TaxTMI 
TaxTMI 
2024 (2) TMI 1102
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....etitioner Company was entitled to avail the set off in respect of the duty and additional duty payable on its imports on account of the benefit conferred under a scheme, namely Target Plus Scheme (hereinafter referred to as 'TPS'). It could only exercise its option of set off to the tune of Rs. 89,29,04,149.25 ps, even though the petitioner is entitled to adjust for a total sum of Rs. 305,72,81,517.84 ps, thus, leaving a balance of Rs. 216.38 crores. According to the petitioner, in view of the Entry 56 of notification No.26/2017-Cus. dated 29.06.2017; paragraph No.3.2.5 (VII) of the Handbook of Procedures (2004-2009) and in view of efflux of time, due to the previous litigations on account of the erroneous orders passed by the respondents, the same could not be achieved by the petitioner. Therefore, the petitioner has filed these three Writ Petitions, firstly, to declare the Entry 56 of notification No.26/2017-Cus. dated 29.06.2017 as violative of Articles 14 and 19(1)(g) of the Constitution of India inasmuch as it takes away the vested rights of the petitioner; to declare paragraph No.3.2.5 (VII) of the Handbook of Procedures (2004-2009) issued by the Director General of F....
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....ice furniture. 2.2. The Central Government, in exercise of its powers under Section 25(1) of the Customs Act, 1962, also issued notification No.73/2006-Cus., dated 10.07.2006 exempting the goods imported into India against the Duty Credit Certificate issued under the TPS from the whole of the duty of customs leviable thereon under the first schedule of the Customs Tariff Act, 1975 and the whole of the additional duty leviable thereon under Section 3 of the Customs Tariff Act, 1975. By virtue thereof, the petitioner could discharge the Duty Credit Certificate under the TPS without any curtailment. 2.3. Paragraph No.2.4 of the FTP empowers the D.G.F.T to specify the procedure to be followed by any exporter or importer for the purposes of implementing the provisions of the Act, Rules and the Orders made therein. It mandates that such procedures shall be included in the Handbook Volume - I and Volume - II, Schedule of DEPB rate and ITC (HS) and published by means of a public notice. Such procedures can be amended from time to time. The Handbook Volume - I is a supplement to the FTP and contains the relevant procedures and other details. The procedure for availing benefits under v....
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....quantum of growth achieved by them. It held that the notifications in question can only be effective from the dates on which they were issued. 2.6. As a matter of fact, as per the judgment of the Hon'ble Supreme Court of India, the petitioner claimed that it is entitled to utilise the duty credit for the balance sum of Rs. 216.38 crores. The Central Government also issued two trade notices in Trade Notice Nos.06/2018 and 07/2018 for implementation of the judgment of the Hon'ble Supreme Court of India in Kanak Exports' case (cited supra). As a matter of fact, the authorities insisted upon No Due Certificates for implementation of the benefit under the judgment, but, however, by withholding the same, the benefits were not extended. Therefore, a Contempt Petition came to be filed and by the order dated 26.11.2019, the Hon'ble Supreme Court of India directed the concerned authorities to extend the benefit to the beneficiaries of TPS. All along by repeated representations including letters, dated 02.11.2015, 24.09.2020 and 08.02.2021, the petitioner has been requesting for release of the balance amount of Target Plus Scrips so as to claim the benefit. The D.G.F.T gran....
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....ity of the Duty Credit Scrips issued under the TPS shall be as per the paragraph No.3.2.5(VII) of the Handbook of Procedures. The contention of the petitioner is an afterthought. The aim and objective of the Handbook of Procedures is to aid the exercise of powers under the Act and FTP also by laying down the procedures therein. There is no illegality in prescribing the validity limit of 24 months. As far as the Notification No.26, dated 29.06.2017 is concerned, prior to the implementation of the G.S.T, Section 3 had sub-sections viz., (1), (3), (5) levying three different additional duties wherever applicable on the articles imported into India. With the introduction of G.S.T, new sub-sections (7), (8), (9) and (10) have been inserted to Section 3 of the Customs Tariff Act, 1975 for levy and collection of of I.G.S.T and Compensation Cess respectively. I.G.S.T and Compensation Cess, collected on imported goods, have not been defined as additional duties under the Customs Tariff Act, 1975 and therefore, are not exempted whenever there is an exemption from additional duty under Section 3 of the Customs Tariff Act, 1975. The impugned notification was issued only to make the same explic....
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....that a condition which is dependent on an action of the public authorities over which if the importer has no control and if the condition could not be complied with on account of the delay on the part of the public authority, resultantly, the benefit cannot be denied to the importer. Referring to paragraph No.39 of the judgment of the Hon'ble Supreme Court of India in Priyanka Overseas Pvt. Ltd. and Anr. Vs. Union of India and Ors. 1991 Supp (1) SCC 102, he would submit that even an obligation to pay higher duties which arise on account of the omission of the customs authority was nullified. He would further place reliance on the judgment of the Punjab and Haryana High Court in Pushpanjali Floriculture Pvt. Ltd. Vs. Union of India MANU/PH/1257/2016, in respect of DFIA scrips, when the petitioner was unable to utilise on account of the invalid notifications, circulars etc., direction was given to revalidate. Reliance is paced on the judgment of the Hon'ble Supreme Court of India in the case of Eicher Motors Limited and Anr. Vs. Union of India and Ors. (1999) 2 SCC 361. Therefore, in view of the delay, the very nature of duty regime has changed and as such, the delay on the p....
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....ustoms Trade Notice No.80/2017, dated 27.06.2017 expressly refers them as additional duty, the very action of the respondents in excluding them from the purview of adjustment under the TPS alone is arbitrary. Adverting the decisions submitted by the respondents, Mr.P.S.Raman, learned Senior Counsel would submit that reliance placed by the respondents on the judgment of the Hon'ble Supreme Court of India in Union of India and Ors. Vs. Cosmo Films Ltd. (2023) 9 SCC 244 is incorrect as in the present case, the very jurisdiction and power in laying down restriction is challenged. In the light of the above, he would pray that the Writ Petitions be allowed. 4.6. Per contra, Mr.AR.L.Sundaresan, learned Additional Solicitor General of India appearing for the respondent Nos.1 to 5, would firstly contend that the benefits under the TPS in the form of Duty Credit Certificate is only a concession. In order to encourage business, the Government of India had thought fit to grant concession in the form of the TPS which is now contended as if creating an indefeasible right. Whenever exemptions and concessions are granted subject to conditions, if the conditions are not fulfilled, then, the ....
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....39; case (cited supra). The judgment of the Hon'ble Supreme Court of India was rendered on 27.10.2015. Thereafter, in May, 2017, No Due Certificates were insisted upon in order to avail the benefits. Subsequently, the Hon'ble Supreme Court of India, by its order, dated 04.02.2020, directed the grant of benefits under the TPS. Accordingly, Duty Credit scrips were issued on 24.02.2021. The passage of time did not in any manner work out to the detriment of the petitioner since a Duty Credit Certificate is valid for a period of two years from the date of its issue. There was no alteration in the period of validity and the benefits which were available under the customs notification No.73/2006, dated 10.07.2006 which continued to be available even after the Notification No.26/2017, dated 29.06.2017 and there was no change. Therefore, the arguments based on the delay on the part of the respondents are without merits. 4.9. Adverting to the notification, dated 29.06.2017, the learned Additional Solicitor General of India would submit that all that is done by the above notification is instead of words "under Section 3" the words "subsections (1), (3) and (5) of Section 3" is subs....
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....ns cannot result in vested rights, the judgment of the Hon'ble Supreme Court of India in Chowgule and Company Ltd., Vs. Assistant Director General of Foreign Trade and Ors. (2023) 1 SCC 320 and Union of India and Ors. Vs. Agricas LLP and Ors. (2021) 14 SCC 341 are relied upon. 4.12. Further adverting to the contention on the jurisdiction of the D.G.F.T, in respect of prescribing the two year period in the Handbook of Procedures, the learned Additional Solicitor General of India would submit that firstly, the arguments that it is only the Central Government and for the D.G.F.T, would lose its significance inasmuch as the D.G.F.T is also the Additional Secretary to the Government of India and the power of the D.G.F.T as an Additional Secretary to the Government of India has been recognised by the Hon'ble Supreme Court of India in Agricas LLP's case (cited supra). Further, Clause 2.4 of the FTP itself makes explicitly clear that the procedure will be published in the Handbook of Procedures. Therefore, the contention regarding the prescription of two year limitation is without any basis. The learned Additional Solicitor General of India would submit that it is for the le....
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....t enter upon the realm of legislative policy. He would also rely upon the judgment of the Hon'ble Supreme Court of India in Swiss Ribbons Pvt. Ltd. and Anr. Vs. Union of India and Ors. (2019) 4 SCC 17 to contend that the Courts would adopt a hands off in the matters relating to economic practices and legislations. Finally, he would place reliance on the judgment of the Hon'ble Supreme Court of India in Shri Bakul Oil Industries and Anr. Vs. State of Gujarat and Anr. (1987) 1 SCC 31 to contend that a concession can be withdrawn at any time and no time limit can be insisted upon before the concession is withdrawn. In the light of the above, he would pray that the Writ Petitions be dismissed. E. The Points for Consideration: 5. We have considered the rival submissions made on either side and perused the material records of the case. The following questions arise for our consideration :- (i) Whether the period of validity for availing the Duty Credit Benefits under the TPS as 24 months from the date of issue of scrips is without jurisdiction and illegal ? (ii) Whether the Entry 56 made vide notification, dated 01.07.2017 is illegal and amounts to taking ....
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....nsing authority which may include- (a) the quantity, description and value of the goods; (b) actual user condition; (c) export obligation; (d) the value addition to be achieved; and (e) the minimum export price." 6.3. Chapter - III of the FTP provides various promotional measures and paragraph No.3.7 consists the TPS which reads as follows :- "3.7. Target Plus Scheme 3.7.1. Objective.-The objective of the Scheme is to accelerate growth in exports by rewarding star export houses who have achieved a quantum growth in exports. High performing star export houses shall be entitled for a duty credit based on incremental exports, substantially higher than the general annual export target fixed (since the target fixed for 2005-2006 is 17%, the lower limit of performance for qualifying for rewards is pegged at 20% for the current year). 3.7.2. Eligibility Criteria.-All star export houses (including status-holders as defined in Para 3.7.2.1 of the EXIM Policy 2002-2007) which have achieved a minimum export turnover in free foreign exchange of Rs 10 crores in the previous licensing year are eligible for consideration u....
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.... be calculated considering the export performance of the applicant company during the previous licensing year and current licensing year. It shall be necessary that the adjusted export performance of all the Star Export House companies of the group during the current licensing year does not fall below the combined performance of all Star Export House companies of the group in the previous licensing year. In case the group chooses to apply based on the overall growth in group's turnover (i.e. the turnover of all the Star Export House companies), any one of the Star Export House companies of the group may file an application on behalf of all the Star Export House companies of the group. 3.7.5. The following exports shall not be taken into account for calculation of export performance or for computation of entitlement under the Scheme: (a) Export of imported goods covered under Para 2.35 of the Foreign Trade Policy or exports made through transshipment. (b) Export turnover of units operating under SEZ/EOU/EHTP/STPI/BTP Schemes or products manufactured by them and exported through DTA units. (c) Deemed exports (even when payments are rec....
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....right to change the eligibility criteria and rate of entitlement under the Scheme effective from the date of notification of this policy. Similarly, the Government may from time to time also notify the list of goods, which shall not be allowed for import under the duty credit entitlement certificate issued under the Scheme." 6.4. Thereafter, in exercise of the powers conferred under paragraph No.2.4 of the FTP, the Handbook of Procedures Volume - I was notified by the Ministry of Commerce and Industry vide public notice No.1, dated 07.04.2006 incorporating the annual supplement. In the said notification, the following procedure was laid down in the paragraph No.3.2.5 with respect to the TPS and the same is extracted hereunder :- "3.2.5 Target Plus Scheme The Policy for the Target Plus Scheme is given at Chapter 3 of the Foreign Trade Policy I. For direct as well as third party exports, the Export documents viz Export Order, Invoice, GR form, Bank Realization Certificate should be in the name of applicant only. However for the third party exports, where goods have been procured from a manufacturer, the shipping bill should contain the ....
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....s. 6.5. The submission of the petitioner, in this regard, is twofold. Firstly, it is submitted that unless it is expressly delegated by a delegated legislation, provision of period of limitation is illegal and secondly, on a reading of Sections 5 and 6 of the Act, the D.G.F.T of Foreign Trade will not have the jurisdiction to amend or alter the policy. 6.6. In the case of State of Orissa and Ors. Vs. Tata Sponge Iron Limited (cited supra), while considering the action of the respondents in prescribing a validity period of five years for availing deferment of payment of tax upon expansion / modernisation of its unit, the Hon'ble Supreme Court of India held that when the original scheme framed by the Government did not prescribe a limitation period and when the petitioner's right had accrued to claim exemption, subsequently, in a consequential order, it cannot make any new stipulation or conditions alien to the original policy. It held that such a stipulation would frustrate the very objective sought to be achieved in the policy. 6.7. In the case of Deepak Fertilizers and Petrochem Vs. Designated Authority (cited supra), in the context of an imposition of three month....
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....t, whereby, the D.G.F.T of Foreign Trade issued a public notice to amend Handbook of Procedures so as to prohibit duty free import of natural rubber, held as follows :- "14. The Apex Court in the case of University of Kashmir and Ors, v. Mohammad Yasin and Ors., MANU/SC/0406/1973 : (1974)ILLJ109SC has laid down the following proposition of law :-- "When a statute creates a body and vests it with authority and circumscribes its powers by specifying limitations, the doctrine of implied engagement de hors the provisions and powers under the Act would be subversive of the statutory scheme regarding appointments of officers and cannot be countenanced by the Court. Power in this case has been vested in the University Council only and the manner of its exercise has been carefully regulated. Therefore, the appointment of the . respondent could be made only by the Council and only in the mode prescribed by the statute." Respectfully following the aforesaid ratio of the Apex Court, we hold that the impugned circulars and the public notice amending the Hand Book of Procedures in fact, amount to amend the policy by an authority other than the Central Government which....
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....pectively, are vested. Article 77 does not provide for delegation of any power, albeit under sub-section (3) of Article 77, the President is to make Rules for more convenient transaction of business and allocation of same amongst Ministers. Under the Government of India (Transaction of Business) Rules, 1961, the Government business is divided amongst Ministers and specific functions are allocated to different Ministries. The Director General of Foreign Trade is an ex officio Additional Secretary in the Government of India and is appointed by the Central Government under subsection (1) to Section 6 of the FTDR Act to advise the Central Government in formulation and carrying out the Foreign Trade Policy. Wherefore, even the website of the Ministry of Commerce and Industry, Department of Commerce, states that DGFT is an agent of the Central Government and attached office to it. Further, clause (2) of Article 77 provides that validity of an order or instrument made or executed in the name of the President, authenticated in the manner specified in the Rules made by the President, shall not be called in question on the ground that it is not an order or an instrument made or executed by t....
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....he present case, Section 5 of the Act empowers the Central Government to announce the export and import policy and also to amend the policy from time to time. Section 6 of the Act empowers the Central Government to appoint any person as D.G.F.T to advice the Government in formulation of the policy to carry out the policy and to exercise such powers as is conferred upon him by the Central Government in implementing the EXIM policy. Section 6(3) of the Act provides power to amend that policy cannot be delegated to D.G.F.T and it would be prerogative to the Central Government. 6.12. It is in this background, the Central Government has chosen to designate the D.G.F.T as the Ex Officio Additional Secretary to the Government of India. Because the substantial part of the scheme is contained in the FTP and the procedural part of it has to be laid down in the Handbook of Procedures, it is expressly authorised under the paragraph No.2.4 of the FTP, the Handbook of Procedures is also notified by the Ministry of Commerce and Industry, Government of India and the public notice is signed by the person in the capacity both as the D.G.F.T and Ex Officio Additional Secretary to the Government of....
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....the time being leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that percentage of the value of the imported article : Provided that in case of any alcoholic liquor for human consumption imported into India, the Central Government may, by notification in the Official Gazette, specify the rate of additional duty having regard to the excise duty for the time being leviable on a like alcoholic liquor produced or manufactured in different States or, if a like alcoholic liquor is not produced or manufactured in any State, then, having regard to the excise duty which would be leviable for the time being in different States on the class or description of alcoholic liquor to which such imported alcoholic liquor belongs. Explanation. -- In this sub-section, the expression "the excise duty for the time being leviable on a like article if produced or manufactured in India" means the excise duty for the time being in force which would be leviable on a like article if produced or manufactured in Ind....
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....at Act; or (ii) the goods specified by notification in the Official Gazette under section 3 read with clause (1) of Explanation III of the Schedule to the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955), the value of the imported article shall be deemed to be the retail sale price declared on the imported article less such amount of abatement, if any, from such retail sale price as the Central Government may, by notification in the Official Gazette, allow in respect of such like article under clause (2) of the said Explanation. Explanation. --Where on any imported article more than one retail sale price is declared, the maximum of such retail sale price shall be deemed to be the retail sale price for the purposes of this section. Provided further that in the case of an article imported into India, where the Central Government has fixed a tariff for the like article produced or manufactured in India under sub-section (2) of section 3 of the Central Excise Act, 1944 (1 of 1944), the value of the imported article shall be deemed to be such tariff value. Explanation. --Where on any imported article more than one retail sale p....
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.... or, as the case may be, such charges are leviable at different rates the highest such tax or, as the case may be, such charge. (6) For the purpose of calculating under sub-section (5), the additional duty on any imported article, the value of the imported article shall, notwithstanding anything contained in sub-section (2), or section 14 of the Customs Act, 1962 (52 of 1962), be the aggregate of - (i) the value of the imported article determined under sub-section (1) of section 14 of the Customs Act, 1962 (52 of 1962) or the tariff value of such article fixed under sub-section (2) of that section, as the case may be; and (ii) any duty of customs chargeable on that article under section 12 of the Customs Act, 1962, (52 of 1962), and any sum chargeable on that article under any law for the time being in force as an addition to, and in the same manner as, a duty of customs, but does not include - (a) the duty referred to in sub-section (5); (b) the safeguard duty referred to in sections 8B and 8C; (c) the countervailing duty referred to in section 9; and (d) the anti-dumping duty referred to in section 9A. (7) The duty charg....
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....tained in section 14 of the Customs Act, 1962 (52 of 1962), be the aggregate of - (i) the value of the imported article determined under sub-section (1) of section 14 of the Customs Act, 1962 (52 of 1962) or the tariff value of such article fixed under sub-section (2) of that section, as the case may be; and (ii) any duty of customs chargeable on that article under section 12 of the Customs Act, 1962 (52 of 1962), and any sum chargeable on that article under any law for the time being in force as an addition to, and in the same manner as, a duty of customs, but does not include- (a) the duty referred to in subsections (1), (3), (5), (7) and (9); (b) the safeguard duty referred to in sections 8B and 8C; (c) the countervailing duty referred to in section 9; and (d) the anti-dumping duty referred to in section 9A: Provided that in case of an article imported into India,-- (a) in relation to which it is required, under the provisions of the Legal Metrology Act, 2009 or the rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such articl....
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....oduction or manufacture of such article, it may, by notification in the Official Gazette, direct that such imported article shall, in addition, be liable to an additional duty representing such portion of the excise duty leviable on such raw materials, components and ingredients as, in either case, may be determined by rules made by the Central Government in this behalf. (4) In making any rules for the purposes of sub-section (3), the Central Government shall have regard to the average quantum of the excise duty payable on the raw materials, components or ingredients used in the production or manufacture of such like article. (5) If the Central Government is satisfied that it is necessary in the public interest to levy on any imported article whether on such article duty is leviable under sub-section (1) or, as the case may be, sub-section (3) or not such additional duty as would counter-balance the sales tax, value added tax, local tax or any other charges for the time being leviable on a like article on its sale, purchase or transportation in India, it may, by notification in the Official Gazette, direct that such imported article shall, in addition, be liable to an additio....
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.... of its value, the value of the imported article shall, notwithstanding anything contained in section 14 of the Customs Act, 1962 (52 of 1962), be the aggregate of- (a) the value of the imported article determined under sub-section (1) of section 14 of the Customs Act, 1962 (52 of 1962) or the tariff value of such article fixed under sub-section (2) of that section, as the case may be; and (b) any duty of customs chargeable on that article under section 12 of the Customs Act, 1962 (52 of 1962), and any sum chargeable on that article under any law for the time being in force as an addition to, and in the same manner as, a duty of customs, but does not include the tax referred to in sub-section (7) or the cess referred to in sub-section (9). (8A) Where the goods deposited in a warehouse under the provisions of the Customs Act, 1962 (52 of 1962) are sold to any person before clearance for home consumption or export under the said Act, the value of such goods for the purpose of calculating the integrated tax under subsection (7) shall be,-- (a) where the whole of the goods are sold, the value determined under subsection (8) or the transaction value of such....
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.... in the same manner as, a duty of customs, but does not include the tax referred to in sub-section (7) or the cess referred to in sub-section (9). (10A) Where the goods deposited in a warehouse under the provisions of the Customs Act, 1962 (52 of 1962) are sold to any person before clearance for home consumption or export under the said Act, the value of such goods for the purpose of calculating the goods and services tax compensation cess under sub-section (9) shall be,-- (a) where the whole of the goods are sold, the value determined under subsection (10) or the transaction value of such goods, whichever is higher; or (b) where any part of the goods is sold, the proportionate value of such goods as determined under sub-section (10) or the transaction value of such goods, whichever is higher: Provided that where the whole of the warehoused goods or any part thereof are sold more than once before such clearance for home consumption or export, the transaction value of the last of such transaction shall be the transaction value for the purposes of clause (a) or clause (b): Provided further that in respect of warehoused goods which remain unsold,....
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....ty and therefore, the challenge of the petitioner with respect to the impugned notification bound to fail. The Trade Notice No.80/2017, dated 27.06.2017 reads as follows :- "Levy and Collection of IGST: (i) The Taxable Value for the calculation of IGST value is outlined as per Section 3(8) of the Customs Tariff Act. The IGST and GST Compensation Cess would be collected as Additional Duty of Customs under sections 3(7) and 3(9) of the Customs Tariff Act." 7.3. A reading of Sections 3(7) and 3(9) would show that the legislature consciously did not employ the term as 'additional duty'. It is only the trade notice which mentions the manner of collection as if they would be collected as additional duty. Thus, mentioning as such in the trade notice will not make the I.G.S.T or G.S.T Compensation Cess as additional duty. Accordingly, we answer this question that the impugned Entry 56 merely clarifies and makes the existing position abundantly clear and does not in any manner take away any vested right and as such, is not illegal or ultravires. H. Question No.(iii ): 8. It is true that pursuant to the various amendments which were the subject matter of the earlie....