Whether importer liable to take registration under the Insecticides Act for import of boric acid for industrial use also?

Case:-MALIAKKAL INDUSTRIAL ENTERPRISES VERSUS UNION OF INDIA

Citation:-2013(290) E.L.T. 330 (Ker.)

Brief Facts:-In all these writ petitions, the same issue arises as to whether by a condition in the import policy of the Government of India, the respondents can insist upon the petitioners in these writ petitions to obtain a registration under the Insecticides Act, 1968, as a condition for obtaining a licence to import of boric acid, if such import is not for the purpose of using the same as an insecticide under the Insecticides Act, 1968, and as to whether such a condition in the import policy is legally sustainable.

The facts are in a very narrow compass. Boric acid is a substance, which is used as an insecticide and also for industrial and other purposes. The petitioners use imported boric acid not for use as an insecticide but for other manufacturing purposes. By the export-import policy, as a condition for grant of licence to import boric acid, the petitioners are obliged to obtain a registration for boric acid under the Insecticides Act, 1968, from the authorities under the Insecticides Act, 1968. That condition is prescribed in the export-import policy by the Central Government by virtue of the powers conferred on them under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992. It is pursuant to the said power, that the Central Government has prescribed the condition impugned in these writ petitions for the purpose of issuing import licence to the petitioners for import of boric acid, for implementing which, the circulars impugned in these writ petitions have been issued. These different writ petitions relate to periods before and after the amendment of the import policy. But both pre-amendment and post-amendment policies contain the same condition prescribing a registration under the Insecticides Act, 1968, as a condition for applying for licence to import boric acid.

Appellant’s Contention:-The contention of the petitioners is that although Section 9 of the Insecticides Act, 1968, prescribes a registration for substances used as insecticide for the purpose of import or manufacture of that insecticide, under Section 38 of the Act, any substance specified in the Schedule to the said Act, if such substance, is intended for the purposes other than as an insecticide is exempted from the provisions of the said Act and therefore when substances included in the Schedule are imported for use otherwise than as an insecticide, registration is not required under Section 9. Boric acid is included in the Schedule of the Insecticides Act, 1968. If the import of boric acid is for a purpose other than as an insecticide, registration of the same under the Insecticides Act, 1968 is not necessary and exempted from. The petitioners submit that, therefore, the Central Government cannot put a condition in the import policy insisting on the petitioners getting a registration under the Act for enabling them to apply for licence to import boric acid. According to them, the export-import policy being a subordinate legislation and the Insecticides Act, 1968 being a plenary legislation, the subordinate legislation cannot violate the provisions of the plenary legislation insofar as under the plenary legislation, viz., the Insecticides Act, 1968, when boric acid is used for purposes other than as an insecticide, no registration is necessary or is contemplated. The petitioners rely on the decision of the Supreme Court in Kerala Samsthana Chethu Thozhilali Union v. State of Kerala and Others - (2006) 4 SCC 327, in support of that contention.

Respondent’s Contention:-The learned Standing Counsel for the Central Board of Excise and Customs would seek to controvert the contentions of the petitioners with the support of a counter affidavit filed by the respondents. According to the respondents, if at all there is a plenary legislation relevant in this case, that plenary legislation is the Foreign Trade (Development and Regulation) Act, 1992, which authorises the Central Government to lay down import and export policy and going by the various decisions of the Supreme Court on the subject, this Court not being the expert in the field, cannot look into the validity of such condition prescribed in the export-import policy. The learned Standing Counsel relies on the following decisions on the subject:
1. Subhash Photographics and Others v. Union of India and Others - 1993 Suppl. (3) SCC 323 = 1993 (66)E.L.T. 3 (S.C.),
2. M/s. D. Navinchandra and Co., Bombay and Others v. Union of India and Others - (1987) 3 SCC 66 = 1987 (29)E.L.T. 492 (S.C.), and
3. Liberty Oil Mills and Others v. Union of India and Others, (1984) 3 SCC 465.
Therefore, he would contend when the export-import policy prescribes a condition that for obtaining a licence for importing boric acid, the petitioners should get a registration under the Insecticides Act, 1968, there is nothing violative of the fundamental rights of the petitioners under the Constitution of India in prescribing such a condition and, therefore, they cannot challenge the said condition. It is submitted that any person desiring to import or manufacture boric acid, is bound to obtain from the authority under the Insecticides Act, 1968, a registration of boric acid as per Section 9 of the Act. Boric acid being an insecticide, the petitioners can certainly apply and obtain registration under the Insecticides Act, and as such, the condition prescribed in the export-import policy obliging the petitioners to get registration under Section 9 of the Insecticides Act, 1968, does not in any way violate the fundamental rights of the petitioners is the contention raised.

Reasoning of Judgment:-The High Court have considered the rival contentions in detail.

The powers of the Government to lay down export-import policy under the Foreign Trade (Development and Regulation) Act, 1992, cannot be disputed by anybody. What the Tribunal has to consider here is as to whether the specific condition requiring the petitioners to obtain a registration under the Insecticides Act, 1968 for importing boric acid to be used for purposes other than as an insecticide, is in any way unsustainable. Section 9(1) of the Insecticides Act, 1968 reads thus:
“9. Registration of insecticides. - (1) Any person desiring to import or manufacture any insecticide may apply to the Registration Committee for the registration of such insecticide and there shall be separate application for each such insecticide :
Provided that any person engaged in the business of import or manufacture of any insecticide immediately before the commencement of this section shall make an application to the Registration Committee within a period of seventeen months from the date of such commencement for the registration of any insecticide which he has been importing or manufacturing before that date :
Provided further that where any person referred to in the preceding proviso fails to make an application under the proviso within the period specified therein, he may make such application at any time thereafter on payment of a penalty of one hundred rupees for every month or part thereof after the expiry of such period for the registration of each such insecticide.

xxx xxx xxx xxx”

Section 38 of the Insecticides Act, 1968 reads thus :
“38. Exemption. - (1) Nothing in this Act shall apply to -
(a) the use of any insecticide by any person for his own household purposes or for kitchen garden or in respect of any land under his cultivation;
(b) any substance specified or included in the Schedule or any preparation containing any one or more such substances, if such substance or preparation is intended for purposes other than preventing, destroying repelling or mitigating any insects, rodents, fungi, weeds and other forms of plant of animal life not useful to human beings.
(2) The Central Government may, by notification in the Official Gazette, and subject to such conditions, if any, as it may specify therein, exempt from all or any of the provisions of this Act or the rules made thereunder, any educational, scientific or research organization engaged in carrying out experiments with insecticides.”

Boric acid is one of the substances included in the Schedule to the Insecticides Act, 1968. Therefore, nobody can dispute the proposition that if boric acid when intended for purposes other than as an insecticide, the provisions of the Act will not apply to the same. Both the Foreign Trade (Development and Regulation) Act, 1992 and the Insecticides Act, 1968, are plenary legislations operating in different fields. The export-import policy is certainly a subordinate legislation under the former plenary legislation and therefore what is relevant to consider is as to whether the said subordinate legislation is in conformity with the plenary legislation, viz., the Insecticides Act.

In the decision of the Supreme Court in Kerala Samsthana Chethu Thozhilali Union’s case (supra), the Kerala Government, after banning the sale of arrack in the State, in exercise of their Rule making power under the Abkari Act, imposed a condition by a subordinate legislation requiring the licensees of toddy shops to employ at least one abkari employee, who has lost employment on account of ban of sale of arrack, as a condition of the licence for vending toddy. The Kerala High Court upheld the condition, which was taken up in appeal before the Supreme Court. While setting aside that condition of the licence, in Paragraph 17 of the judgment, the Supreme Court held thus :

“17. A rule is not only required to be made in conformity with the provisions of the Act where under it is made, but the same must be in conformity with the provisions of any other Act, as a subordinate legislation cannot be violative of any plenary legislation made by Parliament or the State Legislature.”

Tribunal was of the opinion that the said law laid down by the Supreme Court squarely applies to the petitioners’ case also insofar as the subordinate legislation in the form of the condition in the export-import policy is clearly violative of Section 38 of the plenary legislation, viz., the Insecticides Act, 1968.

Apart from that, the condition violates the fundamental rights of the petitioners under Article 14 of the Constitution of India. The authorities under the Foreign Trade (Development and Regulation) Act, 1992, do not have any direct control over the authorities under the Insecticides Act, 1968. They have no powers to direct the authorities under the Insecticides Act, 1968 to do something, which the authorities under the Insecticides Act, 1968 are not obliged to do as per the provisions of the Insecticides Act, 1968. If boric acid is imported for the purposes other than for use as an insecticide, the authorities under the Insecticides Act, 1968, are not legally obliged to entertain an application for registration under Section 9 of the Act at the instance of the petitioners. The situation being so, by the impugned condition in the export-import policy, what the respondents are requiring the petitioners to do is to fulfill a condition, which is impossible for them to fulfill, insofar as if they apply for registration under the Insecticides Act, 1968, for the boric acid to be imported by them for the purposes other than as an insecticide, the authorities under the Insecticides Act, 1968, can very well refuse to consider the same relying on Section 38 of the Act, against which the petitioners have no remedy. The imposition of such a condition on the petitioners, which the petitioners are incapable of complying with practically, is certainly arbitrary and unreasonable and, therefore, is violative of the fundamental rights of the petitioners under Article 14 of the Constitution of India. The decisions relied upon by the learned counsel for the Central Board of Excise and Customs, in my opinion, cannot govern the issue to any extent, since they do not lay down any different law. In fact, it is settled law that if the export-import policy themselves impinge on the fundamental rights of a citizen of India, the same can be challenged appropriately. According to Tribunal, for valid imposition of such a condition on importers, Section 38 of the Insecticides Act, 1968 should have been qualified by words like, “subject to provisions of the export-import policy”, “except otherwise provided for in any other law for the time being in force”, which is not the case here. Or else, an appropriate provision should be made in the Foreign Trade (Development and Regulation) Act, 1992, or at least in the import policy, making it obligatory on the authorities under the Insecticides Act, to consider applications for registration of boric acid, which is not intended for use as an insecticide. In the above circumstances, it was held that the impugned condition in the import policy requiring the petitioners to take out a registration under the Insecticides Act, 1968, for applying for licence to import boric acid is arbitrary and unsustainable and is liable to be quashed.

Decision:-Appeal is allowed.

Comment:-The essence of this case is that a subordinate legislation cannot override the provisions of the primary legislation on the issue. In the present case, when the importer of pesticides for other purposes is not liable for taking registration under the Insecticides Act, he cannot be compelled to take registration for complying with the export-import policy framed by the DGFT.

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