2015 (5) TMI 441 - HC - Customs

Benefit of Vishesh Krishi Upaj Yojana scheme - exporters of Menthol and Mentha Oil - export of value added products under the description Mentha Arvensis - Classification of goods - Held that - Inclusion of value added products were detailed in Appendix 37A of the Handbook. The relevant value added extracts of herbs were introduced in Appendix 37A under product code 11 and specifically 11.111, 11.112 and 11.113. On 1st April, 2008 with benefits due form 1st April, 2007. Having considered all the facts and the relevant provisions, we find that Vishesh Krishi Upaj Yojana was introduced for incentivising exports in a phased manner. It is not as if every product which could be relatable to the items listed in 37A can qualify for export benefits. But only products that found mention in Appendix 37A qualified for export benefits - The petitioners were specifically granted benefit with effect from 1st April, 2007. This is evident from the Appendix which specifies dates of export from which benefit can be admissible. In case of diverse products different dates apply. For instance, in items covered under product Code 1 to 7, the relevant date was taken as 1st April, 2004. In chapter 33 of ITC (HS), Oleoresins specified in the list of items under product code 7A qualified for benefit from 1st April, 2005. Product code 8.106 only included the plant Mentha (Japanese pudina) (Mentha arvensis) which qualified for export benefit on 1st April, 2004. These did not in our view include the products derived from Mentha Arvensis. Mentha Arvensis, Linn (Mint, Pudina) covered by product code 08.432 qualified with effect from 1st April, 2004. The distinction drawn between product code 08.432 Mentha Arvensis (Mint, Pudina) and 08.438 described as Mintha Arvensis (Podina) itself makes it obvious that they are different variants of Mentha Arvensis covered by product code 08.106, 08.432 and 08.438. Petitioners specific products i.e. value added extracts of Mentha such as Menthol BP/USP, Menthol Crystal BP/USP, Mentha oil IP were covered by product code 11 and were undoubtedly, different from those covered by product code 08.106, 08.432 and 08.438. In addition, even within product code 11, we find different kinds of Mentha derived product. For instance, 11.114 refers to Menthone, 11.115 refers to Menthol liquid 11.116 refers to Mint Blend, 11.117 refers to Peppermint oil, 11.118 refers to Rectified peppermint oil, 11.119 refers to Spearmint, 11.120 refers to Cornmint oil, 11.121 refers to Dementholised peppermint oil and 11.122 refers to value mint, all of which qualified for benefits effective from 1st April, 2007. It is, therefore, not possible to accept the petitioners contention that their product qualified even earlier to their inclusion in product code 11. - Petitioners will not be entitled to benefits of the Yojana from 1st April, 2004 till 31st March, 2007 - Decided against assessee.

Summary

Issues Involved:
1. Eligibility for export benefits under the Vishesh Krishi Upaj Yojana (VKUY) for exports made between 1st April 2004 and 31st March 2007.
2. Interpretation of policy circular dated 28th February 2006 and its effective date.
3. Classification of Menthol and Mentha Oil under the VKUY.
4. Allegations of arbitrary and discriminatory cutoff dates violating Article 14.

Detailed Analysis:

1. Eligibility for Export Benefits under VKUY for Exports Made Between 1st April 2004 and 31st March 2007:
The petitioners, exporters of Menthol and Mentha Oil, claimed benefits under the VKUY from 1st April 2004, arguing that their products fell under the generic description "Minor Forest Produce and their value-added products" in the foreign trade policy effective from 1st April 2004. They contended that the specific products were only listed later due to delayed notifications. However, the respondents argued that the petitioners' products were not explicitly listed under Appendix 37A until 1st April 2007, thus not qualifying for benefits prior to this date.

2. Interpretation of Policy Circular Dated 28th February 2006 and Its Effective Date:
The VKUY aimed to promote exports of various agricultural and forest products, with items being added or altered annually. The petitioners argued that the policy's generic terms should cover their products from the policy's inception. Conversely, the respondents maintained that only products explicitly listed in Appendix 37A were eligible for benefits, and the petitioners' products were not included until the 2007-08 supplement.

3. Classification of Menthol and Mentha Oil under VKUY:
The petitioners argued that their products, derived from Mentha Arvensis, should be covered under the generic description of minor forest produce. They cited the inclusion of "value-added products" in policy descriptions as evidence that their products were always intended to be covered. The respondents countered that the specific listing of value-added products of Mentha only occurred in the 2007-08 supplement, thus benefits could not be retroactively applied.

4. Allegations of Arbitrary and Discriminatory Cutoff Dates Violating Article 14:
The petitioners claimed that the cutoff date of 1st April 2007 for benefits was arbitrary and violated Article 14, as the policy was effective from 1st April 2004. They argued that the delayed listing of their products was a procedural issue and should not affect their eligibility. The respondents defended the cutoff date as a valid policy decision, emphasizing that the policy explicitly stated that not all minor forest produce would qualify for benefits and that specific products would be notified separately.

Judgment:
The court dismissed the petitions, upholding the respondents' position that the petitioners' products were only eligible for VKUY benefits from 1st April 2007. The court found no arbitrariness in the policy's implementation and concluded that only products explicitly listed in Appendix 37A were eligible for benefits. The challenge to the policy circular dated 28th February 2006 was rejected, and the court ruled that the petitioners were not entitled to benefits for the period from 1st April 2004 to 31st March 2007.