TaxTMI 
TaxTMI 
2011 (7) TMI 427
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....d under the Foreign Trade Policy for 2004-09. The circular under challenge was in turn based on the minutes of a meeting of the Policy Interpretation Committee (PIC) dated 5 July 2010. Counsel for the Petitioners has confined the challenge in these proceedings to the decisions taken at serial nos. 1, 2(b), 4(ii) and 4(iii) by the PIC which were directed to be implemented by the Circular dated 5 July 2010. 3. In the companion Petition, by a judgment delivered by this Court on 17 June 2011, the Circular has been quashed and set aside in respect of the directions contained therein to implement the decision of the PIC at Serial nos. 1, 2(a) and 2(b). Counsel appearing on behalf of the Petitioners and counsel appearing on behalf of the Respondents state before the Court that the challenge in these proceedings to the minutes of the PIC meeting contained at serial nos. 1 and 2(b) will be governed by the earlier judgment of this Court. Consequently, for the reasons which have been already indicated by this Court while allowing Writ Petition No.2357/2010, the impugned Circular dated 15 July 2010 in so far as it directs the implementation of the decision taken at Sr. nos.....
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.... do not charge separately for capacity usage in respect of the portion of the cable located in India and the portion of the cable located outside India. The Petitioners claim SFIS benefits in respect of foreign exchange that they have earned and received from foreign telecommunication carriers for eligible services covered by Appendix10 to the Handbook of Procedures of the Foreign Trade Policy for 2004-09. 5. The objective of the SFIS is prescribed in paragraph 3.6.4.1 of the Foreign Trade Policy as follows: "3.6.4.1 Objective Objective is to accelerate growth in export of services so as to create a powerful and unique Served From India' brand, instantly recognized and respected world over." Paragraph 3.6.4.2 defines "eligibility" thus: "All Service Providers, of services listed in Appendix-10 of HBP v1, who have a total free foreign exchange earning of at least Rs.10 lakhs in preceding financial year shall qualify for Duty Credit scrip. For Individual Service Providers, minimum would be Rs.5 lakhs." Paragraph 3.6.4.3 defines the entitlement of an eligible service provider and is to the following effect: "All Service Provi....
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....ht to clarify the entitlement to SFIS benefits to Telecommunications providers in several situations. Following this, the DGFT issued a policy circular on 15 July 2010 which mandated that all Regional Authorities would review previously sanctioned cases and that the entitlement in each case would be recomputed in terms of the decision taken. The Regional Authorities were directed to initiate recoveries in the event that benefits in excess of what was permissible were provided. 10. The challenge in these proceedings by the Petitioners is to the decision contained at points 2(b), 4(ii) and 4(iii) of the minutes of the PIC. The first part of the challenge, as noted earlier, is covered by the judgment delivered by this Court on 17 June 2011 in the case of Vodafone Essar Ltd. In serial no. 4 of the minutes, the PIC has dealt with other services provided by Telecom service providers. Clause 4(ii) deals with rentals from optic fibre cables in India, while 4(iii) deals with rentals from optic fibre cables overseas. The PIC has opined that these services do not fall within the purview of paragraph 9.53 of the Foreign Trade Policy. According to the PIC, foreign exchange earnings ea....
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....y within the meaning of clause (i) or the supply of a service from India through commercial or physical presence in the territory of any other country within the meaning of clause (iii). 13. Counsel appearing on behalf of the Respondents submitted that the PIC, in the course of its decision rendered on 5 July 2010, proceeded on the basis that the rentals from optic fibre cables in India could be dealt with as a separate category from rentals from optic fibre cables overseas. Counsel submitted that the situation which the Petitioners have postulated before the Court namely of a transmission of data/voice/video on a continuous fibre optic cable from a point in India to an overseas destination was not before and was not hence considered by the PIC. The grievance of the Petitioners is that the PIC minutes purport to artificially split the transaction in which a dedicated bandwidth is provided between a place located in India and a place outside India into two separate transactions relating to the portion of the optic fibre cables physically located in India and the portion located overseas. According to the Petitioners, they provide a dedicated bandwidth as a part of a cohesi....