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TMI Blog2016 (9) TMI 776X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 30.11.2004 was passed cancelling the DEPB imposing penalty of 2,00,000/- on the petitioner. All these actions are after the expiry of the period of validity of the DEPB. Once the period of validity of the DEPB has expired no action to cancel or withdraw it can be taken because then there is no ‘DEPB' in existence to be cancelled and on which the cancellation order can operate. Cancellation of DEPB in such a situation is a meaningless order and can have no consequence. Section 9(4) enables the Director General or officer authorised by him to cancel or suspend the licence - in Section 9(4) there is no power to cancel or suspend the licence retrospectively. The order of cancellation of the DEPB being illegal and without jurisdiction the penalty imposed being a consequence thereof also cannot sustain - petition allowed - decided in favor of petitioner. X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner has raised three contentions. (i) The DEPB is a 'scrip' and not a 'licence' and hence it could not have been cancelled in exercise of power under Section 9(4) of the 1992 Act because the provision as existing on the date of passing of the impugned orders only enabled suspension or cancellation of a licence. 'licence' as defined in the 1992 Act meant a licence to import or export including a customs clearance certificate and any other permission issued or granted under the Act. It was only later by The Foreign Trade (Development and Regulation) Amendment Act, 2010 that the term 'licence' has been substituted with the words ' licence, certificate, scrip or other instrument bestowing financial or fiscal benefits' in Section 9(1), (3), (4) and (5). This amendment is not retrospective. Hence, it is after this amendment that the Director General can be said to have power to cancel the DEPB which is a scrip. (ii) The validity period of the DEPB is only 12 months and no extension thereof is permissible. After the expiry of its validity, it is mere piece of paper of no worth. In the very nature of things, it cannot be cancelled after the expiry of its validity wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be in such form as may be prescribed; (b) be valid for such period as may be specified therein; and (c) be subject to such terms, conditions and restrictions as may be prescribed or as specified in the licence with reference to the terms, conditions and restrictions so prescribed. (4) The Director General or the officer authorised under subsection (2) may, subject to such conditions as may be prescribed for good and sufficient reasons, to be recorded in writing, suspend or cancel any licence granted under this Act: Provided that no such suspension or cancellation shall be made except after giving the holder of the licence a reasonable opportunity of being heard. (5) An appeal against an order refusing to grant, or renew or suspending or cancelling, a licence shall lie in like manner as an appeal against an order would lie under Section 15." 13. The amendment made to Section 9 by the 2010 Amendment Act is as under: "9. Amendment of Section 9.-In Section 9 of the principal Act,- (a) in sub-sections (1), (3), (4) and (5) for the word "licence", wherever it occurs, the words "licence, certificate, script or any instrument bestowing financial or fiscal benefits" shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation for grant of credit under DEPB may be made to the licensing authority concerned in the form given in Appendix 11- C along with the documents prescribed therein. The provisions of Para 7.2 shall be applicable for DEPB also. The FOB value in free foreign exchange shall be converted into Indian rupees as per the authorised dealer's T/T buying rate, prevalent on the date of negotiation/purchase/collection of document. DEPB rate of credit shall be applied on the FOB value so arrived. In case of advance payment, the FOB value in free foreign exchange shall be converted into Indian rupees as per the authorised dealer's T/T buying rate, prevalent on the date of receipt of advance payment. 15. As is clear from a reading of Para 7.14 the objective of Duty Entitlement Pass Book Scheme is to neutralise the incidence of customs duty on the import content of the export product. The neutralisation is to be provided by way of grant of duty credit against the export product. The nature of DEPB has been explained by the Supreme Court in various cases. 16. In Commr. of Customs v. Indian Rayon & Industries Ltd., (2008) 14 SCC 228, at page 234 Hon'ble the Supreme Court explained about the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ket can be described as anything else but "goods". 61. If any more analogies are to be given one might compare DEPB with prepaid meal tickets or prepaid petrol coupons or accumulated flying miles. A meal ticket, a petrol coupon or flying miles credit has its own intrinsic value. If permitted free transferability those would soon become market commodities and would be sold and bought for their value as "goods". 62. In light of the discussions made above, the two questions framed at the beginning of the judgment are to be answered as follows: The Constitution Bench decision in Sunrise does not alter the position in regard to levy of tax on sale of REP licence and on that issue the three-Judge Bench decision in Vikas1 continues to hold the field. DEPB has an intrinsic value that makes it a market commodity. Therefore, DEPB, like REP licence qualifies as "goods" within the meaning of the sales tax laws of Delhi, Kerala and Mumbai and its sale is exigible to tax." 19. As per Para 7.15 of the Export Import Policy, the DEPB shall be valid for a period of 12 months from the date of issue. The DEPB in this case was issued on 25.8.2000. Thus, it remained valid only till 24.8.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is nothing subsisting to suspend or cancel, about a DEPB which has lost its validity, for it is no longer a DEPB but a piece of paper of no worth. 25. In M/s Stella Industries (P) Ltd. Vs. State of Haryana (2009) 20 VST 62 (P&H) a Division Bench of this Court was considering the question as to whether an eligibility certificate granted under Rule 28-A of the Haryana General Sales Tax Rules, 1975 could be withdrawn or cancelled after the benefit thereunder has been availed of or the currency of the eligibility certificate had expired. With reference to Rule 8(a) of the Rules, as per which, the eligibility certificate granted to an industrial unit was liable to be withdrawn at any time during its currency under specified circumstances, the learned Court held that the eligibility certificate could be withdrawn only during its currency and not after the maximum period for its validity had expired. The relevant extract from the judgment is as under: "A perusal of the conditions of eligibility certificate granted to the petitioner shows that the maximum amount of benefit available to the petitioner was fixed and also maximum period during which the benefit could be availed of that is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Cancellation of DEPB in such a situation is a meaningless order and can have no consequence. 26. Moreover, in Section 9(4) there is no power to cancel or suspend the licence retrospectively. 27. It is well settled that no action taken under a statute can have retrospective effect in the absence of a specific provision in the statute conferring such power . 28. In M.D. University v. Jahan Singh, (2007) 5 SCC 77, Hon'ble the Supreme Court held as under: "19. The Act does not confer any power on the Executive Council to make a regulation with retrospective effect. The purported regulations, thus, could not have been given retrospective effect or retroactive operation as it is now well settled that in absence of any provision contained in the legislative Act, a delegatee cannot make a delegated legislation with retrospective effect. 20. In Mahabir Vegetable Oils (P) Ltd. v. State of Haryana this Court stated: (SCC p. 633, paras 41-43) "41. We may at this stage consider the effect of omission of the said note. It is beyond any cavil that a subordinate legislation can be given a retrospective effect and retroactive operation, if any power in this behalf is contained in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort licence retrospectively or otherwise without the grant of any opportunity to the importer? (iii) Is the action of the respondents in initiating proceedings for the confiscation of the goods legal and, thus, tenable? Regarding (i): 9. With the object of providing for the development and regulation of foreign trade, the Parliament has enacted the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as the Act). The primary object of this Act is to facilitate "imports into and augment export from India…….". Section 9 of the Act inter alia provides for the issue of suspension and cancellation of licence. In Clause (2) "the Director General or an officer authorised by him" is competent to "grant or renew or refuse to grant or renew, a licence to import and export such class or classes of goods, as may be prescribed, after recording in writing his reasons for such refusal." A licence granted under Section 9 has to be in a prescribed form. It is valid for the period which may be specified therein. Terms, conditions and restrictions can also be imposed. The provision also authorises the competent authority to suspend or cancel a licence. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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