AI Drafter 
TaxTMI 
TaxTMI 
2024 (11) TMI 1150
X X X X Extracts X X X X
X X X X Extracts X X X X
....,8, 9 & 12. JUDGMENT YASHWANT VARMA, J. TABLE OF CONTENTS A. FACTUAL BACKGROUND .................................................................................... 3 B. ARGUMENTS RENDERED BY THE PETITIONERS ............................................. 18 C. SUBMISSIONS OF THE RESPONDENTS ........................................................... 43 D. ASSESSMENT UNDER THE CUSTOMS AND FTDR ACT .................................... 47 E. RECOVERY OF DUTY UNDER SECTION 28 AND 28AAA ................................... 59 F. SCOPE OF THE AUDIT POWER ............................................................................ 68 G. THE POWERS OF THE DGFT .............................................................................. 71 H. THE IMPUGNED AUDIT OBJECTION LETTER ................................................ 76 I. THE PURVIEW OF SECTIONS 28(4) AND 28AAA ............................................ 80 J. THE CUSTOMS AND THE DGFT CROSSROAD .............................................. 82 K. PRE-REQUISITES UNDER SECTION 28AAA ................................................... 86 L. DISPUTE OF CLASSIFICATION ..........................
X X X X Extracts X X X X
X X X X Extracts X X X X
....er Indian Trade Classification (Harmonised System) ITC (HS) 68159990, including during the operation of the MEIS scheme, which held the field between 2015 upto 2020. The products themselves are described to be handcrafted articles of stone popularly known as 'Chakla Belan' (Rolling Board and Rolling Pin), mortar and pestle and other allied articles. According to the writ petitioner, those products are prepared by combining marble and stone with steel, wood, glass and the composite material being thereafter bound together with the use of adhesives. 4. According to the disclosures made in the writ petition, the shipping bills of the petitioner submitted for the period 2007 to 2009, and in terms of which the products were classified under ITC(HS) 68159990, were duly accepted and cleared. Apart from the aforesaid exports, the petitioner had also exported those articles during the operation of the MEIS during the period 2015 and right up to 2020. It is asserted that various governmental organizations had, from time to time, duly certified the exported articles as being handicraft products and thus no question ever being raised with respect to their classification under CTH 6815. 5....
X X X X Extracts X X X X
X X X X Extracts X X X X
....S) is to offset infrastructural inefficiencies and associated costs involved in export of goods/products, which are produced/manufactured in India, especially those having high export intensity, employment potential and thereby enhancing India's export competitiveness. 3.04 Entitlement under MEIS Exports of notified goods/products with ITC[HS] code, to notified markets as listed in Appendix 3B, shall be rewarded under MEIS. Appendix 3B also lists the rate(s) of rewards on various notified products [ITC (HS) code wise]. The basis of calculation of reward would be on realised FOB value of exports in free foreign exchange, or on FOB value of exports W.P.(C) 14477/2022 & Connected Matters Page 7 of 91 as given in the Shipping Bills in free foreign exchange, whichever is less, unless otherwise specified. 3.05 Export of goods through courier or foreign post offices using e-Commerce (i) Exports of goods through courier or foreign post office using e-commerce, as notified in Appendix 3C, of FOB value upto Rs. 25000 per consignment shall be entitled for rewards under MEIS. (ii) If the value of exports using e-commerce platform is more than ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (Para 3.06 amended vide Notification No 8/2015-20 dated 4th June, 2015)." 9. For the purposes of implementation of the MEIS, a Public Notice No. 02/2015-2020 was issued by the Director General of Foreign Trade DGFT specifying the eligible countries to which exports could be made for availing benefits under the scheme as well as the ITC(HS) code wise list of products with reward rates. Appendix 3B which formed a part thereof, listed out the products which were recognized to be eligible under the MEIS and included products classifiable under CTH 6815. CTH 6815 was concerned with "articles of stone or of other mineral substances (including carbon fibres, articles of carbon fibres and articles of peat), not elsewhere specified or included". 10. The petitioners were classifying the exported article specifically under ITC(HS) 68159990 and which constituted the residual clause and read as "others". By virtue of the inclusion of articles falling within the ambit of ITC(HS) 68159990, those products became entitled to claim MEIS rewards @ 5%. The aforenoted Public Notice No. 02/2015 was thereafter amended from time to time including by way of Public Notice No. 44/2015-2020 dated 05 D....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... authorities up the policy chain including the Ministry of Textiles as well as the Office of the Development Commissioner (Handicrafts). 14. A detailed representation is also stated to have been made in this regard on 11 February 2019 by the Handicraft Exporter Association Agra to the Department of Commerce and Industry. In terms of the said representation, that Association asserted that if the stand of the respondents were to be accepted, it would become ineligible to claim the benefits of the MEIS and which had already been passed on to the buyers. This, according to the Association, would inevitably cause grave hardship and financial loss to its members-exporters. 15. The representation of the Association is stated to have been taken up for consideration in the third meeting of the Board of Trade which was chaired by the Minister of Commerce and Industries and was convened on 15 February 2019. Pursuant to the discussion which ensued in that meeting, the Joint Director of Foreign Trade issued an Office Memorandum dated 26 February 2019 requesting the Department of Revenue as well as other concerned stakeholders in the Union Government to furnish their comments and views. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orters have been included under the Interest Equalisation Scheme @ 3% subvention • In January, 2019, Pre-Import condition on advance authorization licenses to avail exemption of IGST was removed and exemption of Integrated Tax and Compensation Cess extended to deemed supplies. • Exemption granted on 3% IGST on gold sourced by exporters from nominated agency w.e.f. 1.1.2019 to help Gems and Jewellery sector by freeing blocked capital. • Freight subsidy for exports of agricultural and marine products. • In the Mid-Term Review MEIS rates increased by 2% for MSMEs/labour intensive industries involving an additional outlay of Rs. 7310 crore per annum. • SEIS (Service Export from India Scheme) incentive rate was increased by 2% for all notified services amounting to Rs 1140 crore of additional reward per annum. • MEIS allocation enhanced from 21000 Crores in 2014-15 to 39000 Crores in 2018-19 • GST exemption was restored in October 2017 under the Advance Authorization Scheme, Export Promotion Capital Goods Scheme and 100% Export Oriented Unit for sourcing inputs from abroad without payment of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pedited through a drive. • Consequently over 13000 Advance Authorisation and 9500 EPCG cases have been redeemed. • Revamp of DGFT's IT System initiated to make all DGFT processes paperless and provide end-to-end IT enablement for all services. DGFT highlighted that due to these initiatives of the Government, India has jumped to 30th place in 2018 from 1146th place in "Trading across Borders Ranking" as released by the World Bank. The representatives of industry, while welcoming steps taken by the Government proposed many constructive measures to boost exports The issues/suggestions put forth by the members of Board of Trade are as under* 1. President, FIEO Shri G.K.Gupta : • A new Incentive scheme may be introduced for branded exports- both at country level and Company level • Budget for MAI and TIES may be increased significantly for promoting trade in new countries. • The scheme for sales to foreign tourist must be started immediately for handicrafts and textiles items Foreign tourist sale for allowed 20-25 years back. Now if a person is making counter sale to foreign tourist he must get M....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orded in the minutes of the meeting held on 15 February 2019. This led to the Association addressing further communications to the CBIC as well as the Ministry of Finance to accord clarification. 18. On 31 May 2019, the CBIC acting through its Tariff Unit issued the following communication:- "To Chairman, EPCH, "EPCH House" Pocket 6 & 7, Sector-C, L.S.C., Vasant Kunj, New Delhi Subject: Discrepancy in the HSN Code Classification of Stone & Marble Handicrafts:- reg. Sir, Undersigned is directed to refer your letter no. EPCH- 3/1(3)/2018- 19 Customs, dated 05.02.2019 wherein while referring to the discrepancy in the classification of Stone & Marble Handicrafts under CTH 6802 or 6815, it has been emphasized that MEIS @ 7% is available under HS Code 6845 99 90 whereas the benefit is not available on HS Code 6802 21 90 2. Issue has been examined in detail in this office. It has been concluded that the said item is rightly classifiable u/h 6802 subject to compliance to other conditions given in the ENs to this heading, however, classification at 8-digit level will be decided by the concerned Customs forma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Deputy/ Assistant Commissioner in charge of Appraising Main (Export) through mail/ Phones (email address: [email protected], Phone No. : 022-27244959). -Sd- (Sunil Kumar Mall) Commissioner of Customs, NS-II, JNCH, Nhava Sheva" 21. On the basis of the aforesaid, the respondents proceeded to issue the audit objection letter dated 18 November 2019 which is impugned before us. It becomes relevant to extract the following passages from that communication:- "2. The items "Artistic & Decorative Stone products (Handicraft)" which had been exported under various Shipping Bills to US, Denmark, etc. should have been rightly classified under CTH 68022190 / 68029900 wherein the MEIS benefits is prescribed @ 0% of FOB value (From 01.04.2015 till date). However, it has been observed that the goods had been wrongly classified by you under CTH 68159990 with an intention to claim higher MEIS benefit@ 5% of FOB value (From 01.04.2015 to 31.10.2017) instead of 0%; @ 7% of FOB value (From 1.11.2017 till date) instead of 0%. Therefore, it appears that the goods had been mis-classified by you under CTH 68159990 with an intention to claim higher MEIS benefit instea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....requiring the representative of the petitioner to appear before the respondents on 17 May 2022. The petitioner further alleges that during the course of those proceedings it was also forced to pay an amount of INR 5,00,000/- to the ninth respondent under duress and threat. This deposit is stated to have been made even though no Show Cause Notice SCN or adjudicatory proceedings had been commenced. It is in the aforesaid backdrop that the petitioners had approached this Court for a declaration classifying handicraft articles made of stone and marble under ITC(HS) 68159990 as well as to hold the petitioner to be a valid beneficiary under the MEIS. The petitioners also raise a challenge to the letter of the CBIC dated 31 May 2019 as well as the Public Notice No. 57/2019 dated 19 June 2019 issued by respondent no. 6. A direction is also sought for quashing of the summons which have been issued and are dated 15 November 2021, 24 January 2022, 17 May 2022, 06 June 22 and 30 September 2022. B. ARGUMENTS RENDERED BY THE PETITIONERS 23. Appearing in support of the writ petitions, Mr. Gulati, learned senior counsel, addressed the following submissions. At the outset, it was submitted th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... or building stone and articles thereof, cut or sawn, with a flat or even surface: 6802.21 - - Marble, travertine and alabaster 6802.23 - - Granite 6802.29 - - Other stone - Other: 6802.91 -- Marble, travertine and alabaster 6802.92 - - Other calcareous stone 6802.93 - - Granite 6802.99 - -Other stone This heading covers natural monumental or building stone (except slate) which has been worked beyond the stage of the normal quarry products of Chapter 25. There are, however, certain exceptions where goods are covered more specifically by other headings of the Nomenclature and examples of these are given at the end of this Explanatory Note and in the General Note to the Chapter. The heading therefore covers stone which has been further processed than mere shaping into blocks, sheets or slabs by splitting, roughly cutting or squaring, or squaring by sawing (square or rectangular faces). The heading thus covers stone in the forms produced by the stone- mason, sculptor, etc., viz.: (A) Roughly sawn blanks; also non-rectangular sheets (one or more faces triangular, hexagonal, trape....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... carbonising organic polymers in filamentary forms. The products are used; for example, for reinforcement. (3) Articles made of peat (for example, sheets, cylinder shells, pots for raising plants). Textile articles of peat fibre are, however, excluded (Section XI). (4) Unfired bricks made of dolomite agglomerated with tar. (5) Bricks and other shapes (in particular magnesite or chrorne- magnesite products), chemically bonded but not yet fired. These articles are fired during the first heating of the furnace in which they are installed. Similar products presented after firing are excluded (heading 69.02 or 69.03), (6) Unfired silica or alumina vats (e.g., as used for melting glass). (7) Touchstones for testing precious metal; these may be of natural stone (e.g.; lyddite, a hard, fine-grained dark stone resistant to acids). (8) Paving blocks and slabs obtained by moulding fused slag without a binder, but excluding those having the character of heat-insulating goods of heading 68.06. (9) Filter tubes of finely crushed and agglomerated quartz or flint. (10) Blocks, slabs, sheets and other articles of fused basalt; ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Goods and Service Tax Council and was based upon its recommendations. According to Mr. Gulati, that explanation clearly dispels all doubts that may have been possibly harboured insofar as handcrafted products were concerned. 34. Proceeding then to the audit objection itself, it was Mr. Gulati's contention that the said communication proceeds on the basis that the petitioners had wrongly classified the exported articles under ITC(HS) 68159990 with an intent to claim higher MEIS benefits. Mr. Gulati submitted that without affording even a rudimentary opportunity of hearing, the audit objections proceed to hold the petitioners liable to refund what is described to be the undue benefits which were claimed by them under the MEIS. It is in aforesaid light that it was submitted that the audit objection clearly deprives the petitioner of even contesting the position that has been taken and the view as expressed. 35. According to learned senior counsel, the impugned communication and which is described to be a 'post clearance audit objection' is also contrary to the spirit of Section 99A of the Customs Act. It is in the aforesaid context that Mr. Gulati drew our attention to the decis....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... xxxx xxxx 20. For the reasons stated above, we are of the opinion that in the absence of a show-cause notice it is not open to the Revenue to make a demand on the appellants even assuming that the contention of the Revenue in regard to classification as held by the Tribunal is correct." 36. In Gorkha Security Services, the Supreme Court had made the following observations, albeit in the context of blacklisting: - "27. We are, therefore, of the opinion that it was incumbent on the part of the Department to state in the show-cause notice that the competent authority intended to impose such a penalty of blacklisting, so as to provide adequate and meaningful opportunity to the appellant to show cause against the same. However, we may also add that even if it is not mentioned specifically but from the reading of the show-cause notice, it can be clearly inferred that such an action was proposed, that would fulfil this requirement. In the present case, however, reading of the show-cause notice does not suggest that noticee could find out that such an action could also be taken. We say so for the reasons that are recorded hereinafter. 28. In the instant case,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Act, 2012 w.e.f. 28 May 2012. That provision is extracted herein below: - "28AAA. Recovery of duties in certain cases.- (1) Where an instrument issued to a person has been obtained by him by means of - (a) collusion; or (b) wilful mis-statement; or (c) suppression of facts, for the purposes of this Act or the Foreign Trade (Development and Regulation) Act, 1992, [or any other law, or any scheme of the Central Government, for the time being in force, by such person] or his agent or employee and such instrument is utilised under the provisions of this Act or the rules [or regulations] made or notifications issued thereunder, by a person other than the person to whom the instrument was issued, the duty relatable to such utilisation of instrument shall be deemed never to have been exempted or debited and such duty shall be recovered from the person to whom the said instrument was issued: PROVIDED that the action relating to recovery of duty under this section against the person to whom the instrument was issued shall be without prejudice to an action against the importer under section 28. Explanation 1: For the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (5) Where the person referred to in sub-section (3) fails to repay the amount within the period of thirty days specified therein, it shall be recovered in the manner laid down in sub-section (1) of section 142." 38. Mr. Gulati would contend that an 'instrument' as defined, would include the MEIS authorization or certificate that was issued to the writ petitioners under the MEIS and the provisions of the Foreign Trade (Development and Regulation) Act, 1992 FTDR Act. According to Mr. Gulati, it is only in a case where the respondents had found that the MEIS scrip had been obtained by the petitioners by way of collusion, wilful misstatement or suppression of facts, that the proceedings impugned before us could have sustained. According to Mr. Gulati, there is no allegation laid against the writ petitioners which would evidence collusion, wilful misstatement or suppression of facts. In view of the aforesaid, learned senior counsel submitted that the entire action as initiated by the respondents is liable to be quashed on this ground alone. 39. Mr. Gulati then submitted that in the absence of any determination by a competent authority on the issue of whether the MEIS scrip cou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e necessary for import or export of any goods, nor any goods shall be prohibited for import or export except, as may be required under this Act, or rules or orders made thereunder. [5. Foreign Trade Policy.-The Central Government may, from time to time, formulate and announce, by notification in the Official Gazette, the foreign trade policy and may also, in like manner, amend that policy: Provided that the Central Government may direct that, in respect of the Special Economic Zones, the foreign trade policy shall apply to the goods, services and technology with such exceptions, modifications and adaptations, as may be specified by it by notification in the Official Gazette." 41. It was contended by Mr. Gulati that a prohibition, restriction or regulation of import or export of goods would be primarily governed by the orders which the Union may promulgate under the FTDR Act. According to Mr. Gulati, as long as the export is shown to be compliant with the regulations as framed under the FTDR Act, there would exist no jurisdiction for the customs authorities to question the classification of goods or the claim of benefits under a particular scheme formulated in t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....been granted to the importer in terms of the then existing Project Import Regulations, 1986. The essentiality certificate was, in terms of those Regulations, required to be issued by the appropriate Ministry in the Union Government enabling a person to claim benefits of project import assessment and in the facts of that case claim a right to import goods required for establishment of a fertilizer plant at a 'nil' rate of duty. The customs authorities in Zuari Industries had sought to doubt whether a power plant which had been imported by virtue of the recognition accorded to that import in terms of the essentiality certificate would be eligible for benefits. The customs authorities had sought to contend that the import of a power plant would not constitute an integral part of a fertilizer project and thus not entitled to the benefits of project import assessment. 46. While negating that contention, the Supreme Court had pertinently observed as follows: - "13. Firstly, on the facts we find that the assessee had given to the sponsoring Ministry its entire project report. In that report they had indicated that for the expansion of the fertilizer project they needed an extr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sion rendered in the context of an advance license for import which was held by the appellant assessee and its claim for the grant of protection in terms of an exemption notification. The authorities of customs appear to have doubted the eligibility of the appellant assessee to claim those exemptions and thus question the grant of the license itself. Negating that stand, the Supreme Court in Titan Medical Systems held thus: - "12. As regards the contention that the appellants were not entitled to the benefit of the exemption notification as they had misrepresented to the licensing authority, it was fairly admitted that there was no requirement for issuance of a licence that an applicant set out the quantity or value of the indigenous components which would be used in the manufacture. Undoubtedly, while applying for a licence, the appellants set out the components they would use and their value. However, the value was only an estimate. It is not the respondents' case that the components were not used. The only case is that the value which had been indicated in the application was very large whereas what was actually spent was a paltry amount. To be, noted that the licen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. The Central Government may also, by order published in the Official Gazette, make provision for prohibiting, restricting or otherwise regulating, in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the Order, the import or export of goods or services or technology. According to sub-section (3) of section 3 all goods to which any order under sub section (2) of the said section applies should be deemed to be goods the import or export of which has been prohibited under section 11 of the Customs Act, 1962 and all the provisions of that Act shall have effect accordingly. According to section 5, it is for the Central Government which may, from time to time, formulate and announce, by notification In the Official Gazette, the Foreign Trade Policy and may also, in like manner, amend that policy. The proviso to the said section provides that the Central Government may direct that, in respect of the Special Economic Zones, the foreign trade policy shall apply to the goods, services and technology....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is nothing but an administrative guideline as would appear from a combined reading of paragraph 2.4 of the Foreign Trade Policy and section 6 of the Foreign Trade (Development and Regulation) Act, 1992. We have already pointed out that section 3 of the Foreign Trade (Development and Regulation) Act, 1992 grants power to respondent No. 1 to make provisions relating to imports and exports and respondent No. 1 under section 5 of the Foreign Trade (Development and Regulation) Act, 1992 can formulate and announce the Foreign Trade Policy. It further appears from section 6(3) of the Foreign Trade (Development and Regulation) Act, 1992 that of the powers conferred upon respondent No. 1 under the Foreign Trade (Development and Regulation) Act, 1992, except those provided in sections 3, 5, 15, 16 and 19, all others can be delegated to respondent No. 2 by order published in the Official Gazette. We find that respondent No. 2 through paragraph 8.3.6 of the Handbook of Procedures has sought to incorporate the provisions of the Duties Drawback Rules to deemed exports mutatis mutandis which is not permissible in view of the fact that no power has been granted to the Director General of Foreign T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....determine or reverify the deemed export benefits if such benefits have been approved or granted as per the provisions of the Foreign Trade (Development and Regulation) Act, 1992 except by way of review as provided in section 16. In the absence of any power under the Foreign Trade (Development and Regulation) Act, 1992, respondent No. 2 or its subordinates cannot assume quasi-judicial power for instance, the power to redetermine or reverify under the administrative guidelines, i.e., paragraph 7 of the ANF 8 Form. Therefore, by virtue of paragraph 7 of the ANF 8, respondent No. 2 is deriving the quasi-judicial power which is beyond the provisions of the Foreign Trade (Development and Regulation) Act, 1992. We have already pointed out that according to section 6 of the Foreign Trade (Development and Regulation) Act, 1992, respondent No. 2 or the officer subordinate to him cannot usurp the power under sections 3, 5, 15, 16 and 19 ... Section 15 of the Foreign Trade (Development and Regulation) Act, 1992 provides for appeal and, according to the said section, any person aggrieved by any decision or order made by the adjudicating authority may prefer an appeal where the decision....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... recovery proceedings on the basis of this order, exceeds the authority granted by law under the Foreign Trade (Development and Regulation) Act. Taking this view of the matter, the court does not return any findings as to the legality of the decisions of the Policy Interpretation Committee, or the legality of paragraph 2.3 of the Policy." 51. The authority and jurisdiction of customs authorities to question a benefit claimed under the FTDR Act or to delve into issues of classification then appears to have fallen for consideration of the Allahabad High Court in PTC Industries Ltd. v. Union of India and Others 2009 SCC OnLine All 2138. The said High Court, after noticing Para 2.3 of FTP 2004 - 2009 which vested DGFT with the authority to rule on all questions or allay doubts with respect to the interpretation of any provision in the FTP, had pertinently observed: - "16. The scheme of the Customs Act, 1962 and the Foreign Trade (Development and Regulation) Act, 1992, provide that whereas the officers on the check-post or port and the point of entry and exit, have powers to prevent or detect the illegal exports of goods, and also confiscate the goods attempted to be imprope....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 18. In Pradip Polyfils Pvt. Ltd. v. Union of India (2004) 173 ELT 3 (Bom) a somewhat similar question arose for consideration. The petitioner had exported filter plates and accessories made with polypropylene under the DEPB Scheme through the Bombay coastal area at Bombay for which DEPB licences were issued by the DGFT Surat. The customs authorities rejected the claim for credit of duty on the grounds that the goods exported did not fall under Chapter 39 of ITC (HS) classification of export import item, which is a precondition for claiming credit under SI. No. 14, of Public Notice No. 6, dated April 15, 1998. It was not in dispute that the DEPB licences were issued against export of polypropylene filter plates and accessories as contained in the shipping bills, which was required to be forwarded to the customs for verification of the particular set out in the shipping bills and necessary endorsements. The verification of the customs authorities under Circular No. 15 of 1997 dated June 3, 1997 was restricted to the description, quantity, and FOB value of the export products set out in the shipping bills. The customs authorities did not allege that there was any discrepancy in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of goods. At best it is case in which it was to be found whether the welding or clipping could be included, or can be taken to be forging, when according to the DGFT the hatch was to be made predominantly of stainless steel of not less than 90 per cent. by weight. It is not the case of the customs authorities that the item produced for consideration before the DGFT and subjected to the DEPB Committee (inter-ministerial committee) which discussed the components was not the same, which was produced for export. The Committee of Experts in the office of DGFT included the representatives of Ministry of Steel; Joint DGFT Industrial Advisory, Joint Industrial Advisor and DGFT and three other DGFT. The representatives of Department of Steel explained the forging process in general and that the committee opined that the item produced was licensed item falling in the classification SI. No. 530B of the Schedule of DEPB. 21. On the aforesaid discussion, we find from the scheme of the Customs Act, 1962 and the Foreign Trade (Development and Regulation) Act, 1992 that whenever a dispute may arise as to the classification of the goods, other than its description, quantity and FOB value, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sing authorities have wrongly accepted the statement of the petitioner, so long as the licence is valid and subsisting the import of materials set out in the advance licence are liable to be cleared duty free, under Notification No. 116 of 1988 and the Customs authorities cannot deny duty free clearance of the materials set out in the licence. It is open to the Customs authorities to sit in appeal and hold that the licensing authorities have erroneously endorsed advance licence to permit import of die steel as a material required in the manufacture of the resultant product. In this view of the matter, we are of the opinion that the impugned orders passed by the Customs authorities below cannot be sustained." 53. In yet another decision of the Bombay High Court in Commissioner of Customs (E.P.) v. Jupiter Exports & Ors. 2007 SCC OnLine Bom 467, the following pertinent observations came to be rendered in the context of a license issued by the DGFT and whether the same could be appraised or inquired into by the authorities of customs. Answering the aforesaid in the negative, the Bombay High Court had held as follows: - "21. With regard to the issue as to whether a license ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....self-assess their exported goods in order to obtain MEIS benefits that they were not entitled to. 55. According to learned counsel, MEIS was a scheme intended to incentivise exporters of certain kinds of goods and the benefits whereof would be accorded to products exported under a certain CTH and calculated based on the FOB value of goods exported. The benefits afforded to exporters under the MEIS was thus provided in the form of scrips of a certain value, constituting a certain percentage of the FOB value of the goods so exported. This scrip could thereafter be utilised for the payment of duty on goods imported by the exporters of a value equivalent to that of the scrip. In the alternative, the scrip could have also been sold by exporters to other importers who are entitled to use the same for payment of import duty. 56. The petitioners, according to learned counsel, had been exporting handicraft articles of stone and marble classifying the same under CTH 6815 only with the intent of illegally obtaining benefits under the MEIS. Learned counsel based his submission upon the purported "intelligence" received by the respondents that "certain unscrupulous exporters" were deliber....
X X X X Extracts X X X X
X X X X Extracts X X X X
....objection letter dated 18 November 2019 being ultra-vires Section 99A, contended that the legislative intent behind the introduction of Section 99A was to provide a statutory framework for the conduct of a post-clearance audit and that the Customs Audit Regulations, 2018 Audit Regulations 2018 were introduced appointing customs officers of specified ranks for the purpose of carrying out audits under Section 99A. The said officers are statutorily empowered to send SCNs' based on the findings of an audit conducted by a proper officer. Learned counsel submitted that the proceedings initiated by way of the audit objection and the enquiries made on the basis of intelligence gathered by customs officials were distinct and independent and ought not be conflated with the other. Accordingly, learned counsel argued that the submissions addressed by the writ petitioners with regards to the untenability of the audit objection letter in the absence of any SCN is misconceived. 62. Turning then to the issue of the purported deliberate misclassification of goods by the petitioner, learned counsel placed reliance upon the CBIC communication dated 31 May 2019 and the Public Notice No. 57/2019 to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y reads as follows:- "2. Definitions. xxxx xxxx xxxx [(2) "assessment means determination of the dutiability of any goods and the amount of duty, tax, cess or any other sum so payable, if any, under this Act or under the Customs Tariff Act, 1975 (51 of 1975) (hereinafter referred to as the Customs Tariff Act) or under any other law for the time being in force, with reference to- (a) the tariff classification of such goods as determined in accordance with the provisions of the Customs Tariff Act; (b) the value of such goods as determined in accordance with the provisions of this Act and the Customs Tariff Act; (c) exemption or concession of duty, tax, cess or any other sum, consequent upon any notification issued therefor under this Act or under the Customs Tariff Act or under any other law for the time being in force; (d) the quantity, weight, volume, measurement or other specifics where such duty, tax, cess or any other sum is leviable on the basis of the quantity, weight, volume, measurement or other specifics of such goods; (e) the origin of such goods determined in accordance with the provisions of the Cust....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the imported goods or export goods, as the case may be, can be ascertained, and to furnish any information required for such ascertainment which it is in his power to produce or furnish, and thereupon the importer, exporter or such other person shall produce such document and furnish such information. (4) Notwithstanding anything contained in this section, imported goods or export goods may, prior to the examination or testing thereof, be permitted by the proper officer to be assessed to duty on the basis of the statements made in the entry relating thereto and the documents produced and the information furnished under sub-section (3); but if it is found subsequently on examination or testing of the goods or other wise that any statement in such entry or document or any information so furnished is not true in respect of any matter relevant to the assessment, the goods may, without prejudice to any other action which may be taken under this Act, be re-assessed to duty. (5) Where any assessment done under sub-section (2) is contrary to the claim of the importer or exporter regarding valuation of goods, classification, exemption or concessions of duty availed consequent to any....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch the Finance Bill, 2011 receives the assent of the President, such imported goods or export goods shall continue to be governed by the provisions of section 17 as it stood immediately before the date on which such assent is received.] 68. For the purposes of the question which stands posited for our consideration, suffice it to note that post the introduction of a system of self-assessment being adopted and thus a bill of entry as submitted being liable to be accepted unless questioned in accordance with the procedure stipulated in Section 17, the declaration as made by the importer or the exporter, as the case may be, attains finality unless refuted or reopened in accordance with the statutory provisions enshrined in the Customs Act. It was in extension of the said power that the proper officer stood empowered to require the importer or the exporter to produce all relevant material and which may have a bearing on the duty leviable for its consideration. Section 17 also confers a power on the proper officer to subject the goods to verification and testing and thus evaluate the correctness of the disclosures made in the course of self-assessment. In terms of Section 17(4), if i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eared from its factory and had filed a refund claim in respect of duty paid by it during the period of July 2001 to March 2002 in light of the exemption Notification No. 67.95-CE, which it had not been aware of at the relevant time. However, the said refund application came to be rejected and which lead to the filing of an appeal before the Supreme Court. The Supreme Court, while deliberating whether self-assessment falls within the ambit of assessment as envisaged under Sections 2(2) and 17(1) of the Customs Act prior and post the amendment of 2011, rendered the following pertinent observations:- "32. Coming to the procedure of assessment of duty as prevailed before the amendment of the Act prior to the amendment made in Section 17(1) by the Finance Act of 2011, the imported goods or exported goods were required to be examined and tested by the proper officer. After such examination, he had to make an assessment of the duty, if any, leviable on these goods. Under sub- section (3) of Section 17, the proper officer was authorised to require the importer, exporter or any other person to produce any contract, broker's note or any other document as specified in the proviso....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 41. It is apparent from the provisions of refund that it is more or less in the nature of execution proceedings. It is not open to the authority which processes the refund to make a fresh assessment on merits and to correct assessment on the basis of mistake or otherwise. xxxx xxxx xxxx 43. As the order of self-assessment is nonetheless an assessment order passed under the Act, obviously it would be appealable by any person aggrieved thereby. The expression "Any person" is of wider amplitude. The Revenue, as well as the assessee, can also prefer an appeal aggrieved by an order of assessment. It is not only the order of reassessment which is appealable but the provisions of Section 128 make appealable any decision or order under the Act including that of self-assessment. The order of self-assessment is an order of assessment as per Section 2(2), as such, it is appealable in case any person is aggrieved by it. There is a specific provision made in Section 17 to pass a reasoned/speaking order in the situation in case on verification, self-assessment is not found to be satisfactory, an order of reassessment has to be passed under Section 17(4). Section 128 has....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s modified in accordance with law by taking recourse to the appropriate proceedings and it would not be within the ken of Section 27 to set aside the order of self-assessment and reassess the duty for making refund; and in case any person is aggrieved by any order which would include self-assessment, he has to get the order modified under Section 128 or under other relevant provisions of the Act. 48. Resultantly, we find that the order(s) passed by the Customs, Excise and Service Tax Appellate Tribunal are to be upheld and that passed by the High Courts of Delhi and Madras 19 to the contrary, deserve to be and are hereby set aside. We order accordingly. We hold that the applications for refund were not maintainable. The appeals are accordingly disposed of. Parties to bear their own costs as incurred." 73. Subsequent to ITC Limited, this Court in BT (India) Private Limited, v. Union of India and another 2023 SCC OnLine Del 7143 had dealt with a challenge to the rejection of refund claims and the self-assessment done by the petitioners therein, albeit in the context of unutilised Central Value Added Tax CENVAT credit. While dealing with the challenge raised therein, the C....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 60. Flock (India) was one of the earliest decisions which dealt with the aspect of a claim for refund emanating from a return which had been duly assessed. In Flock (India), the self-assessed returns had been duly assessed by the Assistant Collector and the issue of classification was answered against the assessee. The aforesaid order of the Assistant Collector came to be affirmed by the Collector (Appeals). It was thereafter and while seeking to prosecute a claim for refund that the assessee sought a review of the aforesaid decisions which had been rendered by the authorities. Negativing the said contention, the Supreme Court observed that once an assessment filed had been duly adjudicated in accordance with the procedure prescribed under the statute, it would be impermissible for the said decision being reviewed or revisited at the stage of consideration of a refund claim. 61. In Priya Blue Industries, the Supreme Court was faced with a situation where a bill of entry had been duly assessed and the duty payable in terms of that assessment deposited under protest. It was thereafter that an application for refund came to be preferred. As would be evident from the con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....de a self-assessment return, is modified in accordance with the procedure prescribed in the statute. In our considered opinion, it is these principles enunciated in Flock (India), Priya Blue Industries and ITC Limited, which compel and convince us to observe that the impugned order is clearly rendered unsustainable. 65. Undisputedly, the petitioner had submitted self-assessment returns proceeding on the basis that the output services rendered by it would qualify as an "export of service" and thus it being not exigible to service tax. The aforesaid self-assessment returns remained untouched and had not been questioned by the respondents either in terms of section 72 or 73 of the Act. The application for refund of Cenvat credit was founded on the petitioner assessing that it was not liable to pay service tax on services so exported. The accumulation of Cenvat credit came about in light of the various input services received by the petitioner and it having availed credit of service tax paid thereon in terms of rule 3 of the CCR Rules. It was in respect of the accumulated Cenvat credit that the application for refund came to be made. 66. In our considered view, unless....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct has clearly passed. That then leaves us to identify and determine the avenues which would otherwise be available to the customs authorities to reopen or review an assessment duly made. E. RECOVERY OF DUTY UNDER SECTION 28 AND 28AAA 76. This leads us firstly to Section 28 of the Customs Act and which deals with recovery of duties either not levied or paid, short levied or short paid or erroneously refunded. Section 28 reads thus: - "28. Recovery of [duties not levied or not paid or short-levied or short-paid] or erroneously refunded. (1) Where any [duty has not been levied or not paid or short- levied or short-paid] or erroneously refunded, or any interest payable has not been paid, part-paid or erroneously refunded, for any reason other than the reasons of collusion or any wilful mis-statement or suppression of facts, - (a) the proper officer shall, within [two years] from the relevant date, serve notice on the person chargeable with the duty or interest which has not been so levied [or paid] or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-paid or erroneously refunded, by reason of,- (a) collusion; or (b) any wilful mis-statement; or (c) suppression of facts, by the importer or the exporter or the agent or employee of the importer or exporter, the proper officer shall, within five years from the relevant date, serve notice on the person chargeable with duty or interest which has not been [so levied or not paid] or which has been so short-levied or short-paid or to whom the the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice. (5) Where any [duty has not been levied or not paid or has been short-levied or short paid] or the interest has not been charged or has been part-paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts by the importer or the exporter or the agent or the employee of the importer or the exporter, to whom a notice has been served under sub- section (4) by the proper officer, such person may pay the duty in full or in part, as may be accepted by him, and the interest payable thereon under section 28AA and the penalty ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (a) within six months from the date of notice, [***] in respect of cases falling under clause (a) of sub- section (1); (b) within one year from the date of notice, [***] in respect of cases falling under sub-section (4): [PROVIDED that where the proper officer fails to so determine within the specified period, any officer senior in rank to the proper officer may, having regard to the circumstances under which the proper officer was prevented from determining the amount of duty or interest under sub-section (8), extend the period specified in clause (a) to a further period of six months and the period specified in clause (b) to a further period of one year: PROVIDED FURTHER that where the proper officer fails to determine within such extended period, such proceeding shall be deemed to have concluded as if no notice had been issued;] [(9A) Notwithstanding anything contained in sub-section (9), where the proper officer is unable to determine the amount of duty or interest under sub-section (8) for the reason that- (a) an appeal in a similar matter of the same person or any other person is pending before the (b) Appellate Tribun....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Explanation 1: For the purposes of this section, "relevant date" means, - (a) in a case where duty is [not levied or not paid or short- levied or short-paid], or interest is not charged, the date on which the proper officer makes an order for the clearance of goods; (b) in a case where duty is provisionally assessed under section 18, the date of adjustment of duty after the final assessment thereof or re-assessment, as the case may be; (c) in a case where duty or interest has been erroneously refunded, the date of refund; (d) in any other case, the date of payment of duty or interest. Explanation 2: For the removal of doubts, it is hereby declared that any non-levy, short-levy or erroneous refund before the date on which the Finance Bill, 2011 receives the assent of the President, shall continue to be governed by the provisions of section 28 as it stood immediately before the date on which such assent is received.] [Explanation 3: For the removal of doubts, it is hereby declared that the proceedings in respect of any case of non-levy, short-levy, non-payment, short-payment or erroneous refund where show cause notice has been i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e allegations would sustain only if we were to find that the respondents assert that the MEIS scrips are tainted by the aforenoted factors. However, the respondents do not even suggest or lay that charge against the writ petitioners at least in explicit terms. The respondents stop short of laying this allegation since that would necessarily entail it being urged that the DGFT office had colluded with the petitioners. 80. The invocation of Section 28 in the context of an MEIS scrip would also not sustain in light of the ambivalent stand taken by the DGFT who despite being a party to these proceedings has refrained from filing any affidavit or striking a principled stand. We take note of the following instructions that were provided by the DGFT to its counsel dated 11 January 2023 and which was placed on the record of these proceedings for our consideration: - "OFFICE MEMORANDUM Subject: - W.P (C) No. l7314 of 2022 in the matter of M/s Amit Exports v/s UOl & Others. filed before the Hon'ble High Court of Delhi. Please refer to writ petition in the above mentioned subject matter, wherein, UOI, Through Ministry of Finance, Department of Revenue, CBIC is Resp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tive, introduces a legal fiction by employing the phrase "shall be deemed never to have been exempted or debited......". 83. The provisions of Section 28AAA are attracted where it is found that an instrument issued to a person under the FTDR Act was obtained by means of collusion, wilful misstatement or suppression of facts. While Section 28AAA does undoubtedly statutorily empower the respondents to recover duty benefits illegitimately claimed by virtue of an instrument, the larger question which merits consideration is of identifying the authority which could be recognized in law to undertake a determination with respect to whether an instrument could be said to have been obtained by way of collusion, wilful misstatement or suppression of facts. 84. While we propose to return to this principal question a little later and in the subsequent parts of this decision, suffice it to note that Section 28AAA is a provision which stands at the crossroads of the Customs Act and the FTDR Act. It constitutes, in that sense, a junction or an intersection where the two statutes meet. Section 28AAA deals with situations of convergence and where a demand of duty is predicated upon a doubt be....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... sample or goods are available and where necessary, drawl of samples;" 87. The procedure for the conduct of an audit is set out in some detail in Audit Regulation 5 and which reads thus: - "5. Manner of conducting audit. (1) The proper officer may conduct audit either in his office or in certain cases at the premises of an auditee. (2) The proper officer may, where considered necessary, request the auditee to furnish documents, information or record including electronic record, as may be relevant to audit. (3) The proper officer shall give not less than fifteen days advance notice to the auditee to conduct audit at the premises of the auditee. (4) The proper officer may, where considered necessary, inspect the imported goods or export goods or dutiable goods at the premises of the auditee or request the auditee to produce sample, if available with him. (5) The proper officer shall inform the auditee of the objections, if any, before preparing the audit report to provide him an opportunity to offer clarifications with supporting documents. (6) Where the auditee is in agreement with the audit findings, he may make volu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....true those provisions as enabling the customs authorities to suspend or cancel an instrument itself, be it under the Customs or the FTDR Act. G. THE POWERS OF THE DGFT 90. This then takes us to the provisions contained in the FTDR Act and which we had an occasion to review while noticing the submissions which were addressed by Mr. Gulati. Undoubtedly, it is the DGFT who is liable to be recognized as the pivotal authority and one who is enjoined to administer the provisions of that statute. With a view to develop and regulate foreign trade, the Union stands conferred with the power to issue appropriate orders prohibiting, restricting or regulating the import or export of goods. An order referable to Section 3(2) of the FDTR Act and all goods to which that statutory instrument may extend leads to those goods being deemed to be goods the import or export of which is prohibited under Section 11 of the Customs Act. As was noted by us hereinbefore, the FTP itself is a statutory instrument and derives that status by virtue of Section 5 of the FTDR Act. The word 'license' has been defined in the FTDR Act to mean a license to import or export as also to include within its ambit a cust....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sing to grant, or renew or suspending or cancelling, a [licence, certificate, scrip or any instrument bestowing financial or fiscal benefits] shall lie in like manner as an appeal against an order would lie under section 15." 91. By virtue of amendments which came to be introduced by Act 25 of 2010, sub-section (3) of Section 9 came to be amended with the Legislature extending the width of its applicability beyond a mere license and thus including within its ambit a certificate, script or any instrument "bestowing financial or fiscal benefits". Corresponding amendments are also found in Section 9(1) and which too added certificates, scrips and instruments bestowing fiscal benefits as falling within the ambit of that provision. 92. The power to suspend or cancel any of those instruments is then spoken of in the Foreign Trade (Regulation) Rules, 1993 FTDR Rules. It would thus be pertinent to notice Rules 7, 9 and 10 thereof and which are reproduced hereinbelow: - "7. [Refusal to grant licence, certificate, scrip or any instrument bestowing financial or fiscal benefits and recovery of benefits].- (1) The Director-General or the licensing authority may for reasons to be rec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n signed by a person other than a person duly authorised by the applicant under the provisions of the policy; [(n) the applicant has attempted to obtain or has obtained or has erroneously claimed Terminal Excise Duty, duty drawback, cash assistance benefits admissible to Importer-exporter Code holder or any other similar benefits from the Central Government or any agency authorised by the Central Government in relation to exports made by him on the basis of any false, fraudulent or misleading statement or any document which is false or fabricated or tampered with.] (2) The refusal of a 52[licence, certificate, scrip or any instrument bestowing financial or fiscal benefits] under sub-rule (1) shall be without prejudice to any other action that may be taken against an applicant by the licensing authority under the Act. [(3) In case of any erroneous payment of Terminal Excise Duty, duty drawback, cash assistance benefits admissible to importer-exporter Code holder or any other similar benefits from the Central Government or any agency authorised by the Central Government in relation to exports made by him, the Director General or the licensing authority may,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....been revoked on the report of the Advisory Board under Section 8 read with sub-section (2) of Section 9 of that Act or before receipt of such report; (iii) has been set aside by a court of competent jurisdiction. (2) The Director-General or the licensing authority may by an order in writing suspend the operation of any 62[licence, certificate, scrip or any instrument bestowing financial or fiscal benefits] granted under these rules, where proceedings for cancellation of such [licence, certificate, scrip or any instrument bestowing financial or fiscal benefits] has been initiated under rule 10. 10. Cancellation of a [licence, certificate, scrip or any instrument bestowing financial or fiscal benefits].-The Director- General or the licensing authority may by an order in writing cancel any [licence, certificate, scrip or any instrument bestowing financial or fiscal benefits] granted under these rules, if- (a) the [licence, certificate, scrip or any instrument bestowing financial or fiscal benefits] has been obtained by fraud, suppression of facts or misrepresentation; or (b) the [licensee or transferee] has committed a breach of any of the conditions o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... conclusion reached. 95. The tone and tenor of the audit objection letter and the language in which it is framed could legitimately be construed by the noticee of the issue having been predetermined and no useful purpose being served by representing or responding to the same. This we observe notwithstanding the audit objection letter neither feigning nor posturing itself to be a notice to show cause. This is evident from the said communication advising the petitioners to pay the amount as determined and thus closing all avenues of contestation. 96. The Supreme Court in Oryx Fisheries Private Limited v. Union of India and Others (2010) 13 SCC 427 while dealing with a challenge to the cancellation of the registration certificate of the appellant, had rendered the following illuminating observations with regard to the need for notices issued by any statutory authority to consist of reasoning as opposed to a simpliciter recordal of definitive conclusions and which would thus lead the noticee to arrive at the inevitable conclusion that a right of representation would be an empty formality. This becomes evident from a reading of the following passages of that decision:- "2....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... But one thing is clear that while reading a show-cause notice the person who is subject to it must get an impression that he will get an effective opportunity to rebut the allegations contained in the show- cause notice and prove his innocence. If on a reasonable reading of a show-cause notice a person of ordinary prudence gets the feeling that his reply to the show-cause notice will be an empty ceremony and he will merely knock his head against the impenetrable wall of prejudged opinion, such a show-cause notice does not commence a fair procedure especially when it is issued in a quasi-judicial proceeding under a statutory regulation which promises to give the person proceeded against a reasonable opportunity of defence. 32. Therefore, while issuing a show-cause notice, the authorities must take care to manifestly keep an open mind as they are to act fairly in adjudging the guilt or otherwise of the person proceeded against and specially when he has the power to take a punitive step against the person after giving him a show-cause notice. xxxx xxxx xxxx 37. Therefore, the bias of the third respondent which was latent in the show-cause notice became pat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aiming benefits under the MEIS. 99. We find ourselves unable to appreciate how the petitioners could have been charged of having failed to make a "correct and truthful" declaration when the imports were affected under the cover of MEIS certificates granted by the DGFT and which had never been questioned. In fact, the DGFT has not even and till date initiated any action against the writ petitioners alleging that the MEIS Certificate had been wrongly obtained. This too leads us to conclude that the impugned action is rendered wholly illegal, arbitrary and unsustainable. 100. Regard must also be had to the fact that the power under Section 28(4) additionally could have been invoked only within a period of five years from the relevant date, an expression which stands duly defined in that provision by virtue of the Explanations appended to that section. The aforesaid provisions assume significance when we view the power that is sought to be invoked with the assistance of sub-section (4) of Section 28 in juxtaposition with the period during which the exports were affected and which in the facts of these cases was between 1991 to 2018. The earliest proceedings which appear to have b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the FTDR Rules, we find ourselves unable to recognize a right that may be said to inhere in the customs authorities to doubt the issuance of an instrument. We, in the preceding parts of this decision, had an occasion to notice the relevant provisions contained in the FTDR Act and which anoint the DGFT as the central authority for the purposes of administering the provisions of that statute and regulating the subject of import and exports. The FTP 2015-20 in unequivocal terms provides in para 2.57 that it would be the decision of the DGFT on all matters pertaining to interpretation of policy, provisions in the Handbook of Procedures, Appendices, and more importantly, classification of any item for import/export in the ITC (HS) which would be final and binding. The FTP undoubtedly stands imbued with statutory authority by virtue of Section 5 of the FTDR Act. 105. Of equal importance are the FTDR Rules and which too incorporate provisions conferring an authority on the Director General or the licensing authority to suspend or cancel a license, certificate, scrip or any instrument bestowing financial or fiscal benefits. Once it is held that the MEIS would clearly qualify as an instr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n courts to acknowledge its position of primacy when it come to the interpretation of policy measures referable to the FTDR Act as well as issues of classification emanating therefrom. 108. This clearly flows from what our High Court held in Simplex Infrastructure when it approved the view expressed by the Gujarat High Court in Alstom India and which had held that export benefits claimed and enjoyed pursuant to approvals granted as per the provisions of the FTDR Act could not be reviewed or redetermined except in accordance with the procedure prescribed therein. A similar view came to be expressed by the Allahabad High Court in PTC Industries and where it was held that any doubt with respect to the description or classification of exported goods would have to be referred for the consideration of the DGFT. The Allahabad High Court had thus concurred with the view expressed by the Bombay High Court and which too had observed that benefits which could be claimed under a Duty Entitlement Pass Book license could not be denied by the customs authorities on the basis of their own perception on the subject of appropriate classification. The Bombay High Court had held that as long as the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rs as well as industry associations to lend clarity and lay all doubts at rest. The record further bears out that taking cognizance of the issues which were arising at different customs outposts, the industry associations had also approached the Ministry of Commerce and Industry and which had in turn convened a meeting of all concerned stakeholders so as to elicit their views. That process of deliberation, however, has yet not translated into a stated or principled view being expressed by that Ministry. 111. It is only much later and on 31 May 2019 that the CBIC issued a communication attempting to resolve questions pertaining to the classification of stone and marble handicraft items which were being exported. While that communication did hold that stone and marble handicrafts were liable to be classified under CTH 6802, it too left various aspects pertaining to classification subject to verification and examination of individual items. As we read this communication of the CBIC, we find ourselves unable to construe the same as conclusively determining all possible issues concerned with the classification of stone and marble handicraft products. This since the communication itse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d Monumental or Building Stone". CTH 6815, on the other hand, pertains to articles of stone or of other mineral substances "not specified or included elsewhere". As CTH 6815 stands, it clearly does not appear to be associated with stone that may be used in a monument or a building. Of equal significance are the Explanatory Notes which stand appended to CTH 6802 and which explain the scope of that entry as being intended to cover all natural, monumental or building stone which may have been worked upon beyond the stage at which they would be found at the mouth of a quarry. The Explanatory Notes proceed further to explain the width of that entry as being not only confined to construction stone but also to articles such as steps, cornices, pediments balustrades and others. 116. CTH 6815 is the residual entry falling in Chapter 68. Although it too relates to articles of stone or of other minerals substances, it is clearly distinct and separate from what could be said to possibly fall under CTH 6802. The various products, minerals and materials which are spoken often in CTH 6802 appear to be those which would be found in buildings and monuments or used in the course of construction. ....