TMI Blog2002 (10) TMI 485X X X X Extracts X X X X X X X X Extracts X X X X ..... Court allowed these appeals only on the ground of territorial jurisdiction . Following is the operative part of the judgment : For the reasons stated above, these appeals succeed and the same are hereby allowed. The impugned judgment is set aside. We further direct that Special Civil Application Nos. 3282/99 and 3279/99 filed by the respondents are hereby directed to be transferred to the High Court of Madras at Chennai forthwith and on receipt of the papers, we request the Chief Justice of the High Court of Madras to place them before an appropriate Bench for disposal in accordance with law. We are also of the opinion that since the parties have already undergone one round of litigation before the High Court at Ahmedabad and thereafter in these appeals before us, it is appropriate to request the High Court to dispose of these appeals as early as possible. The appeals are, accordingly, allowed. In pursuance of the above direction, the matters were sent to this Court which were re-registered as W.P. Nos. 4320 and 4321 of 2002 and have now been placed before us for disposal by the Hon ble Chief Justice. 3. Though the controversy involved in these writ petitions is extremely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of giving fillip to the exporters and thereby earn more foreign exchange for the country. Under Chapter VII of the EXIM Policy, a Duty Exemption Scheme was framed. 5.3.1 Paragraph 48 of the said scheme speaks about Advance Licence and describes it to be a licence granted for import of inputs without payment of basic customs duty. It further provides that such licence shall be subject to the fulfilment of a time-bound export obligation and value addition as would be specified. Such advance licences are either value-based or quantity-based. In short, under this advance licence the goods could be imported with the obligation to use those goods or the value thereof for the purpose of exports. These licences were specific and while in case of a value-based advance licence, it specified the names and description of items to be imported and exported, the CIF value of imports, and the FOB value and quantity of exports and in case of quantity-based advance licence, it specified the names and description of items to be imported and exported, the quantity of each item to be imported or, if the quantity cannot be indicated, the value thereof, the CIF value of imports and the FOB value an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms duties on the imported goods. Payment shall be by a debit entry to be made in the Pass book by the designated authority. The export goods shall not be eligible for drawback on the inputs for which credit in the Pass book is taken. The import and export shall be made through the same port. Any goods which are not included in the Negative List of Imports or in the list of Sensitive Items may be imported under this scheme. The Pass book shall be valid for a period of two years from the date of issue and may be renewed from time to time. (emphasis supplied) 5.3.4 The standard input-output norms (SION) would be necessary to be seen for the present controversy. The norm regarding the fish products and more particularly Entry 7 therein would be relevant for our purpose. The relevant entry regarding export item and import item is re-produced hereunder : Duty Exemption Scheme I.O. Norms - Fish Products S. Export Item Import Item Value Remarks No. Quantity Quantity Allowed Addition % 1. Block Frozen Fillets 1 kg 1 Frozen Fish 2.50 kg 100 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Policy. Based on the standard input-output and value addition norms (referred to in Paragraphs 51 and 60 of the Policy), the Designated Authority will determine the basic customs duty deemed to have been paid by such an exporter and the said amount will be credited in the Pass Book. The exporter can utilise the credit so given for import of permissible items. The Pass book will be valid for a period of two years from the date of issue. However, any credit in the Pass book at the end of the period of two years may be utilised within a period of 12 months thereafter and any unutilised credit at the end of the period of three years shall lapse. ... ... ... After determining the applicable customs duties on such imports, clearance of imports will be permitted and the customs duties so arrived at will be debited in the Pass book by the Designated Authority. ... ... ... The exports and imports and the debit and credit entries will be permitted only to the holders of the Pass Book. However, the Pass book holder is free to sell the goods so imported. ... ... ... (emphasis supplied) 5.3.6 Paragraph 54 of the Policy and more particularly the last part underwent a slight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Import Items, viz. Vitamin Mixes at the rate of 227 kilos per metric ton. In short, petitioners claim that for every metric ton of the export made, they should be given the credit of the customs duty payable on 227 kilos of Vitamin Mixes. They claimed the rate of U.S. $ 36 per kilo. However, the customs authorities proposed that the credit should be granted by the respondents at the rate of U.S. $ 8 per kilo for Vitamin Mixes. It is significant to see here, at this stage there was no dispute regarding the quantity of 227 kilos for every metric ton of export. The dispute was only as regards the rate which, according to the petitioner, was U.S. $ 36 per kilo while according to the respondents, it was only U.S. $ 8 per kilo. An order to that effect was passed by the first respondent and the petitioners filed appeals before the Commissioner of Customs (Appeals) who allowed the appeals and accepted the petitioners claim for the credit at the rate of U.S. $ 36 per kilo. The matter was carried by the Department by way of appeal to the Customs, Excise and Gold (Control) Appellate Tribunal (in short CEGAT ) who ultimately passed the final orders and confirmed the order passed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y regarding the Vitamin Mixes which hitherto was a consolidated entry permitting the import of Vitamin Mixes/Mineral Mixes to the extent of 0.227 MT/MT was bifurcated and the permissible quantity under the new SION was Vitamin Mixes 0.027 MT and Mineral Mixes 0.200 MT. It seems that vide letter No. 3/36/97-98/P I, dated 25-5-1998, the customs authorities were advised not to allow the clearance of Vitamin Mixes beyond the quantity of 27 kilos per metric ton of export. A stand was, therefore, taken regarding the claims of the petitioners that in respect of the advance licences issued prior to 1-4-1997 also, the new SION should be made applicable meaning thereby that for the import of Vitamin Mixes, credit should be given only at the rate of 27 kilos for every metric ton of export of frozen Head-on/Headless Shrimps. Needless to mention that similar was the stand taken by the respondents before the Gujarat High Court. It was suggested, more particularly in Paragraph 6 of their reply affidavit, that 0.227 MT/MT of export product was the combined quantity allowed for Vitamin Mixes and Mineral Mixes. However, taking advantage of this grouping of quantities, some of the exporters/importers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ificant. In the earlier norms, there was nothing limiting the imports only to the Vitamin Mixes or only the Mineral Mixes. The quantity up to 0.227 kilos per metric ton could be imported in any proportion or even individually. The restriction was only the limit of 227 kilos per metric ton. When we see the amended entry (j), it becomes apparent that under the same now if the Vitamin Mixes are to be imported as against the exports that will be restricted only to 27 kilos per metric ton as against the export of 1 metric ton of frozen Head-on/Headless Shrimps. Similarly, the Mineral Mixes would be subject to the extent of 200 kilos per metric ton. The respondents insist and took a stand before the Gujarat High Court that it would be these amended norms which would be applicable even in respect of the exports which were made during the period of two years from 1-4-1995 to 31-3-1997. In short, the contention is that the petitioners if they want to claim the credit on the basis of Vitamin Mixes, it would be only to the extent of only 27 kilos as against the export of 1 metric ton of frozen Head-on/Headless Shrimps. It is on this issue that the parties are at loggerheads. 10. Learned Sen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... os of Vitamin Mixes and Mineral Mixes. The learned Counsel says that there would be no question of prior imports or even the subsequent imports as on the basis of the credit given the exporter could import any other goods, of course, with the exception of the goods included in the Negative List of Imports or in the list of Sensitive Items. The following sentence in the Pass book Scheme is very heavily relied upon by the Learned Senior Counsel, that being : Any goods which are not included in the Negative List of Imports or in the list of Sensitive Items may be imported under this scheme. (emphasis given) The argument, therefore, is that the SION is only meant for the calculation and there would be no necessity of importing the goods included in SION only. The learned Counsel, therefore, asserts that in the wake of proved exports by the petitioners, they were entitled to the matching credits in accordance with SION. 12. It is further pointed out that initially this was accepted by the respondents which would be clear from their reply-affidavit. The only dispute raised by the Department in this case was regarding the rate at which the credit was to be calculated, i.e. whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme to suggest that the subsequent SION was restrictive in nature and would thus apply to the earlier period also. The argument is that there is no hiatus between the factum of export and the entitlement of the credit based thereupon and, therefore, as soon as the exports were made during the currency of the Pass book Scheme, the credits on the notional imports as per the SION had become due as a matter of right. 14. As against this the learned Additional Solicitor General, Mr. V.T. Gopalan, appearing on behalf of the respondents tried to suggest that the Pass book Scheme being in the nature of a concession only, there was no question of any fundamental or vested right in the petitioners to claim the credit of customs duties. It was clarified that there was nothing to suggest any proportion between the Vitamin Mixes and the Mineral Mixes as per the old SION entries as they were bracketed together. The learned Counsel suggests that their being bracketed together would mean that the imported content had the combination of both the Vitamin Mixes and Mineral Mixes. The learned Counsel further suggests that since there was no specified division, it become necessary particularly in vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d norms. 17. In the language of Para 54, which pertains to the Pass book Scheme, there is a clear-cut indication to suggest that the credit should be calculated on the basis of the exports made and the calculation would be in terms of the SION. We will have to necessarily infer that the credits could have been calculated only on the basis of the norms as they were existing on the date of exports. A correct reading of Paragraph 54 and more particularly the third part thereof would suggest that there is no hiatus in between the exports and the consequent or the resultant entitlement of the credits. It is unthinkable that on the basis of the exports, the authorities could be allowed to wait for the period to end the existing policy and then to calculate the credit in the light of the new norms particularly when in the new policy there is no scope or mention or reference to the Pass book Scheme at all. If the Pass book Scheme was conspicuously absent in the new policy, one fails to understand as to how the authorities could be allowed to calculate the credits payable to the exporter under a non-existent Pass book Scheme. Therefore, on the basis of the language at least there does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petitioners in this case. 19. In this behalf, it may still be further seen that in the Pass book Scheme once the exports were made and the credits accrue and recorded by the competent authority in the pass book, on the basis of those credits any goods could be imported and even be sold. We have deliberately quoted extensively Para 54 of Chapter 7 of the Policy (see Para 5.3.3. supra) under which, there is a clear reference that any goods not included in the Negative List of imports or in the list of Sensitive Items could be imported on the basis of that credit. It is further to be seen that the relevant Paragraph 114 has also been quoted by us in Para 5.3.5. of this judgment which would suggest that the goods so brought on the basis of the credits earned on the basis of the exports made could even be sold. All these would suggest the unique nature of the Pass book Scheme and more particularly the fact that the scheme worked in praesenti. The language of these paragraphs, more particularly Para 54 and Para 114, which have been deliberately quoted by us, would give a complete idea that there was no necessity whatsoever for matching prior or subsequent imports or the exports ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the date of the filing of applications for Advance Licence whereas, the Department s view was that the norms which were applicable on the date of the licence could alone be relied upon by the exporter. That was also a case where the norms were changed to the detriment of the exporter and perhaps because of that it was claimed that the changed norms were not applicable. The Supreme Court held as quoted above and the observations would go to show that the norms which were there on the date of licence were alone to be considered. They being the changed norms in the facts of that case, the Supreme Court held that the amended norms would be applicable. In fact, this case was relied upon by the learned Additional Solicitor General to suggest that if the norms are changed, the revised norms would be applicable. In fact, according to us, this decision should support the petitioners case more than the department because of the observations made by the Supreme Court that the norms which were in force on the date of the licence would alone be applicable. In the present case also the same position is obtained inasmuch as during the pendency of the pass books issued to the petitioners, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitlement of the petitioners to the credit earned on account of the exports made during the pendency of the pass books granted to them could not be set at naught by relying on the subsequent norms which came into effect only from 1-4-1997. The Bombay High Court had also relied upon the aforementioned decision of S.B. International Limited case. We also respectfully agree with the learned Judges of the Bombay High Court and would choose to follow the same course as they did. 23. Once the finding regarding the applicability of the norms is in favour of the petitioners in the sense that once it is held that the subsequent norms could not be relied upon by the Department for setting at naught the credit claim of the petitioners, there would be really no necessity to proceed further in the matter. Learned Senior Counsel appearing on behalf of the petitioners also pointed out that in addition to this, the Department had admitted the case of the petitioners in respect of their quantity based entitlement at the rate of 227 kilos as against the export of 1 MT of frozen Head-on/Headless Shrimps. He also pointed out that in that the Department had read the entry correctly so as to give cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lighted these amendments in Para 5.3.6. (supra). In Paragraph 54 and more particularly the third part thereof, the import was described as deemed import at two places. From this, the learned Additional Solicitor General suggests that since the pass books were issued prior to 25-3-1997 when the amendments came into effect, there will be no question of any concept of deemed or notional imports and in order to be entitled to the credit, there would have to be actual imports alone. In short, the contention is that the petitioners are not entitled to any credit whatsoever on the basis of their exports unless they prove to the satisfaction of the competent authority that they have actually imported the goods as per the SION meaning thereby that there will be no question of credits on the basis of notional imports. 26. As against this, the learned Senior Counsel, Mr. P. Chidambaram, contended that apart from the fact that such case is being pleaded for the first time, the import of the word deemed was completely being misinterpreted. According to the learned Counsel, even in the absence of the words deemed imports , there could be no change which would be apparent from the lang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book holder, the designated authority has to calculate the basic customs duty payable on the imports in the light of the SION and has to credit the said amount in the pass book. The subsequent sentence clarifies the position further, which is to the following effect : Upon imports being made by the Pass book holder, the credits may be utilised to pay the basic and additional customs duties on the imported goods. Now, if the idea was that of the matching prior imports such sentence would never have been there. The matters do not stop there but the further sentence clarifies the real scope of the Pass book scheme. It is to the following effect : Any goods which are not included in the Negative List of Imports or in the list of Sensitive Items may be imported under this scheme. This gives a direct blow to the argument of the learned Additional Solicitor General that the exporter has to first satisfy in relation to the prior import of the goods as per SION only. The goods to be imported need not be the goods which are mentioned in SION and under the scheme any goods can be so imported. Not only this, but, such goods can be sold also. This becomes clear from the language of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y amendment, the word deemed came to be added in the Pass book Scheme also, more particularly in the third part of Paragraph 54. We have quoted the same paragraph in Paragraph 5.3.6 of this judgment. From this, the learned Additional Solicitor General contends that at least from the date of the issue of the pass book, i.e. from 25-11-1995, up to 25-3-1996 the deeming provision was not available and, therefore, at least insofar as that period is concerned, the petitioners will have to prove the actual imports. In our opinion, the argument is wholly incorrect. It is therefore that we have shown that though the word deemed before the word import was absent in the unamended Paragraph 54 of the Policy, the idea of deemed payment of customs duty was very much present even in unamended Paragraph 114 of Chapter VII of the Handbook of Procedures, Vol. 1, which we have quoted above. Once the concept of notional duty or a deemed duty on the notional imports or deemed imports becomes available even from the unamended Pass book Scheme, there would be no question of holding against the petitioners merely because the word deemed came to be added before the word imports . Once the amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xus between the imports and the exports) was not applicable and could not be made applicable to the Pass book Scheme which was entirely different and based on only the notional imports. 31. In view of all that has been stated above, it must be said that the writ petitions deserve to be allowed. In these cases, the pass books were issued on 25-11-1995 and throughout the relevant period the petitioners were entitled to the credit on the basis of 227 kilos of Vitamin Mixes as against the export of 1 MT of frozen Head-on/Headless Shrimps as per the SION. The petitioners are claiming the credit of basic customs duty on the basis of the exports made up to 31-3-1997 in respect of the Vitamin Mixes in accordance with the afore-mentioned SION. The petitioners would be entitled to the same. 32. It is pointed out at this juncture that by interim relief, the petitioners were granted some benefits and though initially some bills were calculated on the basis of 227 kilos at the rate of U.S.$8 per kilo, after the decision of the CEGAT few bills were corrected. The remaining bills, however, have not been corrected by the Department. The Department is directed to pass appropriate orders in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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