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2019 (5) TMI 1636 - HC - CustomsAdvance Authorization Scheme - extension of export obligation period - import of bulk drugs for the purposes of supplying the same to the Russian Company after repackaging the drug in question for retail trade and exporting the same to the Russian Company - HELD THAT - The contention that the petitioner had imported the drug in question from a registered source and, therefore, the export obligation period was thirty six months and not twelve months, cannot be accepted. First of all, no such contention has been canvassed before the Licensing Authority or before the PRC and no such contention has been raised by the petitioner in the writ petition as well. This Court is, thus, of the view that this contention is an afterthought and must be rejected outrightly - Secondly, even if it is accepted that the petitioner had imported the products from a registered source (which, in this case, it had not), it cannot be accepted that the export obligation period was 36 months and not twelve months. In terms of policy circular no.12 dated 27.06.2005, it was clarified that if the imports are from registered sources, conditions governing normal advance licences are applicable. In these cases, it included validity period and normal export obligation period. The petitioner is correct that in the event, it is accepted that if the products are exported from a registered source, normal provisions with regard to the export obligation period would apply. However, the contention that the said period is thirty six months is incorrect. In terms of paragraph 4.22 of the Handbook of Procedures for the year 2009-2010 (Volume-I), the export obligation period for advance authorization issued with inputs as mentioned in Appendix 30A would be for the period as stipulated against each entry, therein - Appendix-30A of the said Handbook clearly specifies that the export obligation period for drugs (with specific export order and pre import condition) would be twelve months from the date of clearance of each import consignment by the Customs Authorities. In view of the above, even if it is accepted the petitioner had imported the drug in question from a registered source, the export obligation period applicable would be twelve months from the date of the consignments imported by the petitioner. In the present case, the import against the advance authorization was made against two Bills of Entry dated 13.06.2012 and 20.06.2012. Thus, the export obligation period expired on 12.06.2013 and 19.06.2013 respectively. During this period, the petitioner had exported five consignments, last of which was exported on 15.02.2013. The PRC had acceded to the petitioner s request and had extended the export obligation period by further six months, which expired on 12.12.2013/19.12.2013 - During the said extended period, the petitioner had exported another consignment which was done on 29.08.2013. However, the remaining three consignments were exported after a significant delay; first two consignments were exported on 17.10.2014 and the last consignment was exported on 02.06.2015. In terms of paragraph 2.5 of the FTP, DGFT is empowered to grant relaxation as he deems fit and proper on the ground of genuine hardship and adverse impact on trade in genuine if the extension, as sought for by the petitioner, is not granted - Although, the petitioner contends that its case is one of the genuine hardships, there is no material on record which could persuade the PRC to consider that the extension of export obligation period to such an extent is warranted. The petitioner was fully aware while accepting the advance authorization and importing the products that it would require to perform the export obligation within a period of twelve months. It is possible that the petitioner has faced commercial difficulties, however, that would not be a ground to extend the export obligation period from twelve months to three years (thirty six months). It is also well settled that the relaxation of the policy is not a matter of right. Sufficient discretion is granted to the DGFT to relax any provision of the policy or procedure as it deems fit - In the present case, this Court is unable to accept that the decision of the PRC to deny extension of export obligation period is perverse, arbitrary or falls foul of the guidelines as indicated in paragraph 2.5 of the FTP. Petition dismissed.
Issues Involved:
1. Rejection of the petitioner's request for reconsideration of the PRC's earlier decision. 2. Denial of extension of the export obligation period for the Advance Authorization. 3. Petitioner's compliance with export obligations and related hardships. 4. Applicability of policy provisions and relaxation under the Foreign Trade Policy (FTP). Issue-Wise Detailed Analysis: 1. Rejection of the petitioner's request for reconsideration of the PRC's earlier decision: The petitioner challenged the PRC's decision from its meeting on 08.08.2017, which upheld its earlier decision from 19.07.2016, denying an extension of the export obligation period for Advance Authorization No. 0310696315 dated 28.05.2012. The PRC had extended the export obligation period from twelve months to eighteen months but rejected further extensions. 2. Denial of extension of the export obligation period for the Advance Authorization: The petitioner, a merchant exporter of pharmaceutical products, imported Cycloserine USP under an Advance Authorization and exported it in nine tranches. Despite fulfilling the export obligation in terms of quantity and value, some shipments were made beyond the extended export obligation period. The Licensing Authority issued deficiency letters, and the PRC extended the period by six months, which the petitioner contested, seeking further extension. 3. Petitioner's compliance with export obligations and related hardships: The petitioner argued that it faced genuine hardships due to policy changes by the Russian Government and that the DGFT should have granted relaxation under paragraph 2.5 of the FTP. The petitioner contended that it had imported drugs from a registered source, implying a thirty-six-month export obligation period, and cited a similar case (Mylan Laboratories Ltd.) where the PRC extended the period from eighteen to thirty-six months. 4. Applicability of policy provisions and relaxation under the Foreign Trade Policy (FTP): The court rejected the petitioner's claim of a thirty-six-month export obligation period, noting that the petitioner had not raised this argument earlier and had sought extensions based on a twelve-month period. Paragraph 4.22 of the Handbook of Procedures specified a twelve-month period for drugs from the date of import. The court found no material evidence of genuine hardship warranting further extension and upheld the PRC's decision, emphasizing that policy relaxation is discretionary and not a right. Judgment: The court dismissed the petition, ruling that the PRC's decision was neither perverse nor arbitrary and adhered to the guidelines of paragraph 2.5 of the FTP. The petitioner's reliance on the Supreme Court decision in Macquarie Bank Limited was deemed misplaced, as export obligations are substantive conditions, not procedural matters. The court also found no relevant factual matrix in the Mylan Laboratories Ltd. case to support the petitioner's claim.
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