Full Judgment Text
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CASE NO.:
Transfer Case (civil) 165 of 2006
PETITIONER:
M/s Hindustan Granites
RESPONDENT:
Union of India & Ors
DATE OF JUDGMENT: 03/04/2007
BENCH:
DR. ARIJIT PASAYAT & S.H. KAPADIA
JUDGMENT:
J U D G M E N T
I.A. Nos. 1 & 2
in
T.C.(C) No. 165/2006
with
I.A.Nos.2,4,5,6,7, & 10 in TP(C) No.579 of 2006
T.P.(C) No.1067 of 2006
I.A.No.1 & 2 in T.C.(C) No.168 of 2006
SLP (C) No.13670 of 2006
SLP (C) No.13671 of 2006
C.A. No. of 2007 arising out of S.L.P)\005\005\005\005\005 (CC
NO.9879 of 2006)
C.A. No. of 2007 arising out of S.L.P)\005\005\005\005\005 (CC
No.9880 of 20006)
C.A. No. of 2007 arising out of S.L.P)\005\005\005\005\005 (CC
NO.9881 of 2006)
T.C. (C) No.166 of 2006
W.P.(C) No.600 of 2006
T.C.(C) NO.167 of 2006
T.C.(C) 1 of 2007
W.P.(C) No.22 of 2007
SLP (C) No.5376 of 2007
KAPADIA, J.
In this batch of matters, the central question which we
are called upon to decide is regarding the validity of Policy
Circular dated 30.8.05 and Notification No.24 dated 31.8.05
which has the effect of amending para 6.8(a) and para 6.8(h) of
the Foreign Trade Policy 2004-2009.
This judgment is confined to Domestic Tariff Area sales
(DTA sales) by 100% Export Oriented Unit (EOU).
Leave granted in special leave petitions filed by Union of
India against various EOUs.
The basic issue which we need to decide in this batch of
cases is: whether DTA sales by 100% EOUs form an integral
part of EOU Scheme?
For the sake of convenience we reproduce hereinbelow
the facts as reproduced in the case of Union of India & others
v. M/s. Abhishek Exports [Civil Appeal No\005\005\005\005\005\005of
2007 arising out of S.L.P. (C) No\005\005\005\005(CC9879 of 2006)].
The concept of EOU was introduced in 1980 in the EXIM
Policy. The EOU Scheme was framed in order to boost the
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Indian exports. Under the said Scheme, EOU could be located
at any place. In 1992, statutory recognition was given to
EXIM Policy vide Section 5 of the Foreign Trade (Development
and Regulation) Act, 1992. In 1991, EOU was permitted to
sell rejects upto 5% and goods in the DTA after obtaining
permission from the Export Commissioner. In 1997, under
EXIM Policy 1997-2002, EOU was permitted to sell rejects as
well as goods upto 50% of the FOB Value of exports subject to
payment of duty and fulfillment of minimum Net Foreign
Exchange Earnings (NFE). Over and above this limit, EOU
could sell finished products which were freely importable
against payment of full duty.
On 24.3.2000 M/s. Abhishek Exports was granted the
Letter of Permission (LOP) by the Development Commissioner,
NOIDA, to manufacture and export marble tiles and finished
marble blocks. In the LOP it was stipulated that M/s.
Abhishek Exports had to maintain NFE percentage and they
were required to achieve minimum Export Obligations. In the
said LOP it was further stipulated that M/s. Abhishek Exports
cold make domestic sales as per the provisions of EXIM Policy
1997-2002.
M/s. Abhishek Exports started exporting finished marble
made out of rough imported marble and rough indigenous
marble. The rough marble so imported was duty-free. Under
the LOP, M/s. Abhishek Exports had the right to make sales
in DTA, subject to payment of concessional and full duty as
the case may be.
On 1.4.04 FTP 2004-2009 came into force. We quote
herein below paras 6.1, 6.5, 6.8(a), 6.8(b), 6.8(d), 6.8(e), 6.8(g)
and 6.8(h) of the FTP 2004-2009 which read as under:
"CHAPTER- 6
EXPORT ORIENTED UNITS (EOUs), ELECTRONICS HARDWARE
TECHNOLOGY PARKS (EHTPs), SOFTWARE TECHNOLOGY PARKS (STPs)
AND BIO-TECHNOLOGY PARKS (BTPs)
Eligibility
6.1
Units undertaking to export their entire production of goods and services
(except permissible sales in the DTA), may be set up under the Export
Oriented Unit (EOU) Scheme, Electronic Hardware Technology Park (EHTP)
Scheme, Software Technology Park (STP) Scheme or Bio-Technology Park
(BTP) scheme for manufacture of goods, including repair, re-making,
reconditioning, re-engineering, and rendering of services. Trading units,
however, are not covered under these schemes.
Net Foreign
Exchange Earnings
(NFE)
6.5
EOU/EHTP/STP/BTP unit shall be a positive net foreign exchange earner.
Net Foreign Exchange Earnings (NFE) shall be calculated cumulatively in
blocks of five years, starting from the commencement of production.
DTA Sale of
Finished Products/
Rejects Waste/
Scrap/ Remnants
and By-products
6.8
The entire production of EOU/EHTP/STP/BTP units shall be exported subject
to the following:
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(a)
Units, other than gems and jewellery units, may sell goods upto
50% of FOB value of exports subject to fulfillment of positive
NFE on payment of concessional duties . Within the entitlement
of DTA sale, the unit may sell in DTA its products similar to the
goods which are exported or expected to be exported from the
units. No DTA sale at concessional duty shall be permissible in
respect of motor cars, alcoholic liquors, books and tea (except
instant tea) or by a packaging/ labeling /segregation/
refrigeration unit/
compacting/micronisation/pulverization/granulation /conversion
of mono-hydrate form of chemical to anhydrous form or vice-
versa and such other items as may be notified from time to time.
Sales made to a unit in SEZ shall also be taken into account for
the purpose of arriving at FOB value of export by EOU
provided payment for such sales are made from EEFC Account.
Sale to DTA would also be subject to mandatory requirement of
registration of pharmaceutical products (including bulk drugs).
(b)
For services, including software units, sale in the DTA in any
mode, including on line data communication shall also be
permissible up to 50% of FOB value of exports and /or 50% of
foreign exchange earned, where payment of such services is
received in foreign exchange.
(d)
Unless specifically prohibited in the LOP, rejects may be sold in
the Domestic Tariff Area (DTA) on payment of duties as
applicable to sale under paragraph 6.8(a) on prior intimation to
the Customs authorities. Such sales shall be counted against
DTA sale entitlement. Sale of rejects upto 5% of FOB value of
exports shall not be subject to achievement of NFE.
(e)
Scrap/ waste/ remnants arising out of production process or in
connection therewith may be sold in the DTA as per the
Standard Input-Output norms notified under the Duty
Exemption Scheme on payment of concessional duties as
applicable within the overall ceiling of 50% of FOB value of
exports. Such sales shall not, however, be subject to
achievement of positive NFE. In respect of items not covered by
the norms, the Development Commissioner may fix ad-hoc
norms on the basis of data for a period of six months and within
this period, he shall get the norms fixed by the BOA. Sale of
waste/scrap/remnants by units not entitled to DTA sale or sales
beyond the DTA sale entitlement, shall be on payment of full
duties. The scrap/waste/remnants may also be exported.
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(g)
By-products included in the LOP may also be sold in the DTA
subject to achievement of positive NFE on payment of
applicable duties within the overall entitlement of paragraph
6.8(a). Sale of by-products by units not entitled to DTA sales or
beyond the entitlements of paragraph 6.8 (a) shall also be
permissible on payment of full duties.
(h)
EOU/ EHTP/ STP/BTP units may sell finished products, which
are freely importable under the Policy in the DTA under
intimation to the Development Commissioner against payment
of full duties provided they have achieved the positive NFE."
To sum up, para 6.8(a) of the FTP provided that goods,
upto 50% of FOB Value of exports, could be sold on payment
of concessional rate of duty in the DTA subject to fulfillment of
positive NFE. The ceiling, therefore, included sale of rejects
under para 6.8(d) as well as sale of waste under para 6.8(e)
and by-products under para 6.8(g). Under para 6.8(h), sale of
finished products could be made in DTA against payment of
full duty, provided the said good was freely importable under
the Policy. Further, under para 6.8(h) sale of by-products and
sale of waste beyond the entitlement of para 6.8 was
permissible on payment of full duty. The above quoted
paragraphs are relevant extracts of FTP 2004-2009 in respect
of EOU.
On 16.12.04, the Development Commissioner, NOIDA,
approved the Renewal Application made by M/s. Abhishek
Exports for next five year that is from 2005-2006 to 2009-
2010, under LOP dated 24.3.2000.
The approval dated 16.12.04 stipulated that M/s.
Abhishek Exports should have NFE of Rs.9.90 crores in the
next five years. Under the LOP, the exporter was required to
maintain positive NFE.
On 31.8.05 the impugned Notification was issued
amending para 6.8(a) and para 6.8(h) of FTP 2004-2009. By
the impugned Notification the EOUs were prevented from
making DTA sales of the finished marble from imported rough
marble, with immediate effect. It is this Notification which is
the subject-matter of challenge.
According to M/s. Abhishek Exports, an investment of
Rs.300 lakhs had been made; that, it had taken a loan from
State Bank of Bikaner & Jaipur to the tune of Rs.2.30 lakhs
on the basis of the Policy of Government of India and that by
making the above investments it had changed its position
substantially. According to M/s. Abhishek Exports, on
account of the impugned Notification, the quantity of marble
sold by it in the DTA stood reduced. According to M/s.
Abhishek Exports such an amendment to the FTP 2004-2009
by the impugned Notification was devoid of any element of
public interest. According to M/s. Abhishek Exports, the
impugned Notification was against the basic feature of the
EOU Scheme.
The Notification was challenged before the Rajasthan
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High Court. Vide Order dated 29.09.06 the writ petition filed
by M/s. Abhishek Exports in the Rajasthan High Court stands
transferred to this Court vide Transfer Case (C) No.165 of
2006.
According to M/s. Abhishek Exports, by the impugned
Circular dated 30.8.2005 the quantity which could be
imported by Special Import License Units (SIL Units) was
arbitrarily increased from 80,000 MT to 1.30 Lakh MT. The
Circular dated 30.8.05 has been challenged on the ground
that it discriminates unreasonably between 100% EOUs and
SIL Units; that, the impugned Circular gives benefit to selected
importers; that, the effect of the impugned Circular was to
increase the availability of imported rough marble blocks for
use in the domestic market and that for no reason the right to
import has been unreasonably limited only to SIL Units by the
impugned Notification dated 31.8.05. According to M/s.
Abhishek Exports, by reason of the impugned
Circular/Notification the quantity of marble sold by the EOUs
in the domestic area has been reduced and the quantity of
marble sold by SIL Units from the same imported rough
marble stood significantly increased which has resulted in the
loss to the EOUs. According to M/s. Abhishek Exports, the
impugned Circular/Notification was against public interest
since the SIL Units had no Export Obligations, they were not
Foreign Exchange Earners; they were required to pay lesser
rate of duty and consequently according to M/s. Abhishek
Exports the impugned Circular/Notification was not in public
interest. Further, according to M/s. Abhishek Exports, DTA
sales constituted essential feature of the EOU Scheme since
vide para 6.1, 100% EOUs undertook to export their entire
production of goods, except permissible sale in the DTA, under
the EOU Scheme and, therefore, the DTA sales constituted an
integral part of EOU Scheme. It was submitted that the DTA
sales were permitted only if the EOU fulfilled its Export
Obligations and achieved positive NFE and, therefore, the
intention was to grant benefit to the EOU on achieving positive
NFE and it had no co-relation with the imported raw material
out of which the exports are made. According to M/s.
Abhishek Exports, in the absence of DTA sales, an EOU would
be compelled to sell its entire production in the export market.
According to M/s. Abhishek Exports, on account of total
restriction on DTA sales their inventory of marble tiles is likely
to get accumulated in the factory blocking the working capital
and funds, which otherwise would have been disposed of in
the local market. According to M/s. Abhishek Exports, the
unamended Policy had provided an insulation/hedge against
the fall in the export business in the international market.
According to M/s. Abhishek Exports, an EOU could sell the
marble tiles in the domestic market in the slump season so
that production and business activity of an EOU was not
adversely affected. According to M/s. Abhishek Exports on
account of impugned Circular/Notification an idle capacity
during the slump season would accrue. Further, under the
unamended Policy, in case of loss, an EOU could make good
the loss by DTA sales and, therefore, such sales constituted an
essential feature of the EOU Scheme. According to M/s.
Abhishek Exports, DTA sales were essential to run the plant at
maximum capacity, to minimize the cost of production in the
competitive export market, to deal with export surplus and to
provide for disposal of export products on cancellation of
export orders. According to M/s. Abhishek Exports, the
impugned Circular/Notification has been published with the
view to protect the SIL Units at the cost of 100% EOUs.
According to M/s. Abhishek Exports, the impugned
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amendments would disrupt the business of EOUs and it would
flood the domestic market with 1.30 lakhs MT of finished
marble product made from imported rough marble which
would not serve the public interest. According to M/s.
Abhishek Exports, the impugned Circular/Notification has
been issued to protect the marble industry of Gujarat which is
the primary beneficiary of the SIL based import policy of
marble. M/s. Abhishek Exports further submitted that Article
14 of the Constitution of India is violated in the present case
since the impugned Circular/Notification has been issued to
give concession to SIL importers at the cost of EOUs.
On 10.1.07 when the above matters came for hearing
before this Court, the following order was passed:
"Ban on DTA sales by 100% EOU under OGL
licence and limiting the issuance of licences to
those applicants who have imported crude marble
between 1999-2001 under SIL scheme vide
impugned policy circulars Nos. 24 dated
30.8.2005, No. 34 dated 30.11.2005 and
notification Nos. 23 and 24 dated 31.8.2005
(hereinafter referred to as the impugned new
policy) was the subject matter of challenge vide
writ petitions filed in various High Courts.
By order dated 29.9.2006, the said writ
petitions stood transferred to this Court.
Having regard to the arguments advanced
before us and in view of the fact that the
entitlement of Domestic Users for financial year
2005-06 is going to lapse on 31.3.2007 the
following interim order is passed.
DGFT would be entitled to grant licences to
the applicants who are so entitled under policy
circular No. 24 dated 30.8.2005. To that extent
our order dated 29.9.2006 stands vacated.
In T.P. (C) No. 579/06 filed by the Director
General of Foreign Trade it has been inter alia
stated that on account of representations received
from the traders and the material (including
complaints) gathered by DGFT, the impugned new
policy came to be enacted. This was after detailed
discussions with the Trade. The broad features of
the new policy and the reasons for enacting the
policy are given in paragraphs 15, 16 and 17 of
T.P. (C) No. 579/06. However, it appears that the
requisite material was not supplied to the affected
100% EOUs. who have complained before us that
the changes have been made in FTP vide the
impugned policy without giving any opportunity to
the affected Units. At this stage we may point out
that learned Solicitor General of India stated
before us that the impugned policy decision is
taken on certain material (including complaints/
representations received) which he is prepared to
disclose to the concerned EOUs. Accordingly, we
direct DGFT to supply the material in its
possession to the affected EOUs., who have filed
the writ petitions, on or before 15.1.2007. The said
petitioners (EOUs.) who have filed writ petitions in
the High Court shall thereafter make
representations to the DGFT within 10 days on
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and from the receipt of the material (including
complaints) from DGFT. Thereafter, DGFT will
decide the matter in accordance with law. We
make it clear that it will be open to DGFT to
equitably work out the matter, if possible. One
point, however, needs to be mentioned. It is stated
on behalf of M/s Hindustan Granites that they
have accumulated wastes which they are entitled
to sell in DTA under the unamended policy. It is
contended on behalf of M/s Hindustan Granites
that they have fulfilled the benchmark of Net
Foreign Exchange earnings and, therefore, they
were entitled to sell the accumulated wastes in the
domestic market (DTA) under para 6.8 (h) on
payment of full duty. On this point, M/s
Hindustan Granites can also make the
representation giving facts and figures regarding
the quantity of waste which has accumulated and
it will be open to DGFT if possible to decide the
question regarding sale of the said waste in the
DTA.
The question as to whether the impugned
circulars/notifications constitutes a change in the
policy or whether it is a matter of detail within the
existing policy is the question which will be
decided on the next date of hearing when we will
examine the merits of the case.
On receiving the report from DGFT, we shall
hear the matter on merits on the next occasion. In
the meantime, the ban on EOU Units undertaking
DTA sales shall continue to remain in operation.
Consequently, interim order of the Rajasthan High
Court dated 26.10.2005 in DB Civil Writ Petition
No. 5811/05 shall remain stayed.
Stand over to 31.1.2007."
On 7.2.07, the Director General of Foreign Trade after
hearing the parties and after considering their representations
passed an order rejecting the various representations made by
M/s. Hindustan Granites Ltd., M/s. Abhishek Exports,
M/s. Pacific Industries Limited, M/s. Jain Grani Marmo
Pvt. Limited, M/s. Marble Art (all 100% EOUs). The said
order is also under challenge before us.
The said order has re-affirmed the decision taken on
31.8.05 qua 100% EOUs and qua SIL Units without any
change. In this connection, it is submitted on behalf of M/s.
Abhishek Exports that the Director General had erred in
holding that the EOUs were misusing the DTA facility by
making finished products from indigenous marble and
exporting the said finished products rather than making
finished products from the imported marble and exporting the
same. According to M/s. Abhishek Exports, FTP 2004-2009
specifically allow EOUs to sell finished products made from
imported marble in the DTA, upto 50% of FOB value on
payment of concessional rate of duty vide para 6.8(a). That,
the said Policy permitted EOUs to sell anything above 50% of
the FOB value of exports in the DTA on payment of full duty
[para 6.8(h)] subject to the EOUs maintaining a positive NFE.
According to M/s. Abhishek Exports, the above system
operated for seven years. According to M/s. Abhishek
Exports, the above system is allowed in the Hand Book of
Procedure under which there was no requirement to co-relate
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every import consignment with exports. According to M/s.
Abhishek Exports, for last seven years the Implementing
Authority has not objected to the manufacture of finished
goods from indigenous marble and that the said Authority has
never objected to such finished goods being exported as
breach or misuse of the Policy. According to M/s. Abhishek
Exports, the Director General had erred in holding that the
impugned amendment was to protect the domestic marble
industry. According to M/s. Abhishek Exports, on account of
change in Policy the EOUs which were previously buying
rough marble from the domestic market to make finished
products and exporting the same would not be now able to do
so. That, under the amended Policy the EOUs are now
required to export finished products made from imported
marble. According to M/s. Abhishek Exports, on account of
change in Policy qua SIL Units permitting them imports of
marble to the order of 1.30 Lakhs MT as compared 68,000 MT
would effect the domestic mining industry. According to M/s.
Abhishek Exports, the Director General had erred in holding
that there was diversion of the imported rough marble in DTA
which defeated the very purpose of putting marble as under
the restricted category. In this connection, M/s. Abhishek
Exports contend that there was no diversion because DTA
sales was specifically permitted under paras 6.8(a) and 6.8(h)
of FTP 2004-2009 prior to its amendment on 31.8.05 and,
therefore, there was no misuse as found by the Director
General of Foreign Trade.
We find no merit in the challenge to the impugned
Circular/Notification for the following reasons. Firstly, it is
important to note that under para 6.1 of the unamended FTP
2004-2009, 100% EOUs undertook to export their entire
production except permissible sales in DTA. Therefore, DTA
sales constituted an exception or an incidental facility. DTA
sales were not an integral part of the EOU Scheme. Under
para 6.1, EOUs were allowed to be set up on the condition that
they would export their entire production. It is on this
condition that 100% EOUs could avail of various benefits
under Customs and Excise Act. The said DTA sales or sales of
rejects were exceptions. DTA sales were not an integral part of
the EOU Scheme in the sense that if for reasonable reasons if
these exceptions are eliminated, as in this case, the Scheme
would become unworkable. In fact, M/s. Hindustan Granites
even today after the impugned amendment works without use
of domestic raw material. Hence, DTA sales is not an integral
part of the EOU Scheme. Secondly, it is important to note
that 100% EOUs have been importing rough marble blocks
from which they are producing marble tiles/slabs and what
they are exporting is the said marble tiles/slabs. However, the
Director General found, in the course of last seven years, that
the entire export of marble tiles/slabs is made out of the poor
quality indigenous rough marble blocks. On the other hand, it
is found that the entire sale of marble tiles/slabs in DTA is
from rich good quality imported rough marble blocks.
Therefore, the DTA sales by 100% EOUs are now disallowed
under the impugned Circular/Notification. Thirdly, on
account of the above practice, the Director General has found
that four to five 100% EOUs have been importing rough
marble ostensibly for export but in effect after slight polishing
the same are sold in DTA. Marble is a restricted item. On
account of the above practice, the Director General has found
circumvention of the Restricted Import Policy of marble during
100% EOU Scheme (unamended). As stated above, the
concept of Net Foreign Exchange earning is very important.
On account of the price differential, under the impugned
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practice, there is substitution of imported inputs by domestic
inputs. The rational behind allowing imports of rough marble
blocks by 100% EOUs was that the raw material would be
used for export production and that it will not be diverted in
DTA defeating the very purpose of putting marble in the
restricted category. The object behind the EOU Scheme is
consumption of imported raw material for manufacture of
finished products which are to be exported. If that facility
leads to substitution of imported inputs by domestically
procured inputs then the facility has to be discontinued. This
discontinuation has been done by the impugned
Circular/Notification. Fourthly, as stated above, marble is an
item under restricted category. It is put in the restricted
category since it is not treated as only revenue-generating
resource. It is put in the restricted category because the
mining industry depends on that resource. It generates
employment. Mining generates employment. Marble is an
input required in the mining industry. As a result of
impugned substitution, the Indian market gets flooded by the
imported goods resulting in unemployment in the mining
industry. Fifthly, by the impugned Circular/Notification, the
Government has stopped procurement of domestic rough
marble blocks for achieving NFE earnings. This is the major
object behind the impugned Circular/Notification. It is true
that the unamended Policy had no co-relation between the
input imported and the finished product exported. That was
the loophole. To stop the procurement of domestic rough
marble blocks for achieving NFE, the DTA sales had to be
prohibited. By the amended Policy 100% EOUs are now
required to produce marble tiles/slabs (finished products) out
of imported rough marble blocks and thereby the amended
Policy stops the procurement of domestic rough marble blocks
for achieving NFE by these 100% EOUs. Lastly, there are 20
to 25 SIL Units (found to be eligible) vis-‘-vis 4 to 5 100%
EOUs and, therefore, the volume has been increased from
68,000 MT to 1,30 Lakhs MT.
Before concluding, we would like to refer to the authority
cited on behalf of 100% EOUs.
In the case of Bannari Amman Sugars Ltd. v.
Commercial Tax Officer and Others \026 (2005) 1 SCC 625,
the Division Bench of this Court speaking through one of us,
Pasayat, J., has held that exemption from purchase tax on
sugarcane granted in favour of sugar mills established in
public sector whose production exceeded Rs.300 lakhs was
entitled to tax benefit and that the Government was not right
in withdrawing that benefit, particularly, when the industry
stood established on basis of representation made by the
Government. While explaining the doctrine of promissory
estoppel it has been observed vide paras ’16’ and ’17’ that if
the State acts within the bounds of reasonableness to be
decided in an objective manner and from the stand point of
public interest then the restriction cannot be said to be
unreasonable, merely because it operates harshly. In our
view, on the facts of the present case, we are satisfied that the
impugned amendment fulfills the test of public interest and it
also fulfills the test of reasonableness qua the restrictions
imposed on 100% EOUs.
Similarly, in the case of Union of India and Another v.
International Trading Co. and Another - (2003) 5 SCC 437,
the Division Bench of this Court speaking through one of us,
Pasayat, J., has held that if State acts reasonably keeping in
mind national priority and good trade policies then it cannot
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be said that the restrictions imposed in economic interest are
unreasonable even though they operate harshly [See: paras
’22’ and ’23’].
In the case of Union of India & ors. V. M/s. Asian Food
Industries - (2006) 12 Scale 105, on which reliance is
placed by counsel for M/s. Abhishek Exports, the Division
Bench of this Court has held that Foreign Trade Policy under
Foreign Trade (Development and Regulation) Act, 1992 along
with the Hand Book of Procedure constituted a composite
Scheme. We do not dispute with this proposition. Hand Book
of Procedure merely implements the policy. It does not
prevent the Central Government from changing the policy.
Vide paras ’29’ and ’30’ of the said judgment it has been held
specifically that the Central Government can, in exercise of its
powers under Section 5 of the 1992 Act, prohibit exports. In
that case, this Court was concerned with the question of
banning of exports. It is not so in this case. In the matter
before us there was an incidental. Facility given to 100%
EOUs to hedge the losses which may arise on account of
changes in foreign exchange rates which facility is removed.
In our view, nothing prevents the Central Government, in
public interest, to plug the loophole by tinkering with the
existing policy as is done in the present case. Disallowing DTA
sales by 100% EOUs for above reasons cannot be compared
with total ban on export of pulses which was the case in the
matter of M/s. Asian Food Industries (supra). As held
hereinabove, DTA sales did not constitute an integral part of
the EOU Scheme, hence the above judgment has no
application.
For the above reasons, we do not see any merit in the
challenge to the impugned Circular dated 30.8.05 and the
Notification dated 31.8.05 by the above 100% EOUs.
Accordingly, we uphold the validity of the Circular dated
30.8.05 and the Notification dated 31.8.05. Interlocutory
Applications, civil appeals, transfer petition and transfer cases
are disposed of accordingly with no order as to costs.
As stated above, this judgment is confined to the
challenge to the impugned Circular/Notification by 100%
EOUs and has nothing to do with the challenge by SIL Units
who have instituted separate petitions which will be heard in
normal course.