2015 (10) TMI 2331 - HC - Customs

Recovery of duty credit granted under Served From India Scheme - brand Four Seasons is not an Indian brand - Foreign Exchange Earnings - Petitioner contends that Revenue denied benefits implicitly secured by them under FTP 2009-14 and seek to amend eligibility criteria under SFIS - Power to amend FTP 2009-14 lies only with Central Government and as such SFIS and PIC minutes are contrary to FTP 2009-14 - Held That - Challenge to impugned SCN as well as PIC minutes would have to fail - Not permissible for authorities adjudicating claims arising to recover from Petitioner SFIS benefits granted till 2007-08 and they are falling within earlier policy framework - Decision made in case of Shri Naman Hotels Private Ltd v/s The Union of India and Others 2015 (9) TMI 564 - BOMBAY HIGH COURT followed - Decided in favour of Petitioner.

Summary

Issues Involved:
1. Validity of the Demand-cum-Show Cause Notice (SCN) dated 29th October 2014.
2. Legality of the minutes of the Policy Interpretation Committee (PIC) meeting dated 27th December 2011.
3. Jurisdiction and authority of the Respondents to amend eligibility criteria under the Served From India Scheme (SFIS) of the Foreign Trade Policy 2009-14 (FTP 2009-14).
4. Violation of the Petitioner's fundamental and constitutional rights.
5. Recoverability of SFIS benefits granted for periods prior to FTP 2009-14.

Detailed Analysis:

1. Validity of the Demand-cum-Show Cause Notice (SCN):
The Petitioner challenged the SCN issued by Respondent No.4 for recovery of duty credit entitlement under the SFIS for the financial year 2011-12. The Petitioner argued that the SCN was issued arbitrarily and without jurisdiction, as it introduced conditions not contemplated in the FTP 2009-14. The Court, however, found that the issues raised were already covered by a previous Division Bench decision in the case of Shri Naman Hotels Private Ltd v/s The Union of India and Others. The Court agreed with the reasoning in the Naman Hotels case, which emphasized that the SFIS aimed to create a powerful and unique 'Served From India' brand recognized worldwide, and benefits were intended for entities creating an Indian brand.

2. Legality of the PIC minutes dated 27th December 2011:
The Petitioner also challenged the PIC minutes which allegedly introduced new eligibility criteria for SFIS benefits. The Court referred to the Naman Hotels case, which held that the object of SFIS was to encourage entities creating an Indian brand and that the eligibility criteria were framed to support this objective. The Court found no merit in the Petitioner's contention that the minutes were illegal or arbitrary.

3. Jurisdiction and authority of the Respondents:
The Petitioner argued that the Respondents had no authority to amend the FTP 2009-14 and that only the Central Government could do so. The Court, however, held that the eligibility criteria under SFIS were consistent with the objectives of the FTP 2009-14, as interpreted in the Naman Hotels case. The Court found that the Respondents acted within their jurisdiction and authority.

4. Violation of the Petitioner's fundamental and constitutional rights:
The Petitioner claimed that the Respondents' actions violated their fundamental and constitutional rights. The Court, however, found no violation of Articles 14 and 19(1)(g) of the Constitution, as the Petitioner could not claim a vested right to SFIS benefits. The Court reiterated that the benefits were subject to eligibility criteria aimed at promoting an Indian brand.

5. Recoverability of SFIS benefits for periods prior to FTP 2009-14:
The Petitioner expressed concern about recoveries for periods prior to FTP 2009-14. The Court clarified that recoveries could not be made for SFIS benefits granted till 2007-08, as they fell within an earlier policy framework. However, any recoveries for the period after 2007-2008 under FTP 2009-14 would have to be made in accordance with the law.

Conclusion:
The Court dismissed the Petitioner's challenge to the SCN and PIC minutes, upholding the Respondents' actions as consistent with the objectives of the FTP 2009-14. The Court allowed the Petition in part, ruling that recoveries for SFIS benefits granted till 2007-08 could not be made. The Petitioner's request for a stay of the judgment was refused, as no interim order had been in place since the Petition was lodged.