BAPL INDUSTRIES LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner has filed this writ petition for the issue of writ of declaration to declare the circular bearing F.No. 305/48/2000-FTT/GOI/ Ministry of Finance dated 7-4-2000 issued by the first respondent as ultra vires the provisions of the Foreign Trade (Regulation & Development) Act, 1962, the Export-Import Policy 1997-2002, Article 14, 19(1)(g) and Article 265 of the Constitution of India in so far as the petitioner is concerned.

(2.) The case of the petitioner is that the petitioner is a 100% Export Oriented Unit (EOU). The petitioner is engaged in the manufacture of cotton yarn. The petitioner has effected deemed export in terms of the Export-Import Policy 1997-2002 against which the petitioner was allowed corresponding Domestic Tariff Area (hereinafter referred to as "DTA") sale entitlement. According to the petitioner, paragraph 9.9(b) of the Export Import Policy originally stipulated that 25 of the production in value terms may be sold in the DTA subject to payment of applicable Excise/Customs duty. That was amended with effect from 1-4-1999. As per the amendment, the DTA sale upto 50% of FOB value of exports may be sold in the DTA subject to payment of applicable duties. DTA sales shall be subject to fulfillment of minimum net foreign exchange earning as a percentage of exports prescribed in Appendix 1 of the Policy. No DTA sale shall be permissible in respect of motor cars, alcoholic liquors and such other items as may be stipulated by the Director General of Foreign Trade by a public notice issued in this behalf. With effect from 1-4-1999, the Ministry of respondent issued a Circular F.No. 305/48/2000-FTT dated 7-4-2000 inter alia seeking to interpret the provisions of paragraph 9.9(b) of the Export-Import Policy 1997-2002 to impose duty on the petitioner and to deny the future DTA sale entitlement. The petitioner all along clearing the goods under the cover of form AR3A. In terms of the above circular, the first respondent has directed all its officers to review all DTA clearances under their jurisdiction after 1-4-1999 and initiate recovery proceedings in case there being short levy of duty.

(3.) According to the petitioner, paragraph 10 of the Export-Import Policy categorically permits supplies in DTA for reckoning the fulfillment of the export obligation undertaken by EOU/Export Processing Zone (hereinafter referred to as "EPZ") viz., supplies effected in DTA. In terms of Paragraph 10.2 of the policy, supplies effected in DTA against payment in foreign exchange, supplies to other EOU/EPZ/Electronic Hardware Technology Parks (hereinafter referred to as "EHTP")/Software Technology Parks (hereinafter referred to as STP) units provided that such goods are permissible for procurement in terms of Paragraph 9.2 of the Policy, supplies made to bonded warehouses set up under 11.14 of the Policy and supply of goods against special entitlement of duty free import of goods. In terms of Paragraph 10.2(b) of the Export-Import Policy, supply of goods to EOUs or units located in EPZ or STPs or to EHTPs shall be regarded as "deemed exports". The Export Import Policy also confers benefit on such deemed exports under para 10.3 para 10.3(c).