TaxTMI 
TaxTMI 
2026 (1) TMI 906
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....rt has upheld a challenge, by the petitioner in the said writ petition Malik Tanning Industries, to Circular No. 42 (RE-2010)/2009-14 dated 21 October 2011 issued by the Directorate General of Foreign Trade ["DGFT"]. That judgment forms subject matter of challenge, at the instance of the DGFT, before us, in LPA 335/2015. 2. By a subsequent judgment dated 9 January 2018, the learned Single Judge sustained the challenge against the aforesaid DGFT Circular dated 21 October 2011, instituted by five other writ petitioners in WP (C) 222/2017 Good One Traders Pvt. Ltd. v. Directorate General of Foreign Trade, WP (C) 250/2017 BRD International v. Directorate General of Foreign Trade, WP (C) 257/2017 High Value Exim Pvt. Ltd. v. Directorate General of Foreign Trade, WP (C) 251/2017 Attire Designers Pvt. Ltd. v. Directorate General of Foreign Trade and WP (C) 259/2017 Welldone Exim Pvt. Ltd. v. Directorate General of Foreign Trade, following his earlier judgment dated 8 December 2014. This subsequent judgment dated 9 January 2018 forms subject of challenge, at the instance of the DGFT, in LPA 652/2018, LPA 657/2018, LPA 659/2018, LPA 660/2018 and LPA 661/2018. 3. As such, all these LPA....
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....heme. In implementing the said provisions of the scheme, in the event an order of prohibition, restriction or regulation is passed, the provisions of the 1962 Act [the Customs Act, 1962] mutatis mutandis would apply." 8. Chapter 3 of the FTP dealt with "Promotional Measures". Para 3.15, thereunder, dealt with the Focus Product Scheme ["FPS"], which was an Export Incentive Scheme aimed at augmenting of realisation of foreign exchange. Para 3.15.2 thereunder read thus: "3.15.2 Entitlement - Exports of notified products (as in Appendix 37D of HBPv1) to all countries (including SEZ units) shall be entitled for Duty Credit script equivalent to 2% of FOB value of exports (in free foreign exchange) for exports made from 27.08.2009 onwards. However Special Focus Product(s)/sector(s), covered Appendix 37D shall be granted Duty Credit equivalent to 5% of FOB value of exports (in free foreign exchange) for exports made from 27.08.2009 onwards." 9. Chapter 3 of the HBP deals with the FPS, and paras 3.9, 3.9.1, 3.9.2 thereof read as under: "3.9 Policy pertaining to FPS is given in Chapter 3 of FTP. Notified Products are listed in Appendix 37D. ....
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....ight of textured polyester filaments: Unbleached or bleached" with further SHs 54075111 to 54075490, (vi) SH 540761 covers "Other woven fabrics, containing 85% or more by weight of polyester filaments: Containing 85% or more by weight of non-textured polyester filaments" with further SHs 54076110 to 54076900, (vii) SH 540771 covers "Other woven fabrics, containing 85% or more by weight of synthetic filaments: Unbleached or bleached", with further SHs 54077110 to 54077400, (viii) SH 540781 covers "Other woven fabrics, containing less than 85% by weight of synthetic filaments, mixed mainly or solely with cotton: Unbleached or bleached" with further SHs 54078111 to 54078490 and (ix) SH 540791 covers "Other woven fabrics" with further SHs 54079110 to 54979400. 13. On 5 May 2010, the Joint DGFT wrote to the DGFT as under: "File No. Jt.DG/SRT/Policy/2010-770 Date: 05.05.2010 To Director General of Foreign Trade, Udyog Bhawan, Maulana Azaad Road New Delhi 110011. Kind Attn.:- Shri Tapan Mazumder, Jt. DG (Policy). Sub.:- Focus Product Scheme clarification for eligibility regarding....
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.... The Asstt. Commissioner of Customs, Moradabad while perusing the duplicate copies of the shipping bills from Customs record; observed that the party has actually exported "Dyed/Printed Fabrics made from 100% Polyester Filament/Texturised yarn with or without embroidery and/or without metallised yarn" and therefore, vide his letter no. C. No. VIII(30) Cust/ ICD/FPS/907/10/4136 dated 22/10/2010 requested this office to inform them whether the goods exported by the party are eligible for benefit of FPS under ITC (HS) code 5407 or not. A copy of letter received from Customs is enclosed herewith for your perusal. However, since ITC (HS) Code No. 54023910 shows the specific entry of Dyed & Printed Fabrics and Appendix 37D i.e. list of notified products under FPS do not show specific entry for textile product & do not show item-wise classification as per Chapter 54 of ITC (HS), this office considered the case and issued licence as per Sr. No.33 of Technical Textile Products. This was also confirmed by Chartered Engineer. You are requested to kindly clarify as to whether the goods exported by the party i.e. "Dyed/Printed Fabrics made from 100% Polyester Filament....
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.... Circular: Only 33 items are eligible to get FPS benefit under heading "Technical Textiles" as per Sr.No.33, of Table 4, Appendix 37D of HBPv1. The list of 33 items, so eligible, is in the Annexure to this Policy Circular and this list is applicable for export made with effect from 01.04.2011. (Hardeep Singh) Joint Director General of Foreign Trade [email protected] (Issued from F. No.01/91/180/547/AM11/PC-3) Annexure to Policy Circular No.42 (RE-2010)/2009-14 dated 21 October, 2011. ITC HS Codes Woven fabrics obtained from high tenacity yarn of nylon or other polyamides of polysters: Unbleached: 5407 10 11 Parachute fabric 5407 10 12 Tent fabrics 5407 10 13 Nylon furnishing fabrics 5407 10 14 Umbrella cloth panel fabrics 5407 10 15 Other nylon and polyamide fabrics (filament) Bleached: 5407 10 21 Parachute fabric 5407 10 22 Tent fabrics 5407 10 23 Nylon furnishing fabrics 5407 10 24 Umbrella cloth panel fabrics 5407 10 25 Other nylon and polyamide fabrics of filament yarn Dyed: 5407 10 31 Parachute Fabrics 5407 10 32 Tent fabrics 540....
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....ndents, could not have been restricted by the Policy Circular dated 21 October 2011 issued by the DGFT. 19. Moreover, submitted the respondents, the DGFT, in any case, did not have the power to make the circular retrospectively applicable from 1 April 2011, thereby disentitling the exporters who, on the basis of S. No. 33 in Table 4 in Appendix 37D to the HBP, had exported fabrics which fell within the description of "woven fabrics of synthetic filament yarn", in the expectation that they would be entitled to export incentives under the FPS. The impugned judgment 20. The learned Single Judge has, in the impugned judgment, upheld the challenge set up by the respondents, and has struck down the DGFT Policy Circular dated 21 October 2011. In doing so, the learned Single Judge has reasoned as under: (i) The power to frame the FTP, under the FTDR Act, vested with the Central Government. The role of the DGFT was to specify the procedure to be followed by importers and exporters for implementing the FTP and to clarify doubts in interpreting any provisions of the FTP, classification of items under the ITC (HS) Code or the HBP. (ii) The HBP had been framed by the ....
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....ions 5 and 6^2 of the FTDR Act did not empower even the Central Government to frame a policy with retrospective effect. This position also stood clarified in para 48 of the judgment of the Supreme Court in Asian Food Industries, which read thus: "48. The Delhi High Court, however, in our view correctly opined that the Notification dated 4-7-2006 could not have been taken into consideration on the basis of the purported publicity made in the proposed change in the export policy in electronic or print media. Prohibition promulgated by a statutory order in terms of Section 5 read with the relevant provisions of the policy decision in the light of sub-section (2) of Section 3 of the 1992 Act can only have a prospective effect. By reason of a policy, a vested or accrued right cannot be taken away. Such a right, therefore, cannot a fortiori be taken away by an amendment thereof." (viii) Where the Central Government itself did not have the power to amend the provisions of the FTP with retrospective effect, no such power, needless to say, could be conceded to the DGFT. It was only entrusted with the task of implementing the FTP. The position that retrospective or retro-ac....
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....pression "technical textiles". The restrictive interpretation that the Policy Circular dated 21 October 2011 accords, to the expression "technical textiles", would have to find place in Appendix 37D to the HOP itself, for it to apply. The scope of a broad entry provided in the HOP, with respect to the products covered by an export incentive scheme, cannot be reduced by way of a clarificatory circular. 28. Though the learned Single Judge has, in para 17, has interpreted the dash (-) between the words "technical textiles" and "woven fabrics of synthetics filament yarn", we do not think it is necessary to enter into any such syntactical exercise. It is clear to us that the use of the words "woven fabrics of synthetics filament yarn" is deliberate. In fact, the manner in which the DGFT Policy Circular dated 21 October 2011, as well as Mr. Beriwal before us, seeks to interpret S. No. 33 in Table 4 in Appendix 37D to the HBP, would render the words "woven fabrics of synthetics filament yarn" entirely redundant and would result in re-writing the entry as reading "technical textiles" alone. This is not an exercise that DGFT, or for that matter, even this Court can undertake. 29. It i....