TaxTMI 
TaxTMI 
2016 (2) TMI 1008
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....er authority, by denying the benefit of the said scheme to the appellant, has confirmed duty of customs to the extent of Rs. 11.29 crores (approximately) against them along with confirmation of interest and imposition of penalty to the extent of 100% of the duty involved. 2. Before we go into the facts involved in the present case, we would like to refer to the Target Plus Scheme as also the notification in question, whose interpretation is involved in the present case. The said Target Plus scheme was introduced in the Foreign Trade Policy (FTP) in the year 2005. The said scheme is available to all Star Export Houses, which have achieved a minimum export turn-over in free foreign exchange of Rs. 10 crores in the previous licensing year. The objective of the said scheme is to accelerate growth in exports by rewarding Star Export Houses who have achieved a quantum growth of exports. In terms of the said scheme, high performing Star Export Houses are entitled for a duty credit based on incremental exports substantially higher than the general annual export target fixed. In terms of the said scheme, the Star Export Houses entitled to the said scheme are allowed to use the duty ....
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....iod. In terms of the Chapter 3 Para 3.2.5 which relates to the Target Plus Scheme, goods allowed to be imported under this Scheme shall have a broad nexus with the products exported. For the purpose of import entitlements under this Scheme, 'broad nexus' would mean goods imported with reference to any of the product groups of the exported group within the overall value of the entitlement certificate. However the said Para 3.2.5 was further amended by DGFT Public Notice No. 9(RE-2007)/2004-09, dated 21-6-2007 and the words "For the purpose of import entitlements under the scheme, 'broad nexus' would mean goods imported with reference to any of the product groups of the exported goods within the overall value of the entitlement certificate" were deleted. As a result of the said amendment, the goods allowed to be imported were required to have a broad nexus with the products exported. For better appreciation of the said clauses, we reproduce the same :- Before amendment : 3.25. Target Plus Scheme I ..... ..... II Goods allowed to be imported under this scheme shall have a broad nexus with th....
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....charge including the listed supporting manufacture job worker etc. if any, and thereafter you are free to sell the resultant product(s) in the market. There is no export obligation attached with the resultant product(s) obtained after processing of goods imported under the scheme. You are required to maintain proper account of the utilization of imported goods and abide by the Actual Condition. Moreover there is no requirement of endorsing the name(s) of processor(s) in the DFCE/IPS scripts and you are at liberty to choose any processor to convert your goods into value added resultant product(s). Thus it is clarified that in your case, you are permitted to import Almonds (dry fruits) under the Target Plus Scheme and get the same processed/converted from any processor of your choice into possible resultant product(s) before selling in the domestic market. This clarification is issued with the approval of DG on file." The above circular was subsequently withdrawn by the DGFT and a new circular dated 8-5-2007 was introduced detailing as under :- "3. The matter has been examined in consultation with the Ministry of Law (MOL). After examination of the provisions of Para....
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....age of goods to be imported under Target Plus Scheme. Para 3 of the said circular is reproduced below for better clarification :- 3. The Board had clarified vide Circular No. 21/2007-Cus., dated 21-5-2007, that the words 'Inputs' and 'use' may not be brushed aside and have to be in focus for the intended import. Together, these words indicate that the item sought to be imported should be an 'Input' in the manufacture of the exported products which is required for 'use' by the exporter or the supporting manufacturer, as the case may be. For this purpose, the intended Input must have a relationship with the export product. Whereas SION will act as a prima facie evidence of 'Inputs', the exporter is not debarred from satisfying the authorities that there is a 'broad nexus' between the intended import item as an 'input' with the export product, both falling within the same product group, it was also clarified that the holder of TPS certi­ficate is permitted to Import an Item under the TPS and get the same processed into possible resultant products only if the same has a 'broad nexus' with the product group as an 'input' in the product exported for which the TPS benefit is s....
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....h the said notification as also the Target Plus Scheme contained in the FTP does not prescribe any condition of nexus but the same is contained in Para 3.2.5 of the HBP. As such, he submits that issue of nexus cannot be held to be a mandatory condition for availing the benefit of the said scheme but in any case even if the broad nexus has to be established, the appellant is covered by the said Para 3.2.5 of the HBP. By drawing our attention to the said paragraph as it stood before the amendment, the said broad nexus would be held to be there as long as both the items i.e. exported and the imported items fall under the same product group. He further submits that the expression "product group" nowhere stands defined and for considering the same, one has to go to the Input and Output Norms. By taking us to the said norms, he submits that rice and wheat as also the palmolein oil fall under the same product group E (Food Products). As such, he submits that as long as the exported and imported items fall under the same product group, they have to be held as having broad nexus, thus satisfying the condition as contained in Para 3.2.5 of the HBP. He further submits that the said para, prio....
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....asmuch as the disputes stand settled by the said decisions of the Hon'ble Bombay High Court and the Hon'ble Delhi High Court and inasmuch as they satisfied the conditions of both items falling under the same product group, the impugned order be set aside and appeal be allowed. 9.4 As regards the second objection raised by the Revenue about the condition of actual user, he submits that the goods have actually been used by them for getting the same manufactured from the supporting manufacturers, as job worker. As such, he submits that the said condition stands satisfied by them and in fact the adjudicating authority has also not adopted the said condition as a reason for rejecting their claim of exemption. The adjudicating authority has observed that even in terms of the notification in question, the merchant exporter is entitled to get the imported goods manufactured through the supporting manufacturers. However he has held that inasmuch as the activity of packing of palmolein oil in 1 kg. Packs, directly out of the pipelines or tanks would not be covered by the definition of manufacture, the benefit cannot be extended. By drawing our attention to Notification No. 32/2005-Cu....
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....upporting manufacturers and which have been further supplied to the Government of Andhra Pradesh for public distribution system, they have satisfied the said condition of actual user in the notification. Accordingly he prays for setting aside the impugned order and allow the appeal with consequential relief to the appellant. 10.1 Countering the above stand of the learned advocate, learned AR Shri S.K. Singh, Commissioner appearing for the Revenue submits that the appellant has entered into agreement with Andhra Pradesh State Civil Supplies Corporation Ltd. for importing RBD Palmolein oil imported in bulk and subsequently packed into 1 litre pouches for onward supply through public distribution system. The said Palmolein oil imported by the appellant in liquid form was pumped directly from the vessels to the storage points of their supporting manufacturers M/s. Ruchi Infrastructure Ltd., M/s. Acalmar Oils and Fats Ltd. and their other job workers for further packing of the same in 1 litre pouches. He submits that in terms of the Target Plus Scheme, the importer can import items for THEIR OWN USE OR THAT OF SUPPORTING MANUFACTURERS as declared in Aayaat Niryaat Form. By drawi....
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....by itself does not indicate that the imported goods should constitute inputs in the exported goods relying upon Atul Commodities (supra) wherein we also agree that the interpretation of the expression broad nexus undertaken by the learned Single Judge." It implies that the word nexus has been taken as referred to a larger group of similar goods and not from exported goods itself only. Meaning thereby, that even if the goods imported is not directly relatable to exported goods it should be relatable to similar goods which has been exported. The product group as discussed in the judgment of High Court is mentioned in Handbook of Procedure, Standard Input Output Norms (duty exemption scheme) wherein chapter E, which covers food products. There is general note to these input output norms which states (a) norms have been put with a view to facilitate determination of the proportion of various inputs which can be used or are required in the manufacture of different resultant products. In many cases resultant products and the inputs have been described in generic terms. The applicants shall, therefore, ensure that the goods sought for import and actually imported are those which are....
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....roup wherein export goods and relevant import items are listed, it is categorically established that the broad nexus is between the food item exported in the above mentioned sub-group exists with the item referred for importation in the particular sub-group. (c) E-5 has export item as biscuits with or without dry fruits it refers to import item Maida/Atta/Flour/Sugar/Vegetable Cream/Skimmed Milk, Additives and other bakery ingredients like Emulsifier, Leavening agent, food flavour, packing materials, paper and paper board and relevant dry fruits. By no stretch of imagination the Listed import items in E-127 of Food product group i.e. crude mustard oil, caustic lye, phosphoric acid, citric acid, coal/coke, diesel can be imported against export of biscuits as listed at E-5. Because in the product group of food items there is separate heading for food items to be exported and separate heading for items to be imported which has broad nexus with the food items exported in their relevant sub-headings. The interpretation of the two Hon'ble High Court judgments cannot lead to an interpretation to import diesel coal/coke mustard oil/phosphoric acid etc. against ex....
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.... activity undertaken by the assessee in filling the smaller container from bulk container namely tankers can never fall within the fiction of manufacture". The decision squarely applies to the present case and thus filling RBD Palmolein in one Litre pouches from storage tanks cannot be termed as manufacture. Further the above matter has been examined vide C.B.E. & C. Circular No. 910/30/2009-CX, dated 16-12-2009 wherein it was clarified that activity of transferring the goods from tankers to smaller packs cannot be said to be manufacture. 11. We have considered the submissions made by both the sides and have gone through the impugned order of the Commissioner. 12. After considering the submissions made by both the sides and after going through the impugned order passed by the Commissioner and after examining the various provisions of the FTP as also the HBP and various circulars issued by the DGFT and the Customs, we note that the issue required to be decided in the present case is as to whether the import of Palmolein oil as against the export of rice and wheat is covered by the Target Plus Scheme introduced in the FTP and whether the appellant is entitled to pay d....
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....he expression "broad nexus". It stands clearly laid dawn that what is the meaning of broad nexus and how such a broad nexus has to be established between the imported items and the exported items. In terms of the unamended Paragraph 3.2.5 of the HBP, the broad nexus means that the imported items as also the exported items must fall under the same product group. However the said para was subsequently amended w.e.f. 21-6-2007 and the expression "relatable to the meaning of the broad nexus" was deleted. However the requirement of the imported goods to have broad nexus with the exported items remained. 16. As such, it has to be seen that whether the goods imported by the appellant under the said scheme has any broad nexus with the goods exported by them. The question remains as to how to arrive at the said broad nexus. Before we move further, we have to keep in mind that the expression used in the said paragraph is not only nexus but the same stands qualified by the expression 'broad'. As such, it is the broad nexus between the imported and the exported item which is to be looked into. After the amendment in Para 3.2.5 of the HBP, which explains that how the broad nexus has to ....
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....boost the export by way of rewards to the star export houses, the Hon'ble High Court considered Clause 3.7.6 of the FTP as also Para 3.2.5 of the HBP. It came to the conclusion that the Circular dated 8-5-2007 issued by the Board restricting the imports only to the inputs to be used in the manufacture of the exports is ultra vires the policy and as such the same was quashed. For better appreciation of the High Court's decision, we reproduce Paras 9 & 10 of the said judgment. 9. Now, it is not disputed before the Court that the goods which have been imported by the Petitioner satisfy the requirement that there should exist a "broad nexus" between the goods which are imported and the goods which are exported as stipulated in Paragraph 3.2.5 of the Handbook of Procedures. The requirement under the Handbook of Procedures is that for the purposes of import entitlements under the scheme, 'broad nexus' would mean goods imported with reference to any of the product groups of the imported goods within the overall value of the entitlement certificate. There is no dispute before the Court that this requirement under the Handbook of Procedures has been duly fulfilled. No submission to ....
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....irement of physical incorporation, such a condition has been made expressly in other provisions of the Foreign Trade Policy. For instance, in relation to advance plus licences governed by the duty exemption scheme, it has been stipulated that an advance licence is issued to allow duty free importable inputs which are physically incorporated in the export products (paragraph 4.1.3 of the Foreign Trade Policy for April, 2005). Similarly, while issuing an exemption notification in relation to imports covered by advance licences, the Union Government in its notification dated 10 September, 2004 (Notification 93/2004) has specifically defined materials to mean raw materials, components, intermediates, consumables, catalysts and parts which are required for manufacture of resultant products. No such requirement was incorporated in paragraph 3.7.6 of the Foreign Trade Policy. In other words, the condition that the inputs which are imported must be used in the export of the resultant product was not incorporated as part of paragraph 3.7.6 of the Foreign Trade Policy. In that view of the matter, it is not possible to accept the contention of the Respondent that the conditions which were imp....
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....onsidered as broad nexus with each other. Admittedly in the present case, rice and wheat which were exported and the palmolein oil which was imported fall under the same product group of Food Products-E. Inasmuch as both the items fall under the same product group, we hold, by following the Hon'ble Bombay High Court's decision, that it would be entitled to the benefit of Target Plus Scheme. 20. We may also refer to the Hon'ble Delhi High Court's decision in the case of Indian Exporters Grievance Forum & Anr. v. UOI & Ors. The Hon'ble High Court vide its order dated 5-8-2010 in Writ Petition No. 2497 of 2008 has considered an identical issue. After taking into account the entire development in the Target Plus Scheme as also various public notices issued by the DGFT, it was observed that even though the broad nexus requirement was justified keeping in view the overall objectives of the FTP, the further changes made by Circular dated 21-6-2007 to restrict the import to only those goods that constituted an input in the exported product is indeed impermissible. The condition is unduly restrictive and has the effect of negating the accrued benefit. The Court further observed t....
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....rt upheld the said order, reported as UOI v. India Exporters Grievance Forum [2013 (290) E.L.T. 481 (Del.)]. The Hon'ble High Court observed that the issue whether the import can be only of those inputs which have nexus with the goods exported is not following from the scheme. It observed that the expression broad nexus used in HBP, which has the word broad prefixed with nexus, has to be assigned the meaning given by DGFT itself in their letter dated 1-8-2006. Accordingly the Court held that the nexus has to be maintained in terms of "product group" viz. the category of the products which is exported. If the import falls in the same category/group, it would be allowable. In relation to the exports of food items, it was clarified that it would be food category with reference to which the exporter was required to maintain nexus. Accordingly the Court held that the Circular dated 1-8-2006 of DGFT was in tune with the scheme of the FTP. Accordingly the order by the learned Single Judge of the Hon'ble Delhi High Court was upheld. 21. When we examine the issue in the light of the law declared by the Hon'ble Bombay High Court as also the Hon'ble Delhi High Court, it becomes clear ....
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.... as contained in Para 3.7.1 of the FTP. The same stands introduced with an object of accelerating the growth by star export houses and such acceleration of exports is to be obtained by rewarding the star export houses. It stands clearly held that high performed star export houses shall be entitled for a duty credit based on incremental exports, substantially higher than the general annual export target fixed. The said objectives nowhere reflect upon the legislative intent that such incentives to the star export houses would be only in relation to the import of inputs which they would use in the exported products. In the absence of any such indication in the objective of the Target Plus Scheme, which is meant for promoting the exports, restrictive views cannot be adopted and obstacles cannot be raised, which would defeat the said objective of the scheme. 24. In view of the above discussion, we hold that inasmuch as the rice and wheat i.e. exported products and the palmolein oil i.e. imported item fall under the same product group i.e. E-Food products, they have to be held as having broad nexus thus satisfying the condition of Target Plus Scheme. 25. The Commissioner ....
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....t be transferred or sold as such. The same can be used by supporting manufacturers of the merchant exporter. It nowhere stands provided in the said condition that the use of the goods by the supporting manufacturers "must amount to manufacture". The processes carried out by the supporting manufacturers may or may not be covered by the definition of manufacture and as long as supporting manufacturers had undertaken some processes on the goods imported and such processed goods are sold by the merchant exporter, said Condition No. 3 stands fulfilled. In the present case, we note that the imported oil was further processed by the supporting manufacturers, by repacking the same into 1 kg. packs, which packs were sold by the appellant to the Government of Andhra Pradesh for public distribution. In the absence of any such condition in the notification that the activity undertaken by the supporting manufacturers must amount to manufacture, the introduction of such condition by the adjudicating authority, on his own, is beyond the accepted legal position. Though no support of any decision to hold that the legal provisions should be interpreted in the light of the language used therein and n....
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.... as there is any process undertaken by a person so as to produce the resultant different product, the same would get covered by the said definition. Admittedly the supporting manufacturers have converted the oil into 1 kg. retail packs by packing the same and the said activity has resulted in bringing into existence of a new product inasmuch as 1 kg. packs which are retail packs cannot be compared to the liquid cargo available in the tankers. As such, we hold that even if the aspect of the manufacture has to be examined, the appellant seems to have satisfied the said test. 31. In view of the above, we hold that inasmuch as the appellant has established the broad nexus between the imported item and the exported item and has also satisfied the condition of the Notification No. 32/2005, they are entitled to avail the benefit of the Target Plus Scheme. Accordingly we set aside the impugned order and allow the appeal with consequential relief to the appellant. (Order pronounced and dictated in open Court) Sd/- Archana Wadhwa Member (Judicial) 32. [Per : Ashok K. Arya, Member (T)]. - Heard both parties in detail. 33. They have narrated the facts, which....
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....he importers, in this case the appellants viz. M/s. MMTC Ltd., have to qualify and pass the test of 'broad nexus' in respect of their imports with reference to the exports they had made earlier with reference to the 'broad nexus requirement' of Paragraph 3.2.5 of the Handbook of Procedures - HBP. The Hon'ble Delhi High Court (decided on 24-2-2012) in the case of UOI v. Indian Exporters Grievance Forum (supra), quotes the decision of the learned Single Judge passed in the Writ Petition No. 2497 of 2008 and states as under :- 29. In this backdrop, while quashing the impugned Circular dated 8-5-2007, Public Notice dated 21-6-2007 and further Circular dated 19-12-2007 as well as amended Para 3.4.5 of the HBP, the learned Single Judge has made following remarks : "27. Given the objective of providing an incentive to exporters, para 3.7.6 of the FTP can reasonably be interpreted to require an exporter to show that the goods imported should have a "broad nexus" with reference to any product group of the exported goods within the overall value of the entitlement certificate. The word "nexus" obviously refers to a larger group of similar goods (emphasis supplied) and not the....
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....r to further understand the scenario, let us refer to exact items mentioned at Sl. No. E-38 and E-122 of above Section E - FOOD PRODUCTS; the same are given below (quantity not given as it is not immediately relevant) : Sl. No. Export item Import item Name Quantity Name Quantity allowed E-38 Rice/Wheat/Chicken Biryani/Vegetable Biryani/Vegetable Pulao/Zeera Rice 1. Canvas/Jute 2. LDPE/HDPE/PP Granules 3. Printing Ink 4. Art Paper E-122 Refined Palmolein Oil (Edible grade) FFA content 0.25% 1. Crude Palmolein oil 2. Phosphoric acid 3. Citric acid 4. TONSIL Bleaching earth Above reproduction gives an indication that what could be the item(s) of import having a 'nexus' with the item(s) of export as per Foreign Trade Policy. It is understood that items of import given above would have some direct or indirect application or use either in production or manufacture or presentation, preparation, packing, marketing, sale etc. of the export item mentioned against the said import items. And this said long list is not a superfluous one, a large number of p....
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....goods within the overall value of the entitlement certificate. III ... ... .. IV ... ... .. V ... ... ... VI ... ... ... VII ... ... ... VIII ... .... ... It uses the wordings 'product groups'. It is pointed out that the 'product groups' is a plural indication of the items, within the category of 'Food Products', there are many product groups. One cannot say that for the purpose of imports against an export item under TPS (Target Plus Scheme), each and every item given in, from Sl. No. E-1 to E-128 could be covered by the wordings 'PRODUCT GROUPS'. 36.3 When we closely peruse the list of food products/items given in the Section (E) of FOOD PRODUCTS of the FTP (Foreign Trade Policy)-Input-Output Norms (Duty Exemption Schemes) 2004-09 (Vol. 2), among these 128 items (E-1 to E-128), one finds many product groups spread over these 128 serial numbers. For example, one finds here : * Confectionary/biscuits/chocolate (E-1, E-5, E-69) * Instan....
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....he only yardstick is that they are to pass the test of 'broad nexus'. In simple words, one has to dispassionately and judiciously judge clearly what is the direct or indirect relation or the link between the exported item and the imported item. When both the exported item(s) (rice & wheat) and the imported item (RBD Palmolein) happen to be just 'food items', one cannot conclusively say that, that is why, they have broad nexus with each other. Using the words quoted by Hon'ble Delhi High Court in the case of UOI v. Indian Exporters' Grievance Forum (supra), we can say that to claim the benefit of the Notification No. 32/2005-Cus., dated 8-4-2005 the goods imported (RBD Palmolein) has to be in the category of goods having a broad nexus with either the goods similar to the exports or with the export item(s) (Rice & wheat) themselves; this nexus (broad or even broader) has not been found in existence or been established. 36.5 It is pointed out that this Tribunal in the case of Gimpex Ltd. v. CC, Hyderabad decided on 6-6-2012, reported in 2012 (285) E.L.T. 193 (Tri.-Bang.) held that the wordings broad nexus cannot be so liberally construed as to mean that where two or more goods....
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....old - (i) that, for claiming the benefit of exemption under Notification No. 32/2005-Cus., dated 8-4-2005 under the Target Plus Scheme, it was not necessary for the assessee-appellants to establish that the goods imported as input by them were usable in the manufacture of the goods exported by them; (ii) that, for claiming the above benefit, it was enough for them to establish a broad nexus between the imported input and the exported products with reference to the respective Export Product Groups; (iii) .. ... ... (iv) .. ... ... (v) .. ... ... (vi) .. ... ... (vii) .. ... ... It is pointed out here that above order of this Tribunal did take note of the Hon'ble Delhi High Court's decision in case of UOI v. Indian Exporters Grievance Forum (decided on 24-2-2012) quoted earlier, where 'broad nexus' criteria used in the Handbook of Procedures (HBP) was found meaningful and also stated therein that the word 'broad' is prefixed with 'nexus'; the word 'nexus' has to be assigned same meaning. In other words, both the words i.e. 'broad' and 'nexus' have got their significance and cannot be ignored when the policy is to be interpret....
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.... that one imports under TPS (Target Plus Scheme) anything under the sun from a small needle to a big ship. Learned Commissioner (AR) argues that the appellant has exported items like iron ore, chrome ore, Manganese ore, rice, wheat, Pig iron, blast furnace, granulated slag and imported the goods RBD Palmolien, which is no way related to any of these exported products, even to the items rice and wheat, mentioned and specially emphasized by the appellant. 38. It is important here to point out that Hon'ble Bombay High Court in the case of Essel Mining and Industries Ltd. v. UOI (supra) has referred to the case of export of iron ore under the Target Plus Scheme and import of Molybdenum concentrate for the manufacture of Ferro Molybdenum giving the benefit of Notification No. 35/2005-Cus. saying that there has been a broad nexus with the imports and exports in the said case. In the present case, the appellant exported rice/wheat and have imported RBD Palmolein. The learned advocate for the appellant says that both are under the category of food. But by describing and categorizing these two as just member of wide 'food group', one cannot say that these two have judiciously passed....
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.... export item E-79). One cannot say that if one has exported one food item, the said exporter would be entitled to import under the Target Plus Scheme (TPS) any of the import items mentioned against the export items in the Sl. Nos. E-1 to E-128 of 'Food Products' even without bothering about and without following the yardstick and condition of the wordings "broad nexus". The said importer cannot say that he/she has qualified 'broad nexus' unless he/she is able to clearly establish the said 'broad nexus' by producing the necessary facts that there is certainly a direct or indirect relationship either in manufacture or production or presentation, preparation, marketing, sale etc. between these two import and export items. 40. Here there is no need to refer to the said condition of the Notification No. 32/2005-Cus. i.e. the condition of "use" and "own use" (i.e. goods are not to be transferred or sold), if the appellants have not passed the test of 'broad nexus' itself with reference to their export item and import item. However it is agreed that whatever imports the appellant made, they have made the required use, they were supposed to use as per the requirement of the Policy ....
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....dbook of Procedure, in respect of the imports of RBD Palmolein oil made by them as against the export of Rice and Wheat; (ii) Whether the appellants have satisfied the criteria of broad nexus between the imported and exported goods; (iii) Whether the disputed issue is covered by the decisions of the Hon'ble High Court of Bombay and the Hon'ble High Court of Delhi, as observed by Member (Judicial) or the same is distinguishable in the facts and circumstances of the case, as held by Member (Technical); and (iv) Whether the appeal has to be allowed as held by Member (Judicial) or to be rejected as held by Member (Technical). Sd/- Ashok Kumar Arya Member (Technical) Archana Wadhwa Sd/- Member (Judicial) 41. [per : Sulekha Beevi C.S., Member (J)]. - The difference of opinion was referred to me as per orders of Hon'ble President for resolving the following points :- i. Whether the appellants are covered by the Target Plus Scheme, read with the provisions of Handbook of Procedure, in respect of the imports of RBD Palmolein oil made by them as against the export of Rice and W....
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....shall have a broad nexus with the products exported. Prior to 21-6-2007, the meaning of 'broad nexus' was elucidated in this para itself. Later as per DGFT Public Notice dated 21-6-2007, the said Para 3.2.5 was amended and the meaning given for broad nexus was deleted. After such amendment, these words 'broad nexus' has become a grey area leading to clarificatory circulars by DGFT and litigations by parties. 45. The meaning of 'broad nexus' before its deletion as contained in the second sentence in Para 3.2.5(ii) of HBP read as "For the purpose of import entitlements under this scheme, 'broad nexus' would mean goods imported with reference to any of the product groups of the exported goods within the overall value of the entitlement certificate". (emphasis supplied). Thus prior to the amendment deleting, the meaning of broad nexus was such that if the goods imported had reference to any of the product groups of the exported goods it would satisfy the criteria of broad nexus. To put it more clearly, if the export product falls within a particular group of SION book, the import of any input if listed in the relevant product group would satisfy the condition of broad nexus. Th....
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....es Ltd. case is that the petitioner was a manufacturer of Ferro Molybdenum for which Molybdenum concentrate was an input. The petitioner exported iron ore and against this claimed benefit of TPS for the import of Molybdenum concentrate. The benefit was sought to be denied by department for the reason that Molybdenum concentrate is not an input for iron ore which is the export product. This was contested by the petitioner by stating that both iron ore and Molybdenum concentrate belong to the same product group as per SION (Standard Input Output Norms) and therefore the criteria of broad nexus was satisfied. The Hon'ble High Court observed that the condition that the inputs which are imported must be used in the export of the resultant product was not incorporated as part of Para 3.7.6 of FTP, and quashed the impugned circular. The Hon'ble Delhi High Court in UOI v. Indian Exporters Grievance Forum & Another [2013 (290) E.L.T. 481 (Del.)] while considering the appeal filed against the judgment of learned Single Judge has taken a similar view. These judgments have been elaborately quoted by both Member (J) and Member (T). The learned Member (T) has held that these judgments are not ap....
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....ra 10) that such deletion, seeks to narrow down the right to import only such inputs under TPS as those which have nexus with the export product, and not the export product group. The Hon'ble High Court allowed the writ petition quashing not only the circular dated 8-5-2007, but also the public notice dated 21-6-2007 and further circular dated 19-12-2007. The Hon'ble Single Judge ordered that the duty entitlement of petitioners is to be computed on the above basis and corresponding credit on duty has to be given. In appeal preferred by Union of India, the Hon'ble High Court dismissed the appeal as devoid of merits, upheld the judgment of the Hon'ble Single Judge and also endorsed the view taken by the Single Judge in regard to the interpretation of broad nexus. The Hon'ble Delhi High Court also noticed the judgment in Essel Mining & Industries Ltd. case being an identical issue. 52. The learned AR submitted that in Essel Mining & Industries Ltd. case and also in the case of UOI v. India Exporters Grievance Forum & Anr. [2013 (290) E.L.T. 481 (Del.)], the issue of 'broad nexus' was not agitated or negated but the question considered was whether the inputs imported should fin....