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2016 (7) TMI 628 - PUNJAB & HARYANA HIGH COURT

2016 (7) TMI 628 - PUNJAB & HARYANA HIGH COURT - 2016 (340) E.L.T. 32 (P & H) - Import of soda ash against Duty Free Import Authorization (DFIA) Scheme - Re-validation - exemption of anti-dumping duty - Reassessment of the ex-bond Bill of Entry - goods imported under the above pending clearance at ICD Ludhiana, with the petitioner unwilling to clear the goods without being extended the benefit of the DFIA scheme and the Customs authorities and the authorities under the Directorate General of For .....

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was held out by the respondent to the DFIA holders as well as, consequently, to the transferees thereof, that all benefits accruing under the said DFIAs read with the then existing FTP, HOP and DGFT Circulars etc would be available thereunder. It was on the basis of this promise, as held out by the respondent, that the petitioner invested considerable amounts in purchasing the said DFIAs from the original holders thereof in the belief that import benefits available to the said DFIAs at the time .....

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t of the import of Soda Ash by the petitioner by debiting the DFIA licence under Bill of Entry no. 7080616 dated 16.10.2014. - The prayer for granting exemption, so far as antidumping duty is concerned, is rejected - Decided partly in favor of petitioner. - CWP No. 12647 of 2016 - Dated:- 1-7-2016 - M. Jeyapaul And A. B. Chaudhari, JJ. Mr. Hari Shankar, Senior Advocate with Mr. Pawan Kumar, Advocate for the petitioner Mr. Sharan Sethi, Sr. Standing Counsel for the respondent ORDER M. Jeyapaul, J .....

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35 (RE: 2013)/2009-14, dated 30.10.2013, and (iv) Notification No. 90 (RE: 30)/2009-14, dated 21.08.2014, issued by the Ministry of Commerce, Government of India, or for reading down of the said Notifications/Public Notice/Circular, as to be applicable to licences issued under the Duty Free Import Authorization (DFIA) Scheme contained in Para 4 of the Foreign Trade Policy (FTP) 2009-14, after 01.08.2013. Consequent prayers, in the form of revalidation of the DFIAs No. 0310688209, dated 28.03.20 .....

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scheme and the Customs authorities and the authorities under the Directorate General of Foreign Trade (DGFT) (Respondents 1 to 3 in the writ petition) unwilling to extend, to the petitioner, the benefit of the said Scheme, the writ petition has been treated as urgent and heard finally, with the consent of all parties. 5. The DFIA scheme is one of the export promotion schemes contained in Chapter 4 of the Foreign Trade Policy, 2009-2014, and provides for duty free imports, by the holder of a lic .....

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D & R) Act, the Rules and Orders made thereunder, FTP and terms and conditions of any Authorisation granted. All imported goods shall also be subject to domestic Laws, Rules, Orders, Regulations, technical specifications, environmental and safety norms as applicable to domestically produced goods. No import or export of rough diamonds shall be permitted unless accompanied by Kimberly Process (KP) Certificate as specified by Gem and Jewellery EPC (GJEPC). 2.8 Every Authorisation shall be vali .....

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cheme. Our Duty Remission Scheme enables post export replenishment/remission of duty on imports used in export product. Duty Remission Schemes consist of (a) Duty Entitlement Pass book (DEPB) Scheme and (b) Duty Drawback (DBK) Scheme. 4.1.11 Holder of Advance Authorisation, Advance Authorisation for Annual Requirement and Duty Free Import Authorisation intending to source inputs from indigenous sources/State Trading Enterprises, in lieu of direct import, as option to source them either against A .....

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for an ARO or Invalidation letter, availed of the facility of Back-to-Back Inland Letter of Credit in accordance with the procedure specified in HBP v1. 4.1.13 Prohibited items of imports mentioned in ITC (HS) shall not be imported under Advance Authorisation/DFIA. Further items reserved for imports by STEs cannot be imported against Advance Authorisation/DFIA. However those items can be procured from STEs against ARO or Invalidation letter. STEs are also allowed to sell goods on High Sea Sale b .....

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) shall not be exported under Advance Authorisation/DFIA scheme. Export of restricted items shall be subject to all conditionality is requirements of Export Authorisation or permission, as may be required, under Schedule II of ITC (HS). 4.1.14 In case of an Advance Authorisation, drawback shall be available of 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 .....

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ce, transferability is endorsed, Authorisation Holder may transfer DFIA or duty-free inputs, except fuel and any other item (s) notified by DGFT. However, for fuel, import entitlement may be transferred only to companies which have been granted authorisation to market fuel by Ministry of Petroleum and natural gas. 6. As mentioned in para4.2.6 of the FTP, already extracted herein above, para 4.36A of the Handbook of Procedures (HOP), issued under the FTP and containing the procedures for implemen .....

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re sought to be transferred after fulfillment of E.O. Clearly, therefore, transferability of the DFIA would be endorsed, by the DGFT, only after Export Obligation was fulfilled. It is an admitted position, in the present case, that the DGFT endorsed both the DFIAs transferable, in the case of DFIA dated 28.03.2011 on 10.07.2013 and in the case of DFIA dated 13.04.2012 on 28.09.2015. 7. The two DFIA Licenses,dated 28.03.2012 and 13.04.2012, involved in the present case, were originally issued to .....

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having been completed thereby, are not disputed either in the counter-affidavit filed by the respondents, or during the course of oral submissions made before this Court. 8. The list of items permitted to be imported, duty free, under the said DFIAs, included Soda Ash, as per the amendment sheets, attached to the said licence. There is also no dispute on the fact that the Standard Input and Output Norms (SION) issued by the Central Government under the FTP also permit such import of Soda Ash aga .....

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pect of the export items covered by the DFIA issued to the petitioner. 11. Condition 4 of the Terms and Conditions attached to the DFIAs required the export obligation to be fulfilled by the DFIA holder, as per the terms and conditions specified in the FTP, 2009-14 and the HOP 2009-14 and guidelines issued by the DGFT from time to time. 12. Condition 12 of the DFIAs stipulated that all conditions of FTP and HOP and ITC (HS) Classification, as amended, would be applicable unless specifically disp .....

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g ex-bond B/E dated 16.08.2014. 15. Vide letter dated 21.01.2016,Respondent No 4 directed the petitioner to pay full duty on the goods, thereby denying to it, the benefit of duty free clearance under DFIA. This was, apparently and avowedly, because of the following Notifications/Circular/Public Notice, issued by the Ministry of Commerce, through the DGFT: (i) Notification No 31 (RE-2013)/2009-2014, dated 01.08.2013, (ii) Policy Circular No 03 (RE-2013)/2009-2014, dated 02.08.2013 (iii) Public No .....

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s para 4.2.3 of FTP made paras 4.1.11, 4.1.12, 4.1.13 and 4.1.14 of the FTP applicable to DFIA holders, the impugned Notification dated 01.08.2013 supra amended para 4.2.3, by making DFIAs also subject to para 4.1.15 of the FTP, which itself was inserted only by the said Notification dated 01.08.2013. The said para 4.1.15 stipulated that, wherever the SION permitted use of generic input or alternative inputs, unless the name of the specific inputs got indicated/endorsed in the relevant Shipping .....

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horization and that inputs actually imported must be used in the export products , further clarifying that this has to be established in respect of every DFIA. 18. The impugned DGFT Circular dated 02.08.2013 stipulated that, in view of Notification No 31 dated 01.08.2013 supra, the earlier policy Circular No 30 dated 10.10.2005 becomes infructuous and hence stands withdrawn and reiterated that duty free import of inputs, under the schemes in Chapter 4 of the FTP, would be guided by Notification .....

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le before 01.08.2013, in all other cases, even where the export was fully or partially completed before 01.08.2013, corresponding imports would be allowed subject to an undertaking from the DFIA holder that only inputs which had been actually used in the product already exported would be imported. 20. The impugned Notification, dated 21.08.2014 amended para 4.1.15 of the FTP, as inserted by Notification dated 01.08.2013 supra, by stipulating that the quantities or inputs permitted for import wou .....

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ce on the date of issuance of the DFIAs themselves. Additionally, he has emphasised the impossibility of compliance with the conditions stipulated in the impugned Notifications, Circular and Public Notice, which require specifications to be inserted in the Shipping Bills whereunder the exports, in fulfilment of Export Obligation, are made and, further, imports, only of such items, to be effected, as were used in the manufacture of the export product, irrespective of the SION norms. He submits th .....

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ing in the FTP, HOP and in the instructions issued by the DGFT in this regard, on or before the date of issuance of the DFIAs. DFIAs issued prior to 01/08/2013, in other words, could not, according to the learned Senior Counsel, be subjected to conditions and limitations which came into being thereafter, in the impugned Notifications/Circular/Public Notice. The doctrine of promissory estoppel is also pressed into service, in this regard. 22. While learned Counsel appearing for Respondent No 4 do .....

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e of DFIAs, by importing inputs which had nothing to do with the export product, had been going on, which, according to him, was contrary to the very ethos of the DFIA Scheme. He has also sought to place reliance, in this regard, on the judgement of the High Court of Bombay in Writ Petition No 9955 of 2013 (Sevantilal& Sons v U.O.I.) which, according to them on the substantially similar issue. 23. We have bestowed our anxious consideration to the submissions made by the petitioner and by Res .....

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ant shipping Bill and these inputs, so endorsed, matched the description in the relevant Bill of entry, the concerned Authorisation will not be redeemed. In other words, the name/description of the input used (or to be used) in the Authorisation must match exactly the name/description endorsed in the shipping Bill. At the time of discharge of export obligation (EODC) or at the time of redemption, RA shall allow only those imported which have been specifically indicated in the shipping Bill. (Emp .....

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ce of the said DFIAs. It would be impossible, therefore, for any additional indication/endorsement to be entered in the Shipping Bills whereunder the exports had already been effected. Clearly, therefore, requiring the holder or the transferee of the DFIA, which was issued on post-export bases, to comply with para-4.1.15 as inserted by the above-mentioned impugned Notification dated 01/08/2013, would amount to insisting on an impossibility. On the face of it, therefore, insistence on the said re .....

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This has to be established in respect of every Advance Authorisation/DFIA. (Emphasis supplied) 27. It has been emphasized, by the learned Senior Counsel appearing before us on behalf of the petitioner - and, we feel, rightly - that the italicized words, in para-4 of the impugned Notification dated 01/08/2013, are absurd, and reflective of total non-application of mind in issuance of the said Notification. Significantly, we find the same absurdity reflected in para-2 of the consequent impugned P .....

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his Notification: Quantity of input to be allowed under Advance Authorisation / DFIA shall be in proportion to the quantity of input actually used / consumed in production. 28. How an importer could be required only to import inputs which have actually been used in products which already stand exported. SION norms are notified to prescribe permissible inputs against any export product. The DFIA is issued on such standard basis. It cannot be argued that what is contemplated by these clauses is on .....

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to India. To say the least, such requirement is manifestly absurd, and it s very incorporation, in the impugned Notification and Public Notice, reflective, as the learned Senior Counsel has correctly emphasized, of total non-application of mind, on the part of the authorities issuing the said Notification/Public Notice. 29. Indeed, on the face of it, it appears that these covenants, by their very nature were never intended to cover the cases of post-export DFIA or transferees of such DFIAs. Else .....

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ither Section 5 of the Foreign Trade (Development and Regulation) Act, 1992, nor para 1.2 of the FTP, whereunder the impugned Notifications dated 01/08/2013 and 21.08.2014 purport to have been issued, allow retrospective divesting, by any newly added provision, of the rights already available to the Licence holder /subsequent transferee, of the DFIA. It is well settled that the power to legislate retrospectively is not inherent, and has to be specifically conferred by statute no such power seems .....

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s issued to the petitioner also stated they would be governed by the extent FTP, HOP and guidelines issued by the DGFT. Significantly, the words used in the said clause are as amended and not as amended from time to time. In any event, the provisions of the FTP, HOP, Notifications, Public Notices and guidelines issued by DGFT as amended till the date of issuance of the DFIA, would govern the DFIAs during their entire life. 32. The same position stands reflected in para 4.2.2. (b) of FTP, as amen .....

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did exist in the case of Advance Authorizations, in para 4.1.7 of the FTP, which read thus: Advance Authorisation shall be issued in accordance with Policy and procedure in force on Authorisation issue date. There is no reason to believe that the framers of the FTP intended the FTP to apply differently, in the case of the DFIA Scheme, as compared to the Advance Authorisation Scheme, especially in view of para-4.1 of the FTP, which already stands extracted herein above, and which parenthesize th .....

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SION. This guideline, therefore, would govern the availability of import benefits under the subject DFIA during their lifetime. 34. Details of exports made in respect of subject DFIAs make it clear that even prior to issuance of the DFIAs exports had already taken place. Export Obligation Discharge Certificates (EODCs) in respect of the said DFIAs were also issued by the DGFT. This fact of discharge of Export Obligation also stands acknowledged by the DGFT by making endorsement of transferabili .....

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from the principle of promissory estoppel, inasmuch as, at the time of issuance of the DFIAs, it was held out by the respondent to the DFIA holders as well as, consequently, to the transferees thereof, that all benefits accruing under the said DFIAs read with the then existing FTP, HOP and DGFT Circulars etc would be available thereunder. It was on the basis of this promise, as held out by the respondent, that the petitioner invested considerable amounts in purchasing the said DFIAs from the or .....

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FT Circular dated 02.08.2013 is also, consequently, illegal, insofar as it makes the Notification dated 01.08.2013 (supra) applicable to all imports effected under the DFIA scheme thereafter. 38. Insofar as Notification dated 21.08.2014 is concerned, again, the stipulation in the newly introduced clause (b) in para 4.1.15 of the FTP, to the effect that proportion of inputs actually used or consumed in the production of export products, shall be clearly indicated in the S/Bs cannot be made applic .....

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0. Any other interpretation would also render the statutory SION norms a dead letter. DFIA is issued in terms of the SION norms. Duty free import benefits on all items referred to in the said licences as per the SION as on date of its issuance have, therefore, to be guaranteed to the licence holder as well as to all bonafide transferees thereof. Such benefit cannot be whittled down and truncated on the basis of any notification or executive instructions that may be subsequently issued after issu .....

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s, dated 11.09.2009. These were, in turn, provoked by the amendment of the FTP, by introducing a provision to the effect that exemption from anti-dumping duty would be available on actual user basis only, before endorsement of transferability. It was in this context that the petitioner, in that case, contested its right to avail the benefit of exemption from anti-dumping duty. It specifically recorded in para 38 as follows- 38. Equally, we are not required to consider whether any subordinate leg .....

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, of the DFIA licence issued on post-export basis. This would be contrary to the very ethos of the DFIA scheme itself, and not sanctioned by any of the provisions thereof. 42. Although we are of considered opinion that in absence of any power of amendment with retrospective operation, any subsequent issuance of any notification or instructions by Central Government or any other authority would not divest, the licence holder or the transferee, of the benefits promised on the date of issuance of D .....

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sic customs duty. 43. It is pointed out in the petition that despite absence of any power under section 5 of the FTDR Act, 1992 for any retrospective amendment, several such amendments / instructions are being issued and are being arbitrarily applied in a retrospective manner. Some notifications of such nature are already struck down such as DGFT Notification No. 4 (RE:2013)/ 2009-14 dated 18.04.2013 withdrawing deemed benefits for supplies to Non-Mega Power Projects - Hon ble High Court of Guja .....

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ue to the actions of the Respondents the DFIAs could not be utilised by the petitioner. The Hon ble Supreme Court in the matter of Sandeep Exports Ltd., 2004 (9) SCC 128 had directed the Respondents to issue certificate for the purpose of revalidation of expired licenses due to disputes raised by the department. We are satisfied that due to the impugned invalid notifications / Public Notice / Circular, licenses could not be utilised by the petitioner. The petitioner cannot be expected to present .....

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