2022 (10) TMI 892 - HC - Customs

Court upholds rejection of revalidation & enhancement of Advance Authorizations. Evidence of hardship required for policy relaxation.

Madura Coats Pvt. Ltd., Rep. by its Manager, Excise & Legal Versus The Director General of Foreign Trade, The Policy Relaxation Committee (PRC), O/o. Directorate General of Foreign Trade, Ministry of Commerce, New Delhi, The Joint Director of General of Foreign Trade, The Assistant Commissioner of Customs

The court dismissed the writ petition challenging the Policy Relaxation Committee's decision to reject revalidation and enhancement of Advance ... Advance Authorization Scheme - Issuance of Revalidation and Enhancement of value of import entitlement - discharge of export obligation or not - non-utilisation of Advance Authorization scheme - eligibility to file necessary application for duty draw back in terms of 4.28 (iv) of Para Handbook of Procedures to 2004-09 - validity period of an Advance Authorization - HELD THAT:- The validity of an import licence/ certificate/ Authorisation/ permission is decided with reference to the date of shipment/ dispatch of the goods from the supplying country as given in Paragraph 9.11 A of the Handbook and not the date of arrival of the goods at an Indian port - The subject Advance Authorisation came with a validity period 24 months from the date of their issue. Unless, they were revalidated before their expiry for a period of 6 months, the rights cannot be claimed except in accordance with the provisions of the Foreign Trade Policy and the relevant Handbook of Procedure. Revalidation of import/export license/certificate/authorization/permission - HELD THAT:- As per the provisions for the Handbook of Procedures of Foreign Trade Policy 1992-97, the application for revalidation was required to be made within a month of the expiry of the license (for initial period) or before the expiry of license (later period). Subsequently, these time limits prescribed for filing application for Enhancement/Reduction in the value of Advance Authorization as well as for Revalidation of Advance Authorizations have been removed under Paras 4.21 and 4.23 respectively under the Handbook of Procedures issued under the respective respondent of Foreign Trade Policy. Enhancement/reduction in the value of authorization - HELD THAT:- As per para 4.21 of Handbook of Procedure, the concerned Regional Authority could consider the request for enhancement or reduction in the value of the authorization. As per para 4.21.1 of the Handbook of Procedure to Foreign Trade Policy 2004-09, request for pro rata enhancement in the value and quantity may be made either before or after exports. It further stipulates that in such cases where there is a change in standard input output norm SION prior to export of the product, pro rata enhancement shall be given after calculating entitlement on revised SION. Application after expiry of last date - HELD THAT:- Paragraph 9.13 of the HOP which states DGFT may, on his own or otherwise, call for records of any case pending with or decided by an officer subordinate to him or an officer of any EPC/FIEO including a Group/ Committee of officers nominated, appointed or authorised by him and pass such orders as he may deem fit is also not relevant. Claim for Exemption from the Policy / Procedure under 2.5 of 2009-14 Policy and later 2.58 of 2015-2020 is without merits - The application was filed on 16.02.2011 for the first time after the extension of two years. Thus, the application was beyond the limitation. Paragraph 9.3 of the Foreign Trade Policy therefore cannot come to the rescue of the petitioner. Period of discharging the export obligation - HELD THAT:- Period of export obligation (EO) under an Advance Authorisation commences from the date of issue of Authorisation, unless otherwise specified. Export obligation issued under FTP 2004-09, 2009-14 and 2015-20 were to be fulfilled within 18, 24 and 36 months respectively - As per Paragraph 4.22 of the Handbook of Procedure with effect from 27.8.2009 the normal period of discharge of export obligation to 18 months. No applications were filed within the time prescribed for extending the period of export obligation. Since, such a request was made for the first time on 16.2.2011, it was correctly rejected on 02.06.2011. Further, it is also not clear about the quantity imported and quantity that was lying unutilized on these dates when the period expired. The case of the petitioner does not fall within the above specified period. In any event no application was filed by the petitioner in time. Therefore, the petitioner has no case made on merits - Request for revalidation of an Advance Authorisation can be made once for 6 months from the expiry of date of its validity in terms of Paragraph 4.23 of the Handbook of Procedure and/or for enhancement/reduction in the entitlement in terms of Paragraph 4.21 of the Hand Book of procedure can be made only either before or after export. This writ petition is disposed of with the following directions:- (i) Fourth respondent Adjudicating Authority is directed to dispose the Show Cause Notice issued on 10.05.2013 within a period of twelve months from the date of receipt of a copy of this order. (ii) To the extent, the petitioner has utilized the Advance Authorisations, it shall file necessary documents for discharging its Export Obligation undertaken. iii) To the extent, the petitioner has not utilized the Advance Authorisations it shall file necessary application for duty draw back in terms of 4.28 (iv) of Para Handbook of Procedures to 2004-09. Issues Involved:1. Challenge to the Policy Relaxation Committee's decision.2. Request for revalidation and enhancement of Advance Authorizations.3. Genuine hardship due to SAP software issues and global economic meltdown.4. Applicability of late cut provision under Para 9.3 of Handbook of Procedure.5. Regularization of bonafide default under Para 4.28 of Handbook of Procedure.Detailed Analysis:1. Challenge to the Policy Relaxation Committee's Decision:The petitioner challenged the decision of the Policy Relaxation Committee (PRC) dated 05.04.2016 and 11.04.2016, which rejected the request for revalidation and enhancement of Advance Authorizations. The impugned decision was pursuant to an order dated 28.10.2015 by the Division Bench of the High Court in W.A No. 575 of 2014, which remanded the matter for fresh consideration.2. Request for Revalidation and Enhancement of Advance Authorizations:The petitioner sought revalidation and enhancement of import entitlement for four Advance Authorizations issued under the Foreign Trade Policy (FTP) 2004-2009. The validity of these authorizations had expired, and the petitioner had not applied for revalidation within the prescribed period. The PRC, in its decision, emphasized that policy relaxation is not a matter of right and requires establishing genuine hardship or adverse impact on trade, which the petitioner failed to do.3. Genuine Hardship Due to SAP Software Issues and Global Economic Meltdown:The petitioner cited technical problems with the newly implemented SAP software and the global economic meltdown as reasons for failing to meet import obligations. The PRC rejected these grounds, stating that the introduction of SAP should have improved accounting efficiency and that the petitioner failed to provide documentary evidence of the alleged issues. The committee also noted that the petitioner had 23 Advance Licenses in operation but failed to import only under five, indicating a lack of systematic and timely monitoring by the management.4. Applicability of Late Cut Provision Under Para 9.3 of Handbook of Procedure:The petitioner argued that the late cut provision under Para 9.3 of the Handbook of Procedure should apply to their case. However, the PRC and the court held that the late cut provision is applicable only where a time limit for submission of applications is prescribed, which was not the case for revalidation and enhancement requests under the Advance Authorization scheme. The court noted that the petitioner's application for revalidation was made long after the expiry of the validity period, making it time-barred.5. Regularization of Bonafide Default Under Para 4.28 of Handbook of Procedure:The court observed that the petitioner did not invoke Para 4.28 of the Handbook of Procedure for regularizing bonafide default in fulfilling export obligations. This provision allows for regularization by paying customs duty on unutilized imported material and a penalty, provided the default was bonafide. The court directed the petitioner to file necessary documents for discharging export obligations and apply for duty drawback for unutilized authorizations.Conclusion:The court dismissed the writ petition, upholding the PRC's decision. It directed the petitioner to comply with the show cause notice and submit documents for discharging export obligations. The petitioner was also advised to apply for duty drawback for unutilized authorizations under Para 4.28(iv) of the Handbook of Procedures 2004-2009. The court emphasized that policy relaxation is not a matter of right and must be substantiated with genuine hardship or adverse impact on trade.