K.RAVICHANDRABAABU,J. - (1.) The petitioner is aggrieved against the order of the first respondent dated 02.11.2018, wherein and whereby the appeal preferred by the petitioner challenging the order of the second respondent in refusing to grant P5 license under Ammonium Nitrate Rules 2012 was rejected. Consequently, the petitioner seeks for a direction to the second respondent to issue the P5 license to the petitioner.
(2.) The case of the petitioner, in short, is as follows: The petitioner firm has been in the business of trading in Ammonium Nitrate falling under Chapter 31 of both Customs and Central Excise Tariff Acts. Apart from sourcing the goods indigenously, the firm also imported the goods on payment of appropriate duties of customs duty. The petitioner sell the subject goods mostly to buyers who are basically engaged in agricultural operations/activities. The petitioner started importing the goods from the year 2012 both through the Port of Vishakhapatnam and Chennai. The goods were assessed and cleared by the customs by classifying the same under Customs Tariff Heading 3102 and extended the benefit of Nil rate of Basic Customs Duty and full exemption from payment of the Countervailing Duty in terms of Notification No.12/2012-CE dated 17.03.2012. The Government of India had introduced a new rule known as Ammonium Nitrate Rules. For storing and trading Ammonium Nitrate, one should possess a license in form P3. Accordingly, the petitioner made necessary application before the second respondent. The petitioner was granted P3 license dated 03.12.2014. For any import of Ammonium Nitrate, one should be in possession of P5 license granted by the second respondent. The petitioner was advised that they are entitled to get P5 license, since they are already holding P3 license. Accordingly, an application was made before the second respondent on 05.08.2015 with supportive documents for the grant of P5 license. The second respondent without putting the petitioner on notice or hearing them, passed an order on 19.08.2015 rejecting their application for grant of P5 license. Since the goods ordered by them viz., 740 Metric Tonnes of Ammonium Nitrate had already arrived at Chennai Airport, the petitioner filed the Bill of Entry bearing No.2704255 dated 24.09.2015 and also informed the authorities the fact of rejection of their application for grant of P5 license by the second respondent. The Customs Authorities seized the goods and started conducting further investigation. The goods are still in the possession and custody of the customs stored in the port. The second respondent had advised for auctioning of the goods to the other P3 license holder. However, the goods were not released to the petitioner, when they are already holding a P3 license. The petitioner filed W.P.Nos.20826 and 20827 of 2016 challenging the order of rejection dated 19.08.2015 and the order of the Joint Controller of Explosives, Chennai dated 20.05.2016, suspending the P3 license issued to the petitioner. By common order dated 11.08.2016, the Writ Court dismissed both the writ petitions. Writ Appeal Nos. 1067 and 1068 of 2016 were filed by the petitioner challenging the order of the Writ Court. By order dated 19.10.2016, the Hon'ble Division Bench granted liberty to the petitioner to file an appeal against the order rejecting P5 license. In sofar as the suspension of P3 license is concerned, the Division Bench directed the petitioner to file application before the Chief Controller of Explosives, who in turn was directed to consider the said application after affording an opportunity to the petitioner. The Division Bench has also observed that the Appellate Authority, while hearing the appeal against the order rejecting P5 application, shall not be influenced by the view expressed by the Writ Court. Accordingly, the petitioner preferred an application before the second respondent in respect of the suspension of P3 license. The petitioner also preferred appeal before the first respondent as against the rejection of P5 license. On 30.03.2017, the second respondent revoked the suspension of P3 license and accordingly, allowed the petitioner to continue with P3 license. However, the appeal filed before the first respondent was dismissed on 08.02.2017 without considering any of the grounds raised by the petitioner. Thus, the petitioner filed another writ petition in W.P.No.28851 of 2017, challenging the order of the first respondent dated 08.02.2017. By order dated 05.09.2018, the Writ Court allowed the writ petition and set aside the order of the first respondent and remitted the matter back to him for considering the appeal once again on merits and pass orders in accordance with law after giving due opportunity of personal hearing to the petitioner. Accordingly, the first respondent heard the petitioner in person on 23.10.2018. However, the first respondent passed the present impugned order once again recording the same finding that the petitioner is a trader and not an actual user. Hence, the present writ petition.
(3.) The respondents 1 and 2 filed counter affidavit, wherein it is stated as follows: Initially Ammonium Nitrate or a combination thereof was notified as a "special category explosive substance" for the purpose of Explosives Substances Act 1908 (Act 6 of 1908); vide Notification No.S.O.2899(E) dated 10th December 2008 by the Government of India. Later, Government of India issued Notification No.S.O.1678(E) dated 21st July, 2011 declaring Ammonium Nitrate (AN) having the chemical formula NH4 NO3 or any combination containing more than 45% of AN by weight including emulsions, suspensions, melts or gels (with or without inorganic nitrates) shall be deemed to be an explosive within the meaning of Explosives Act, 1884. New set of Rules viz., Ammonium Nitrate Rules, 2012 were framed under Explosive Act, 1884 vide Government of India Notification No.GSR, 553 (E) dated 11th July 2012 to regulate manufacturing conversion, import, export, stevedoring, bagging, transport, possession, sale and use of the Ammonium Nitrate, which is administered jointly by Petroleum and Explosives Safety Organization (PESO) and State Governments through District Authorities. The aforesaid Ammonium Nitrate Rules, 2012 came into force with effect from its date of publication i.e. on 11th July, 2012. The license in Form P-3 under Ammonium Nitrate Rules, 2012 to possess for sale of Ammonium Nitrate from a store house for 1000 M.T. located at Survey No.35/1, 2 and 3, 36/1 and 2, 50/1 and 51/1, Anjakavundanpatti Village, Aravakurichi Taluk, Karur District, Tamilnadu bearing license No.A/HQ/TN/P3/18(A100) dated 03.12.2014 was issued in favour of the petitioner and was valid upto 31.03.2019. The Deputy Commissioner of Customs, Special Intelligence and Investigation Branch, Chennai posted in the O/o the 4th respondent, vide his letter No.Enq/56/2015-SIIB and INV/01/2016-SIIB dated 17.05.2016 informed the second respondent that the petitioner had cleared 694 MT of Ammonium Nitrate through Chennai Port and 500 MT through Vishakhapatnam Port without a valid license in Form P5 issued under Ammonium Nitrate Rules 2012. The investigation of the fourth respondent revealed that the petitioner had sold the entire imported Ammonium Nitrate to various individuals and to companies involved in stone quarrying, Construction and Mining activities. On further investigation on selected buyers, it was found that entire quantity of Ammonium Nitrate was ultimately used in the mines and quarries for blasting operations and not used for agricultural purpose. The investigation by the fourth respondent brought out the entire list of sale of imported Ammonium Nitrate made by the petitioner to various individuals and firms and not holding Form P3 license for possession and use/sale of Ammonium Nitrate under Ammonium Nitrate Rules, 2012. From these facts, it is clear that petitioner had imported Ammonium Nitrate but also indulged in sale of imported Ammonium Nitrate to unauthorized persons. The proposal on import of Ammonium Nitrate by the petitioner was not considered by this respondent for issuance of Form P-5 under Ammonium Nitrate Rules, 2012 and the same was conveyed vide letter No.P-5 (AN) Ports /2014 (A1743) Ammonium Nitrate Rules, 2012 dated 19.08.2015. Despite of this letter on a later date, the petitioner had imported 740 MT of Ammonium Nitrate through Chennai Port vide Bill of Entry No.2704255 dated 24.09.2015 as reported by the Principal Commissioner of Customs, Chennai vide letter No.ENQ/56/2015-SIIB dated 08.10.2015. Since inception of Ammonium Nitrate Rules, 2012, License for import of Ammonium Nitrate is being granted by PESO only to the bonafide users viz., Catridge and Bulk Explosives Manufacturers for their captive consumption, not for sale purpose, in the interest of national security, on the following grounds. i) Explosives Manufacturers are only permitted to import Ammonium Nitrate for their captive consumptions, only to meet the gap between the demand for Ammonium Nitrate in the country and domestic production of Ammonium Nitrate, which ensures non- dumping of unwarranted Ammonium Nitrate in the country. ii) Further, import of Ammonium Nitrate by Traders will not have such balancing mechanism and would lead to excess dumping of Ammonium Nitrate in the country and make it easily available for misuse by anti social elements. This situation would not only pose threat to public safety at large and national security but also lead to Trade Deficit. iii) The pattern of import, transport, store and day-to-day use of Ammonium Nitrate by the Explosives Manufacturers for captive consumption is accountable, through each imported Ammonium Nitrate consignment is in several thousands of MT. Whereas, it becomes complex in case of import by Traders, since several, multiple and long supply chains are involved, which provide much scope for pilferage and diversion for the illegal activity at every point of transaction. iv) Considering the quantum of Ammonium Nitrate being imported in the country to the tune of 3 lakh MT in a year, the national security concern becomes more crucial when Ammonium Nitrate allowed for import by traders for domestic sale, which would lead to excess dumping of Ammonium Nitrate in the country and freely available for any misuse. Considering the quantum of Ammonium Nitrate being imported in the country, to the tune of 3 lakh MT in a year, the national security concern becomes more crucial, when Ammonium Nitrate is allowed for import by traders for domestic sale, which would lead to excess dumping of Ammonium Nitrate in the country and freely available for any misuse. The first respondent had passed the order No.1 of 2018 dated 02.11.2018 in a speaking manner based on the submissions made by the Advocate of the petitioner, Dr.S.K.Dixit, Controller of Explosives, PESO, careful perusal of records, considering all facts of the cases and relevant provisions of Explosives Act 1884 and Ammonium Nitrate Rules 2012 bringing out all facts, submissions made by all parties and grounds for rejection of the appeal of the petitioner in the speaking order which briefly stated that: (i) A licence in Form P-5 was required to import ammonium nitrate, which the petitioner did not possess and despite refusal to grant import licence by CCE, Nagpur on 19th August 2015, the appellant had imported the aforesaid AN consignment of 740 MT through Chennai Port on a later date i.e. 24th September 2015, which amounts to violation of Rules 4 and 6(4)(a) of the Ammonium Nitrate Rules, 2012. ii) Bill of Lading is prepared in advance and is not a valid document and explanation offered by the appellant is not satisfactory. iii) Further the petitioner knowing his application for grant of P-5 license has been refused by the Chief Controller of Explosives, did not stop dispatch of consignment from Korea. iv) Special Intelligence and Investigation Branch (SIIB), Principal Commissioner of Customs informed that appellant had earlier cleared 696 MT of Ammonium Nitrate through Chennai Port and 500 MT through Vishakapatnam Port without a valid license. It revealed that the appellant had sold the entire AN imported earlier by them to various individuals and to companies involved in stone quarrying, construction and mining activities and the same was not used for agricultural purpose. ;