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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 ..... s its lapse but terms it as procedural and on the other hand despite this lapse there is adequate proof of fulfilment of export obligation available on record. The petitioner was not being denied the benefit or relief only on the ground that they have failed to forward the Bill of Export. They have been specifically informed that the request for redemption of the advance authorisation cannot be granted because there is no proof of fulfilment of the export obligation - the petitioner having duly supplied the copies of the ARE-1 forms, it is only a further technical objection, of the said form not mentioning the advance authorisation number in the initial copies of the same but supplied later on, could have been condoned. It is not as if ARE-1s have not been filed. It is not as if ARE-1s have not been filed. It is not as if there is a doubt about the copy of ARE-1s or the authenticity or genuineness thereof. It is not anybody's case that there are no ARE-1 forms on record. Therefore, these forms were available. Therefore, the stand that there is no proof of export obligation being discharged, could not have been maintained once the petitioner was told to approach the Policy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 issuance of an advance authorisation for duty free import of goods into India against supplies to be made to the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 as per para 4.1.5 of FTP from CA/Jurisdictional Central Excise authority (7) Submit 4 copies of No Bond Certificate. You are requested to remove above deficiencies within a peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 19.1.2010 (Key No.2498510 dated 22.3.2010). 6. Cenvat Declaration: We hereby declare that all the imported inputs have been used in the manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 1 1-2 -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 policy decision and that is sought to be reviewed by the petitioner but that review is refused by assigning cogent and satisfactory reasons, then, this Court cannot exercise the appellate powers in inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner, 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 after thought. 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 that the only reason for not accepting the request of the petitioner is not forwarding of a Bill of Export. However, that is a pure procedural requirement. Once it is a pure procedural requirement, that cannot be elevated to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ata Concentrator for 36 sub stations. 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 stage wise 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 6 2006 to the Joint Director General of Foreign Trade by the petitioner. The petitioner refers to an order dated 13 -2- 2007 from M/s. Reliance Petroleum Limited, Jamnagar for the manufacture/export of 425 numbers Remote I/O Control Panels for a t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorisation 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 (Vol I), 2004 -09. The export obligation shall be fulfilled by the authorisation holder as per the terms and conditions specified in this FTP and Handbook of Procedures and other guidelines issued by the Director General of Foreign Trade from time to time. 33. The authorisation holder shall deliver or cause to be delivered to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 19 1 2010 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 19 1 2010 reads as under: As evidence of fulfillment of the Export Obligation ₹ 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. ANF 4F Form filled in and signed. 2. One Original Bank Certificate of Payment for supplies to SEZ. 3. Self Certified Part H duly filled in and signed. 4. Chartered Engineer Certificate indicating details of import items imported and used in the Export Product. 5. Bill of Export (ARE 1 along with Tax Invoice). 6. Information in terms of Public Notice No.8 dated 13.05.2005. 7. Photocopy of Authorisation and Exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port 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 1 4 2002), original shipping bills (EP copy), original Bank Realisation Certificate as per Appendix 22 of Handbook (2002-2007), original DEEC (Import) and its photocopy along with the original licences, self certified statement of exports and imports, shipment wise, with the item of import and export along with their values indicated therein. The petitioner was informed that it has failed to submit proo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isation 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 there are no details of the same available. The appendix 23 was submitted already with the application for redemption on 19 -1 -2010. The petitioner claims that no Cenvat has been availed on the inputs as the imported inputs have been used in the manufacture of resultant product. They also submitted a No Bond Certificate in four sets. The petitioner was informed that these documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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, non filing of Bill of Export is a lapse which should be condoned and therefore the Policy Relaxation Committee's decision should be recalled. 46. On 28- 1 -2014, this letter was addressed and thereafter what the petitioner has done is to inform the Policy Relaxation Committee on 28 8 1015 by a further communication. In this communication, they admit that advanced authorisation was inadvertently not mentioned initially on ARE-1, however, immediately taking cognizance of the omission, they had obtained the endorsement from the jurisdictiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtaking 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 24 8 2016. The petitioner canvassed the arguments and which are reiterated in the note of written arguments, running into 13 pages. 49. The petitioner at the same time seeks to question the decision of the Policy Relaxation Committee dated 10 8 2016, though they have already proceeded to contest the Show Cause Notice. 50. Today, the argument is that in the light of the decision of the Policy Relaxation Committee, no useful purpose will be served by contesting the allegations in the Show Cause Notice an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, 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 paper book 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 30 8 2010 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 we have received 341 Nos. of Remote I/O Control Panels against our PO No 2519 JGZ EU0L03 MA dated 11.05.2007. The supplies have been effected into our SEZ Unit, in Reliance Jamnagar SEZ, Jamnagar, Gujarat. We are also enclosing a statement showing the details of the item wise requirement of inputs as per our Bill of Materials for the said supply of 341 Nos. of Remote I/O Control Panels. What is enclosed therewith is a summary of consumption of inputs used in the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of the above date, certification from M/s. Reliance Industries Limited, Unit of Reliance SEZ, confirming receipt of 341 numbers of Remote I/O Control Panels of the resultant export product. This fact can also be ascertained, according to them, from the ARE-1 copies attached, wherein the SEZ Preventive Officer has certified that the goods have been received. Then, they also rely upon a summary of consumption of inputs used in the resultant product certified by M/s. RIL from which the authorities, namely, the Joint Director General of Foreign Trade can conclude that the imported inputs have been used on net t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 paper -book. It is issued on 18 -4 -2013. It says, this is to certify that the petitioner holding Excise Registration Number, details of which are mentioned, have imported the inputs (details as per Annexure -A) under advance authorisation No.0310424318, dated 26- 3 2007, and used the same in the manufacture of Remote I/O Control Panels (341 Nos.) supplied to M/s. Reliance Petroleum Industries Ltd., Special Economic Zone, Jamnagar (details as per Annexure- B) as verified from the records of the Company. This Annexure -A is the list of inputs imported under the advance authorisation number and used in the final product. The de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 been duly endorsed and stamped. What we find is that the Policy Relaxation Committee still maintains that there is no mention of advance authorisation number on the copy of the ARE-1, submitted vide letter dated 298 2013. The same copies of AREs, submitted on 28- 11 -2013, however bears the details of the advance authorisation number. Thus, it is evident that the endorsement regarding authorisation details were made subsequently. 64. The petitioner has not disputed this position. They have clearly stated in their letter dated 29 -8 -2013 that the advance authorisation number or whatever certificates obtained by SEZ Customs Authorities as proof of the export obligation being fulfilled were obtained sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 earlier supplied, did not contain the advance authorisation number and its date, that subsequently even that aspect was clarified by the petitioner. The petitioner clarified that it took the very same copies to the authorities and obtained their endorsement. It is not just a self- generated version or a self -certification but that there was an endorsement by the statutory authorities. The statutory authorities, namely, the Range Superintendent of Central Excise and the Development Commissioner, SEZ would not have appended their signatures on these copies and allowed the endorsement or the affixation of a stamp bearing the date of the advance authorisation and its number, unless they were satisfied that these are the very ARE-1 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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