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TMI Blog2024 (8) TMI 729X X X X Extracts X X X X X X X X Extracts X X X X ..... oduct, to help verify the civil nature of the end use of these products. The contention of the Respondent that these products have dual use and can potentially be used for military purposes, and hence should not be exported without further clearance of the DGFT finds no footing with this court. Almost everything can have a dual use, like soap being manipulated into a bomb, but rationality must guide the implementation of export regulations. Import and export regulation must be rational to effectively balance economic interests with national and global security concerns. Items that have been certified by subject matter experts as having civil use and are allowed within the ambit of the export policy, cannot be stopped from being exported to countries with which India has established export ties, with no restrictions in the realm of economic policy, on the pretext that the products may have a potential military use. In view of the fact that the products which the Petitioner company is trying to export are of civil nature and do not attract any of the restrictions established in the SCOMET list or Catch-All provisions, the impugned notification is quashed. The writ petition is allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition. 3. After receiving the Impugned Letter, the LEO to export, the said Aircraft Engines, was denied to the Custom House Agent on the pretext of a DRI alert. It is pertinent to mention that, in the interim, the Petitioner made various representations to the Joint Director, DGFT and to the Customs Commissioner to release the consignment under Airway Bill No. 7552481, along with 3 other consignments, under Airway Bill Nos 7567057, 7567132, 7596729 also containing other aircraft spare parts, that were stopped from being exported and hence lying at the airport as a result of the impugned letter. Thereafter, on the advice of the Respondent, the Petitioner tried to apply for the SCOMET license on the DGFT Website but did not fall into any of the eight-criterion mentioned on the website, attached below:- 0. Nuclear materials, nuclear-related other materials, equipment and technology 1. Toxic chemical agents and other chemicals 2. Micro-organisms, toxins 3. Materials, Materials processing Equipment and_ related technologies 4. Nuclear-related other equipment and technology, not controlled under Category 0 5. Aerospace systems, equipment, including production and test equipment, related ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 102) (AIRCRAFT SPARE PARTS) GEARBOX ASSY-ACCESSORY (340-046-508-0) (AIRCRAFT SPARE PARTS) 4 7567057 15.02.2024 NEW AIRCRAFT TYRES 27X7.75-15 AIR/12/225 029-616 (FOR THIRD COUNTRY EXPORT) RETREADED AIRCRAFT TYERS H44.5X16.5-21 AIR/28/225 029 (FOR THIRD COUNTRY EXPORT) 7. The learned Counsel for the Petitioner contends that import and export of goods from India is governed by the Foreign Trade (Development and Regulation) Act, 1992 wherein under Section 5 of the act, the Central Government may notify the Foreign Trade Policy from time to time. He further states that in terms of Chapter 2.01 of Foreign Trade Policy (FTP), 2023, import and export shall be free except from certain prohibitions /restrictions, or exclusive trading through State Trading Enterprises. He adds that simple reading of the Export Import Policy 2023 clearly indicates that there is no restriction on export of any item unless it is expressly provided under the policy. The learned Counsel for the Petitioner further submits that the impugned order, issued by the DGFT, is contrary to the provisions of the Foreign Trade Policy (FTP), 2023 as formulated by the Central Government. He adds that the DGFT has no authority t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for military end-use. He further contests that as per Para 10.05 of the FTP mentions that export of items not in the SCOMET list may also be regulated under provisions of the Weapons of Mass Destruction and their Delivery System (Prohibition of Unlawful Activities) Act, 2005 and it is on this ground that the impugned letter was issued asking the Petitioner to apply for SCOMET Authorization for the export of such items. 11. Heard learned Counsel appearing for the Parties and perused the material on record. 12. At this stage it is pertinent to reproduce the following paras of the FTP, 2023, below:- 2.01 Policy regarding import /Exports of goods (a) Exports and Imports shall be Free except when regulated by way of Prohibition , Restriction or Exclusive trading through State Trading Enterprises (STEs) as laid down in Indian Trade Classification (Harmonized System) [ITC (HS)] of Exports and Imports. The list of Prohibited , Restricted , and STE items can be viewed under Regulatory Updates at https://dgft. gov.in (b) Further, there are some items which are Free for import/export, but subject to conditions stipulated in other Acts or in law for the time being in force xxx 10.02 SCOMET Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for civil application and therefore this clause do not apply provided civil type certificate under 8A901a Note-1 a b are In support which shall be obtained from the exporter. ii. Engine CFM34-SE5 Serial no: ESN193865 (Aircraft engine with Stand), The item (Qty 1) is CF34-3E5 engine which is a high bypass turbofan aircraft engine used only in Civil Aircrafts. Applicable Sl. Nos in SCOMET list a) 6A1010d;-Item does not fall under this category b) 8A901a:-The engine may be incorporating all or some of the technologies specified by 8E903.a, 8E903.h or SE903.i. But this engine is used only for civil application and therefore this clause do not apply provided civil type certificate under 8A901a Note-i a b are in support which shall be obtained from the exporter. iii. Upper RH Transparent Assy (Part no 3G5610A0633R) (Spare Parts for Civil Helicopters) The item (Qty 1) Is a single piece transparent fiber glass part Based on the markings, geometry and features, the item closely matches declared description as a spare part (windshield) of some helicopter. Applicable SI. Nos in SCOMET list a) 6A010a:- Item does not fail under this category if used in civil application. Since end use Is not ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (ICAO). Note 2 8 A901.1. a does not apply to aero gas turbine engines designed for Auxiliary Power Units (APUs) approved by the civil aviation authority of India. 8A901 b. (Reserved) 8A902 'Marine gas turbine engines' designed to use liquid fuel and having all of the following, and specially designed assemblies and components therefor: a. Maximum continuous power when operating in steady state mode at standard reference conditions specified by ISO 3977-2:1997 (or national equivalent) of 24,245 kW or more; and b. 'Corrected specific fuel consumption' not exceeding 0.219 kg/kWh at 35% of the maximum continuous power when using liquid fuel. Note: The term 'marine gas turbine engines' includes those industrial, or aero-derivative, gas turbine engines adapted for a ship's electric power generation or propulsion. Technical Note For the purposes of 8A902, 'corrected specific fuel consumption' is the specific fuel consumption of the engine corrected to a marine distillate liquid fuel having a net specific energy (i.e., net heating value) of 42MJ/kg (ISO 3977-2:1997). 8A903 Specially designed assemblies or components, incorporating any of the technolog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attract any of the restrictions that were mentioned in the SCOMET list or Catch-All provisions. A perusal of Appendix 3 of the SCOMET lists shows the exception that has been carved out under Clause 8A901.1.A, i.e. Catch-all or SCOMET provisions do not apply to any of those aero gas turbine engines that are certified by civil aviation authorities of India and have a type rated certificate. Perusal of the DRDO report and the type certificate issued by the DGCA was that the GE CF-34-8E5 model of engines is a recognized type of civil engine and has also been further cleared by the DRDO as having civilian application. Further the Petitioner in this case has also provided end user certificates, from the party they are exporting the product, to help verify the civil nature of the end use of these products. 16. The contention of the Respondent that these products have dual use and can potentially be used for military purposes, and hence should not be exported without further clearance of the DGFT finds no footing with this court. Almost everything can have a dual use, like soap being manipulated into a bomb, but rationality must guide the implementation of export regulations. Import and e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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