TaxTMI 
TaxTMI 
2019 (5) TMI 1636
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....entered into an agreement with a Russian Company for supply of a drug named Cycloserine USP, which is used to prevent/treat drug resistant Tuberculosis. It is stated that the said Russian Company intended to supply the said drugs to the Russian Government pursuant to a tender invited by the Russian Government. 3. The petitioner applied for an Advance Authorization for importing the bulk drugs for the purposes of supplying the same to the Russian Company after repackaging the drug in question for retail trade and exporting the same to the Russian Company. Pursuant to the petitioner's application, it was issued an Advance Authorisation No.0310696315 dated 28.05.2012. In terms of the Advance Authorization, the petitioner was entitled to import the specified inputs for exporting the drug, "Cycloserine Capsule USP 250 Mg". The petitioner claims that it utilised the said Advance Authorization for importing 694.79 Kgs of Cycloserine USP against two Bills of Entry bearing No. 7099833 dated 13.06.2012 and 7165657 dated 20.06.2012 4. According to the petitioner, it exported 681.173 kgs (2724690 Nos.) of Cycloserine Capsule USP 250 Mg of FOB value of Rs. 9,56,80,677/- against the Adv....
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....interest for excess import of 271.230 kgs of Cycloserine. It was further stated therein that a total of 172.330 kgs of Cycloserine USP drug were lying unutilised with the petitioner and, therefore, in terms of the Policy Circular no.18 dated 30.10.2007, the same were required to be destroyed and the petitioner was required to furnish the Destruction Certificate. 8. The petitioner responded to the said letter on 24.03.2017. Whilst, the petitioner paid the compensation fee as demanded, it submitted that the calculation of the unutilised product was erroneous as the entire quantity imported had been utilised for performing the export obligations and, in the circumstances, the said products could no longer be destroyed. 9. In the meantime, the PRC in its meeting held on 19.07.2016, considered the petitioner's request and extended the export obligation period for a period from twelve months to eighteen months against the import of each consignment. Accordingly, the export obligation period was extended upto 30.06.2014 in respect of the first consignment imported on 13.06.2012 and upto 31.06.2014 for second consignment imported on 20.06.2012. The said extension was subject to a pay....
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....hardships on account of the policy change by the Russian Government and the same ought to have been considered by the PRC. She referred to paragraph 2.5 of the Foreign Trade Policy (FTP) and submitted that the DGFT was empowered to grant relaxation in cases of genuine hardships and, therefore, the petitioner's case ought to have been considered favourably. 13. The learned counsel further submitted that the PRC failed to appreciate that the drugs in question were imported from a registered source and, therefore, in terms of the Policy Circular no. 12 dated 27.06.2005, the normal conditions for export were applicable. She submitted that in terms of the licence and the FTP, the export obligation period was not twelve months as assumed by the respondents but thirty six months. Lastly, she submitted that the PRC, in the case of Mylan Laboratories Ltd., Hyderabad: Case No.41, decided on 04.05.2016, had extended the export obligation period from eighteen months to thirty six months and therefore, the petitioner's case should also have been considered favourably. 14. She also referred to the decision of the Supreme Court in Macquarie Bank Limited v. Shilpi Cable Technologies Ltd.: 20....
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....s, conditions governing normal Advance Licences are applicable in these cases which include normal validity period and normal EG period. 18. In view of the above, the petitioner is correct that in the event, it is accepted that if the products are exported from a registered source, normal provisions with regard to the export obligation period would apply. However, the contention that the said period is thirty six months is incorrect. In terms of paragraph 4.22 of the Handbook of Procedures for the year 2009-2010 (Volume-I), the export obligation period for advance authorization issued with inputs as mentioned in Appendix - 30A would be for the period as stipulated against each entry, therein. Paragraph 4.22 of the Handbook of Procedures is set out below:- "Export Obligation (EO) Period and its extension 4.22 Fulfilment Period of EO under an Advance Authorisation shall commence from Authorisation issue date, unless otherwise specified. EO shall be fulfilled within 36 months except in case of supplies to projects / turnkey projects in India / abroad under deemed exports category, where EO must be fulfilled during contracted duration. EO period for Advance Authorizat....
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....port obligation period from twelve months to three years (thirty six months). 23. It is also well settled that the relaxation of the policy is not a matter of right. Sufficient discretion is granted to the DGFT to relax any provision of the policy or procedure as it deems fit. 24. At this stage, it is relevant to refer to paragraph 2.5 of the Foreign Trade Policy 2009-2014 (FTP). Clearly, the DGFT is required to exercise its discretion keeping in view the guidelines which are implicit in the paragraph 2.5 of the FTP and the same is set out below: "2.5 Exemption from Policy/Procedure DGFT may pass such orders or grant such relaxation or relief, as he may deem fit and proper, on grounds of genuine hardships and adverse impact on trade. DGFT may, in public interest, exempt any person or class or category of persons from any provision of FTP or any procedure and may, while granting such exemption, impose such conditions as he may deem fit. Such request may be considered only after consulting committees as under: Sl.No. Description Committee (i) Fixation/modification of product norms under all Schemes Norms Committee (ii) Nexus with Capita....