TaxTMI 
TaxTMI 
TaxTMI 
2015 (11) TMI 80
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....Shah, Adv., Mr. Alok Yadav, Adv., Mr. Raghav Shankar, Adv., Mr. Aswin Dave, Adv., Ms. Swati, Adv., Mr. E.R. Kumar, Adv., Mr. Nitin Thukral, Adv., Mr. Galav Sharma, Adv., Mr. Sameer Parekh, Adv., For M/s. Parekh & Co., Ms. Bina Gupta,Adv., Ms. Sushma Suri,Adv., M/s. Parekh & Co.,Adv. And Mr. V. K. Verma,Adv. JUDGMENT A.K. SIKRI, J. Civil Appeal No. 554 of 2006 Civil Appeal No. 658 of 2006 Civil Appeal No. 1587 of 2006 Civil Appeal No. 1589 of 2006 Transfer Case (Civil) No. 36 of 2007 Transfer Case (Civil) No. 1 of 2008 Transfer Case (Civil) No. 3 of 2008 Transfer Case (Civil) No. 49 of 2009 Writ Petition (Civil) No. 343 of 2009 Writ Petition (Civil) No. 246 of 2010 Export Import (EXIM) Policy 2002-2007 was framed by the Central Government under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as the 'Act'), which came into force with effect from April 01, 2003. The main purpose and objective of this Policy was to boost the exports. In furtherance of the same, a Special Scheme containing the provisions thereof was incorporated therein which gave certain kind of incentives to the exporters of some specified items. However, som....
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....arat High Court in one of the cases dismissed the writ petition and the LPA was filed by the said petitioner before the Division Bench of the High Court. Since the issue involved in these appeals is the same, which is raised in the LPA in the Gujarat High Court and still pending in the writ petitions filed in various High Courts, transfer petitions were filed by the Union of India seeking transfer of all those cases and to be heard along with these two appeals. Those transfer petitions were allowed. This is how all these cases are bunched together and heard simultaneously as the issue is substantially the same in all these matters. 4) With this background reflecting the nature of these cases, we now proceed to discuss the main provision of the EXIM Policy and how the aforesaid Notifications have amended the provisions of that Policy. That would give an indication as to what kind of grievance is raised by these exporters in challenging the validity of these Notifications. 5) The Act was passed to provide for the development and regulation of foreign trade by facilitating imports into, and augmenting exports from India and for matters connected therewith or incidental thereto. The ....
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....in powers to the Central Government and, therefore, these powers have to be exercised by the Central Government only and cannot be delegated to DGFT or an Officer subordinate to him. Sections 15 and 16 relate to appeal and revision which can be filed against the orders passed by the Adjudicating Authority against any person committing contravention of provisions of the Act, Rules, Orders and EXIM Policy. Appeal lies to DGFT if the Adjudicating Authority, who passes the order, is an Officer subordinate to DGFT. In those cases, where the Adjudicating Officer is DGFT himself, appeal lies to the Central Government. Under Sections 16, revisionary powers are conferred upon the Central Government. These powers of appeal and revision also cannot be delegated by virtue of Section 6(3) of the Act. Section 19 again confers power upon the Central Government to make Rules for carrying out the provisions of the Act generally and in respect of various matters specifically enumerated in sub-section (2) of Section 19. This power of the Central Government also cannot be delegated. 9) It may be noted that under Section 5 of the Act, the Central Government has been formulating EXIM Policies from time....
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....ing a level playing field for the domestic producers." 12) Keeping in mind the aforesaid principal objectives, para 2.1 made it clear that exports and imports shall be free, except in cases where they are regulated by the provisions of the said Policy or any other law for the time being in force. As per para 2.4, DGFT was authorised to specify the procedure which needs to be followed by an exporter or importer or by any licencee or other competent authority for the purposes of implementing the provisions of the Act, the Rules and the Orders made therein and this Policy. Such a procedure was to be stipulated and included in the Handbook (Volume-I), Handbook (Volume-II), Schedule of DEPB and in ITC (HS) and published by means of a public notice. It was permissible to amend this procedure from time to time. 13) Another provision of this Policy which needs to be noticed is para 2.34 that pertains to 'third party exports' and reads as under: "2.34 Third party exports, as defined in paragraph 9.55 shall be allowed under the Policy." 14) Since the third party exports are to be allowed, as defined in para 9.55, we reproduce herein the said para as well: ""Third-party exports" means ex....
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....ear or during the preceding 1/2/3 licensing years (in Rupees) Export House 45 crores Trading House 300 crores Star Trading House 1500 crores Super Star Trading House 6000 crores Note: 1. Units in Small Scale Industry/Tiny Sector/ Cottage Sector/Units registered with KVICs or KVIBs/Units located in North Eastern States, Sikkim and J&K/Units exporting handloom, handicrafts, hand knotted carpets, silk carpets/ exporters holding golden status/exporters exporting to countries in Latin America and CIS/ sub Saharan Africa as listed in Appendix-17C, units having ISO 9000 (series)/ WHOGMP/ HACCP/SEI CMM level-II and above status granted by agencies listed in Appendix-28A, shall be entitled for export house status on achieving Rs. 15 crore FOB/FOR during the current licencing year or during the preceding 1/2/3 licensing years. The same threshold limit shall be applicable to the service exporters and agri exporters (other than grains) for obtaining Export house status. 2. Export made on re-export basis shall not be counted for the purpose of recognition. 3. The exports made by a subsidiary of a limited company shall be counted towards export performance of the l....
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....& Jewellery e) Agriculture f) Service sector Department of Commerce shall take concerted efforts to promote exports of these sectors by specific sectoral strategy. 18) It is already noted above in para 3.7.1 that various kinds of categories are eligible for recognition as status holders. These include Export Oriented Units (EOUs), Electronic Hardware Technology Parks (EHTPs) and Software Technology Parks (STPs). A separate Chapter, i.e. Chapter VI, is carved out to deal with the aforesaid categories. Eligibility thereof is stipulated in para 6.1, which is to the following effect: Eligibility 6.1 Units undertaking to export their entire production of goods and services, except permissible sales in the DTA, as per the Policy, may be set up under the Export Oriented Unit (EOU) Scheme, Electronic Hardware Technology Park (EHTP) Scheme or Software Technology Park (STP) Scheme for manufacture of goods, including repair, re-making, reconditioning, re-engineering, and rendering of services. No trading units shall, however, be permitted. 19) Such EOUs/EHTPs/STPs are permitted to export goods through status holder, as specifically provided in para 6.10 and we ....
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....al upgradation or expansion. Capital goods also include packaging machinery and equipment, refractories for initial lining, refrigeration equipment, power generating sets, machine tools, catalysts for initial charge, equipment and instruments for testing, research and development, quality and pollution control. Capital goods may be for use in manufacturing, mining, agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture and viticulture as well as for use in the services sector. 9.31 "Manufacturer Exporter" means a person who export goods manufactured by him or intends to export such goods. 9.33 "Merchant Exporter" means a person engaged in trading activity and exporting or intending to export goods. 23) To put it in nutshell, EXIM Policy 2002-2007 was promulgated with the principal objective, inter alia, to facilitate sustained growth in exports to achieve a share of 1% of global merchandise trade. Therefore, the thrust of this Policy was to ensure and facilitate growth in exports. Because of this reason, exports and imports were made free, except in relation to cases where they were specifically regulated by the provisions of t....
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....rate in their exports. It is proposed to give a duty free entitlement to them for import of capital goods, spares, office equipments and consumables. This will be available to status holders who achieve a growth rate of 25% or more in the current year with a minimum export performance of Rs. 25 crore. They would be entitled to a duty free entitlement of 10% of the incremental growth in exports during the current financial year. This entitlement would be subject to actual user condition which can be passed on to associate manufacturers." 25) In fact, as a part of the EXIM Policy, with amendment coming into effect from April 01, 2003, certain incentives known as 'Special Strategic Package' for status holders was incorporated in para 3.7.2.1. We are concerned with sub-para (vi) thereof, which granted duty free entitlement of 10% of the incremental growth in exports. This para is reproduced above. A reading of the said para would demonstrate that in order to have the aforesaid entitlement, following conditions were to be satisfied: (a) the exporter had to be 'Status Holder'; (b) achieving incremental growth of more than 25% in FOB value of exports in free foreign exchange ; (c) min....
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....is subsequently subjected to any restriction or regulation, such export or import will ordinarily be permitted notwithstanding such restriction or regulation, unless otherwise stipulated, provided that the shipment of the export of import is made within the original validity of the irrevocable letter of credit established before the date of imposition of such restriction. xx xx xx 2.2 Every exporter or importer shall comply with the provisions of Foreign Trade (Development & Regulation) Act 1992, the Rules and Orders made thereunder, the provisions of this Policy and the terms and conditions of any licence/certificate/ permission granted to him, as well as provisions of any other law for the time being in force. All imported goods shall also be subject to domestic laws, rules, orders, regulations, technical specifications, environmental and safety norms as applicable to domestically produced goods. No import or export of rough diamonds shall be permitted unless the shipment parcel is accompanied by Kiberley Process (KP) Certificate required under the procedure specified by the Gem & Jewellery Export Promotion Council (GJEPC). 2.3 If any question or doubt arises in respect of th....
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.... value addition to be achieved; and (e) the minimum export price. 2.9 No person may claim a licence/certificate/ permission as a right and the Director General of Foreign Trade or the licensing authority shall have the power to refuse to grant or renew a licence/ certificate/permission in accordance with the provisions of the Act and the Rules made thereunder. 2.10 If a licence/certificate/permission holder violates any condition of the licence/certificate/ permission or fails to fulfill the export obligation, he shall be liable for action in accordance with the Act, the Rules and Orders made thereunder, the Policy and any other law for the time being in force. 27) On March 31, 2003, in exercise of the powers conferred under paragraph 2.4 of the EXIM Policy, 2002-207, the DGFT notified the Handbook of Procedures (Volume-I) (Revised Edition - March 2003) which was to come into effect with effect from April 01, 2003. Para 3.2.5 of the same provided that: "The status holders having an annual incremental growth of more than 25% in the FOB value of exports (in free foreign exchange) shall be entitled to the facility of duty free credit entitlement subject to achieving a minimum ann....
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....s for better understanding: "Note 1 - For the purpose of calculating the value of exports, the following exports shall not be taken into account, namely: (i) re-export of imported goods or exports made through transshipment; (ii) export turnover of units operating under SEZ/ EOU/EHTP/STP Schemes or products manufactured by them and exported through DTA units; (iii) deemed exports (even when payments are received in free foreign exchange) and payment from EEFC account; (iv) service exports; (v) supplies made by one status holder to another status holder; (vi) export performance made by one status holder on behalf of other status holder will not be eligible for entitlement under the scheme; (vii) supplies made or export performance effected by a non-status holder (Merchant exporter/ Manufacturer with any export performance in 2003-04) to a status holder if the applicant as well as the non status holder have less than 25 per cent incremental growth over their respective previous years direct export turnover; and (viii) the exports made by an applicant within a group and the group to which it belongs has individually less than 25 per cent incremental growth of export. Note 2 ....
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.... under: "The scheme will be applicable to status holders who were also status holders as on 31.3.2003 and who had achieved minimum export turnover of 25 crores in the year 2003-04: I. For direct as well as third party exports, the Export documents viz. Export Order, Invoice, GR Form, Bank Realization Certificate should be in the name of applicant only. However, for the third party exports, where goods have been procured from a manufacturer, the shipping bill should contain the name of the exporter as well as the supporting manufacturer. II. Goods allowed to be imported under this scheme shall have a nexus with the products exported and a declaration in this regard shall be made by the applicant in Appendix 17D. III. The licensing authority shall at the time of issuance of the duty free credit entitlement certificate endorse the name of the associate manufacturer/supporting manufacturer/ job worker on the certificate as declared by the applicant. Goods imported against such entitlement certificate shall be used by the status holder or his supporting manufacturer/job worker in proportion to the value of their direct contribution to the entitlement. IV. The last date for filing o....
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....TP/STPI Schemes or products manufactured by them and exported through DTA units; DFCE would be of no use to Export Oriented Units (EOU) as they are already entitled to import duty free. And since a firm is not allowed to transfer or sell its DFCE entitlements or goods, it cannot benefit from it. Notification 28 and Public Notice 40, kept the above logic in mind while excluding 100% EOU from the said scheme. EXIM Policy makes a very clear distinction between the exports from an Export Oriented Units (EOU) and other exports (called Domestic Tariff Area or DTA exports) primarily because of the difference in nature of support required by the two sectors. EOUs have been allowed zero duty facilities, besides availing industrial licensing exemptions. Since these exemptions are not available to DTA exporters, specific schemes like DFCE been formulated. (iii) Deemed exports Goods do not leave the country and are not considered physical exports. (iv) Service exports The DFCE scheme was available only for physical goods. (v) Supplies made by one status holder to another status holder; The benefits of DFCE Scheme were not applicable to all the status holders but only....
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....in India (Except for a trickle from Panna). Exporting rough diamonds from India is like exporting ostrich or giraffes from India. India imports rough diamonds polished them and exports to the world. The scheme ban rough diamond while fully allowing polished diamonds. Together, the export of diamonds and supplies taken from other status holders accounted for 81.4% of the exports of M/s Adani Exports Ltd. during the year 2003-04. Of these 2475 crores were accounted for by the export of rough and re-exported polished diamonds. The fact that the petitioners were exporting rough diamonds merely to take the benefits of DFCE Scheme is proved beyond doubt by the fact that firm stopped exporting the rough diamonds the moment the Notification was issued in January, 2004 and have not exported any rough diamonds during January - March, 2004. b Gold, silver in any form including plain jewellery thereof 10% DFCE benefits allowed the exporters to experiment in commodities like gold wherein India does not have comparative advantage. Gold coins and jewellery was exported by M/s. Adani Exports and M/s Rajesh Exports largely to ports like Dubai wh....
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....s would not be permitted for counting entitlement under the Duty Free Entitlement Certificate for Status Holders: e) Rough, uncut and semi polished diamonds f) Gold, silver in any form including plain jewellery thereof g) Good grains sourced from central pool maintained by FCI h) Items exported under free shipping bills. Note 7 - The following items would not be allowed for imports under Duty Free Entitlement Certificate for Status Holders: Agricultural products, which fall under Chapters 1-24 of I T C (HS) classification of Export and Import items." Note 6 added in para 3.7.2.1 of the EXIM Policy was earlier inserted as part of para 3.2.6 in the Handbook of Procedures (Volume-I) and is subject matter of controversy. 35) On July 23, 2004, the High Court of Gujarat partly allowed Special Civil Application No. 1676 of 2004 holding that "so far as Note 6 to Para 3.7.2.1 of the EXIM Policy as inserted by the Government notifications dated April 21 and 24, 2004 and the D.G.F.T.'s public notice dated 28.01.2004 exclude the following exports from the benefit of the duty free import entitlement for the export status holders as contained in Para 3.7.2.1 of the EXIM Policy 2002-2007:....
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.... Court issued notice on the Special Leave Petition as well as on application for condonation of delay in the Special Leave Petition (c) (CC NO.6638 of 2005) filed by M/s. Adani Export Ltd. 40) On December 13, 2005, aggrieved by the order of Bombay High Court dated July 04, 2005 in W.P. No.2397 of 2004 upholding the validity of the Notification No.28 of 2004 dated January 28, 2004, M/s. Kanak Exports filed Special Leave Petition (Civil) No. 26123 of 2005. 41) Aggrieved by the order of the Bombay High Court dated July 04, 2005 in Writ Petition No.2397 of 2004, the appellant/Union of India and DGFT filed Special Leave Petition (Civil) No.1331 of 2006. 42) On January 13, 2006 Special Leave Petition (c) No. 26123 of 2005 filed by M/s. Kanak Exports and Special Leave Petition (Civil) No.1331 of 2006 filed by the appellants/Union of India and DGFT challenging the order of the Bombay High Court dated July 04, 2005 in W.P.(c) No. 2397 of 2004 came up for hearing before this Court. This Court upon hearing the parties granted leave in the Special Leave Petition (c) No. 1331 of 2006 and in the meantime stayed the operation of the impugned order in Civil Appeal arising out of S.L.P.(c) No.13....
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....ubstantial changes by inserting new conditions under the cover of clarification, which was not permissible. (iii) Note 4 was also violative of the petitioners fundamental rights under Article 14 and 19(1)(g) of the Constitution. (iv) Doctrine of Promissory Estoppel was also invoked by contending that acting upon the EXIM Policy, which came into effect from April 01, 2003, the petitioners had exported the goods on the promise and assurance contained in sub-para (vi) of Para 3.7.2.1 of the EXIM Policy and fulfilled the conditions set out therein, thereby achieving the target of incremental exports stipulated in the said para and, thus, became entitled to the benefit conferred therein, namely, 10% duty free imports of the specified items. The petitioner had, therefore, altered its position and the respondents were estopped from going back on their promises and assurances. (v) Insofar as Public Notice dated January 28, 2004 is concerned, paragraphs 2 and 3, whereby certain items of goods which were exported were excluded from the purview of the special scheme, were challenged on the ground that they were ultra vires the powers of the DGFT as it amounted to usurping the power of the ....
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....ed the caveat sounded in those judgments. In this behalf, it quoted the following passage from the judgment of this Court in State of Madhya Pradesh & Ors. v. Nandlal Jaiswal & Ors. (1986) 4 SCC 566, which guides as to how the Courts have to deal howwith the challenge to a policy decision of the Government in economic matters: "34...We had occasion to consider the scope of interference by the Court under Article 14 while dealing with laws relating to economic activities in R.K. Garg v. Union of India [(1981) 4 SCC 675]. We pointed out in that case that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion, etc. We observed that the legislature should be allowed some play in the joints because it has to deal with complex problems which do not admit of solution through any doctrinaire or strait-jacket formula and this is particularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature. We quoted with approval the following admonition give by Frank....
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....y if the policy decision is patently arbitrary, discriminatory or mala fide." 48) The Court then observed that these principles were reiterated in Zippers Karamchari Union v. Union of India & Ors. (2000) 10 SCC 619 and in BALCO Employees Union (Regd.) v. Union of India & Ors. (2002) 2 SCC 333 Thereafter, the High Court referred to the various provisions of the EXIM Policy and the amendments made by the impugned Notifications as well as Public Notice, which have already been taken note of above. 49) The High Court thereafter adverted to three exclusions under Note 1 to Para 3.7.2.1 which, according to the writ petitioner, had adversely affected their interest and these exclusions are: (i) Export turnover of units operating under SEZ/EDU/THRP/ STPI Schemes or products manufactured by them and exported through DTA units. (ii) Supplies made by one status holder to another status holder. (iii) Export performance made by one status holder on behalf of other status holder. 50) In the light of the above, the Court first discussed the propriety or validity of the Notification dated January 28, 2004 and pointed out that this Notification does not make 'third party exports' illegal or e....
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....ideration the argument of the writ petitioner that the impugned Notification and Public Notice had the effect of taking away the vested right of the writ petitioner, which was repelled in the following words: "17. Under the policy in force prior to the impugned notifications and even thereafter the third party exports are permitted. What the legal earlier is not made illegal at all. For instance, exports of goods manufactured by units in EDU/SEZ zones through status holder are not prohibited but such exports even made between 1.4.2003 and 27.1.2004, are excluded because the benefit of duty free import was already availed for the export of such goods. Chapter 6 of the Exim Policy relates to Exports Oriented Units (EDUs), Electronics Hardware Technology Parks (EHTPs) and Software Technology Parks (STPs). As provided in paras 6.1 and 6.8 of the Exim policy, these units undertake to export their entire production of goods and services, except permissible sales in the Domestic Tariff Area as per the Exim Policy. Para 6.2(b) of the Exim Policy provides that "an EDU/EHTP/STP unit may import without payment of duty all types of goods, including capital goods, as defined in the Policy, req....
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....esaid legal concepts, it came to the conclusion that Notes 3, 6 and 4 were only retroactive in nature and not retrospective and since Notification dated January 28, 2004 (including Note 3 thereof) on exports made from April 01, 2003 was upheld as valid, Notifications dated April 21 and 23, 2004, flowing from the said Note 3 and adopting contents of Public Notice dated January 28, 2004, could not be faulted with on the ground of retrospectivity. 55) The Court then took the issue of Promissory Estoppel and discussed numerous case law on the subject and concluded that since it was a case of change in economic policy with future effect or retroactive effect only to 'prevent manifest injustice or fraud', such public interest would override individual interest even if the promisee cannot resume his position. On this basis, the argument based on the principle of Promissory Estoppel was rejected. 56) At the same time, exclusion of two items vide Note 6 in Notifications dated April 21 and 23, 2004 and Public Notice dated January 28, 2004 was found to be neither clarificatory nor in public interest and, therefore, bad in law. These are exclusion of following exports from the benefits of du....
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....rred to any other exporter i.e. exporter's own incremental growth will be counted for entitlement. The appellants have not challenged the validity of Note 2. What is challenged is the validity of Note I which states that for the purpose of calculating the value of certain exports shall not be taken into account in respect of sub-clauses (ii),(v),(vi) and (vii) thereof. 20. It appears that till 2002-2003 the petitioners' export performance was going down steadily. In 2002-2003 the export of the petitioners was hardly Rs. 27 crores. In the year 2002-2003 India's export increased by 22% whereas as compared to the petitioners' export of about Rs. 27 crores in 2002-2003, it catapulted to more than Rs. 1000 crores. The national export growth rate was only 22% while the petitioners' exports grew at more than 3800%. It is obvious that this growth is merely a paper growth and not incremental growth within the meaning of the scheme. Notification dated 28th January 2004 does not make any third party export illegal or entirely ineligible for getting incentives under the Exim Policy. However, the basic intention of the amended scheme was to encourage the export of products manufactured by smal....
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....m the purview of the scheme and, therefore, it amounted to amendment of the scheme which could be done by the Central Government only that too by means of Notification under Section 5 of the Notification, clarified that power of the DGFT is only to be exercised for procedural purpose which was evident from para 2.1.4 of the EXIM Policy. On the other hand, para 3.2.6 inserted by Public Notice dated January 28, 2004 went beyond the procedural conditions as these conditions were not found in the Policy. According to the High Court, since the Notification was not clarificatory and it amounted to amendment of the policy which was statutory in nature, this form of delegated or subordinate legislation could be only prospective and not retrospective unless the rule making authority has been vested with the power under the Statute to make rules with retrospective effect. (iii) Insofar as Notes (vi) and (vii) which were added vide Notifications dated April 21 and 23, 2004, the High Court took the view that they were not merely clarificatory in nature. It was pointed out that vide these Notifications, four items were sought to be excluded from the purview of the scheme and, therefore, could ....
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....he view that the amendment is merely retroactive. Once it is shown that the Central Government does not have the power to give retrospective effect to the amendment which is introduced in exercise of power conferred by sec. 5 of the Foreign Trade Act then whether the said amendment is retro-active or retrospective is rather immaterial. The amendment has clearly an impact on the rights which are already crystallized. We have therefore no hesitation to hold that the Notifications dated 21st and 23rd April 2004 would have prospective operation only." OUR ANALYSIS AND CONCLUSIONS 58) The factual matrix, coupled with the arguments advanced before us by both sides, makes it clear that the issues remain the same which were canvassed before the High Courts. Even the position taken by the parties on either side is predicated on identical legal edifice. Before adverting to the analytical discussion and deciding the validity of impugned Notifications and public notice, keeping in mind the legal principles, we would like to first discuss the background in which they came to be issued. We feel that argument of the Union that these were issued in public interest has to be considered first as t....
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....rds in DFCEC Scheme for Status Holders so that third party exports are not counted for the purpose of calculating the incremental growth in exports. Similarly, in case of corporate houses having more than one exporting companies, incremental growth may be calculated by taking into account the overall exports made by all the companies of that group. You may also like to provide for any other safeguards in DFCEC Scheme for Status Holders to ensure that the benefits of DFCEC Scheme is made available only to those status holders who actually achieve incremental growth of 25% or more in FOB value of exports during the financial year 2003-04 vis-a-vis to financial year 2002-03. One way to disallow DFCEC Scheme benefit to such artificial growth may be to define the term "incremental growth in exports" used in para 3.7.2.1(vi) of the EXIM Policy." 61) The said letter dated 14.10.2003 was forwarded to the Office of the Commissioner of Customs, Export Promotions to various Commissioners of Customs and the Commissioner of Customs, Mumbai on 05.11.2003 responded that: "The Customs House at Mumbai has noticed exports of sugar by State Trading Corporation of India Ltd. showing account of Adani....
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....subsidiary company and its limited company shall be taken together to determine the incremental exports. - In case of EOU/SEZ/STP/EHTP units, this facility shall not be available as such units are already eligible for duty free import of capital goods/raw materials/office equipments etc. Further the status holder which also has a DTA unit along with EOU/SEZ/STP/EHTP unit should be excluded for the purpose of determining of third party export. - Value of third party export. - In case of doubt regarding valuation of goods by Customs authorities, the value of goods as determined by Customs authority should be taken for determining incremental export instead of value declared by exporter. - Value of exports made in terms of fulfillment of any export obligation under any export promotion scheme such as EPCG, Advance License etc. Further to plug the loopholes, there is need to incorporate the following safeguards in the scheme. - It is essential to incorporate a provision in the scheme providing that the status holder availing the benefit of above said scheme and importing raw material shall not avail export incentive by way of drawback/DEPB on foods manufactured using such duty fr....
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....objective of DFCEC Scheme for Services Providers is to permit import of aforesaid goods with a view to increase the capability of the services providers so as to enable him to render a better and efficient service. With this in mind import of professional equipments which are required in the profession of the service providers has been allowed. However, insofar as capital goods are concerned, its import to service provider has already been allowed through EPCG route. Therefore, insofar as DFCEC Scheme is concerned, under the category of professional equipments, import of only those equipments would be permissible under DFCEC Scheme, which are professional equipments required by the Service Provider for the purpose of rendering service & earning free foreign exchange. It is reiterated that import of capital goods which are other than professional equipment or office equipment shall not be allowed under DFCEC Scheme for Service Providers. In order to remove doubts, the words "capital goods" used in condition (3) of 54/2003-Cus dated 1.4.2003 has also been corrected to read as "Professional equipment" by issue of corrigendum. Suitable Public Notice for Trade and Standing Order for th....
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....of exports, which have been made directly by the status holder as involved in the export documents and for which the export proceeds have been realized in the name of the status holders shall be taken into account. 68) Thereafter, on December 12, 2003, the Chief Commissioner of Customs, Mumbai addressed a communication to the Joint Secretary (Drawback), Ministry of Finance, Department of Revenue indicating that: "The status holders as well as status holder corporate groups are showing artificial incremental growth of 25% in Exports(.) Even a Govt. of India undertaking, such as S.T.C. Limited have also sold their exports to another status holder(.) It is felt that the incentive scheme under DFCEC for 25% incremental growth in Exports during 2003-04 vis-a-vis 2002-03 has spurred this "artificial clubbing of exports"(.) However, the DGFTS clarificatory policy circular of 16/2002 dated 2.12.2002 envisages that allowing third party export is a conscious decision of the Government(.) It appears that in the face of the current policy provisions, the benefits allowed to third party exports cannot be legally denied(.) Hence it is proposed that Ministry may consider prevailing upon the Mi....
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....ister, Finance Minister, Secretary Finance, Secretary Revenue, Secretary DGFT, Additional DGFT (Policy), Joint Secretary etc. wherein it was decided that salient changes should be brought in the Handbook of Procedure (Volume-1) to the following effect: "the duty free entitlement for status holders has been fine tuned to obviate any possible misuse such as mandating the insertion of the exporter and third party's name on the export documents, need to have nexus for import under the certificate vis-a-vis the exports made etc." 73) In the counter affidavit filed by the Union of India, details of the modus operandi used by these exporters are given on the basis of which it is projected that these exporters indulged in inflating their exports by achieving a growth rate from 300% to 3800% when during the same period i.e. 2003-2004, the national growth of export was merely 18%. It is demonstrated by tabulating figures as follows: S.No. Firm Turnover crores - 2002-03 Turnover crores - 2003-04 % Growth 1 Adani Exports Limited, Ahmedabad 377 4657 1135 2 Rajesh Exports, Bangalore 112 2372 2017 3 Kanak Exports, Mumbai 27 1070 3816 4 Survanshi Exports, Hyderabad ....
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....o the respondent herein M/s Adani Exports Limited had stopped exporting the rough diamonds the moment the Notification was issued in January, 2004 and according to Gems and Jewellery export promotion council, "Party has not exported rough diamonds during Jan/March 2004." III-Export of gold coins, Jewellery-Circular trading and Exports to related companies Most notorious misuse of the scheme was carried out by few firms who exported Gold medallion and studded jewellery. Key firms included M/s. Kanak Exports, M/s. Rajesh Exports Ltd. And M/s. Adani Exports Limited. Petitioners exported to their own counterparts in Dubai and Sharjah. Since the jewellery attracted 5% import duty at Dubai, the consignments which were declared as jewellery in India were declared as scrap in Dubai to avoid the import duty. The export goods have been declared as "Studded gold jewellery/CE Bangles" at the Indian port, whereas at the port of destination they were cleared as gold scrap. In few consignments belonging to M/s Adani Exports Ltd. and produced by M/s Rajesh Exports as supporting manufacturer, the export products declared as 'Bangles' were nothing but strips of gold formed into the shape of ban....
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....(DFCE) and Target Plus Scheme was prepared which is annexed with the counter affidavit. At the time of arguments, Mr. Adhyaru, learned senior counsel extensively read and profusely relied upon this note with his passionate plea that all these writ petitioners have indulged in sharp practices in trying to take undue advantage of the scheme and, therefore, they should not be held entitled to the benefit of the scheme. It was also submitted that this material would clearly support the plea of the Government that the Notifications were issued to curb the misuse and were clearly in public interest. Exact summary and details of misuse as mentioned in the said note are as under: "Executive Summary The following note is based on the intelligence gathered by the government. If needed copies of supporting documents may be produced. Since the Scheme was based on growth of individual exports, many unscrupulous exporters resorted to inflating their export turnover mainly by following type of activities. M/s. Adani Exports and few other exporters purchased the exports of other firms to inflate their turnover. Contracts have been signed between the petitioners and other exporters that petitio....
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....f accelerating the incremental growth in exports and to facilitate India emerging as a major base for different source of products and services for the rest of the world. The reward was supposed to motivate and spur exporters in increasing their export turnover. However, the scheme could not have envisaged at the time of its launch that certain exporters would employ non-commercial and unlawful tactics in a manner that would be injurious to the revenue interest and to derive undeserved benefits without actually having positive effect on the overall export effort of the country. DGFT started getting the reports of misuse of the Scheme predominantly on account of buying of exports from the parties who would otherwise not be eligible under the Scheme. To plug the misuse and also to provide clarification on the details of the Scheme, Notification 28 and Public Notice 40 were issued on 28.1.2004. I-Purchase of exports One of the major misuses reported was that many Status holders were entering into contracts with various exporters for arrangements showing themselves as third party exporters. Such contracts were executed on stamp paper. Ostensibly such status holders indicated themse....
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....r Notification No.28 dated January 28, 2004 vide which Notes 1 to 5 to para 3.7.2.1 were inserted in the EXIM Policy 2002-2007 was only clarificatory in nature or it amounted to amendment of the provisions of para 3.7.2.1 of the EXIM Policy? 77) In order to discuss this question in proper perspective, it would be necessary to take note of those portions of the provisions contained in the original Scheme which are relevant for our purposes. Here, we are concerned with para 3.7.2.1 of the Scheme, which we reproduce again for ready reference: "3.7.2.1 The status holders shall be eligible for the following new/ special facilities: (i) Licence/certificate/permissions and Customs clearances for both imports and exports on self-declaration basis; (ii) Fixation of Input-Output norms on priority within 60 days; (iii) Exemption from compulsory negotiation of documents through banks. The remittance, however, would continue to be received through banking channels; (iv) 100% retention of foreign exchange in EEFC account; (v) Enhancement in normal repatriation period from 180 days to 360 days; (vi) Duty free import entitlement for status holders having incremental growth of more than 25%....
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....merce and Industry Minister's speech on introducing new EXIM Policy 2002-2007. It reads as under: "We recognize that the status holders will continue to play a significant and increasing role in boosting exports, particularly from the small scale sector, as most of the small scale units will not be in a position to directly access the international markets. Moreover, it will be our endeavor to facilitate India emerging as a major base for out sourcing products and services for the rest of the world. They are also critical to our strategy for accelerating the rate of incremental growth of export. Therefore, we intend to give a premium to the status holders who achieve high growth rate in their exports. It is proposed to give a duty free entitlement to them for import of capital goods, spares, office equipments and consumables. This will be available to status holders who achieve a growth rate of 25% or more in the current year with a minimum export performance of Rs. 25 crores. They would be entitled to a duty free entitlement of 10% of the incremental growth in exports during the current financial year. This entitlement would be subject to actual user condition which can be passed....
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....ing under STZ/EOU/EHTP schemes was also excluded as these units are getting all facilities for import without payment of duty on various types of goods including capital goods required by them for their activities. The intention of the makers of the scheme was not to confer double benefit under para 3.7.2.1. Further an exporter is required to export himself and not benefit from export capabilities of STZ/EOU/EHTP etc. This would be only paper growth and amount to abuse of scheme. Reliance placed by the petitioners on Circular No. 16 dated 24th December 2002 is also of no assistance as the said Circular stating that 3rd party exports are eligible for all the export promotion schemes was issued long before the special incentive scheme was announced on 31st March 2003. In our opinion, the provisions contained in the impugned Notification dated 28th January 2004 are merely clarificatory and cannot be treated as amendment to the scheme." 82) The Gujarat High Court, likewise, had come to the same conclusion in the writ petition of Adani Exports Limited. In fact, paras 17 and 18 of the judgment of the Gujarat High Court is reproduced by the Bombay High Court in its judgment which reflect....
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....y the petitioner. Hence, there is no substance in the challenge to a Notes 1 and 2 read with note 4." 83) Sub-note (ii) of Note 1 now provides that export turnover of units pertaining to SEZ/EOU/EHTP/STP or products manufactured by them and exported through DTA units are not to be included and taken into account for the purpose of calculating the value of exports. Both the High Courts in the impugned judgments have held it to be clarificatory on the ground that such export turnover was excluded as these units, namely, those pertaining to SEZ/EOU/EHTP/STP schemes are getting all facilities for import without payment of duty on various types of goods including capital goods required by them for their activities and there was no intention in the original scheme also to confer double benefit under para 3.7.2.1. This question by the writ petitioners by referring to paras 6.10, 7.1 and 7.8 of the EXIM Policy which permitted, inter alia, export through status holders. On that basis, it was argued by the learned counsel appearing for these writ petitioners that sub-note (ii) of Note 1 which stipulated that such exports would not be counted for the purpose of entitlement was not clarificat....
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....he two status-holders if they carry out the exports and made the target as per the Scheme were entitled to the benefit of the Scheme, we agree with the High Courts that even insertion of these clauses is clarificatory in nature inasmuch as it only states that the supply made by one status-holder to another status-holder will not be counted. This clarification was issued, as rightly pointed out by the High Courts, to ensure that two status-holders belonging to the same group may not start pooling and try to take undue advantage. 85) Insofar as sub-note (vii) of Note 1 is concerned, it stipulates that supplies made or export performance affected by a non status holder to a status holder will not be taken into account for the purpose of calculating the value of exports, if the applicant as well as the non status holder have less than 25% incremental growth over their respective previous years. This appears to be clearly clarificatory in nature inasmuch as the purpose of the Scheme was to give benefit to those who are able to achieve incremental growth of 25%. Thus, each such status holder has to independently attain the growth target stipulated in the scheme to avail the benefit. Obv....
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....re, we are concerned with the powers of DGFT to issue such a Public Notice. 89) In order to answer this question, we have to first determine as to whether this Public Notice dated January 28, 2004 is only an amendment to Handbook of Procedure or it tinkers with the EXIM Policy. To answer this question, we may first go into the Scheme of the Act. For this purpose, Section 5 as well as Section 6 of the Act are to be taken note of in the first instance and read as under: "5. Foreign Trade Policy.-The Central Government may, from time to time, formulate and announce, by notification in the Official Gazette, the foreign trade policy and may also, in like manner, amend that policy: Provided that the Central Government may direct that, in respect of the Special Economic Zones, the foreign trade policy shall apply to the goods, services and technology with such exceptions, modifications and adaptations, as may be specified by it by notification in the Official Gazette.] 6. Appointment of Director General and his functions.-(1) The Central Government may appoint any person to be the Director-General of Foreign Trade for the purposes of this Act. (2) The Director-General shall advise th....
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....o force with effect from April 01, 2002 and shall remain in force upto March 31, 2007 and will be co-terminus with the Tenth Five Year Plan (2002-2007). However, the Central Government reserves the right in public interest to make any amendments to this Policy in exercise of the powers conferred by Section 5 of the Act. Such amendment shall be made means of a Notification published in the Gazette of India". Para 1.2 of the said Policy provides that: "Any Notifications made or Public Notices issued or anything done under the previous Export/Import Policies, and in force immediately before the commencement of this Policy shall, insofar as they are not inconsistent with the provisions of this Policy, continue to be in force and shall be deemed to have been made, issued or done under this Policy. License/Certificate/ Permissions issued before the commencement of this Policy shall continue to be valid for the purpose for which such licence/Certificate/permission was issued unless otherwise stipulated". Para 2.4 of the Import and Export Policy dealing with the Procedure provides that: "The Director General of Foreign Trade may, in any case or class of cases, specify the procedure to....
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....amounted to change in the said EXIM Policy. It is crystal clear that the Public Notice alters the provisions of EXIM Policy. It would, therefore, amount to amending the EXIM Policy, whether clarificatory or otherwise. There may be a valid justification and rational for exclusion of four items contained therein, as pleaded by the Union. However, it had to be done in accordance with law. When the DGFT had no power in this behalf, he could not have excluded such items from the purview of EXIM Policy by means of Public Notice. The power of DGFT is only to be exercised for procedural purposes and both the High Courts have rightly remarked that para 3.2.6 inserted by public notice goes beyond the procedural conditions. 95) In fact, the Government itself realised the same, namely, the DGFT had no such power. It is for this reason that what was sought to be achieved by the said Public Notice, was formalised by the Central Government by issuing Notifications dated April 21 and 23, 2004 in exercise of powers conferred on the Central Government by Section 5 of the Act and the same four items were excluded. 96) Therefore, we hold that public notice dated January 28, 2004 issued by DGFT, so f....
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....ernment. It is for the Government to take the decision to grant such a privilege or not. It is also trite law that such exemptions, concessions or incentives can be withdrawn any time. All these are matters which are in the domain of policy decisions of the Government. When there is withdrawal of such incentive and it is also shown that the same was done in public interest, the Court would not tinker with these policy decisions. This is so laid down by catena of judgments of this Court and is now treated as established and well grounded principle of law. In such circumstances, even the Doctrine of Promissory Estoppel cannot be ignored. 102) We may suitably refer to the judgment of this Court in Kasinka Trading v. Union of India (1995) 1 SCC 274. In that case, Government of India had issued Notification under Section 25(1) of the Customs Act, 1962 in 'public interest' granting exemption from whole of the customs duty on import of PVC resin. This Notification was to remain in force till March 31, 1981. However, even before the said date, by another Notification dated October 16, 1980, the full exemption from custom duty was withdrawn and it was reduced to the exemption from custom d....
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....ollowing words: "The Courts have to balance equities between the parties and indeed the Courts would bind the Government by its promise to prevent manifest injustice or fraud". The Court also quoted with approval the following observations from Malhotra & Sons v. Union of India AIR 1976 J&K 41: "The Courts will only bind the Government by its promises to prevent manifest injustice or fraud and will not make the Government a slave of its policy for all times to come when the Government acts in its Governmental, public or sovereign capacity." 103) The above decision was followed by this Court in Shrijee Sales Corporation v. Union of India (1999) 3 SCC 398 where also the same notifications were considered. In that case also, the appellants-petitioners had alleged that they would not have imported the PVC resin without the exemption as that would have been unviable and uneconomical and further that many persons took full advantage of the exemption. The Court held that the facts of the economic situation explained in the judgment rendered in Kasinka Trading's case were not contravened nor was it alleged that public interest did not call for supersession of the exemption notification....
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....xports with minimum export value turnover of 25 crore, said exporter got right to have duty free entitlement equivalent to 10% of incremental growth in exports. The only condition was that this entitlement was to be used w.e.f. April 01, 2004 for import of items specified in the said clause. On that basis, it was argued that the effect of the impugned Notification was to take away this vested right accrued away in their favour and it amount to giving retrospective operation to the said circular which was not permissible. Following judgments were cited in support of the plea that there was no such power to make provision with retrospective effect in exercise of power of delegated legislation: (i) Union of India & Ors. v. Asian Food Industries (2006) 13 SCC 542 "48. The Delhi High Court, however, in our view correctly opined that the Notification dated 4-7-2006 could not have been taken into consideration on the basis of the purported publicity made in the proposed change in the export policy in electronic or print media. Prohibition promulgated by a statutory order in terms of Section 5 read with the relevant provisions of the policy decision in the light of sub-section (2) of Sec....
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....he meaning of that provision. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. Section 29(2) before it was enacted, was precise in its implication as well as in its expression: the meaning of the words used was not in doubt, and there was no omission in its phraseology which was required to be supplied by the amendment." (iv) Commissioner of Income Tax v. Vatika Township Private Ltd. (2015) 1 SCC 1 "28. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bed rock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This prin....
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....e only on the termination of the tenancy, and in the present case it would have been available to him on March 31, 1953 if the statutory provision had not in the meanwhile extended the life of the tenancy. It is true that the appellant gave notice to the respondents on March 11, 1952 as he was then no doubt entitled to do; but his right as a landlord to obtain possession did not accrue merely on the giving of the notice, it accrued in his favour on the date when the lease expired. It is only after the period specified in the notice is over and the tenancy has in fact expired that the landlord gets a right to eject the tenant and obtain possession of the land. Considered from this point of view, before the right accrued to the appellant to eject the respondents amending Act 33 of 1952 stepped in and deprived him of that right by requiring him to comply with the statutory requirement as to a valid notice which has to be given for ejecting tenants. 9. In this connection it is relevant to distinguish between an existing right and a vested right. Where a statute operates in future it cannot be said to be retrospective merely because within the sweep of its operation all existing rights....
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....here the period of notice had expired after the amending Act had come into force and that the effect of the amending Act was no more than this that it imposed a new and additional limitation on the right of the landlord to obtain possession from his tenant. It was observed in that judgment that "a notice under Section 34(1) is merely a declaration to the tenant of the intention of the landlord to terminate the tenancy; but it is always open to the landlord not to carry out his intention. Therefore, for the application of the restriction under sub-section 2(a) on the right of the landlord to terminate the tenancy, the crucial date is not the date of notice but the date on which the right to terminate matures; that is the date on which the tenancy stands terminated". (vi) Sakuru v. Tanaji (1985) 3 SCC 590 "4. Our attention was drawn to the fact that subsequent to the decision of the High Court, the State Legislature has enacted the Andhra Pradesh Tenancy Laws (Amendment) Act, 1979 - Act 2 of 1979, whereby Section 93 of the Act has been amended and the provisions of Section 5 of the Limitation Act, 1963 have now been expressly made applicable to appeals and revisions preferred under....
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....romotees, would be determined with reference to the year in which the direct recruits are appointed. And further, that direct recruits cannot claim seniority with reference to the year in which the vacancies against which they are appointed had arisen. In our considered view reliance on the Letter dated 11-5-2004, for the determination of the present controversy, is liable to outright rejection. This is so because, the Letter dated 11-5-2004 has been styled as a "clarification" (see heading in right hand column). One of the essential ingredients of a clarification is, that it "clarifies" an unclear, doubtful, inexplicit or ambiguous aspect of an instrument. A "clarification" cannot be in conflict with the instrument sought to be clarified. The Letter dated 11-5-2004 breaches both the essential ingredients of a "clarification" referred to above. That apart, the Letter dated 11-5-2004 is liable to be ignored in view of two subsequent Letters of the Ministry of Finance, Department of Revenue dated 27-7-2004 and 8-9-2004. 37. The Letter dated 27-7-2004 is reproduced hereunder: " New Delhi, 27-7-2004 To, The Chief Commissioner of Income Tax (CCA), Chandigarh Subject: Fixation of i....
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....h achieving of the export targets, they became eligible to avail the benefit of the Scheme but before this benefit could be availed of, for which the effective date was April 01, 2004, impugned Notification was issued on January 28, 2004. On this basis, it was argued that the Notification given only retroactive effect and not retrospective effect. 108) We may, in the first instance, make this legal position clear that a delegated or subordinate legislation can only be prospective and not retrospective, unless rule making authority has been vested with power under a statute to make rules with retrospective effect. In the present case, Section 5 of the Act does not give any such power specifically to the Central Government to make rules retrospective. No doubt, this Section confer powers upon the Central Government to 'amend' the policy which has been framed under the aforesaid provisions. However, that by itself would not mean that such a provision empowers the Government to do so retrospective. This legal position is rightly discussed by the Bombay High Court in the impugned judgment in the following words: "We are unable to accept the submissions of learned Additional Solicitor ....
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....emed to have come into force on July 27, 1956 must be held ultra vires." The reliance placed on the power to regulate under Section 3 of the Act is equally misconceived. Section 5 gives express power to formulate the policy and to amend it. This is specific power. The power to regulate therefore cannot be read as a power to amend when a specific power to amend is given. If the power to regulate does not include the power to amend retrospectively such a power cannot be read into Section 3 of the Act. Section 21 of the General Clauses Act on which reliance is placed by learned Additional Solicitor General is also of no assistance to sustain the retrospective operation of the notification. Section 21 of the General Clauses Act embodies a rule of construction, nature and extent of application of which must inevitably be governed by the relevant provisions of the statute which confers power to issue the notification. The said power must be exercised within the limits prescribed by the provisions conferring the said power. (See Gopichand v. Delhi Administration, AIR 1959 SC 609, Lachmi Narayan and Ors. v. Union of India and Ors. (1976) 2 SCC 953 and State of Kerala and Ors. v. K.G. Mad....
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....ecial incentive in terms of the scheme which, of course, was to be availed from April 01, 2004. The case of the Government, on the other hand, is that the benefit was to accrue to these exporters only from April 01, 2004 and before that it was withdrawn and, thus, no vested right accrued in their favour. It was also argued that in the policy, which provides special incentives to status holder, the term "incremental growth in export" was not defined/clarified at the time when the policy was issued. By the impugned notification, the blanks/gaps were filled and the term incremental growth in export was defined and it was clarified as to how the incremental growth in export is to be actually worked out. This was also done before the question of actual working out of the incremental growth in exports arose and hence, no retrospective effect. 111) An astute and penetrative examination of the record, with reference to the results of the investigation, which had prompted the Central Government to issue these Notifications, provides a very tidy answer to the question posed above is that the so-called targets achieved were only on paper through fraudulent means and, therefore, it cannot be ....
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....ernment. All these aspects are discussed in much details earlier and need not be repeated. We would like to recapitulate the following stark features/practices which have surfaced on record as a result of investigation: 113) Mr. Adhyaru has successfully demonstrated that the following methods were found to be resorted to by these exporters to inflate their export turnovers:- (i) Export of rough diamonds even though India is not a rough diamond producing country. These exports stopped the moment DFCE benefits were disallowed. Export of such rough diamonds earlier has never been part of the normal commercial operations and has taken place just to take advantage of the Scheme. According to Gems and Jewellery Export Promotion Council, "India is not a rough exporting country. Rough diamonds which are unsustainable for cutting in India are re-exported." Such exports stopped the moment benefit was explicitly withdrawn. (ii) In the present case also the respondent M/s Adani Exports Limited had stopped exporting the rough diamonds the moment the Notification was issued in January, 2004 and according to Gems and Jewellery Export Promotion Council, "Party has not exported rough diamonds ....
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....isuse of the Scheme. Therefore, we are of the opinion that even when impugned Notification issued under Section 5 could not be retrospective in nature, such retrospectivity have not deprived the writ petitioners/exporters of their right inasmuch as no right had accrued in favour of such persons under the Scheme. This Court, or for that matter the High Court in exercise of its writ jurisdiction, cannot come to the aid of such petitioners/exporters who, without making actual exports, play with the provisions of the Scheme and try to take undue advantage thereof. To this extent, direction of the Bombay High Court granting these exporters benefit of the Scheme for the past period is set aside. 115) One incidental issue remains to be discussed. This pertains to imposition of fee sought to be levied by Public Notice No. 18 dated July 24, 2003. The exporters are right in their submission that fee could not be imposed by a Public Notice and it was necessary to have recourse to Section 5 of the Act to impose such a fee. Notification dated July 24, 2003 insofar as it relates to imposition of fee is, therefore, set aside. 116) Thus, appeals and transfer cases stand disposed of in terms of ....
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....exports by rewarding Star Export Houses who have achieved a quantum growth in exports. High performing Star Export Houses shall be entitled for a duty credit based on incremental exports, substantially higher than the general annual export target fixed (Since the target fixed for 2005-06 is 17%, the lower limit of performance for qualifying for rewards is pegged at 20% for the current year). 3.7.2 Eligibility Criteria All Star Export Houses (including Status Holders as defined in Para 3.7.2.1 of Exim Policy 2002-07) which have achieved a minimum export turnover in free foreign exchange of Rs. 10 crores in the previous licensing year are eligible for consideration under the Target Plus Scheme. 3.7.3 Entitlement The entitlement under this scheme would be contingent on the percentage incremental growth in FOB value of exports in the current licensing year over the previous licensing year, as under: Percentage incremental growth Duty Credit Entitlement (as a % of the incremental growth) 20% and above but below 25% 5% 25% or above but below 100% 10% 100% and above 15% (of 100%) Note: (1) Incremental growth beyond 100% will not qualify for computation of duty cr....
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....roup may file an application on behalf of all the Star Export House companies of the Group. 3.7.5 The following exports shall not be taken into account for calculation of export performance or for computation of entitlement under the scheme: (a) Export of imported goods covered under Para 2.35 of the Foreign Trade Policy or exports made through transshipment. (b) Export turnover of units operating under SEZ/EOU/EHTP/STPI/BTP Schemes or products manufactured by them and exported through DTA units. (c) Deemed exports (even when payments are received in Free Foreign Exchange and payment is made from EEFC account). (d) Service exports. (e) Rough, uncut and semi polished diamonds and other precious stones. (f) Gold, silver, platinum and other precious metals in any form, including plain and studded Jewellery. (g) Export performance made by one exporter on behalf of another exporter. 3.7.6 Imports allowed The Duty Credit may be used for import of any inputs, capital goods including spares, office equipment, professional equipment and office furniture provided the same is freely importable under ITC (HS) Classification of Export and Import items, for their own use or that of sup....
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....t Zone (AEZ's), Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and Bio Technology Parks (BTPs) shall be eligible for applying for status as Star Export Houses. 3.5.2 Status Category The applicant shall be categorized depending on his total FOB/FOR export performance during the current plus the previous three years: Category Performance (Rupees in Crores) One Start Export House 15 Two Star Export House 100 Three Star Export House 500 Four Star Export House 1500 Five Star Export House 5000 Note: 1. Manufacturer exporters in Small Scale Industry/Tiny Sector/Cottage Sector, Units registered with KVICs/KVIBs, Units located in North Eastern States, Sikkim and J&K, Units exporting handloom/handicrafts/hand knotted or silk carpets, exporters exporting to countries in Latin America/CIS/sub-Saharan Africa as listed in Appendix-9, units having ISO 9000 (series)/ISO 14000(series)/WHOGMP/HACCP/SEI CMM level-II and above status granted by agencies listed in Appendix-6, exports of services and exports of agro products shall be entitled for double weightage of exports made for grant of Start Export House status. 2. Exports made on re-export b....
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....le under the ITC (HS) classification of export and import items for their own use and that of supporting manufacturers, as declared in the application 17D. The exporters in these cases claim that relying on the aforesaid Scheme, they ensured that they achieved incremental exports. 123) Thereafter, however, the Central Government, in exercise of powers conferred by Section 5 of the Act issued Notification bearing No. 48 (RE 2005)/2004-2009 dated February 20, 206. Vide this Notification, the Government amended the list of exports enumerated in para 3.7.5 of the FTP thereby excluding the exports of all types of forms of petroleum products covered under ITC (HS) codes 2706-2715 for the purpose of calculation of TPS and computation of its entitlement. This amendment was made effective from April 01, 2005 in respect of exports effected during April 01, 2005 to March 31, 2006. The relevant portion of the said Notification, with which we are concerned, reads as under: "6. In para 3.7.5, the following shall be inserted after sub para 3.7.5(f) (g). Ores and Concentrates, of all types and in all forms. (h) Cereals, of all types. (i) Sugar, of all types and in all forms. (j) Crude/Petrol....
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.... under ITC (HS) codes 2706-2715 and these items could not be excluded by the aforesaid amendment. In nutshell, submission was that by giving retrospective effect to the amendment, which was in any case impermissible, even the vested right of these exporters was taken away. It can, thus, be seen that the arguments on vested right and retrospectivity are the same and the counsel who appeared in these matters advanced identical legal submissions. 128) We have already discussed these aspects in detail. To recapitulate, it is held by us that Section 5 of the Act does not empower the Government to make amendments with retrospective effect, thereby taking away the rights which have already accrued in favour of the exporters under the Scheme. No doubt, the Government has, otherwise, power to amend, modify or withdraw a particular Scheme which gives benefits to a particular category of persons under the said Scheme. At the same time, if some vested right has accrued in favour of the beneficiaries who achieved the target stipulated in the Scheme and thereby became eligible for grant of duty credit entitlement, that cannot be snatched from such persons/exporters by making the amendment retro....
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....M Policy 2002-2007 and the evidence that surfaced during the said investigation, particularly with respect to the alleged dubious practices adopted by some exporters who had inflated their turnover in respect of gold and diamond exports and it is mentioned that under these circumstances, for 'anticipating misuse', the Government came out with the aforesaid Notification. The amendment Notification is justified on the ground that in the Scheme itself it had preserved the right to change the eligibility criteria and rate of entitlement effective from the beginning of the year, in public interest. Thus, the action is justified on the ground that such a power was reserved in the TPS itself and that measure was taken to avoid misuse by unscrupulous exporters. Nowhere it is stated that there was misuse by any of these parties. 132) Pertinently, it is also not denied that these petitioners/exporters had achieved the quantum/incremental growth, as stipulated in the TPS, which made them eligible to get the rewards under the said Scheme. These exporters, therefore, had fulfilled the conditions contained in the TPS. The Scheme was floated to accelerate quantum growth in exports and when those....