Export-Import Policy: Foreign Trade Policy 2004-2009 – Scheme notified for 2006-2007 provided that exports made by export-oriented units (EOUs) shall not be taken into account for Duty Credit Entitlement under the scheme – Circular dated 21.01.2009 was issued to clarify that for the period 1.4.2006 to 31.3.2007, exports made by EOUs are not eligible for benefits under various schemes – Appellant was engaged in the manufacturing/trading and selling of Guar Gum, Guar Chri and Korma and was purchasing Guar Gum Powder from a 100% EOU – Appellant filed writ petition before High Court challenging the circular on the ground that it was contrary to the Foreign Trade Policy 2004-2009 – High Court dismissed writ petition – Held: Circular dated 21.01.2009 did not modify or amend the Scheme notified for the year 2006-07 – It only clarified that 100% EOUs who are not entitled to seek exemption cannot avail benefit indirectly through the purchasers from them – It is modification or amendment of the Scheme which is required to be carried out by publication in the official gazette but not the clarifications to remove ambiguity in the existing Scheme – The purpose of the Scheme is that 100% EOU or units situated in Special Economic Zone are not to be granted incentives – The purpose and object of the Scheme notified cannot be defeated by granting incentives to units which exports though 100% Export Oriented Units – In terms of Clause 3.8.5 of the Scheme, the Government has reserved the right to specify from time to time the export products which shall not be eligible for calculation of entitlement – Therefore, Circular dated 21.01.2009 cannot be said to be illegal in any manner – Since the appellant is a purchaser from 100% EOUs, therefore, the medium of the appellant cannot be used to avoid the intended purport of the policy for the year 200607 – Foreign Trade (Development and Regulation) Act, 1992 – s.5. Dismissing the appeals, the Court
HELD: 1.1 Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 empowers the Central Government to formulate and announce by notification in the official gazette the Foreign Trade Policy and may also, in the like manner, amend that policy from time to time. The Circular dated 21 st January, 2009 does not modify or amend the Scheme notified for the year 2006-07. It only clarifies that 100% export-oriented units which are not entitled to seek exemption cannot avail benefit indirectly through the purchasers from them. In terms of Clause 3.8.5 of the Scheme, the Government has reserved the right to specify from time to time the export products which shall not be eligible for calculation of entitlement. Since the Government has reserved right in public interest in terms of the Scheme notified under the Act, therefore, the Circular dated 21st January, 2009 cannot be said to be illegal in any manner. [Para 12][877-E-G]
1.2 There is no merit in the argument that the Scheme excludes the benefit of exports by units in DTA in a Scheme pertaining to FMS notified along with Yojna in April 2006 for the reason that FMS has an explicit clause whereas the DTA was not excluded from claiming exemption under clause 3.8.2.2 related to Yojna. Since the appellant is a purchaser from 100% exportoriented unit, therefore, the medium of the appellant cannot be used to avoid the intended purport of the policy for the year 200607. The export-oriented units cannot use the appellant for export under the Scheme and to claim benefit of export when it is not permissible for them directly. [Para 15][878-B-C] Director General of Foreign Trade & Anr. v. Kanak Exports & Anr. (2016) 2 SCC 226 : [2015] 15 SCR
287 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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