TMI Blog2014 (9) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... ance Authorization was made by the petitioner. The DGFT could also not be expected to sou moto make any amendment in the Advance Authorization which had been issued to the petitioner; the necessary figures of exports for making such amendment had also not been furnished by the petitioner along with its application. Given the scheme of the FT(D&R) Act, the Foreign Trade Policy and the role of DGFT, the Handbook of Procedures as notified by the DGFT is to specify the procedure for the purpose of carrying out the policy as formulated by the Central Government. Since the Foreign Trade Policy expressly provides that a status holder will have the privilege of exemption from providing a Bank Guarantee in respect of any scheme, the Handbook of Procedures - which is for providing the procedure in aid of the Foreign Trade Policy - cannot impose a condition which militates against the said Policy. - no need to furnish any bank guarantee - decided in favor of assessee. - W. P. (C) 5090/2013 & CM No. 11457/2013 - - - Dated:- 1-9-2014 - Hon ble Mr. Justice Vibhu Bakhru,JJ. For the Petitioner : Mr C. Hari Shankar with Mr. S. Sunil For the Respondents : Mr Sanjeev Narula, CGSC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner s claim for Advance Authorization based on the exports made in the year 2011-12 was not disputed as the stand of the respondents was that in the event the petitioner required an amendment in the Advance Authorization, the same could be amended under the Foreign Trade policy. 5. The learned counsel appearing for the respondents referred to paragraph 4.7.1 of the Handbook of Procedures, which specified the manner of computing the entitlement of an exporter for Advance Authorization. The learned counsel further drew the attention of this Court to paragraph 4.7.3 of Handbook of Procedures, which specifically provided that an applicant would be entitled to authorization in excess of the entitlement subject to furnishing of 100% bank guarantee to the Customs Authority to cover the exemption from Customs Duty. It was submitted that the impugned communication was in conformity with the said clause and the petitioner had been advised to submit the Advance Authorization for endorsement of the Bank Guarantee condition for the amount in excess of its entitlement. 6. The learned counsel further referred to the petitioner s application for the Advance Authorization, filed electro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... policy and may also, in the like manner, amend that policy. Section 6 of the FT(D R) Act contains provisions for appointment and functions of DGFT. The said Section is quoted below for ready reference: 6. Appointment of Director General and his functions. (1) The Central Government may appoint any person to be the Director General of Foreign Trade for the purposes of this Act. (2) The Director General shall advise the Central Government in the formulation of the export and import policy and shall be responsible for carrying out that policy. (3) The Central Government may, by Order published in the Official Gazette, direct that any power exercisable by it under this Act (other than the powers under sections 3, 5, 15, 16 and 19) may also be exercised, in such cases and subject to such conditions, by the Director General or such other officer subordinate to the Director General, as may be specified in the Order. 10. It is thus seen that the DGFT is appointed for the purposes of the FT(D R) Act and is responsible for carrying out the export-import policy that may be formulated by the Central Government. 11. In exercise of powers under Section 5 of the said FT(D R) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same cannot be faulted. The reference made by the learned counsel for the petitioner to Rule 8 of the Foreign Trade (Regulation) Rules, 1993 which provides for amendment of any licence to rectify any error or omission therein is misplaced. Admittedly, no such application for amendment of the Advance Authorization was made by the petitioner. The DGFT could also not be expected to sou moto make any amendment in the Advance Authorization which had been issued to the petitioner; the necessary figures of exports for making such amendment had also not been furnished by the petitioner along with its application. 14. The only question that remains to be answered is whether the petitioner being a status holder under the Foreign Trade Policy is exempt from furnishing bank guarantees. The learned counsel for the petitioner had submitted that since Foreign Trade policy is framed under the FT(D R) Act which exempts the status holders from furnishing Bank guarantees under any scheme in the FTP the same would also include exemption from furnishing bank guarantees under the Advance Authorization Scheme. 15. The duty exemption and remission schemes are provided under Chapter IV of Foreig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orisation shall be as prescribed in HBP v1. xxxx xxxx xxxx xxxx 4.1.14 Admissibility of Drawback In case of an Advance Authorisation, drawback shall be available for any duty paid material, whether imported or indigenous, used in goods exported, as per drawback rate fixed by DoR, Ministry of Finance (Directorate of Drawback). Drawback allowed shall be mentioned in Authorisation. 16. The Foreign Trade Policy specifically provides for certain promotional measures under the Chapter titled Promotional measures in DGFT . The recognition of export and trading houses is a measure which falls within the said Chapter. Paragraph 3.10 of Chapter 3 of the Foreign Trade Policy contains provisions for export and trading houses. Paragraph 3.10.2 of the Foreign Trade Policy provides for Export and Trading Houses to be categorized on the basis of their export performance. Paragraph 3.10.4 provides for the privileges available to an export and trading house status holder and is quoted below for ready reference:- 3.10.4. Privileges of Export and Trading House Status Holders A Status Holder shall be eligible for privileges as under: (i) Authorization and Customs Clearances for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Procedures expressly provides that an authorization in excess of the entitlement would be permitted on furnishing of a bank guarantee. Paragraph 4.7.3 of the Handbook of Procedure provides for furnishing of bank guarantee to the Customs Authorities to cover exemption from custom duties. The relevant paragraph reads as under:- 4.7.3 Authorisation in Excess of Entitlement An applicant shall be entitled for authorisation in excess of entitlement mentioned in paragraph 4.7.1 subject to furnishing of 100% Bank Guarantee to Customs authority to cover exemption from customs duties. A specific endorsement to this effect shall be made on authorization. 19. The purpose of providing for a bank guarantee to Custom Authorities is to mitigate the risks against a default by the exporter and to ensure that in the event the exporter fails to perform its obligations i.e. unable to export goods of a value higher than the imports plus the minimum value addition required, the Custom Authorities can recover the duty in respect of the imports which were cleared without payment of duty. It is, thus, clear from the context that the condition of providing bank guarantee by a status holder in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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