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PETITIONER: PREM CHAND SOMCHAND SHAH AND ANR.ETC. ETC

       Vs.

RESPONDENT: UNION OF INDIA AND ANR.

DATE OF JUDGMENT05/02/1991

BENCH: AGRAWAL, S.C. (J) BENCH: AGRAWAL, S.C. (J) RANGNATHAN, S. KASLIWAL, N.M. (J)

CITATION:  1991 SCR  (1) 232        1991 SCC  (2)  48  JT 1991 (1)   340        1991 SCALE  (1)128

ACT:      Constitution  of  India, 1950:  Article  14  -Equality- Reasonable   classification-ExportHouses-Additional   Import Licences-Classification  of  Licences  for  the  purpose  of benefit  of flexibilities of import items under Para  215(4) of  1988-91  Imports and Exports Policy-Held  Export  Houses granted Additional Import Licences prior to 1.4.1988 on  the basis  of   f.o.b.   value of  Exports  and  Exports  Houses granted Additional import Licences after 1.4.88 on the basis of  the  net  foreign exchange earnings on  exports  do  not constitute  a single Class-Held classification  of  licences valid since basis and conditions of grant of licences  under 1978-79 Policy and 1988-91 policy were different.      Import and Export Policy, 1978-79: Paras 165,166, 174 & 176 Import and Export Policy, 1988-91: Paras, 212, 214,  215 and  218-Appendices 3 and 5 Part-A-Export  Houses-Additional Export  Licences-Benefit  of flexibilities in  import  items under Para 215(4)-Benefit extended to grantees of Additional Import  Licences  issued after  1.4.1988  i.e.  under 1988-91 Policy and denied to grantees of Additional Import  Licences issued  prior  to 1.4.1988 i.e. under 1978-79  Policy,  Para 218(10)-Held   Export  Houses  granted   Additional   Import Licences  prior  to  1.4.88  cannot  claim  the  benefit  of relaxation of import under Para 215(4)-Para 218(10) of 1988- 91 Policy  held valid.

HEADNOTE:     The petitioners, carrying,on import-export of  diamonds, field  applications  for registration as Export  Houses  and grant  of Additional Import Licences under Para 174 and  176 of the Import and Export Policy 1978-79 which were  rejected by  the authorities on the ground that they have  failed  to diversify their exports of "other products" during the  year 1977-78.   They challenged the order of the  authorities  by filing  writ  petitions before the Bombay High  Court  under Article  226 of the Constitution.  One of the petitions  was dismissed  by a learned single judge of the High  Court  and the said petitions filed an appeal before a Division   Bench of the High Court.During the pendency of the appeal                                                        233 and the writ petition,the Supreme  Court by its order  dated

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April  18,  1985  decided  the case of  Union  of  India  v. Rajnikant  Bros.  holding that there was no  requirement  of diversification of exports as a condition for the  grant  of Export  Houses Certificates in the Import Export Policy  for the year 1978-79 but the grantee of Additional Licences were not only prohibited from importing items which were excluded in the Export Policy 1978-79 but also from importing   items excluded  under  the Import Policy prevailing  at  the  time import.  The High Court decided the cases of the petitioners in  accordance with the decision of this Court in  Union  of India  v. Rajnikant Bros.  Purusant to the decision  of  the Bombay  High  Court petitioners were granted   Export  House Certificates and Additional Import Licences which were valid for 12 months, with the  same condition as provided by  this Court  in  its  order dated April18, 1985  in  the  case  of Rajnikant.  However, the petitioners were not able  to  make imports  under  the said licences  till  31st  March,1988.On 1.4.1988,  the Government of India issued a  revised  Export and  Import  Policy for the period  1988-91.Under  Para  215 of  the   said  revised policy  certain  flexibilities  were granted  in  the  matter  of  imports  to  the  grantees  of Additional  Import  Licences. However,  under  para  218(10) of  the  said revised Policy the  holdersof  the  Additional Import Licences issuedprior to 1.4.1988 were made ineligible for the benefit of flexibilities in import as  contained  in para 215(4).  Since ,the petitioners were  holding  licences issued   prior  to  1.4.1988  they  could  not   avail   the flexibilities  in  import as contained in Para  215  of  the 1988-91 Policy.  Consequently, they filed writ petitions  in this  Court challenging the validity of para218(10)  of  the 1988-91  Policy contending (i)  that all the  Export  Houses who  were granted Additional Licences constitute  at  single class  and their classification on the basis of date  or  on the  basis of period of exports has no connection  with  the object  sought  to be achieved by the 1988-91  policy;  (ii) that   Para   218(10)   of   1988-91   Policy    arbitrarily discriminates   between  Export  Houses  who   were   issued Additional  Licences  prior to 1.4.1988 since  the  benefits ofPara  214  of 1988-91 Policy were conferred  only  on  the latter; (iii) that in view of the judgement of this Court in C.Naveenchandra  and Co. v. Union of India, [1987] 2  S.C.R. 989  the  petitioners  should  be  treated at par  with  the grantees of Additional Licences under the Export Policy  for the subsequent years and since there has been relaxation  in the  matter of policy of canalisation of imports under  Para 215(4)  in  respect Additional Licences  granted  to  Export Houses  under the 1988-91 Policy, the petitioners were  also entitled to a similar relaxation.      Dismissing the petitions, this Court,                                                        234      HELD:  1.   The  right  to  equality  guaranteed  under Article 14 ensures equality amongst equals and its  aim is to protect persons   similarly  placed  against   discriminatory treatment.    It   means   that   all   persons    similarly circumstance  shall  be  treated alike  both  in  privileges conferred and liabilities imposed. Conversely discrimination may  result  if persons dissimilarily  situate  are  treated equally.     Even   amongst   persons   similarly    situate differential treatment wouldbe permissible between one class and  the  other.  In that event  it is necessary   that  the differential treatment should be founded on an  intelligible differentia  which distinguishes persons or things that  are grouped together from others left out of the group and  that differentia  must  have  a rational  relation  tothe  object sought  to be achieved by the statute in  question.   [242H,

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243A-B]      2.  A close examination of the Import &  Export  Policy 1978-79  and the Import & Export Policy 1988-91  shows  that there  is  material difference between  the  conditions  for grant of Additional licences under Import Policy 1978-79 and the  conditions for grant of such licences under the  Import Policy 1988-91.  While in the Import & Export \policy  1978- 79  the  emphasis was only on the f.o.b.  value  of  exports without taking into account the outgo of foreign exchange in importing the goods required for achieving the exports by an Export House and Additional licences were granted for a much larger  amount  at a higher percentage on the basis  of  the f.o.b.value of the exports, where as in the Import &  Export Policy 1988-91 there is a more realistic appraisal of actual benefit  to  the country’ economy by the exports  by  taking into  account  the  net  foreign  exchange  earnings   after deducting  the value of the imports and additional  licences are  issued  on  the basis of  the   net   foreign  exchange earnings   for   a   much  lesser   value   on   a   smaller percentage.Therefore, the basis for the grant of  Additional Licences  which are  entitled to relaxation in import  under the  1988-91  Policy is different from the  basis  on  which Additional  Licences were granted under the 1978-79  policy. [243C, 245B-C,248A]      3.    The  petitioners  were  not  granted   Additional Licences  on the basis of net foreign exchange earnings  and they  have secured the Additional Licences on the  basis  of f.o.b. value of the exports, without taking into account the value  of goods imported by them for achieving the  exports. It cannot be said that the petitioners who have been granted Additional Licences under the 1978-79 Policy and the  Export Houses who were granted Additional Licences under the  1988- 91  Policy  are persons similarly  circumstanced.  Therefore the  petitioners cannot claim the same facilities that  have been  provided to Export Houses who are  granted  Additional Licences  under the 1988-91 Policy.  Hence they have  failed to make out a case for interference by this Court under                                                        235 Article 32 and consequently they cannot assail the  validity of Para 218(10) of the Import & Export Policy 1988-91.[245E, 243D, 245F, 249C, 248B]      4.  Export  Houses,  like  the  petitioners,  who  were granted  Additional Licences on the basis of order  of  this Court dated April 18, 1985 are not to be treated at par with Export Houses who are granted Additional Licences under  the Import  &  Export Policy prevalent at the  time  of  import. Import  of canalised items under Additional Licences  issued to the petitioners would be permissible if the import policy prevailing at the time of import permits them to import such items.   Therefore the rights  of the petitioners under  the Additional Licences issued to them would be governed by  the terms  of  the  Import  Policy prevailing  at  the  time  of import.[246A-B, 247E, 247H]      D. Naveenchandra & Co. Bombay & Anr. v. Union of  India JUDGMENT:      Raj  Prakash Chemicals Ltd. & Anr. v. Union of India  & Ors.,  [1986] 1 S.C.R. 448; Union of India v.  Godrej  Soaps Pvt . Ltd., [1986]3 S.C.R. 771; Union of India v.  Rajnikant Bros.,  Civil Appeal No. 1423 of 1984 decided on  18.4.1985; Indo Afghan Chamber of Commerce v. Union of India, [1986]  3 S.C.R 88, referred to.      B. Vijay Kumar & Co. etc. etc. v. Collector of  Central Excise and Customs, [1991] 1 Scale 33; held inapplicable.

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&      ORIGINAL  JURISDICTION: Writ Petition No. 459 & 460  of 1988.      (Under Article 32 of the Constitution of India).      Harish  N. Salve, S.V. Kamdar and M.N. Shroff  for  the Petitioners.      P.K.  Goswami,  Additional Solicitor  General,  Kailash Vasdev and Ms. A Subhashini for the Respondents.      The Judgement of the Court was delivered by      S.C.  AGRAWAL, J.  These petitions under Article 32  of the Constitution raise a common question as to the  validity of  sub-para (10) of para 218 of the Import & Export  Policy for the period April, 1988 to March, 1991.                                                        236      The  petitioners  in  both  these  writ  petitions  are partnership  firms carrying on business of import  of  rough diamonds  and  export  of cut and  polished  diamonds.   The Import  & Export Policy for the period April 1978  to  March 1979,  in  para  174, made provision for  grant  of  certain import facilities to Export Houses which were registered  in accordance  with the provisions of the said Policy.  One  of the  said facilities was grant of an Additional  licence  in terms  of  para 176 of the said Policy for an amount  to  be calculated  at one third the f.o.b. value of the exports  of select  products made by the Export House in the year  1977- 78.  The petitioners submitted application for  registration as  Export Houses and for grant of Export House  Certificate which  would  have  entitled  them  to  the  grant  of  such Additional   licence.    The  said   applications   of   the petitioners  were  rejected by the authorities on  the  view that  petitioners  had failed to diversify their  export  of "Other  Products" during the year 1977-78.  The  said  order refusing  the  Export  Certificate  was  challenged  by  the petitioners  by filing writ petitions under Article  226  of the  Constitution before the Bombay High Court.One of  those writ  petitions (filed by the petitioners in  writ  petition No.  460 of 1988 herein) was dismissed by a  learned  Single Judge  of the High Court and the said petitioners  filed  an appeal before a Division Bench of the High Court.  While the said  appeal  and  the other writ  petition  (filed  by  the petitioners viz. writ petition No. 459 of 1988 herein)  were pending  in the Bombay High Court, this Court decided  Civil Appeal  No.  1423  of  1984, Union  of  India  v.  Rajnikant Brothers,  and other connected matters by order dated  April 18,  1985,  wherein  it  was  observed  that  there  was  no requirement of diversification of exports as a condition for the  grant of Export House Certificates in theImport  Policy for the year 1978-1979, and the authorities were directed to issue  necessary Export Certificates for the  year  1978-79. In   that   order  this  Court  laid  down   the   following conditioned:          "Save  and  except  items  which  are  specifically          banned  under  the prevalent import policy  at  the          time  of import, the respondents shall be  entitled          to  import  all other items  whether  canalised  or          otherwise in accordance with the relevant rules". The writ petition and the appeal were decided by the  Bombay High Court in accordance with the aforesaid decision of this Court  in the case of Union of India v. Rajnikant  Brothers, (supra) and the High Court directed the authorities to grant Export  House  Certificates  to the  petitioners  under  the Import-Policy 1978-79 within three months.  While giving the said direction the High Court imposed a condition in                                                        237

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the same terms as laid down by this Court in its order dated April 18, 1985, referred to above.      While  construing the aforesaid direction contained  in its  order dated April 18, 1985, in Rajnikant Brothers  case (supra)  this  Court  has  held that  the  grantees  of  the Additional licences were not only prohibited from  importing items  which were excluded under the Export  Policy  1978-79 but  also  from importing items excluded  under  the  Import Policy  prevailing at the time of import and that  the  word "banned"  was  intended to take in terms which  were  banned altogether as well as items which were banned for import  by the  holder  of  an Additional licence.  (See:  Raj  Prakash Chemicals  Ltd.  & Anr. v. Union of India &  Ors.  [1986]  1 S.C.R.  448.   In Union of India v. M/s. Godrej  Soaps  Pvt. Ltd.  & Anr., [1986] 3 S.C.R. 771 this Court  construed  the words  ’whether  canalised or otherwise’  contained  in  the order  dated  April 18, 1985, passed in  Rajnikant  Brothers case  (supra) and it was observed that the Court  would  not know whether in the future  certain canalised items could be imported  directly by an Export House holding an  Additional licence and that the possibility of a policy being framed in the  future enabling an Export House holding  an  Additional licence  to directly import items which are  ‘non-canalised’ and also item which are  ‘canalised’ could not be ruled  out and it was in this light that the Court can be said to  have used the words "whether canalised or otherwise" in the order dated  April 18, 1985.  The matter was further clarified  by this  Court  in D.Navinchandra & Co. Bombay & Anr.  Etc.  v. Union  of  India & Ors., [1987] 2 S.C.R. 989,  wherein  this Court has observed:          "Analysing the said order, it is apparent, (1) that          the  importation that was permissible was of  goods          which  were  not  specifically  banned,  (2)   such          banning  must be under the prevalent import  policy          at the time of import, and (3) whether items  which          were canalised or uncanalised would be imported  in          accordance   with   the  relevant   rules.    These          conditions  had to be fulfilled.  The  Court  never          did  and could not have said that  canalised  items          could  be imported in any manner not permitted  nor          it  could  have  given  a  go-bye  to  canalisation          policy". (P. 1000)      In  accordance with the directions given by the  Bombay High Court the petitioners in writ petition No. 459 of  1988 herein  were granted the Export House Certificate  and  were also granted an Additional licence dated November 16,  1987. Similarly, the petitioners in                                                        238 writ petition No. 460 of 1988 herein were granted the Export House Certificate and an Additional licence dated August 31, 1987.  These licences  were valid for a period of 12  months and they contained the following endorsement:          "This   licence  in  valid  for  import  of   items          permissible  to Export Houses under the  Additional          Licence  category as per para 176 of Import  Policy          for the period 1978-79 excluding those items  which          were  banner in the policy for the  period  1978-79          and  those which have been specifically  banned  in          the prevailing Import Policy, 1985-88, pursuant  to          and  subject to the decision of the  Supreme  Court          dated  5.3.1986 in M/s. Raj Prakash Chemicals  case          civil  appeal No. 4978 of 1985; the decision  dated          15.5.1986  in the case of M/s. Indo-Afghan  Chamber          of  Commerce  writ petition No. 199  of  1986,  the          decision  dated 12.9.86 in the case of  M/s  Godrej

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        Soap  Pvt.  Ltd. civil appeal  No.  3418/1986;  the          decision  dated 12.9.1986 in the case of  M/s  Star          Diamonds Company of India in civil misc.  petitions          No.   20021-22  of  1986  in  civil   appeal    No.          2924/1984; and the decision dated 15.4.1987 in  the          writ  petition  No. 1483 of 1987 filed by  M/s.  D.          Naveen Chandra & Company. xxx" It  appears  that  the petitioners were  not  able  to  make imports  under the said Additional licences till  March  31, 1988.   With  effect from April 1, 1988, the  Government  of India  issued  the revised Import & Export  Policy  for  the period  April,  1988 to March 1991.   The  Import  &  Export Policy   1988-1991  also  contains  in  para  214  and   215 provisions  for  grant  of  Additional  licences  to  Export Houses.   In para 215 of the said Policy certain  additional facilities  have  been  given in the matter  of  imports  by Export  Houses under Additional licences issued to them.  In sub-para(4) 215 it has been provided as under:          "(4)  Additional licences issued to  Export  Houses          will also be valid for the import of the  following          items  upto  10% (upto 15% in the case  of  Trading          Houses) of the value of the licence for:-          (i) Import of technical designs, drawings and other          technical  documentation for a value not  exceeding          Rs. 10 lakhs in the case of Export Houses, and  Rs.          25 lakhs in the case of Trading Houses;                                                        239          (ii)  import  of items appearing  in  Appendices  3          Part-A,3  Part-B  and  5  Part-A  subject  to   the          following conditions:          (a) that the c.i.f. value of a ‘single item’  shall          not exceed 10% of the flexibility in value terms of          Rs.10 lakhs, whichever is less:          (b)  where the value for import of a ‘single  item’          on  the basis of 10% as at (a) above, works out  to          less   than  Rupees  one  lakh,  import  would   be          permitted  upto a value of Rs. 1 lakh, provided  it          is  within the overall flexibility allowed  on  the          licence: and          (iii)  import of non-OGL capital goods (other  than          those  appearing  in Appendices 1 Part-A  and  8)          without  indigenous clearance, subject to the  same          conditions as stipulated at (ii) above, within  the          overall   flexibility  allowed  to   Export/Trading          Houses". Paragraphs  217  and  218 of the  said  Policy  provide  for transitional  arrangements.  In para 217, it  is  prescribed that Export Trading House Certificates issued prior to April 1,  1988  would continue to be valid till the  date  of  the expiry  and  the Export House Trading House  can  apply  for fresh   certificates,   if  they  fulfil   the   eligibility conditions laid down in the policy and in cases where  these Certificates  are  expiring  on 31st March,  1988,  and  the applicants  do  not fulfil the  eligibility  conditions  for recognition laid down under the revised Policy,  recognition would be granted for one year only if they fulfil conditions for renewal of these Certificates as laid down in the Import Policy,  1985-88.   Para  218 of the said  Policy  reads  as under:          "218.  (1)  Where  the  applications  from   Export          Houses/Trading Houses for Additional licences  have          not   been  disposed  of  by  31st  March  of   the          proceeding licensing year, the rate of  entitlement          will   be  the  same  as  permissible  during   the          licensing  year to which the application  pertains,

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        but  the  items to be allowed will be  as  per  the          Import Policy in force on the  date of issue of the          licence.            (2)  Additional licences already issued prior  to          1.4.1988 shall continue to be ‘non-transferable’.            (3)   The  Additional licences  issued  prior  to          1.4.1988                                                        240          shall cease to be valid for import of items of  raw          materials, components and spares which appeared  in          Parts  I  and II of List 8, Appendix  6  of  Import          Export Policy, 1985-88, but are not now covered  by          Part I of List 8, Appendix 6 of this Policy.  These          licences will also cease to be valid for the import          of  items  of  capital  goods  which  appeared   in          Appendix 1 Part-B of Import Export Policy,  1985-88          but  are now covered by Appendix 1 Part-B  of  this          Policy.             (4)   The Additional licences issued to  Trading          Houses  prior to 1.4.1988 will cease to  the  valid          for   the  import  of  items  which   appeared   in          Appendices  3  and 5 Part-A  of  the  Import-Export          Policy,  1985-88 but do not appear in Appendices  3          and 5 Part-A of this Policy.             (5)    Additional  licences  issued  to   Export          Houses/Trading Houses prior to 1.4.1988 shall cease          to be valid for import of items of spares appearing          in  Appendices  2,3,  5 Part-A, 8 and  10  of  this          Policy.             (6)  Notwithstanding the provisions contained in          sub paras (3), (4) and (5) above, the  restrictions          will  not apply to the extent the  licence  holders          have  already made firm commitments by  irrevocable          Letters  of Credit opened and  established  through          authorised  dealers in foreign exchange before  1st          April,  1988 but any extension of these letters  of          credit made after 31st March, 1988 shall be treated          as ‘fresh commitments’.             (7)    Additional  licences  issued  to   Export          Houses/Trading  Houses prior to 1.4.1988 will  also          be valid within their overall value, for import  of          raw  materials, components, consumables and  spares          appearing  in Appendix 6, List 8, Part -A  of  this          Policy.   Similarly,  such licences  will  also  be          valid  for  import of items of  capital  goods  now          covered by Appendix 1, Part-B of this Policy within          their overall value.             (8)  REP licences held by Export  Houses/Trading          Houses  and  already endorsed  prior  to  1.4..1988          shall  cease  to be valid for import  of  any  item          which could be imported under Open General  Licence          under the Import-Export Policy, 1985-88 but are  no          longer so in this Policy.                                                        241             (9)    Additional  licences  issued  to   Export          Houses/Trading  Houses  after 1.4.1988  on  exports          made  during  1986-87 or earlier periods,  will  be          ‘non-transferable’.   These licences will be  valid          for import of the items appearing in Part-I of List          8, Appendix 6 of this Policy.  These licences  when          issued  to Trading Houses, will also be  valid  for          import of the items appearing in Appendices 3 and 5          Part-A  of this Policy, subject to  the  conditions          laid  down  in this regard,  in  the  Import-Export          Policy, 1985-88.

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           (10)   Additional  licences  issued  on   Export          Houses/Trading Houses prior to 1.4.1988, or  issued          after  1.4.1988 on exports made during  1986-87  or          earlier  periods,  will  not be  eligible  for  the          flexibilities  in  the  import  of  items  of   raw          materials,  components and consumables  covered  by          Appendices  3  and 5 Part-A and  items  of  non-OGL          capital   goods  (other  than  those   covered   by          Appendices  1  Part-A and 8) available  under  this          Policy.   However, these licences will be  eligible          for  the endorsement (if not already endorsed)  for          the  import  of non-OGL capital goods  (other  than          those  covered  by Appendices 1 Part-A  and  8)  as          allowed against such licences in the Import Policy.          1985-88,  subject  to  the  conditions  laid   down          therein  provided the items sought to  be  imported          against  such  licences  continued to  be  non  OGL          (other  than those covered by Appendices 1  Part  A          and 8) under this Policy".      The  grievance of the petitioners is confined  to  sub- para  (10)  of  para 218 which  lays  down  that  Additional licences  issued  to Export Houses/Trading Houses  prior  to April,  1, 1988, or issued after April 1, 1988,  on  exports made during 1986-87 or earlier periods, will not be eligible for  the  flexibilities  in  the  import  of  items  of  raw materials, components and consumables covered by  Appendices 3 and Part-A, and items of non-OGL capital goods (other than those covered by Appendices 1 Part-A 8) available under  the revised Policy.  Appendix 3 Part-A relates to raw materials, components,  consumables, tools and spares (other than  Iron and Steel and Ferro-Alloys) and part-B of the said  Appendix deal  with raw materials (Iron and Steel and  Ferro-Alloys). Part-A  of Appendix 5 contains the list of items  import  of which  is  canalised through public sector agencies.   As  a result of the aforesaid provision contained in sub-para (10) of the para 218, the petitioners who were granted Additional licences   prior  to  April  1,  1988,  cannot   avail   the flexibilities in import of items granted under                                                        242 clauses  (ii) and (iii) of sub para (4) of para 215  of  the Import Policy 1988-1991.      On behalf of the petitioners it has been urged by  Shri Salve that sub-para (10) of para 218 of the Import &  Export Policy  1988-1991 arbitrarily discriminates  between  Export Houses who were issued Additional licences prior to April, 1 1988, and Export Houses who were issued Additional  licences on  or after April 1, 1988 in as much as the  Export  Houses who  were issued Additional licences prior to April 1, 1988, on  the  basis  of exports made during  1986-87  or  earlier periods  have  been denied the facilities  which  have  been given  to Export Houses who were issued Additional  licences on or April 1, 1988, on the basis of exports made during the period  subsequent to 1986-87.  It has been  submitted  that all Export houses who have been granted Additional  licences constitute  a  single class and that there is no  basis  for classifying such Export Houses into two different categories on  the  basis  of the date of issuance  of  the  Additional Licences  or  on  the basis of the  period  of  the  exports against which such licences have been issued and that such a classification has no connection whatsoever with the  object sought to be achieved by the Import & Export Policy 1988-91.      On  behalf of the respondents it has been submitted  by the  learned Additional Solicitor General that there  is  no similarity  between  the petitioners who have  been  granted Additional  licences  on  the basis of  their  exports  made

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during  the  period  1977-78 in accordance with  the  Import Policy  1978-79 and the Export Houses who would  be  granted Additional  licences  on or after April 1, 1988,  under  the Import & Export Policy 1988-91 inasmuch as the conditions of eligibility  for  grant of such licences and  the  value  of licences under the Import & Export Policy 1978-79 were quite different from those contained in the Import & Export Policy 1988-91.   It  has  been urged that under  Import  &  Export Policy  1978-79 Additional licences were to be given on  the basis  of one third of the f.o.b. value of the exports  made in  1977-78  whereas under Import &  Export  Policy  1988-91 Additional  licences  are to be given on the  basis  of  not foreign exchange earnings from the exports actually made and the  value of such Additional licence is only 10 to  12%  of the net foreign exchange earnings.      As  regards  the  right to  equality  guaranteed  under Article 14 the position is well settled that the said  right ensures  equality amongst equals and its aim is  to  protect persons  similarly placed against discriminatory  treatment. It means that all persons similarly circumstan-                                                        243 ced shall be treated alike both in privileges conferred  and liabilities  imposed.  Conversely discrimination may  result if  persons dissimilarly situate are treated equally.   Even amongst  persons  similarly situate  differential  treatment would  be permissible between one class and the  other.   In that  event it is necessary that the differential  treatment should  be  founded  on an  intelligible  differentia  which distinguishes  persons or things that are  grouped  together from others left out of the group and that differential must have a rational relation to the object sought to be achieved by the statute in question.      The  petitioners, in order to successfully  invoke  the right guaranteed under Article 14 of the Constitution,  will have to establish that they and the Export Houses which were issued  Additional licences under the Import Policy  1988-91 are similarly situate.  A close examination of the Import  & Export Policy 1978-79 under which the petitioners have  been granted  the  Additional licences and the  Import  &  Export Policy  1988-91  shows  that there  is  material  difference between  the  conditions for grant  of  Additional  licences under Import Policy 1978-79 and the conditions for grant  of such licences under the Import Policy 1988-91 and it  cannot be   said  that  the  petitioners  who  have  been   granted Additional licences under the Import & Export Policy 1978-79 and the Export & Import Policy 1988-91 are persons similarly circumstanced.      Under  the Import & Export Policy 1978-79,  there  were two  requirements for grant of Additional license:  one  was the  condition  as  to eligibility for  registration  as  an Export House and grant of Export House Certificates; and the other  was the basis for issuing the Additional licences  to Export   House   which  had  been   granted   Export   House Certificates.   In Para 165 of the said  Policy  eligibility for grant of Export House Certificates was to be  determined on  the basis of the export actually made in the three  year base period 1975-76, 1976-77 and 1977-78 and in para 166  it was laid down that annual average f.o.b. value of exports in the prescribed base period of select products should not  be less than Rs. One crore or those of non-select products  Rs. Five  crores,  but in the case of a small scale  unit  or  a consortium of small scale units, the said minimum limit  was reduced to Rs. 25 lakhs for select products and Rs. 2 crores for non select products.  In para 176 of the said Policy  it was  laid down that the value of the Additional licences  to

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be  granted for 1978-79 would be calculated at one third  of the  f.o.b. value of the export of select products  made  in 1977-78  and  manufactured by the small  scale  and  cottage industries                                                   244 plus  5%  of  the f.o.b. value of other  exports  of  select products  made in the same year.  In other words, under  the Import  &  Export Policy of 1978-79 the basis for  grant  of Export  House  Certificate as well as  grant  of  Additional licences  to  Export  Houses was the  f.o.b.  value  of  the exports.      Under the Import & Export Policy 1988-91 provision with regard  to eligibility for the grant of Export  House/Trading House Certificate is contained in para 212 which  prescribed that  the said eligibility shall be determined on the  basis of  the net foreign exchange (NEF) earnings from the  export actually  made in preceding three licensing years termed  as ’the  Base  period’.  The expression ’net  foreign  exchange earnings’  has  been defined as the total  f.o.b.  value  of admissible exports minus the c.i.f. value of Advance/Imprest (including  Diamond Imprest/DTC  Imperest)  Licences/Import- Export  Pass Books (excluding Special-Imprest  Import-Export Pass Book) if any issued, and the REP licences issued or the eligibility  thereto, during the preceding  three  licensing years.   Among the conditions for eligibility for  grant  of such  Certificates are that the annual average NFE  earnings in the prescribed base period should not be less than Rs.  2 crores in the case of Export House and Rs. 10 crores in  the case  of Trading Houses and the NEF earnings in none of  the three  years of the base period should be less than  25%  of the   minimum   average  NFE   earnings   prescribed.    For determining the eligibility of the products manufactured  by small scale and cottage sector industries are to be reckoned at  twice the actual NFE earnings.  In para 215 of the  said Policy,  it is providedthat the Export  House/Trading  House would be eligible to Additional licences on the basis of the admissible exports made in the preceding licensing year  and that  the value of these licences will be calculated at  10% of  the NFE earnings on the total eligible exports  made  in the preceding licensing year and that this percentage  shall be  12%  in cases where an Export/Trading House is  able  to achieve  a minimum growth of 10% in term of NFE  realisation in the previous year, over and above the year preceding  the same.  This indicates that under the Import & Export  Policy 1988-91 for the purposeof grant of Export House  Certificate as  well as Additional licences the emphasis is on  the  net foreign  exchange earnings made by the Export  House,  which means that the value of the imports made by the Import House for  the purpose of exporting goods is to be  excluded  from the  f.o.b. value of exports.  That apart even the value  of the Additional licences which can be issued under the Import & Export Policy 1988-91 on the basis of NFE earnings is much less  viz. 10% as against 33.33% of f.o.b. value  under  the Import & Export Policy 1978-79.  The said 10% value can be                                                        245 increased to 12% in cases where the Export House is able  to achieve  a minimum growth of 10% in terms of realisation  in the  previous  year, over the above the year  preceding  the same.      The  aforesaid examination of the provisions  contained in  the  Import  & Export Policy 1978-79 and  the  Import  & Export  Policy  1988-91  shows that while in  the  Import  & Export  Policy 1978-79 the emphasis was only on  the  f.o.b. value  of exports without taking into account the  outgo  of foreign  exchange  in  importing  the  goods  required   for

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achieving  the  export  by an Export  House  and  Additional licences  were  granted for a much larger amount at  a  high percentage on the basis of the f.o.b. value of the  exports, in  the  Import  & Export Policy 1988-91  there  is  a  more realistic  appraisal of actual benefit to country’s  economy by  the  exports  by taking into  account  the  net  foreign exchange  earnings after deducting the value of the  imports and  additional licences are issued on the basis of the  net foreign  exchange  earnings  for a much lesser  value  on  a smaller  percentage.   The  petitioners  who  were   granted Additional  licences to the extent of 33.33% of  the  f.o.b. value  of  the  exports made them during  the  year  1977-78 cannot,   therefore,  be  said  to  be   persons   similarly circumstanced as Export House who exported goods in the year 1987-88  and  in  subsequent  years  and  obtain  Additional licences  for  a much lesser value under the  Import  Policy 1988-91  on the basis of the net foreign exchange  earnings. The  provisions  conferring  flexibility in  the  matter  of imports contained in sub-para (4) of para 215 of the  Import & Export Policy 1988-91 are intended to give an incentive to Export Houses to increase the exports in a way as to enhance the  net  foreign  exchange earnings of  the  country.   The petitioner were no granted Additional licences on the  basis of  net foreign exchange earnings and they have secured  the Additional licences on the basis of the f.o.b. value of  the exports, without taking into account the value of the  goods imported  by  them for achieving the exports.   They  cannot claim  to be entitled to the same facilities that have  been provided  to  Export  Houses  who  are  granted   Additional licences under the Import & Export Policy 1988-91.      Shri  H.N. Salve, has, however, urged that in  view  of the  decision  of this Court in D. Navinchandra &  Co.  case (supra)  the  Export  Houses  who  were  granted  Additional licences under the Import & Export Policy 1978-79 have to be treated  at  par with Export Houses who  have  been  granted Additional licences under the Import & Export Policy for the subsequent years and since there has been relaxation in  the matter  of policy of canalisation of imports under  sub-para (4) of                                                        246 para 215 in respect of Additional licences granted to Export Houses  under  the  Import  &  Export  Policy  1988-91,  the petitioners  are also entitled to a similar relaxation.   We are   unable   to  agree  with  this  contention.    In   D. navinchandra & Co. case (supra) this Court has not laid down that  Export Houses, like the petitioners, who  are  granted Additional  licences on the basis of the order  Dated  April 18,  1985, are to be treated at par with Export  Houses  who are granted Additional licences under Import & Export Policy prevalent  at the time of import.  In that case this  Court, while  explaining  the background in which the  order  dated April 18, 1985, was passed, has observed:           "It has to be borne in mind that basic  background          under which the Rajnikant’s decision was  rendered,          the  Export  Houses had been refused  Export  House          Certificates  because  it was  insisted  that  they          should have diversified their export and that was a          condition for the grant or entitlement of an export          house  certificate.  it was found and it is  common          ground  now that was wrong.  Therefore,  the  wrong          was undone.  Those who had been denied Export House          Certificates on that wrong ground were put back  to          the  position as far as it could be if  that  wrong          had   not  been  done.   To  do  so,   the   Custom          authorities and Govt. authorities were directed  to

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        issue  necessary Export House Certificates for  the          year 1978-79 though the order was passed in  April,          1985.   This was a measure of restitution, but  the          Court while doing so, ensured that nothing  illegal          was done." (P.1000)  After  referring to the decision in Raj  Prakash  Chemicals Ltd. (supra) this Court has stressed:           "The items had to pass to two tests, firstly, they          should have been importable under the import policy          1978-79  and  secondly they should also  have  been          importable under the import policy 1985-88 in terms          of the Order dated 18th April, 1985, and if one may          add,  in such terms ’in accordance with the  import          rules’  whether  canalised or not  canalised."  (P.          1001) This Court has gone on to emphasise:           "It  must  be emphasised that in the  Order  dated          18th  April, 1985, this Court did not do away  with          canalisation.  That                                                        247           was   not  the  issue  before  this  Court.    The          expression ’whether canalised or not canalised’ was          to  include  both.   This Court did  not  say  that          canalised  items could be imported directly by  the          importers  ignoring the canalisation process.   We          are of the opinion that this Court did not say that          canalisation  could be ignored.  That was  not  the          issue.  High public policy, it must be  emphasised,          It involved in the scheme of canalisation."  (Pages          1001-2) Shri Salve has placed reliance on the following observations of this Court in this case:           "  Canalised  items  are  those  items  which  are          ordinarily  open  to import only through  a  public          sector   agency.   Although  generally  these   are          importable  through public section agencies, it  is          permissible  for  any import policy to  provide  an          exception  to  the  rule and  to  declare  that  an          importer  might import a canalised  item  directly.          It  is in that sense and that sense only  that  the          Court could have intended to define the entitlement          of  diamond  exporters.  They would be  entitled  to          import  items  which were canalised or not  if  the          import  policy  prevailing at the  time  of  import          permitted  them to import items falling under  such          category.   This was also viewed in that  light  in          the  case  of  Indo  Afghan  Chambers  of  Commerce          (supra)." These   observations  only  indicate  that  import  of   the canalised  items under Additional licences issued to  Export Houses,  like the petitioners, would be permissible  if  the import policy prevailing at the time of import permits  them to import such items.  In other words it would depend on the terms of the import policy prevailing at the time of import. The decision in Indo Afghan Chambers of Commerce v. Union of India, [1986] 3 S.C.R. 88 to which reference has been  made, is  also  to the same effect.  In fact case  Export  Houses, like  the petitioners, wanted to import to Dry Fruits  under the  Additional licences issued to them.  Under  the  Import POLIcy  1985-88 prevailing at the time of such  import,  the import of Dry Fruits was permissible only by dealers engaged in  the  trade of stocking and selling Dry Fruits.   It  was held  that the Export Hoses could not import Dry  Fruits  in view  of  the said restriction placed in the  Import  Policy 1985-88.   The decision of this Court in D.  Navinchandra  &

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Co.   case  (supra)  reiterates  that  the  rights  of   the petitioners  under  the Additional licences issued  to  them would  be  governed  by  the  terms  of  the  import  policy prevailing at the time of import.                                                        248      Here we find that in the Import & Export Policy 1988-91 there has been relaxation to a limited extent in respect  of import by Export Houses who are granted Additional  licences under  the said Policy on the basis of their exports  during that period 1987-88 and subsequent periods.  Since the basis for  the grant of Additional licences which are entitled  to this  relaxation  is  different  from  the  basis  on  which Additional  licences  were granted to the  petitioners,  the petitioners cannot claim the benefit of the same  relaxation and assail the validity of sub-para (10) of para 218 of  the Import & Export Policy 1988-91.      Shri  Salve  has invited our attention  to  the  Import Licence  dated  November 21, 1988 issued in favour  of  M/s. Suraj Diamonds Industries Pvt. Ltd wherein it is stated that this licence is valid for import of items as per para 215 of Import    &    Export    Policy    1988-91    subject     to restrictions/conditions  laid  down therein.   It  has  been submitted  that this licence has also been issued under  the Import  & Export Policy 1978-79 on the basis of  the  f.o.b. value of exports.  It has been urged that the petitioners as well  as  the  said license,  namely,  M/s.  Suraj  Diamonds Industries  Pvt.  Ltd.  are persons  similarly  situate  and whereas  M/s. Suraj Diamonds Industries Pvt. Ltd. have  been granted an Additional licence whereunder, it is  permissible to  import  items  as per para 215 of the  Import  &  Export Policy  1988-91,  the said facility has been denied  to  the petitioners and that the petitioners have been subjected  to arbitrary   and   hostile   discrimination.    The   learned Additional  solicitor  General  had  pointed  out  the  said licence  to  M/s. Suraj Diamonds Industries  Pvt.  Ltd.  was used under a mistake and the said mistake has been rectified on 2nd December, 1988, i.e., within 10 days of the issue  of the  said  licence.  In view of the fact  that  the  licence issued  in  favour  of M/s. Suraj  Diamonds  Industries  was issued  under  a  mistake  and the  said  mistake  has  been rectified, it cannot be said that the petitioners have  been subjected  to hostile discrimination vis-a-vis other  Export House similarly situate.      Before  we  conclude, we may take note  of  the  recent decision  of  this  Court in B. Vijay Kumar &  Co.  etc.  v. Collector of Central Excise and Customs, [1991] 1 Scale 33. The  appellants therein had been granted  Additional  Import licence  in pursuance of this Court’s order dated April  18, 1985  in Rajnikant Brothers, case (supra) and  had  imported canalised items under the said licence.  The goods were  not cleared  by  the customs authorities and  the  Collector  of Customs  imposed penalty and passed orders for  confiscation of  the goods and permitted the appellants to take  delivery of good on payment of redemption fine.  The Customs,  Excise & Gold (Control) Appellate Tri-                                                        249 bunal (hereinafter referred to as ’the Appellate  Tribunal’) on  appeal,  while  upholding the  order  of  imposition  of redemption  fine, set aside the order of Collector  imposing penalty.  In view of the special facts and circumstances  of the case and specially having regard to the findings of  the Appellate  Tribunal that the appellants  imported  canalised items  bona  fide, this Court set aside the  orders  of  the Collector   and  the  Appellate  Tribunal  with  regard   to confiscation  of  goods  and  imposition of redemption  fine

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without dealing with the submissions of learned counsel  for the parties with regard to the interpretation and the effect of  the  earlier  judgments of this  Court  in  Raj  Prakash Chemicals  case  (supra), Indo-Afghan case  (supra),  Godrej Soap  case (supra) and D. Navinchandra & Co.  case  (supra). This  decision is, therefore, a decision based on the  facts of that particular case only.      As a result of the aforesaid discussion it must be held that  the  petitioners have failed to make out  a  case  for interference   by  this  Court  under  Article  32  of   the Constitution.      As  indicated  earlier,  the  licences  issued  to  the petitioners were valid for a period of twelve months and the said  period has  expired during the pendency of these  writ petitions.   By  order  dated  may  3,  1988,  this   Court, whiledirecting  that notice be issued had  further  directed that  the  matter be listed on July 20, 1988, and  in  these circumstances this Court did not pass any interim order  for stay.   The writ petitions could not, however, be  heard  as per  the  aforesaid directions.  Since the matter  has  been pending in this Court and the Additional licences issued  to the petitioners have expired in the meanwhile we consider it appropriate that the period of validity of the said licences should  be  extended so that the petitioners can  avail  the same  and  are  able to import the goods  which  can  be  so imported   under  the  prevailing  Import  Policy.  It   is, therefore,  directed  that  the period of  validity  of  the Additional   licences   that  have  been  granted   to   the petitioners  under  Import & Export Policy  1978-79  may  be extended  by  six months from the date  of  such  extension. Subject  to the aforesaid observations, the  writ  petitions are  dismissed.   The  parties are left to  bear  their  own costs. T.N.A.                                    Petitions dismissed.                                                        250