Court Invalidates Customs Notification, Upholds DGFT Interpretation on Goods Transfer under SFIS

The court held that Customs Notification No. 91/2009 was ultra vires the relevant acts and rules, allowing for the transfer of goods imported under the SFIS. It deemed the letter challenging the transfer of vessels as contrary to the law, emphasizing the DGFT's authority in interpreting the FTP. The court affirmed the transferability of goods under SFIS after a specified period without RA permission. It resolved the DoR-DGFT conflict by upholding the DGFT's interpretation as final and binding. The petitioner was granted relief, enabling the transfer/sale of vessels without DoR objections due to the vessels' age.

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Issues Involved:
1. Validity of Customs Notification No. 91/2009.
2. Legality of the letter dated 12th June 2013 from the Commissioner of Customs (Exports).
3. Interpretation of the Foreign Trade Policy (FTP) 2004-2009 and 2009-2014.
4. Transferability of goods imported under the Served From India Scheme (SFIS).
5. Conflict between the Department of Revenue (DoR) and the Directorate General of Foreign Trade (DGFT).

Issue-wise Detailed Analysis:

1. Validity of Customs Notification No. 91/2009:
The petitioner challenged the Customs Notification No. 91/2009 dated 11th September 2009 issued by the DoR under Section 25(1) of the Customs Act, 1962, which restricted the transfer/sale of goods imported using SFIS duty certificates/scrips. The court held that the notification was ultra vires the Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act), the Foreign Trade (Regulation) Rules 1993 (FTR Rules), and the FTP 2004-2009 and 2009-2014. The court noted that the FTP and the Hand Book of Procedure (HBP) allowed for the transfer of such goods after a specified period, and the notification conflicted with these provisions.

2. Legality of the Letter Dated 12th June 2013:
The petitioner also challenged a letter dated 12th June 2013 from the Commissioner of Customs (Exports), which stated that the decision of the Policy Relaxation Committee (PRC) to approve the transfer of one of the imported vessels was contrary to the FTP and HBP. The court found this letter to be contrary to the legal position and held that it had no binding effect on the DGFT. The court emphasized that on questions of interpretation of the FTP, the views of the DGFT would prevail.

3. Interpretation of the FTP 2004-2009 and 2009-2014:
The court analyzed the relevant provisions of the FTP 2004-2009 and 2009-2014, particularly those related to the SFIS. It noted that the SFIS forms part of both FTPs and that the provisions concerning SFIS in both FTPs are similar. The court highlighted that the DGFT, as a statutory authority under the FTDR Act, is responsible for the interpretation and implementation of the FTP. The court rejected the contention that the HBP should give way to the FTP, stating that the HBP, issued by the DGFT, is binding and part of the FTP manual.

4. Transferability of Goods Imported Under SFIS:
The court examined the provisions related to the transferability of goods imported under SFIS. It noted that para 2.43 of the HBP allowed for the transfer of imported goods under certain conditions, and prior permission of the Regional Authority (RA) was not required for transfer or disposal after a specified period. The court found that the provisions in the FTP and HBP allowed for the transfer of goods imported under SFIS after a certain period, and there was no prohibition on such transfers.

5. Conflict Between the DoR and DGFT:
The court addressed the conflict between the DoR and the DGFT regarding the transfer of goods imported under SFIS. It emphasized the need for a harmonious interpretation of the FTDR Act, FTR Rules, FTP, HBP, and the Customs Act. The court held that in the event of a conflict between two ministries, the view of the ministry primarily responsible for the policy, in this case, the Ministry of Commerce and the DGFT, should prevail. The court noted that the DGFT's interpretation of the FTP is final and binding.

Conclusion:
The court restrained the DoR from objecting to the transfer/sale of the vessels imported by the petitioner, as each of the vessels had been imported more than five years ago. The writ petition was disposed of in favor of the petitioner, allowing the transfer/sale of the vessels without any objections from the DoR.

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