TMI Blog2012 (5) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... 1992. The policy cannot be amended by an administrative circular. - the circular does not in this case supplement the policy or fill up an interstitial space. - the conditions which were stipulated by the circular dated 8 May 2007 were ultra vires paragraph 3.7.6 of the Foreign Trade Policy and Customs notification dated 8 April 2005 (Customs Notification 32/05). - Writ Petition No. 4499 of 2007, - - - Dated:- 14-6-2011 - D.Y. Chandrachud and Anoop V. Mohta, JJ. S/Shri V. Sreedharan with Prakash Shah, i/b PDS Legal, for the Petitioner. S/Shri Pradeep S. Jetly with Rajinder Kumar, for the Respondent. [Judgment per : D.Y. Chandrachud, J. (Oral)]. The Petitioner has been recognized as an Export House by the Director General of Foreign Trade in the Union Ministry of Commerce. The Petitioner engages in the manufacture of Ferro molybdenum, which falls under Heading 72.02 of the Central Excise Tariff, at its factory at Vapi. Roasted molybdenum concentrate is the principal raw material and input in the manufacture of Ferro molybdenum and is imported by the Petitioner. The Petitioner is also engaged in the mining of iron ore. Iron ore is sold within India and is expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... importable could be imported. Moreover, importers could import inputs only for their own use or that of supporting manufacturers . The Handbook of Procedures listed out in paragraph 3.2.5 the nature of goods which were allowed to be imported under the Scheme. Paragraph 3.2.5 requires a broad nexus with the products exported. The relevant provision in the Handbook of Procedures was to the following effect : II. Goods allowed to be imported under this scheme shall have a broad nexus with the products exported. For the purpose of import entitlements under this Scheme, broad nexus would mean goods imported with reference to any of the product groups of the exported goods within the overall value of the entitlement certificate. (emphasis supplied). The Standard Input-Output Norms for Engineering products in the Handbook of Procedures contain Entry C-478 which relates to ferro molybdenum and Entry C-1932 which relates to iron ore including processed iron ore. 4. In exercise of the powers conferred by Section 25 of the Customs, Act, 1962 the Union Government issued an exemption notification (32 of 2005) on 8 April 2005 to provide for an exemption from the payment of customs d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07. The circular records that it had been brought to the notice of the Ministry by the trade that some exporters had obtained duty credit certificates against exports of rice and using these certificates, they had imported almonds which, after removal of shells, had been sold in the market without payment of duty. As dry fruit/almonds cannot be used in the processing or manufacture of rice, it was alleged that the condition of broad nexus stipulated in the Handbook was not fulfilled. Moreover, it was alleged that the actual user condition specified in the policy and in the Customs notification was also violated because almonds, after removal of shells were being sold in the open market. It is alleged that the act of importation of almonds which were neither inputs nor capital goods in relation to rice would be a misuse of the Target Plus Scheme. The circular states that the opinion of the Union Ministry of Law was sought on the interpretation of the terms contained in paragraph 3.7.6 of the Foreign Trade Policy. The circular elaborates that while interpreting the expression inputs and use in paragraph 3.7.6 of the Policy, the Ministry was of the following opinion : Together ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as an additional incentive which was given to accelerate the growth of exports. The submission of the Respondent is that the expression inputs in paragraph 3.7.6 implies that the products which are imported must be inputs in the manufacture of those goods which are exported and in respect of which benefit is claimed under the Target Plus Scheme. In the affidavit in reply, this submission has been reiterated. The contention of the Respondent in the reply is that there should be one to one nexus between the export product and the imported inputs . Paragraph 3.2.5 of the Handbook of Procedures made, according to Counsel for the Respondent, a relaxation in the Foreign Trade Policy. The circular restores the intendment of the policy. According to the Respondent, the Petitioner obtained a Target Plus Licence against the export of iron ore and would not be entitled to utilise the duty credit against the import of molybdenum concentrates which is not an input in the manufacture of iron ore. 9. Now, it is not disputed before the Court that the goods which have been imported by the Petitioner satisfy the requirement that there should exist a broad nexus between the goods which are imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst time by the circular dated 8 May 2007. 10. The Foreign Trade Policy, it is well settled, is referable to the provisions of Sections 4 and 5 of the Foreign Trade Development and Regulation Act, 1992. The policy cannot be amended by an administrative circular. The circular does not in this case supplement the policy or fill up an interstitial space. The circular imposes a substantive condition at variance with the policy. Where the Central Government has considered it necessary to impose a requirement of physical incorporation, such a condition has been made expressly in other provisions of the Foreign Trade Policy. For instance, in relation to advance plus licences governed by the duty exemption scheme, it has been stipulated that an advance licence is issued to allow duty free importable inputs which are physically incorporated in the export products (paragraph 4.1.3 of the Foreign Trade Policy for April 2005). Similarly, while issuing an exemption notification in relation to imports covered by advance licences, the Union Government in its notification dated 10 September 2004 (Notification 93/04) has specifically defined materials to mean raw materials, components intermediat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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