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TMI Blog2016 (9) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of manufacturing activity. Even if a literal interpretation of expression used in Clause 6.5 of the foreign trade policy is taken, it refers to the calculation of NFE cumulatively in block of five years “starting from the commencement of production” - block of five years to begin from 1.04.2003. Monitoring the performance of the unit - period envisaged would be the financial year immediately starting the manufacturing activity - the unit which has not completed one year from the date of commencement of commercial production will not be monitored. Further, a unit which has completed less than five years from the date of commencement of the commercial production, it would be monitored only for the number of completed years. The reference to completed years must be for a broken period between the date of commencement of production and the commencement of financial year. Interpretation of policy not in favor of petitioner - decided against the petitioner. - Special Civil Application No. 7021 of 2016 - - - Dated:- 1-9-2016 - Akil Kureshi And A. J. Shastri, JJ. Mr D K Trivedi, Advocate for the Petitioner Ms Trusha K Patel, Advocate for the Respondent ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity in the order dated 12.02.2014 observed that on 29.02.2003, the petitioner had merely made imports of the raw materials. There was nothing on the record to suggest that the manufacturing activity actually commenced. However, accepting the petitioner's contention that such activity had actually commenced, proceeded to hold that the block periods for consideration of NFE would be the financial years 2003-04 to 2007-08 and thereafter, financial year 2008-09 to 2012-13. On such basis he concluded that the petitioner had negative NFE of ₹ 55.73 lacs in the second block and imposed penalty of ₹ 5.50 lacs under Section 11(2) of the Act. He also noted that the petitioner had discontinued manufacturing activity since last couple of years and the unit had closed down. However, taking note of the petitioner's contention of a possible revival of the unit, he did not take any further penal action in this respect. 4. The petitioner challenged this order before the appellate authority. The appellate authority, was of the opinion that the block period would start from the date of manufacturing activity itself. In his opinion, the first block period would, therefore, compr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d cumulatively in blocks of five years, starting from commencement of production. Whenever a unit is unable to export due to prohibition/restriction imposed on export of any product mentioned in LOP, the five year block period for calculation of NFE earnings may be suitably extended by BoA. BoA may also consider extension of block period by another one year, for calculation of NFE on case ot case basis, for those units which complete 5 years block period in between 30.09.2008 and 30.09.2009 keeping in view the decline in exports in that particular unit, due to economic slow down only. 9. This policy contained guidelines for monitoring the performance of EOU/SEZ etc. units in the Appendix 14-I-G. Relevant portion of these guidelines reads as under: (1) The annual review of performance of each operational unit and its compliance with the conditions of approval shall be undertaken by the Development Commissioner before the end of the first quarter of the following financial year; (2) A summary of annual performance review will be sent by each Development Commissioner to the Ministry of Commerce for information under the three formats indicated below latest by 30th Sept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an EOU would be a positive net foreign exchange earner except where for sector specific provision, a higher value addition would be specified. It is further provided that such net NFE shall be calculated cumulatively in blocks of five years starting from the commencement of production. This requirement of para 6.5 would have to be appreciated and interpreted bearing in mind the guidelines for monitoring the performance of such units. In clause (1) it is provided that the annual review of performance of each unit and its compliance with the conditions of approval shall be undertaken by the Development Commissioner before end of the first quarter of the financial year . As per clause (2) a summary of annual performance review would be sent by each Development Commissioner to the Ministry of Commerce latest by 30th September every year in prescribed proforma which would include unit wise statement of NFE showing the result of review. Clause (3) provides for criteria for annual monitoring. Under sub clause (i) if a unit falls short in achieving NFE at the end of the 1st and IInd year the same will be kept under watch. In case, such default occurs at the end of third or subsequent yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... broken period between the date of commencement of production and the commencement of financial year. 14. As per the guidelines, the unit would be required to submit its quarterly performance report in prescribed format. We have perused one such format produced by the petitioner at Annexure K to the petition. It has reference to the quarterly period of a financial year viz. April-June, July-September, October- December and January-March. Thus, the computation of NFE would be financial year wise and which would be the beginning of the financial year following the year under which the manufacturing activity commences. Under no circumstances such period would be the period anterior with the date of manufacturing activity. Even if we take a literal interpretation of expression used in Clause 6.5 of the foreign trade policy, it refers to the calculation of NFE cumulatively in block of five years starting from the commencement of production . 15. The purpose of framing such a policy can be easily appreciated. All imports, exports and settlement of accounts would largely relatable to the financial years. Providing guidelines for ignoring a part of financial year during which the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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