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TMI Blog2016 (2) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... he said scheme to the appellant, has confirmed duty of customs to the extent of Rs. 11.29 crores (approximately) against them along with confirmation of interest and imposition of penalty to the extent of 100% of the duty involved. 2. Before we go into the facts involved in the present case, we would like to refer to the Target Plus Scheme as also the notification in question, whose interpretation is involved in the present case. The said Target Plus scheme was introduced in the Foreign Trade Policy (FTP) in the year 2005. The said scheme is available to all Star Export Houses, which have achieved a minimum export turn-over in free foreign exchange of Rs. 10 crores in the previous licensing year. The objective of the said scheme is to accelerate growth in exports by rewarding Star Export Houses who have achieved a quantum growth of exports. In terms of the said scheme, high performing Star Export Houses are entitled for a duty credit based on incremental exports substantially higher than the general annual export target fixed. In terms of the said scheme, the Star Export Houses entitled to the said scheme are allowed to use the duty credit certificates given by the Director G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich relates to the Target Plus Scheme, 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 group within the overall value of the entitlement certificate. However the said Para 3.2.5 was further amended by DGFT Public Notice No. 9(RE-2007)/2004-09, dated 21-6-2007 and the words "For the purpose of import entitlements under the 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" were deleted. As a result of the said amendment, the goods allowed to be imported were required to have a broad nexus with the products exported. For better appreciation of the said clauses, we reproduce the same :- Before amendment : 3.25. Target Plus Scheme I ..... ..... II Goods allowed to be imported under this scheme shall have a broad nexus with the products exported. For the purpose of import enti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and thereafter you are free to sell the resultant product(s) in the market. There is no export obligation attached with the resultant product(s) obtained after processing of goods imported under the scheme. You are required to maintain proper account of the utilization of imported goods and abide by the Actual Condition. Moreover there is no requirement of endorsing the name(s) of processor(s) in the DFCE/IPS scripts and you are at liberty to choose any processor to convert your goods into value added resultant product(s). Thus it is clarified that in your case, you are permitted to import Almonds (dry fruits) under the Target Plus Scheme and get the same processed/converted from any processor of your choice into possible resultant product(s) before selling in the domestic market. This clarification is issued with the approval of DG on file." The above circular was subsequently withdrawn by the DGFT and a new circular dated 8-5-2007 was introduced detailing as under :- "3. The matter has been examined in consultation with the Ministry of Law (MOL). After examination of the provisions of Para 3.7.6 of the FTP and Para 3.2.5(II) of the HBP, the MOL has opined that the FTP do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced below for better clarification :- 3. The Board had clarified vide Circular No. 21/2007-Cus., dated 21-5-2007, that the words 'Inputs' and 'use' may not be brushed aside and have to be in focus for the intended import. Together, these words indicate that the item sought to be imported should be an 'Input' in the manufacture of the exported products which is required for 'use' by the exporter or the supporting manufacturer, as the case may be. For this purpose, the intended Input must have a relationship with the export product. Whereas SION will act as a prima facie evidence of 'Inputs', the exporter is not debarred from satisfying the authorities that there is a 'broad nexus' between the intended import item as an 'input' with the export product, both falling within the same product group, it was also clarified that the holder of TPS certificate is permitted to Import an Item under the TPS and get the same processed into possible resultant products only if the same has a 'broad nexus' with the product group as an 'input' in the product exported for which the TPS benefit is sought. 6. As is seen from the above provisions of law, the Target Plus Scheme allows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of nexus but the same is contained in Para 3.2.5 of the HBP. As such, he submits that issue of nexus cannot be held to be a mandatory condition for availing the benefit of the said scheme but in any case even if the broad nexus has to be established, the appellant is covered by the said Para 3.2.5 of the HBP. By drawing our attention to the said paragraph as it stood before the amendment, the said broad nexus would be held to be there as long as both the items i.e. exported and the imported items fall under the same product group. He further submits that the expression "product group" nowhere stands defined and for considering the same, one has to go to the Input and Output Norms. By taking us to the said norms, he submits that rice and wheat as also the palmolein oil fall under the same product group E (Food Products). As such, he submits that as long as the exported and imported items fall under the same product group, they have to be held as having broad nexus, thus satisfying the condition as contained in Para 3.2.5 of the HBP. He further submits that the said para, prior to its amendment in the year 2007, specifically clarified and laid down a definition of broad nexus a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi High Court and inasmuch as they satisfied the conditions of both items falling under the same product group, the impugned order be set aside and appeal be allowed. 9.4 As regards the second objection raised by the Revenue about the condition of actual user, he submits that the goods have actually been used by them for getting the same manufactured from the supporting manufacturers, as job worker. As such, he submits that the said condition stands satisfied by them and in fact the adjudicating authority has also not adopted the said condition as a reason for rejecting their claim of exemption. The adjudicating authority has observed that even in terms of the notification in question, the merchant exporter is entitled to get the imported goods manufactured through the supporting manufacturers. However he has held that inasmuch as the activity of packing of palmolein oil in 1 kg. Packs, directly out of the pipelines or tanks would not be covered by the definition of manufacture, the benefit cannot be extended. By drawing our attention to Notification No. 32/2005-Cus., Condition No. 3, he submits that the only restriction is that the goods imported against the duty credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tribution system, they have satisfied the said condition of actual user in the notification. Accordingly he prays for setting aside the impugned order and allow the appeal with consequential relief to the appellant. 10.1 Countering the above stand of the learned advocate, learned AR Shri S.K. Singh, Commissioner appearing for the Revenue submits that the appellant has entered into agreement with Andhra Pradesh State Civil Supplies Corporation Ltd. for importing RBD Palmolein oil imported in bulk and subsequently packed into 1 litre pouches for onward supply through public distribution system. The said Palmolein oil imported by the appellant in liquid form was pumped directly from the vessels to the storage points of their supporting manufacturers M/s. Ruchi Infrastructure Ltd., M/s. Acalmar Oils and Fats Ltd. and their other job workers for further packing of the same in 1 litre pouches. He submits that in terms of the Target Plus Scheme, the importer can import items for THEIR OWN USE OR THAT OF SUPPORTING MANUFACTURERS as declared in Aayaat Niryaat Form. By drawing our attention to the provisions of Para 3.2.5 of HBP Vol. I, he submits that the goods imported under the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commodities (supra) wherein we also agree that the interpretation of the expression broad nexus undertaken by the learned Single Judge." It implies that the word nexus has been taken as referred to a larger group of similar goods and not from exported goods itself only. Meaning thereby, that even if the goods imported is not directly relatable to exported goods it should be relatable to similar goods which has been exported. The product group as discussed in the judgment of High Court is mentioned in Handbook of Procedure, Standard Input Output Norms (duty exemption scheme) wherein chapter E, which covers food products. There is general note to these input output norms which states (a) norms have been put with a view to facilitate determination of the proportion of various inputs which can be used or are required in the manufacture of different resultant products. In many cases resultant products and the inputs have been described in generic terms. The applicants shall, therefore, ensure that the goods sought for import and actually imported are those which are used/required in the export product. The items allowed for the import in the licence shall be co-related with the descri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the particular sub-group. (c) E-5 has export item as biscuits with or without dry fruits it refers to import item Maida/Atta/Flour/Sugar/Vegetable Cream/Skimmed Milk, Additives and other bakery ingredients like Emulsifier, Leavening agent, food flavour, packing materials, paper and paper board and relevant dry fruits. By no stretch of imagination the Listed import items in E-127 of Food product group i.e. crude mustard oil, caustic lye, phosphoric acid, citric acid, coal/coke, diesel can be imported against export of biscuits as listed at E-5. Because in the product group of food items there is separate heading for food items to be exported and separate heading for items to be imported which has broad nexus with the food items exported in their relevant sub-headings. The interpretation of the two Hon'ble High Court judgments cannot lead to an interpretation to import diesel coal/coke mustard oil/phosphoric acid etc. against export of biscuits which belong to E-5 of export product group and the items of import belonging to E-127 of the product group. Similarly the import of RBD Palmolein belonging to E-112 cannot be allowed against export of rice/whea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itre pouches from storage tanks cannot be termed as manufacture. Further the above matter has been examined vide C.B.E. & C. Circular No. 910/30/2009-CX, dated 16-12-2009 wherein it was clarified that activity of transferring the goods from tankers to smaller packs cannot be said to be manufacture. 11. We have considered the submissions made by both the sides and have gone through the impugned order of the Commissioner. 12. After considering the submissions made by both the sides and after going through the impugned order passed by the Commissioner and after examining the various provisions of the FTP as also the HBP and various circulars issued by the DGFT and the Customs, we note that the issue required to be decided in the present case is as to whether the import of Palmolein oil as against the export of rice and wheat is covered by the Target Plus Scheme introduced in the FTP and whether the appellant is entitled to pay duty on the imported goods, by using the duty credit certificates issued by the DGFT. As we have seen the Target Plus Scheme was formulated in Para 3.7.1 of the FTP for the year 2004-09 with an intention to accelerate the growth of exports, by reward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... broad nexus means that the imported items as also the exported items must fall under the same product group. However the said para was subsequently amended w.e.f. 21-6-2007 and the expression "relatable to the meaning of the broad nexus" was deleted. However the requirement of the imported goods to have broad nexus with the exported items remained. 16. As such, it has to be seen that whether the goods imported by the appellant under the said scheme has any broad nexus with the goods exported by them. The question remains as to how to arrive at the said broad nexus. Before we move further, we have to keep in mind that the expression used in the said paragraph is not only nexus but the same stands qualified by the expression 'broad'. As such, it is the broad nexus between the imported and the exported item which is to be looked into. After the amendment in Para 3.2.5 of the HBP, which explains that how the broad nexus has to be arrived at, there is no rule/section/para, anywhere providing any guidance as to how the broad nexus has to be established. 17. There are various circulars issued by DGFT as also by the C.B.E. & C. First circular of DGFT was issued on 1-8-2006 wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the inputs to be used in the manufacture of the exports is ultra vires the policy and as such the same was quashed. For better appreciation of the High Court's decision, we reproduce Paras 9 & 10 of the said judgment. 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 imported and the goods which are exported as stipulated in Paragraph 3.2.5 of the Handbook of Procedures. The requirement under the Handbook of Procedures is that for the purposes of import entitlements under the scheme, 'broad nexus' would mean goods imported with reference to any of the product groups of the imported goods within the overall value of the entitlement certificate. There is no dispute before the Court that this requirement under the Handbook of Procedures has been duly fulfilled. No submission to the contrary has been urged by Counsel for the Respondents. The fact that the goods imported were required by "the Petitioner for its own use has not been disputed before the Court by Counsel for the Respondents. But the case of the Respondents is that the requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 93/2004) has specifically defined materials to mean raw materials, components, intermediates, consumables, catalysts and parts which are required for manufacture of resultant products. No such requirement was incorporated in paragraph 3.7.6 of the Foreign Trade Policy. In other words, the condition that the inputs which are imported must be used in the export of the resultant product was not incorporated as part of paragraph 3.7.6 of the Foreign Trade Policy. In that view of the matter, it is not possible to accept the contention of the Respondent that the conditions which were imposed by the circular dated 8 May, 2007 were implicit in paragraph 3.7.6 of the Foreign Trade Policy. We, therefore, come to the conclusion that the conditions which were stipulated by the circular dated 8 May, 2007 were ultra vires paragraph 3.7.6 of the Foreign Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we hold, by following the Hon'ble Bombay High Court's decision, that it would be entitled to the benefit of Target Plus Scheme. 20. We may also refer to the Hon'ble Delhi High Court's decision in the case of Indian Exporters Grievance Forum & Anr. v. UOI & Ors. The Hon'ble High Court vide its order dated 5-8-2010 in Writ Petition No. 2497 of 2008 has considered an identical issue. After taking into account the entire development in the Target Plus Scheme as also various public notices issued by the DGFT, it was observed that even though the broad nexus requirement was justified keeping in view the overall objectives of the FTP, the further changes made by Circular dated 21-6-2007 to restrict the import to only those goods that constituted an input in the exported product is indeed impermissible. The condition is unduly restrictive and has the effect of negating the accrued benefit. The Court further observed that the subsequent Circular dated 8-5-2007 issued by the C.B.E. & C. and Public Notice dated 21-6-2007 issued by the DGFT, in the garb of clarifying the term 'broad nexus', unduly restricted the meaning of the inputs to only those inputs used in the manufacture of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It observed that the expression broad nexus used in HBP, which has the word broad prefixed with nexus, has to be assigned the meaning given by DGFT itself in their letter dated 1-8-2006. Accordingly the Court held that the nexus has to be maintained in terms of "product group" viz. the category of the products which is exported. If the import falls in the same category/group, it would be allowable. In relation to the exports of food items, it was clarified that it would be food category with reference to which the exporter was required to maintain nexus. Accordingly the Court held that the Circular dated 1-8-2006 of DGFT was in tune with the scheme of the FTP. Accordingly the order by the learned Single Judge of the Hon'ble Delhi High Court was upheld. 21. When we examine the issue in the light of the law declared by the Hon'ble Bombay High Court as also the Hon'ble Delhi High Court, it becomes clear that the imported items would have broad nexus with the exported goods as long as the same fall under the same product group. No contra decisions stand shown to us by the Revenue, in support of their plea that the imported items must be inputs for exported goods. 22. We al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be entitled for a duty credit based on incremental exports, substantially higher than the general annual export target fixed. The said objectives nowhere reflect upon the legislative intent that such incentives to the star export houses would be only in relation to the import of inputs which they would use in the exported products. In the absence of any such indication in the objective of the Target Plus Scheme, which is meant for promoting the exports, restrictive views cannot be adopted and obstacles cannot be raised, which would defeat the said objective of the scheme. 24. In view of the above discussion, we hold that inasmuch as the rice and wheat i.e. exported products and the palmolein oil i.e. imported item fall under the same product group i.e. E-Food products, they have to be held as having broad nexus thus satisfying the condition of Target Plus Scheme. 25. The Commissioner has also held against the appellant on the ground that the imported oil, which was subsequently packed by them into the retail packs of 1 kg., through their supporting manufacturers, does not satisfy the user condition. It is seen that while holding so, Commissioner has referred to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturers may or may not be covered by the definition of manufacture and as long as supporting manufacturers had undertaken some processes on the goods imported and such processed goods are sold by the merchant exporter, said Condition No. 3 stands fulfilled. In the present case, we note that the imported oil was further processed by the supporting manufacturers, by repacking the same into 1 kg. packs, which packs were sold by the appellant to the Government of Andhra Pradesh for public distribution. In the absence of any such condition in the notification that the activity undertaken by the supporting manufacturers must amount to manufacture, the introduction of such condition by the adjudicating authority, on his own, is beyond the accepted legal position. Though no support of any decision to hold that the legal provisions should be interpreted in the light of the language used therein and no extraneous condition can be introduced for the same is required but one such reference can be made to Hon'ble Supreme Court's decision in the case of Hemraj Gordhandas v. H.H. Dave [1978 (2) E.L.T. J350 (S.C.)]. 28. We also find favour in the appellant's alternative submissions that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing into existence of a new product inasmuch as 1 kg. packs which are retail packs cannot be compared to the liquid cargo available in the tankers. As such, we hold that even if the aspect of the manufacture has to be examined, the appellant seems to have satisfied the said test. 31. In view of the above, we hold that inasmuch as the appellant has established the broad nexus between the imported item and the exported item and has also satisfied the condition of the Notification No. 32/2005, they are entitled to avail the benefit of the Target Plus Scheme. Accordingly we set aside the impugned order and allow the appeal with consequential relief to the appellant. (Order pronounced and dictated in open Court) Sd/- Archana Wadhwa Member (Judicial) 32. [Per : Ashok K. Arya, Member (T)]. - Heard both parties in detail. 33. They have narrated the facts, which are also available on record for consideration. Here the main crux is the entitlement to the benefit of the Notification No. 32/2005-Cus., dated 8-4-2005 where along with other conditions, the main conditions which require discussion are : a. that the goods imported have to satisf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t (decided on 24-2-2012) in the case of UOI v. Indian Exporters Grievance Forum (supra), quotes the decision of the learned Single Judge passed in the Writ Petition No. 2497 of 2008 and states as under :- 29. In this backdrop, while quashing the impugned Circular dated 8-5-2007, Public Notice dated 21-6-2007 and further Circular dated 19-12-2007 as well as amended Para 3.4.5 of the HBP, the learned Single Judge has made following remarks : "27. Given the objective of providing an incentive to exporters, para 3.7.6 of the FTP can reasonably be interpreted to require an exporter to show that the goods imported should have a "broad nexus" with reference to any product group of the exported goods within the overall value of the entitlement certificate. The word "nexus" obviously refers to a larger group of similar goods (emphasis supplied) and not the very exported goods itself. Consequently the impugned circulars and notice that purported to "clarify" the term "broad nexus", i.e. the impugned circular dated 8th May, 2007, the Public Notice dated 21st June, 2007 and the further circular dated 19th December, 2007, travelled beyond what was envisaged by para 3.7.6 of the FTP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Biryani/Vegetable Pulao/Zeera Rice 1. Canvas/Jute 2. LDPE/HDPE/PP Granules 3. Printing Ink 4. Art Paper E-122 Refined Palmolein Oil (Edible grade) FFA content 0.25% 1. Crude Palmolein oil 2. Phosphoric acid 3. Citric acid 4. TONSIL Bleaching earth Above reproduction gives an indication that what could be the item(s) of import having a 'nexus' with the item(s) of export as per Foreign Trade Policy. It is understood that items of import given above would have some direct or indirect application or use either in production or manufacture or presentation, preparation, packing, marketing, sale etc. of the export item mentioned against the said import items. And this said long list is not a superfluous one, a large number of policy inputs certainly have gone into preparation and finalization of this by the Ministry of Commerce/DGFT and their staff. 36.1.1 From above, we find that against export of Rice/Wheat, one can import 1. Canvas/Jute 2. LDPE/HDPE/PP Granules 3. Printing Ink 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the items, within the category of 'Food Products', there are many product groups. One cannot say that for the purpose of imports against an export item under TPS (Target Plus Scheme), each and every item given in, from Sl. No. E-1 to E-128 could be covered by the wordings 'PRODUCT GROUPS'. 36.3 When we closely peruse the list of food products/items given in the Section (E) of FOOD PRODUCTS of the FTP (Foreign Trade Policy)-Input-Output Norms (Duty Exemption Schemes) 2004-09 (Vol. 2), among these 128 items (E-1 to E-128), one finds many product groups spread over these 128 serial numbers. For example, one finds here : * Confectionary/biscuits/chocolate (E-1, E-5, E-69) * Instant Food Mixes (E-2) * Pulses (Urad dal) (E-3) * Fresh fruits/vegetables (E-109) * Fruit slices/pickles/fruit drinks/fruit jams/fruit juices/ pulps/concentrates (E-11, E-16, E-17, E-18) * Different kinds of oils - Refined - Rice Bran Oil, Soyabean Oil, Palmolein Oil, Sunflower Oil, Mustar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Hon'ble Delhi High Court in the case of UOI v. Indian Exporters' Grievance Forum (supra), we can say that to claim the benefit of the Notification No. 32/2005-Cus., dated 8-4-2005 the goods imported (RBD Palmolein) has to be in the category of goods having a broad nexus with either the goods similar to the exports or with the export item(s) (Rice & wheat) themselves; this nexus (broad or even broader) has not been found in existence or been established. 36.5 It is pointed out that this Tribunal in the case of Gimpex Ltd. v. CC, Hyderabad decided on 6-6-2012, reported in 2012 (285) E.L.T. 193 (Tri.-Bang.) held that the wordings broad nexus cannot be so liberally construed as to mean that where two or more goods of different product groups are exported by an exporter for obtaining TPS certificate from licensing authority, he need not establish any nexus between some of exported goods and inputs imported under the Target Plus Scheme and that it is enough for him to establish a broad nexus between imported goods and any one of different products exported by him. It is pointed out that CESTAT, Bangalore have in the case of M/s. GIMPEX Ltd. for import item C.C. Copper rods and, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e respective Export Product Groups; (iii) .. ... ... (iv) .. ... ... (v) .. ... ... (vi) .. ... ... (vii) .. ... ... It is pointed out here that above order of this Tribunal did take note of the Hon'ble Delhi High Court's decision in case of UOI v. Indian Exporters Grievance Forum (decided on 24-2-2012) quoted earlier, where 'broad nexus' criteria used in the Handbook of Procedures (HBP) was found meaningful and also stated therein that the word 'broad' is prefixed with 'nexus'; the word 'nexus' has to be assigned same meaning. In other words, both the words i.e. 'broad' and 'nexus' have got their significance and cannot be ignored when the policy is to be interpreted. 36.6 It is to be emphasized here that the category of 'Food Products' under Section E of FTP (Foreign Trade Policy) : Input-Output Norms, it starts from Sl. No. E-1 and ends at Sl. No. E-128. This long list of Export-Import items from Sl. No. E-1 to E-128 does not mean that exporter of any food item can import any of the import items mentioned therein completely ignoring the wordings "broad nexus" and thus making these wordings 'broad nexus' superfluous as if they carry no meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut that Hon'ble Bombay High Court in the case of Essel Mining and Industries Ltd. v. UOI (supra) has referred to the case of export of iron ore under the Target Plus Scheme and import of Molybdenum concentrate for the manufacture of Ferro Molybdenum giving the benefit of Notification No. 35/2005-Cus. saying that there has been a broad nexus with the imports and exports in the said case. In the present case, the appellant exported rice/wheat and have imported RBD Palmolein. The learned advocate for the appellant says that both are under the category of food. But by describing and categorizing these two as just member of wide 'food group', one cannot say that these two have judiciously passed the test of 'broad nexus'. What is this 'broad nexus' between these two export items (rice & wheat) and the import item RBD Palmolein? Whether RBD Palmolein could in any way be connected to rice and wheat to become eligible as per the condition for benefit of Notification in question (No. 32/2005-Cus.)? Or has the import item got a connection or nexus with larger groups of goods similar to the export items? The appellant has not been able to establish any direct or indirect relation of 'RBD Palm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xus' by producing the necessary facts that there is certainly a direct or indirect relationship either in manufacture or production or presentation, preparation, marketing, sale etc. between these two import and export items. 40. Here there is no need to refer to the said condition of the Notification No. 32/2005-Cus. i.e. the condition of "use" and "own use" (i.e. goods are not to be transferred or sold), if the appellants have not passed the test of 'broad nexus' itself with reference to their export item and import item. However it is agreed that whatever imports the appellant made, they have made the required use, they were supposed to use as per the requirement of the Policy to claim benefit of Notification No. 32/2005-Cus. The import item namely RBD Palmolien, the appellant imported in bulk; they converted the same with the help of supporting manufacturers into the retail packings which they supplied to Andhra Pradesh Government Corporation for distribution under the Public Distribution Scheme. In other words, with reference to the condition "use" and "own use" (no transfer/sale), I agree with my learned colleague Member that the appellant passed the second condition; b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ember (Technical); and (iv) Whether the appeal has to be allowed as held by Member (Judicial) or to be rejected as held by Member (Technical). Sd/- Ashok Kumar Arya Member (Technical) Archana Wadhwa Sd/- Member (Judicial) 41. [per : Sulekha Beevi C.S., Member (J)]. - The difference of opinion was referred to me as per orders of Hon'ble President for resolving the following points :- i. Whether the appellants are covered by the Target Plus Scheme, read with the provisions of Handbook of Procedure, in respect of the imports of RBD Palmolein oil made by them as against the export of Rice and Wheat; ii. Whether the appellants have satisfied the criteria of broad nexus between the imported and exported goods; iii. Whether the disputed issue is covered by the decisions of the Hon'ble High Court of Bombay and the Hon'ble High Court of Delhi, as observed by Member (Judicial) or the same is distinguishable in the facts and circumstances of the case, as held by Member (Technical); and iv. Whether the appeal has to be allowed as held by Member (Judicia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose 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). Thus prior to the amendment deleting, the meaning of broad nexus was such that if the goods imported had reference to any of the product groups of the exported goods it would satisfy the criteria of broad nexus. To put it more clearly, if the export product falls within a particular group of SION book, the import of any input if listed in the relevant product group would satisfy the condition of broad nexus. This is seen clarified by issue of DGFT circulars dated 1-8-2006 which was subsequently withdrawn. 46. A new circular dated 8-5-2007 was introduced by DGFT wherein the clarification is to the effect that the item sought to be imported should be an input in the manufacture of the exported item required for use by the exporter or the supporting manufacturer. The C.B.E. & C. Circular No. 45/2007-Cus., dated 19-12-2007 is another circular issued clarifying the compliance of 'inputs', 'broad nexus' and 'use' to claim the benefit under Notification No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore the criteria of broad nexus was satisfied. The Hon'ble High Court observed that the condition that the inputs which are imported must be used in the export of the resultant product was not incorporated as part of Para 3.7.6 of FTP, and quashed the impugned circular. The Hon'ble Delhi High Court in UOI v. Indian Exporters Grievance Forum & Another [2013 (290) E.L.T. 481 (Del.)] while considering the appeal filed against the judgment of learned Single Judge has taken a similar view. These judgments have been elaborately quoted by both Member (J) and Member (T). The learned Member (T) has held that these judgments are not applicable to the facts of the case on hand. 50. I am afraid I am not able to agree with the view of my learned brother Member (T) that the decision of Essel Mining & Industries Ltd. (supra) cannot be applied to the present case and distinguishing the same on facts. In the present case, the appellant has exported rice/wheat and imported Palmolein oil on which the exemption of duty and TPS benefit is claimed. Both these products belong to the same product group (Food Product Group), and the petitioner contends to have satisfied the condition of "broad ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le High Court dismissed the appeal as devoid of merits, upheld the judgment of the Hon'ble Single Judge and also endorsed the view taken by the Single Judge in regard to the interpretation of broad nexus. The Hon'ble Delhi High Court also noticed the judgment in Essel Mining & Industries Ltd. case being an identical issue. 52. The learned AR submitted that in Essel Mining & Industries Ltd. case and also in the case of UOI v. India Exporters Grievance Forum & Anr. [2013 (290) E.L.T. 481 (Del.)], the issue of 'broad nexus' was not agitated or negated but the question considered was whether the inputs imported should find a physical form in the goods exported. According to him, even though rice/wheat and Palmolein oil fall in the same product group as mentioned in SION, they do not have any broad nexus. He adverted to Para 27 of the judgment of Delhi High Court where it is stated that 'nexus' obviously refers to a larger group of similar goods and not the very exported goods itself. This contention has been emphasised by the learned Member (T). The learned AR explained that in the case of export of rice/wheat, the import of an item like fertiliser would fall within the broad nex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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