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2017 (9) TMI 1019
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....iated value. 2. The petitioner was also issued an Authorisation (licence) computing the export obligation on the basis as claimed by the petitioner. However, the Authorisation was sought to be amended subsequently, after the petitioner had sought a discharge certificate of its export obligation and closure of the Authorisation. 3. The principal controversy involved in the present petition is whether under FTP 09-14 read with Handbook of Procedures (hereafter 'HOP'), the export obligation under the applicable EPCG scheme is to be computed as multiple of the duty saved, as claimed by the petitioner, or as multiple of the depreciated value on the capital goods as insisted upon by the respondents. The petitioner also claims that amendment of the Authorisation enhancing the export obligation is without jurisdiction. This is disputed by the respondents. 4. Briefly stated, the relevant facts necessary to address the aforesaid controversy are as under:- 4.1 The petitioner is a partnership firm and is engaged in the manufacture of Glass Beads, Chatons etc. The petitioner setup a 100% Export Oriented Unit (hereafter 'EOU') at Valsad in 2005. In terms of the EOU re....
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..... This was accepted by the DGFT by a letter dated 04.08.2011 and the average annual value of exports was amended from Rs.284,960,333.33/- to zero. 4.6 The petitioner states that it performed its export obligations as per the EPCG authorisation and, thereafter, on 22.11.2013 filed an application for redemption/ closure of the EPCG authorisation. Thereafter, the petitioner received a communication dated 23.01.2014 from the DGFT unilaterally enhancing the export obligation from Rs.12,27,37,317.18/- to Rs.51,14,05,488/-. The said communication did not indicate any reason for such amendment. The petitioner objected to such amendment by its letter dated 27.01.2014. 4.7 Thereafter, DGFT issued a deficiency letter dated 28.01.2014 indicating that the petitioner's application was deficient for the following reason:- "1. IT IS INFORMED THAT E.O IS AMENDED AS PER POLICY CIRCULAR 84/DT. 30/4/2009 AS LICENCE WAS TO BE ISSUED ON DEPRECIATED VALUE AND E.O. 6 TIMES OF DEPRECIATED VALUE. THIS IS THE FIRST LIC AFTER THE FIRM WAS DEBONDED FROM EOU." 4.8 The petitioner sent various representations, contesting the aforesaid amendment, however, the same were not accepted; and, on 22.03.2....
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....rding to him, Circular no. 84/2004-09 dated 30.04.2009 was issued to clarify an earlier notice (Circular no. 79 dated 01.04.2009), regarding the maintenance of average annual export turnover in case of entities having multiple units. He submitted that the reference to export obligation equivalent to six / eight times the depreciated value was erroneously incorporated from an earlier circular - Circular no. 35 dated 01.10.1999 - which had been issued as per the then FTP which was prevalent at that time. 7. Mr. Parikh further contended that in any event, the Circular no. 84 dated 30.04.2009 could not override the FTP 09-14. He relied upon the decision of the Supreme Court in Atul Commodities Private Limited and Ors. v. Commissioner of Customs, Cochin 9: (2009) 5 SCC 46 and the decision of this Court in Yum Restaurants (I) Pvt. Ltd. v. Union of India: 2015 (320) E.L.T. 781 (Del.) in support of his contention. 8. Mr. Sanjeev Narula, learned counsel appearing for the respondent submitted that FTP 09-14 and paragraph 5.4 of HOP only provided for an exit from the EOU regime and did not permit 'conversion' to the EPCG scheme. He earnestly contended that there was a difference....
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....e Director General or such other officer subordinate to the Director General, as may be specified in the Order." 12. It is apparent from the above that the role of DGFT is to carry out the foreign trade policy (FTP) that may be formulated by the Central Government. Paragraph 2.4 of FTP 09-14 also empowers DGFT to specify the procedure to be followed by an exporter / importer / licensing authority / competent authority for the purposes of implementing the FT D&R Act, the rules, orders made thereunder and the FTP. The DGFT has notified the HOP 09-14 in terms of the said delegated power. 13. It is, thus, obvious that DGFT cannot amend or alter the FTP and is bound by the same. In terms of paragraph 2.3 of the FTP, the DGFT is empowered to interpret the FTP. However, the question of interpreting the FTP would arise only where there is any ambiguity or doubt as to any of its provisions. Plainly, the DGFT cannot issue a clarification, which is ex facie contrary to the FTP and HOP (Handbook of Procedures) notified by the DGFT. 14. Chapter 5 of the FTP 09-14 contains the provisions with respect to EXPORT PROMOTION CAPITAL GOODS (EPCG Scheme). In terms of paragraph 5.1 of FTP-09-14....
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.... scheme, eligibility criteria under EPCG scheme and standard conditions indicated in HBP v 1. (e) Units proposing to exit out of EOU scheme shall intimate DC and Customs and Central Excise authorities in writing. Unit shall assess duty liability arising out of debonding and submit details of such assessment to Customs and Central Excise authorities. Customs and Central Excise authorities shall confirm duty liabilities on priority basis, subject to the condition that the unit has achieved positive NFE, taking into consideration the depreciation allowed. After payment of duty and clearance of all dues, unit shall obtain „No Dues Certificate‟ so issued by the Customs and Central Excise authorities, unit shall apply to DC for final deboding." [underlining for emphasis] 16. A plain reading of paragraph 6.18(d) of FTP 09-14, clearly indicates that exit from an EOU scheme may be permitted on payment of duty under the prevailing EPCG Scheme. Thus, clearly the EPCG scheme applicable to the petitioner would be as provided under the FTP 09-14. 17. The contention that the FTP 09-14 only provides for an exit from EOU and not a conversion from EPCG Scheme, is unmerited. A....
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.... BG/LUT is to be submitted alongwith the application for debonding under LPCG scheme. The issue of fixation of export obligation in such cases has also been examined. It is clarified that where one unit of the firm/company opts to debond under EPCG scheme, the average export obligation in respect of the licence issued to the firm/ company (other than the debonding unit) shall remain unchanged. On the debonding unit, the average export obligation shall be fixed by excluding the export made by the debonding unit from the total exports of the firm/company which runs concurrently for all the units of the firm/company. Moreover, an additional export obligation equivalent to 6 times or 8 times of the depreciated value may be imposed on the unit debonding under EPCG scheme as the case may be, depending on the scheme in which unit opts for debonding . However, if a standalone EOU/EPZ unit which to debond under EPCG scheme, there shall be no export obligation for maintenance of the average the only such an obligation under EPCG scheme on a standalone unit shall be imposed which may be equivalent to 6 times or 8 times of the depreciated value, as the case may be, depending upon the sch....
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....ircular is set out below:- "F. No. 01/36/218/88/AM09/EPCG-I Government of India Ministry of Commerce& Industry Department of Commerce Directorate General of Foreign Trade Udyog Bhawan, New Delhi Dated the1st April, 2009 CIRCULAR NO. 79(RE:20008/2004-09 To All RAs, Subject-: Terms and conditions to govern EPCG Authorizations issued to DTA unit after conversion from EOU unit. In view of various representations received from different Regional Authorities and individual firms, the issue regarding exit from EOU Scheme and transition to EPCG Scheme has been examined and Para 5.4 of Handbook of Procedures Vol. I (RE:2008) / 2004-2009 has been amended vide Public Notice No. 164 dated 25.03.2009. 2. It has further been decided to clarify with regard to export obligation period and fulfilment of export obligation: (a) The export obligation period for a unit which converts from EOU / SEZ Scheme to EPCG Scheme would be the same as is available to a direct EPCG Authorization Holder i.e. 8/12 years from issue date of EPCG authorization as per Para 5.1 of Foreign Trade Policy (FTP). (b) The unit upon conversion from EOU shall be required t....
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....r General of Foreign Trade" 25. A plain reading of the aforesaid circular indicates that the central purpose of the circular was not to define the quantum of export obligation but to provide a clarification with regard to maintenance of annual average turnover. Clause (i) of the aforesaid circular clarified that a standalone unit was not required to maintain an annual average export obligation. However, in case where the firm or a company had multiple units, average export obligation after debonding of unit would be fixed by excluding the exports made by the debonded units from the total exports of the firm. If the said circular is read in the context of the FTP 04-09, it is at once clear that the reference to computation of export obligation on the basis of depreciated value of machinery, is inapposite and contrary to the provisions of the FTP 04-09. However, it appears that this error had crept into the circular because a similar clarification was provided by the Policy Circular no. 35 issued on 01.10.1999 and that circular (Circular no. 35) referred to additional export obligation to be six times or eight times the depreciated value of goods (which was in conformity with t....