2005 (3) TMI 825 - HC - Indian Laws

Summary

Issues: Conversion of Shipping Bills from DFRC Scheme to DEPB Scheme; Rejection of conversion request by respondent authority; Validity of communication dated 19th February 2004; Jurisdiction of DGFT; Compliance with circulars; Quashing of impugned communication; Relief sought by the petitioner.

Analysis:
1. The petitioner, a Limited Company, sought conversion of Shipping Bills from Duty Free Replenishment Certificate (DFRC) Scheme to Duty Entitlement Pass Book (DEPB) Scheme. The petitioner was engaged in the production, clearance, and export of finished excisable goods. The controversy arose when respondent No. 2 rejected the conversion request on 19th February 2004, citing Board Circular No. 04/2004-CUS dated 16th January 2004 as the basis for the rejection.

2. The petitioner approached the Director General of Foreign Trade (DGFT) seeking clarification regarding the effective date of applicability of DEPB rates for the product in question, "Chlorhexidine Gluconate." DGFT, through a letter dated 30th December 2003, clarified that the product was covered under DEPB until 31st March 2002 and that corrections made in the rate list had retrospective effect from 1st April 2002. This clarification was crucial in determining the eligibility of the petitioner for the conversion sought.

3. The High Court observed that the respondent authority failed to provide a valid reason for denying the conversion request. The communication dated 19th February 2004, which cited circular No. 04/2004-CUS, did not specify the grounds for disallowing the conversion. The Court emphasized that an order must stand on its own merit and cannot be supported by subsequent explanations provided in affidavits.

4. The Court held that since there was no legal or factual basis to disqualify the petitioner from converting the Shipping Bills, the impugned communication dated 19th February 2004 was quashed and set aside. The respondent authorities were directed to permit the conversion as claimed by the petitioner by 18th March 2005. The Court granted the relief sought by the petitioner and allowed the petition, making the rule absolute without any order as to costs.