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2015 (1) TMI 493 - HC - CustomsRestriction on Export of bullet proof jacket - whether the condition requiring the exporters to obtain permission of DoDP for exports of products such as bullet proof vests is contrary to the FTP and/or the FTDR Act - Held that - There is no restriction as to export of any item unless it is expressly provided under the FTP or any law in force. In the present case, there is, admittedly, no law that expressly prohibits or restricts the exports of bullet proof vests - Entry no. 4, which relates to military stores indicates that military stores are freely exportable; the same is indicated by the word Free under the column under the heading Policy . However, it is also provided that a No Objection Certificate from DoDP would be required for export of items other than those listed under Note 1 to Table-A. It is relevant to note that entry no. 4 only applies to military stores as specified by the DGFT. Admittedly, the DGFT has not specified any item of military stores as yet and thus, the present entry has been rendered ineffective. The expression military stores only specifies the nature of items that may be specified by the DGFT. This entry cannot be read as restricting all items in the nature of military stores unless made freely exportable by the DGFT. Given the underlying intent of FTP - items are freely exportable unless restricted - it is not possible to read any restriction under entry no. 4 unless the DGFT specifies those items. - Plainly, the FTP empowered the DGFT to specify items of military stores that would be freely exportable subject to obtaining a NOC from DoDP. Admittedly, the DGFT has not specified any such list but, by the impugned circular, has sought to pass an omnibus order disallowing export of all goods which are apparently in the nature of Military Stores . Clearly, the same is not in conformity with the FTP read with Schedule 2 of ITC (HS), 2012 as notified by the Central Government. Whether the DGFT is empowered under the legal framework to issue such omnibus directions which are, apparently, not in conformity with the notified FTP. - Held that - entry no. 4 of Table A of Schedule 2 of ITC (HS), 2012 requires that a NOC be obtained from DoDP in respect of items specified by the DGFT. In the circumstances, the only role that the DGFT could play in respect of the said entry was to specify a list of items covered under the said entry. Clearly, the impugned circular is not in conformity with this entrusted function. - appointment and the functions of the DGFT are as indicated in Section 6 of the FTDR Act and the DGFT is not authorized to interpret other commitments of the Central Government and issue circulars with respect thereto. Paragraph 2.1 of the FTP notes that restrictions in exports may be imposed by any other law. However, such restrictions would have to be specified in the text of that law and not by circulars issued by the DGFT. And, it is not the respondent s case that exports of military stores are restricted under any other law. - implying that the impugned circular has been issued considering India s commitment regarding non-proliferation of weapons of mass destruction is, plainly, without application of mind. Bullet proof vests and military stores cannot be read as including weapons of mass destruction. Further, the respondent has failed to point out any commitment made by India for restricting export of bullet proof vests, which is the product in question. Admittedly, bullet proof vests are not included in the SCOMET list as yet. In the circumstances, I am unable to accept that the FTP, in any manner, restricts export of bullet proof vests. In any event the impugned circular does not purport to notify any item of SCOMET list but seeks to restrict items, which are apparently considered as military stores . - bullet proof vests are freely importable in the country. In the circumstances, it does not stand to reason to read in any restriction for export of such items in the FTP. - impugned circular is set aside - Decided in favour of assessee.
Issues Involved:
1. Validity of the impugned circular dated 04.12.2008 issued by the DGFT. 2. Whether the impugned circular is ultra vires the FTDR Act and the FTP. 3. The requirement of a No Objection Certificate (NOC) from the Department of Defence Production (DoDP) for the export of bulletproof vests. 4. The role and powers of the DGFT under the FTDR Act and FTP. 5. Whether bulletproof vests fall under the category of military stores or SCOMET goods. Detailed Analysis: 1. Validity of the Impugned Circular: The petitioner challenges the circular dated 04.12.2008 issued by the Director General of Foreign Trade (DGFT), which mandates an NOC from the Department of Defence Production (DoDP) for the export of goods classified as military stores. The petitioner argues that this circular is not in line with the Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act) and the Foreign Trade Policy (FTP). 2. Ultra Vires the FTDR Act and FTP: The petitioner contends that the circular is ultra vires the FTDR Act and FTP, asserting that bulletproof vests are freely exportable under the FTP and not restricted by any law. The court notes that paragraph 2.1 of the FTP states that exports are free unless regulated by the FTP or any other law in force. Since no law expressly prohibits the export of bulletproof vests, the court examines whether any restriction can be inferred from the FTP. 3. Requirement of NOC from DoDP: The court examines entry 4 of Table-A of Schedule 2 of ITC (HS), 2012, which pertains to military stores and indicates that such items are freely exportable but require an NOC from DoDP unless listed under Note 1. The court highlights that the DGFT has not specified any items of military stores, rendering the entry ineffective. Therefore, the circular's blanket restriction on exporting items "apparently in the nature of military stores" is not in conformity with the FTP. 4. Role and Powers of the DGFT: The court discusses the DGFT's role under Section 6 of the FTDR Act, which includes advising the Central Government on foreign trade policy and implementing it. The DGFT can issue clarifications and specify procedures but cannot modify the FTP. The court emphasizes that the DGFT's powers do not extend to issuing circulars that impose restrictions not specified in the FTP. 5. Classification of Bulletproof Vests: The court rejects the respondent's argument that bulletproof vests fall under the SCOMET list, noting that Appendix 3 of the SCOMET list does not include bulletproof vests. The court also dismisses the contention that the circular aligns with India's commitments to non-proliferation, as bulletproof vests do not constitute weapons of mass destruction. Conclusion: The court concludes that the impugned circular is not in conformity with the FTP and the FTDR Act. The DGFT's circular is set aside, and the DGFT is directed to specify the list of military stores requiring an NOC from DoDP within eight weeks. In the interim, the petitioner is permitted to export non-lethal items not expressly restricted under the FTP or any other law. The court's decision underscores the importance of adhering to the legal framework established by the FTDR Act and the FTP, ensuring that any restrictions on exports are clearly specified and justified.
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