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TMI Blog2017 (2) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... hich would be defeated if their LOAs are not renewed. The worn clothing units of SEZ provide large employment, they fulfilled their NFEE requirement by way of exporting same products to the various countries outside India. The worn clothing imported is non-hazardous in nature, further import is fumigated at the origin to ensure that imported worn clothing is free from germs and they earn valuable foreign exchange for our country, thus there is no reason to impose extra conditions to regulate the functioning of the worn clothing units in SEZ that are over and above the provisions already provided in SEZ Act/ Rules. The authority has bye-passed the mandatory provisions and issued the impugned instructions against the prescribed law which was beyond their jurisdiction. Respondents are directed to allow the petitioners to clear their past accrued entitlement of DTA sales of un-mutilated worn clothing to the extent of 15% of their CIF value of imports made prior to 19.5.2010 and for unutilized DTA entitlement of un-mutilated worn clothing as on 19.5.2010, DTA entitlement quantity of un-mutilated worn clothing to be calculated as per the valuation norms as prevalent on 19.5.2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Director General of Foreign Trade (for short, DGFT ), the petitioners were allowed to sell unmutilated worn clothing in DTA to the extent of 15% of CIF value of imports made in the previous year. By notification dated 19.05.2010, this provision came to be deleted. The petitioners may not be eligible for sale of 15% of un- mutilated worn clothing after the date of notification dated 19.5.2010 but they were eligible for their past accrued entitlement for the period from 1.4.2009 to 18.5.2010. This is because the notification dated 30.03.2006 provided that the petitioners would be entitled to sell in DTA un-mutilated worn clothing to the extent of 15% of CIF value of imports made in the previous year. This was denied to the petitioners by the respondents. On 3.4.2013, the respondents issued a Circular along with the draft policy to regulate the functioning for worn clothing units in Special Economic Zone (for short, SEZ ) and the same was circulated to all the Ministries including Ministry of Textile, Ministry of Environment, Ministry of Finance and to the stakeholders. After considering the feedback from all the concerned, the respondents framed a policy dated 17.9.2013 wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not say exports , export means physical export out of India. Rule 53 of SEZ Rules, 2006, provide various transactions of SEZ units against payment of foreign exchange as exports. Rule 19(6) says that SEZ unit has only one obligation that is at the end of block period of 5 years the unit should remain positive, when their NFEE is cumulatively monitored. Section 30 of the Act read with Rule 47 to 49 says that a unit in SEZ can make DTA clearances on payment of applicable duties without any limits so long as they are positive in NFEE. In the entire SEZ Act / Rules, there is no any condition which can compel the SEZ units to make export physically out of India. Therefore, the impugned order i.e. policy dated 17.9.2013 and the letter dated 30.1.2014 of the respondents are unreasonable, arbitrary, irrational and illegal without authority of law. Since the same have seriously impelled the activities of the petitioners and are violative of Article, 14, 19 (1) (g), 265 and 300-A of the Constitution of India. Vide Notification dated 30th March, 2006 issued by DGFT, the worn clothing units in SEZ were permitted to clear their un-mutilated clothing as export surplus and the export reject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f FTDR, the Government has right to amend the policy / provisions. Further, learned counsel of the respondents claimed that the worn clothing units are falling under Rule 18 (4) (C) and their LOAs are renewed by BOA and BOA is empowered to put such conditions as they may deem fit. The Government had to consider and issue in its totality that it has to take account of all positive and negative of an issue and therefore disallowing 15% in DTA are justified. Further, the clearance of 15% of un-mutilated clothing were subject to issue of amendment of notification dated 19.5.2010 by DGFT. Learned counsel for the respondents has also argued that notification dated 30th March, 2006 that allowed the petitioners to sell 15% in DTA of their total imports made in the previous year was deleted vide notification dated 19.5.2010, thus the issue is now time barred and petitioners have now lost their entitlement. He also claimed that the petitioners have accepted all the terms and conditions of policy dated 17.9.2013. Thus, they cannot challenge the same. Learned counsel for the respondents justified the special policy to be made by the respondents only to regulate the functioning of the plastic r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich has already been earned before notification dated 19.5.2010 as the same was pertaining to their imports made in the previous year 10. Learned counsel for the petitioners argued that because 15% of the previous year s value was allowed to be sold in DTA in the immediate next proceeding year, the benefit was only to be enjoyed in the next subsequent year. The petitioners are having vested accrued right to sell the worn clothing in the DTA to the extent of 15% of the value of imports made in the previous year (Notification dated 30th March, 2006). By way of notification dated 19.05.2010 vested rights of the petitioners were curtailed with retrospective effect. The said notification, on the face of it, does not have any retroactive order, retrospective operation. The interpretation put by the respondents is not supported by the plain wordings of the said notification. Also, the word stands deleted imply that the deletion would operate, hereafter, not before the date of notification. The petitioners are entitled to benefit of DTA entitlement by allowing to clear un-mutilated clothing upto 15% of CIF value of imports made in the previous year accrued pursuant to the Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to make rules. The Authority in this case has bypassed the mandatory conditions of laying of the rules and therefore, it is against the law, and therefore, indirect imposition of the conditions is against the prescribed law and therefore, the authority has no power to impose such conditions on the existing units. Only those terms and conditions which have been enacted by way of rules can be imposed and therefore, impugned conditions imposed by the respondents is dehors, the act and rules, without jurisdiction and the Board of Approval, by an executive decision has no power to impose the condition not prescribed by the Act or Rules. 13. In the entire SEZ Act and Rules, there is no any condition which can compel the SEZ units to make export physically out of India and therefore, it cannot be imposed by way of such policy. Section 2 (w) defines prescribed means prescribed by the rules made by the Central Government under this Act. Section 15(8)(b) defines the terms and conditions, subject to which the Unit shall undertake the authorized operations and its obligations and entitlements. Section 55 (3) provides power to make Rules, every rule made by the Central Government under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A is of 5 years and its extension is also for a period of 5 years is fixed by the statute to meet the conditions of Rule 53 i.e. for calculation of NFEE cumulatively for a period of 5 years and therefore, no slab calculation or break up is allowed in LOA. 16. Learned counsel for the petitioners has also referred to the report of the Parliamentary Committee on Petitions for worn clothing industry in SEZ and pointed out that according to the findings of the parliamentary committee even if 20% DTA sales of the import value if allowed would be equal to 0.01% of the market size of the Indian Garment industry, therefore, there is no question of destroying the domestic market as observed by the Parliamentary Committee. 17. Learned counsel also referred to blanket industry of Panipat and has contended that as many as 1,50,000 workers are engaged in this industry. Apart from workers at Panipat, about 12,000 workers are working at SEZ. If these industries are brought to grinding halt, all the employment which has been provided to these workers will be put to end and these workers will be left with no job whatsoever. Learned counsel has also replied regarding the fumigation etc. Accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Asian Food Industries; (B) AIR 2006 SCW 5272 , MRF Ltd. Kottayam V/s. Assistant Commissioner of Sales Tax (C) 2013 (16) SCC 147 , Union of India V/s. Ashokkuamar Aggarwal (D) 1997 (4) SCC 301 , P. Sadagopan and others V/s Food Corporation of India (E) 2013 (4) SCC 656 , Tata Sky V/s. State of MP and others. 19. This Court has gone through the entire record of the case and having heard the learned advocates for the respective parties. The definition of export given in Section 2(m) of the Act says that the exports can be physically or otherwise. For this purpose, Rule 53 provides number of transactions which are considered to be deemed export for the purpose of calculation of NFEE and to discharge of export obligation of the petitioners. Even in the policy dated 17.9.2013, the respondents have provided that the petitioners will be allowed to sell unmutilated worn clothes, being export surplus and export rejects on payment of applicable duty to the extent of 15% of FOB value of their exports. The unilateral withdrawal of 15% from retrospective effect may not be justified. This industry is providing large employment to unskilled workers in the local ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suade ourselves to accept this submission of the learned counsel. Merely by mentioning the date 31.3.1981, as the date upto which the exemption notification No.66 of 1979 was to be operative, no unequivocal representation could be said to have been made that it could not be rescinded or modified before that date even if the Government was satisfied that it was necessary in the public interest to rescind it. Since the notification had been issued under Section 25(1) of the Act, the very same power was available to the authority for rescinding or modifying that notification and the appellant ought to have known that the said notification was capable of or liable to be revoked, modified or rescinded at any time even before the expiry of 31.3.1981 if the public interest so demanded to hold that after the Government had issued the Notification No.66 of 1979 indicating that it was to remain operative till 31.3.1981, it could not be rescinded or modified before the expiry of that date would amount to prohibiting the Government from discharging its statutory obligation under Section 25(1) of the Act, if it was satisfied that it was in the public interest to withdraw, modify or rescind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifying or withdrawing an exemption notification under Section 25(1) of the Act. 24. The aforementioned decision of the Apex Court emphasis is laid down on the point that the Government is empowered to withdraw the exemption in public interest and such withdrawal is a matter of policy and Courts would not bind the Government to its policy decision. Now, it is to be seen whether the impugned notifications by the respondents do serve any public interest or are beneficial to the Government or to the people of the country. 25. As reproduced earlier, Parliamentary Committee has recommended otherwise and has said that if SEZ units are given reasonable incentives they can earn substantial foreign exchange and provide employment opportunities to unskilled labours. 26. The entire business of shoddy / blanket industry of Panipat procures their raw material from the worn clothing units in SEZ and thus huge number of indirect labour employment has to be appreciated. Considering the provision of Section 15(8) (B) read with Section 2(w) of the Act it is apparently clear that no new condition can be imposed on the petitioners in their LOA without amending the relevant rules as such, polic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued in derogation of statutory regulations. 30. In Tata Sky Ltd. V/s. State of M.P. and others (supra) it was laid down, coming now to notification dated 5.5.2008, it is elementary that a notification is issued in exercise of powers under the Act cannot amend the Act. The Notification cannot enlarge either the charging section or amend the provisions of collection under Section 4 of the Act read with the 1942 Rules . 31. Similarly, in yet another decision Union of India and others V/s. Ashokkumar Aggarwal , in para Nos.58 and 59, it has been held that: 58. A Constitution Bench of this Court while dealing with a similar issue in respect of executive instructions in Sant Ram Sharma V/s. State of Rajasthan held: (AIR P.1914, para 7) 7 It is true that the Government cannot amend or supersede statutory rules by administrative instructions, but if the rules are silent on any particular point the Government can fill up the gaps and supplement the rules and issue instructions not inconsistent with the rules already framed . 59. The law laid down above has consistently been followed and it is a settled proposition of law that an authority cannot issue orders / office m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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