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TMI Blog2025 (5) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... HDPE monofilament yarn, bare drums/barrels, mosquito net fabrics, etc., and that these products had nothing whatsoever to do with the products exported by them i.e., rice and some spices. The show cause notice thus proposed to deny the exemption claimed on the ground that the goods imported did not have Broad Nexus with the products exported as laid down in paragraph 3.2.5 (II) of the Hand Book of Procedures ['HBP' for short]. 2. Both before the Commissioner and before us, it is the case of the respondent that the granules were sent to job workers to be converted into plastic bags in which the spices and rice exported by the respondent were packed for export. 3. By the impugned Orders-in-Original, the Commissioner found that the scope of the 'actual user condition' is very limited and not comparable to similar conditions in other export related schemes. He found that this condition did not contemplate compulsory utilisation of imported inputs in the process of manufacture of products to be exported in future, and that there was no export obligation on the part of the Respondent. To reach this conclusion, he relied on pronouncements of the DGFT. He found on facts that the importe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Respondent relied on the impugned order and relied on case law which we shall note in considering the issues below. 7. We have considered the rival submissions and perused the material on the record, we are of the view that these appeals deserves to be rejected for the following reasons : 7.1 The Hon'ble Bombay High Court, in Essel Mining & Industries Ltd. Vs Union of India - 2011 (270) ELT 308 (Bom.) noted the requirements of paragraphs 3.2.5 and 3.7.6 of the FTP Handbook of Procedures. The Hon'ble High Court observed that the these paragraphs did not incorporate a requirement that the goods which are imported as inputs must find physical incorporation in the export products in relation to which the benefit of the TPS was claimed. It was also noted that paragraph 3.2.5 spelt out the meaning of the 'broad nexus' requirement and did not impose such a condition. It was therefore observed by the Hon'ble High Court that such a requirement was sought to be introduced for the first time by the circular dated 08.05.2007. It was then observed that the FTP cannot be amended by an administrative circular. 7.2 This order of the Bombay High Court has since been followed by a coordinate B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 7.5 In MMTC Ltd. Vs CC Visakhapatnam - 2016 (341) ELT 225 (Tri.-Bang.) the question, finally answered by the Third Member, was whether the assessee was entitled to the benefit of TPS on the import of Palmolein Oil as against the export of rice and wheat. The third Member observed that neither the FTP nor Notification No.32/2005 laid down a condition of 'broad nexus'. It was observed that it was after Public Notice dated 21st June 2007 that para 3.2.5 was amended and the meaning given for broad Nexus was deleted. It was observed that after such amendment, the meaning of this term 'broad nexus' became a grey area leading to clarity circular by the DGFT. It was observed that before such deletion, 'broad nexus' has been defined to mean 'goods imported with reference to any of the product groups of the exported goods within the overall value of the entitlement certificate'. After analysing the law, the subject, the learned Third Member held that both Palmolein Oil and rice and wheat belonged to the same product group, being food product group. It was also observed that the deletion of the meaning of the term 'broad nexus' which was affected by Public Notice dated 21.06.2007 had also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hemes are concerned, the DGFT is the Authority that frames for Trade Policies, which is also responsible for bringing amendments and clarifications to the policies. Hence, the decisions of Ministry of Commerce through the DGFT is final and the Customs Department cannot find fault with the policies prescribed by the DGFT. Moreover, it is an undisputed fact that the Customs Act, 1962 and the Foreign Trade (Development and Regulations) Act, 1992 [FTDR for short] operate in their own spheres. Customs duty is payable on imported goods as per the relevant notifications issued under the Customs Act 1962, whereas the FTDR and the Rules, etc. framed thereunder regulate the import or export of goods. 12. It is clear from the above that the TPS is administered by DGFT and consequently, it is the DGFT alone which can say whether an importer or the exporter has satisfied the conditions of TPS or not. The revenue in the case on hand has sought the reference to Customs Notification No.32/2005, to say that the importer/assessee has not fulfilled the conditions under TPS but however, the scheme launched by the DGFT, the said Authority being satisfied has granted the license in terms of which impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TPS is thus an additional incentive given to accelerate the growth of exports, FTP is referable to the provisions of Section 4 and 5 of the FTDR. 14.1 The Explanation to the Notification defines the term "goods" as follows :- "goods" means any inputs, capital goods including spares, office equipment, professional equipment, office furniture and agricultural products listed in Chapters 1 to 24 of the First Schedule to said Customs Tariff Act as may be notified by DGFT from time to time, which are freely importable under the Foreign Trade Policy. 14.2 Further, the take away from the decisions of Hon'ble Delhi High Court in Union of India Vs Indian Exporters Grievance Forum (supra) and the Hon'ble Bombay High Court in Essel Mining & Industries Ltd. (supra) is as follows : (i) Para (3.7.6.) of the FTP, by itself, does not indicate that the imported goods should constitute inputs in the goods exported. It is not possible to read para (3.7.6.) restrictively. (Delhi HC) (ii) Given the objective of providing an incentive to exporters, para (3.7.6.) of the FTP can reasonably be interpreted to require an exporter to show that the goods imported should have broad nexus with reference ..... X X X X Extracts X X X X X X X X Extracts X X X X
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