TMI Blog2023 (12) TMI 1158X X X X Extracts X X X X X X X X Extracts X X X X ..... ior to 5.12.2017 inasmuch as prior to revision even in case of third party exports, full realised value of shipping bill was to be taken into consideration for the fulfillment of export obligation which was restricted to actual payment from third party exporter after 5.12.2017. In facts of the case, under the guise of amendment in HBP with policy circular dated 29.03.2019, respondents nos.2 and 3 have tried to make changes in FTP so far as the application of such amendment in para 5.10 (c) of the HPB to the EPCG Authorisation issued prior to 05.12.2017- the date of amendment which is the exclusive domain of the Central Government. The amendment in para 5.10(c) from 05.12.2017 can be made applicable to the EPCG Authorisation issued from the said date only and the date of issuance EPCG Authorisation under FTP cannot be ignored under guise of policy decision by applying the same to all third-party exports made after 05.12.2017. The respondents have jurisdiction to amend the HBP for availing the benefit under the EPCG Scheme in view of the revised FTP 2015-20 (mid term review) but such amendment cannot affect the conditions stipulated in the EPCG Authoristion already issued for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evised Handbook of Procedures under revised FTP 201520 and Policy Circular Notice No. 22/2015-20 dated 29.03.2019 issued by the Respondent No. 3 in respect of EPCG authorisations issued prior t 05.12.2017; (b) YOUR LORDSHIPS may be pleased to issue writ of Mandamus or a writ in the nature of Mandamus or any other appropriate writ, order or direction under Article 226 of the Constitution of India, ordering and directing the Respondents, their subordinate servants and agents to permit the members of the Petitioners to fulfil their Export Obligation in accordance with the relevant FTP under which EPCG Authorizations has been issued to them, by counting full realized value of the Shipping Bill in case of Third-party exports; (c) YOUR LORDSHIPS may be pleased to issue writ of Mandamus or a writ in the nature of Mandamus or any other appropriate writ, order or direction under Article 226 of the Constitution of India, ordering and directing the Respondents, their subordinate servants and agents to give an additional extension of two years to the members of the Petitioner No. 1 to fulfil their Export Obligation in respect of EPCG authorisations issued prior to 05.12.2017; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6/8 times of duty saved on capital goods to be fulfilled in 6/8 years reckoned from the date of issue of Authorization. 3.4) In terms of Paragraph 2.42 of the original FTP 2015-20, third party exports are also allowed under FTP. The extracts of Paragraph 2.42 of the original FTP 2015-20 are reproduced below for ready reference: 2.42 Third Party Exports Third party exports (except Deemed Export) as defined in Chapter 9 shall be allowed under FTP. In such cases, export documents such as shipping bills shall indicate name of both manufacturing exporter/manufacturer and third-party exporter(s). Bank Realization Certificate (BRC), export order and invoice should be in the name of third-party exporter. 3.5) Paragraph 9.60 of the original FTP 2015-20 defines Third-party exports as under: 9.60 Third-party exports means exports made by an exporter or manufacturer on behalf of another exporter(s). In such cases, export documents such as shipping bills shall indicate name of both manufacturing exporter/ manufacturer and third-party exporter(s). Bank Realisation Certificate, Self-Declaration Form (SDF), export order and invoice should be in the name of third p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc. shall indicate name of both authorization bolder and supporting manufacturer, if any, along with EPCG authorization member. BRC, GR declaration, export order and invoice should be in the name of third party exporter. The goods exported through third party should be manufactured by the EPCG Authorization Holder or the supporting manufacturer where the capital goods imported under the authorization have been installed. Proceeds realized through normal banking channel from third party exporter's account to the authorization holder's account on account of such exports only shall be counted towards fulfilment of export obligation. 3.10) The effect of revision was that, prior to 05.12.2017, the full realized value of the Shipping Bill was to be taken into consideration for fulfilment of Export Obligation. However, post the amendment i.e. w.e.f. 05.12.2017, only the actual payment received by the Authorization holder from the third-party exporter through normal banking channel is to be taken into consideration for fulfillment of Export Obligation. 3.11) The members of the petitioner No. 1 applied for and granted Authorizations under the EPCG scheme under FTP 2009-14 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded the FTP. 4.2) It was submitted that respondent No. 2 and 3 have taken away the benefit which was available to the petitioners under the FTP 2009-14 and original FTP 2015-20. 4.3) It was further submitted that the amendment in paragraph 5.10(c) in the revised HBP 2015-20 read with the Policy Circular dated 29.03.2019 changes the meaning of Export Obligation and also the manner in which Export Obligation is to be computed. 4.4) Learned advocate Mr. Shah further submitted that any change to the meaning of Export Obligation or the manner in which Export Obligation is to be computed can be done only by way of amendment in FTP. 4.5) It was submitted that in terms of Section 5 of the FTDR Act, the Central Government alone has the power to amend the FTP. Further, in terms of para 1.03 of the FTP, the power of Respondent No. 2 is restricted only to lay down the procedure which is to be followed by an exporter or importer. 4.6) It was submitted that by way of amendment in Paragraph 5.10(c) in the revised HBP 2015-20, the respondent No. 2 has indirectly nullified the express provisions of the FTP 2015-20 framed by the Central Government. 4.7) Learned advocate Mr. Shah s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able prior to 05.12.2017) under the pretext that full realized value of the Shipping Bill will be taken into consideration for fulfillment of Export Obligation. 4.12) It was submitted that making the amendment made in Paragraph 5.10(c) of the revised Handbook of Procedures 2015-20 applicable to the EPCG Authorizations issued prior to 05.12.2017 is in violation of the principles of legitimate expectation and promissory estoppel. 4.13) Learned advocate Mr. Shah submitted that the petitioners were governed by the FTP in vogue during the time EPCG Authorizations were issued to the petitioners though the Courts have time and again held that the grant of license depends upon the FTP prevailing as on the date of issue of license. 4.14) The attention of the Court was invited to Paragraph 1.05(a) of the revised ETP 2015-20 which provides that any License / Authorisation/ Certificate/ Scrip/instrument bestowing financial or fiscal benefit issued before the commencement of revised FTP 2015-20 w.e.f. 05.12.2017 shall continue to be valid for the purpose and duration for which it was issued. 4.15) It was submitted that even the EPCG Authorizations issued to the petitioners clearly m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furtherance to the original section and the condition is merely to develop and enhance genuine transactions of the exporters. 5.2) Learned advocate Mr. Divyeshwar submitted that on plain reading of the condition to 5.10 (c) it is clear that there is no benefit curtailed or restricted and if at all, more transparency was added by way of condition to it to curb fake and fictitious transactions and to promote real exporter in all manner. 5.3) It was submitted that para 5.10(c) in the revised Hand Book Of Procedures 2015-20 with effect from 5-12-2017 as clarified by the policy circular notice no. 22/2015-20 dated 29-3-2019, is within the domain of the respondent and it does not create any hindrance nor it is obstructive in the business of the export. 5.4) It was submitted that the adding of condition is just a procedural aspect and cannot be said to be in any manner outside the power of the authority. In support of his contention, reliance was placed on the following judgments: 1) In case of Union of India and others v. Agricas LLP and others etc. reported in 2020 10 Scale 740. 2) In case of Atul Commodities Private Limited and others v. Commissioner of Customs, C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id policy can be held to be beyond the pale of discrimination or unreasonableness, bearing in mind the material on record. 5.9) Reliance was also placed on decision in case of Arun Kumar Agrawal v. Union of India reported in (2013) 7 SCC 1], wherein it is held as under: 41.... This Court sitting in the jurisdiction cannot sit in judgment over the commercial or business decision taken by parties to the agreement, after evaluating and assessing its monetary and financial implications, unless the decision is in clear violation of any statutory provisions or perverse or taken for extraneous considerations or improper motives. States and its instrumentalities can enter into various contracts which may involve complex economic factors. State or the State undertaking being a party to a contract, have to make various decisions which they deem just and proper. There is always an element of risk in such decisions, ultimately it may turn out to be a correct decision or a wrong one. But if the decision is taken bona fide and in public interest, the mere fact that decision has ultimately proved to be wrong, that itself is not a ground to hold that the decision was mala fide or tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by itself fructify into a right and therefore it does not amount to a right in the conventional sense. 5.12) Relying upon the decision in case of Food Corporation of India v. Kamdhenu Cattle Feed Industries (Judgment dated 3.11.1992 in Civil Appeal No. 4731 of 1992.), it was submitted that this Court considered whether by submitting a tender in response to the notice issued by the Food Corporation of India for the sale of stocks of damaged food grains, the respondent had acquired a right to have its tender accepted and the appellant was not entitled to reject the same. It was submitted that the Hon ble Apex Court while approving the view expressed by the High Court that rejection of the highest tender of the writ petitioner-respondent was legally correct, observed as under: The mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirement of due consideration of a legitimate expectation forms part of the principle of non-arbitrariness. a necessary concomitant of the rule of law. Every leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authorisation holder and all the documents should be in the name of third party exporter. 8. It appears that on the introduction of Goods and Service Tax Act from 01.07.2017, FTP 2015-20 was revised by Notification No. 41/2015-2020 dated 05.12.2017 and the revised edition of Handbook of Procedures was also notified by the Public Notice No. 43/2015-2020 dated 05 December 2017, so as to align FTP-2015-20 with GST Act and there was a major amendment made in condition for fulfillment of export obligation provided under paragraph no. 5.10(c) of the revised Handbook of Procedures 2015-20 whereby was further amended that Proceeds realized through normal banking channel from third party exporter's account to the authorization holder's account on account of such exports only shall be counted towards fulfillment of export obligation. 9. Therefore, in view of such amendment in paragraph no. 5.10(c) of Handbook of Procedures 2015-20 with effect from 5.12.2017, the full realized value of the Shipping Bill was not to be taken into consideration for fulfillment of export obligation, but, only the proceeds realized through normal banking channel from third party exporter's acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of EPCG Authorization holder and supporting manufacturer, if any, number and date of EPCG Authorization shall also be indicated in the Shipping Bills. BRC, GR declaration, export order and invoice shall be in the name of third party exporter. The goods exported through third party shall be manufactured by the EPCG Authorisation holder or the supporting manufacturer where the capital goods imported under the authorisation have been installed [Para 5.10(c) of HBP 2015-2020)]. In such cases, the authorisation holder shall submit the additional documents prescribed in Para 5.10(d) of Handbook of Procedures, 20152020 at the time of final redemption. 12. There was no stipulation in the aforesaid condition with regard to actual payment realised through normal banking channel from third party exporter s account to Authorisation holder s account as such condition was not prescribed prior to 05.12.2017. Such condition would not be there in all the EPCG Authorisation which were issued prior to 5.12.2017. 13. In such circumstances, question arises as to whether the Policy Circular Notice No. 22/2015-20 dated 29.03.2019 can be said to implement the amendment in paragraph no. 5.10(c) of H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r published in the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. The Central Government may also, by Order published in the Official Gazette, make provision for prohibiting, restricting or otherwise regulating, in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the Order, the import or export of goods or services or technology. According to subsection (3) of section 3 all goods to which any Order under subsection (2) of the said section applies should be deemed to be goods the import or export of which has been prohibited under section 11 of the Customs Act, 1962 and all the provisions of that Act shall have effect accordingly. According to section 5, it is for the Central Government which may, from time to time, formulate and announce, by notification in the Official Gazette, the foreign trade policy and may also, in like manner, amend that policy. The proviso to the said section provides that the Central Government may direct that, in respect of the Special Economic Zones, the foreign trade policy shall apply to the goods, services a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of Article 14 of the Constitution of India. According to the provisions contained in Section 59A, if any question arises as to the right of tax leviable under the said Act on the sale or purchase of any goods, such question should be referred to the Government for decision and the decision of the Government thereon shall, notwithstanding any other provision of the said Act, be final. In the above context, the Supreme Court made the following observations:- 13. Plain reading of Section 59A shows that if any question relating to the rate of tax leviable under the Act on any goods is referred to the Govt. then its decision thereon, notwithstanding any other provision in this Act is final. This section does not indicate as to who can make a reference to the Govt. There is no obligation on the Government to hear any dealer before it decides as to the rate of tax leviable on the sales or purchase of any type of goods. In fact, as we have noticed earlier, by an omnibus order dated 23rd April, 1984 the Govt. decided rates of tax payable in respect of various items without any opportunity of being heard having been granted to any of the dealers. Lastly Section 59A clearly states t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, this restriction in our opinion would run counter to the terms of FTP itself and ultra vires the powers of the Director General of Foreign Trade. The title of the Appendix itself provides that it is a procedure to be followed for reimbursement of Central Sales Tax. Para.1 further clarifies that the procedure given in the said annexure shall be applicable for reimbursement of CST. There is little doubt therefore, that Appendix 14II aimed to lay down the procedure for claiming the benefit. In any case, such procedure could not have restricted the benefit by excluding the purchases from certain source which exclusion did not flow from the Foreign Trade policy itself. 22. Perhaps a contention could have been raised by the respondents that the Foreign Trade Policy itself envisaged such a restriction since only when the goods are manufactured in a DTA area, it may be stated that same are manufactured in India and by a deeming fiction any manufacturing activity taking place in an EOU should be excluded from such expression. The respondents would draw our attention to subsection(1) of section 3 of the Central Excise Act, 1944, which besides others, envisages levy of excise duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven years, that too, without any explanation for such delayed action. 3) In case of Ashok Kumar Jain v. Union of India reported in 2010(253) E.L.T. 767(Bom), wherein Bombay High Court held as under: 6. The import and export policy for AM 88-91 is published in two Volumes. Volume 1 contains Import and Export Promotion Policy and Volume 2 contained policy in respect of items under Export licensing. The first volume contains 343 paragraphs divided into 23 chapters and 12 Appendices. Chapter I titled as Introduction and definitions inter alia contains definitions of certain words. Paragraph 6(8) defines capital goods to mean any plant, machinery, equipments or accessories required by an investor for the production of goods or for rendering services, including those require for replenishment or extension. Chapters XI to XXIII of AM 8891 contain Import Policy for registered exporters. Paragraph 164 of Chapter XV titled as Import Policy for Registered Exporters says that the object of the scheme is to provide to the registered exporters, by way of import replenishment, the essential inputs required in the manufacturing of the products exported and also to allow cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents of which are recorded on video audio tapes. Films are recorded on cassettes with the help of the equipment in question. The equipment in question which is used for production of films recorded on cassettes would therefore fall within the definition of capital goods. 9. Paragraph no. 177(2) of AM 1988-91 provides that within the value of flexibility allowed, the REP Licence can be utilised for import of capital goods without the recommendation of the sponsoring authority and without indigenous clearance subject to a condition that the total value of the import shall not exceed Rs. 10 lakhs and the capital goods imported do not fall in Appendix I (Part A) or Appendix 8 or is not an office machine as defined in paragraph 11.8. It is not the case of revenue that the TV broadcast and studio equipment in question falls in Appendix - I (Part A) or Appendix 8 or is an office machine as defined in paragraph 11.8. TV broadcast and Studio equipment in question, being a capital good could therefore be imported as a capital good in view of paragraph no. 177(2) of AM 1988-91. 10. Mr. Jetly, learned counsel for the applicant submitted that the equipment in question would fall under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k Exports reported in 2015(326) E.L.T. 26(SC), wherein the Hon ble Apex Court held as under: 101) We may state, at the outset, that the incentive scheme in question, as promulgated by the Government, is in the nature of concession or incentive which is a privilege of the Central Government. It is for the Government to take the decision to grant such a privilege or not. It is also trite law that such exemptions, concessions or incentives can be withdrawn any time. All these are matters which are in the domain of policy decisions of the Government. When there is withdrawal of such incentive and it is also shown that the same was done in public interest, the Court would not tinker with these policy decisions. This is so laid down by catena of judgments of this Court and is now treated as established and well grounded principle of law. In such circumstances, even the Doctrine of Promissory Estoppel cannot be ignored. 102) We may suitably refer to the judgment of this Court in Kasinka Trading v. Union of India(1995) 1 SCC 274 . In that case, Government of India had issued Notification under Section 25(1) of the Customs Act, 1962 in 'public interest' granting exempti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e like manner. The Court also examined the case of the appellant-petitioners that relying upon the notification dated March 15, 1979, they had acted and the Government could not be permitted to go back on its assurance otherwise they would be put to huge loss. The Court dealt with this contention in the following words: The Courts have to balance equities between the parties and indeed the Courts would bind the Government by its promise to prevent manifest injustice or fraud . The Court also quoted with approval the following observations from Malhotra Sons v. Union of India AIR 1976 J K 41: The Courts will only bind the Government by its promises to prevent manifest injustice or fraud and will not make the Government a slave of its policy for all times to come when the Government acts in its Governmental, public or sovereign capacity. 103) The above decision was followed by this Court in Shrijee Sales Corporation v. Union of India(1999)3 SCC 398 where also the same notifications were considered. In that case also, the appellants-petitioners had alleged that they would not have imported the PVC resin without the exemption as that would have been un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Section confer powers upon the Central Government to 'amend' the policy which has been framed under the aforesaid provisions. However, that by itself would not mean that such a provision empowers the Government to do so retrospective. This legal position is rightly discussed by the Bombay High Court in the impugned judgment in the following words: We are unable to accept the submissions of learned Additional Solicitor General. The word amend does not give power to make amendment retrospectively if it is used in relation to the power to make a piece of delegated legislation. The connotation of the word amend when it is used for the exercise of power by a legislature cannot be pressed to construe the word amend in relation to the power to make delegated legislation. In this regard the following observations of the Supreme Court in Accountant General and another v. Doraiswamy (1981) 4 SCC 93 are pertinent: The next question is whether clause (5) of Article 148 permits the enactment of rules having retrospective operation. It is settled law that unless a statute conferring the power to make rules provides for the making of rules with retrospective operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of construction, nature and extent of application of which must inevitably be governed by the relevant provisions of the statute which confers power to issue the notification. The said power must be exercised within the limits prescribed by the provisions conferring the said power. ( See Gopichand v. Delhi Administration, AIR 1959 SC 609, Lachmi Narayan and Ors. v. Union of India and Ors. (1976) 2 SCC 953 and State of Kerala and Ors. v. K.G. Madhavan Pillai and Ors. (1988) 4 SCC 669. The ratio in H.C. Suman's case also cannot be applied because in that case it was found that Section 88 of the Delhi Cooperative Societies Act, 1972 contained the power to exempt and if the provisions of Section 12 of the said Act were to be exempted the provisions which provided that byelaws are effective from the date of registration. The notification issued under Section 88 would exempt it and Section 88 would contain the power to exempt retrospectively. Similarly, Section 14 of the General Clauses Act has no application as it merely provides that where any power is conferred on the Government, then that power can be exercised from time to time as occasion requires. Under that Sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso done before the question of actual working out of the incremental growth in exports arose and hence, no retrospective effect. 128) We have already discussed these aspects in detail. To recapitulate, it is held by us that Section 5 of the Act does not empower the Government to make amendments with retrospective effect, thereby taking away the rights which have already accrued in favour of the exporters under the Scheme. No doubt, the Government has, otherwise, power to amend, modify or withdraw a particular Scheme which gives benefits to a particular category of persons under the said Scheme. At the same time, if some vested right has accrued in favour of the beneficiaries who achieved the target stipulated in the Scheme and thereby became eligible for grant of duty credit entitlement, that cannot be snatched from such persons/exporters by making the amendment retrospectively. In the present case, we find that Section 5 of the Act does not give any specific power to the Central Government to make the Rules with retrospective effect. The Central Government is authorised to make Rules/ Schemes under the said provision as a delegatee, which means that the EXIM Policy/Scheme fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obligation or the manner in which export obligation is to be computed can be done only by way of amendment in FTP. Therefore, we are of the opinion that in facts of the case, under the guise of amendment in HBP with policy circular dated 29.03.2019, respondents nos.2 and 3 have tried to make changes in FTP so far as the application of such amendment in para 5.10 (c) of the HPB to the EPCG Authorisation issued prior to 05.12.2017- the date of amendment which is the exclusive domain of the Central Government. 17. The amendment in para 5.10(c) from 05.12.2017 can be made applicable to the EPCG Authorisation issued from the said date only and the date of issuance EPCG Authorisation under FTP cannot be ignored under guise of policy decision by applying the same to all third-party exports made after 05.12.2017. The respondents have jurisdiction to amend the HBP for availing the benefit under the EPCG Scheme in view of the revised FTP 2015-20 (mid term review) but such amendment cannot affect the conditions stipulated in the EPCG Authoristion already issued for the benefit under the EPCG Scheme framed under the provisions of FTDR Act and FTP 201520. Revised FTP 2015-20 would be applic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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