the said Act provides for imposition of penalty where any person makes or abets or attempts to make any export or import in contravention of any provision of the Act or any rules or orders made thereunder. Annexure-C to the petition is copy of the relevant provisions of the Foreign Trade (Development & Regulation) Act, 1992.
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On or about 30.12.1993, the Foreign Trade Regulation Rules, 1993 were notified vide GSR 791(E) and published in the Gazette of India. Rule 10 permits the Director General or the Licensing Authority, by an order in writing, to cancel any licence granted under these rules. Rule 13 (2) prohibits disposal of any goods imported by any person against a licence except in accordance with the terms and conditions of such licence. Annexure-D to the petition is a copy of the Foreign Trade Regulation Rules, 1993, notified vide GSR 791(E) and published in the Gazette of India.
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Policy Circular No. 77 (RE-2008)/2004-2009 was issued by Director General of Foreign Trade (for short "DGFT") prescribing guidelines for import of precious metals by the Nominated Agencies which included Premier Trading Houses. The monitoring mechanism and the format of Certificate for the said purpose, were also provided in the said Policy Circular. Annexure-E to the petition is a copy of the said Policy Circular No. 77 (RE-2008)/2004-2009 issued by DGFT. Subsequently Policy Circular 24(RE-2009-2014) was issued. Annexure-F to the petition is copy of the said Circular. Both these circulars were withdrawn vide Policy Circular 14(RE-2010)/2009-14 dated 1.02.2011, thereby relaxing the norms and doing away, inter alia, with the requirement of sale of 15% quantity to exporters. Annexure-G to the petition is a copy of the said Policy Circular 14(RE-2010)/2009-14 dated 1st February, 2011.
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On 8th August, 2011, the petitioner No. 1-Company was awarded status of "Premier Trading House" by the Ministry of Commerce. Prior thereto, the petitioner was awarded Certificate of Recognition as Star Trading House on 09.09.2009. Annexure-H to the petition is a copy of the said Premier Trading House Status Certificate awarded by the Ministry of Commerce.
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On 18th May, 2010, a Certificate as 'Nominated Agency' was granted to the petitioner No. 1 by the DGFT for direct import of Precious Metals in terms of Para 4A.4 of Foreign Trade Policy. Annexure-I to the petition is a copy of the said Certificate as 'Nominated Agency' granted to the petitioner No. 1 by the DGFT authorities on 18th May, 2010.
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The said certificate for import of Precious Metals by Nominated Agency was thereafter renewed every year on various dates i.e. 15th March, 2011, 17th April, 2012, 9th April, 2013 and 5th May, 2014 with validity from 1st April of the respective year to 31st March of the next year. Annexures-J, K, L and M to the petition are copies of the said certificates styled as 'Nominated Agency' dated 15th March, 2011, 17th April, 2012, 9th April, 2013 and 5th May, 2014, respectively. Certificate dated 5th May, 2014 was issued with validity from 1st April 2014 to 31st March 2015. The following quantities of gold were imported upon issuance of the said certificates as Nominated Agency in the financial years 2010-11 to 2013-14.
Out of this total quantity of 46,361 kg of gold imported as Nominated Agency prior to issuance of the Certificate dated 5th May, 2014, the dispute raised by the Respondent No. 3 is only in regard to 2 consignments of 100 Kg each, both shipped from UAE on 22nd July, 2013, which were handed over by the foreign supplier for supply before issuance of the impugned RBI Circular dated 22nd July, 2013.
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Under Invoice Nos. USV-5274 & 75, both dated 22.07.2013 for Ahmedabad and Hyderabad respectively, two consignments of gold were shipped from UAE for importation into India. Annexures-N and O to the petition are copies of the said Invoices, both dated 22nd July, 2013 for Ahmedabad and Hyderabad.
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The price for the shipment was fixed at "LONDON-AM-FIX" of 22nd July, 2013 on London Bullion Market Association at around 3.00 p.m. (10.30 a.m. London time) at US$ 1313.75 (London AM fixing rate for gold on 22nd July, 2013) + USD 0.25 (Fixing charges) + USD 2.50 (Supplier charges) = USD 1316.5 per ounce. Annexure-P to the petition is a copy of the said document showing fixing of price on London Bullion Market.
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On 22nd July, 2013, the foreign supplier handed over the shipment at 4.30 p.m. and 4:35 p.m. (UAE time) to Brinks' Global Services, the renowned International Logistic Company handling Precious Metals, for onward transport to destination, for which Collection Notes were also issued by the said Brinks' Global Services evidencing the delivery time. Annexures-Q and R to the petition are copies of the Collection Notes issued by the said Brinks' Global Services evidencing handing over shipment at 4.30 p.m. and 4.35 p.m. on 22nd July, 2013.
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The Customs procedure was completed in respect of the two shipments at Dubai time 18.00 hrs. and 18.05 hrs. and consequently, two airway bills bearing numbers 17652586273 (for Ahmedabad shipment) and 17652586262 (for Hyderabad shipment) both dated 22nd July, 2013 were issued at 19:21 hrs and 21:13 hours (both UAE time). Annexures-S, T-1 and T-2 to the petition are copies of the certificate issued by Brinks' Global Services showing time for completion of customs procedure at Dubai, for Airway bills bearing Nos. 17652586273 (for Ahmedabad shipment) and 17652586262 (for Hyderabad shipment) both dated 22nd July, 2013.
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Subsequently, on the same day, the impugned Circular bearing No. 15 dated 22.07.2013 was issued by the Reserve Bank of India (Respondent No. 2) ["RBI" for short] and was uploaded on the RBI website at 19.47 hrs. The Circular contained the directions issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999). Both these provisions under FEMA empower RBI to issue directions to Authorized Dealers (Banks in the instant case). The said Circular also informed that -
"5. Government of India will be issuing separate instructions, if any, to the customs authorities/DGFT to operationalize and monitor these import restrictions."
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Two Bills of Entry, both dated 23rd July, 2013, were filed for the consignments upon their reaching the respective destination ports in India. Annexures-U and V to the petition are copies of the said Bills of Entry.
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EDI Data dated 24th July, 2013 shows a query raised at Ahmedabad Air Customs Cargo - "Put up compliance to the RBI Circular No. 15 dated 22nd July, 2013", and satisfaction thereon. Annexure-W to the petition is a copy of the said EDI Data dated 24th July, 2013.
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The Authorized Dealer permitted outward remittance for these consignments imported by the...
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