TaxTMI 
TaxTMI 
2024 (5) TMI 83
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....th July, 2023 [As amended on 29th August, 2023 vide Notification no. 29/2023] ('the Notification') issued by the Department of Commerce, Government of India. The learned Single Judge, inter alia, rejected the Appellant's argument that the Appellant has substantially complied with the exemption conditions set out in the Notification and thus, on the basis of doctrine of substantial compliance, it should be permitted to export 11,000 MT of non-basmati white rice. Brief Facts 2. The Appellant herein is an exporter of rice and other agricultural products. It is stated that the Appellant herein received an order from its overseas buyer, M/s Indi Sino Trade Pte Ltd. for purchase of 40,000 MT of rice ('the said order'), which was to be exported from Kandla Port in Gujarat. It is stated that in pursuance to the said order, the Appellant herein purchased 28,000 MT of rice and made an application before the port authority at Kandla seeking permission to store 28,000 MT of rice. It is stated that, however, due to lack of space at the port, the authority granted permission for storage only to the extent of 11,000 MT of rice. It is stated that the remaining quantity i.e., 17,000 MT of rice, w....
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...., 2023, as amended by Notification dated 29th August 2023, the Appellant was not allowed to export 11,000 MT of rice. 7.1. He stated that with respect to condition no. (ii) set out in the Notification, all the shipping bills were filed prior to issuance of the Notification, the rotation number for the vessel was allotted on 18th July, 2023, however, the vessel had not berthed or arrived and anchored before the issuance of the Notification. It is stated after the issuance of the said rotation number on 18th July, 2023, the vessel could have anchored at the port only when the permission was granted by the port authority, which is beyond the Appellant's control. 7.2. He stated that with respect to condition no. (iii) of the Notification, the consignment had to be handed over to the Customs before the 21:57:01 hrs on 20th July, 2023. He stated that as is evident from the letter dated 2nd August, 2023 [Issued by the Deendayal Port Authority], the Appellant had applied to Customs for entrance and storage of the entire quantity of 28,000 MT on 15th July, 2023. He stated that however, due to lack of space at the port, permission was given to store only 10,525 MT of rice and the Appellant....
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....rry out the export of 11,000 MT. He stated that the Appellant cannot rely upon the doctrine of substantial compliance, since the intention behind issuing the Notification was to put an immediate ban on the export of non-basmati rice, given the sudden increase in the export of rice and concern for food security in India. He stated that intent behind imposing the ban with immediate effect was the only effective means of achieving price control. 8.2. He stated that the Appellant has not challenged the vires of the Notifications. He stated that in the facts of the case there has been no infringement of the fundamental rights of the Appellant and, therefore, the writ petition is not maintainable. 8.3. He stated that with respect to the judgments relied upon by the Appellant, the Respondent has not accepted the said judgements and had already filed Special Leave Petition(s) before the Supreme Court. Findings and analysis 9. We have heard the learned counsels for the parties and perused the record. 10. It is stated [Para 1.1 of the written submissions dated 27th February 2024] by the Respondent that in year 2022, due to a sudden spike in global prices of rice, there was a sudden incr....
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....icy, 2023, hereby amends the Export Policy of Non-basmati rice against ITC (HS) code 1006 30 90 of Chapter 10 of Schedule 2 of the ITC (HS) Export Policy, as under: ITC HS Codes Description Export Policy Revised Export Policy 1006 30 90 Non-basmati white rice (Semi-milled or wholly milled rice, whether or not polished or glazed: Other) Free Prohibited 2. The Notification will come into immediate effect. The provisions as under Para 1.05 of the Foreign Trade Policy, 2023 regarding transitional arrangement shall not be applicable under this Notification for export of Non-basmati rice. Consignments of Non-basmati rice will be allowed to be exported under following conditions: i. where loading of Non-basmati rice on the ship has commenced before this Notification; ii. where the shipping bill is filed and vessels have already berthed or arrived and anchored in Indian ports and their rotation number has been allocated before this Notification; The approval of loading in such vessels will be issued only after confirmation by the concerned Port Authorities regarding anchoring/berthing of the ship for loading of Non-basmati rice prior to the Notification; iii. where Non-bas....
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....ment of the specific condition mentioned therein. 16. It is admitted that the Appellant has neither challenged the validity of the Notifications dated 20th July, 2023 and 29th August, 2023, nor the constitutional vires of the said Notifications on the ground of it being violative of any fundamental rights of the Appellant. It is also admitted that the Appellant does not satisfy any independent condition of exemption in its entirety. 17. Therefore, in the present appeal the issue involved is whether the Appellant ought to be allowed to export 11,000 MT quantity of rice which is lying at private warehouses near the customs port at Kandla, Gujarat, on the test of substantial compliance of the conditions of exemption. 18. It is the case of the Appellant, that despite best of its efforts and due to no fault of it, the quantity of 11,000 MT could not be handed over to the Custodian at Deendayal Port Authority prior to 20th July, 2023, due to lack of storage space at the Port, as evidenced by letter dated 2nd August, 2023, issued by the Custodian. In addition, the Appellant contends that the vessel call number was allocated to it prior to the Notification and the non-berthing of the ve....
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....ent or its authorities can be directed to refrain from enforcing a provision of law or to act in contravention of the rules or to violate any law. It is stated that Respondent is obliged to enforce the said Notifications uniformly on all the exporters so as to ensure that there is no allegation of arbitrariness or bias. 21. It is stated that allowing the request of the Appellant herein under Paragraph 2 (iii) on the basis of the documents issued by private warehouses (as a proof of storage), would be difficult to verify and would give rise to mischief by applicant exporters. The relevant plea is set out by the Respondent in its pleadings at paragraph 27 of the counter affidavit filed in the writ petition. 22. It is stated that each of the exemption conditions is independent of each other and has to be complied with in its entirety by the applicant; and the Appellant's submissions showing compliance of part conditions in different categories do not entitle it to the exemption. 23. Before we proceed further, it is noted that the Appellant initially in the writ petition and in the present appeal pleaded that despite best efforts it was unable to comply with condition no. (v) of Par....
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....red opinion that for an exporter seeking to invoke the said condition no. (ii); compliance of the stipulation of the vessel having anchored and berthed/arrived was an essential condition, which cannot be relaxed on the test of substantial compliance. It is the intent of this condition that the exception is being carved out for the vessels that have, both, anchored and berthed/arrived before the stipulated time. 26. Similarly, with respect to compliance of condition no. (iii) the Appellant has fairly admitted that it was unable to handover the consignment of 11,000 MT to the Customs before the appointed time nor the consignment had entered the Customs station for exportation before the appointed time. The Appellant has relied upon the letter dated 2nd August, 2023, issued by the Custodian of the Deendayal Port Authority to contend that while the Appellant had applied for storage of the entire quantity of 28,000 MT, however, due to lack of storage at the Port, permission was given to store only 10,525 MT of rice. The Appellant states that it was, therefore, constrained to store the balance consignment which includes 11,000 MT at adjoining storage facilities. It is the contention of ....
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....ent states that each exemption condition of Paragraph 2 of the Notifications is an independent exception and the exporter seeking to invoke the exception must satisfy the whole condition as clarified by DGFT on 18th August, 2023. 27.1. We find merit in the submission of the Respondent that each condition at Paragraph 2 in the Notifications is an independent exception and the exporter seeking to invoke the said exception has to fulfil each of the stipulations set out in the said condition. This is for the reason that each condition in the Notifications is intended to independently carve out an exception for facilitating export of shipments, which were in transition and the test to determine if the shipment is in transition was identified separately as condition nos. (i) to (iv) in the Notifications. 27.2. Each of the conditions set down an objective criterion so as to enable the Respondent to determine eligibility of the exporter to claim exemption and complete its export. The stipulations set down in each of the conditions are unambiguous. The facts and documents forming basis of the conditions are all based on verifiable evidence. 27.3. On the other hand, the evaluation of cont....
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....iance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably be expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the "essence" or the "substance" of the requirements. Like the concept of "reasonableness", the acceptance or otherwise of a plea of "substantial compliance" depends upon the facts and circumstances of each case and the purpose and object to be achieved and the context of the prerequisites which are essential to achieve the object and purpose of the rule or the regulation. Such a defence cannot be pleaded if a clear statutory prerequisite which effectuates the object and the purpose of the statute has not been met. Certainly, it means that the Court should determine whether the statute has been followed sufficiently so as to carry out the intent for which the statute was enacted and not a mirror image type of strict compliance. Substantial compliance means "actual compliance in respect to the substance essential to every reasonable objective of the statute" and the Court should determine whether the statute has been followed sufficiently so as to ....
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.... are to be invoked at different stages of interpreting it. The question whether a subject falls in the Notification or in the exemption clause, has to be strictly construed. When once the ambiguity or doubt is resolved by interpreting the applicability of exemption clause strictly, the Court may construe the Notification by giving full play bestowing wider and liberal construction. The ratio of Parle Exports case [CCE v. Parle Exports (P) Ltd., (1989) 1 SCC 345 : 1989 SCC (Tax) 84] deduced as follows : (Wood Papers Ltd. case [Union of India v. Wood Papers Ltd., (1990) 4 SCC 256 : 1990 SCC (Tax) 422] , SCC p. 262, para 6) "6. ... Do not extend or widen the ambit at stage of applicability. But once that hurdle is crossed, construe it liberally." 60. We do not find any strong and compelling reasons to differ, taking a contra view, from this. We respectfully record our concurrence to this view which has been subsequently, elaborated by the Constitution Bench in Hari Chand case [CCE v. Hari Chand Shri Gopal, (2011) 1 SCC 236]. xxx xxx xxx 64. In Hari Chand case [CCE v. Hari Chand Shri Gopal, (2011) 1 SCC 236], as already discussed, the question was whether a person claiming exem....
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....hattisgarh in I.A. No. 01/2023 filed in W.P.(C) 5045/2023 permitting the exporter therein to export non-basmati rice. In this regard, we may note that the learned Single Judge of the High Court has referred and relied upon the order dated 19th October, 2023 passed by High Court of Andhra Pradesh while passing the interim order. The Respondent has stated that it is in the process of filing a SLP against the order passed by High Court of Chhattisgarh. The High Court of Chhattisgarh has considered the fact that the exporter therein has a pre-existing contract with the foreign importer along with letter of credit for granting ad-interim permission for export. We are of the considered opinion that in view of the express suspension of Paragraph 1.05(b)1of the FTP, 2023, the said fact stands expressly excluded from the scope of the Notifications and therefore, could not have formed the basis for granting relief. 35. The Appellant has also relied upon the judgment of High Court of Gujarat in writ petition numbered as Special Civil Application No. 16017/2023 which was decided vide judgment dated 27th September, 2023. The High Court in the said judgment has returned a finding at Paragraph 2....