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TMI Blog2016 (7) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... o the DFIA holders as well as, consequently, to the transferees thereof, that all benefits accruing under the said DFIAs read with the then existing FTP, HOP and DGFT Circulars etc would be available thereunder. It was on the basis of this promise, as held out by the respondent, that the petitioner invested considerable amounts in purchasing the said DFIAs from the original holders thereof in the belief that import benefits available to the said DFIAs at the time of issuance thereof would not be denied to it merely by erroneously applying the restrictions which were introduced thereafter. To the said extent, therefore, the impugned Notifications, Public Notice and Circulars, insofar as they make the restrictive conditions incorporated therein applicable to all imports made thereafter, even under DFIAs issued prior thereto, cannot sustain. 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. - The prayer for granting exemption, so far as antidumping duty is concerned, is rejected - Decided partly in favor of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled, and subject to transferability being endorsed on the licences by the DGFT. The following clauses of the said Scheme, as contained in the FTP and as they existed at the time of issuance of the DFIA licences in the present case, merit reproduction: "2.2 Every exporter or importer shall comply with the provisions of FT (D & R) Act, the Rules and Orders made thereunder, FTP and terms and conditions of any Authorisation granted. All imported goods shall also be subject to domestic Laws, Rules, Orders, Regulations, technical specifications, environmental and safety norms as applicable to domestically produced goods. No import or export of rough diamonds shall be permitted unless accompanied by Kimberly Process (KP) Certificate as specified by Gem and Jewellery EPC (GJEPC). 2.8 Every Authorisation shall be valid for prescribed period of validity and shall contain such terms and conditions as may be specified by RA which may include: (a) Quantity, description and value of goods; (b) Actual User condition; (c) Export obligation; (d) Value addition to be achieved; and (e) Minimum export/import price. 4.1 Duty exemption schemes enable duty-free import of inputs re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.1.14 In case of an Advance Authorisation, drawback shall be available of any duty paid material, whether imported or indigenous, used in goods exported, as per drawback rate fixed by DoR, Ministry of Finance (Directorate of Drawback). Drawback allowed shall be mentioned in Authorisation. 4.2.2 Provisions of para 4.1.3 shall be applicable in case of DFIA. However, these Authorisations shall be issued only for products for which Standard Input and Output Norms (SION) have been notified. 4.2.3 Provisions of paras 4.1 .11, 4.1 .12, 4.1 .13 and 4.1 .14 of the FTP shall be applicable for DFIA holder. 4.2.6 Once export obligation has been fulfilled, request for transferability of Authorisation or inputs imported against it may be made before concerned RA. Once, transferability is endorsed, Authorisation Holder may transfer DFIA or duty-free inputs, except fuel and any other item (s) notified by DGFT. However, for fuel, import entitlement may be transferred only to companies which have been granted authorisation to market fuel by Ministry of Petroleum and natural gas." 6. As mentioned in para4.2.6 of the FTP, already extracted herein above, para 4.36A of the Handbook of Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exporter, holding a DFIA licence, had the flexibility to import alternative inputs or products mentioned in the SION. 10. The SION also stipulated Soda Ash to be a permissible input in respect of the export items covered by the DFIA issued to the petitioner. 11. Condition 4 of the Terms and Conditions attached to the DFIAs required the export obligation to be fulfilled by the DFIA holder, as per the terms and conditions specified in the FTP, 2009-14 and the HOP 2009-14 and guidelines issued by the DGFT from time to time. 12. Condition 12 of the DFIAs stipulated that all conditions of FTP and HOP and ITC (HS) Classification, as amended, would be applicable unless specifically dispensed with by the DFIA. 13. Consequent to the DGFT endorsing both the DFIAs transferable, in the case of DFIA dated 28.03.2011 on 10.07.2013 and in the case of DFIA dated 13.04.2012 on 28.09.2015, the said DFIAs were transferred by the original holder to the petitioner during the period of their validity, which was 24 months from the date of issue. 14. The petitioner imported Soda Ash under into-Bond B/E dated 13.06.2014 and subsequently sought duty free clearance thereof, against DFIA, by filing ex-bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rated that duty free import of inputs, under the schemes in Chapter 4 of the FTP, would be guided by Notification 31 dated 01.08.2013, and that any clarification issued by the DGFT to the said Notification would be deemed to have been superseded to the extent of such repugnancy. 19. The impugned Public Notice dated 30.10.2013 stipulated that, while the impugned Notification dated 01.08.2013 (supra) would not cover the goods, if both export and import had been completed prior to 01.08.2013, irrespective of whether the DFIAs had been redeemed or not, or to cases where the DFIAs had been endorsed as transferable before 01.08.2013, in all other cases, even where the export was fully or partially completed before 01.08.2013, corresponding imports would be allowed subject to an undertaking from the DFIA holder that only inputs which had been actually used in the product already exported would be imported. 20. The impugned Notification, dated 21.08.2014 amended para 4.1.15 of the FTP, as inserted by Notification dated 01.08.2013 supra, by stipulating that the quantities or inputs permitted for import would be in proportion to the quantities which would be consumed in production, which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considerable misuse of DFIAs, by importing inputs which had nothing to do with the export product, had been going on, which, according to him, was contrary to the very ethos of the DFIA Scheme. He has also sought to place reliance, in this regard, on the judgement of the High Court of Bombay in Writ Petition No 9955 of 2013 (Sevantilal& Sons v U.O.I.) which, according to them on the substantially similar issue. 23. We have bestowed our anxious consideration to the submissions made by the petitioner and by Respondents 1 to 3 as well as to the material on record and the various decisions relied upon by both sides. 24. Para-2 of the impugned Notification No 31 (RE-2013)/2009- 2014, dated 01/08/2013, inserted in the FTP, new para-4.1.15 after para- 4.1 .14, which reads thus: "4.1.15 Wherever SION permits use of either (a) a genetic input or (b) alternative inputs, unless the name of the specific input(s) [which has (have) been used in manufacturing the export product] gets indicated/endorsed in the relevant shipping Bill and these inputs, so endorsed, matched the description in the relevant Bill of entry, the concerned Authorisation will not be redeemed. In other words, the name/de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus: "2 If only export has been fully completed/partly completed before 01/08/2013, then the corresponding import would be allowed subject to an undertaking from the authorisation holder, that the inputs which have been actually used in the product already exported shall only be imported."(Emphasis supplied) Further, Clause 3 of the impugned Notification no. 90 (Re-2013)/ 2009-14 dated 21.8.2014 reads as under- "3. Effect of this Notification: Quantity of input to be allowed under Advance Authorisation / DFIA shall be in proportion to the quantity of input actually used / consumed in production." 28. How an importer could be required only to import inputs which have actually been used in products which already stand exported. SION norms are notified to prescribe permissible inputs against any export product. The DFIA is issued on such standard basis. It cannot be argued that what is contemplated by these clauses is only replenishment, as replenishment is an entirely independent concept, in respect of which the FTP and the HOP contains separate clauses. We can only understand these clauses, i.e. para-4 of the impugned Notification dated 01/08/2013, and para-2 of the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the said clause are "as amended" and not "as amended from time to time." In any event, the provisions of the FTP, HOP, Notifications, Public Notices and guidelines issued by DGFT as amended till the date of issuance of the DFIA, would govern the DFIAs during their entire life. 32. The same position stands reflected in para 4.2.2. (b) of FTP, as amended w.e.f. June 2012, which reads as under: "DFIA shall be issued in accordance with Policy and procedure in force on the date of issue of Authorisation . " (Emphasis supplied) Though, undoubtedly, the specific stipulation to that effect was not contained in the FTP on the dates of issuance of DFIA to the petitioner i.e. 28.03.2012 and 13.04.2012, introduction of the said stipulation, just 3 months thereafter, has to be regarded as clarificatory, especially in view of the fact that such stipulation did exist in the case of Advance Authorizations, in para 4.1.7 of the FTP, which read thus: "Advance Authorisation shall be issued in accordance with Policy and procedure in force on Authorisation issue date." There is no reason to believe that the framers of the FTP intended the FTP to apply differently, in the case of the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. 37. To the said extent, therefore, the impugned Notifications, Public Notice and Circulars, insofar as they make the restrictive conditions incorporated therein applicable to all imports made thereafter, even under DFIAs issued prior thereto, cannot sustain. The impugned DGFT Circular dated 02.08.2013 is also, consequently, illegal, insofar as it makes the Notification dated 01.08.2013 (supra) applicable to all imports effected under the DFIA scheme thereafter. 38. Insofar as Notification dated 21.08.2014 is concerned, again, the stipulation in the newly introduced clause (b) in para 4.1.15 of the FTP, to the effect that proportion of inputs actually used or consumed in the production of export products, shall be clearly indicated in the S/Bs cannot be made applicable to cases where DFIA is already issued prior to such stipulation, or exports have already taken place prior to issuance of the DFIAs or prior to the date of such stipulation and much less to any transferee of the DFIAs. 39. That apart, as already indicated herein above, said clause (b) of para 4.1.15 cannot be used to restrict or limit the entitlement under DFIA, which existed on the date of issuance of DFIA und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any notification or instructions by Central Government or any other authority would not divest, the licence holder or the transferee, of the benefits promised on the date of issuance of DFIA, however, it is seen that the validity of the Customs Notifications which are issued by the Central Government to restrict exemption from anti-dumping duty are not under challenge in this writ petition. Therefore, we cannot direct the Commissioner of Customs at Ludhiana to grant exemption of anti-dumping duty.Consequently, the prayer in regard to exemption from anti-dumping duty is rejected. The exemption available to the petitioner under the DFIA would therefore be restricted only to the basic customs duty. 43. It is pointed out in the petition that despite absence of any power under section 5 of the FTDR Act, 1992 for any retrospective amendment, several such amendments / instructions are being issued and are being arbitrarily applied in a retrospective manner. Some notifications of such nature are already struck down such as DGFT Notification No. 4 (RE:2013)/ 2009-14 dated 18.04.2013 withdrawing deemed benefits for supplies to Non-Mega Power Projects - Hon'ble High Court of Gujarat struc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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