2008 (1) TMI 18 - HC - Customs

Import of goods under Advance Licence Scheme for export. Export of sub-standard goods are also goods, benefit of import under DEEC scheme can not be denied. Once there be a policy in force and even if there had been power in the PRC to take a decision that decision can not be against the policy

Summary

Issues:
1. Interpretation of duty exemption and remission provisions under the Export-Import Policy.
2. Discrepancies in export obligations under advance licenses.
3. Allegation of exporting sub-standard goods and imposition of duty.
4. Authority of Policy Relaxation Committee (PRC) to reject export claims.
5. Jurisdictional validity of PRC's decision and retrospective effect.

Analysis:

1. The judgment concerns a company engaged in manufacturing and exporting Rayon Viscose Filament Yarn under advance licenses granted as per the Export-Import Policy. The company fulfilled its export obligations, but discrepancies arose regarding the quality classification of the exported yarn.

2. The company faced allegations of not completing export obligations under two advance licenses, leading to demands for enforcement of bank guarantees. Despite explanations, the authorities insisted on non-compliance and threatened fiscal penalties, creating a dispute over the completion of export obligations.

3. The core issue revolved around the classification of exported yarn as sub-standard, triggering demands for customs duty payment on proportionate imported raw materials. The company contended that different quality grades of the yarn, though labeled sub-standard, still met the required specifications and were commercially recognized as Rayon Viscose Filament Yarn.

4. The Policy Relaxation Committee (PRC) rejected the company's claims for DEPB norms, citing non-eligibility due to the quality classification of the exported goods. The PRC's decision was based on the application of standard input-output norms for quality products, leading to a denial of benefits sought by the company.

5. The court analyzed the jurisdictional validity of the PRC's decision, emphasizing that the committee lacked the authority to amend the export-import policy as notified by the Central Government. The judgment highlighted that any decision by the PRC, even if administrative, could not have retrospective effects on parties who had already fulfilled their obligations under the prevailing policy.

In conclusion, the court allowed the petition, quashing the decision based on the PRC's recommendations and emphasizing the exclusive authority of the Central Government to amend export-import policies. The judgment clarified the limitations on committee decisions and their retrospective applicability, providing relief to the company in question.