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2024 (2) TMI 1102 - HC - CustomsPrayer for a direction extending the validity period of Duty Credit Certificate by a period of 15 years - permit use of the Duty Credit Certificate to defray I.G.S.T and G.S.T Compensation Cess - utilise the benefit under the Target Plus Scheme ('TPS') - Option of set off in duty and additional duty payable on its imports - Entry 56 of notification No.26/2017-Cus. - violative of Articles 14 and 19(1)(g) of the Constitution of India - retrospective amendment of EXIM policy affecting the rights under the TPS - prescribes 24 months time limit for utilisation of the certificate under the TPS - Director General of Foreign Trade ('D.G.F.T') to be ultra-vires the Section 5 of the Foreign Trade (Development and Regulation) Act, 1972 ('the Act') read with Foreign Trade Policy (2004-2009) - (i) Whether the period of validity for availing the Duty Credit Benefits under the TPS as 24 months from the date of issue of scrips is without jurisdiction and illegal ? - HELD THAT - Section 5 of the Act empowers the Central Government to announce the export and import policy and also to amend the policy from time to time. Section 6 of the Act empowers the Central Government to appoint any person as D.G.F.T to advice the Government in formulation of the policy to carry out the policy and to exercise such powers as is conferred upon him by the Central Government in implementing the EXIM policy. Section 6(3) of the Act provides power to amend that policy cannot be delegated to D.G.F.T and it would be prerogative to the Central Government. It is in this background, the Central Government has chosen to designate the D.G.F.T as the Ex Officio Additional Secretary to the Government of India. Because the substantial part of the scheme is contained in the FTP and the procedural part of it has to be laid down in the Handbook of Procedures, it is expressly authorised under the FTP, the Handbook of Procedures is also notified by the Ministry of Commerce and Industry, Government of India and the public notice is signed by the person in the capacity both as the D.G.F.T and Ex Officio Additional Secretary to the Government of India. Thus, the ruling of the Hon'ble Supreme Court of India in Agricas LLP's case 2020 (8) TMI 705 - SUPREME COURT would be squarely applicable to the facts of the case and the very same authority being both the D.G.F.T and the Additional Secretary to the Government of India and the notification being issued by the Ministry of Commerce and Industry, Government of India, it cannot be said that period of 24 months has been prescribed by the delegatee. Secondly, a reading of Clauses 2.4 and 2.8 of the FTP it can be seen that not only the laying down the procedure is ordered to be made in the Handbook of Procedures, it is also stated that the Certificates are valid only for the period mentioned therein. Therefore, it cannot be said that there is no express delegation of power to prescribe the validity period of 24 months. Thirdly, the 24 months period of validity was prescribed by the notification mentioned above on 07.04.2006. As a matter of fact, when in the earlier round of litigation, the retrospective amendment of EXIM policy affecting the rights under the TPS was challenged before the Hon'ble Supreme Court of India in Kanak Exports' case 2015 (11) TMI 80 - SUPREME COURT , none of the petitioners thereunder including the present petitioner complained about the prescription of 24 months period of validity of the Duty Certificate. Suffice it to say that when the TPS was introduced in the FTP, simultaneously, the Handbook of Procedures in Volume - I also prescribed the said validity period of 24 months. Having availed the benefit with the said period prescribed and just because now in the year 2021, due to its business reasons, wherein, the petitioner is unable to exhaust the entire duty credit it cannot now belatedly challenge the prescription of 24 months and therefore, we hold that there is no infirmity or illegality in Clause 3.2.5(VII) of the Handbook of Procedures. Accordingly, we answer this question. (ii) Whether the Entry 56 made vide notification, dated 01.07.2017 is illegal and amounts to taking away the vested rights of the petitioner ? - HELD THAT - According to the Central Government, these additional duties which are brought in by the amendment need not be given exemption by adjustment of duty credit under the TPS. Accordingly, the impugned notification, was issued, whereunder by Entry 56, it was made clear limiting the exemption on imports availed under Duty Credit Certificates to the levy of additional duties under Sections 3(1), 3(3) and 3(5). Thereby, it was ensured that there was no change in the scope of exemption that has been originally granted by the notification, dated 10.07.2006. Thus, it cannot be said that the Entry 56 takes away any vested right. A reading of Sections 3(7) and 3(9) would show that the legislature consciously did not employ the term as additional duty . It is only the trade notice which mentions the manner of collection as if they would be collected as additional duty. Thus, mentioning as such in the trade notice will not make the I.G.S.T or G.S.T Compensation Cess as additional duty. Accordingly, we answer this question that the impugned Entry 56 merely clarifies and makes the existing position abundantly clear and does not in any manner take away any vested right and as such, is not illegal or ultravires. (iii) Whether the petitioner is entitled for extension of time to avail the Duty Credit in view of the delay on the part of the respondents in issuing the Duty Credit Scrips ? - HELD THAT - It is true that pursuant to the various amendments which were the subject matter of the earlier round, even though the TPS was introduced in the FTP of 2004-2009, ultimately, the retrospective amendments were held to be invalid and the Central Government and the D.G.F.T were directed to confer the benefits on the Star Trading Agencies as per the scheme by the judgment dated 27.10.2015. Even thereafter, no due certificates from the departments were insisted upon and only after the order of the Hon'ble Supreme Court of India in the Contempt Petition, dated 26.11.2019, ultimately, the Target Plus Scrips were issued on 19/04/2021. However, that by itself does not cause prejudice to the petitioner because the 24 months period starts running from the date of issue of the scrips and therefore, no vested right of the petitioner is defeated. Thus, the Court cannot come to the aid of the petitioner by granting the relief of extending time by 15 years as the same is not based on any concomitant right. However, during the course of the arguments, it was brought to the notice of this Court that by citing the time lag and the varied circumstances, the petitioner has moved the Policy Relaxation Committee under Clause 2.5 of the Policy and pending the hearing, by an order, dated 12.01.2024, we held that pendency of the Writ Petitions would not be an impediment for the Committee to take a decision on its own merits dehors the pendency of the Writ Petitions. We once again reiterate that the consideration of the Policy Relaxation Committee can be on its own merits dehors the dismissal of the Writ Petitions. In the result - (i) The Writ Petitions in W.P.Nos.3335 and 3337 of 2022 shall stand dismissed; (ii) W.P.No.3339 of 2022 is disposed of rejecting the prayer of the petitioner to extend the validity period of Duty Credit Certificate by a period of 15 years and to use the Duty Credit Certificate to defray I.G.S.T and G.S.T Compensation Cess, however with the observations that it would be open for the respondents or the Policy Relaxation Committee under Clause 2.5 of the Policy to consider extension of time etc., on the petitioner's request on its own merits as per the law and policy. (iii) There shall be no order as to costs. Consequently, W.M.P.No.3458 of 2022 is closed.
Issues Involved:
1. Validity of the 24-month period for availing Duty Credit Benefits under the Target Plus Scheme (TPS). 2. Legality of Entry 56 of the notification dated 01.07.2017, which limits the exemption on imports availed under Duty Credit Certificates. 3. Entitlement of the petitioner for an extension of time to avail the Duty Credit due to delays by the respondents. Summary: Issue 1: Validity of the 24-month period for availing Duty Credit Benefits under TPS: The court examined whether the 24-month validity period prescribed in Clause 3.2.5(VII) of the Handbook of Procedures was without jurisdiction and illegal. The petitioner argued that this period was not expressly delegated by the parent legislation and thus was beyond the jurisdiction of the Director General of Foreign Trade (D.G.F.T). The court referred to various cases, including *State of Orissa v. Tata Sponge Iron Limited* and *Deepak Fertilizers and Petrochem v. Designated Authority*, concluding that the D.G.F.T, as an ex officio Additional Secretary to the Government of India, was authorized to prescribe such a validity period. The court held that the 24-month period was valid and had been consistently applied since the scheme's inception. Therefore, the court found no infirmity or illegality in Clause 3.2.5(VII) of the Handbook of Procedures. Issue 2: Legality of Entry 56 of the notification dated 01.07.2017: The court analyzed whether Entry 56, which limits the exemption on imports availed under Duty Credit Certificates to the levy of additional duties under Sections 3(1), 3(3), and 3(5) of the Customs Tariff Act, 1975, was illegal and took away vested rights. The court noted that the newly inserted sub-sections 3(7) and 3(9) relating to I.G.S.T and Compensation Cess were not referred to as 'additional duties'. The court concluded that Entry 56 merely clarified the existing position and did not take away any vested rights. Therefore, the court held that Entry 56 was not illegal or ultra vires. Issue 3: Entitlement of the petitioner for an extension of time to avail the Duty Credit: The court acknowledged the delays in issuing the Duty Credit Scrips due to various amendments and legal challenges. However, it noted that the 24-month period started from the date of issue of the scrips, thus not prejudicing the petitioner. The court emphasized that it could not extend the validity period by another 15 years, as it would amount to laying down a new scheme, which is beyond its jurisdiction. The court referred to cases like *Jain Exports Pvt. Ltd.* and *Ambika Mills Ltd., Ahmedabad*, stating that equitable considerations cannot be applied in matters of concession and exemption. However, the court noted that the petitioner had moved the Policy Relaxation Committee under Clause 2.5 of the Policy, and it was open for the Committee to consider the extension request on its own merits. Result: 1. The Writ Petitions in W.P.Nos.3335 and 3337 of 2022 were dismissed. 2. W.P.No.3339 of 2022 was disposed of, rejecting the prayer to extend the validity period of the Duty Credit Certificate by 15 years and to use it to defray I.G.S.T and G.S.T Compensation Cess. However, the court allowed the Policy Relaxation Committee to consider the extension request on its own merits. 3. No order as to costs. Consequently, W.M.P.No.3458 of 2022 was closed.
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