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2019 (10) TMI 1057 - HC - CustomsPIL against the DFIA Scheme - unwarranted loss of public money - case of petitioner is that respondents have failed to discharge their obligations and inaction of the respondents is resulting in loss of public revenue in the form of duty exemption being availed by unscrupulous exporters and importers, wherein the likelihood of connivance of exporters and importers with the officials of the respondents cannot be ruled out - principles of natural justice - HELD THAT - Directions are being sought by the petitioner against the respondents without any justifiable grounds. The DFIA Scheme as also the earlier Transferable DEEC Schemes are based on the Standard Input Output Norms. In any event, there is no need to go into the issue of applicability or otherwise of the various judgments referred by the petitioner. In Pushpanjali Floriculture Pvt. Ltd. Vs. Union of India, 2016 (7) TMI 628 - PUNJAB HARYANA HIGH COURT , a Division Bench of the Hon'ble Punjab and Haryana High Court has already considered the DFIA Scheme and has observed that The Commissioner of Customs, ICD Ludhiana, is directed to allow exemption of basic customs duty in respect of the import of Soda Ash by the petitioner by debiting the DFIA licence under Bill of Entry no. 7080616 dated 16.10.2014. There are no reason to take a different view to take away the benefits otherwise available under the DFIA Scheme under the Foreign Trade Policy, whether of 2009-14 or 2015-20, merely to satisfy the petitioner. The aforesaid judgments of the Punjab and Haryana High Court still hold the field, so far as permitting duty-free imports under DFIA are concerned. The contention of the petitioner that duty free import of any goods under DFIA cannot be permitted unless each of the above-mentioned three essential conditions are satisfied, clearly runes counter to the above judgments which are binding on the authorities - Neither the officers of the respondents can be proceeded against for following such binding precedents nor can the exporters or importers be subjected to any onerous conditions, declaration, bond or undertaking contrary to these binding precedents, which if taken would be non-est. There is no merit in any of the prayers of the petitioner - petition dismissed.
Issues Involved:
1. Validity and applicability of the Duty Free Import Authorization (DFIA) Scheme under the Foreign Trade Policy (FTP) 2009-14 and 2015-20. 2. Alleged misuse of the DFIA Scheme by exporters and importers. 3. Petitioner's demand for prohibition of duty-free import under DFIA without specific conditions. 4. Petitioner's request for departmental and criminal proceedings against responsible officers and exporters/importers. Issue-wise Detailed Analysis: 1. Validity and Applicability of the DFIA Scheme: The Government of India formulated the Foreign Trade Policy (FTP) under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act) to enhance Indian international trade. The FTP 2009-14 and 2015-20 included the Duty Free Import Authorization (DFIA) Scheme, which allows duty-free import of inputs used in the production of export goods. The DFIA Scheme is a post-export scheme that provides exemptions from basic customs duty for specified inputs, subject to conditions outlined in the FTP and corresponding notifications. 2. Alleged Misuse of the DFIA Scheme: The petitioner, an advocate, claimed that the DFIA Scheme was being misused by unscrupulous exporters and importers, leading to a significant loss of public revenue. The petitioner argued that the respondents failed to ensure that the imported goods under DFIA were actually used in the manufacture of export products, and that the technical specifications and quality of the imported goods were not adequately declared. 3. Petitioner's Demand for Prohibition of Duty-Free Import: The petitioner sought a prohibition on duty-free imports under DFIA unless three essential conditions were met: a) The technical specification/quality and characteristics of the imported goods are specifically declared in the shipping bills by the exporter. b) The imported goods are actually used as inputs in the manufacture of the export product. c) The imported goods are not merely alternative inputs or goods capable of being used in the export product. 4. Petitioner's Request for Departmental and Criminal Proceedings: The petitioner requested the court to direct the respondents to initiate departmental and criminal proceedings against officers responsible for permitting duty-free imports without ensuring compliance with the above conditions. The petitioner also sought recovery proceedings against exporters/importers who availed undue duty benefits under the DFIA Scheme. Court's Findings: Validity of the DFIA Scheme: The court noted that the DFIA Scheme, as well as the earlier Transferable DEEC Schemes, are based on Standard Input Output Norms (SION). The court referenced the judgment in Pushpanjali Floriculture Pvt. Ltd. Vs. Union of India, where it was observed that requiring compliance with certain conditions post-export would be impossible and absurd. The court emphasized that beneficial schemes like DFIA should be interpreted to extend benefits rather than restrict them. Alleged Misuse and Petitioner's Conditions: The court found no merit in the petitioner's claim that duty-free imports under DFIA should be prohibited unless the specified conditions were met. The court referenced the judgments of the Punjab and Haryana High Court and the Bombay High Court, which held that the DFIA Scheme allows flexibility in importing alternative inputs mentioned in SION. The court concluded that the petitioner's conditions were contrary to binding precedents and the intended flexibility of the DFIA Scheme. Request for Departmental and Criminal Proceedings: The court rejected the petitioner's request for departmental and criminal proceedings against officers and exporters/importers. The court held that there was no prima facie case for such actions, as the DFIA Scheme and the judgments supporting it were binding on the authorities. Conclusion: The court dismissed the Public Interest Litigation (PIL) filed by the petitioner, finding no merit in the prayers for prohibition of duty-free imports, departmental proceedings, or criminal prosecution. The court upheld the validity and applicability of the DFIA Scheme under the Foreign Trade Policy, emphasizing the need to interpret beneficial schemes in a manner that extends their benefits. No order as to costs was made.
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