Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 13.02.2020
Date of decision: 05.03.2020
+ W.P.(C) 6045/2016
M/S WADPACK PRIVATE LIMITED
..... Petitioner
Through: Mr.Karan Sachdev & Mr.Kunal
Kapoor, Advs.
versus
THE DIRECTOR GENERAL OF FOREIGN TRADE & ANR
..... Respondents
Through: Mr.Akshay Makhija, CGSC with
Ms.Kriti Awasthi, Adv.
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
1. This petition has been filed by the petitioner praying for a Writ of
Mandamus directing the respondent no. 1 to condone the procedural lapse
of supplying the goods to the SEZ units only under ARE-1 without Bills
of Exports with respect to its Advance Authorization No. 0710063364
dated 02.03.2009 as also for issuance of Redemption Certificate to the
petitioner with respect to the said Advance Authorization.
2. The facts in brief are that the petitioner was issued the Advance
Authorization by the respondent no. 2 on 02.03.2009. The petitioner
claims to have supplied the finished goods, that is corrugated boxes, to
Nokia Semens and its units in SEZ units between 2009 to 2011. On
22.05.2012, the petitioner submitted the documents to respondent no. 2
W.P.(C) 6045/2016 Page 1
for issue of Export Obligation Discharge Certificate (EODC). The
respondent no. 2 in turn called upon the petitioner to furnish the Bills of
Exports towards goods supplied to the SEZ units as also the Bank
Realization Certificate in Appendix-22A of the Hand Book of Procedure.
The petitioner, while submitting The Bank Realization Certificate,
instead of Bills of Exports, submitted the ARE-1 as proof of making
exports against Advance Authorization. The petitioner claims that due to
an inadvertent error, the Bills of Exports were not filed.
3. Pursuant to an order for personal hearing being granted to the
petitioner, passed by this Court, the petitioner approached the Policy
Relaxation Committee (PRC) seeking condonation of this lapse. The
PRC in its meeting dated 02.02.2016 observed as under:-
“The case was discussed again at length. The committee
was of the view that in terms of Para 4.12 of FTP, 2009-
14, the applicant was require to mention consumption of
exempted materials on export documents along with file
No/Licence No against that exports are being made
towards discharge of export obligation. In terms of Para
4.25 of HBP, 2009-14 read with ANF-4F for discharge of
export obligation, the applicant should submit original
copy of Shipping Bill/Bill of Export, Excise Invoice and
Bank Realisation Certificate. However, the applicant has
failed to submit these documents except BRC Certificate
issued by Superintendent Central Excise cannot substitute
the documents prescribed in ANF-4F because it does not
prove that duty free imported goods were consumed in
the resultant products have been supplied to SEZ unit
towards discharge of export obligation against Advance
authorization in question. The Committee, therefore, did
not accede to the request. The applicant is hereby
W.P.(C) 6045/2016 Page 2
directed to get the case regularized in terms of Para 4.49
of Hand Book of Procedures, 2015-20.”
4. The learned counsel for the petitioner submits that though the
petitioner admits its mistake of not submitting the Bills of Exports as they
were not generated/filed, the petitioner, in form of ARE-1; its own
affidavit alongwith statement showing use of imports for finished goods
duly certified from the Chartered Accountant; and a certificate
confirming the receipt of goods in the SEZ as also the Bank Realization
Certificate, has produced sufficient proof to show its entitlement to the
fulfillment of exports obligation under the Advance Authorization and
therefore, was entitled to the issuance of the EODC. He places reliance
on the judgment of the Bombay High Court in Larsen & Toubro Limited
vs. Union of India , 2018 (360) ELT 289 (Bom.), to submit that in a
similar circumstance, the High Court had held that where the ARE-1
form had been supplied, it was only a technical obligation of the said
form not mentioning the Advance Authorization Number in the initial
copies on which the claim of the petitioner herein had been rejected, and
that the PRC should have accepted the explanation given by the petitioner
therein instead of penalizing the petitioner therein for such procedural
lapse.
5. The learned counsel for the petitioner further places reliance on the
Circular dated 11.07.2012 issued by the DGFT, granting relaxation under
Para 2.5 of the Foreign Trade Policy condoning procedural lapse of non-
mention of EPCG licence number and date on the shipping bills. He
submits that similar lapse of the petitioner of mentioning the Advance
W.P.(C) 6045/2016 Page 3
Authorization number and date on the ARE-1 should have been
condoned by the PRC.
6. The learned counsel for the petitioner further submits that even in
ARE-1, it is only the self-declaration of the petitioner that is material. It
is made only for the purpose of ensuring that the party does not obtain the
benefit twice over for the same export. In the present case, apart from the
certificate from the Chartered Accountant, the PRC itself has verified
from the concerned Excise Department that the petitioner has not availed
such benefits twice over. The learned counsel for the petitioner further
submits that the ARE-1 has also been certified by the Customs Authority
of the SEZ.
7. On the other hand, the learned counsel for the respondents submits
that the power of this Court while exercising jurisdiction under Article
226 of the Constitution of India is highly limited and does not extend to
relaxation of the conditions contained in the Hand Book of Procedure,
which rests exclusively with the PRC. Unless the decision of the PRC is
found to be perverse, arbitrary and unreasonable, this Court cannot
interfere with the same. He places reliance on the Judgment dated
26.09.2018 of this Court in W.P. (C) 10193/2018 titled Shashi Cables
Ltd. vs. Directorate General of Foreign Trade (DGFT) and Anr .
8. He further submits that the petitioner was well aware of the
requirement of submission of documents as prescribed in Paragraph 4.25
of the Hand Book of Procedure (Volume-1), 2004-09 as evidence of
fulfillment of export obligations imposed under the Advance
Authorization. He refers to the “Guidelines For Applicants”, which
W.P.(C) 6045/2016 Page 4
require copies of the shipping bills containing details of shipment
effected or Bill of Export incase of export to SEZ unit, to be submitted
for claiming such benefits. He further refers to the SEZ Rules, 2006 and
specifically Rule 30(3) thereof, which requires the Bill of Exports to be
filed by the supplier. He submits that the PRC exercises its powers only
where it finds a case of genuine hardship or public interest involved.
Merely because a party has not been vigilant, would not require PRC‟s
interference.
9. The learned counsel for the respondent further submits that the
reliance of the petitioner on the verification submitted by the Excise
Department would be of no relevance inasmuch as it is the Customs
Authority which has to verify the factum of export against the Advance
Authorization. He further relies upon the judgment of this Court in
Holoflex Limited and Anr. vs. Union of India and Ors , 2019 (2) TMI
1576, which distinguished the judgment of the Bombay High Court in
Larsen & Toubro Limited vs. Union of India , 2018 (360) ELT 289
(Bom.), and observed that filing of Bills of Exports is not a mere
formality but serves as a valuable check for ensuring that the goods
deemed to have been exported are in fact received by the SEZ Unit and
are accounted as Deemed Exports.
10. I have considered the submissions made by the learned counsels
for the parties.
11. To answer the submissions made by the respective counsels for the
parties, certain provisions of Foreign Trade Policy, Handbook of
Procedure and the SEZ Rules, 2006 need to be considered.
W.P.(C) 6045/2016 Page 5
12. Paragraph 4.13 of the Foreign Trade Policy, 2004-2009, deals with
“Advance Authorization Scheme” and provides that an Advance
Authorization is issued to allow Duty Free Import of input duly and
physically incorporated in export directed (making normal allowance for
wastage). Such Advance Authorization can be issued either to
manufacturer exporters or merchant exporters tied to support
manufacturer(s) for inter-alia physical exports (including exports to
SEZ). Paragraph 4.1.6 further states that exports to SEZ units,
irrespective of currency of realization, would be covered.
13. The Handbook of Procedure, 2009-2014 as also 2015-2020, in
Paragraph 4.12 and Paragraph 4.27 respectively, requires the
shipping/supply document(s) to be endorsed with File Number or
Authorisation Number to establish co-relation of export/supplies with the
Authorization issued. Paragraph 4.25 further provides that the
Authorization Holder shall furnish prescribed document in ANF-4F in
support of fulfilment of export obligation.
14. Paragraph 5 of the condition attached to the Advance
Authorization specifically draws the attention of the petitioner to
paragraph 4.25 and states that the documents prescribed therein must be
delivered for claiming discharge of export obligation.
15. Form ANF-4F, which is the Application form for „Redemption/No
Bond Certificate against Advance Authorization‟ further requires
submission of shipping bill against the details of physical exports/deemed
exports made.
W.P.(C) 6045/2016 Page 6
16. Paragraph 2.5 of the Foreign Trade Policy empowers the DGFT to
pass orders granting relaxation or relief from policy/procedure. It reads
as under:
“ 2.5 Exemption from Policy/Procedure
DGFT may pass such orders or grant such relaxation
or relief, as he may deem fit and proper, on grounds of
genuine hardship and averse impart on trade.
DGFT may, in public interest, exempt any person or
class or category of persons from any provision of FTP
or any procedure and may, while granting such
exemption, impose such conditions as he may deem fit.
Such request may be considered only after consulting
Committees as under:
SL.
No.
Description Committee
(i) Fixation/modification of
product norms under all
Schemes
Norms
Committee
(ii) Nexus with capital goods
(CG) and benefits under
EPCG Schemes
EPCG Committee
(iii) All other issues Policy Relaxation
Committee (PRC)
17. A reading of the above provisions would clearly show that the
exemption from Policies/Procedure can be granted only in cases of
genuine hardship and adverse impact on trade or in public interest, in
consultation with inter-alia the PRC.
W.P.(C) 6045/2016 Page 7
18. Rule 30 of the SEZ Rules further prescribes the procedure for
procurement from the Domestic Tariff Area by SEZ units. Rule 30(3)
specifically provides that where the goods are procured by the Unit in the
SEZ under the claim of export entitlement, the same shall be allowed
admission into the SEZ on basis of ARE-1 and a Bill of Export filed by
the supplier. In fact, the Proviso to Rule 30 (3) of the Rules further
prescribes that if the goods arrive before a Bill of Export has been filed
and assessed, the same shall be kept in an area designated for same
purpose by the Specified Officer and shall be released to the Unit only
after completion of the assessment of Bill of Export. Rule 30(7) provides
for examination of the goods alongwith documents, that inter-alia
include ARE-1 and Bill of Export, where goods are being procured under
claim of an export entitlement. Rule 30(9) further provides that a copy of
Bill of Export and ARE-1 with an endorsement of the Authorized Officer
shall be treated as proof of export.
19. Rule 30 of the Rules, so far as is relevant to the controversy in
question, is reproduced herein below:
“30 Procedure for procurements from the Domestic Tariff
Area
xxxxxx
(2) Goods procured by a Unit or Developer, on which
Central Excise Duty exemption has been availed but without
any availed of export entitlements, shall be allowed
admission into the Special Economic Zone on the basis of
ARE-1.
(3) The goods procured by a Unit or Developer under claim
of export entitlements shall be allowed admission into the
W.P.(C) 6045/2016 Page 8
Special Economic Zone on the basis of ARE-1 and a Bill of
Export filed by the supplier or on his behalf by the Unit or
Developer and which is assessed by the Authorized Officer
before arrival of the goods:
Provided that if the goods arrive before a Bill of Export has
been filed and assessed, the same shall be kept in an area
designated for this purpose by the Specified Officer and
shall be released to the Unit or Developer only after
completion of the assessment of the Bill of Export.
xxxxxx
(7) On arrival of the goods procured from the Domestic
Tariff Area at the Special Economic Zone gate, the
Authorized Officer shall examine the goods in respect of
description, quantity, marks and other relevant particulars
given in the ARE-1, invoice, Bill of Export of packing list
and also as per the examination norms laid down in respect
of export goods in cases where the goods are being
procured under claim of an export entitlement.
xxxxxx
(9) A copy of the Bill of Export and ARE-1 with an
endorsement of the Authorized Officer that the goods have
been admitted in full in the Special Economic Zone, shall be
treated as proof of export.
xxxxxx
(11) The Unit or Developer may also procure goods from
Domestic Tariff Area without availing exemptions,
drawbacks and concessions on the basis of invoice or
transport documents, issued by the supplier:
Provided that such invoices or transport documents shall be
endorsed to the effect that no exemptions, drawbacks and
concessions have been availed on the said supplies.”
W.P.(C) 6045/2016 Page 9
20. A reading of the above provisions would clearly show that the Bill
of Export is an essential document to be submitted for claiming discharge
of export obligation under the Advance Authorization. The petitioner
admits that in the present case it did not submit the Bill of Export and
therefore, claims exemption under Paragraph 2.5 of the FTP. It is further
admitted that the ARE-1 Forms that were submitted with the Excise
Department at the time of supplies to the SEZ Unit did not bear the
endorsement of the Advance Authorization Number or its date. It also
did not specify the quantity of input used by the petitioner in the goods
that was so supplied. It is only when the PRC demanded submission of
original ARE-1, that the petitioner submitted copies of the ARE-1 with
the Advance Authorization Number and its date stamped by itself on such
ARE-1.
21. Besides, petitioner‟s statement of having worked and manufactured
boxes for the past 39 years further weakens his claim in the petition.
There is no explanation as to why the petitioner supplied goods only
under cover of ARE-1 and not with Bill of Export except for it being an
inadvertent mistake. A market player in business for this long would be
expected to comply with formalities and file all relevant documents
timely.
22. As is evident from the reading of the Paragraph 2.5 of the FTP,
exemption from following policy/procedure can be granted only in cases
of genuine hardship or adverse impact on trade or in public interest. In
my opinion, it is not applicable for cases where the exporters, even
bonafide , are not vigilant or are lax in compliance with the mandatory
W.P.(C) 6045/2016 Page 10
conditions. The onus cannot be shifted to the Authorities in such cases to
retrospectively determine if the petitioner had otherwise complied with
all conditions of Advance Authorization.
23. As held by this Court in Holoflex Limited (supra), filing of Bill of
Export is not a mere formality but serves as a valuable check for ensuring
that the goods deemed to have been exported are in fact received by the
SEZ unit and are accounted as Deemed Exports. These goods, if they are
to be claimed for export entitlement, are put to scrutiny by the Authorized
Officer before they are allowed entry into the SEZ.
24. The judgment of the Bombay High Court in Larsen& Toubro
Limited (supra), can also be of no avail to the petitioner. In the said case,
the Court was persuaded in favour of the petitioner therein as the claim of
the petitioner had been verified and endorsed by the Range
Superintendent, Central Excise and the Development Commissioner of
the SEZ. It was found not to be just a self generated version or a self
certification. In the present case, however, the petitioner has merely put a
rubber stamp on the copy of ARE-1(s) subsequently without such claim
having been endorsed from the concerned Authority. The affidavit and
the certificate from the Chartered Accountant are also self serving
documents. In fact, in the representation submitted to the PRC, the
petitioner revised its claim from 409.571 MTs of corrugated boxes
having a value of Rs.1,79,82,784/- having been supplied, to 414.657 MTs
of a value of Rs.3,25,36,085.70. This itself shows that the claim of the
petitioner could not have been taken on its face value.
W.P.(C) 6045/2016 Page 11
25. The PRC had earlier rejected the claim of the petitioner vide its
communication dated 17.12.2013 stating that the Committee was not
satisfied about the corroborating evidence produced by the petitioner. On
challenge made by the petitioner, this Court by an order dated
16.12.2014, passed in WP(C) 8924/2014, titled M/s Wadpack Private
Limited v. The Director General of Foreign Trade & Anr , granted
opportunity to the petitioner to make a fresh representation alongwith all
documents and further directed the DGFT to consider the same after
affording an opportunity of hearing to the petitioner. The PRC has again
rejected the claim of the petitioner by the Impugned Decision taken in the
meeting held on 02.02.2016, observing that the certificate issued by the
Superintendent, Central Excise cannot substitute documents prescribed in
ANF-4F as it does not prove that duty free imported goods were
consumed in the resultant products supplied to the SEZ Unit. As held by
this Court in Shashi Cables Ltd. (supra), unless such decision of the PRC
is found to be perverse, arbitrary, capricious or unreasonable or otherwise
contrary to the statutory framework, no interference with the such
decision is permissible in exercise of power of judicial review. In the
present case, no such infirmity is found with the decision of the PRC.
26. In view of the above, I find no merit in the present petition and
same is dismissed. There shall be no order as to cost.
NAVIN CHAWLA, J
MARCH 05, 2020 /rv/Arya
W.P.(C) 6045/2016 Page 12