9911796707
TMI Blog2025 (2) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... ificates, that were allegedly wrong - HELD THAT:- A careful scrutiny of the Impugned SCN shows that it does not allege any mis-statement other than the assertion by Essar that the SFIS File was in conformity with the SFIS. Such an approach in the Impugned SCN is directly in the teeth of the DB Judgement, and is completely untenable.
There are no hesitation in holding that the Impugned SCN is covered by res judicata, and is unreasonable and arbitrarily attempts to re-open an issue already closed. The Recovery Notices having been quashed, the Impugned SCN is a circumvention of the effect of such quashing.
Petition disposed off. X X X X Extracts X X X X X X X X Extracts X X X X ..... or export of services and to create a "Served From India" brand. Under the SFIS, on the basis of the quantum of free foreign exchange earned out of services exported in the previous financial year, "duty credit scrips" would be issued to the service exporters for a value equivalent to 10% of the export earnings. These 'scrips' could then be used to offset Customs Duty payable on imports of any capital goods, spares, equipment and the like. 5. At all times relevant to this Petition, Essar was in the business of providing shipping services to clients - an export of services by an Indian company. It is common ground that export of shipping services was eligible under the SFIS. Ships owned or chartered by Essar would ply in international water ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icy Circular, based on deliberations held on December 14, 2007, the DGFT took a view that the earnings from export of services that would qualify for the benefit of duty credit scrips, ought to be from exports that physically "originate from India". The Policy Circular stipulated that "while examining the claim of "Service Providers" for duty credit scrips, there ought to be a connection to India which providing services. Specifically, with regard to airlines and shipping services, it was stated that "services provided from Country X to Country Y routes (not touching India at all)" are not services originating from India. Only the receipts of foreign exchange from services on routes originating from India or touching India as per the route ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied for earning the foreign exchange. It was argued that the export contracts were booked by the Indian company and foreign exchange was earned by the Indian company, and earnings from such export of services would be aligned with the policy objective of the SFIS. The Policy Circular was attacked on the premise that it was a substantial amendment, disguised as a clarificatory amendment, and that it required due process for issuance of any amendment. It was argued that a circular could not be the instrument to make such amendments. The constitutional validity was therefore challenged since the Policy Circular was utilised as an instrument of retrospective amendment, rendering it arbitrary. 11. The Policy Circular was defended by the DGFT as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t otherwise qualified to obtain benefits under the SFIS, the Court's view would have been otherwise. Specifically, it was ruled that the benefits had been examined and settled in favour of Essar by the DGFT on the basis of its understanding of the pre-Policy Circular position that the DGFT had, without any question being raised. The processing of such benefits was an official act, to which a presumption of legality is attached, and on this ground, the Recovery Notices were quashed. Basis of Overcoming the DB Judgement: 14. It is one paragraph in the DB Judgement that the Learned Counsel for DGFT relies on, to defend the Impugned SCN . This is Paragraph 56, which bears reproduction:- "56. However, since it appears to be the case of the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quashing of the Recovery Notices, there ought to have been a suppression of information outside of the route-wise break up, for such action to be tenable. 17. It is seen from the DB Judgement that the Learned Counsel for the Union of India had sought a stay on the operation of the DB Judgement, and it was turned down. Learned Counsel for the Respondents in this Petition confirms that no appeal was actually filed - meaning thereby, that the DB Judgement became final. Therefore, to then issue the Impugned SCN in January 2023, there would need to be material outside the scope of what was already considered and ruled upon in the DB Judgement. For the DGFT to now state that Essar's earlier confirmations that the data provided in the SFIS file ..... X X X X Extracts X X X X X X X X Extracts X X X X
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