TaxTMI 
TaxTMI 
2016 (9) TMI 776
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....n (BCER) from their banker and applied for DEPB to the jurisdictional officer of Director General of Foreign Trade (DGFT) by filing one application in respect of three shipping bills. The DGFT after examining the copies of the shipping bills and BCER in respect of the three shipping bills issued a common DEPB of Rs. 9,30,515/- on 25.8.2000. 4. Respondent No. 1, issued a show cause notice dated 20.10.2003 proposing to impose penalty under Section 11(2) of the Foreign Trade (Development and Regulation) Act, 1992 (for short the Rs. 1992 Act'). It was alleged therein that the petitioner in connivance with the custom officials had got ante-dated copy of shipping bill. The specific allegation was that the material was actually exported on 04.04.2000 whereas the shipping bill mentions the date as 30.03.2000. It was alleged that the petitioner got the shipping bill ante-dated to avoid the value cap which came into effect w.e.f., 01.04.2000. The petitioner was actually entitled to benefit of Rs. 1,00,980/- instead of the Rs. 2,72,752/- availed. Later on, through a corrigendum dated 05.07.2004, it was also proposed to cancel their DEPB ab initio. Pursuant thereto, vide order dated 30.11....
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....that the petitioner neither complied with the condition of mandatory pre-deposit before filing the appeal, nor despite sufficient opportunities being given, did he appear before the authorities to explain his defence. Hence, the appeal was rightly dismissed. 9. He further argued that the DEPB is in fact a licence'. The 2010 amendment whereby the term 'licence' has been substituted with licence, certificate, scrip or other instrument bestowing financial or fiscal benefits' is clarificatory in nature and cannot lead to the inference that prior to this amendment there was no power to cancel the DEPB. 10. Heard Ld. Counsel for the parties and perused the record. 11. At the outset it would be necessary to refer to the relevant provisions of the 1992 Act and the 2010 amendment . The term licence is defined in Section 2 (g), which as under: "licence" means a licence to import or export and includes a customs clearance permit and any other permission issued or granted under this Act;" 12. Section 9 deals with the issue, suspension and cancellation of licence. This section is reproduced below: "9. Issue, suspension and cancellation of licence.-(1) The Central Government ma....
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....cheme (DEPB) finds place in Chapter 7 of the Export and Import Policy, 1997-2002 as notified by the Central Government in Notification No. 1(RE-99)/1997-2202 dated 31-3-2000. The relevant Paras 7.14, 7.15, 7.16 and 7.38 which explain the objective, period of validity, the manner of making application etc. are extracted hereinbelow: "7.14. For exporters not desirous of going through the licensing route, an optional facility is given under DEPB. The objective of Duty Entitlement Pass Book Scheme is to neutralise the incidence of customs duty on the import content of the export product. The neutralisation shall be provided by way of grant of duty credit against the export product. Under the Duty Entitlement Pass Book Scheme (DEPB), an exporter may supply for credit, as a specified percentage of FOB value of exports, made in freely convertible currency. The credit shall be available against such export products and at such rates as may be specified by the Director General of Foreign Trade by way of public notice issued in this behalf, for import of raw materials, intermediates, components, parts packing material, etc. The holder of Duty Entitlement Pass Book Scheme (DEPB) shall....
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....'ble Court the Supreme Court explained that DEPB is essentially an export incentive the objective whereof is to neutralise the incidence of customs duty payment on the import content of export product. 18. In Yasha Overseas v. CST, (2008) 8 SCC 681, the Hon'ble Supreme Court held that DEPB credit has its own intrinsic value and is thus clearly "goods" within the meaning of sales tax laws. It was held to be comparable with prepaid meal tickets or prepaid petrol coupons or accumulated flying miles which have intrinsic value and are marketable commodities. It was observed thus: "59. We are afraid, we find the submission unacceptable. We are unable to see DEPB either as a debt or as a beneficial interest in movable property not in possession of the claimant. To us it is plain that DEPB like REP licence has its own intrinsic value and the purchaser, on payment of consideration, buys something for its value. DEPB credit is thus clearly "goods" within the meaning of sales tax laws and its sale is clearly exigible to tax. 60. We may observe here, if DEPB (or for that matter REP licence!) has to be compared with a lottery ticket, it can only be compared with a lottery ticket t....
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....ancelled even under the un-amended Section 9(4) as argued by the Ld. Counsel for the respondent, the question is could DEPB be cancelled ab initio after the expiry of its period of validity? If the answer to this question is in the negative then we may not need to consider the contentions No. (i) and (iii) raised by the Ld. Counsel for the petitioner. 21. The DEPB whether considered as 'goods' or as 'a scrip' (which is defined in Black's Law Dictionary 9th Edition as - A document that entitles the holder to receive something of value), has worth or value only during its period of validity. On the expiry of that period it loses all value and becomes nothing more than a piece of waste paper. 22. Section 9(4) enables the Director General or officer authorised by him to cancel or suspend the licence. 23. The terms 'cancel' and 'suspend' are defined in Black's Law Dictionary- 9th Edition as under: "Cancel, vb. 1. To destroy a written instrument by defacing or obliterating it<she canceled her will by marking through it>. 2. To terminate a promise, obligation, or right <the parties canceled the contract>. {Cases: Contracts 251.} suspend vb. (14c) 1. To inte....
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....s earlier. In the present case, it is not in dispute that the benefit available to the petitioner was availed of by it by the year ending March 31, 2002. Meaning thereby, in terms of the conditions of eligibility certificate, the same ceased to be operative thereafter. Once it is so, no action possibly could be taken under Sub Rule 8 of Rule 28A of the Rules, which enables the withdrawal of an eligibility certificate at any time during its currency. Once the currency of the eligibility certificate is over, power under Sub rule 8 of Rule 28A of the Rules cannot be exercised on the ground it is sought to be exercised by the respondents that is mis-statement or concealment of facts by the petitioner. The plea of the respondents that proceedings for withdrawal of eligibility certificate had been initiated during the currency of the same, have just, to be noticed and rejected, being without any merit. Plan language of Sub Rule 8 of Rule 28A of the Rules provides that it is the withdrawal of the eligibility certificate, which has to take place during its currency and not that the process of withdrawal is to start during that period. Any order passed for withdrawal of eligibility certific....
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....o provision under the Act or the Regulations has been brought to our notice which empowers the delegatee to alter the terms and conditions of the contract with retrospective effect. The purported policy decision must, therefore, be tested not only having regard to the provisions of the statute but also having regard to Clause 4 of the offer." 30. A closely similar case under the 1992 Act is Vikrant Overseas v. Union of India, (1999) 2 RCR (Civil) 397. In this case initially on September 8, 1998, the petitioner was granted a licence for the import of 3000 mt. tonnes of 'Khas Khas' (poppy seeds). The petitioner was permitted to import the poppy seeds from "the country of origin - Pakistan, Afghanistan, Turkey and Australia." 31. On December 8, 1998, the Joint Director General of Foreign Trade, Amritsar, informed the petitioner that names of Pakistan and Afghanistan were deleted from the licence with effect from the date of issue of licence. He was informed that this action had been taken under "Para 8 of Foreign Trade (Regulation) Rules, 1993." Aggrieved by the retrospective amendment of its licence, the petitioner therein approached the Court through a Writ Petition. 32. A Divis....