TaxTMI 
TaxTMI 
2004 (7) TMI 645
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....of Foreign Trade (DGFT) [the second respondent herein] amending paragraph 3.2.6 of the Hand Book of Procedure. The amendments/corrections to the EXIM POLICY and the public notice pertain to Duty Free Import Entitlement for Export Status Holders. In particular, the petitioner has challenged the aforesaid notifications and the public notice in so far as the amendments/corrections are expressly made applicable to the exports made from 1.4.2003 i.e. prior to the date of the notifications and the public notice. 2 The relevant provisions falling for consideration are as under :- 2.1 Under the Exim Policy 2002-07 as introduced on 1.4.2002, the Central Government announced "Special Strategic Package for Status Holders " [hereinafter referred to as "the Special Scheme" or "the Incentive Scheme"]. The term "status holder" is defined by paragraph 9.53 of the Exim Policy as under :- "9.53 "Status Holder" means an exporter recognized as "Export House/Trading House" by DGFT/Development Commissioner as Star Trading House/Super Star Trading House by the Director General of Foreign Trade." As per the "Special Scheme", the status holders are eligible for certain s....
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....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 percent incremental growth of export. Note 2 - The incremental growth of exports by an exporter shall not, directly or indirectly, be transferred to any other exporters. Note 3 - Government reserves the right in public interest, to specify the export products, which shall not be eligible for calculation of incremental growth/entitlement. Similarly, the government may also notify the list of goods, which shall not be allowed for imports under the scheme. Note 4 - These guidelines will be applicable to the exports made on or after 1.4.2003. Note 5 - The entitlement will be in terms of duty credit." 2.3 By the impugned public notice dated 28.1.2004 (Annexure "C"), amendments have been made to the Hand Book of Procedure, particularly to paragraphs 3.2.5 and 3.2.6 of the Special Scheme for duty free import entitlement for the status holders. While most of those amendments are procedural, the following amendment is significant for the purposes of the present petition:- "2. In ter....
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....the Central Government hereby makes the following correction in Exim Policy, 2002-07 (as amended upto 31.3.2003) 1. In terms of para 2 and 3 of the Public Notice No.40 dated 28.01.2004, exports of certain products for calculation of entitlement as well as imports of certain products were excluded from the purview of the Duty Free Entitlement Certificate for Status Holders. The said provision is hereby inserted in the Exim Policy by correcting Notification No.28 dated 28.01.2004 as under : In Chapter-3, in paragraph 3.7.2.1, after sub-paragraph (vii), the following note is inserted after No.5 namely :- "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 a. Rough, uncut and semi polished diamonds b. Gold, Silver in any form including plain jewellery thereof c. Food grains sourced from Central pool maintained by FCI d. Items exported under free shipping bills Note 7 -The following items would not be allowed for imports under Duty Free Credit Entitlement Certificate for Status Holders....
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.....3.2003 as prescribed in the Scheme. 3.3 The impugned notifications and the public notice are also challenged on the ground that they are contrary to the avowed purpose of the Exim Policy to boost exports and also to render exports competitive in the international market. Since the provisions totally HC-NIC Page 7 of 60 Created On Wed Nov 04 12:28:11 IST 2015 negate the object and purpose to promote exports, the same are arbitrary and unreasonable and violative of Articles 14 and 19(1)(g) of the Constitution conferring the fundamental right to carry on the business of exporting. 3.4 While challenges levelled against notes 1 to 3 and 6 to 7 will be enumerated while discussing them, it is necessary to set out the most important challenge which is to Note 4 of the notification. Note 4 providing that "these guidelines will be applicable to the exports made on or after 1.4.2003" is challenged on the ground that the same gives retrospective effect to the impugned notification. Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 does not confer any power on the Central Government to make amendments to the Exim Policy with retroactive and retrospective eff....
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.... without prejudice to the petitioner's right to make a separate representation against the change in policy even with prospective effect. This Court had clarified that pendency of this petition did not preclude the respondents from considering and deciding such a representation. The petitioner accordingly made the representation which came to be rejected by the order dated 19.3.2004. 5. On behalf of the respondents, affidavit in reply dated 22.3.2004 is filed by the Joint Director General of Foreign Trade. Written submissions are also filed. The major defences are - 5.1 The impugned notifications and the public notice are in the nature of clarification of the Duty Free Credit Entitlement Scheme notified by the Central Government under the Exim Policy as amended upto 31.3.2003. When the clarification is made in the Scheme, it always relates back to the date of issuance of the original scheme and, therefore, it cannot be said that any retrospective effect has been given by amending the policy. The scheme was announced on 31.3.2003. The benefit of the scheme is made available with effect from 1.4.2004. The export entitlements are to be calculated for the current financial ye....
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.... the benefit of Duty Free Credit Entitlement on the export of others. According to the Department of Revenue, 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. To contain this kind of misuse, one of the major recommendations of the Department of Revenue was to put necessary restriction in the scheme by way of clarification by not allowing third party exports from being counted for the purpose of calculating the incremental growth in exports subject to certain conditions. The impugned notifications and public notice have been issued with a view to clarify the aspect as to how incremental growth in export should be reckoned. From Note 1 which was inserted after sub-paragraph (vii) of paragraph 3.7.2.1 in Chapter 3, it is clear beyond doubt that third party exports are not totally excluded from the scheme. The third party exports are to be excluded for reckoning the incremental growth in exports, if the supplies made or export performance effected by a non-status holder (merchant exporter/manufacturer exports with any export performance in 2003-2004) t....
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....dered dispassionately. However, the request of the petitioners made in the representation was rejected on the grounds set out in the speaking order dated 19.3.2004." 5.6 As regards promissory estoppel and legitimate expectation, the respondents have stated as under in the reply affidavit :- "The Import and Export Policy can be amended or rescinded by the Central Government at any time and by issuance of Exim Policy, no promise is held out by the Central Government. The petitioners, therefore, cannot invoke the doctrine of promissory estoppel against the respondents. Without prejudice to the contention that in this case the doctrine of promissory estoppel does not apply, it is submitted that to invoke the doctrine of promissory estoppel, the petitioners are required to satisfy certain requirements and they have to specifically prove that on the basis of the promise held out by the Government, they have altered their position. In the present case, the petitioners are in the business of exports and are holding Golden Superstar Trading House Certificate. The export business is the routine business of the petitioners. The petitioners have not given any details in respect of ....
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....pugned notifications defeat the very object of the Act and the Exim Policy. Hence, the amendments are violative of Article 14 of the Constitution. 7.3 Exclusion of various items through the trade notice issued by the DGFT is illegal and without authority of law as the DGFT cannot amend the policy for which the Central Government is the only competent authority. The Central Government not having issued any notification in this behalf till 31.3.2004, the DGFT had no authority to exclude any items from the special scheme. The public notice is, therefore, contrary to and in violation of Section 5(3) of the Foreign Trade (Development & Regulation) Act, 1992. 7.4 The Government notifications dated 21/24.4.2004 seek to give further retrospective effect to Notes 6 and 7 added in para 3.7.2.1 to the exports made between 1.4.2003 and 31.3.2004. Such a retrospective effect cannot be given even by delegated legislation. 7.5 In any view of the matter, relying on the provisions of the special scheme which was applicable to the exports made from 1.4.2003 to 31.3.2004, the petitioner had put in extra efforts for the growth of exports both direct exports as well as third party exports for ....
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....t to the amendments being given retrospective effect. It is submitted that the amendments made in January, 2004 for the purpose of giving incentives from 1.4.2004 may be in relation to the exports made between April 2003 and March 2004. That does not amount to giving retrospective effect, but means only retroactive operation of the clarifications or the amendments. 8.3 Section 5 of the Foreign Trade (Development & Regulation) Act and para 1.1 of the EXIM POLICY preserve the right of the Government to amend the policy in public interest. A statutory power to amend the policy, after noticing the misuse of the policy for purposes for which it was never intended, can never be frustrated on the plea that the petitioners had a legitimate expectation that they can continue to exploit the policy for a purpose totally different from the one for which it was intended and then expect that the Government will not take any action whatsoever. That apart, the doctrine of legitimate expectation can never curtail a statutory provision, far less can it be pressed into service to assail an action taken entirely to sub-serve the public interest. 8.4 As per the settled legal position, the writ Co....
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....to consider the scope of interference by the Court under Article 14 while dealing with laws relating to economic activities in RK Garg vs 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 given by Frankfurter, J. in Morey v. Doud, 343 US 457 = 1 L Ed.2d 1485 (1957) :- 'In the utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial deference to legislative judgment. The legislature after all has the affirmative responsibility. The courts have only the power to destroy, not to reconst....
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....le that in matters of trade and commerce or economic policy, the wisdom of the Government must be respected and courts cannot lightly interfere with the same unless such policy is contrary to the provisions of the Constitution or any law or if such policy is wholly arbitrary. 10. In exercise of the powers conferred by Section 5 of the Foreign Trade (Development & Regulation) Act, 1992, the Central Government has notified the Export and Import Policy for the period 2002-2007. Para 1.1 of the Policy states that the Central government reserves the right in public interest to make any amendments to the Policy in exercise of the powers conferred by Section 5 of the Act. Such amendment shall be made by means of a notification published in the Gazette of India. Para 1.4 of the Policy lays down the principal objectives of the policy as under:- "1.4 The principal objectives of this Policy are : [i] To facilitate sustained growth in exports to attain a share of atleast 1% of global merchandise trade. [ii] To stimulate sustained economic growth by providing access to essential raw materials, intermediates, components, consumables and capital goods required for au....
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....e 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 on to associate manufacturers." 12. Paragraph 3.7.2.1 (the relevant portion of which is already quoted in para 2.1 of this judgment) enumerates the special facilities for which the status holders are eligible, which are again quoted herein below for the sake of convenience :- "3.7.2.1 The status holders shall be eligible for the following new/special facilities :- [i] to [v] ... ... ... ... ... [vi] Duty free import entitlement for status holders having incremental growth of more than 25% in FOB value of exports (in free foreign exchange) subject to a minimum export turnover of Rs. 25 crore (in free foreign exchange). The duty free entitlement shall be 10% of the incremental growth in exports. Such entitlement can be used for import of capital goods, office equipment and inputs for their own factory or the factory of the associate/supporting manufacturer/job worker. The entit....
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....s in paras 2.34 and 9.55 of the scheme. 9.55 "Third party exports" means exports made by an exporter or manufacturer on behalf of another exporter(s). In such cases, shipping bills shall indicate the name of both the exporter/manufacturer and exporter(s). General Provisions Regarding Imports and Exports 2.34 Third party exports, as defined in paragraph 9.55 shall be allowed under the Policy. 14.2 Para 5 of the impugned notification dated 28.1.2004 sets out the reasons for making clarifications:- "The Scheme was announced as part of the initiatives taken in the Exim Policy announced on 31st March 2003 with the specific objective of accelerating the incremental growth in exports and to facilitate India emerging as a major base for sourcing different products and services for the rest of the world. It was recognized that status holders would continue playing a significant and increasing role for boosting exports particularly from the small-scale sector, as most of the small scale units would not be in a position to directly access the international market. In view of this, duty free import entitlement @ 10% of the incremental growth in value of e....
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....entive scheme. Therefore, the Government stipulated through the impugned notification dated 28.1.2004 that the condition of 25% incremental growth of exports will apply both to the applicant-status holder as well as to the supplier, whether the supplier is a status holder or is an existing supplier-exporter of goods. The clarifications made by the impugned notification in so far as they provide that the incremental growth of 25% in FOB value of exports is the criterion applicable both to the status holders as 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 merely giving appearance of the incremental growth of exports. 14.4 At this stage, we may record the clarification made by Mr Raju Ramchandran, learned Addl. Solicitor General that the manufacturers like small scale industries which had not made any exports before the current year (i.e. 2003-04) and who have made such exports for the first time in 2003-04 through a status holder like....
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....y do not require the benefits of duty free import under the Special Scheme under consideration. 15. Obviously, these provisions in the impugned notification dated 28.1.2004 are clarifications and cannot be treated as amendments to the scheme. We, therefore, hold that Notes 1 and 2 inserted by the notification dated 28.1.2004 merely amplify what was implicit in the original scheme. As per the settled legal principle as enunciated in the aforesaid decisions in State of MP vs. Nandlal Jaiswal, 1986 (4) SCC 566, it is not for this Court to sit in appeal over the wisdom of the Government in such economic matters and such clarificatory amendments cannot, therefore, be treated as arbitrary or unreasonable restrictions on the petitioner's right to carry on business. In fact, the amendments are to the incentive scheme and they do not impose any restrictions on the petitioner's right to carry on the business of exporting goods. 16. But, as already indicated earlier, the thrust of the petitioner's challenge to application of the clarifications/amendments 1.4.2003 and 28.1.2004 is on the ground that the impugned notification and public notice take away the vested rights of....
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....14 1854.24 4656.88 -04 2803.1 It is submitted on the basis of the above figures that it is not for the first time in the year 2003-04 that the petitioner has made third party exports. Earlier also, the petitioner was making such exports, but this year the petitioner put in extra efforts to boost third party exports as well as direct exports. 17. Under the policy in force prior to the impugned notifications and even thereafter the third party exports are permitted. What was legal earlier is not made illegal at all. For instance, exports of goods manufactured by units in EOU/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 Export Oriented Units (EOUs), 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 Poli....
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.... and 6. 20. Looking to the language of the Special Scheme as contained in the Exim Policy amended upto 31.3.2003, it does appear that 10% duty free credit entitlement was to follow exports covered by the incremental growth of 25% (as explained above). Under that scheme, it was not a matter of discretion for the DGFT to exclude exports of any of those goods merely by stating that rough diamonds or food items were to be excluded. The business community at large was entitled to proceed on the basis that all categories of goods were covered by the Incentive Scheme. On that basis, contracts might have been entered into, exports might have been made, goods have physically moved out of the country, prices might have been determined on that basis and payments have been made by the buyers to the sellers. The sellers or the export houses would ordinarily and naturally take into consideration special incentive of duty free imports to the extent of 10% of exports while determining prices for export of goods. It would, therefore, not be possible to say that the status holders and exporters having achieved 25% incremental growth in exports over previous years (Rs.25 crores and above) as expla....
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.... behalf of the respondents that a retroactive delegated legislation does not have to face any challenge that a retrospective delegated legislation has to encounter, it is necessary to look at the three categories of cases where such controversies are raised - (i) Where legislation or delegated legislation seeks to take away vested rights - benefits which are already obtained by a party are sought to be taken away because of legislation/delegated legislation being given effect from the date prior to its enactment. For the reasons to be discussed hereinafter, the Rules of interpretation of statute raise a presumption against such retrospective effect being given to a legislation and Courts may strike down such offending measure as arbitrary on the touchstone of Article 14. (ii) While in the first category, retrospective delegated legislation takes away rights which are already vested, in the second category - the principle of promissory estoppel and doctrine of legitimate expectation are to be invoked when the legislation/ delegated legislation/ executive instructions take away the future benefits which would have otherwise become available to the petitioner if exis....
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....iated by House of Lords 24. The principles of far reaching importance enunciated by the House of Lords through Lord Mustill in L'Office Cherifien (Supra) now need to be quoted in their entirety, because these weighty principles deserve fullest consideration by the Courts in India. After referring to the principles enunciated in Maxwell on The Interpretation of Statutes (12th edn.) and Craies on Statute Law (7th edn.) raising a presumption against retrospective operation of a statute, Lord Mustill made the following pertinent observations :- "My Lords, it would be impossible now to doubt that the Court is required to approach questions of statutory interpretation with a disposition, and in some cases a very strong disposition, to assume that a statute is not intended to have retrospective effect. Nor indeed would I wish to cast any doubt on the validity of this approach for it ensures that the courts are constantly on the alert for the kind of unfairness which is found in, for example, the characterization as criminal of past conduct which was lawful when it took place, or in alterations to the antecedent natural, civil or familial status of individuals. Nevertheless....
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....of unlikelihood that this is what Parliament intended, will vary from case to case. So also will the clarity of the language used by Parliament, and the light shed on it by consideration of the circumstances in which the legislation was enacted. All these factors must be weighed together to provide a direct answer to the question whether the consequences of reading the statute with the suggested degree of retrospectivity is so unfair that the words used by Parliament cannot have been intended to mean what they might appear to say." After referring to the above quoted observations of Lord Denman CJ in R vs Inhabitants of St. Many, Whitechapel (Supra), Lord Mustil in L'Office Cherifien went on to make the following pertinent observations :- "These cases do not point directly to a conclusion, but they do demonstrate that where an intermediate type of retrospectivity is in issue the purpose of the legislation and the hardship of the result contended for are of particular importance." The House of Lords also referred to the orthodox distinction between accrued substantive rights and procedural rights and held that sometimes it is not possible to assign rights under co....
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....eated or canceled by the act of any other private person, and which it is right and equitable that the government should recognize and protect, as being lawful in themselves, and settled according to the then current rules of law, and of which the individual could not be deprived arbitrarily without injustice, or of which he could not justly be deprived otherwise than by the established methods of procedure and for the public welfare. Such interests as cannot be interfered with by retrospective laws; interests which it is proper for state to recognize and protect and of which individual cannot be deprived arbitrarily without injustice. American States Water Service Co. of California v. Johnson, 31 Cal.App.2d 606, 88 P.2d 770, 774. Immediate or fixed right to present or future enjoyment and one that does not depend on an event that is uncertain. A right complete and consummated, and of such character that it cannot be divested without the consent of the person to whom it belongs, and fixed or established, and no longer open to controversy. State ex rel. Milligan v. Ritter;s Estate, Ind.App., 46 N.E.2d 736, 743." 25.3 Francis Bennion's Statutory Interpretation (Part V....
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.... PUBLIC POLICY and, therefore, the tests laid down by the House of Lords in L'Office Cherifien (1994) 1 All ER 20 speaking through Lord Mustill are very much in consonance with the settled legal principles and are applicable to all three categories of cases as enumerated in para 23 hereinabove. Classification and consequences - Analysis of Principles 26. From the fundamental principles flowing from various decisions that public interest is a superior equity and, therefore, where the overwhelming public interest so demands, the legislation/subordinate legislation may have to be allowed to take away future benefits promised in the past [M/s Motilal Padampat Sugar Mills Co. Ltd. vs. State of UP, (1979) 2 SCC 409 = AIR 1979 SC 621] and having regard to the principles enunciated in the leading text-books as explained in para 25 hereinabove and the principles laid down in L'Office Cherifien as quoted in para 24 hereinabove, the following principles emerge :- I when challenge to delegated legislation or executive order bringing about a change in Government's policy with PROSPECTIVE effect is examined by the Court on merits, the Court does not sit in appeal over ....
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....ith retrospective effect; (ii) secondly the Government has to satisfy the tests (a) and (b) as indicated above. (iii) In absence of overwhelming and overriding public interest, the Court must strike down the delegated legislation as arbitrary and violative of Article 14 without applying test (c) as indicated above. Application of Principles - Notes 3, 6 and 4 27. In light of the aforesaid discussion, while the Court is of the view that the present case is concerned with delegated legislation with retroactive operation and, therefore, belongs to the intermediate category of retrospectivity where the duty free import entitlement to be given to the export houses on and from 1.4.2004 will be affected by the notification dated 28.1.2004 read with public notice dated 28.1.2004 and further Government notifications dated 21/24.3.2004 covering the exports during the entire period from 1.4.2003 to 31.3.2004 and such notifications would have effect on the exports made from 1.4.2003 to 27.1.2004 also (besides affecting the future exports from 28.1.2004 to 31.3.2004). The next important question is whether it is unfair on the part of the Central Government to make ....
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....r even the Director General of Foreign Trade could have anticipated, contemplated or visualized while framing a particular policy. Hence, by adding Note 3 to para 3.7.2.1 of the Exim Policy on 28.1.2004, the Government made its intention very clear that exports and imports of certain goods were to be excluded from the benefits of the Special Scheme for status HC-NIC Page 39 of 60 Created On Wed Nov 04 12:28:11 IST 2015 holders. In view of the said Note, Section 6 of the Act and para 3.2.5 of the Handbook of Procedures, the DGFT issued the public notice dated 28.1.2004 on which the exporters and status holders including the petitioner started acting (for instance the petitioner stopped export of rough diamonds as stated in the respondents' written submissions para 10). The then Commerce Minister also rejected the petitioner's representation dated 11.2.2004 and thereby granted the seal of approval on the DGFT's public notice dated 28.1.2004 excluding certain export goods from the Special Scheme w.e.f. 1.4.2003. In this background, once the RETROACTIVE operation of the Government notification dated 28.1.2004 (including Note 3 thereof) on exports made from 1.4.2003 is uphel....
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....id stipulated period, another notification dated 16.10.1980 was issued in "public interest" withdrawing the exemption and confining the exemption from customs duty as is in excess of 40% ad valorem. The appellant-petitioner before the Apex Court contended that relying on the exemption notification dated 15.3.1979, it had placed orders for the import of PVC resins on the understanding that the commodity was totally exempt from customs duty, the Government must be held bound by the representation contained in the notification dated 15.3.1979 and the Government was estopped on the basis of promissory estoppel to go back on its promise. The Government justified the withdrawal of exemption on the ground that the Government had issued notification dated 15.3.1979 with a view to equalizing sale prices of the indigenous and the imported material and to make the commodity available to the consumer at a uniform price, keeping in view the trends in the supply of the material. Subsequently, it was realized that the international prices of the product were falling and consequently the import prices had become lower than the ex-factory prices of the indigenous material. Hence, it was decid....
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....t the facts of the economic situation explained in the judgment of Kasinka were not controverted nor was it alleged that public interest did not call for supersession of the exemption notification. The Court also examined the question whether the fact that the notification dated 15.3.1979 mentioned the period during which it was to remain in force would make any difference to the situation. The Court then held that, "once public interest is accepted as the superior equity which can override individual equity, the principle should be applicable even in cases where a period has been indicated". 32.3 However, in the subsequent decision in Dai-ichi Karkaria Ltd. vs. Union of India, (2000) 4 SCC 57 relied upon by Mr Dave for the petitioner, the Court was concerned with a controversy somewhat similar to the controversy in the above two cases, but on different facts. The Court held that the Government had failed to discharge the burden of justifying reduction of the extent of exemption. By notification dated 10.9.1982 (which stated that it would be in force till 10.9.1987), the Government of India exempted from payment of customs duty/ additional duty all raw material and components im....
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....ationality or reasonableness of impugned notification. The Apex Court did not lay down a different principle. 32.4 An analysis of the above cases, therefore, clearly indicates that if at all the fundamental principles regarding applicability of the principle of promissory estoppel have undergone any change from those enunciated in Motilal Padampat Mills case in 1979, it is only to soften the rigour of burden of proof on the Government by requiring the petitioner to prove "manifest injustice or fraud" and not merely commercial loss. Accordingly, the Courts will interfere with change in policy with future effect or retroactive effect only to "prevent manifest injustice or fraud". At the cost of repetition, we would say that superior equity of public interest may override individual interest even if the promisee cannot resume his position. It is only when there is no such overriding public interest and the promisee cannot resume his position that the Government would not be allowed to resile from its promise (principle II in para 25 hereinabove). This fundamental principle of superior public equity is as much applicable to the principle of retroactive operation of delegated legisla....
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.... aforesaid decisions cited on behalf of the petitioner. 33.1 In State of MP vs. GS Dall and Flour Mills, 1992 Supp (1) SCC 150, the State of MP framed an executive scheme for the grant of subsidy/interest free loan to new industries set up in Madhya Pradesh. The scheme excluded "traditional industries" like dall mills from the benefit of the scheme. The Government thereafter issued notification dated 23.10.1981 in exercise of power under the MP Sales Tax Act granting concession in payment of sales tax by new industrial units which commenced production after 1.4.1981. The statutory scheme did not exclude "traditional industries" from the grant of sales-tax concession. However, by notification dated 3.7.1987, the State Government amended the 1981 notification with retrospective effect so as to exclude "traditional industries" from the grant of the sales-tax benefits. The Apex Court held that 1981 notification had not clearly envisaged exclusion of any industry, which fulfils the terms of the notification, from availing of the exemption granted under it, but the 1987 amendment had the effect of rescinding the exemption granted by 1981 notification in respect of the traditional indu....
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....on i.e. on 28.1.2004. The incentive scheme is to come into force from 1.4.2004 on the basis of the exports made between 1.4.2003 and 31.3.2004. Hence, the facts in the instant case are entirely different. 33.3 In State of Gujarat vs. Raman Lal Keshav Lal Soni, AIR 1984 SC 161, the Court was concerned with the retrospective amendments to the Gujarat Panchayats Act, 1961. The employees of the erstwhile Municipalities converted into Panchayats were treated as Government servants under the unamended Act for 20 years. By the impugned amended Act their status as Government servants was sought to be taken away after passage of 20 years. It was in the context of these facts that the Court held that the law cannot say, 20 years ago the parties had no rights, therefore, the requirements of Constitution will be satisfied if the law is dated back by 20 years. A legislature cannot legislate today with reference to a situation that obtained 20 years ago and ignore the march of events and the constitutional rights accrued in the course of the 20 years. This case has no relevance to the controversy at hand which is concerned with midstream clarification/amendment to Exim Policy in January 20....
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....ify the list of goods, which shall not be allowed for imports under the scheme. 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 a. Rough, uncut and semi polished diamonds b. Gold, Silver in any form including plain jewellery thereof c. Food grains sourced from Central pool maintained by FCI d. Items exported under free shipping bills Note 7 -The following items would not be allowed for imports under Duty Free Credit Entitlement Certificate for Status Holders : Agricultural products, which fall under Chapters 1-24 of ITC (HS) Classification of Export and Import items. 35.0 EXCLUSION OF ROUGH, UNCUT AND SEMI-POLISHED DIAMONDS, 35.1 In their note submitted at the hearing, the petitioners stated as under :- (i) Rough Diamonds export is Rs. 751.96 crores and Rs. 1719.49 crores is export of polished diamonds. (ii) These exports have been made/effective by the petitioners under Para 2.36 and 2.39 of the Exim Policy. (iii) The petitioners have not imported the rough diamonds but ....
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....of intelligence report revealed that there was round tripping of diamonds (rough diamonds imported without any payment of duty and thereafter successive stages through which the diamonds were processed for enhancing the export turn HC-NIC Page 50 of 60 Created On Wed Nov 04 12:28:11 IST 2015 over), the Government was justified in excluding the exports of rough, uncut and semi-polished diamonds from the special scheme. It is pertinent to note that the Government has not excluded exports of polished diamonds, but has excluded only rough, uncut and semi polished diamonds from the benefits under the special scheme. Paras 2.36 and 2.39 of the Exim Policy only provide for legality of exports of all categories of diamonds, but that does not necessarily mean that exports of all goods deserve to be rewarded with the benefits of the special scheme. As regards exports of diamonds being in Thrust Section in para 3.10 (d) of the Exim Policy, it is pertinent to note that what is excluded in only rough diamonds and not polished diamonds. It is necessary to note that while issuing the remedial notifications and the public notice, the Government was dealing with the international trade at large ....
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....cified in this behalf. 4.4.3 Exporters of gold/silver/platinum jewellery and articles thereof may import their essential inputs such as gold, silver, platinum, mountings, findings, rough gems, precious and semi-precious stones, synthetic stones and unprocessed pearls etc. in accordance with the procedure specified in this behalf." 36.3 In view of the justification given by the Government, it does not appear to be unfair to the petitioners if export of gold, silver including jewellery does not entitle them to import any inputs under the Special Scheme. However, clause (vi) in para 3.7.2.1 of the said Special Scheme provides as under :- "Such entitlement can be used for import of capital goods, office equipment and inputs for their own factory or the factory of the associate/supporting manufacturer/job worker. The entitlement/goods shall not be transferable." If, therefore, the exporter or the supporting manufacturer is desirous of using the duty free import entitlement for import of capital goods or office equipment, para 4.4.3 will not be of any avail to the exporter or to the associate/supporting manufacturer. Hence, it is for the petitioners to decide whet....
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....cations at the time of introduction of the scheme. Even if this restriction was not there in the customs notification, the petitioners cannot use their entitlement in this sector as no processing is involved. The same argument holds well in the case of clinkers and iron ore also." 37.3 While the justification given by the Government that the export of the foodgrains is already subsidized may not by itself be a sufficient ground for excluding with retroactive effect foodgrains procured from the central pool of FCI, the said justification taken alongwith the other justification (that the entitlement on the basis of exports of foodgrains cannot be used for import of any agro or dairy products because of the restriction vide notification No.53/2003 dated 1.4.2003 and circular No. 25/2003 dated1.4.2003 which where thus issued as far back as on 1.4.2003 when the special scheme was introduced) is sufficient to hold that it is not unfair on the part of the Government to exclude the export of foodgrains from the benefits of the Special Scheme. There is also considerable substance in the submission made on behalf of the Government that there is no retrospective or retroactive application ....
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....g to exclusion of items exported under free shipping bills-, 38.1 The petitioners have stated as under :- (i) There is nothing such as Free Shipping Bills. The Customs Act prescribes the following as Shipping Bills :- (a) Shipping bill for duty free goods. (b) Shipping bill for duty free goods ex-bond. (c) Shipping bill for exports under drawback. (d) Shipping bill for exports under DEPB. (e) Shipping bill for exports under DEEC (Advance License) (f) Shipping bill for dutiable goods. (ii) All goods which are exported, other than those exported under clause (c) to (f) above, are exported under shipping bill which fall under clause (a) above. This includes exports under EPCG of para 2.39 mentioned above. The form of shipping bill does not and cannot be determinative of the substantive rights available to an exporter under a particular scheme. This is more so when there is no such restriction contained in the Exim policy. (iii) No export incentives/benefits are availed in respect of goods exported under Shipping bill at (a) and (b) above, unlike in the case of drawback, DEPB, etc. There is, therefore, ....
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.... submitted in triplicate and one of the copies bears the title "Export Promotion Copy". Each of these Forms also contains a column "Value FOB" of the goods being exported and a declaration that the particulars given in the Form are true and correct. The aforesaid Forms read in conjunction with the definition of "third party exports" make it clear that the procedural safeguard that the exports made by a status holder on behalf of any party like manufacturer will have to be supported by contemporaneous evidence like the shipping bill because the shipping bill has to indicate the names of both the exporter/manufacturer and exporter as will be clear from the definition of "third party exports" in para 9.55 of the Exim Policy. 9.55 "Third party exports" means exports made by an exporter or manufacturer on behalf of another exporter(s). In such cases, shipping bills shall indicate the name of both the exporter/manufacturer and exporter(s). Apart from the fact that Circular No. 6/2002 dated 23.1.2002 is not on record, such a circular issued prior to the announcement of the Special Incentive Scheme cannot negate the effect of substantive provisions of a Scheme in the Exim Po....
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....xport value of the goods sought to be exported. Even the duty free import entitlement under the Special Scheme is to be worked out at the rate of 10% of the incremental growth in exports (subject to minimum export turn over of Rs. 25 Crores) and such incremental growth has to be at more than 25% in FOB value of exports. The Government has not placed any material to show that when any items are exported under what the Government calls "free shipping bills", the FOB value of exports is not indicated in such bills. Of course, the fact whether any exports have actually taken place and whether the shipping bills reflect the correct FOB value of exports could be a matter of scrutiny or verification, but in the guise of procedural safeguards, the Central Government or the DGFT cannot take away the substantive rights available to the exporters/status holder under a particular scheme. Only those procedural safeguards which are relevant for verification of genuineness of the exports and for determining FOB value of the goods and which are in conformity with the substantive provisions of the Special Scheme as amended by the impugned notifications dated 28.1.2004 and 21/24.4.2004 can be app....