2017 (10) TMI 40 - HC - Customs

Advance Authorisation scheme - petitioner applied for issuance of an advance authorisation for duty free import of goods into India against supplies to be made to the purchasers - the petitioner was required to export a prescribed quantity of the said products for validly redeeming the Licence - It is the specific case of the petitioner that this export criteria was met by supplying the requisite goods to the purchasers against the Order, copy of which is at Annexure A . However, due to an inadvertent error, while having issued all the other necessary supporting documents, the petitioner omitted to file the Bills of Export corresponding to the said supplies at that relevant point of time - the petitioner made an application, invited the said advance authorisation and which is conditional. Held that - the petitioner seeks to term the lapse on its part as procedural lapse of generating Bill of Export and as per Policy Relaxation Committee what is demanded is proof of export obligation being fulfilled. This is a clear case where on one hand the petitioner accepts its lapse but terms it as procedural and on the other hand despite this lapse there is adequate proof of fulfilment of export obligation available on record. The petitioner was not being denied the benefit or relief only on the ground that they have failed to forward the Bill of Export. They have been specifically informed that the request for redemption of the advance authorisation cannot be granted because there is no proof of fulfilment of the export obligation - the petitioner having duly supplied the copies of the ARE-1 forms, it is only a further technical objection, of the said form not mentioning the advance authorisation number in the initial copies of the same but supplied later on, could have been condoned. It is not as if ARE-1s have not been filed. It is not as if ARE-1s have not been filed. It is not as if there is a doubt about the copy of ARE-1s or the authenticity or genuineness thereof. It is not anybody's case that there are no ARE-1 forms on record. Therefore, these forms were available. Therefore, the stand that there is no proof of export obligation being discharged, could not have been maintained once the petitioner was told to approach the Policy Relaxation Committee and it was empowered to relax any of the technical requirements or procedural matters. Equally, it was empowered to clarify in the facts of this case at least that the documents forwarded by the petitioner can be accepted as proof of export. Once we have held on facts that the requirement is duly fulfilled, then, we do not think that it is necessary to advert to the provisions of the SEZ Rules and particularly Rule 30 thereof. All the more when supplying goods from the domestic tariff area to SEZ is taken as equivalent to an export of goods physically from this country to abroad. Once such an act of the petitioner is taken to be an export, entitling them to the benefits of the advance authorisation and the scheme in respect thereof, then, all the conditions stipulated in that authorisation ought to be taken as fulfilled. Therefore, the Policy Relaxation Committee, as an after thought, could not have directed the petitioner to get the case regularised as per provisions of the Handbook of Procedures 2009 -2014, Vol I or the SEZ Rules. We do not think that the petitioner was required to be visited with any adverse consequences, including issuance of Show Cause Notice - petition allowed - decided in favor of petitioner.

Issues Involved:
1. Challenge to the Letter dated 1.12.2016 and Show Cause Notice dated 22.7.2016.
2. Request for quashing and setting aside the impugned Letter and directing the redemption of Advance Authorisation Licence.
3. Compliance with the Foreign Trade Policy and Handbook of Procedures.
4. Procedural lapses and their condonation by the Policy Relaxation Committee.
5. Proof of export obligation fulfillment.

Detailed Analysis:

1. Challenge to the Letter dated 1.12.2016 and Show Cause Notice dated 22.7.2016:
The petitioner challenged a Letter dated 1.12.2016 issued by the Foreign Trade Development Officer and a Show Cause Notice dated 22.7.2016 from the Deputy Director General of Foreign Trade, Mumbai. The petitioner sought a writ of certiorari to quash these documents, claiming compliance with the export obligations under the Advance Authorisation Licence.

2. Request for quashing and setting aside the impugned Letter and directing the redemption of Advance Authorisation Licence:
The petitioner requested the court to quash the impugned Letter and direct the respondents to redeem the Advance Authorisation Licence No.0310424318, dated 26.3.2007, by accepting ARE-1s as proof of export under paragraph 4.25 of the Handbook of Procedures 2009-14. The petitioner asserted that the necessary export criteria were met, despite an inadvertent error in filing the Bills of Export.

3. Compliance with the Foreign Trade Policy and Handbook of Procedures:
The petitioner applied for an advance authorisation for duty-free import of goods against supplies to be made to Reliance SEZ Unit, Jamnagar. The petitioner argued that the export obligation was fulfilled by supplying the requisite goods, supported by documents such as a certificate from the Development Commissioner, Jamnagar SEZ, and a letter from the purchaser. The Regional Authority raised objections due to the absence of valid Bills of Export, leading to a Defect Memo and subsequent communications emphasizing the need for specific documentation as per policy guidelines.

4. Procedural lapses and their condonation by the Policy Relaxation Committee:
The petitioner approached the Policy Relaxation Committee to condone the procedural lapse of non-filing of Bills of Export. The Committee initially rejected the request due to discrepancies in ARE-1s but was later requested to review its decision. The Committee maintained that the requirement of Bill of Export could not be dispensed with, despite the petitioner providing alternative proof of export fulfillment.

5. Proof of export obligation fulfillment:
The petitioner provided various documents, including certificates from the Development Commissioner and Central Excise authorities, to prove the export obligation was met. The petitioner argued that the procedural requirement of filing Bills of Export should not override the substantive proof of export. The court noted that the Policy Relaxation Committee had the authority to relax procedural requirements and found the Committee's refusal to accept the petitioner's documents as proof of export to be arbitrary and unreasonable.

Conclusion:
The court concluded that the petitioner had provided sufficient proof of export obligation fulfillment and that the Policy Relaxation Committee's refusal to accept the documents was arbitrary and unfair. The court quashed the impugned Letter and Show Cause Notice, directing the redemption of the Advance Authorisation Licence. The writ petition was allowed, and Rule was made absolute in terms of prayer clauses (a) and (c).

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