TaxTMI 
TaxTMI 
2017 (3) TMI 217
X X X X Extracts X X X X
X X X X Extracts X X X X
....an Rs. 148.76 million), equivalent to USD. Notably the quantum of USD was not specified. Terms of payment were: "Advance to the account of seller" i.e. the petitioner was to receive the sale consideration in advance. The delivery time was upto 31.03.1994 (this period was subsequently extended by the buyer). The quality of the product was specified as under: "Quality : Width- 500 MM+- 10MM; Height 1000 MM+15-0 MM; Above seal - 990MM + 15-0MM; Seal Width - 5MM, Below Seal - 10MM+-5MM, Thickness 220 Microns +-15%; Weight of bag - 206 grams +-15%" 3. Upon petitioner's application dated 04.10.1993, the Reserve Bank of India (RBI) vide its memorandum dated 16.07.1993, permitted release of Rs. 72,50,00,000/- into the petitioner's account through Punjab National Bank as advance from the bank for Foreign Economic Affairs of the USSR in terms of the agreement between the petitioner and the Russian purchaser. The petitioner applied for license under the Duty Exemption Scheme for Value Based Advance License under Appendix XVII of the Hand Book of Procedure 1992- 97. It specified the FOB value of exports as Rs. 14,69,26,650/- in the column Currency of Exports and the CIF va....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... through a Show Cause Notice dated 23.09.1994, respondent intimated the petitioner that the license was issued apropos General Currency Area (GCA) countries. The communication noted inter alia: "It has now come to the notice of this office that you have slipped badly in the exports schedule despite the fact that you had availed advance payments. In the circumstances you are requested to explain and intimate as to why the said licence may not be cancelled on account of non-fulfilment of export obligation. Your detailed reply should reach this office within t15 days from the date of receipt of this letter. Failure to reply will attract action as deemed necessary under ITC Regulations." 7. The petitioner replied vide letter dated 11.10.1994, that the payment had already been received from non-convertible bilateral Rupee account against contract No. 1082884 dated 18.06.1991 and that in terms of the RBI's Circular No. 30, the funds received from India Side in payment of State Credits granted by erstwhile Soviet Union would be utilised by the Russian Side for purchase of any goods and services from India; that the time for effective export was till February, 1995, but they had a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....146926650/- USD 4591457.81. From the above it is seen that the notice firm had clearly indicated fob value of exports both in Indian currency and in US dollars. They had also not suppressed the fact that the mode of payment was advance payment. They cannot be held responsible if the Licensing Authority failed to take note of these facts stated so clearly. The allegations contained in the show cause notice dated 7.7.95 are thus clearly not sustainable. I therefore see no reason to proceed against the notice firm any further in this case. By virtue of powers vested on me under Section 9(4) of the Foreign Trade (Development & Regulation) Act, 1992, I absolve the notice firm of the allegations contained in the show cause notice dated 7.7.95, and discharge he said notice." 10. Accordingly, the first prayer seeking quashing of the show cause notice has become infructuous. The petitioner, however, seeks amendment/modification and re-validation of its import license as per its request dated 2.3.94. 11. The respondents have opposed the grant of the said relief on the ground that although the Appendix XVII application of the petitioner under Duty Exemption Scheme indicates net FOB v....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dated 15 September 1998 that the 'transaction in question pertains to exports from India against liquidation of rupee balance of the erstwhile USSR.' 14. During the pendency of the writ petition, the petitioner was heard by the Advance Licensing Committee on 21.09.1999 which decided that because of quantitative factors relating to non-fulfilment of export obligation under the Advance Licence and absence of evidence about use of packing material, as spelt out in paras 4 & 5 thereof, the exports made by the petitioner was not eligible for grant of the relief of conversion of the exports into the duty drawback system. The reasons specified were: "4. The Committee at their meeting held on 21st September, 1999 considered the entire matter. The Committee noted that Condition No.4 indicated on the reverse of the said Value Based Advance Licence No. 1526408 dated 14.12.l994 read as under:- "4.The firm shall export 21,25,000 of LDPE Liner Bags having LDPE 2429.333 MT packed in packing material made of Board/White Card Board weighing 13.49 MT and processed timber weighing 34.5 MT for an FOB value of us $ 45,91.45781- and realise the proceeds in free foreign exchange only by makin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r any document which is false or fabricated or tampered with". 16. However in the proceedings pursuant to the impugned SCN dated 9.9.1995 the Deputy Director General of Foreign Trade, in his order dated 28.05.1997, had already found that the petitioners had clearly indicated FOB value both in Indian currency and USD; that they had not suppressed that the mode of payment was advance payment and therefore, the issue of cancellation of license did not arise. All relevant information was duly disclosed to the respondents before the issuance of the Advance License. The currency of export was specified as Indian Rupees, therefore logically, the export obligation in terms mandated in dollar currency in the advance license was sought to be corrected/amended. 17. The Court would note in particular, that the agreement between the petitioner and the Russian importer, specified only the Indian rupee value and not its US dollar equivalent. General Rules of international trade may be laid down under domestic laws but such trade happens only under the peculiar and specific terms as may be agreed between the trading parties. It is for the parties to determine which permissible currency they ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e exports from India against liquidation of Rupee balance to the credit of erstwhile RPA countries, the value addition norms shall be 100% or the percentage of value addition indicated in the Handbook of procedures (Volume-II) 1992-97, whichever is higher; and (c) For exports to the Russian Federation against India's repayments of state Credits granted by the former USSR, the value addition norms shall be 100% or the percentage of value addition indicated in the Handbook of Procedures (Volume-II), 1992-97, whichever is higher. In respect of exports indicated at sub-paragraphs (b) and (c) above the following further relaxations shall be applicable:- (i) The provisions of paragraph 126 of the Exim & Import Policy 1992-97 (revised edition March 1994) shall stand relaxed to the extent that exports contracts and invoices shall be determined in nonconvertible Indian Rupees; and (ii) The provision of paragraph 231of the Handbook of Procedures (Volume -I), 1992-97 (revised Edition: March, 1994) shall stand relaxed to the extent that imposition and discharge of export obligation on the duty free licences, if availed under the Duty Exemption Scheme on such exports, shall be i....