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TMI Blog2020 (6) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia, Central Board of Excise and Customs, addressed to the DGFT as also various other contemporaneous letters/Circulars/Minutes of Meeting leading up to the issuance of the Notifications dated 21.04.2004 and 23.04.2004. It also took note of the counter affidavit filed by the Union of India, giving details of the modus operandi used by the exporters in inflating their exports to claim benefit of the DFCE Scheme - In the counter affidavit, specific reference was made by the respondents to the petitioner herein to contend that the petitioner has shown an exponential growth in its exports of 3816% against the National Growth of Export of merely 18%. The petitioner in fact, filed a Review Petition seeking review of the said judgment, which was also dismissed by the Supreme Court. In the Review Petition, the petitioner had categorically contended that the finding of the Supreme Court that held the petitioner as having resorted to paper transactions was not justified as the respondents had not placed any material on record against the petitioner to prove the same. Relevant paragraphs of the Review Petition have been quoted hereinabove. The Review Petition was, however, dismissed by the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Paragraph 2.34 of the Policy allows Third-party exports . Paragraph 9.55 defines the term Third-party exports as under: Third-party exports means exports made by an exporter or manufacturer on behalf of another exporter(s). In such cases, shipping bills shall indicate the name of both the exporter/ manufacturer and exporter(s). 5. Chapter-III of the Policy deals with Promotional Measures which are to be undertaken to achieve the objective of the Policy. 6. Paragraph 3.7.1 of the Policy states that Merchants as well as Manufacturer Exporters, Service Providers, Export Oriented Units (EOU s)/ Units located in the Special Economic Zone, etc., shall be eligible for recognition as Status Certificate . Paragraph 3.7.2 laid down the requirement of average export performance level to be achieved by the applicant. 7. Paragraph 9.53 defines the term Status Holder as under: Status Holder means an exporter recognized as Export House/Trading House by DGFT/ Development Commissioner or Star Trading House/Super Star Trading House by the Director General of Foreign Trade. 8. Paragraph 3.7.2.1 gave the Special Strategic Package for Status Holders . This petition is primarily concerned with sub-parag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic interest, to specify the export products, which shall not be eligible for calculation of incremental growth/ entitlement. Similarly, the government may also notify the list of goods, which shall not be allowed for imports under the scheme. Note 4 These guidelines will be applicable to the exports made on or after 1.04.2003. Note 5 The entitlement will be in terms of duty credit. 11. A Public Notice bearing no.40(RE 2003)/2002-2007 dated 28.01.2004 was also issued by the Directorate General of Foreign Trade (DGFT) making certain amendments in the Handbook of Procedures(Volume 1), inter alia inserting Paragraph 3.2.6 A, which reads as under: The scheme will be applicable to status holders who were also status holders as on 31.3.2003 and who had achieved minimum export turnover of 25 crores in the year 2003-04. I. For direct as well as third party exports, the Export documents viz. Export Order, Invoice, GR Form, Bank Realization Certificate should be in the name of applicant only. However for the third party exports, where goods have been procured from a manufacturer, the shipping bill should contain the name of the exporter as well as the supporting manufacturer. II. Goods allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Import items. 12. By a subsequent Notification no.38/(RE 2003)2002-2007 dated 21.04.2004, Notes 6 and 7 were inserted in Paragraph 3.7.2.1., after subparagraph (vii) of the Policy and read as under: Note 6 - The export of the following products and categories of products would not be permitted for counting entitlement under the Duty Free Entitlement Certificate for Status Holders. a. Rough, uncut and semi polished diamonds. b. Gold, silver in any form including plain jewellery thereof c. Food grains sourced from central pool maintained by FCI d. Items exported under free shipping bills. Note 7 - The following items would not be allowed for imports under Duty Free Credit Entitlement Certificate for Status Holders: Agriculture products, which fall under Chapters 1-24 of ITC (HS) Classification of Export and Import items. 13. By Notification no.40/(RE 2003)/2002-2007 dated 23.04.2004, a minor correction was made in the Notification No.38 (RE-2003)/ 2002-2007 dated 21.04.2004. 14. Adani Exports Ltd . filed a writ petition before the High Court of Gujarat, being Special Civil Application no.1676 of 2004 , inter alia challenging the validity of the Notification no.28 as also the Public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the exporters prior to April 21, 2004 in respect of the classes of goods covered by Notification dated 21.04.2004 were entitled to be taken into consideration for the purposes of determining the entitlement of duty free imports. The relief granted by the High Court in favour of the petitioner is reproduced hereinbelow: 36. In the result the petition is partly allowed. Public Notice dated 28th January 2004 is quashed and set aside. As far as Notifications dated 21st and 23rd April, 2004 are concerned, it is declared that the said notifications will have only prospective operation and the exports made by the petitioners prior to the said notifications in respect of the classes of goods covered by the said notifications shall be liable to be computed for the purpose of determining the entitlement of the petitioners. No order as to costs. 18. The judgment passed by the Gujarat High Court as also the Bombay High Court were challenged by the parties by way of Special Leave Petitions before the Supreme Court. The Supreme Court vide common judgment dated 27.10.2015 was pleased to dispose of these appeals inter alia holding as under: (A) The Notification no. 28(RE 2003)/2002-2007 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and it was clarified as to how the incremental growth in export is to be actually worked out. This was also done before the question of actual working out of the incremental growth in exports arose and hence, no retrospective effect. 111) An astute and penetrative examination of the record, with reference to the results of the investigation, which had prompted the Central Government to issue these Notifications, provides a very tidy answer to the question posed above is that the so-called targets achieved were only on paper through fraudulent means and, therefore, it cannot be said that any vested right accrued in favour of these exporters. 112) We have referred to such material in detail while upholding the contention of the Union that Notifications were issued in public interest to ensure that their misuse is not allowed. To recapitulate, the inquiry conducted by the Government revealed that there were exports of rough diamonds even though India is not a rough diamond producing country. These exports stopped the moment DFCE benefits in respect of rough diamond were disallowed. It was also found that cut and polished diamonds were imported, stored inside a bond and reexported wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gems and Jewellery Export Promotion Council, India is not a rough exporting country. Rough diamonds which are unsustainable for cutting in India are reexported. Such exports stopped the moment benefit was explicitly withdrawn. (ii) In the present case also the respondent M/s Adani Exports Limited had stopped exporting the rough diamonds the moment the Notification was issued in January, 2004 and according to Gems and Jewellery Export Promotion Council, Party has not exported rough diamonds during January/March 2004 . (iii) Cut and polished diamonds were imported, stored inside a bond and re-exported with artificial value addition. Few large firms including the petitioners exported these products to buyers directly related to them. (iv) According to reliable information the same sets of diamonds were rotating and these never entered the Indian domestic territory or to the end consumers abroad. The value of such exports in the past two years may exceed ₹ 15,000 crores. Government has detailed report of the modus operandi of the firms involved. (v) Most notorious misuse of the Scheme was carried out by few firms who exported Gold medallion and studded jewellery. Key firms inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court, thereafter, passed the following directions: 116) Thus, appeals and transfer cases stand disposed of in terms of aforesaid answers provided by this Court to the various questions formulated. To put it precisely, the effect of the aforesaid discussion would be to uphold the decision of the Gujarat High Court, though on different ground, thereby dismissing the appeals of the exporters against the said judgment except to the extent indicated in para 114 above while the appeals of the Government are allowed. Likewise, appeals of the Union of India against the judgment of the Bombay High Court are allowed to the aforesaid extent and the appeals of the exporters/writ petitioners are dismissed. 21. Feeling aggrieved of the above judgment, the petitioner herein preferred an application seeking review of the same, being Review Petition (Civil) No.1593/2016. Some of the averments made in the Review Petition are relevant to answer the contentions raised by the petitioner in the present petition and are therefore, reproduced hereinunder: A. It is submitted that the Respondents did file pleadings in Kanak s Writ Petition before the Hon ble Bombay High Court and in the Civil Appeals b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n dated 21.11.2016 before the respondent, contending therein that out of the total exports of ₹ 1070.35 crores made by the petitioner between 01.04.2003 to 31.03.2004, exports of ₹ 355.69 crores had become ineligible in view of the exclusion set out in Notification dated 28.01.2004, leaving the eligible exports at ₹ 714.66 crores entitled for the benefit of the DFCE Scheme. In paragraph 3 of the said Application, the petitioner summarized, what according to it was the effect of the judgment dated 27.10.2015 of the Supreme Court, in the following words: 3. Thereafter, the Supreme Court has decided the issue by judgment dated 27th October, 2015 inter alia holding that: Notification dated January 28, 2004 is clarificatory (para 85), Public Notice dated January 28, 2004 is ultra vires so far as it excludes four items (para 96), Notifications dated April 21 23, 2004 are prospective (para 108), If status holder achieved 25% incremental growth in exports, they acquired right to get benefit under scheme which cannot be taken away (para 109) Vested rights do not accrue to those exporters whose exports are not genuine but only on paper through fraudulent means (para 111 r/w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court in Inderjeet Arya Anr., MANU/DE/5778/2012; Bhavnagar University vs. Palitana Sugar Mill (P) Ltd., (2003) 2 SCC 111; and UP Electricity Board vs. Pooran Chandra Pandey, (2007) 11 SCC 92. 26. The learned senior counsel for the petitioner further submits that the allegations of fraud have to be specifically pleaded along with the supporting material and cannot be based on mere presumptions and surmises. He places reliance on the judgments in Bishnudeo Narain vs. Seogeni Rai and Jagernath, AIR 1951 SC 280; Tukaram Dhondiba vs. Andappa Genu Walekar, 2012 (3) Mh. LJ 150; Sangramsinh Gaekwad vs. Shantadevi Gaekwad, (2005) 11 SCC 314; Union Of India vs. Chaturbhai M. Patel, (1976) 1 SCC 747; and Indian Bank vs. Satyam Fibres, (1996) 5 SCC 550. 27. The learned senior counsel for the petitioner submits that in the present case, neither the Impugned Order nor the counter affidavit has made any reference to any investigation that was carried out by the respondents or any adverse material having been established against the petitioner. 28. The learned senior counsel for the petitioner further submits that the respondents, by issuing Trade Notice dated 08.05.2017, themselves have right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner herein to contend that the petitioner has shown an exponential growth in its exports of 3816% against the National Growth of Export of merely 18%. 34. I have already quoted in detail the findings of the Supreme Court, which would clearly show that the Supreme Court was particularly considering the case of M/s Adani Export as also the petitioner herein. For both these firms, the Supreme Court found them to have resorted to blatant misuse of the provisions of the Scheme and set aside the direction of the Bombay High Court granting relief to the petitioner under the said Scheme. 35. The petitioner in fact, filed a Review Petition seeking review of the said judgment, which was also dismissed by the Supreme Court. In the Review Petition, the petitioner had categorically contended that the finding of the Supreme Court that held the petitioner as having resorted to paper transactions was not justified as the respondents had not placed any material on record against the petitioner to prove the same. Relevant paragraphs of the Review Petition have been quoted hereinabove. The Review Petition was, however, dismissed by the Supreme Court. 36. The petitioner certainly could not have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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