TMI Blog2017 (5) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... elled. In the interest of justice, the instant petition merits a decision on merits. Retrospective applicability of the said Notification and Public Notice - Held that: - the DFIA would be governed by the FTP in force on the date on which DFIA was issued. Any subsequent amendment in the FTP or HBP cannot govern the entitlement under the DFIA as it existed as per the FTP on the date of issuance of DFIA. Therefore, discharge of export obligation, transferability and utilization of DFIA would necessarily be governed by the policy in force is vague on the date of issuance of DFIA. The benefit of DFIA ought to have been given its actual meaning to include materials that are required in order to produce the export product, in essence, the duty free import under DFIA cannot be confirmed to only such goods which are actually used or physically incorporated in the production of the export product, but would also include goods which, though not used in the production of the export goods, are required in order to produce the same. Once the DFIA licence, when issued, permitted duty free import of any Insecticides with Technical characteristics, specifications and quality as per Sched ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t page 43) were applicable for permitting such duty free-imports. It is claim of the petitioner that due to continued erroneous approach of the respondent-authorities the DFIA could not be utilized for import of 'Pesticides' during its validity period after its purchase on 01.02.2013 from M/s Pacific Security Solutions Pvt. Ltd., who is also a transferee of the said DFIA Licenses. It is claimed by the petitioner that during the relevant period and even thereafter, the respondents continued to cause various impediments in utilization of the DFIAs for duty free import of 'Pesticides', which were beyond the control of the petitioner. Various developments have been shown on behalf of the petitioner to support the petition, for inter alia, seeking directions for revalidation of DFIA, so that the same can be utilized for duty free clearance of 'pesticides'. 2. The petition was strongly opposed by the respondents. It was mainly contended orally, in the reply and in additional affidavit that:- 3. The petition is liable to be dismissed with costs as the same is filed after gross delay after having failed to utilize the DFIA for own negligence on merely hypoth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 35 dated 30.10.2013 as EODC and transferability have been obtained on 27.01.2012 prior to 01.08.2013, therefore, there is no question of applicability of Notification No.31 dated 01.08.2013 in the case of petitioner. 8. Norms Committee Decision dated 31.05.2012 was never accepted by the DGFT by issuing Public Notice to be published in Gazette of India in terms of Para 2.4 of FTP and was only recommendatory in nature. 9. The entire transaction has no legal basis and sought strict proof that the petitioner is the legal transferee of the DFIA License and the required taxes applicable for transfer of the said DFIA License/scrip were paid, since sale and transfer of DFIA License/scrips are subject to sales tax (CST/VAT) for sale. The customs authorities have not been made necessary respondents. The petitioner has not exhausted the alternate remedies available in terms of the provision of Foreign Trade Policy, Hand Book of Procedures and FTDR Act, 1992 as amended in 2010. 10. I have heard both sides at length and considered the records, i.e., the oral and written submissions, browsed FTP, HBP, notifications, public notices, Instructions and decision of Norms Committee etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rter or merchant exporter tied to supporting manufacturer(s) for: i) Physical exports (including exports to SEZ); and/or ii) Intermediate supplied: and /or .............. So far as basic Scheme for DFIA and Advance Authorization are concerned, the difference is that whereas the DFIA Scheme vide Para 4.2.1 permits duty free import of 'inputs' which are required for production of export product , the Advance Authorisation allows duty free import of 'inputs', which are physically incorporated in the export product . Hence, as per Para 4.1.5 of FTP, unlike DFIA, an Advance Authorization and/or material imported thereunder will only be with actual user condition and will not be transferable even after completion of export obligation. So far as 'Entitlement' is concerned manufacturer exporter or merchant exporter tied to supporting manufacturer(s) would be entitled for the benefit of the scheme for the purpose specified therein, in both the Schemes in view of Para 4.2.2 read with Para 4.1.3 of FTP. The instant case is concerning DFIA License and not Advance Authorization. The Handbook of Procedures(HBP) 2009-2014 issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 800,600/- was required to be made. As per the DFIA Pre Import Item List dated 4.11.2011, amongst other items, duty free import of 22320 Kgs of ' Pesticides (Biocides/Fungicides/Herbicides/Insecticides) ' was permissible under the said DFIA, within total CIF USD 4,000,400/-, thus, Value Addition was also maintained. 14. Standard Input Output Norm (SION) J-373 (Annexure P- 4) permitted duty free import of 0.01116 Kgs of 'Pesticides (Biocides/Fungicides/Herbicides/Insecticides)' as an 'input' againt export of 1 Kg of ' Raw Cotton (not carded or combed)' . Out of four types of Pesticides i.e. Biocides/Fungicides/Herbicides/Insecticides , Para 4.32.3 referred only to Insecticides. The DFIA was thus issued according to the SION as well as Para 4.32.3 by mentioning thereon permissible Insecticides as per Schedule of Insecticide Act, 1968. The DFIA contains the following endorsement- Insecticides allowed for import with Technical characteristics, specifications quality as per schedule I of Insecticide Act, 1968 Evidently the Insecticides permitted to be imported were those which are in Schedule of Insecticide Act, 1968. 15. The DFIA was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny order recalling the said decision was communicated to the applicant Association by any higher authority in accordance with law. It is only contended on behalf of the respondents that the said decision of Norms Committee is recommendatory in nature. 19. On 05.11.2012 the Exporter/Licence Holder transferred the DFIA to M/s Pacific Security Solutions Pvt. Ltd. for valuable consideration vide Transfer Letter dated 05.11.2012 vide Annexure P-2 (colly) (at Page 27). On 01.02.2013, the said Transferee thereafter issued a letter (at Page 28), for re-transfer of the said DFIA to the petitioner M/s R.P. International. 20. The petitioner is a proprietorship firm having office at Amritsar, established on 1.9.1980, having bank account in Amritsar as per the Importer Exporter Code (Annexure P-1) issued by the office of respondent No.2. The petitioner has purchased the DFIA license on the condition that the payment for the same would be made only upon utilization of the said DFIA License i.e. After duty free import of Pesticides. The license remains un-utilized and the payment is yet to be made. However, with re-transfer of the DFIA in favour of the petitioner, the title to the DFIA is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as in Para 2 above. Please specify the number of authorisations issued (month wise, with vale) between 07.07.2011 to 13.02.2013. 5. This issues with the approval of DGFT. Yours sincerely, SD/- (KAILASH CHAND MEENA) (Deputy Director General Foreign Trade For Directorate General of Foreign Trade Email: k c.meena68@nic.in 23. The subject DFIA dated 04.11.2011 was also already issued between the same period i.e. 07.07.2011 to 13.02.2013. The directions issued by the respondent No.2 vide the said Instructions dated 19.02.2013 were being applied in respect of DFIAs issued between 07.07.2011 to 13.02.2013. Therefore, the said instructions specifically covered the subject DFIA. 24. Thereafter, on 01.08.2013, a Notification No.31 (Annexure P-7) was issued by the Central Government, for amendment in the FTP by firstly inserting para 4.1.15 after Para 4.1.14 of FTP, which permitted only those inputs to be imported, which are physically incorporated/actually used in the export product, and secondly amending Para 4.2.3 of FTP so as to apply this newly inserted Para 4.1.15 to the DFIA holder. 25. On 30.10.2013, the respondent No.2 issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is admitted in the reply/affidavit by the respondents that retrospective amendments is not permissible, however, it is still being claimed that inputs which have been actually used and physically incorporated in the product already exported can only be imported. 29. Thus, so far as the period between the said Instructions dated 19.02.2013 (based on Public Notice No.49 dated 13.02.2013), till 30.10.2013 i.e. the date of issuance of Public Notice No.35 and even thereafter, regarding issue of permissibility of import of pesticides under DFIA where exports had already taken place, serious objections were raised by respondent No.2 and the same are continued in view of notice dated 30.10.2013. 30. Even now the respondents are raising objections on permissibility of duty free import of Pesticides/Insecticides under the DFIA on merits by claiming that Policy Circular No.72 dated 23.04.2009 was not applicable by relying on Para 4.32.2 of HBP 2009-14, and by claiming that as per Para 4.2.2 and Para 4.1.3 of the FTP only those inputs, which have been physically incorporated in export product, shall be allowed for import of inputs under DFIA license scheme. It is specific stand that ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that:- 15. Moreover, Para 4.2.2(b) of Foreign Trade Policy stipulates that DFIA shall be issued in accordance with Policy and procedure in force on date of issue of Authorisation. We are therefore, not impressed by the submission of the Revenue that the position as prevailing on the date of clearance would govern imports under valid licence. The appellant, who are transferee, cannot be compelled to establish that wheat gluten was actually used in the manufacture of the biscuits which have been exported against the DFIA. The provisions of Notification No.31, dated 1-8-2013 (as amended) will not be applicable to such DFIA issued on 30-05-2012 i.e. issued prior to amendment. Consequently any policy circular or public notice, if seeks to deny the exemption which is otherwise available in the instant imports, will also have no applicability for the same reason. (ii) CC(Mundra) Vs Global Exim, 2015 (328) ELT 385 (T): The Tribunal in this case observed that- 7. The other aspect of this case is that DGFT Notification No.31, dated 1-8-2013 deals with the case of import either (a) a generic import or (b) alternative imports. Public Notice No.35 dated 30-10-2013 have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , for, that by putting up the DFIA for debating in respect of imported goods at any port despite the instructions issued by respondent no.2, the petitioner would unnecessarily have incurred losses in the form of continued interest, demurrage and detention charges, apart from blocking investment on costs of such goods only to fight cumbersome litigation with the hope of getting due legitimate entitlement. Resultantly, the objection of delay and latches raised by the respondents in the above stated peculiar fact situation is hereby repelled. In the interest of justice, the instant petition merits a decision on merits. 38. I am also not inclined to accept the objection of any alternate remedy. As clearly pointed out on behalf of the petitioner, respondent no.2 has issued the instructions and has declined the representations from the Associations as well as of one Bajrang Cotgin Pvt. Ltd. Thus, there is no alternate efficacious remedy available to the petitioner except the writ jurisdiction. 39. The objection of non-joinder of Customs Authorities as party to the instant writ petition is also misplaced as no relief has been sought and pressed against Customs Authorities. The praye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Kanak Exports reported in 2015 (326) ELT 0026 (SC) held that the said notification cannot be applied retrospectively. 44. It is seen that the DFIA is issued with a limited validity of 24 months. Due 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 licenses for debit in such circumstances. Therefore, a case for directing revalidation of the licence is also made out. 45. In view of the above discussion, the writ petition of the petitioner is partially allowed in the following terms:- (i) Clause 4 of Notification No 31 (RE-2013)/2009- 2014 dated 01/08/2013, Clause 2 of Public Notice No 35 (RE-2013)/2009- 2014 dated 30/10/2013, and Clause 3 of Notification No 90 (RE-2013)/2009-2014 dated 21/08/2014 are struck down. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of products' and 'replenishment of materials used in the manufacture of resultant products' which indicates that the two expression have not been used in the same sense. The expression 'materials required to be imported for the purpose of manufacture of products' cannot be construed as referring only to materials which are used in the manufacture of the products. The said exemption must be given its natural meaning to include materials that are required in order to manufacture the resultant products. On that view, the exemption cannot be confined to materials which are actually used in the manufacture of the resultant product but would also include materials which though not used in the manufacture of the resultant product are required in order to manufacture the resultant product. Crystar Beams imported by the appellant are materials, which though not used in the manufacture of H.T. Porcelain Insulators required for Lightening Arrestors, are materials which are required for producing the insulators in the kilns. 44 Similarly, so far as the basic Scheme for DFIA in para 4.2.1 and that for Advance Authorization in Para 4.1.3 are concerned, the difference i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal characteristics, specifications and quality as per schedule I of Insecticides Act, 1968. I am of the firm view that once the DFIA licence, when issued, permitted duty free import of any Insecticides with Technical characteristics, specifications and quality as per Schedule of Insecticide Act, 1968, no further requirement can be insisted upon on this score based on any subsequent development or amendment or instructions to deny duty free import of any of such Insecticides mentioned in the said Schedule to Insecticides Act, 1968. Duty Free import under the said DFIA of any of the Insecticides mentioned in the decision of the Norms Committee, recognized as 'required for' cotton farming, if in Schedule of Insecticide Act, 1968 shall necessarily permitted under the DFIA, subject to the quantity restriction mentioned in the Licence as per SION J-373. The Shipping Bills filed while making exports were to be seen at the time of export in the light of the details specified in the DFIA. It would not wholly erroneous and incorrect to insist on specifications of Pesticides used by farmers after the exports. 49 Vide Public Notice No. 49 dated 13.2.2013, the input Insecticide has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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