TaxTMI 
TaxTMI 
2011 (7) TMI 394
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.... on the Petitioner in the condition-sheet was that the import should have nexus with the product goods exported in the proportion indicated therein. The Petitioner is entitled under the DFCE Certificate to import chemical and allied products to the extent of 57.68 per cent of eligible exports and 42.32 per cent consisting of fish and fish products. 2. The Petitioner imported chemicals on the payment of duty by utilizing the credit available under the DFCE Certificate. The validity of the Certificate was extended until 25 May 2011. On 5 October 2010, the Petitioner imported a consignment of Anethole (Benzene Methoxy-4-1- Propeny) falling under Chapter Sub-heading 2909 30 19 of the First Schedule to the Customs Tariff from a consignor in the US and filed a Bill of Entry for home consumption. While filing the Bill of Entry, the Petitioner sought to effect payment of duty by making a debit in respect of the credit available under the DFCE Certificate. 3. On 8 October 2010 and 10 October 2010, the Deputy Commissioner of Customs (Imports), who is impleaded as the Fourth Respondent, raised several queries inter alia stating that it was mandatory to establish a nexus betwee....
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.... or the factory of the associate/supporting manufacturer/]ob worker The entitlement/goods shall not be transferable." 6. The Scheme was announced as part of a series of initiatives in the EXIM Policy notified on 31 March 2003 with the object of accelerating the incremental growth of exports and to facilitate the country emerging as a major base for sourcing products and services for the rest of the world. It was recognized that status holders would continue to play a significant role in boosting exports particularly from the small scale sector. In view of this, a duty free import entitlement of 10% of the incremental growth in the value of exports was allowed subject to the condition of eligibility based on actual user. The benefits of the Scheme were available with effect from 1 April 2004. Since the Scheme was a new initiative, a large number of representations were received from Trade Associations, Export Promotion Councils and from individual exporters seeking clarifications on the implementation of the Scheme. Government had also received reports that certain status holders were attempting to increase their export turnover by taking credit for the export of others with....
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....he product group in which the exported goods fall. For instance, in the case of the Petitioner, the export product groups are (i) chemical and allied products; and (ii) fish and fish products. The entitlement of the Petitioner is with reference to the aforesaid product groups. 10. The Petitioner is before this Court in proceedings under Article 226 of the Constitution in order to challenge the validity of the condition imposed by the Handbook of Procedures requiring a nexus between the goods imported under the Scheme with a product group of the exported products. The submission which has been urged on behalf of the Petitioner is that : (i) Whereas, the Foreign Trade Policy is issued in exercise of powers conferred upon the Central Government by Section 5 of the Foreign Trade (Development and Regulation) Act, 1992, the Handbook of Procedures is issued by the Director General of Foreign Trade in pursuance of the powers conferred in para 2.4 of the Policy; (ii) The DGFT while issuing the Handbook of Procedures is entitled to make procedural provisions for the implementation of the policy and cannot modify the policy; (iii) By and as a result of the introduction of the requirem....
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.... (Development and Regulation) Act, 1992, empowers the Central Government to formulate from time to time and announce by a notification in the Official Gazette the export and import policy. The Central Government is empowered to amend the policy that is notified. Section 6(1) empowers the Central Government to appoint the Director General of Foreign Trade. The function of the Director General under sub-section (2) of Section 6, is to advise the Central Government in the formulation of the export and import policy and to be responsible for carrying out the policy. Under sub-section (3) of Section 6 powers exercisable by the Central Government may be delegated to the Director General upon a direction of the Central Government, but the powers under Section 3, 5, 15, 16 and 19 cannot be delegated. Consequently, the power to notify a scheme and to amend the scheme is a power which the Central Government alone can exercise and cannot be delegated to the Director General. Paragraph 2.4 of the EXIM Policy sets out the ambit of the functions of the Director General in the following terms :- "2.4 The Director General of Foreign Trade may, in any case or class of cases, specify the pro....
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....cannot be provided for by the Director General in the Handbook of Procedures. So long as the provision which is made in the Handbook fulfills the essential nature and character of being a provision to implement the policy, or to lay down procedural requirements or other details necessary to flesh out the policy or ensure the proper functioning of the policy, the Director General must be held to have acted within jurisdiction. In each case, therefore, when there is a challenge to the validity of an action taken by the Director General, it is for the Court to determine as to whether the Director General has acted within the contours of the jurisdiction conferred upon him by Section 6(2) read with para 2.4 of the policy or whether he has transgressed the limitations on his jurisdiction by amending the policy. An amendment of the policy is something that lies beyond the powers of the Director General. 14. This principle has been adverted to in judgments of the Supreme Court. In the Union of India v. Asian Food Industries, 2006 (204) E.L.T. 8 (S.C.), the Supreme Court observed that - "The provisions of 1992 Act, the Foreign Trade Policy and the procedures laid down thereunder, t....
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....ject of facilitating an acceleration of exports. Government was seized with the issue of the diversion of benefits and of attempts to enhance exports merely to increase benefits under the Scheme in a manner which would not lead to achieving the object of an incremental growth in export. Simultaneously with the amendment of Paragraph 3.7.2.1 of the policy on 28 January 2004 the Handbook of Procedures was amended. As a result of the amendment para 3.2.6A was inserted in order to stipulate inter alia that the goods allowed to be imported under the scheme shall have a nexus with the product exported and that a declaration in this regard shall be made in Appendix 17D. The requirement that there should be a nexus between the goods imported and the product exported has been further relaxed as a consequence of an amendment brought into force with effect from 4 June 2005. As a result thereof, the nexus that is required is between the goods imported and the product group of the goods exported. 16. The Handbook of Procedures and the policy constitute a composite scheme. The Handbook of Procedures in the present case, has not transgressed the limitations which have been imposed in para....