TaxTMI 
TaxTMI 
2015 (11) TMI 80
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...., Mr. Biju P. Raman, Adv., Mr. Rohan 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 in....
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....l 554 of 2006 respectively. That apart, the Single Judge of the Gujarat 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 fro....
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....16 and 19 of the Act. 8) As already noted above, Sections 3 and 5 give certain 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 ....
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....d quality goods and services at internationally competitive prices while at the same time creating 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 allowe....
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.... achieve the prescribed average export performance level: Category Total FOB/FOR during the current licencing year 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 bas....
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.... 3.10 With a view to achieve the share of 1% of global trade and accelerated growth in exports, the following shall be the thrust sectors: a) Electronic hardware b) Textile including garments c) Auto components/ancillary d) Gem & 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, includ....
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.... educational institution or hospital; or (iii) any service industry. 9.10 "Capital Goods" means any plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly, of goods or for rendering services, including those required for replacement, modernisation, technological 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 ....
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....ernational markets. Moreover, it will be our endeavor to facilitate India emerging as a major base for outsourcing products and services for the rest of the world. They are also critical to our strategy for accelerating the rate of incremental growth of exports. 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 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 incr....
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....be in force and shall be deemed to have been made, issued or done under this Policy. Licence/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. 1.3 In case an export or import that is permitted freely under this policy 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 speci....
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....s, ammunition and implements of war. xx xx xx 2.8 Every licence/certificate/permission shall be valid for the period of validity specified in the licence/certificate/permission and shall contain such terms and conditions as may be specified by the licensing authority which may include: (a) the quantity, description and value of the goods; (b) Actual User condition; (c) export obligation; (d) the 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, 200....
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....ion 5 of the Act read with para 1.1 of the EXIM Policy, certain amendments were made in the EXIM Policy. However, we are concerned here with amendment in para 3.7.2.1 in Chapter III. As noted above, this para provides certain incentives and contains seven sub-paragraphs. After sub-paragraph (vii), five notes were inserted by way of amendment. Though some provisions of Note I are the bone of contention, we reproduce here all these Notes 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 performanc....
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....nst this entitlement." 31) Vide Public Notice bearing No. 40 dated January 28, 2004, which was issued along with the aforesaid Notification No.28 on the same date, certain amendments were made in the Handbook of Procedures (Volume-I). This Public Notice was issued by the DGFT in exercise of powers conferred under para 2.4 of the EXIM Policy. By this Public Notice, paragraph 3.2.6 was inserted below para 3.2.5 of the Handbook of Procedures (Volume-I), which reads as 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....
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....Notification No.28 dated 28.01.2004 and Public Notice No.40 dated 28.01.2004 are as under: S. No. Exclusion Rational for exclusion Note 1 (i) Re-export of imported goods or exports made through transshipment; Such goods are imported under the customs bond and re-exported with little value addition. Such exports come from country A and go to country B via India and are only pass through exports and not considered exports made in India. (ii) Export turnover of units operating under SEZ/ EOU/EHTP/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 s....
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....ile applicant firm's turnover will skyrocket. If the firm had focused on increasing their exports, both the firm and the country would have gained in terms of export turnover, however, the firms chose to focus on people who were already exporting (but were not entitled for this benefit). Thus, the firm's turnover in the past year grew at astronomical rate whereas country's export growth was just average. S. No. Exclusion Rational for exclusion a Rough, uncut and semi polished diamonds Rough diamonds are not produced 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 fa....
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....ry 28, 2004. 34) Thereafter, as noted above, Notification No. 38 dated April 21, 2004 was issued vide which Note 6 and 7 were inserted in para 3.7.2.1 of the EXIM Policy. It may be recalled that first five notes were inserted by Notification No. 28 dated January 28, 2004. By Note 6, certain products and category of products were excluded from entitlement under duty free entitlement certificate for status holders, whereas under Note 7, certain items were not allowed for imports under duty free entitlement certificate for status holders. These Notes read as under: "Note 6 - The export of the following products and categories of products 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 Expo....
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.... came up for hearing before a Division Bench of High Court and upon hearing the parties, the High Court of Judicature at Bombay upheld the validity of Notification No. 28(RE-2003)/2002-2007 dated January 28, 2004. However, it set aside the Public Notice No. 40 dated January 28, 2004 and further held that the Notifications dated April 21 and 23, 2004 have only prospective operation which means that exports made by the exporters respondent prior to April 21, 2004 in respect of the classes of goods covered by Notifications dated April 21/23, 2004 were entitled to be computed for the purposes of determining the entitlement of Duty Free Imports. 39) On October 21, 2005, this 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 da....
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....GFT. The validity of the aforesaid provisions was questioned on the following premise: (i) Since Note 4 provided that the guidelines would be applicable to exports made on or after April 01, 2003, Notification was challenged on the ground that it amounted to giving retrospective effect to the amendment Notification dated January 28, 2004 and there was no such power with the Central Government under Section 5 of the Act, or otherwise, to make amendments to the EXIM Policy with retrospective effect, or even retroactively. (ii) These Notes, particularly Notes 1 to 3, 6 and 7, added by the impugned Notifications were not mere guidelines or clarificatory in nature, but amounted to making substantial 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 EX....
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....isdom of the Government in such economic matters and the Government must have the freedom to experiment and must be allowed to adopt the "trial and error method". It was also argued that economic decision, as contained in the Notifications granting monetary benefits, can be withdrawn even before the expiry of the period for which the benefit was originally given if the decision of the Government is based on relevant material justifying such clarification or even change of the Policy. 47) After taking note of the aforesaid submissions of both the parties, the High Court stated certain legal principles referring to few judgments of this Court, which it deemed necessary to bear in mind, as they reflected 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.....
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....commodations, illogical, it may be, and unscientific. But even such criticism should not be hastily expressed. What is best is not discernible, the wisdom of any choice may be disputed or condemned. Mere errors of government are not subject to our judicial review. It is only its palpably arbitrary exercises which can be declared void. The Government, as was said in Permian Basin Area Rate cases [20 L Ed (2d) 312], is entitled to make pragmatic adjustments which may be called for by particular circumstances. The Court cannot strike down a policy decision taken by the State Government merely because it feels that another policy decision would have been fairer or wiser or more scientific or logical. The Court can interfere only 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 ....
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.... well as to the existing supplier/exporters, will have to be treated as clarificatory if the basic object of the incentive scheme is looked at. The object of the Scheme was to boost exports in actual terms and not merely to encourage the existing exporters to pool their exports for the purpose of giving artificial appearance of the incremental growth of exports. 51) On the aforesaid basis, the High Court concluded that the main purpose of the Notification dated January 28, 2004 was to prevent transfer of export orders from one group company to another company belonging to the same group in order to show enhanced export performance of such another company and, therefore, it was clarificatory in nature. 52) The Court then took up for consideration 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....
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....ng that by this Public Notice certain export products from the Incentive Scheme were sought to be excluded and it could not be treated as mere clarifications, the High Court held that DGFT had no power to exclude exports of such groups merely by stating that rough diamonds or food items were to be excluded. 54) Since Notification dated April 21, 2004 read with Notification dated April 23, 2004 were issued whereby Note 6 was added, which was to the same effect as Public Notice dated January 28, 2004, and since this was held not to be merely clarificatory in nature, the Court went into the issue as to whether Notes 6 and 3 read with Note 4 were retroactive or retrospective. In the process, it dealt with the issue of 'vested right' and after discussing the aforesaid 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 ....
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....us holders as third party exporters holding other parties in obtaining the orders. These contracts were found to have been entered into between the parties as merely a paper arrangement with a view to claim benefits of duty free credit entitlement on the export of others. It also came to notice that the status holders were purchasing exports made by other parties at a premium with a view to show incremental growth of 25% or more in exports without having actually achieved such growth. In the face of this clear abuse of the scheme the Central Government had to intervene and issue the impugned Notification to clarify the correct meaning of the scheme. Note 2 of the Notification provides that incremental growth of exports by an exporter shall not, directly or indirectly, be transferred 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 t....
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.... 2004 are merely clarificatory and cannot be treated as amendment to the scheme." In the process, the High Court rejected the contention of the writ petitioners that the said Notification was unreasonable and irrational. The Court held that in complex economic matters every decision is necessarily empiric and is based on experimentation of what one may call trial and error method and, therefore, its validity cannot be tested on any rigid prior considerations or on the application of any straightjacket formula. (ii) Public notice dated January 28, 2004 issued by the DGFT has been held to be without jurisdiction inasmuch as DGFT has no power to do so under Section 5 read with Section 3 of the Act. The Court held that by this Public Notice, four items were sought to be excluded from 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 Janu....
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....pectively, that could not be assumed on the ground that it was necessitated in public interest. On this aspect, the Bombay High Court did not agree with the view taken by Gujarat High Court which held that Notifications dated April 21 and 24, 2004 were merely retroactive and not retrospective, by giving following reasons: "The Division Bench, however, proceeded to hold that the Notifications dated 21st/24th April, 2004 are merely retroactive and not retrospective. We may hasten to add that the Division Bench struck down the Notifications dated 21st/ 23rd April, 2004 as far as the free shipping bills and gold, silver and jewellery are concerned on the ground that exclusion of these items was unjustified and unreasonable. With great respect to the learned Judges we are unable to agree with the 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....
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.... "It has been reliably learnt that some status holders are trying to show growth in exports so as to avail the benefit of the aforesaid scheme. Such status holders are purchasing exports made by other parties at a premium with a view to show incremental growth of 25% or more in exports without having actually achieved such growth. Similarly some corporate groups having more than one exporting units are reportedly shifting exports in the name of any one status holder group company so as to artificially achieve incremental growth of 25% in exports. You would agree that the objective of DFCEC Scheme is to encourage status holders to achieve substantial growth in exports so that there is corresponding increase in the foreign exchange earnings of the country. It is, therefore, necessary to put suitable safeguards 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....
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....not regarded subsequently as misuse or abuse of the scheme. It is also brought to the notice that it is open to the exporters to export under free Shipping Bill where as per the current instructions there is no scrutiny of Shipping Bills or physical examination of the goods. This would enable the unscrupulous exporters to inflate the FOB Value and get incremental growth and the additional benefit of 10% under DFCEC." 62) In a meeting held with the Officials of the DGFT and the Customs it was suggested as under: "For calculation of incremental value the following should be excluded:- - Value of goods exported on re-export basis. - Since the exports made by a subsidiary of a limited company are counted towards export performance of the limited company for the purpose of recognition, the value of export made by 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/ST....
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....f this. - There is need to clearly express in the scheme that value of only physical exports be taken into consideration and not the value of deemed exports. - The Scheme is open ended and it does not have any linkage with foreign exchange realised. This aspect also needs careful re-examination." 63) On 19.11.2003, the Officer on Special Duty, Government of India, Ministry of Finance, Department of Revenue issued a Circular No. 98/2003 stating that: "Commissioner of Customs (Export), ACC, Sahar had raised an issue whether under DFCEC Scheme, import of all capital goods including professional equipments could be allowed. This doubt has also been created on account of usage of the words "capital goods" in condition (3) of Customs Notification No. 54/2003. This issue has been examined in consultation with DGFT/MOC. DGFT have confirmed that the 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 be....
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....E to service providers. 66) On December 11, 2003, the Additional Director General, Directorate of Revenue Intelligence addressed a letter to the Joint Secretary, (Draw back), Ministry of Finance reiterating the suggestions made in the meeting held with the Officers of the DGFT and the Customs as stated herein above. 67) On December 23, 2003, the Office of the Chief Commissioner of Customs, Bangalore Zone, addressed a Communication to the Joint Secretary (Drawback), Ministry of Finance, Department of Revenue, Central Board of Excise and Customs inter alia indicating: (i) In order to prevent misuse of the scheme, it is desirable to incorporate the following conditions in paras 3.7.2 and 3.7.2.1 of the EXIM Policy 2002-2007 while issuing the duty free import entitlement certificate. (ii) White computing the incremental growth in FOB value of exports, only the value 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 com....
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....and the same discussed threadbare during internal deliberations. 70) There were a series of interactions with the other Ministries involving changes in the procedural aspects of the EXIM Policy as reflected in the Handbook of Procedures (Volume-1). 71) The individual divisions were allocated the task of amending the procedural aspects of the EXIM Policy. Inputs were received from the EPCG division headed by Addl. DGFT (MLB) which carried out changes in Chapter 5 of the Handbook of Procedures (Volume-1), PC II Division carried out changes in the Deemed export chapter and DES IV Division suggested changes in Chapter IV of the Handbook of Procedures (Volume-1). 72) Meetings were held with the (Drawback) Directorates on January 09, 2004 and January 21, 2004 culminating into a presentation to the Hon'ble Prime Minister on January 27, 2004 in the presence of the Commerce and Industry Minister, 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 hol....
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.... past 6 years their exports were declining. The above said growth rate of the companies who have challenged the Notifications and the Public Notices, has been achieved on account of the following: I-Purchase of exports Purchase of the exports of other firms (who were not eligible to get the benefit of the scheme) by M/s. Adani Exports Ltd. to inflate their turnover. For this contracts were signed between the petitioners and other exporters. II-Export of rough diamonds Export of rough diamonds by M/s. Adani Exports Ltd. Even through India is not a rough diamond producing country. These exports stopped the moment DFCE benefits were disallowed. • Export of such rough diamonds earlier 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. In the present case also the respondent herein M/s Adani Exports Limited had stopped exporting the rough dia....
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....of the modus operandi of the firms involved. Exports of cut and polished diamonds took place from small rooms of 10X12 feet where manufacturing activity was not allowed. Firms like M/s. Adani Exports imported their consignments on re-export basis with artificial value addition and to buyers related to them. Page 51 of Annual report 2001-02 of M/s. Adani Exports mentions the name of M/s. Gudami International of Singapore as the related party and associate entity. M/s. Adani Exports exported cut and polished diamonds to this entity. This indicates that the suppliers, exporters and importers were linked and hence the possibility of manipulating value addition. According to one estimate the same set of diamonds were rotating and these never entered the Indian domestic territory or to the end consumers abroad." 74) It is also stated in the counter affidavit that the misuse of the scheme had also come to the notice of DRI and other intelligence officials who had gathered the necessary information and collected supported documents. Based on the intelligence gathered, a note on the misuse of Duty From Credit Entitlement (DFCE) and Target Plus Scheme was prepared which is ann....
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....rough craftsmanship and hence they added extra gold to get the value addition. However, in this process strangely enough per unit price of the gold exported was less than per unit price of gold imported. Government has secured key documents from UAE Customs. Cut and polished diamonds were imported, stored inside a bond and re-exported with artificial value addition. Few large firms led by M/s. Adani Exports Ltd. exported these products to buyers related to them. According to one estimate the same set of diamonds were rotating and these never entered the Indian domestic territory or to the end consumers abroad. The value of such exports in the year 2003-04 and 2004-05 may exceed Rs. 15,000 crores. This report contains observations of DRI, which describes the modus operandi and the firms involved in graphic details. DETAILS OF THE MISUSE OF DUTY FREE CREDIT ENTITLEMENT (DFCE) & TARGET PLUS SCHEME BY THE PETITIONERS Background of Policy changes Intent of the Government has been to accelerate India's exports and towards this intent DFCE scheme was launched. The scheme envisaged rewarding genuine export growth with the specific objective of accelerating the incremental growt....
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....ism would mean that the country's export turnover would remain constant while applicant firm's turnover will skyrocket. If the firm had focused on increasing their exports, both the firm and the country would have gained in terms of export turnover, however, the firms chose to focus on people who were already exporting (but were not entitled for this benefit). Thus, the firm's turnover in the past year grew at astronomical rate whereas country's export growth was just average." The Government has, thus, demonstrated that based on the aforesaid exercise undertaken, Notification dated January 28, 2004 as well as Public Notice of the even date were issued. 75) Notwithstanding strenuous efforts made by learned counsel for the wit petitioners to show that the exports by them were genuine and there was no misuse, we have no hesitation in accepting the plea of the Union that the purport behind Notifications was bona fide which was actuated with the conditions of public interest in mind. We answer the question in the affirmative. 76) Let us now discuss the validity of the Notification dated January 28, 2004. The issue that arises for determination is as to: Whether Notification....
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....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 2003-2004) 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; (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." 79) There was no serious challenge to sub-notes (i), (iii), (iv) and (viii). Before we discuss the effect and impact of the aforesaid sub-notes of Note 1, let us find out as to how the Bombay High Court and Gujarat High Court in their respective judgments have dealt with this issue. 80) So far as the Bombay High Court is concerned, after specifically posing the question as to whether Notification dated January 28, 2004 has the effect of introducing a new condition or term or it is merely in the nature of clarification to the existing policy. The High Court referred to the basic objective of the ....
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....scheme and the scheme was not to encourage the status holder/export house to pool the exports made by other exporters for the purpose of showing incremental growth. On that basis, the High Court held that the Notification dated January 28, 2004 was merely clarificatory and cannot be treated as amendment to the scheme and backed this conclusion with the following reasons: "....However, the basic intention of the amended scheme was to encourage the export of products manufactured by small scale units who do not have access to the international market because of lack of required international marketing expertise and optimum resources to have presence in the international marketing arena. The scheme was not intended to encourage the status holder/export house to pool the exports made by other exporters for the purpose of showing incremental growth in the export. The clarification issued by the impugned Notification in so far as it provides that supplies made by one status holder to another status holder or export performance made by one status holder on behalf of another status holder shall not be eligible for entitlement is in consonance with the basic object of the scheme. The exp....
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....as under: "6.10 As EOU/EHTP/STP unit may export goods manufactured/software developed by it through a merchant export/status holder recognized under this policy any other EOU/EHTP/SEZ unit". The amendments do not impinge upon the right of any party to export its goods in accordance with the EXIM policy. The clarification only excludes exports which were never intended in the first place to be covered by the Special Scheme under consideration. 18. Secondly, the misuse of the scheme by mere paper growth in exports is not to be countenanced. Hence, it is but natural that the notification dated 28.1.2004 would apply to the exports made from 1.4.2003 onwards. In so far as this court holds that the Notes 1 and 2 read with Note 4 introduced by the notification dated 28.1.2004 are merely clarificatory, the exports made by the petitioners between 1.4.2003 and 27.1.2003 would certainly be covered by the said notes. Two views are possible about the expression "incremental growth in exports by 25%" and the Government adopted the interpretation as reflected in the notification dated 28.1.2004 which is quite in consonance with the object of the Act, EXIM policy and the incentive scheme ....
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....hat is allowed, it would be a clear case of misuse of the scheme inasmuch as for the same export turnover units operating under SEZ/EOU/EHTP/STP would get the certain incentives and the status holders also manage to extract the same benefits exploiting the scheme by exporting the goods manufactured by these STZ/EOU etc. On considering the issue in this hue, we agree with the opinion of the High Court that such a sub-note (ii) was merely clarificatory in nature. 84) Sub-note (v) to Note 1 stipulates that if the supply were made by one status holder to another status holder, these shall also be excluded while calculating the value of exports. Likewise, sub-note (vi) of Note 1 excludes the export performance made by one status holder on behalf of other status holder. High Courts have treated it as clarificatory on the ground that the Scheme was not intended to encourage the status holders/export house to pool the exports made by other exporters for the purpose of showing incremental growth in the exports and, therefore, the addition of sub-note (v) to Note 1 was in consonance with the basic objective of the scheme as originally envisaged. Having regard to the nature of this sub-not....
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....c Notice issued by DGFT dated January 28, 2004 was without jurisdiction. An additional ground of retrospectivity was also taken to challenge the Public Notice. It was also argued that DGFT by the said Public Notice was seeking to impose additional conditions, not forming part of the original policy which was again impermissible. 88) Mr. Adhyaru, learned senior counsel appearing for the Union of India, on the other hand, submitted that the paramount consideration in issuing the Public Notice was to check unscrupulous exporters including the writ petitioners for inflating their export turnover by adopting dubious methods. He emphasized the rational for inclusion of four items by this Public Notice which has already been taken note of. His endeavour was to demonstrate that issuance of the Public Notice in question became paramount to cluck unscrupulous methodology adopted by certain exporters with the objective to wrongfully acquire the benefits of the Schemes that could not be countenanced and had to be checked. We are not delving with those alleged malpractices and hold back the same at this juncture. They will be spelled out while discussing the validity of the Notification date....
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....rpose of carrying out the objectives of the Act which includes implementation of the Policy, Central Government is authorised to appoint DGFT as per Section 6 of the Act. Main functions of the DGFT are advising the Central Government in formulation of the Policy and he is also responsible for carrying out the said Policy. Sub-section (3) of Section 6 provides that Central Government may delegate its power exercisable under the Act. However, powers under Sections 3, 5, 15, 16 and 19 are specifically excluded which means these powers cannot be delegated. Thus, power to announce the Policy and to amend the same remains with the Central Government. Likewise, power to make rules under Section 19 which vests with the Central Government, cannot be delegated. 92) Keeping in mind the aforesaid legal position, we reproduce certain portion of the EXIM Policy announced vide Notification No.1 dated March 31, 2003 which have bearing on the issue at hand. These are: Para 1.1 of the Export and Import Policy provided that: "In exercise of the powers conferred under Section 5 of The Foreign Trade (Development and Regulation Act), 1992 (No.22 of 1992), the Central Government hereby notifies the....
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....ns, Order and Resolutions issued by the Ministries of Government of India, (other than the Defence Ministry) and by the Supreme Court of India are published under Part 1 Section 1 of the Gazette of India. On the other hand, Notifications issued by the Ministries of Government of India (other than the Defence Ministry) are published under Part 2 Section 3 and sub-section 2 of the Gazette of India. On that basis, justification is sought to be given that the Notification No.28(RE-2003)/2002-2007 dated January 28, 2004, Notification No.38/(RE-2003) 2002-2007 dated April 21, 2004 were published in the Gazette of India under Part 2 and 3(II), while Public Notice No.40 dated January 28, 2004 was published in the Gazette of India under Part 1 Section 1 of the Gazette of India and as such, as both the Notifications as well as the Public Notices are officially gazetted in the Gazette of India. Thus, there is no distinction between the two as the same carry the same impact and effect. 94) From the aforesaid explanation, we take it that the Public Notice dated January 28, 2004 was published in the Gazette of India in accordance with the requirement of law. The question, however, is as to wh....
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....ble to demonstrate the same in full measure. This aspect has already been discussed in detail at the outset itself. 100) However, at the same time, as already been pointed out above, this Notification is not clarificatory in nature unlike Notification dated January 28, 2004. Therefore, the issue of retrospectivity becomes important. The contention of Mr. Adhyaru is that the Notification is not retrospective but retroactive in nature. In the alternative, it is submitted that even it is treated as retrospective, the Government has right to do so under the given circumstances inasmuch as grant of concession or incentive is the privilege of the Central Government which can always be withdrawn and in the present case, it is withdrawn for justifiable reasons and in public interest which is the paramount consideration and over rights all private considerations. Therefore, it is argued, the question of retrospectivity of Policy by the impugned Notification does not arise at all. Mr. Adhyaru also argued that there was an implied power vested with the Central Government to amend the Policy retrospectively. 101) We may state, at the outset, that the incentive scheme in question, as prom....
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....his Court held that, "the reasons given by the Union of India justifying withdrawal of the exemption notification, in our opinion, are not irrelevant to the exercise of the power in public interest nor are the same shown to be insufficient to support the exercise of that power". The Court also observed that, the power to grant exemption from payment of duty flows from the provisions of Section 25(1) of the Customs Act. The power to exempt includes the power to modify or withdraw the same. Such an exemption by its very nature is susceptible of being revoked or modified or subjected to other conditions. The supersession or revocation of an exemption notification in the public interest is an exercise of the statutory power of the State under the law itself as is obvious not merely from the language of Section 25 of the act, but also from the General Clauses Act under which the authority which has the power to issue a notification has the undoubted power to rescind or modify the notification in the like manner. The Court also examined the case of the appellant-petitioners that relying upon the notification dated March 15, 1979, they had acted and the Government could not be permitted t....
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....h as freedom of speech, religion etc., 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 doctrine or straightjacket formula and this is particularly true in case of legislation dealing with economic matters, where having regard to the nature of the problems greater latitude require to be allowed to the legislature. The question, however, is as to whether it can be done retrospectively, thereby taking away some right that had accrued in favour of another person? 105) The case of the exporters is that by achieving the target contained in the Scheme in respect of incremental exports, these exporters had right accrued in their favour to claim the benefits provided for achieving this target. It was submitted in this behalf that the Scheme came into force w.e.f. April 01, 2003 and from April 01, 2003 to March 31, 2004 i.e. during these 12 months, the status holders were entitled to make the exports and once the targets as set out in the clause 3.2.7.1 (vi) were achieved, the exporters became entitled to get duty free import to the extent of 10% of the incremental growth in exports. Acc....
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.... legislation. A delegatee therefore can make rules only within the four corners thereof. 42. It is a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication." (iii) Keshavlal Jethalal Shah v. Mohanlal Bhagwandas & Anr. (1968) 3 SCR 623 "13. Counsel for the respondent also submitted that Section 29(2) as amended was intended to have retrospective operation, because the Amending Act was in the nature of explanatory legislation. There is nothing in the language of Section 29(2) as amended, which may indicate that it was intended to be retrospective in operation. Section 29(2) as amended in terms confers jurisdiction upon the High Court to call for the record of a case for the purpose of satisfying itself that the decision in appeal was according to law, which the High Court did not possess before the date of the Amending Act. The amending clause does not seek to explain any pre-existing legislation which was ambiguous or defective. The power of the High Court to entertain a petition for exercising revisional jurisdiction....
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....ation or to explain a former legislation. We need not note the cornucopia of case law available on the subject because aforesaid legal position clearly emerges from the various decisions and this legal position was conceded by the counsel for the parties. In any case, we shall refer to few judgments containing this dicta, a little later. xx xx xx 33. A Constitution Bench of this Court in Keshavlal Jethalal Shah v. Mohanlal Bhagwandas & Anr. (1968) 3 SCR 623, while considering the nature of amendment to Section 29(2) of the Bombay Rents, Hotel and Lodging House Rates Control Act as amended by Gujarat Act 18 of 1965, observed as follows: "The amending clause does not seek to explain any pre-existing legislation which was ambiguous or defective. The power of the High Court to entertain a petition for exercising revisional jurisdiction was before the amendment derived from s. 115, Code of Civil Procedure, and the legislature has by the amending Act attempted to explain the 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." (v) Trimbak Damodhar Rajpurkar v. Assara....
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....and or property leased without licence or consent, such covenant, condition or agreement shall, unless the lease contains an expressed provision to the contrary, be deemed to be subject to a proviso to the effect that no fine or sum of money in the nature of a fine shall be payable for or in respect of such licence or consent. It was held that the provisions of the said section applied to all leases whether executed before or after the commencement of the Act; and, according to Buckley, L.J., this construction did not make the Act retrospective in operation; it merely affected in future existing rights under all leases whether executed before or after the date of the Act. The position in regard to the operation of Section 5(1) of the amending Act with which we are concerned appears to us to be substantially similar. 10. A similar question had been raised for the decision of this Court in Jivabhai Purshottam v. Chhagan Karson- Civil Appeal No 153 of 1958 decided on 27-3-1961 in regard to the retrospective operation of Section 34(2)(a) of the said amending Act 33 of 1952 and this Court has approved of the decision of the Full Bench of the Bombay High Court on that point in Durlabb....
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.... Subject: Fixation of inter se seniority of DR and promotee Income Tax Inspectors in view of clarification given by DoP&T in r/o OM dated 3-7-1986 Sir, I am directed to refer to your Letter F.No.CC/CHD/2003-04/935 dated 4-12-2003 on the above subject and to say that the matter has been examined in consultation with DoP&T and necessary clarification in the mater is given as under: Point/query raised Clarification Whether direct recruit Inspectors should be given seniority of the year in which selection process initiated or vacancy occurred or otherwise. 'It is clarified by DoP&T that direct recruits' seniority via-a-vis the promotees is reckoned from the year in which they are actually recruited. DRs cannot claim seniority of the year in which the vacancies had arisen. The question of grant of seniority to DRs of the period when they were not even in service does not arise.' 3. The representations may please be disposed of accordingly. Yours faithfully, sd/- Under-Secretary to the Government of India" 36. A perusal of the Letter dated 11-5-2004 reveals that it adopts a position in clear conflict with the one expressed in the ....
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....uted seniority between rival parties before this Court was based on the appointment to the cadre of Income Tax Inspectors, well before the OM dated 3-3-2008 was issued. As such, it was pointed out, that the same would not affect the merits of controversy before this Court. We have considered the instant submission. It is not possible for us to accept the aforesaid contention advanced at the hands of the learned counsel. If the OM dated 3-3-2008 was in the nature of an amendment, there may well have been merit in the submission. The OM dated 3-3-2008 is in the nature of a "clarification". Essentially, a clarification does not introduce anything new, to the already existing position. A clarification, only explains the true purport of an existing instrument. As such, a clarification always relates back to the date of the instrument which is sought to be clarified." 106) In nutshell, it was submitted that once there is a vested right and not merely existing right, taking away that right amounts to giving retrospective effect to the Notification which was impermissible. In the same breath, it was argued that it cannot be treated as retroactive operation of the Notification. 107) L....
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....t held that the rules framed under the proviso to Article 309 of the Constitution could have retrospective operation. The conclusion followed from the circumstance that the power conferred under the proviso to Article 309 was intended to fill a hiatus, that is to say, until Parliament or a State Legislature enacted a law on the subject-matter of Article 309. The rules framed under the proviso to Article 309 were transient in character and were to do duty only until legislation was enacted. As interim substitutes for such legislation it was clearly intended that the rules should have the same range of operation as an Act of Parliament or of the State Legislature. The intent was reinforced by the declaration in the proviso to Article 309 that "any rules so made shall have effect subject to the provisions of any such Act". Those features are absent in clause (5) of Article 148. There is nothing in the language of that clause to indicate that the rules framed therein were intended to serve until parliamentary legislation was enacted. All that the clause says is that the rules framed would be subject to the provisions of the Constitution and of any law made by Parliament. We are satisfi....
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....s holder achieves 25% incremental growth, the status holder would be entitled to the benefits under the Scheme. Immediately upon attaining the prescribed incremental growth, the status holder becomes eligible to certificate for duty free import and thereby a right vests in the exporter to receive the same." 109) So far so good. The effect of the aforesaid discussion would be that if the Status Holders had achieved 25% incremental growth in exports, they acquired the right to receive the benefit under the Scheme, which could not be taken away. The pertinent and crucial question is as to whether these exporters/writ petitioners acquired any such right? Let us sharpen this question before we answer the same by formulating it in the following words: Whether, in the cases of these exporters, the exports shown by them can be treated as actual exports entitling them to avail the benefit of the Scheme? 110) This issue would be inter-twined with other related issue, namely, whether the notification has retroactive operation or it is retrospective in nature. Both these aspects are to be dealt with simultaneously in order to provide suitable and right answer to the question posed. Th....
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.... out startling revelations: Growth exceeding 2000% for two petitioners came from 100% export of gold coins and plain jewellery Firm Turnover 2002-03 Turnover 2003-04 % Growth Share of Gold coins and Plain jewellery in total exports Rajesh Exports, Bangalore 112 2372 2017 100 Kanak Exports, Mumbai 27 1070 3816 100 For M/s Adani Exports, over 80% of export turnover came for diamonds and Supplies from status holders not meeting the minimum turnover and growth criteria Adani Exports Limited, Ahmedabad Exports (crores) Total exports for the year 2003-04 of which 4657 1 Rough, and re-exported polished diamonds 2475 2 Supplies taken from status holders not meeting the minimum turnover and growth criteria 1316 Share of the above 2 categories in the total exports 81.4% Export surge of 1135% for M/s. Adani Exports came in 2003-04 while for the past six years their exports were declining. It is pertinent to note that except the above mentioned persons no other exporter in the country has ch....
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....orted 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. (vii) As it was difficult for them to achieve the value addition prescribed by the Policy through craftsmanship, they added extra gold to get the value addition. However, in this process strangely enough per unit price of the gold exported was less than per unit price of gold imported. (viii) Few exporters including petitioners have purchased exports of other firms to inflate their turnover. Contracts have been signed between the petitioners and other exporters that petitioner will provide marketing and other services and act as third party exporter. According to reports status-holders were purchasing exports made by other parties at a premium with a view to show incremental growth of 25% or more in exports without having actually achieved such growth. 114) In such a scenario, a sagacious approach with practical sense leads us to conclude that these writ petitioners/exporters had actually achieved the targets set down in the original Scheme and thereb....
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....4) 117) For the reasons mentioned in Transfer Petition (Civil) No. 568 of 2014, the same is allowed and LPA No. 290 of 2007, entitled 'Union of India & Ors. v. M/s. Welspun India Limited', pending in the High Court of Gujarat at Ahmedabad is transferred to this Court. Since the challenge laid in the case is identical with that involved in the rest of the batch matters, summoning of the records of the case is dispensed with and the matter is heard on the basis of the record already available before the Court. 118) In these cases, challenge is to the constitutional validity of para 3.7.8 of the EXIM Policy 2004-2009 as well as Notification No. 48/2005 dated February 20, 2006 and Notification No. 8/2006 dated June 12, 2006 by which certain amendments in the aforesaid EXIM Policy were made. Though it involves a different Scheme, known as 'Target Plus Scheme', since the provisions and amendments are again primarily challenged on the ground that these amendments are given retrospective effect from April 01, 2005, these matters were also analogously heard with the other batch of cases which have already been dealt with above. 119) As already noted above, the Government had announ....
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.... is claimed under para 3.8.2. (4) All exports including exports under free shipping bill verified and authenticated by Customs and Gems & Jewellery shipping bills but excluding exports specified under para 3.7.5, shall be eligible for benefits under the Target Plus Scheme. (5) In respect of export of Cut & Polished diamonds only those shipments would be taken into account for computation of eligible exports under the scheme where a minimum of 10% value addition has been achieved. 3.7.4 Applicant Companies Companies which are Star Export Houses as well as part of a Group company shall have an option to either apply as an individual company or as a Group based on the growth in the Group's turnover as a whole. (For the purpose of this scheme the definition of Group Company as given in Chapter 9 will be applicable. Furthermore, only such companies of the Group as are Star Export Houses will be considered). If a Group company chooses to apply based on the export of one or more of its individual Star Export House companies, the entitlement would be calculated considering the export performance of the applicant company during the previous licencing year and current licencin....
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....fee and Pepper as per Chapter 9 of ITC (HS) Classification of Export and Import Items. (v) All Oil Seeds under Chapter 12 of ITC (HS) Classification of Export and Import Items. Further, Natural Rubber as per Chapter 40 of ITC (HS) Classification of Export and Import items shall also not be allowed for import under the Scheme. Import of all edible oils classified under Chapter 15, shall be allowed under the scheme only through STC and MMTC. 3.7.7 Cenvat/Drawback Additional customs duty/excise duty paid in cash or through debit under Target Plus shall be adjusted as CENVAT Credit or Duty Drawback as per rules framed by the Department of Revenue. 3.7.8 Special Provision Government reserves the right in public interest, to specify from time to time the category of exports and export products, which shall not be eligible for calculation of incremental growth/entitlement. Further the Government shall have the right to change the eligibility criteria and rate of entitlement under the scheme effective from the date of notification of this policy. Similarly, Government may from time to time also notify the list of goods, which shall not be allowed for import under th....
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....missions 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) Entitlement for consideration under the Target Plus Scheme; and (vii) Exemption from furnishing of Bank Guarantee in Schemes under this Policy." 121) Chapter 3 of the EXIM Policy mentions various 'promotional measures' and in para 3.2.5 thereof, it contained, inter alia, procedure for availing the benefit under TPS. Among other things, it was stipulated that the last date for filing of such applications shall be 31st of December and that the duty credit certificate shall be valid for a period of twenty four months from the date of issue, with a clear stipulation that revalidation of duty credit entitlement certificate shall not be allowed. 122) As is clear from the aforesaid provisions of TPS, the Central Government had announ....
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....09 dated June 12, 2006. It also pertained to the exports effected during April 01, 2005 to March 31, 2006. By this Notification, para 3.7.3 was substituted by the following para: "The entitlement under this scheme would be contingent on the minimum percentage incremental growth of 20% in FOB value of exports in the current licensing year over the previous licensing year, and the rate of entitlement shall be 5% of the incremental growth." 126) Original para 3.7.3, which is in respect of 'entitlement' under the TPS mentioned that the said entitlement would be contingent on the minimum percentage incremental growth in FOB value of exports in the current licensing year over the previous licensing year. The percentage incremental growth was subsequently stipulated in the table provided under the said para. As per that, if the incremental growth was 20% and above to below 25%, duty credit entitlement provided was 5%. In case of incremental growth of 25% or above, but below 100%, the duty credit growth entitlement was to the tune of 10%. On incremental growth of 100% and above, duty credit entitlement stipulated was 15% (of 100%). However, by way of amendment, the minimum percentage....
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....crued in favour of particular persons/exporters. We have already enlisted number of judgments of this Court taking such a view. A few such cases laying down the aforesaid principle are: (i) Regional Transport Officer, Chittoor & Ors. v. Associated Transport Madras (P) Ltd. & Ors. (1980) 4 SCC 597 (ii) Accountant General & Anr. v. S. Doraiswamy & Ors. (1981) 4 SCC 93 (iii) A.A. Calton v. Director of Education & Anr. (1983) 3 SCC 33 (iv) Chairman, Railway Board & Ors. v. C.R. Rangadhamaiah & Ors. (1997) 6 SCC 626 129) Keeping in view the aforesaid legal position, we embark on the discussion relevant for the purposes of these cases, namely, pertaining to TPS. 130) TPS, which was introduced in EXIM Policy 2004-2009 on August 31, 2004, adopted some of the features of the earlier Schemes in the EXIM Policy 2002-2007 and introduced the concept of Multi-Entitlement Rates, thus, allowing higher entitlement rates for higher growth. The Multi-Entitlement Rates depended upon the quantum of incremental growth achieved by particular exporters. As taken note of above, the TPS prescribed three rates of entitlement based on growth. It shows that TPS was in the nature of a reward S....
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....forward for adding four items by amending para 3.7.5 vide Notification No. 48 (RE 2005)/ 2004-2009 dated February 20, 2006. The only argument advanced at the time of hearing was that the Government felt that benefit of TPS should not be extended to the exporters of these items. That may be a policy decision and the Government is empowered to take such a decision. It may be noted that in para 3.7.5 of TPS, as was originally provided, certain items of exports were specifically mentioned, which were not to be taken into account for calculation of export performance or for computation of entitlement under the Scheme and the items now added vide Notification No. 48 (RE 2005)/2004-2009 dated February 20, 2006 were not mentioned therein. If the Government realised afterwards that export of these items should not have been given the benefit of TPS and extending the benefit to now excluded items was an ill-considered move, though the Central Government was free to withdraw it in respect of such items but it could do so only prospectively, but was not entitled to do so with effect from the back date, i.e. April 01, 2005, by taking away the vested right that had already accrued in favour of e....