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TMI Blog2017 (10) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned Letter, same be quashed and set aside and thereafter the respondents be directed to forthwith redeem the Advance Authorisation Licence No.0310424318, dated 26.3.2007 by accepting ARE-1s as proof of export under paragraph 4.25 of Handbook of Procedures 2009-14. 4. The petitioner is a company incorporated and registered under the Indian Companies Act, 1913. It has its registered office at the address mentioned in the cause title. It is primarily engaged in the business of manufacturing and supplying of automated engineering products, including but not limited to "Remote I/O Control Panel" (hereinafter referred to as "the said product") from its Unit situated at Navi Mumbai, District Thane in Maharashtra State. The respondents are entrusted with the implementation of the Foreign Trade (Development & Regulation) Act, 1992 (for short, "the FTDR Act"). 5. The petitioner states that the Control & Automation Division of the petitioner was awarded a contract/Order dated 13.2.2007, copy of which is at Annexure "A", by Reliance SEZ Unit, Jamnagar. The contract was for manufacture and supply of the said product. 6. The petitioner applied for issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he copies of these letters. 11. Thereafter, a Defect Memo dated 25-3-2013 was issued, copy of which is at Annexure "G". The petitioner states that a perusal of this Memo would reveal that the deficiency is due to the reasons stated therein. 12. Since both sides have referred to this letter, copy of which is at page 96 of the paper-book, we deem it appropriate to reproduce its relevant portion, which reads as under: "Sub: Deficiency Letter Reference No: Original File:03/95/040/01557/AM07/ Dated : 13.03.2007 and Authorisation No: 0310424318 Dated: 26.03.2007 Sir/Madam, Your Application is deficient due to following reasons: (1) submit original Bill of Exports as per Policy (guidelines of ANF4F a(ii) (2) submit Certificate from C Excise showing the F.No./Lic.No. against the supplies made, also show the exempted material with technical specification to fulfill net to net accountability clause. (3) Copies of ARE-3 & Tax invoices does not indicate this authorisation No/File No. (4) BRC is returned back in order to mention the Bill of Export numbers (5) submit Appx-33 duly certified by CA (6) Submit Cenvat declaration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st on furnishing the Bill of Exports, in this case. 2. Certificate from Central Excise: We enclose certificate in original dated 18.4.2013 issued by Suptd of Central Excise, Belapur, certifying exempted material with specification imported against Advance Authorisation No.0310424318 have been used in the manufacture of the Resultant Product viz. 341 Nos. Remote I/O Control, Panels and supplied to M/s. Reliance Petroleum Limited, SEZ. 3. Copies of ARE-3 and Tax Invoice: We had through an oversight not indicated the Authorisation Number/File no on the ARE-1 and Tax Invoices. We, have therefore submitted certificate in original from Suptd of Central Excise, Belapur certifying that exempted material with specification imported against Advance Authorisation No.0310424318 have been used in the manufacture of the Resultant Product viz. 341 Nos. Remote I/O Control, Panels. 4. Bill of Export to be indicated on BRC: As stated above since the Bill of Export has not been file, the same cannot be indicated on the BRC. We, therefore request you to accept the BRC as submitted. 5. Submit Appendix 23: The Appendix 23 (copy enclosed) was submitted with our application for redemption on 19.1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... J1" and "J2" to the paperbook. 20. Thereafter, on 10-8-2016 the Policy Relaxation Committee once again considered the request of the petitioner but rejected it. 21. The allegation to be found in para 18 of the petition is that in case of similar nature, the procedural lapses have been condoned and on the premise that what is insisted is proof of export obligation being fulfilled. That proof being available in cases of other entities, the licences were redeemed. 22. On 11-2-2016, the petitioner was informed by the third respondent that the redemption application cannot be accepted in the light of the decision of the Policy Relaxation Committee. 23. On being served with a copy of this petition and the annexures thereto, the respondents have filed an affidavit in reply of the Deputy Director General of Foreign Trade. 24. Apart from the preliminary objections, the affidavit proceeds to state that it is a policy decision and unless it is found to be arbitrary or perverse, there is no interference permissible therewith in this Court's writ jurisdiction. Evidently, the framers of the policy are free to interpret the same. If the matter pertains to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut from the point of view of grant of export incentives. The certificate dated 9-11-2012, submitted by the petitioner along with its letter dated 2982013, issued by the office of the Development Commissioner, Jamnagar (Reliance) SEZ does not mention the Advance Authorisation Number under which the supplies are made to the SEZ. It only mentions the ARE-1 numbers and their dates and it is important to note here that the AREs mentioned therein, also do not mention the Advance Authorisation Number. Hence, there is no correlation or nexus established and that is why the revised AREs submitted along with the letter dated 28-11-2013, purporting to mention the Advance Authorisation Number, is but an afterthought. It is meaningless because on the actual date of filing of the AREs, the Customs Officers in the SEZ were not made aware that the said supplies had anything to do with an advance authorisation. It is in these circumstances that the requirement of Bill of Export cannot be dispensed with. Hence, it is prayed that the writ petition be dismissed. 28. Mr. Vikram Nankani, learned Senior Advocate appearing in support of this petition, would submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ign, manufacture, supply, test, erect, field testing and commissioning of this Panel/said product in pursuance of its inquiry/NOA dated 13-2-2007. The description and schedule of quantities has been set out. The supply is of Data Concentrator for 36 substations. Thereafter, the specifications have been set out. The quantities are indicative and they will be finalised during detailed engineering. The other terms and conditions would denote that stagewise contractual delivery schedule for goods is contemplated by the parties. The Clause 4 sets out the delivery schedule and delivery and liquidated damages is dealt with by Clause 5. The schedule is based on the assumption that drawing shall be submitted within fifteen days of the NOA and approval is done within fifteen days of the submission. Then the major milestones would have to be provided in a schedule within two weeks from the date of issue of the NOA. The effective date of the contract shall be the date of the NOA for all contractual purposes, including delivery. This document has some annexures but we shall not refer to them for the simple reason that we are concerned here with the application made on 22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Powai and Navi Mumbai may please be indicated on the Condition Sheet attached to the Authorisation as indicated by us in Aayaat Niryaat Form. We now request that our application be processed expeditiously and the Advance Authorisation be issued to us at an early date." On such an application made, the petitioner was issued the licence in the prescribed form on fulfilment of the conditions, including forwarding of a declaration/undertaking. The petitioner also relied upon a certificate from Chartered Engineer dated 12-3-2007, confirming the order. Thereafter, the petitioner relied on the advance authorisation, copy of which is at page 65 of the paper-book together with the condition sheet. 32. The condition sheet, which is attached to the advance authorisation states that the authorisation holder shall export/supply the products of quantities and values specified in the said condition sheet within a period of 24 months from the date of issue of authorisation or as otherwise specified under the relevant provisions of the Foreign Trade Policy and Handbook of Procedures (VolI), 2004-09. The export obligation shall be fulfilled by the authorisation holder as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 9-11-2012. This certificate was issued as per request of Manager - Commercial Control & Automation of the petitioner. This certificate shows, according to the petitioner, that there are 21 invoices bearing the numbers specified in column 2 and issued on the date specified in column 3. There are dates of ARE-1 as well. Thereafter, the quantity and price are mentioned. Then there is an invoice value mentioned together with date of receipt of the goods. The petitioner states that on 1912010 it informed the Joint Director General of Foreign Trade that it has fulfilled the export obligation and therefore there should be redemption of the advance authorisation. What the petitioner relied upon is para 4.26 of the Handbook of Procedures. This communication dated 1912010 reads as under: "As evidence of fulfillment of the Export Obligation Rs. 14,40,00,000/ (US$ 32,00,000/) in terms of Para 4.26 of the Hand Book of Procedures, we enclose herewith documents for redemption of LUT: 1. ANF4F Form filled in and signed. 2. One Original Bank Certificate of Payment for supplies to SEZ. 3. Self Certified Part H duly filled in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce again request was made to redeem the licence. 38. Pertinently, the defects were notified on 22-3-2010 and this communication is dated 22-11-2010. Thereafter, the petitioner was also informed that there is already a demand notice issued because there is no proof of discharge of export obligation. 39. Once again, on 27-9-2011, the petitioner was informed by the Zonal Joint Director General of Foreign Trade, Ministry of Commerce that it has obtained a licence under duty exemption scheme for import of capital goods/raw material/packing materials, etc.. The petitioner has not submitted documents evidencing fulfilment of the export obligation. Thus, the authorities insisted that the petitioner must fulfil the condition of production of proof and evidence regarding export obligation being discharged. The due discharge of this export obligation would, according to the respondents, be proved and original Duty Exemption Entitlement Certificate (DEEC) (Export) duly audited by Customs along with a photocopy of the same (that is for advance licence issued prior to 142002), original shipping bills (EP copy), original Bank Realisation Certificate as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The petitioner also enclosed original certification certified by the Superintendent of Central Excise, Belapur certifying the exempted material with specification used in the manufacture of the resultant product. Thus, the petitioner claims that it is evident that the exports have been effected towards fulfilment of export obligation in respect of the said advance authorisation and therefore the petitioner requests not to insist on furnishing the Bill of Export. 41. Then the certificate from the Central Excise in original dated 18-4-2013 issued by Superintendent of Central Excise, Belapur, certifying exempted material with specification imported against advance authorisation and used in the manufacture of the resultant product was enclosed. 42. The petitioner admit that through oversight it has not indicated the authorisation number on the ARE-1. They have, therefore, submitted certificate in original from the Superintendent of Central Excise, Belapur certifying that exempted materials with specification imported against advance authorisation number have been used in the manufacture of the resultant product. The Bill of Export has not been filed and therefore the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opies of the AREs-1 along with its letter of August, 2013, those copies did not mention the details of the advance authorisation numbers, whereas the copies forwarded in November, 2013 of the same documents contains the advance authorisation number and these were, therefore, subsequent insertions. 45. The petitioner purported to inform the Policy Relaxation Committee on 28-1-2014 that all the supplies to SEZ were effected with valid ARE-1 forms and certificate from jurisdictional Excise authorities was also issued and the ARE-1 being part of this certificate confirming that the resultant products have been supplied to the SEZ and also certified consumption of exempted inputs against the said advance authorisation, but as the advance authorisation number was not specifically endorsed in ARE-1 forms, they were in touch with the Central Excise Authorities. Therefore, they subsequently certified these forms with the advance authorisation number and the revised ARE-1 forms were submitted with the request to accept the same as a special case. Therefore, nonfiling of Bill of Export is a lapse which should be condoned and therefore the Policy Relaxation Committee's deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obligation during the period specified by the authority and/or extended from time to time. They were advised to submit documents showing fulfilment of export obligation by the licencing authority. Therefore, a Show Cause Notice was issued to produce the documents showing discharge of export obligation. The petitioner did not respond. Thereafter, the licencing authority declared the petitioner as defaulter, and subsequently forfeited the legal undertaking and Bank Guarantee. Thus, the authority has reason to believe that the goods imported against this licence were not utilised for the purpose for which they were imported and the licence was also obtained on the basis of misrepresentation and misdeclaration of facts. The petitioner has also not submitted documentary proof towards discharge of export obligation which tantamounts to violation of the condition against which the licence was issued, and therefore, the Show Cause Notice called upon them to show cause as to why action under the relevant provisions of law be not taken. 48. The petitioner appeared in pursuance of the Show Cause Notice for a personal hearing on 2482016. The petitioner canvassed the arguments and wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thereafter, there are further requirements, including payment certificate, statement of supplies, giving details of supply invoices and indicating the invoice number, date, FOR value and it is only when the export obligation has been fulfilled that the licencing authority can redeem the licence. The Policy Relaxation Committee is constituted to aid and advise the DGFT. What the petitioner is insisting upon and as a proof of fulfilment of the export obligation, though aware of this paragraph of the FTP and the Handbook of Procedures, is acceptance of documents which would enable them to urge that the conditions in the Condition Sheet of the advance authorisation have been fulfilled. The conditions to which we had made a reference and to be found at page 65 of the paperbook mention specifically these two, namely, the FTP and the Handbook of Procedures, 2004-09. The petitioner is relying upon, as proof of fulfilment of the export obligation, a communication of 3082010 from Reliance Industries Limited. The communication relevantportion of the communication reads thus: "With reference to your request vide your letter referred to above, we hereby confirm that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f export obligation. They mentioned the advance authorisation number and the date of its issue. They mentioned the details of physical export/deemed export made, the relevant details of ARE-1s, but what they have been informed throughout is that these ARE-1s have not mentioned specifically the advance authorisation number. The petitioner, therefore, were informed on 2232010 that they must submit the original Bill of Export giving relevant licence number or file number, along with revised statement of export giving relevant bill of export details and net content of import in export, since the licence was based on net to net basis. (see page 92). This is a communication of 22-3-2010. Till this date the petitioners do not say that they had neither any communication much less from M/s. Reliance Petroleum Limited, nor they had any proof as per their understanding of discharge of export obligation. All that they had with them are the documents annexed to the request in writing for redemption of LUT. 54. Therefore, on 11-11-2010 the petitioner admitted that the Bill of Export has not been filed and in lieu of the same they enclosed with their communication o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cates by statutory authorities, according to the petitioner. It is in these circumstances that they would urge that the exports have been effected towards fulfilment of export obligation in respect of the said advance authorisation. 59. Then, they rely upon a certificate dated 18-4-2013, issued by the Superintendent, Central Excise, RangeI-V, Belapur-III Division certifying that the exempted material, with specific advance authorisation number, as having been used in the manufacture of the resultant product. 60. They also rely on the fact that through oversight they had not indicated the authorisation number/file number on the ARE1 and tax invoices. They are, therefore, submitting a certificate in original from the Superintendent of Central Excise, Belapur certifying that exempted material with specification imported against advance authorisation have been used in the manufacture of the resultant product. On 27-4-2013, this was the stand taken by them and that is why they requested that Bill of Export having not been filed, this should be taken as proof of export in lieu thereof. 61. We have perused this certificate, copy of which is at page 99 of the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach the Policy Relaxation Committee. 63. The petitioner accordingly approached the Policy Relaxation Committee on 29-8-2013. The petitioner gave all the details of the purchase order, the goods which were to be supplied against the purchase order, the advance authorisation number and they gave the file number as well from the office of the Joint Director General of Foreign Trade. The Annexure-A of this communication refers to all these details. They claim that the advance authorisation and imported inputs on duty free basis were utilised in the manufacture of the resultant export product. They, therefore, claim that the supplies have been made to the named entity and at SEZ, Jamnagar. That was under the bona fide belief that filing of Bill of Export for the supply of SEZ units is mandatory only in cases of claiming of benefit under the duty drawback scheme. Hence, this procedural lapse of not filing the Bill of Export occurred. That is how they reiterated that the said supplies were effected with valid ARE1 forms, which were subsequently duly certified by SEZ Customs Authorities as proof of evidence for the goods having been supplied. All these documents have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the petitioner can be accepted as proof of export. 67. We do not see how the authorities then maintained that the petitioner's request for condonation of procedural lapse by not generating the Bill of Export cannot be accepted. What the Policy Relaxation Committee has done in its subsequent meeting, and which at page 153 purports to indicate its decision, is that guidelines insisting on Bill of Export being known, that Bill of Export not having been forwarded, the requirement in that behalf cannot be dispensed with. 68. We do not see how this subsequent decision can be reconciled with the earlier stand where the Policy Relaxation Committee was ready and willing to consider the dispensation provided there is proof of fulfilment of export obligation. 69. We were required to give this detailed reasoning only because somewhere down the line the authorities forgot that they were throughout insisting on proof of discharge of the export obligation and the petitioner was continuously maintaining that it had such proof in the form of documents in its possession and which has been duly forwarded. Once this was the issue and there was a doubt as to how the ARE1s, copies of which were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttee empowered by the Policy itself, namely, the FTP to relax the policy condition has acted within the four corners thereof. We have pointed out its flipflop and twists elaborately. We find that it has acted not in accordance with the Policy and the FTDR to insist on absolute satisfaction of the procedural requirement. Though it was agreeable to accept any proof of fulfilment of export obligation, by relaxing the requirement of Bill of Export, it then picked the alleged inadequacies in the documents evidencing fulfilment of export obligation forwarded by the petitioner. These documents were duly certified and stamped/endorsed by the statutory authorities and still the Policy Relaxation Committee failed to grant the necessary relaxation. This decision, therefore, can be termed as wholly arbitrary, unfair, unreasonable and violative of the Mandate of Article 14 of the Constitution of India. It is this conclusion which enables us to interfere in writ jurisdiction with the impugned decision and equally the Show Cause Notice. 72. As a result of the above discussion, the writ petition succeeds. Rule is made absolute in terms of prayer clauses (a) and (c). There shall be no order a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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