TMI Blog2020 (6) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... r contemporaneous letters/Circulars/Minutes of Meeting leading up to the issuance of the Notifications dated 21.04.2004 and 23.04.2004. It also took note of the counter affidavit filed by the Union of India, giving details of the modus operandi used by the exporters in inflating their exports to claim benefit of the DFCE Scheme - In the counter affidavit, specific reference was made by the respondents to the petitioner herein to contend that the petitioner has shown an exponential growth in its exports of 3816% against the National Growth of Export of merely 18%. The petitioner in fact, filed a Review Petition seeking review of the said judgment, which was also dismissed by the Supreme Court. In the Review Petition, the petitioner had categorically contended that the finding of the Supreme Court that held the petitioner as having resorted to paper transactions was not justified as the respondents had not placed any material on record against the petitioner to prove the same. Relevant paragraphs of the Review Petition have been quoted hereinabove. The Review Petition was, however, dismissed by the Supreme Court - The petitioner certainly could not have been allowed to re-agitate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic producers. 4. Paragraph 2.34 of the Policy allows Third-party exports . Paragraph 9.55 defines the term Third-party exports as under: Third-party exports means exports made by an exporter or manufacturer on behalf of another exporter(s). In such cases, shipping bills shall indicate the name of both the exporter/ manufacturer and exporter(s). 5. Chapter-III of the Policy deals with Promotional Measures which are to be undertaken to achieve the objective of the Policy. 6. Paragraph 3.7.1 of the Policy states that Merchants as well as Manufacturer Exporters, Service Providers, Export Oriented Units (EOU s)/ Units located in the Special Economic Zone, etc., shall be eligible for recognition as Status Certificate . Paragraph 3.7.2 laid down the requirement of average export performance level to be achieved by the applicant. 7. Paragraph 9.53 defines the term Status Holder as under: Status Holder means an exporter recognized as Export House/Trading House by DGFT/ Development Commissioner or Star Trading House/Super Star Trading House by the Director General of Foreign Trade. 8. Paragraph 3.7.2.1 gave the Special Strategic Package for Status ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... growth of exports by an exporter shall not, directly or Indirectly, be transferred to any other exporters. Note 3 Government reserved the right in public interest, to specify the export products, which shall not be eligible for calculation of incremental growth/ entitlement. Similarly, the government may also notify the list of goods, which shall not be allowed for imports under the scheme. Note 4 These guidelines will be applicable to the exports made on or after 1.04.2003. Note 5 The entitlement will be in terms of duty credit. 11. A Public Notice bearing no.40(RE 2003)/2002-2007 dated 28.01.2004 was also issued by the Directorate General of Foreign Trade (DGFT) making certain amendments in the Handbook of Procedures(Volume 1), inter alia inserting Paragraph 3.2.6 A, which reads as under: The scheme will be applicable to status holders who were also status holders as on 31.3.2003 and who had achieved minimum export turnover of 25 crores in the year 2003-04. I. For direct as well as third party exports, the Export documents viz. Export Order, Invoice, GR Form, Bank Realization Certificate should be in the name of applicant only. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 3.2.5 of Handbook of Procedures (Volume 1) the following items would not be allowed for imports under Duty Free Credit Entitlement Certificate for Status Holders: a. Agricultural products which fall under Chapters 1-24 of ITC (HS) Classification of Export and Import items. 12. By a subsequent Notification no.38/(RE 2003)2002-2007 dated 21.04.2004, Notes 6 and 7 were inserted in Paragraph 3.7.2.1., after subparagraph (vii) of the Policy and read as under: Note 6 - The export of the following products and categories of products would not be permitted for counting entitlement under the Duty Free Entitlement Certificate for Status Holders. a. Rough, uncut and semi polished diamonds. b. Gold, silver in any form including plain jewellery thereof c. Food grains sourced from central pool maintained by FCI d. Items exported under free shipping bills. Note 7 - The following items would not be allowed for imports under Duty Free Credit Entitlement Certificate for Status Holders: Agriculture products, which fall under Chapters 1-24 of ITC (HS) Classification of Export and Import items. 13. By Notification no.40/(RE 2003)/2002-2007 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2005 partly allowed this writ petition. It upheld the validity of the Notification dated 28.01.2004 holding it to be clarificatory in nature, and set aside the Public Notice dated 28.01.2004 as being ultra vires. It further held that the Notifications dated 21.04.2004 and 23.04.2004 can have only prospective operation, which means that exports made by the exporters prior to April 21, 2004 in respect of the classes of goods covered by Notification dated 21.04.2004 were entitled to be taken into consideration for the purposes of determining the entitlement of duty free imports. The relief granted by the High Court in favour of the petitioner is reproduced hereinbelow: 36. In the result the petition is partly allowed. Public Notice dated 28th January 2004 is quashed and set aside. As far as Notifications dated 21st and 23rd April, 2004 are concerned, it is declared that the said notifications will have only prospective operation and the exports made by the petitioners prior to the said notifications in respect of the classes of goods covered by the said notifications shall be liable to be computed for the purpose of determining the entitlement of the petitioners. No order as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004 and before that it was withdrawn and, thus, no vested right accrued in their favour. It was also argued that in the policy, which provides special incentives to status holder, the term incremental growth in export was not defined/clarified at the time when the policy was issued. By the impugned notification, the blanks/gaps were filled and the term incremental growth in export was defined and it was clarified as to how the incremental growth in export is to be actually worked out. This was also done before the question of actual working out of the incremental growth in exports arose and hence, no retrospective effect. 111) An astute and penetrative examination of the record, with reference to the results of the investigation, which had prompted the Central Government to issue these Notifications, provides a very tidy answer to the question posed above is that the so-called targets achieved were only on paper through fraudulent means and, therefore, it cannot be said that any vested right accrued in favour of these exporters. 112) We have referred to such material in detail while upholding the contention of the Union that Notifications were issued in public interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fications or the Public Notices dated January 28, 2004 and April 21, 2004 respectively. It was also brought to the notice of the DGFT that some of the exporters have procured rough diamonds from local firms and exported the same by a 5% loss as they were confident of covering up the loss by receiving the 10% DFCE incentives offered by the Government. All these aspects are discussed in much details earlier and need not be repeated. We would like to recapitulate the following stark features/practices which have surfaced on record as a result of investigation: 113) Mr. Adhyaru has successfully demonstrated that the following methods were found to be resorted to by these exporters to inflate their export turnovers:- (i) Export of rough diamonds even though. India is not a rough diamond producing country. These exports stopped the moment DFCE benefits were disallowed. Export of such rough diamonds earlier has never been part of the normal commercial operations and has taken place just to take advantage of the Scheme. According to Gems and Jewellery Export Promotion Council, India is not a rough exporting country. Rough diamonds which are unsustainable for cutting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reby acquired any vested right . It was pernicious and blatant misuse of the provisions of the Scheme and periscopic viewing thereof establishes the same. Thus, the impugned decision reflected in the notifications dated April 21 and 23, 2004, did not take away any vested right of these exporters and amendments were necessitated by overwhelming public interest/considerations to prevent the misuse of the Scheme. Therefore, we are of the opinion that even when impugned Notification issued under Section 5 could not be retrospective in nature, such retrospectivity have not deprived the writ petitioners/exporters of their right inasmuch as no right had accrued in favour of such persons under the Scheme. This Court, or for that matter the High Court in exercise of its writ jurisdiction, cannot come to the aid of such petitioners/exporters who, without making actual exports, play with the provisions of the Scheme and try to take undue advantage thereof. To this extent, direction of the Bombay High Court granting these exporters benefit of the Scheme for the past period is set aside . 20. The Supreme Court, thereafter, passed the following directions: 116) Thus, appeals and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document placed on affidavit showing that a single export effected by Kanak was not genuine. In so far as Kanak is concerned, this, is a case of: No pleading No evidence in relation to genuineness of exports, but nevertheless denial of relief granted by the Bombay High Court. xxxxxx H. The statutory scheme provides a comprehensive machinery for separating genuine cases for receiving duty free entitlement certificates from cases that are not genuine. An evaluation of every application seeking DFEC is required to be processed by the DGFT. This is the stage at which nongenuine applications may be weeded out and the applicant denied the benefit. The issue before this Hon ble Court was with respect to the validity of the circulars and notifications and their retrospective effect. Having laid down the law, it is an error apparent on the face of the record for this Court to have made a determination on factual aspects without there being any pleading or evidence. 22. The Supreme Court, however, by its order dated 09.03.2016 was pleased to dismiss the Review Petition filed by the petitioner. 23. The petitioner, thereafter filed a revised application dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd therefore, applicable with retrospective effect, the Public Notice dated 28.01.2004 was held to be ultra vires and the Notifications dated 21.04.2004 and 23.04.2004 were held to be prospective in nature. The observations of the Supreme Court that a vested right is not created in favour of the exporter who, without making actual exports, plays with the provisions of the Scheme and tries to take undue advantage thereof, were general in nature and not specific to the petitioner herein. For the respondents to apply the same observations to the petitioner, they were to conduct an enquiry and only incase, after giving an opportunity of hearing to the petitioner, they come to the conclusion that the exports carried out by the petitioner were not eligible for the purpose of the Scheme, they could deny the benefit of the Scheme to the petitioner. He submits that in the present case, there is no such evidence of improper exports by the petitioner and in fact, the respondents have not carried out any investigation into the same. He further submits that the judgment of the Supreme Court cannot be interpreted like a statute and has to be read and understood as per its plain meaning. He place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplete bar on the consideration of the application of the petitioner or M/s. Adani Export Ltd. for benefit under the Scheme. He submits that to deny the petitioner of the benefit of the scheme would therefore, be discriminatory. 30. The learned counsel for the respondents, on the other hand, submits that the petitioner is, in fact, seeking to reagitate the relief denied to it by the Supreme Court. He submits that the petitioner cannot be allowed to seek the relief which had been denied by the Supreme Court. 31. I have considered the submissions made by the learned senior counsels for the parties. 32. The Supreme Court in its judgment dated 27.10.2015 had inter alia considered the letter dated 13.10.2003 addressed by the Joint Secretary, Govt. of India, Central Board of Excise and Customs, addressed to the DGFT as also various other contemporaneous letters/Circulars/Minutes of Meeting leading up to the issuance of the Notifications dated 21.04.2004 and 23.04.2004. It also took note of the counter affidavit filed by the Union of India, giving details of the modus operandi used by the exporters in inflating their exports to claim benefit of the DFCE Scheme. 33. In the coun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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