2015 (10) TMI 2191 - HC - Customs

Entitlement of Duty Credit Scrips under Served From India Scheme (SFIS) declared deficient revenue tried to disqualify the Petitioner on the basis that the brand under which the Petitioner operates is not an Indian brand. - Held That - It is undisputed that brand Castrol India is not an Indian brand Matter squarely covered in case of Naman Hotels Private Ltd. 2015 (9) TMI 564 - BOMBAY HIGH COURT Challenge to the deficiency letter fails Decided in favour of Revenue.

Issues Involved:
1. Legality and validity of deficiency letters issued to the Petitioner.
2. Entitlement of the Petitioner to Duty Credit Scrips under the "Served From India Scheme" (SFIS) as per the Foreign Trade Policy 2009-14 (FTP 2009-14).
3. Interpretation of the SFIS provisions and whether foreign brands are eligible for benefits under the scheme.
4. Reliance on the Delhi High Court's decision in Yum Restaurant India Pvt Ltd Vs. Union of India & Ors.
5. Jurisdiction and authority of the Respondents in amending or interpreting the FTP 2009-14.

Detailed Analysis:

1. Legality and Validity of Deficiency Letters:
The Petitioner challenged the deficiency letters dated 11th May, 2015, and 14th May, 2015, which informed that their applications for Duty Credit Scrips were deficient because the Petitioner was a foreign brand and hence not entitled to benefits under the SFIS. The Petitioner argued that these letters were arbitrary and issued without authority of law, thus violating the provisions of the FTP 2009-14. The Court found that the deficiency letters were issued based on the Policy Interpretation Committee (PIC) minutes dated 27th December, 2011, which were deemed to be outside the provisions of the FTP 2009-14. However, the Court upheld the validity of these letters based on precedent and the objectives of the SFIS.

2. Entitlement to Duty Credit Scrips:
The Petitioner claimed entitlement to Duty Credit Scrips amounting to Rs. 25,24,483 for FY 2012-13 and Rs. 29,00,354 for FY 2013-14 under the FTP 2009-14. The Petitioner relied on the Delhi High Court's decision in Yum Restaurant India Pvt Ltd Vs. Union of India & Ors, arguing that the Respondents were unlawfully denying them benefits under the SFIS. The Court, however, referred to a Division Bench judgment in the case of Shri Naman Hotels Private Ltd v/s The Union of India and Others, which negated similar contentions and upheld that foreign brands were not entitled to SFIS benefits.

3. Interpretation of SFIS Provisions:
The Court analyzed the SFIS provisions, emphasizing that the scheme aimed to promote a unique 'Served From India' brand, recognized and respected worldwide. The Court agreed with the Respondents that the SFIS was intended to benefit Indian brands and service providers, not foreign brands operating in India. The eligibility criteria under the SFIS were designed to encourage Indian entities that contribute to creating a powerful Indian brand. The Court concluded that the Petitioner, being a foreign brand, did not meet the eligibility criteria for the SFIS benefits.

4. Reliance on Delhi High Court's Decision:
The Petitioner's reliance on the Delhi High Court's decision in Yum Restaurant India Pvt Ltd Vs. Union of India & Ors was addressed by the Court. The Court noted that similar arguments were raised and dismissed in the case of Shri Naman Hotels Private Ltd. The Court found that the reasoning in the Naman Hotels case was sound and binding, thus rejecting the Petitioner's reliance on the Delhi High Court's decision.

5. Jurisdiction and Authority of Respondents:
The Petitioner argued that the Respondents exceeded their jurisdiction by interpreting and amending the FTP 2009-14 provisions through the deficiency letters. The Court, however, upheld the Respondents' actions, stating that the interpretation aligned with the objectives of the SFIS and the FTP 2009-14. The Court emphasized that the policy's intent was to promote Indian brands, and the Respondents acted within their authority to ensure compliance with this objective.

Conclusion:
The Court dismissed the Writ Petition, upholding the validity of the deficiency letters and confirming that the Petitioner, being a foreign brand, was not entitled to benefits under the SFIS. The judgment reinforced the policy objective of promoting Indian brands and service providers under the FTP 2009-14. The Court left the parties to bear their own costs.

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