SHIS and TUFS restriction does not apply to transferees using valid scrips for capital goods imports.

The Foreign Trade Policy bar on simultaneous SHIS and TUFS applies only where a status holder seeks SHIS on its own exports for the same year in which TUFS is availed. Here, the assessee purchased valid SHIS scrips from other license holders and used them as a transferee to debit customs duty on imported capital goods; it did not claim SHIS on its own exports for that year. The customs and Cenvat framework permitted import against such scrips and credit of the eligible additional duty, so denial of Cenvat credit was unsustainable.

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Issues: Whether the appellant had contravened the Foreign Trade Policy by simultaneously availing the benefit of Status Holders Incentive Scrips and Technology Upgradation Fund Scheme, and whether the Cenvat credit taken on capital goods imported against transferred SHIS scrips was liable to be denied.

Analysis: The disputed restriction in para 3.16.2 of the Foreign Trade Policy operates against a Status Holder who avails TUFS in a particular year and seeks SHIS for exports of that same year. On the facts, the appellant did not obtain SHIS on the basis of its own exports. It purchased SHIS scrips from other license holders, and those scrips had been issued to the original holders against their exports. The appellant used the scrips only for debiting customs duties on imported capital goods and was, therefore, a transferee license holder. The record also showed that TUFS benefit was availed in 2013-14, whereas no SHIS benefit was availed by the appellant on its own exports in that year. The exemption notification and the customs/cenvat framework permitted import of capital goods against such scrips and allowed Cenvat credit of the eligible additional duty, so the demand proceeded on an incorrect premise.

Conclusion: The restriction against simultaneous availing of SHIS and TUFS was not attracted to the appellant, and denial of Cenvat credit was unsustainable. The issue is answered in favour of the assessee.

Ratio Decidendi: The bar on SHIS where TUFS is availed in the same year applies to SHIS entitlement based on the holder's own exports, not to a transferee who purchases and uses valid SHIS scrips for import of capital goods.

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