SUBHANKAR BHOWMIK Vs. UNION OF INDIA

JUDGEMENT

(1.) The PIL petitioner is seeking issuance of the following directions by claiming public interest-

(2.) The petitioner seeks directions to initiate appropriate action against their erring Officers who have failed to deny exemption from Basic Customs Duty to goods imported by the Transferees under Transferrable Duty Free Import Authorisation (DFIA) despite non-fulfilment of condition contained in first proviso to condition (iii) of the Custom Notification No.19 of 2015 and/or issued Transferrable DFIAs contrary to the provisions and spirit of Foreign Trade Policy. He contends that the officers of the respondent-Union of India have failed in their constitutional and statutory obligation to confer exemption from duty under Custom Notification No.19 of 2015 to only those Transferees of DFIAs, who fully satisfy all the provisions of Foreign Trade Policy in its true spirit and also satisfy the conditions particularly condition (iii) of the said Notification. The petitioner contends that first proviso to condition (iii) is erroneously being construed to only require establishing broad nexus of the material to be imported and the material actually used in the export product, only for their specific name, description or quantity. He contends that in the first proviso to condition (iii) close nexus ought to be established even for the quality, technical characteristics and specifications of the material to be imported and the material actually used in the export product. He contends that the officers of the respondent-Union of India have failed to apply these provisions and conditions with such restrictive meaning in the actual spirit of the Foreign Trade Policy, and that such failure is resulting in huge revenue leakage. The inputs referred in paragraphs 4.12 (i) and 4.12 (ii) of FTP can be either procured domestically or can be imported goods. In either event he contends that not only the specific name/description and quantity, but also quality, technical characteristics and specifications shall be declared for such material actually used in the export of the resultant product. In effect he contends that requirements applicable in second proviso to condition (iii) though appear to be construed as restricted to sensitive input items specified in Paragraph 4.30 of the Foreign Trade Policy, shall equally apply to all inputs under first proviso to condition (iii) which are referred in paragraphs 4.12 (i) and 4.12 (ii) of FTP even if they are other than sensitive items, and that the words 'the quality, technical characteristics and specifications' shall be read even into the first proviso to condition (iii) and in Paragraphs 4.12 of the Foreign Trade Policy. He also submits that although the substantive condition (iii) of Notification No.19 of 2015 refers to the words 'of materials imported', the words 'the material used' in the first proviso would also include not only the material imported but also even the material which is domestically procured. The petitioner further submits that irrespective of the fact that the words 'same quality, technical characteristics and specifications' are used only in second proviso to condition (iii), the same shall also be necessarily read even in the first proviso to condition (ii). The petitioner further contends that to restrict duty exemption in public interest, the officers shall be directed to issue any Transferrable DFIA or to strictly restrict duty free import entitlement under any Transferrable DFIA already issued, only as per any specific material actually used with quality, technical characteristics and specifications declared by the exporter/original license holder under Appendix 4H, notwithstanding Paragraph 4.27(i) of FTP and the Standard Input Output Norms.

(3.) The petitioner also submits that Exporters, Traders and Importers are importing goods by availing exemption without showing the actual use in the export goods by contending that they are post export replenishments and, therefore, are not required to satisfy the actual user conditions under DFIA Scheme. In many of the input goods, though the input items in SION appears to be of "specific entries', but they are actually "generic entries'. However, they are being imported as "specific entries' under DFIAs without establishing close nexus as stated above and cleared without payment of duty. He had also given examples that in the Automotive industry, "Automotive Spare Parts' are considered as generic entries and permitted goods specified under the SION are considered as specific entries. Similarly, in the Food category, it is claimed that "Food Ingredients' are generic entries and items specified in the SION are specific. He has also placed on record certain judgments of different High Courts and Tribunal which have construed the DFIA Scheme contrary to what the petitioner is contending and he submits that such judgments are erroneous and the issue requires consideration. These judgments are-