2020 (10) TMI 1182 - HC - Customs

Target Plus Scheme - Direction to the Respondents to issue balance/additional duty credit scrips - star export house - HELD THAT - It is evident that Petitioner has submitted the no dues certificate as prescribed. The quantum of claim of the Petitioner to the extent of ₹ 4,22,16,175.00 is also admitted by the Zonal Committee, Mumbai. However, according to the customs representative dues relating to non-submission of BRC are pending. What is required to be submitted is a certificate certifying that no dues are pending against the government including its departments - Without entering into details, we can safely say that the word dues means something which is payable. Shorn of semantics, the word dues means something which a person has an obligation to pay e.g., a debt or a tax; something which is enforceable. Juxtaposing the word dues with the word government , the expression government dues would mean something which is payable to and enforceable by the government on account of a legal obligation or a contract. Therefore, the amount due has to be first quantified by following the due process and as explained by the Supreme Court in the context of the scheme it should be payable to the government and subsisting i.e., not paid. The Target Plus Scheme is a beneficial provision with the objective to accelerate growth in exports by giving incentives to those export houses whose exports show an annual upward trend. Initially the benefits were graded i.e., 5%, 10% and 15% depending upon the percentage of incremental growth in exports. Petitioner fell within the 15% category for the year 2005-2006. Thereafter, by an amendment on 12.06.2006, the percentage of incentives was made uniform i.e., 5% which was given retrospective effect from 01.04.2005 - Petitioner is entitled to the balance 10% benefit for the same period for which the 5% benefit was granted being within the 15% category. When one part of the benefit for a year was given, question of withholding of the remaining benefit for the same year does not arise. Exports are of the year 2005-2006. We are now in 2020. 14 years have lapsed in between. Such inordinate delay can only frustrate the very objective of the scheme. Respondents are directed to issue the necessary licence to the Petitioner for the balance/additional benefit of duty credit scrips for the amount of ₹ 4,22,16,175.00 for the year 2005-2006 under the Target Plus Scheme within a period of four weeks from the date of receipt of a copy of this judgment - Petition allowed.

Summary

Issues Involved:
1. Eligibility of the Petitioner for balance/additional duty credit scrips under the Target Plus Scheme.
2. Retrospective amendment to the Target Plus Scheme and its legal implications.
3. Compliance with procedural requirements for issuance of duty credit scrips.
4. Validity and enforceability of alleged government dues.

Issue-wise Detailed Analysis:

1. Eligibility of the Petitioner for Balance/Additional Duty Credit Scrips:
The Petitioner, a partnership firm engaged in manufacturing and exporting electrical cables and equipment, sought additional duty credit scrips amounting to ?4,22,16,175.73 under the Target Plus Scheme. The scheme, effective from 01.04.2004, aimed to accelerate export growth by rewarding star export houses with a minimum threshold export turnover. The Petitioner’s exports increased by 119.34% from 2004-2005 to 2005-2006, qualifying them for a 15% duty credit entitlement. Initially, the Petitioner received scrips for 5% of the incremental growth due to a retrospective amendment but sought the remaining 10% after the Supreme Court ruled the amendment could not apply retrospectively.

2. Retrospective Amendment to the Target Plus Scheme:
The Government issued Notification No.08 of 2006 on 12.06.2006, reducing the duty credit entitlement to 5% retrospectively from 01.04.2005. This amendment was challenged and ultimately, the Supreme Court in Director General of Foreign Trade Vs. Kanak Exports held that the amendment could only apply prospectively from 12.06.2006. Following this judgment, the Government issued Notification No.6/2015-2020 on 08.05.2017, making the amendment prospective and setting up Zonal Committees for claim scrutiny. The Petitioner renewed its claim for the balance 10% entitlement for the year 2005-2006.

3. Compliance with Procedural Requirements for Issuance of Duty Credit Scrips:
The Petitioner submitted all required documents, including no dues certificates, to the Respondents. Despite repeated submissions and clarifications, the Petitioner faced continuous demands for additional documents from Respondent No.3. The Zonal Committee, in its 11th meeting on 25.09.2020, conditionally approved the Petitioner’s claim subject to clearance from the customs department regarding alleged dues related to non-submission of Bank Realization Certificates (BRCs). The Petitioner contended that no government dues were pending.

4. Validity and Enforceability of Alleged Government Dues:
The Zonal Committee’s minutes noted dues reported by customs related to non-submission of BRCs. However, the Court observed that no specific demand or quantification of dues was mentioned. The Court clarified that "government dues" refers to enforceable obligations payable to the government. Since no quantified dues were established, the alleged non-submission of BRCs could not be construed as pending government dues. The Court emphasized that the Petitioner had already received partial benefit under the scheme, and there was no justifiable reason to withhold the remaining benefit.

Conclusion:
The Court directed the Respondents to issue the necessary licence for the balance duty credit scrips amounting to ?4,22,16,175.00 for the year 2005-2006 within four weeks. The Writ Petition was allowed without any order as to costs, underscoring the inordinate delay in granting the Petitioner the full benefit under the Target Plus Scheme.