9911796707
TMI Blog2024 (5) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... sel before 20th July, 2023, was beyond its control. It is, thus, the case of the Appellant that in its facts though it could have otherwise fallen within the exception of Paragraphs 2(ii) and (iii) of the Notifications, entitling it to export 11,000 MT, it was unable to strictly complete the conditions despite all actions taken at its end, due to the circumstances beyond its control. It is noted that the Appellant initially in the writ petition and in the present appeal pleaded that despite best efforts it was unable to comply with condition no. (v) of Paragraph 2 with respect to payment of export duty on ten shipping bills for 10,000 MT, despite filing the same on to the Portal (ICEGATE) of the Respondent. The Appellant s averment itself is vague. However, the Respondent in the counter affidavit at Paragraph 21 and 22 as well as in this appeal vehemently opposed the said allegation and asserted that the Appellant was making an incorrect statement. The Appellant asserted that its Portal ICEGATE was fully functional and there was no hindrance to any exporter (including the Appellant) in making payments of export duty within the stipulated period. The Appellant herein has since aband ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the interim order dated 06th December, 2023 passed by the High Court of Chhattisgarh in I.A. No. 01/2023 filed in W.P.(C) permitting the exporter therein to export non-basmati rice. In this regard, we may note that the learned Single Judge of the High Court has referred and relied upon the order dated 19th October, 2023 passed by High Court of Andhra Pradesh while passing the interim order. The Respondent has stated that it is in the process of filing a SLP against the order passed by High Court of Chhattisgarh. The High Court of Chhattisgarh has considered the fact that the exporter therein has a pre-existing contract with the foreign importer along with letter of credit for granting ad-interim permission for export. We are of the considered opinion that in view of the express suspension of the FTP, 2023, the said fact stands expressly excluded from the scope of the Notifications and therefore, could not have formed the basis for granting relief. We have been unable to satisfy ourselves in the present appeal that the Appellant herein has satisfied the exemption conditions of the Notifications. Thus, we find that there is no merit in the appeal. Accordingly, the same is dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was to carry the 28,000 MT of rice. It is stated that in between 10th July, 2023 and 20th July, 2023 till around 12:07 hrs., the Appellant filed its 28 shipping bills on the Customs portal i.e., ICEGATE. 4. It is stated that in the interregnum, the Department of Commerce, Government of India, issued its Notification dated 20th July, 2023 and thereby prohibited the export of non-basmati white rice with immediate effect, i.e. 21:57:01 hours on 20th July, 2023. It is stated that, however, with a view to permit the exports which were in progress, conditional exemptions were granted and this formed four distinct categories. 5. The said Notification was further amended vide Notification dated 29th August, 2023, wherein the time by when the details had to be entered into the Customs system was mentioned. Further, an additional category for exemption was also introduced wherein if the custom duty is paid before 21:57:01 hrs on 20th July, 2023, then the consignment could be permitted for export. It is stated that since the Appellant had paid export duty for 17 shipping bills out of 28 within the stipulated time i.e., before 21:57:01 hrs on 20th July, 2023, the Appellant was permitted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad done everything in its power, as per the doctrine of substantial compliance, the Appellant ought to be permitted to export the 11,000 MT of rice and should not be penalized for the situation beyond its control. 7.3. He stated that various High Courts across the country in respect of the same Notification have permitted exports, though there was no strict compliance as is evident from the following judgments and orders: (i) Judgment dated 27th September, 2023, passed by Gujarat High Court in Special Civil Application No. 16017/2023; (ii) Order dated 12th October, 2022, passed by the Andhra Pradesh High Court in W.P. No. 32049/2022, 33016/2022 and 33156/2022; (iii) Order dated 30th September, 2022 passed by the Andhra Pradesh High Court in W.P. 32049/2022; (iv) Order dated 8th February, 2023 passed by the Andhra Pradesh High Court in W.P. 2844/2023; (v) Interim order dated 19th October, 2023, passed by the Andhra Pradesh High Court in W.P. 25933/2023; (vi) Final order dated 29th November, 2023 passed by the Andhra Pradesh High Court in W.P. 25933/2023; (vii) Order dated 6th December, 2023 passed by High Court of Chhattisgarh, Bilaspur, in W.P.(C) 5045/2023. 8. In reply, learned st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Ministries, issued Notification No. 20/2023 dated 20th July, 2023, whereby export of Non-Basmati white rice was changed from free to prohibited with immediate effect i.e., from 21:57:01 hours on 20th July, 2023. And, the provisions under Paragraph 1.05 of the Foreign Trade Policy, 2023 ( FTP ) regarding the transitional arrangement was made inapplicable. 11. It is stated that, however, in order to protect the interest of the exporters who may have acted as per the previous policy, the Notification dated 20th July, 2023, allowed the export of non-basmati rice, provided such consignments of non-basmati rice complied with any one of the four [exemption] conditions set out in the said Notification. 12. It is stated that after the imposition of ban, various requests were received from traders, seeking clarification on the transitional arrangement as bulk shipments were stuck at the Kandla port. Accordingly, the matter was placed before the Inter-Ministerial Committee ( IMC ) for review and on the recommendation of the IMC, the Central Government relaxed the export conditions prescribed in the Notification dated 20th July, 2023, by a subsequent Notification dated 29th August, 2023, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erned Custodian of the Customs Station with verifiable evidence of date and time stamping of these commodities having entered the Customs Station prior to 21:57:01 hours on 20.07.2023. The period of export shall be upto 31.10.2023. [Condition (iii) amended vide Notification no. 29/2023 dated 29th August, 2023.] iv. Export will be allowed on the basis of permission granted by the Government of India to other countries to meet their food security needs and based on the request of their Government. v. Export duty is paid before 21:57:01 hours on 20.07.2023. [Condition (v) added vide Notification no. 29/2023 dated 29th August, 2023] 3. Export of Organic Non-basmati rice will be governed in accordance with Notification No.03/20 15-2020 dated 19th April, 2017 read with Notification No. 45/2015-2020 dated 29th November, 2022. 4. Effect of this Notification : Export Policy of Non-basmati white rice (Semi-milled or wholly milled rice, whether or not polished or glazed: Other) under HS code 1006 30 90 is amended from 'Free' to 'Prohibited'. 14. It is stated that on receiving various representations from the stakeholders as to whether the exemption conditions are independent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l actions taken at its end, due to the circumstances beyond its control. The Appellant has tabulated the action taken with cross reference of Paragraph Nos. 2(ii) and (iii) as under: CONDITION (ii) APPELLANT S ACTION Filing of Shipping Bill; All Shipping Bills filed prior to issuance of Notification; Berthing/Arrival and Anchoring of vessel; After issuance of Rotation Number, the vessel through in Indian waters, could have anchored only when permission/ space is available at the Port, which is beyond the control of the appellant; Allotment of Rotation Number Rotation Number allotted on 18.07.2023 CONDITION (iii) APPELLANT S ACTION Handing of consignment to customs before 21:57:01 hours on 20.07.2023 and registered in their System OR Entrance of consignment at the Customs Station for exportation before 21:57:01 hours on 20.07.2023 and is registered in the electronic systems of the concerned Custodian of the Customs Station A perusal of the Letter dated 02.08.2023 by the custodian Deendayal Port Authority would show that while the appellant had applied for entrance and storage of the entire quantity of 28,000 MT on 15.07.2023, however, due to lack of storage space at the Port, permis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king an incorrect statement. The Appellant asserted that its Portal ICEGATE was fully functional and there was no hindrance to any exporter (including the Appellant) in making payments of export duty within the stipulated period. The Appellant herein has since abandoned the said plea and not relied upon the same in its written submissions dated 27th February, 2024. 24. The Appellant has fairly admitted that it is unable to fulfil all the stipulations contemplated in condition no. (ii) of Paragraph No. 2 so as to entitle it to export the 11,000 MT. The stipulation which the Appellant failed to comply with is with respect to berthing/arriving and anchoring of the vessel at Kandla Port. The Appellant admits that the vessel had not been able to berth and anchor at the Port. The Appellant has not challenged the distinction carved out by the Respondent between (i) the vessels, which have anchored and berthed/arrived at the port; and (ii) vessels, which may have arrived in Indian waters, but are awaiting berthing and anchoring. The substratum of condition no. (ii) is the berthing/arriving and anchoring of the vessel prior to issuance of Notification as is evident from the plain language o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be given a strict interpretation. It is stated that the compliance of this condition cannot be tested on the basis of unverifiable documents such as quantity certificates issued by private warehouses as a proof of storage of 11,000 MT. The Respondent at paragraph 27 of its counter affidavit has pleaded the mischief which would arise in the event documents issued by private warehouses are relied upon for granting permission to the exporter as prayed for. The para 27 reads as under: 27. It is stated that allowing export of non-basmati rice after imposition of prohibition on its export, based on documents that are difficult to verify factually or intent wise may give a free hand to the exporters to export non-basmati rice that are stored in the godowns/storage facilities for the purpose of domestic sale / consumption. It is further stated that verification of such documents from Warehouses, especially private warehouses, would be very difficult to ascertain whether the rice was procured before or after imposition of the ban/prohibition on exports. Allowing export of non-basmati rice on the basis of documents like contractual obligations or quantity certificate etc., would defeat t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal arrangements to comply with their export obligations. The Respondent admittedly was granted the benefit of the exemption for 17,000 MT as it complied with condition no. (v) in its entirety with respect to payment of export duty. 29. Each of the five independent exemptions have essential requirements which the applicant exporter must comply with for completing the export. The Appellant fails to comply with the essential conditions in each of the exceptions. Therefore, the doctrine of substantial compliance relied upon by the Appellant is of no assistance as the Courts have held that latitude can be shown to the applicant only with respect to requirements which are directory in nature, the non-compliance of which would not affect the essence of the Notification granting exemption. The reliance placed by learned Single Judge on the landmark judgment of the Supreme Court in CCE v. Hari Chand Shri Gopal (2011) 1 SCC 236, is apposite and we deem it appropriate to reproduce the same: Exemption clause Strict construction 29. The law is well settled that a person who claims exemption or concession has to establish that he is entitled to that exemption or concession. A provision providi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in such a case, if mandatory requirements are complied with, it will be proper to say that the enactment has been substantially complied with notwithstanding the non-compliance of directory requirements. In cases where substantial compliance has been found, there has been actual compliance with the statute, albeit procedurally faulty. The doctrine of substantial compliance seeks to preserve the need to comply strictly with the conditions or requirements that are important to invoke a tax or duty exemption and to forgive non-compliance for either unimportant and tangential requirements or requirements that are so confusingly or incorrectly written that an earnest effort at compliance should be accepted. 34. The test for determining the applicability of the substantial compliance doctrine has been the subject of a myriad of cases and quite often, the critical question to be examined is whether the requirements relate to the substance or essence of the statute, if so, strict adherence to those requirements is a precondition to give effect to that doctrine. On the other hand, if the requirements are procedural or directory in that they are not of the essence of the thing to be done b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be entitled for exemption. We are pointing out this aspect to dispel any doubt about the legal position as explored in this decision. xxx xxx xxx 66. To sum up, we answer the reference holding as under: 66.1. Exemption Notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption Notification. (Emphasis Supplied) 31. In the facts of this case, since the vires of the Notifications and reasonableness of exemption condition nos. (i) to (v) is not under challenge; and the Appellant admittedly fails to satisfy the essential conditions contained in each of the independent exemptions, we are unable to accept the contention of the Appellant that it can be permitted by Respondent to export 11,000 MT by taking an overall view of substantial compliance, which in the opinion of this Court is in essence a subjective evaluation, which is not the remit of the Notifications. 32. Keeping in view the objective of the Central Government in imposing this ban with immediate effect was to avert a food crisis in the country, a strict compliance of the exemption condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ---------- Notes: 1.1.05 Transitional Arrangements (b) Item wise Import/Export Policy is delineated in the ITC (HS) Schedule I and Schedule II respectively. The importability/ exportability of a particular item is governed by the policy as on the date of import/ export. The date of import/ export is defined in para 2.17 of HBP 2023. Bill of Lading and Shipping Bill are the key documents for deciding the date of import and export respectively. In case of change of policy from free to restricted/prohibited/state trading or otherwise regulated , the import/export already made before the date of such regulation/restriction will not be affected. However, the import through High Sea sales will not be covered under this facility. Further, the import/export on or after the date of such regulation/restriction will be allowed for importer/exporter who has a commitment through Irrevocable Commercial Letter of Credit (ICLC) before the date of imposition of such restriction/ regulation and shall be limited to the balance quantity, value and period available in the ICLC. For operational listing of such ICLC, the applicant shall have to register the ICLC with jurisdictional RA against computerize ..... X X X X Extracts X X X X X X X X Extracts X X X X
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