TMI Blog2016 (2) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... y are entitled to avail the benefit of the Target Plus Scheme. Appeal allowed - decided in favor of appellant. - C/1750/2010-DB - Final Order No. 20188/2016, dated 4-2-2016 and Interim Order No. 156/2015, dated 29-7-2015 - Dated:- 4-2-2016 - Smt. Archana Wadhwa, Member (J) and Shri Ashok Kumar Arya, Member (T) Third Member on Reference : Smt. Sulekha Beevi C.S., Member (J) Shri G. Shivadass, Advocate, V. Lakshmikumaran and V. Sridharan, for the Appellant. Shri S.K. Singh, Commissioner (AR), for the Respondent. ORDER [Order per : Archana Wadhwa, Member (J)]. - After hearing both the sides duly represented by Shri G. Shivadass, Advocate for the appellant and Shri S.K. Singh, Commissioner (AR) for the Revenue for a number of days, we find that the appellant is a public sector undertaking engaged in the activity of imports and exports of various items. The dispute in the present appeal relates to the applicability of the Target Plus Scheme, introduced by the Government in the year 2005 and implemented vide Notification No. 32/2005-Cus., dated 8-4-2005. The lower authority, by denying the benefit of the said scheme to the appellant, has confirmed duty of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he exports made during the financial year 2003-04. Subsequently the said notification was being amended from time to time increasing the period of applicability of the same. The said duty credit certificate so issued to a Star Export House was required to be produced before the Customs House Officer at the time of clearance for debit of the duties leviable on the goods imported, but for the exemption. In terms of Para 3 of the said notification, the said Scheme would also be available where the goods are imported by a merchant exporter having supporting manufacturers whose name and address is specified in the certificate and the goods so imported may be utilised by the said supporting manufacturers. As per the explanation attached to the said notification, goods means any inputs, capital goods including .. .. .. and agricultural products listed in Chapters 1 to 24 of the First Schedule to said Customs Tariff Act. In furtherance to the implementation of the said Target Plus Scheme, consequential measures were made in the HBP (HBP for short) for the relevant period. In terms of the Chapter 3 Para 3.2.5 which relates to the Target Plus Scheme, goods allowed to be importe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g reproduced below :- It is hereby clarified that in terms of the Policy Circular No. 27 (RE-2005)/2004-2009, dated 5-10-2005 read with Policy Para 87.6 and Handbook of Procedure (Vol.1) Para 3.2.5(II) broad nexus is to be maintained with Product Group in your case, your export products are covered under the Food category, you are required to maintain nexus with Food group of SION book, wherein you have the flexibility to import any input listed in the relevant product group category of the SION Book. As dry fruits (including almonds, as in your case) are listed as one of the inputs under SION E5, nexus with Food Products group is clearly established. It is further clarified that you can get the imported goods processed and concerted from any processor of your charge including the listed supporting manufacture job worker etc. if any, 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 req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultant products only if the same has a broad nexus with the product group as an input in the export product and is required to be used as an input in the product exported for which TPS benefit is sought. The Ministry of Law has also clarified that the term broad nexus with the product group is in addition to and not in substitution of the words inputs and own use in Para 3.7.6 of the Scheme. 5. The Ministry has accepted the aforesaid opinion of the Ministry of Law. Accordingly, import of goods against TPS certificates may be allowed keeping in view the said opinion discussed in paragraphs 3 and 4 above. 5. Further a circular was issued by the Customs being Circular No. 45/2007-Cus., dated 19-12-2007 clarifying on the scope of coverage of goods to be imported under Target Plus Scheme. Para 3 of the said circular is reproduced 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 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... road nexus prescribed in terms of Para 3.2.5 of the HBP; (ii) The appellant has not satisfied the actual user condition in terms of Para 3.7.6 of the FTP since the imported goods were subjected to the activity of packing from tanks to retail packs, which does not amount to manufacture in terms of Chapter Note 5 to Chapter 15 of the Central Excise Act. 9.1 Learned advocate Shri G. Shivadass appearing for the appellant submits that the said notification allows the import of agriculture products falling under Chapters 1 to 24 of the Customs Tariff Act without laying down any condition of nexus between the exported items and imported goods. However he fairly agrees that though the said notification as also the Target Plus Scheme contained in the FTP does not prescribe any condition 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is entitlement to use the duty credit certificates issued by the DGFT. He submits that the said decision of the Hon ble Delhi High Court was appealed against by the Revenue before the Division Bench and as per the decision of the Division Bench reported as UOI v. Indian Exporters Grievance Forum [2013 (290) E.L.T. 481 (Del.)], the condition of broad nexus has to be satisfied with reference to the product group available in Input and Output Norms. Accordingly, the Hon ble Delhi High Court upheld the first Circular of the DGFT and struck down the second circular dated 8-5-2007 which required the imported goods to be inputs of the exported items. As such, he submits that inasmuch as the disputes stand settled by the said decisions of the Hon ble Bombay High Court and the Hon ble 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that case. He submits that when there is a definition of manufacture provided in Para 9.37 of FTP, it was not open to the adjudicating authority to refer to the definition of deemed manufacture as provided in Chapter 15 of the Central Excise Act. He submits that in terms of the definition given in the FTP itself, manufacture means emergence of a new product having a distinct name, character or use and the said definition is further expanded by including certain process. As such, he submits that the definition given under the FTP is an inclusive definition and is required to be adopted. Inasmuch as admittedly 1 kg. packs have been manufactured by them through their supporting manufacturers and which have been further supplied to the Government of Andhra Pradesh for public distribution 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 Prades ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bdenum concentrate which is the principal raw material and input in the manufacture of Ferro molybdenum. (b) In case of Essel Mining Industries Limited in Paragraph 29 of Union of India v. Indian Exporters Grievance Forum, the observation of Single judge which was the matter of dispute in the said judgment has classifying the meaning of broad nexus as the word nexus obviously refers to a larger group of similar goods and not the very exported goods itself was upheld by the High Court in Para 36 by stating that we are thus, in agreement that the view taken by the learned Single Judge that Para 3.7.6 of the FTP by itself does not indicate that the imported goods should constitute inputs in the exported goods relying upon Atul 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ric acid TONSIL bleaching earth E-127 Refined mustard oil Crude mustard oil Caustic lye Phosphoric acid Citric acid Coal/coke TONSIL Bleaching earth Diesel (a) At Sl. No. E-38 which constitutes product group rice/wheat, chicken biryani, vegetable biryani, vegetable pulao, fried rice refers to import of canvas jute, LDPE/HDPE PP granules print ink and paper but not RBD Palmolein. (b) The product group E-107 the export item is Choco Supreme, (Cocoa Butter 1 MT Tonne equivalent CBE) it refers to import item like Crude Palm Oil (with FFA upto 5% Max), Palm Mid Fraction (Melting point 36 degree celcius). (c) Product group E-112-Refined Palmolein Edible oil, FFA content 25% refers to import item Crude oil Phosphoric acid, Citric acid, Tonsil, bleaching earth. From the analysis of food products group wherein export goods and relevant import items are listed, it is categorically established that the broad nexus is between the food item exported in the above mentioned sub-group exists with the item referred for importation in the particular sub-group. (c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble, process or bring into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, re-packing, polishing, labelling, Re-conditioning, repair, remaking, refurbishing, testing, calibration, re-engineering. Manufacture, for the purpose of FTP, shall also include agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining. Further Commissioner has relied on the Tribunal s decision in the case of Ammonia Supply Co. [2001 (131) E.L.T. 626 (T)] wherein it was held that the assessee was of getting ammonia in bulk packs. They were getting it in tankers. Ammonia Gas brought in tankers can never be termed as brought in bulk packs. So the assessee was not repacking the goods from bulk packs to retail packs. Accordingly, the activity undertaken by the assessee in filling the smaller container from bulk container namely tankers can never fall within the fiction of manufacture . The decision squarely applies to the present case and thus filling RBD Palmolein in one Litre pouches from storage tanks cannot be termed as manufacture. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue of nexus is concerned. Para 3.7.6 of the FTP provides for import of the goods listed therein as against the exports and the duty credit certificates obtained by the assessee from the DGFT. The only conditions laid down therein are that such goods are freely importable and the inputs are imported by the importers for their own use. There is no such condition laid down in the said para of the FTP. However such a condition is prescribed in the HBP which is subservient to the FTP. Para 3.2.5 of the HBP introduced the condition of the inputs having broad nexus with the export items. 15. We have seen the said paras in the HBP (reproduced in previous paras) which have undergone changes. As per the paragraph prior to 21-6-2007, apart from laying the condition of imported goods should have broad nexus with the exported items, also defined the expression broad nexus . It stands clearly laid dawn that what is the meaning of broad nexus and how such a broad nexus has to be established between the imported items and the exported items. In terms of the unamended Paragraph 3.2.5 of the HBP, the broad nexus means that the imported items as also the exported items must fall under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraph of the said circular, it stands concluded that the import item will have broad nexus with the export item where the same is used as input in the export product and is required to be used as an input in the product exported for which Target Plus Scheme benefit is sought. The subsequent circular issued by the Ministry being Circular No. 45/2007-Cus., dated 19-12-2007 further reiterated on the concept of broad nexus and concluded that the intended inputs to be imported must have a relationship with the exported product. 18. It is seen that the said two circulars issued by C.B.E. C. were the subject matter of the Hon ble Bombay High Court s decision in the case of Essel Mining Industries Ltd. (supra). After considering the object of the introduction of the Target Plus Scheme and after appreciating that the same is to boost the export by way of rewards to the star export houses, the Hon ble High Court considered Clause 3.7.6 of the FTP as also Para 3.2.5 of the HBP. It came to the conclusion that the Circular dated 8-5-2007 issued by the Board restricting the imports only to the inputs to be used in the manufacture of the exports is ultra vires the policy and as such t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sical incorporation in the export products in relation to which the benefit of the Target Plus Scheme is claimed. In fact, even Paragraph 3.2.5 of the Handbook of Procedures which spells out the meaning of the broad nexus requirement does not impose such a condition. Such a requirement is sought to be introduced for the first 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 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealt with the subject of exported goods vis- -vis imported items and never took into consideration the fact of use of imported items into further manufacture of any other final product. The issue before the Hon ble Bombay High Court was restricted to the import of Molybdenum concentrate as against the export of iron ore and the availability of the Target Plus Scheme. It stands clearly held by the Hon ble High Court that even though iron ore was exported and Molybdenum concentrate was imported, which do not have any nexus, with each other but the broad nexus stands established by referring to the SION where both the items fall under the same product group. As such, it clearly stands laid down by the Hon ble Bombay High Court that as long as the two products fall under the same product group, they have to be considered as broad nexus with each other. Admittedly in the present case, rice and wheat which were exported and the palmolein oil which was imported fall under the same product group of Food Products-E. Inasmuch as both the items fall under the same product group, we hold, by following the Hon ble Bombay High Court s decision, that it would be entitled to the benefit of Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccrued to the exporters which cannot but be viewed as unreasonable in the context. The impugned circular dated 8th May, 2007, the Public Notice dated 21st June, 2007, the further circular dated 19th December, 2007 and the amended para 3.25 of the HBP are accordingly quashed. 28. The writ petition is allowed to the above limited extent. The duty entitlement of the members of the Petitioner Society will be computed on the above basis and the corresponding duty credit will be given to them by the Respondents within a period of twelve weeks from today. The writ petition and the application are disposed of in the above terms. The said order of the Hon ble Single Judge of the Delhi High Court was put to challenge by the UOI before Division Bench. The Hon ble Division Bench of the Delhi High Court upheld the said order, reported as UOI v. India Exporters Grievance Forum [2013 (290) E.L.T. 481 (Del.)]. The Hon ble High Court observed that the issue whether the import can be only of those inputs which have nexus with the goods exported is not following from the scheme. It observed that the expression broad nexus used in HBP, which has the word broad prefixed with nexus, has to be ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r falling in the same group or not but the Tribunal concluded the legal issue by observing that for claiming the above benefit, it was enough for them to establish a broad nexus between the imported inputs and the exported products with reference to the respective export product groups . In other words, it stands held by the Tribunal that as long as the two items fall under the same product group, they have to be held as broad nexus. 23. It is well settled law that while interpreting a particular provision of law, the legislative intent has to be taken into account. The interpretation which furthers the legislative intent has to be adopted rather than an interpretation which defeats the same. The intent behind introduction of the Target Plus Scheme is clear from the objectives as contained in Para 3.7.1 of the FTP. The same stands introduced with an object of accelerating the growth by star export houses and such acceleration of exports is to be obtained by rewarding the star export houses. It stands clearly held that high performed star export houses shall be entitled for a duty credit based on incremental exports, substantially higher than the general annual export target fix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gether different Act i.e. Central Excise Act. He submits that if we go by the definition as it appears in the FTP, the activity of converting the liquid oil into 1 kg. pack would be covered by the said definition. 27. We have examined the definition in question. The same allows the use of duty credit certificates subject to the condition that the goods imported against it shall not be transferred or sold provided that where the goods are imported by the merchant exporter having supporting manufacturers whose name and address is specified on the said certificates, the said goods may be utilised by the said supporting manufacturers. In terms of the said Condition No. 3 of the notification, the only restriction is that the goods imported by an assessee would not be transferred or sold as such. The same can be used by supporting manufacturers of the merchant exporter. It nowhere stands provided in the said condition that the use of the goods by the supporting manufacturers must amount to manufacture . The processes carried out by the supporting manufacturers may or may not be covered by the definition of manufacture and as long as supporting manufacturers had undertaken some proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e arena of dispute, can be referred to. This proposition again does not need the strength of any decisions as the same is settled by catena of judgments of various judicial as also quasi-judicial authorities. 30. With this we proceed to examine the definition of manufacture as is appearing under the FTP. In terms of the said definition, manufacture means to make, produce, fabricate, assemble, process or bring into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include There cannot be any dispute that the subsequent portion of the definition is inclusive portion by referring to some of the processes which may be included in the definition. As per the main definition, as long as there is any process undertaken by a person so as to produce the resultant different product, the same would get covered by the said definition. Admittedly the supporting manufacturers have converted the oil into 1 kg. retail packs by packing the same and the said activity has resulted in bringing 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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us., dated 19-12-2007. The main conclusion of the decisions given by Hon ble Bombay High Court in the case of Essel Mining and Industries Ltd. v. UOI [2011 (270) E.L.T. 308 (Bom.)] and Hon ble Delhi High Court in the case of UOI v. Indian Exporters Grievance Forum [2013 (290) E.L.T. 481 (Del.)] are that there cannot be unnecessary restriction on the importation of the inputs under the Target Plus Scheme (TPS). However both the Hon ble High Courts in above case laws have clearly held that the phrase broad nexus has to be honoured and satisfied as a pre-condition of importation. In other words, the goods which are being imported under the Target Plus Scheme (TPS) by the importers, in this case the appellants viz. M/s. MMTC Ltd., have to qualify and pass the test of broad nexus in respect of their imports with reference to the exports they had made earlier with reference to the broad nexus requirement of Paragraph 3.2.5 of the Handbook of Procedures - HBP. The Hon ble Delhi High Court (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 und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t this link is sourced from Foreign Trade Policy (FTP) : Input-Output Norms [Duty Exemption Schemes] - 2004-09 (Vol. 2) - where FOOD PRODUCTS have been mentioned in its Section E. He says the imported item i.e. RBD Palmolein appears at E-122 in the column of Export items and they have exported rice, wheat and other things; rice and wheat are at the Sl. No. E-38 in the column of Export items of said Section (E) FOOD PRODUCTS. Learned advocate says there is no difficulty in finding this nexus when at E-38 in the export column rice and wheat appear and at Sl. No. E-122 item Palmolein (Refined Palmolein Oil - Edible grade) appears. 36.1 In order to further understand the scenario, let us refer to exact items mentioned at Sl. No. E-38 and E-122 of above Section E - FOOD PRODUCTS; the same are given below (quantity not given as it is not immediately relevant) : Sl. No. Export item Import item Name Quantity Name Quantity allowed E-38 Rice/Wheat/Chicken Biryani/Vegetable Biryani/Vegetable Pulao/Zeera Rice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad 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. This is reproduced below :- 3.2.5 Target Plus Scheme The Policy for the Target Plus Scheme is given at Chapter 3 of the Foreign Trade Policy. I. . . 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. III .. IV .. V ... VI VII VIII . It uses the wordings product groups . It is pointed out that the product groups is a plural indication of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sionately and judiciously judge clearly what is the direct or indirect relation or the link between the exported item and the imported item. When both the exported item(s) (rice wheat) and the imported item (RBD Palmolein) happen to be just food items , one cannot conclusively say that, that is why, they have broad nexus with each other. Using the words quoted by 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 authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Target Plus Scheme, it was not necessary for the assessee-appellants to establish that the goods imported as input by them were usable in the manufacture of the goods exported by them; (ii) that, for claiming the above benefit, it was enough for them to establish a broad nexus between the imported input and the exported products with reference to the 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ron ore, chrome ore, Manganese ore, rice, wheat, Pig iron, blast furnace, granulated slag and imported the goods RBD Palmolien, which is no way related to any of these exported products, even to the items rice and wheat, mentioned and specially emphasized by the appellant. 38. It is important here to point out 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the export items in the Sl. Nos. E-1 to E-128 of Food Products even without bothering about and without following the yardstick and condition of the wordings broad nexus . The said importer cannot say that he/she has qualified broad nexus unless he/she is able to clearly establish the said broad nexus 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 reta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted 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 (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 Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory circulars by DGFT and litigations by parties. 45. The meaning of broad nexus before its deletion as contained in the second sentence in Para 3.2.5(ii) of HBP read as 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). 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This was contested by the petitioner by stating that both iron ore and Molybdenum concentrate belong to the same product group as per SION (Standard Input Output Norms) and therefore 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he duty entitlement of petitioners is to be computed on the above basis and corresponding credit on duty has to be given. In appeal preferred by Union of India, the Hon ble 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 emphasi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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