TaxTMI 
TaxTMI 
2017 (10) TMI 40
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....ings and after scrutiny and verification of the impugned Letter, same be quashed and set aside and thereafter the respondents be directed to forthwith redeem the Advance Authorisation Licence No.0310424318, dated 26­.3­.2007 by accepting ARE-1s as proof of export under paragraph 4.25 of Handbook of Procedures 2009­-14. 4. The petitioner is a company incorporated and registered under the Indian Companies Act, 1913. It has its registered office at the address mentioned in the cause title. It is primarily engaged in the business of manufacturing and supplying of automated engineering products, including but not limited to "Remote I/O Control Panel" (hereinafter referred to as "the said product") from its Unit situated at Navi Mumbai, District Thane in Maharashtra State. The respondents are entrusted with the implementation of the Foreign Trade (Development & Regulation) Act, 1992 (for short, "the FTDR Act"). 5. The petitioner states that the Control & Automation Division of the petitioner was awarded a contract/Order dated 13.­2­.2007, copy of which is at Annexure "A", by Reliance SEZ Unit, Jamnagar. The contract was for manufacture and supply of the sa....
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....hat the Licence be redeemed. Annexures "F1" to "F4" are the copies of these letters. 11. Thereafter, a Defect Memo dated 25-­3­-2013 was issued, copy of which is at Annexure "G". The petitioner states that a perusal of this Memo would reveal that the deficiency is due to the reasons stated therein. 12. Since both sides have referred to this letter, copy of which is at page 96 of the paper­-book, we deem it appropriate to reproduce its relevant portion, which reads as under:­ "Sub:­ Deficiency Letter Reference No: Original File:03/95/040/01557/AM07/ Dated : 13.03.2007 and Authorisation No: 0310424318 Dated: 26.03.2007 Sir/Madam, Your Application is deficient due to following reasons: (1) submit original Bill of Exports as per Policy (guidelines of ANF4F a(ii) (2) submit Certificate from C Excise showing the F.No./Lic.No. against the supplies made, also show the exempted material with technical specification to fulfill net to net accountability clause. (3) Copies of ARE-3 & Tax invoices does not indicate this authorisation No/File No. (4) BRC is returned back in order t....
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....above documents, it is evident that the exports have been effected towards fulfillment of export obligation in respect of the said Advance Authorisation. We, therefore, once again request you not to insist on furnishing the Bill of Exports, in this case. 2. Certificate from Central Excise: We enclose certificate in original dated 18.4.2013 issued by Suptd of Central Excise, Belapur, certifying exempted material with specification imported against Advance Authorisation No.0310424318 have been used in the manufacture of the Resultant Product viz. 341 Nos. Remote I/O Control, Panels and supplied to M/s. Reliance Petroleum Limited, SEZ. 3. Copies of ARE-3 and Tax Invoice: We had through an oversight not indicated the Authorisation Number/File no on the ARE-1 and Tax Invoices. We, have therefore submitted certificate in original from Suptd of Central Excise, Belapur certifying that exempted material with specification imported against Advance Authorisation No.0310424318 have been used in the manufacture of the Resultant Product viz. 341 Nos. Remote I/O Control, Panels. 4. Bill of Export to be indicated on BRC: As stated above since the Bill of Export has not b....
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....­-12­-2015. 19. On 22­-7­-2016, though the matter was pending before the Policy Relaxation Committee, the fourth respondent issued a Show Cause Notice to the petitioner. A copy of this Show Cause Notice dated 22-­7­-2016 and the petitioner's reply thereto are annexed as "J1" and "J2" to the paper­book. 20. Thereafter, on 10­-8­-2016 the Policy Relaxation Committee once again considered the request of the petitioner but rejected it. 21. The allegation to be found in para 18 of the petition is that in case of similar nature, the procedural lapses have been condoned and on the premise that what is insisted is proof of export obligation being fulfilled. That proof being available in cases of other entities, the licences were redeemed. 22. On 1­1-2­-2016, the petitioner was informed by the third respondent that the redemption application cannot be accepted in the light of the decision of the Policy Relaxation Committee. 23. On being served with a copy of this petition and the annexures thereto, the respondents have filed an affidavit in reply of the Deputy Director General of Foreign Trade. 24. Apart from the prelim....
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....tioner has been informed that there is no compliance with this requirement or condition. In para 5 of the reply, it is stated that although the goods have been supplied under the cover of ARE-­1, which is more or less a self-declaration, the necessary scrutiny of documents and examination of goods is not carried out from the point of view of grant of export incentives. The certificate dated 9-­11­-2012, submitted by the petitioner along with its letter dated 29­8­2013, issued by the office of the Development Commissioner, Jamnagar (Reliance) SEZ does not mention the Advance Authorisation Number under which the supplies are made to the SEZ. It only mentions the ARE-­1 numbers and their dates and it is important to note here that the AREs mentioned therein, also do not mention the Advance Authorisation Number. Hence, there is no correlation or nexus established and that is why the revised AREs submitted along with the letter dated 28­-11­-2013, purporting to mention the Advance Authorisation Number, is but an after­thought. It is meaningless because on the actual date of filing of the AREs, the Customs Officers in the SEZ were not made aware that t....
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....The petitioner relies upon a Notice of Award ("NOA" for short), copy of which is at page 23. That is a Notice from Reliance Petroleum Limited, for short, Reliance. Reliance states that it is interested in obtaining supply of Remote I/O Package Panel and Automation Systems. This Notice confirms the Award to the petitioner to design, manufacture, supply, test, erect, field testing and commissioning of this Panel/said product in pursuance of its inquiry/NOA dated 13-­2­-2007. The description and schedule of quantities has been set out. The supply is of Data Concentrator for 36 sub­stations. Thereafter, the specifications have been set out. The quantities are indicative and they will be finalised during detailed engineering. The other terms and conditions would denote that stage­wise contractual delivery schedule for goods is contemplated by the parties. The Clause 4 sets out the delivery schedule and delivery and liquidated damages is dealt with by Clause 5. The schedule is based on the assumption that drawing shall be submitted within fifteen days of the NOA and approval is done within fifteen days of the submission. Then the major milestones would have to be provided....
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.... 19. Declaration (Annexure T) 20. Declaration (Annexure U) 21. Statement of Exports for the preceding three liccensing years (Annexure V). 22. List of Goods. In terms of Public Notice No.9 dated 2.12.2004, the following information/documents are attached: 1. Weight of the Equipment. 2. Detailed drawing of the Resultant Product. We also request you to indicate class of Importer as "TRADING HOUSE" on the licence. Further, the addresses of Powai and Navi Mumbai may please be indicated on the Condition Sheet attached to the Authorisation as indicated by us in Aayaat Niryaat Form. We now request that our application be processed expeditiously and the Advance Authorisation be issued to us at an early date." On such an application made, the petitioner was issued the licence in the prescribed form on fulfilment of the conditions, including forwarding of a declaration/undertaking. The petitioner also relied upon a certificate from Chartered Engineer dated 12-­3­-2007, confirming the order. Thereafter, the petitioner relied on the advance authorisation, copy of which is at page 65 of the paper-­book together with t....
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....the exported goods and copies of which are from pages 72 up till page 82 of the paper-­book. 37. The petitioner relied upon a communication dated 9­-11­-2012 from the office of the Development Commissioner, Jamnagar (Reliance) SEZ, that is pursuant to letter dated 30­-10­-2012. That letter was addressed to the petitioner on the subject of supply of the said product to the purchaser/Reliance and at the SEZ, Jamnagar. Then, the petitioner relied upon a certificate, copy of which is at page 84, dated 9­-11­-2012. This certificate was issued as per request of Manager - Commercial Control & Automation of the petitioner. This certificate shows, according to the petitioner, that there are 21 invoices bearing the numbers specified in column 2 and issued on the date specified in column 3. There are dates of ARE-1 as well. Thereafter, the quantity and price are mentioned. Then there is an invoice value mentioned together with date of receipt of the goods. The petitioner states that on 19­1­2010 it informed the Joint Director General of Foreign Trade that it has fulfilled the export obligation and therefore there should be redemption of the advance autho....
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....itioner, can also be ascertained from ARE-1 (copies attached) wherein the SEZ Preventive Officer has certified that the goods have been received. The petitioner relied on the summary of consumption of inputs used in the resultant product certified by M/s. Reliance Industries Limited. That is how it claims that the imported inputs have been used on net to net basis. Then it says that it has already fulfilled the condition of submission of certificate of Chartered Accountant. The originals are already available in the office of the Joint Director General of Foreign Trade and therefore once again request was made to redeem the licence. 38. Pertinently, the defects were notified on 22­-3­-2010 and this communication is dated 22­-11­-2010. Thereafter, the petitioner was also informed that there is already a demand notice issued because there is no proof of discharge of export obligation. 39. Once again, on 27-­9­-2011, the petitioner was informed by the Zonal Joint Director General of Foreign Trade, Ministry of Commerce that it has obtained a licence under duty exemption scheme for import of capital goods/raw material/packing materials, etc.. The petitioner....
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....y;-3­-2013 was duly replied. 40. That reply is at page 97 of the paper­-book. That states or purports to inform the Additional Director General of Foreign Trade that the Bill of Export has not been filed and in lieu of the same the petitioner has submitted original certificate (copy enclosed) certified by Development Commissioner, Jamnagar and Superintendent of Central Excise, Belapur certifying clearly that the resultant product has been manufactured and supplied to M/s. Reliance Petroleum Limited, SEZ and this be accepted as a proof of export in lieu of original Bill of Export. The petitioner also enclosed original certification certified by the Superintendent of Central Excise, Belapur certifying the exempted material with specification used in the manufacture of the resultant product. Thus, the petitioner claims that it is evident that the exports have been effected towards fulfilment of export obligation in respect of the said advance authorisation and therefore the petitioner requests not to insist on furnishing the Bill of Export. 41. Then the certificate from the Central Excise in original dated 18-­4­-2013 issued by Superintendent of Central Excise, B....
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....e. 44. The petitioner was informed on 2-1­1­-2014 that the Policy Relaxation Committee has considered this issue. It observed that there is no mention of advance authorisation number on the copy of the AREs-1 submitted by the petitioner. Some of AREs-1 are submitted by the petitioner vide their letter dated 28­-11­-2013 but they bear the details of advance authorisation number. Thus, it is evident that an endorsement regarding authorisation details was made on AREs subsequently. The Committee, therefore, rejected the request. In other words, when the petitioner earlier supplied copies of the AREs-1 along with its letter of August, 2013, those copies did not mention the details of the advance authorisation numbers, whereas the copies forwarded in November, 2013 of the same documents contains the advance authorisation number and these were, therefore, subsequent insertions. 45. The petitioner purported to inform the Policy Relaxation Committee on 28-­1­-2014 that all the supplies to SEZ were effected with valid ARE-1 forms and certificate from jurisdictional Excise authorities was also issued and the ARE-1 being part of this certificate confirming that t....
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....made clearly known to it. There was a condition to export the resultant product mentioned in the licence of given FOB value within a period of export obligation from the date of issue of the licence. The petitioner executed a legal undertaking/Bank Guarantee to the licencing authority undertaking therein that they would fulfil the corresponding export obligation within the prescribed period and would submit the document within one month from the date of expiry of export obligation period towards discharge of the said export obligation. They failed to furnish the documents evidencing completion of export obligation during the period specified by the authority and/or extended from time to time. They were advised to submit documents showing fulfilment of export obligation by the licencing authority. Therefore, a Show Cause Notice was issued to produce the documents showing discharge of export obligation. The petitioner did not respond. Thereafter, the licencing authority declared the petitioner as defaulter, and subsequently forfeited the legal undertaking and Bank Guarantee. Thus, the authority has reason to believe that the goods imported against this licence were not utilised for t....
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....ies upon para 4.25 of the Handbook of Procedures. Though this is termed as a procedural handbook, what it contemplates is the fulfilment of export obligation. The licence holder has to furnish the documents enlisted therein in support of having fulfilled the export obligation. There is a requirement to be fulfilled as far as the petitioner's export is concerned and for deemed export what is required is a copy of the invoice or a statement of invoice duly signed by the unit receiving the material and the jurisdictional excise authorities certifying the item of supply, its quantity, value and date of such supply. Thereafter, there are further requirements, including payment certificate, statement of supplies, giving details of supply invoices and indicating the invoice number, date, FOR value and it is only when the export obligation has been fulfilled that the licencing authority can redeem the licence. The Policy Relaxation Committee is constituted to aid and advise the DGFT. What the petitioner is insisting upon and as a proof of fulfilment of the export obligation, though aware of this paragraph of the FTP and the Handbook of Procedures, is acceptance of documents which would....
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....rtion. This certificate is of 9-­11­-2012 and even the communication from M/s. Reliance Industries Limited is subsequent to the petitioner's letter dated 19­1­2010, addressed to the Joint Director General of Foreign Trade, Mumbai. The petitioner in that letter says very clearly that they are forwarding the documents for redemption of LUT and one Bill of Export (ARE­-1 along with Tax Invoice). There petitioner also enclosed therewith CC & EC of authorisation, namely, the advance authorisation. Thus, along with this redemption application they claimed to have forwarded relevant documents evidencing discharge of export obligation. They mentioned the advance authorisation number and the date of its issue. They mentioned the details of physical export/deemed export made, the relevant details of ARE-1s, but what they have been informed throughout is that these ARE-1s have not mentioned specifically the advance authorisation number. The petitioner, therefore, were informed on 22­3­2010 that they must submit the original Bill of Export giving relevant licence number or file number, along with revised statement of export giving relevant bill of export details....
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.... informed that the request for redemption of the advance authorisation cannot be granted because there is no proof of fulfilment of the export obligation. 57. The petitioner has understood this very well. Else they would not have replied on 27­4­2013 and admitted that they have not filed the Bill of Export but in lieu thereof they are submitting the original certificate of the Development Commissioner, Jamnagar and Superintendent of Central Excise, Belapur, certifying that the resultant product have been manufactured and supplied to M/s. Reliance Petroleum Limited, SEZ. 58. Therefore, these are original certificates and certificates by statutory authorities, according to the petitioner. It is in these circumstances that they would urge that the exports have been effected towards fulfilment of export obligation in respect of the said advance authorisation. 59. Then, they rely upon a certificate dated 18­-4­-2013, issued by the Superintendent, Central Excise, Range­I-V, Belapur-III Division certifying that the exempted material, with specific advance authorisation number, as having been used in the manufacture of the resultant product. 60. They also re....
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....ation number". The certified copy thereof is dated 28­10­2013, duly attested by the Superintendent, Central Excise, Range­-IV, Belapur-­III Division. There is also a certification filed by the Customs Officer. The consignment is stated to be received in full at Reliance, SEZ, Jamnagar. The consignment was received in full and for Reliance Petroleum Limited. There is signature of the authorised signatory. Equally, the Preventive Officer has signed against the date 20­06­07. The petitioner has thus got the authorisation number and details endorsed. 62. It is in these circumstances, the petitioner was requested to approach the Policy Relaxation Committee. 63. The petitioner accordingly approached the Policy Relaxation Committee on 29­-8­-2013. The petitioner gave all the details of the purchase order, the goods which were to be supplied against the purchase order, the advance authorisation number and they gave the file number as well from the office of the Joint Director General of Foreign Trade. The Annexure-­A of this communication refers to all these details. They claim that the advance authorisation and imported inputs on duty free b....
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....ter on, could have been condoned. It is not as if ARE-1s have not been filed. It is not as if there is a doubt about the copy of ARE-1s or the authenticity or genuineness thereof. It is not anybody's case that there are no ARE-1 forms on record. Therefore, these forms were available. Therefore, the stand that there is no proof of export obligation being discharged, could not have been maintained once the petitioner was told to approach the Policy Relaxation Committee and it was empowered to relax any of the technical requirements or procedural matters. Equally, it was empowered to clarify in the facts of this case at least that the documents forwarded by the petitioner can be accepted as proof of export. 67. We do not see how the authorities then maintained that the petitioner's request for condonation of procedural lapse by not generating the Bill of Export cannot be accepted. What the Policy Relaxation Committee has done in its subsequent meeting, and which at page 153 purports to indicate its decision, is that guidelines insisting on Bill of Export being known, that Bill of Export not having been forwarded, the requirement in that behalf cannot be dispensed with. 6....