2014 (12) TMI 359

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....o 2% of the FOB value of the said products exported by them. Apparently, the said scrips have been utilized/sold by the petitioners. And, as such, the petitioners have already received the benefit available, with respect to the products exported by them, in terms of the Focus Product Scheme (hereafter 'FPS') under the Foreign Trade Policy. The benefit under the FPS was granted to the petitioners as the products exported were considered to be "Technical Textiles" as notified under Appendix 37D of the Handbook of Procedures published by the Government of India. 3. The impugned circular has the effect of excluding the products exported by the petitioners from the definition of technical textiles and thus, has rendered the petitioners ineligible for claiming the incentive under the FPS. The grievance of the petitioners is compounded as the impugned circular excludes the products exported by them from the definition of technical textiles with retrospective effect. Thus, the benefits that have already been availed and utilized by the petitioners, are now sought to be recovered. 4. Malik Tanning Industries (petitioner in W.P.(C) 6387/2012) has been called upon, by a letter dated 16.....

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....t that any power exercisable by it under this Act (other than the powers under sections 3, 5, 15, 16 and 19) may also be exercised, in such cases and subject to such conditions, by the Director General or such other officer subordinate to the Director General, as may be specified in the Order." 10. In exercise of the powers conferred under Section 5 of the Act, the Central Government has notified the Foreign Trade Policy. Paragraph 2.3 of the Foreign Trade Policy, inter alia, provides that any question or doubt relating to interpretation of any provisions contained in Foreign Trade Policy or classification of items shall be referred to DGFT. Paragraph 2.4 of the Foreign Trade Policy further empowers DGFT to specify the procedure to be followed by an importer or exporter for implementation of the Act, the Rules and Orders made thereunder and the Foreign Trade Policy. Paragraph 2.3 and 2.4 of the Foreign Trade Policy are relevant and are quoted below:- "Interpretation of Policy 2.3 If any question or doubt arises in respect of the interpretation of any provision contained in FTP, or classification of any item in the ITC(HS) or HBP-v1 or HBP-v2, or Schedule of DEPB Rates (inc....

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.... applications against export of Market Linked Focus Products under FPS (Para 3.15.3 of FTP) will be the same as laid down for Focus Product Scheme in Para 3.9.1 above. In case of applications for grant of benefit under Market Linked Focus Product scheme, for proof of landing of export consignment in specified market, Para 3.8.2 of HBPVol.1 shall apply." 13. In terms of paragraph 3.9.1 of the Handbook-I, the incentive under the FPS would be determined from the date of export. And, as per the Foreign Trade Policy, the export of products as listed in Appendix 37D of the Handbook-I are eligible for the incentives under the FPS. Entry 33 of Table 4 of Appendix 37D of Handbook-I is relevant for the purpose of these petitions and is extracted below:- "TABLE 4: NEW FOCUS PRODUCTS SL. NO. FPS PRODUCT CODE ITC (HS) CODE DESCRIPTION Xxxx xxxx xxxx xxxx TECHNICAL TEXTILES PRODUCTS " xxxx xxxx xxxx xxxx 33 33 5407 TECHNICAL TEXTILES - WOVEN FABRICS OF SYNTHETIC FILAMENT YARN             14. If one examines the scheme of the Act, the Foreign Trade Policy as well as the role of DGFT,....

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....pondent urged that the words 'technical textiles' must not be read as synonymous to the words 'woven fabrics of synthetic filament yarn'. According to him "woven fabrics of synthetic yarn" is only one of the attributes of technical textiles and does not define that expression. I am unable to accept this contention as the use of 'Em dash' between expressions "technical textiles" and "woven fabrics of synthetic filament yarn" cannot be read in the manner as suggested by the respondent. 'Em dash' is a punctuation mark that depending on the text, is used to insert parentheses. Thus, the expression "woven fabrics of synthetic filament yarn" has to be read as explaining or defining the expression 'Technical textiles'. Further any doubt regarding the meaning of the said entry, although not warranted, is resolved by referring to the ITC (HS) Code 5407, which undisputedly includes polyester dyed fabrics. 18. In view of the aforesaid, the interpretation of the words "Technical Textiles" has never been in any doubt and its interpretation cannot be called in question. However, it has been contended on behalf of the respondent that it was not the legislative intent to include "polyester prin....

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....cs of synthetic filament yarn", but represents a substantive change in policy, i.e. to restrict FPS benefits to textile products for non-aesthetic purposes - 33 specific items as listed in annexure to the impugned circular. Notably, the "new focus products" contained in table 4 were admissible for claiming FPS benefits w.e.f. 27.08.2009; woven fabrics of synthetic filament yarn were granted the benefit of the FPS scheme with effect from the said date. This benefit is sought to be withdrawn w.e.f. 01.04.2011. In other words, there is no dispute that woven fabrics of synthetic filament yarn exported prior to 01.04.2011 would continue to be eligible for export incentive under FPS. In my view, this also indicates that the impugned circular seeks to bring about a substantive change in policy. 21. The quintessential question that needs to be addressed is whether DGFT would have the power to amend the list of products, export of which are eligible for incentive under the FPS with retrospective effect. 22. The above question needs to be answered in light of the provisions of Section 5 and Section 6 of the Act. In terms of Section 5, the Central Government is empowered to formulate an....

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....r 21.04.2010. The circular explained the amendment as under:- "Benefit under DEPB scheme encourages export of concerned commodity. Hence when the intention of the Government is not to encourage exports of specific commodity, DEPB benefit on such a commodity would be contradictory to its intention. Accordingly, this Public Notice clarifies that DEPB benefit on export of cotton shall not be available. DEPB benefit on export of cotton yarn was withdrawn with effect from 21-4-2010, therefore, DEPB benefit on cotton (the basic raw material for cotton yarn) has been disallowed for exports made from 21-4- 2010 onwards." The Bombay High Court held that the DEPB benefits could not be withdrawn with retrospective effect and held as under:- "The issue in the present case is really an issue of the existence of authority or power. The Director General of Foreign Trade had no power or jurisdiction as an authority vested with the power of implementing the Foreign Trade Policy to withdraw the DEPB benefits on the export of cotton with retrospective effect from 21 April 2010. The rationale for the withdrawal was that with effect from 21 April 2010 the policy of the Union Government was not....