Bombay High Court
Ashwini Ashish Dighe ,Indian ... vs The Union Of India And Ors , Though ... on 20 January, 2022
Bench: Milind N. Jadhav
5156 of 21.docx
Ajay
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 5156 OF 2021
Ashwini Ashish Dighe, Indian inhabitant,
carrying on business in the name and style of
Sunteck Telecommunications and having
her office at 2437/B, Pune-Nagar Road,
Opp. Hotel Parijat Dhaba, Wagholi,
Pune 412 207. .. Petitioner
Versus
1. The Union of India, through the
Secretary, Department of Commerce,
Ministry of Commerce & Industry,
Udyog Bhavan, New Delhi 110 107.
2. The Additional Secretary, SEZ Division,
Department of Commerce,
Ministry of Commerce & Industry,
Room No. 35, Udyog Bhawan,
New Delhi 110 011.
3. The Director General of Foreign Trade,
Department of Commerce,
Ministry of Commerce & Industry,
Udyog Bhawan, New Delhi 110 107.
4. The Joint Director General of Foreign Trade,
having his office at C. Block, PMT
Commercial Complex, Shankersheth Road,
PB No. 1623, Pune 411 037 .. Respondents
....................
Mr. Prasad Paranjape a/w. Mr. Sanjeev Nair i/by PDS Legal for the
Petitioner
Mr. Pradeep S. Jetly, Senior Counsel a/w. Mr. J.B. Mishra for the
Respondents
...................
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CORAM : DIPANKAR DATTA &
MILIND N. JADHAV, JJ.
RESERVED ON : 17th DECEMBER 2021.
PRONOUNCED ON : 20th JANUARY, 2022.
(Through Video Conferencing)
JUDGMENT (PER : MILIND N. JADHAV, J.)
1. Rule. By consent of parties heard finally. Heard Mr.
Prasad Paranjape along with Mr. Sanjeev Nair, learned counsel
appearing on behalf of the Petitioner, and Mr. Pradeep S. Jetly,
learned senior counsel along with Mr. J. B. Mishra on behalf of the
Respondents.
2. Petitioner is the proprietor of Sunteck
Telecommunications carrying on business of manufacturing optical
fibres and having its registered office at GAT No. 2347/B, Pune-Nagar
Road, Opp. Hotel Parijat Dhabha, Wagholi, Taluka Haveli, District
Pune - 411 207.
3. By the present Writ Petition, the Petitioner has prayed for
the following reliefs:
"a) that this Hon'ble Court may be pleased to issue a Writ
of Certiorari or a writ in the nature of Certiorari and/or
any other appropriate writ, order or direction under Article
226 and Article 227 of the Constitution of India calling for
the records and papers of the Petitioner's case and after
examining the legality and validity thereof be pleased to
quash and set aside the order dated 03.06.2020 passed by
the Respondent No.3;
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b) that this Hon'ble Court be pleased to issue a mandamus
or a writ in the nature of mandamus or any other
appropriate writ or order or direction under Article 226 of
the Constitution of India ordering and directing the
Respondents themselves, their officers and subordinates to
forthwith:
(i) withdraw and/or cancel impugned
order dated 03.06.2020 passed by the
Respondent No.3;
(ii) allow the Application File Nos: (i)
31/21/090/83127/AM18 dated 06.
10.2017 for Rs.13,79,489, (ii)
31/21/090/83130/AM18 dated 06.
10.2017 for Rs.24,30,571, (iii)
31/21/090/83131/AM18 dated 06.
10.2017 for Rs.26,31,313 and (iv)
31/21/090/83133/AM18 dated 06.
10.2017 for Rs.2,83,604 of the
Petitioner and issue the Duty Credit
Scrip under MEIS under FTP 2015-20
as applied by the Petitioner for
exports effected by him."
4. Petitioner has challenged the order dated 03.06.2020
passed by the Respondent No. 3 - the Director General of Foreign
Trade, Department of Commerce, Ministry of Commerce and Industry,
New Delhi - by which the Petitioner's applications for issuance of Duty
Credit Scrips under the Merchandise Export from India Scheme (for
short: "MEIS") have been rejected. Petitioner has further prayed for
considering the Petitioner's case for seeking Duty Credit Scrips under
the MEIS in accordance with law.
5. Before we advert to the submissions made by the
respective counsel, it will be apposite to refer to the relevant facts
briefly:
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5.1. Respondent No.1 - The Union of India, through the
Secretary, Department of Commerce, Ministry of Commerce &
Industry, New Delhi - announced MEIS as part of the Foreign Trade
Policy (FTP) 2015-20 in order to accelerate growth in export of goods
from India in exercise of powers conferred upon it under the
provisions of the Foreign Trade (Development and Regulation) Act,
1992 (for short: "FTDR Act").
5.2. Petitioner, in the regular course of business, purportedly
supplied Single Mode Optical Fibers G642D - Natural (for short "the
export goods") to an Overseas Buyer, Technocraft Engineering LLC,
Dubai, UAE, (for short "the Overseas Buyer"). As per instructions of
the Overseas Buyer, Petitioner delivered the export goods to
Siddhartha Logistics Co. Pvt. Ltd., a unit located in the Free Trade and
Warehousing Zone (FTWZ) in Sri City Multi-Product SEZ/FTWZ,
Chittor District, Satyavedu Mandal, Andhra Pradesh (for short "the
FTWZ unit"), under four bills of export bearing no. 0000004 dated
08.01.2016, no. 0000016 dated 08.02.2016, no. 0000027 dated
02.03.2016 and no. 0000028 dated 03.03.2016.
5.3. According to the Petitioner, the export goods were
warehoused in the FTWZ unit on instructions of the Overseas Buyer
and were later exported by the FTWZ unit to Taiwan.
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5.4. Petitioner made an application dated 15.06.2017 to the
Respondent No. 4 - the Joint Director General of Foreign Trade - for
issuance of Duty Credit Scrip under MEIS as envisaged under the FTP
2015-20 in respect of some of the export goods which were delivered
to the Overseas Buyer through the FTWZ and were subsequently
exported.
5.5. Respondent No. 4 issued Duty Credit Scrip no.
3119015316 dated 28.07.2017 to the Petitioner under which the
Petitioner was entitled to import goods / raw materials free of customs
duties to the extent of Rs.10,58,375.00, subject to the conditions
specified therein.
5.6. Thereafter, Petitioner made four further applications in
October 2017 to the Respondent No. 4 for grant of Duty Credit Scrips
under MEIS in respect of the remaining export goods that were
delivered to the Overseas Buyer through the FTWZ and which were
subsequently exported to Taiwan. The details of the applications are
as under:
Sr. MEIS Application Date of Application
No. File No. Application Amount (Rs.) of
Duty Credit
claimed
1. File No. 31/21/090/ 06.10.2017 13,79,489
83127/AM 18
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2. File No. 31/21/090/ 06.10.2017 24,30,571
83130/AM 18
3. File No. 31/21/090/ 06.10.2017 26,31,313
83131/AM 18
4. File No. 31/21/090/ 06.10.2017 2,83,604
83133/AM 18
5.7. Respondent No. 4 rejected the applications of the
Petitioner by issuing separate letters dated 25.10.2017, inter alia,
stating that the transaction was between the Petitioner and the FTWZ
unit in an SEZ and thus ineligible for claiming benefit under MEIS.
5.8. By letter dated 20.11.2017, Petitioner requested the
Respondent No. 4 to revisit the decision of rejecting the MEIS
applications and process the same in accordance with Office
Memorandum No. D/12/53/2016-SEZ dated 09.05.2017 issued by the
Respondent No. 2 - Additional Secretary, SEZ Division, Department of
Commerce, Ministry of Commerce & Industry, New Delhi.
5.9. Thereafter by notice dated 17.01.2018 Respondent No.4,
called upon the Petitioner to surrender Duty Credit Scrip No.
3119015316 dated 28.07.2017 which was already issued to the
Petitioner on the ground that the said scrip was wrongly issued to the
Petitioner as the Petitioner's case was ineligible for receiving MEIS
benefit. In respect of this notice, Petitioner attended a personal
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hearing before the Respondent No. 4 and, inter alia, submitted that
the export goods were supplied to the FTWZ unit by the Petitioner on
instructions of its Overseas Buyer in the UAE; that the FTWZ unit was
merely the custodian of the goods trust and ownership of the export
goods vested in the Overseas Buyer in the UAE.
5.10. By letter dated 05.04.2018, Respondent No. 4 cancelled
the Duty Credit Scrip no. 3119015316 dated 28.07.2017, inter alia,
holding that the duty amount under the Duty Credit Scrip is
recoverable along with interest from the Petitioner, and imposed a
penalty of Rs.21,16,750.00 under Section 11 (2) of the FTDR Act.
Petitioner filed the statutory appeal before the Additional Director
General of Foreign Trade, Mumbai, which is pending.
5.11. In the meanwhile, Respondent No. 4 suspended the IEC
License no. 3115905611 of the Petitioner without giving any notice or
assigning / stipulating any reason therefor.
5.12. By letters dated 28.03.2019 and 15.04.2019, Petitioner
requested the Respondent No. 4 to revoke suspension of the IEC
License and also reconsider the decision regarding rejection of the
applications filed by the Petitioner seeking MEIS benefit.
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5.13. Being aggrieved, Petitioner filed Writ Petition no. 6713 of
2019 before this Court challenging the arbitrary, illegal and mala fide
exercise of power in suspending the IEC License, being in gross
violation of the principles of natural justice and/or otherwise without
any authority of law, contrary to the express provisions of the FTP
2015-20 and on other grounds mentioned in the said Writ Petition.
5.14. During pendency of the Writ Petition, the Deputy Director
General of Foreign Trade by letter dated 18.07.2019 informed the
Petitioner that the Petitioner would not be entitled to benefit under
MEIS for the reasons mentioned in said letter. Petitioner therefore
amended the Writ Petition and also challenged the letter dated
18.07.2019 issued by the Deputy Director General of Foreign Trade.
5.15. When the said Writ Petition was taken up for hearing,
Respondents informed this Court that suspension of the Petitioner's
IEC License no. 3115905611 was withdrawn. By order dated
07.08.2019, this Court therefore disposed of the Writ Petition by
setting aside the impugned communication dated 18.07.2019 and
directed the Respondent No. 3 to examine the issue in the context of
the Petitioner's claim; Petitioner was directed to make a fresh
representation for seeking MEIS benefit under the FTP 2015-20 and
the Respondents were directed to dispose of the Petitioner's
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representation in accordance with law.
5.16. Petitioner filed a fresh representation seeking MEIS
benefit. Respondent No. 3 granted personal hearing to the Petitioner
on 14.02.2020 pursuant to which the impugned order dated
03.06.2020, rejecting the representation of the Petitioner, is passed.
5.17. Hence the challenge.
6. Mr. Prasad Paranjape, learned counsel appearing for the
Petitioner, submits that the impugned order dated 03.06.2020
rejecting the application of the Petitioner for claiming MEIS benefit
under FTP 2015-20 is untenable, unsustainable in law, erroneous and
contrary to the relevant legal provisions as well as various office
memoranda issued by the Respondents.
6.1. Mr. Paranjape has asserted that the impugned order
proceeds on an erroneous assumption that the export goods delivered
by the Petitioner to the FTWZ unit fall within the ambit of Paragraph
3.06 (i) of the FTP 2015-20 which enumerates categories of export
goods deemed ineligible for seeking MEIS benefit.
6.2. He submits that the Petitioner has merely delivered the
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export goods to the FTWZ unit (Siddhartha Logistics Co. Pvt. Ltd.) on
the instructions of its overseas buyer in the UAE (Technocraft
Engineering LLC, Dubai) and the principal transaction of the Petitioner
in respect of the export goods is with the Overseas Buyer and not with
the FTWZ unit; hence, such delivery of export goods to the FTWZ unit
falls within the definition of 'export' in terms of Section 2 (m) of the
Special Economic Zones (SEZ) Act, 2005 (for short "SEZ Act"), which
has an overriding effect over all provisions of all other Acts as per
Section 51 of the said Act.
6.3. He submits that the export goods, having passed over to
the Overseas Buyer through the FTWZ unit, were held by the FTWZ
unit merely in trust on behalf of the Overseas Buyer and were
subsequently exported to Taiwan on the instructions of the Overseas
Buyer; therefore, the transaction of the Petitioner in respect of the
export goods is not covered in the list of ineligible categories under
Paragraph 3.06 of the FTP 2015-20. He asserted that there is no
privity of contract with the FTWZ unit and therefore Paragraph 3.06
does not apply to the Petitioner's case.
6.4. He has relied on two office memoranda dated 09.05.17
and 24.04.19 issued by the office of the Respondent No. 2 - Additional
Secretary, SEZ Division, Department of Commerce, Ministry of
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Commerce and Industry, New Delhi - which state that benefits under
the MEIS can be granted to DTA goods that are kept in the FTWZ unit
and are to be exported. Applying the contents of these memoranda to
the Petitioner's transaction, it is pleaded that the Petitioner (a DTA
unit) entered into a transaction with its overseas buyer in UAE;
received consideration in US Dollors in its Indian bank account; the
transaction of delivery and supply of export goods was not with the
FTWZ unit but with the Overseas Buyer and hence the Petitioner is
eligible to claim MEIS benefit under the extant policy.
6.5. Mr. Paranjape has thereafter referred to a compilation of
documents, running into forty-six pages, that has been tendered across
the bar. At page nos. 41 to 46 of the said compilation, a sample set of
documents pertaining to the transaction in question is placed on
record. He submits that perusal of the said documents show that the
Petitioner's transaction was with its overseas buyer in the UAE from
whom the Petitioner had received the relevant foreign exchange in its
bank account in India, making the Petitioner eligible for seeking MEIS
benefit under the extant policy. He has therefore prayed for setting
aside the impugned order dated 03.06.2020 passed by the Respondent
No. 3 and sought grant of the MEIS applications.
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7. PER CONTRA, Mr. P. S. Jetly, learned senior counsel
appearing for the Respondents, has drawn our attention to the
impugned order dated 03.06.2020 and contended that the Petitioner
has submitted twenty-seven bills of exports that have been considered
by the competent authority. The said bills mention the name of the
Petitioner as exporter, the name of the consignee as Siddhartha
Logistics Co. Pvt. Ltd. and the place of delivery as Sri City (Multi-
Product) SEZ, India. He submits that the delivery of the export goods
thus is from a Domestic Tariff Area unit (the Petitioner) to an FTWZ
unit (Siddhartha Logistics Co. Pvt. Ltd.), both of which are located in
India. It is therefore asserted that the transaction cannot be considered
as an export under the FTP 2015-20 read with the FTDR Act, 1992. He
has drawn our attention to Paragraph 7, 8 and 9 of the impugned
order which read thus:
"7. From the above it comes out that the firm is seeking
MEIS for supplies made from a DTA unit to FTWZ unit.
Such supplies cannot be termed as "Exports" in terms of
para 3.04 and 9.20 of the FTP read with FT(D&R) Act.
Further, such supplies are also not entitled for MEIS in
terms of FTP provisions 3.06(i), read with section 2, sub
clause (n) of the SEZ act, as such supplies are from a DTA
unit to FTWZ unit.
8. From the representation filed by the firm it is noted that
the firm has contested that the goods which the firm has
supplied to the FTWZ unit, have been ultimately exported
to the consignee in Taiwan from the FTWZ and for this
transaction, they have submitted "shipping bill for export
of duty free goods" corresponding to each of the Bill of
export. It may be noted that these "Shipping bill for export
of Duty free goods" are the documents which evidence that
certain goods have been shipped to a place outside India.
The "Shipping bill for export of duty free goods" mention
Exporter as "M/s Siddhartha Logistics Co. Pvt. Ltd." and
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there is no mention of the applicant firm i.e. M/s Sunteck
Telecommuncations, in these shipping bills.
9. The supplies by "M/s Siddhartha Logistics Co. Pvt. Ltd.
(FTWZ) can be considered as "Exports" under FTP
provisions, since the goods have been shipped outside
India. However, these supplies are exports made by a
FTWZ unit (since the exporter mentioned in the
documents is M/s Siddhartha Logistics Co. Pvt. Ltd. which
is a unit in FTWZ, Sri City). The impugned supplies are
"exports" made by the FTWZ unit i.e. - M/s Siddhartha
Logistics Co. Pvt. Ltd. However such 'Exports' cannot be
considered as an export by the petitioner firm, M/s
Sunteck Telecommuncations Pvt Ltd. Such exports are also
not eligible, as per the provisions of the para 3.06(vii) of
FTP which states "Exports made by units in FTWZ" as an
ineligible category." "
7.1. From reading of the above paragraphs, he submits that
the shipping bills submitted by the Petitioner for export of duty-free
goods mention the name of the exporter as 'Siddhartha Logistics Co.
Pvt. Ltd.' which is an FTWZ unit. He asserts that such export cannot be
considered as an export by the Petitioner as the shipping bills do not
mention the name of the Petitioner; the proof of export transaction is
the shipping bill evidencing that a shipment has gone outside India
and that the proof of the realization of consideration is the electronic
Bank Realization Certificate (BRC). He submits that there is no
mention of the name of the Petitioner in the shipping bills as well as
the documents evidencing receipt of proceeds for the supply of the
export goods.
7.2. He vehemently submits that the transaction before the
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authority is of supply of goods by the Petitioner (DTA unit) to
Siddhartha Logistics Co. Pvt. Ltd. (an FTWZ unit), which has
thereafter exported the goods to Taiwan; hence Petitioner is not
eligible for claiming MEIS benefit in terms of the FTP 2015-20, namely
Paragraph 3.06 read with Section 2 (m) of the SEZ Act.
7.3. Mr. Jetly submits that the Petitioner has not produced the
contractual documents evidencing the transaction with its Overseas
Buyer (Technocraft Engineering LLC) situated in Dubai, UAE, in order
to substantiate its case that it was at the behest and instructions of the
Overseas Buyer that the Petitioner delivered the export goods to
Siddhartha Logistics Co. Pvt. Ltd. (the FTWZ unit) in India. Our
attention is also drawn to page no. 51 of the Petition being the
authorization referred to and relied upon by the Petitioner in respect
of the export goods under four shipping bills to the country of export,
that is the United Arab Emirates. He submits that in the MEIS
applications filed by the Petitioner, annexed as Exhibit G1 to G4 (at
page nos. 53 to 70) to the Petition, the address of the consignee is
shown as United Arab Emirates only; the name of the Overseas Buyer
(Technocraft Engineering LLC, Dubai, UAE) is not reflected either in
the applications, or in the authorization form or in any other
document produced by the Petitioner before the competent authority
for claiming MEIS benefit, thus rendering the Petitioner's case
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ineligible for consideration of granting MEIS benefit. He supports the
impugned order as having been correctly passed on the basis of the
facts and circumstances of the present case before the Competent
Authority.
8. Mr. Paranjape, in his rejoinder submission, has referred to
and relied on the decision of Jindal Drugs Private Limited Vs. Union of
India and Ors. and Portescap India Pvt. Ltd. Vs. Union of India and
Ors.1 and contented that the facts in issue in the Jindal Drugs case are
identical with the facts in the present case and the said decision
covers the case of the Petitioner at hand.
8.1. He submits that, in the Jindal Drugs case, MEIS benefit
was denied to the Petitioner by the competent authority without
ascribing any reason even though the transaction was between a DTA
unit (Jindal Drugs Private Limited) and its overseas buyer (Utexam
Logistics Ltd., Ireland) through an FTWZ unit (DHL Logistics Pvt.
Ltd.). He submits that the Madras High Court, after scrutinizing the
entire documentary evidence - namely the purchase order, tax
invoices, statements of bank realization certificate (BRC) evidencing
receipt of consideration in US Dollars in relation to the exports made,
shipping bills, etc. - came to the conclusion that the export documents
2021 (7) TMI 1034 - Madras High Court
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were executed by the Petitioner in the said case with its overseas
buyer; hence, the Petitioner was found to be entitled to MEIS benefits
as the exports were made by the Petitioner to the SEZ / FTWZ unit on
the specific instructions of its overseas buyer for onward shipment to a
location of the overseas buyer's choice. He submits that, in the present
case, once the Petitioner (Sunteck Telecommunications Pvt. Ltd.)
placed on record the sample set of documents evidencing the
transaction between the Petitioner and its overseas buyer (in the
United Arab Emirates) through the FTWZ unit (Siddhartha Logistics
Co. Pvt. Ltd.), the Petitioner is eligible for receiving MEIS benefit and
the Petitioner's case of export of goods is not covered by any of the
ineligible categories under Paragraph 3.06 of the FTP 2015-20.
9. We have heard the learned counsel appearing for the
respective parties at length, perused the material on record and the
relevant statutory provisions as applicable and considered the judicial
decision relied upon by the Petitioner.
10. Before we proceed to adjudicate the rival contentions and
the issue, it would be beneficial to refer to the Foreign Trade Policy
(01.04.2015 to 31.03.2020) [updated as on 05.12.2017], with which
we are concerned in the present case. FTP-2015-20 was launched on
01.04.2015 and introduced a slew of measures to provide a framework
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for increasing exports of goods and services, generation of
employment and increasing value-addition in keeping with the 'Make
in India' vision. The Policy was far-reaching in nature and incorporated
various export-friendly innovations and simplifications. These included
simplifications and merger of reward schemes, introducing new
schemes for promotion of merchandise exports, incentivizing e-
commerce exports, encouraging procurement of capital goods from
indigenous manufactures under the EPCG scheme and so on.
10.1. Chapter 3 of the FTP 2015-20 relates to Exports from
India Schemes. Insofar as MEIS is concerned, the relevant provisions
are contained in Paragraphs 3.00 to 3.06 which read thus:
"3.00 Objective
The objective of schemes under this chapter is to provide
rewards to exporters to offset infrastructural inefficiencies
and associated costs.
3.01 Exports from India Schemes
There shall be following two schemes for exports of
Merchandise and Services respectively:
(i) Merchandise Exports from India Scheme (MEIS).
(ii) Service Exports from India Scheme (SEIS).
3.02 Nature of Rewards
Duty Credit Scrips shall be granted as rewards under MEIS
and SEIS. The Duty Credit Scrips and goods imported /
domestically procured against them shall be freely
transferable. The Duty Credit Scrips can be used for :
(i) Payment of Basic Customs Duty and Additional
Customs Duty specified under sections 3 (1), 3 (3)
and 3 (5) of the Customs Tariff Act, 1975 for import
of inputs or goods, including capital goods, as per
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DoR Notification, except items listed in Appendix 3A.
(ii) Payment of Central excise duties on domestic
procurement of inputs or goods,
(iii) Deleted
(iv) Payment of Basic Customs Duty and Additional
Customs Duty specified under Sections 3 (1), 3 (3)
and 3 (5) of the Customs Tariff Act, 1975 and fee as
per paragraph 3.18 of this Policy.
Merchandise Exports from India Scheme (MEIS)
3.03 Objective
Objective of the Merchandise Exports from India Scheme
(MEIS) is to promote the manufacture and export of
notified goods/ products.
3.04 Entitlement under MEIS
Exports of notified goods/products with ITC[HS] code, to
notified markets as listed in Appendix 3B, shall be
rewarded under MEIS. Appendix 3B also lists the rate(s) of
rewards on various notified products [ITC (HS) code
wise]. The basis of calculation of reward would be on
realised FOB value of exports in free foreign exchange, or
on FOB value of exports as given in the Shipping Bills in
freely convertible foreign currencies, whichever is less,
unless otherwise specified.
3.05 Entitlement under MEIS for export of goods through
Courier or Foreign Post Offices
Export of goods through courier or foreign post offices as
notified in Appendix 3C, of FOB value upto Rs. 5,00,000
per consignment shall be entitled for rewards under MEIS.
If the value of exports is more than Rs. 5,00,000 per
consignment then MEIS reward would be calculated on the
basis of FOB value of Rs. 5,00,0000 only.
3.06 Ineligible categories under MEIS
The following exports categories/sectors shall be ineligible
for Duty Credit Scrip entitlement under MEIS
(i) EOUs/EHTPs/BPTs/STPs who are availing
direct tax benefits / exemption;
(ii) Supplies made from DTA units to SEZ units;
(iii) Export of imported goods covered under
paragraph 2.46 of FTP;
(iv) Exports through trans-shipment, meaning
thereby exports that are originating in third country
but transshipped through India;
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(v) Deemed Exports;
(vi) SEZ/EOU/EHTP/BTP/FTWZ products exported
through DTA units;
(vii) Items, which are restricted for export
under Schedule-2 of Export Policy in ITC (HS),
unless specifically notified in Appendix 3B;
(viii) Service Export;
(ix) Red sanders and beach sand;
(x) Export products which are subject to Minimum
export price or export duty;
(xi) Diamond Gold, Silver, Platinum, other precious
metal in any form including plain and studded
jewellery and other precious and semi-precious
stones;
(xii) Ores and concentrates of all types and in
all formations;
(xiii) Cereals of all types;
(xiv) Sugar of all types and all forms, unless
specifically notified in Appendix 3B;
(xv) Crude/petroleum oil and crude/primary
and base products of all types and all formulations;
(xvi) Export of milk and milk products, unless
specifically notified in Appendix 3B;
(xvii) Export of Meat and Meat Products, unless
specifically notified in Appendix 3B;
(xviii) Products wherein precious metal/diamond are
used or Articles which are studded with precious
stones;
(xix) Exports made by units in FTWZ;
(xx) Items, which are prohibited for export
under Schedule-2 of Export Policy in ITC (HS)"
10.2. Paragraph 3.06 of the FTP 2015-20 refers to exported
goods which shall be ineligible for Duty Credit Scrips under MEIS.
Clause (vi) of paragraph 3.06 states that SEZ/FTWZ products exported
through DTA units shall be ineligible for benefit under MEIS.
Similarly clause (xix) states that the exports made by units in FTWZ
shall be ineligible for benefit under MEIS. The Competent Authority /
Respondents have denied benefit to the Petitioner under the aforesaid
two clauses on the premise that the transaction of the Petitioner is
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with the FTWZ unit (Siddhartha Logistics Co. Pvt. Ltd.). On the other
hand, it is the Petitioner's case that its transaction is with its foreign
Overseas Buyer and not with the FTWZ unit to which the export goods
are delivered. Hence, according to the Petitioner, the aforementioned
two clauses do not apply to the case in hand and the Petitioner is
eligible for Duty Credit Scrip under MEIS for the exported goods for
which the Petitioner has received consideration in US Dollars (foreign
exchange).
10.3. Section 2(e) of the FTDR Act, 1992, read with paragraph
9.20 of Chapter 9 and paragraph 3.04 of Chapter 3 of the FTP 2015-20
are relevant in the present case and read thus :
"(e) "import" and "export" means,-
(1) in relation to goods, bringing into or taking out of
India any goods by land, sea or air....."
"Provided that "import" and "export" in relation
to the goods, services and technology regarding Special
Economic Zone or between two Special Economic
Zones shall be governed in accordance with the
provisions contained in the Special Economic Zones
Act, 2005 (28 of 2005)."
9.20. "Export" is as defined in FT (D&R) Act, 1992, as
amended from time to time.
"Exports of notified goods/products with ITC[HS]
code, to notified markets as listed in Appendix 3B, shall
be rewarded under MEIS. Appendix 3B also lists the
rate(s) of rewards on various notified products [ITC
(HS) code wise]. The basis of calculation of reward
would be on realised FOB value of exports in free
foreign exchange, or on FOB value of exports as given
in the Shipping Bills in freely convertible foreign
currencies, whichever is less, unless otherwise
specified."
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10.4. The SEZ Act was enacted to provide for the establishment,
development and management of special economic zones for the
promotion of exports and for matters connected therewith or
incidental thereto. Section 3 (1) of Chapter II of the SEZ Act refers to
establishment of Special Economic Zone either for manufacture of
goods, or rendering services, or for both as an FTWZ. The said Section
3(1) reads thus :
" CHAPTER II
ESTABLISHMENT OF SPECIAL ECONOMIC ZONE
3. Procedure for making proposal to establish Special
Economic Zone.
(1) A Special Economic Zone may be established under
this Act, either jointly or severally by the Central
Government, State Government, or any person for
manufacture of goods or rendering services or for both as a
Free Trade and Warehousing Zone.
(2) ....................."
11. In the present case, Petitioner has pleaded that the
transaction in question for supply of export goods (Single Mode
Optical Fibers G642D) is with its foreign overseas buyer (Technocraft
Engineering LLC, Dubai, UAE), and that it is on the instructions of the
overseas buyer the Petitioner delivered the export goods to the FTWZ
unit (Siddhartha Logistics Co. Pvt. Ltd.) in India. We find this pleading
in Paragraph 7 of the Petition and the same is reproduced below:
"7. In the regular course of business, the Petitioner
supplied Single Mode Optical Fibers G652D - Natural
(hereinafter referred to as "the exported goods") to an
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overseas buyer, Technocraft Engineering LLC, Dubai, UAE
(hereinafter referred to as "the Overseas Buyer"). As per
the instructions of the Overseas Buyer, the Petitioner was
required to deliver the export goods to Siddhartha
Logistics Co. Pvt. Ltd. (hereinafter referred to as "the
FTWZ Unit"), a unit located in Free Trade and
Warehousing Zone at Sri City Multi-product SEZ/FTWZ,
Chittor District, Satyavedu Mandal, Andhra Pradesh. The
goods were delivered to the FTWZ Unit under four Bills of
Export bearing Nos. 0000004 dated 08.01.2016, 0000016
dated 08.02.2016, 0000027 dated 02.03.2016 and
0000028 dated 03.02.2016. Such supplies are treated as
Export of goods in terms of Section 2(m) read with Section
51 of the Special Economic Zone Act, 2005 (hereinafter
referred to as "the SEZ Act")."
11.1. When the Petition was argued before us, the Petitioner
has submitted written propositions (six pages) along with a
compilation of documents (forty-six pages). In Paragraph 3 of the
written propositions, it is stated as under:
"3. The transaction relevant for the purpose of this
petition is that the Petitioner received an order for export
of impugned goods from its customer Ashteck Global FZE
located in UAE. The said Ashteck Global FZE instructed the
Petitioner to deliver the consignment of the impugned
goods to Siddhartha Logistics Company Private Limited, a
unit in a Free Trade and Warehousing Zone (FTWZ),
located in Sri City SEZ at Andhra Pradesh. Thereafter, the
said Ashtech Global FZE directed Siddhartha Logistics
Company Private Limited to consign the goods to its
customer Success Prime Corporation located in Taiwan
and the goods were accordingly physically exported. The
consideration was received by the Petitioner from the said
Ashtech Global FZE, located in UAE, in convertible foreign
exchange. These facts are undisputed."
11.2. From the above, it is seen that in Paragraph 3, the
reference to the Overseas Buyer is to a company called "Ashteck Global
FZE", which on scrutiny shows that it is located in Ajman, UAE. There
is no reference to Technocraft Engineering LLC, Dubai, UAE in the
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written propositions and annexures to the Petition, the written
propositions as well as the compilation of documents tendered across
the bar. A deeper scrutiny and analysis of the sample set of
documents at page nos. 41 to 46 of the compilation reveals the
following :
(i) At page no. 41 is a Bill of Export claiming Duty Drawback
under the extant scheme. This document gives the name of the
Petitioner in the consignor column and the name of the FTWZ
unit (Siddhartha Logistics Co. Pvt. Ltd.) in the consignee column
along with the name of Ashteck Global FZE, Ajman, UAE;
(ii) At page no. 42, the export invoice issued by the Petitioner
is in the name of Ashteck Global FZE, Ajman, UAE, as the
consignee of the export goods;
(iii) At page no. 43, the packing list mentions the name of
Ashteck Global FZE, Ajman, UAE, as the consignee;
(iv) At page no. 44, the statement of bank realization (BRC)
mentions the shipping bill no. 0000082 dated 05.05.17, which
corresponds to the bill of export number in the first document
(i.e. Bill of Export); the BRC does not bear any reference to the
name or transaction with the overseas buyer;
(v) At page Nos. 45 and 46, the Shipping Bill for export and
Airway Bill mentions the name of the FTWZ unit (Siddhartha
Logistics Co. Pvt. Ltd.) on behalf of Ashteck Global FZE, Ajman,
UAE, as consignor and the name of Success Prime Corporation,
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Taiwan, as the consignee to whom the export goods are shipped.
11.3. In none of the annexures referred to and relied upon by
the Petitioner, nor the above documents, does the name of
"Technocraft Engineering LLC, Dubai, UAE", appear. Hence, if it is the
Petitioner's case that under the transaction with its overseas buyer
(Technocraft Engineering LLC, Dubai, UAE), the Petitioner supplied
the goods to the FTWZ unit and therefore the Petitioner is eligible for
MEIS benefit, then the Petitioner is required to furnish the following
documentary evidence to the Competent Authority for seeking benefit
under the MEIS Scheme.
(i) Bills of Receipt;
(ii) Bills of Export of Goods;
(iii) Export Invoices;
(iv) Authorization/Transaction with the Overseas Buyer to
deliver the goods to the FTWZ unit;
(v) Statements of Bank Realization (BRC) for the amount
received in US Dollars;
(vi) Confirmation that the FTWZ unit has neither claimed
nor been granted benefit under MEIS in regard to the instant
transaction;
(vii) Shipping Bills;
(viii) Purchase Orders;
(ix) Tax Invoices.
11.4. None of the aforementioned documents have been
produced before the Competent Authority nor before us save and
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except pleading that the Petitioner's transaction with its overseas
buyer (Technocraft Engineering LLC, Dubai, UAE) needs to be
acknowledged by the Court for enabling the Petitioner to claim MEIS
benefit. The Petitioner has not produced a single document
authorizing the Petitioner to deliver the export goods to the FTWZ unit
(Siddhartha Logistics Co. Pvt. Ltd.). We cannot accept the Petitioner's
case merely on pleadings and in the absence of relevant documentary
evidence.
11.5. That apart, the discrepancy in the name of the Overseas
Buyer is evident on the face of record. The name of "Technocraft
Engineering LLC Dubai, UAE", does not appear in any of the
documentary evidence referred to or relied upon by the Petitioner,
including the Authorization and MEIS applications relied upon by the
Petitioner. Furthermore, in the written propositions given to the Court
and the documentary evidence, the reference to the Overseas Buyer is
to a company called "Ashteck Global FZE" situated in Ajman, UAE, and
not "Technocraft Engineering LLC" situated in Dubai, UAE. This raises
a serious doubt as to the veracity of the Petitioner's claim for seeking
MEIS benefit.
11.6. The Petitioner has placed on record only one bill of export
bearing no. 0000082 dated 05.05.2017 at page no. 41 of the
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compilation of documents which reflects the name of Ashteck Global
FZE, Ajman, UAE, as the overseas buyer. Incidentally, in the Petition,
the same Bill of Export is also claimed by the Petitioner in the case of
its purported transaction with Technocraft Engineering LLC, Dubai,
UAE, and that too for the same amount - 216241.35 US Dollars. The
Petitioner has not produced bill of export nos. 0000060 dated
04.04.2017, 0000080 dated 03.05.2017, 0000081 dated 03.05.2017,
and 0000083 dated 08.05.2017 pertaining to the transaction with
Technocraft Engineering LLC, Dubai, UAE, either before the
Competent Authority or before us. Hence, to consider the Petitioner's
case as being outside the purview of the ineligible categories under
Paragraph 3.06 (vi) and/or 3.06 (xix), the documentary evidence is
required to be placed on record.
11.7. We have carefully perused the decision in the case of
Jindal Drugs Private Limited (supra) relied upon by the Petitioner.
Paragraph 11 of the said decision is relevant and is reproduced below:
"11. Upon a comparison of the above details
contained in the bills of export of goods under which the
petitioner has claimed duty drawback, with the bills of the
parties to the transaction, I find that the numbers and date
tally. It is thus clear that the export documents have been
executed by the petitioner. The petitioner also confirms
that the FTWZ has neither claimed not been granted any
benefit under MEIS Scheme in regard to the instant
transactions. If at all such claims had been advanced, they
would have been barred under the provisions of 3.06(vii)
of the policy note."
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11.8. Applying the ratio of the above decision, in the absence of
necessary documentary evidence as alluded to hereinabove, the
Petitioner cannot claim MEIS benefit merely on the basis of pleadings.
If the Petitioner claims that the export goods are delivered to the
FTWZ unit and thereafter exported to Taiwan on the instructions of its
Overseas Buyer, the burden of proof is on the Petitioner to produce the
contractual agreement / authorization / transaction details with the
Overseas Buyer to substantiate the same. It is the Petitioner's case that
the FTWZ unit has merely held the goods in trust on the instructions
of the Overseas Buyer as a warehousing unit and hence the Petitioner
cannot be deemed ineligible for benefit under Paragraph 3.06 (vi) and
3.06(xix) of the FTP 2015-20. This fact is not substantiated with any
confirmation from the FTWZ unit (Siddhartha Logistics Co. Pvt. Ltd.)
that it held the goods merely in trust for the Overseas Buyer and that it
has neither claimed nor been granted benefit in regard to the export
goods which were subsequently shipped to Taiwan. In the Jindal
Drugs case, though the facts are similar to the case in hand, the
Madras High Court therein looked into the principal transaction
between the parties to ascertain the role of the parties, it confirmed
receipt of foreign exchange from Ireland and the BRC evidencing this
position, it referred to the supporting documentation pertaining to
onward shipment by the FTWZ unit therein to the location of choice of
the overseas buyer and then concluded that the FTWZ unit therein
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merely offered a facility of warehousing to the Petitioner therein to
facilitate the export. None of the above issues have been pleaded, and
effectively proved by the Petitioner, save and except one shipping bill
which does not evidence the aforesaid position in the case of the
Petitioner.
11.9. It is a settled proposition of law that a party has to plead
the case and produce/adduce sufficient evidence to substantiate his
submissions made in the petition. In the absence of the same, the
Court need not entertain the pleadings and submissions so made. The
Hon'ble Supreme Court in Bharat Singh & Ors. Vs. State of Haryana &
Ors.,2 at Paragraph 13, has held as under:
" 13. ... In our opinion, when a point which is ostensibly
a point of law is required to be substantiated by facts, the
party raising the point, if he is the writ petitioner, must
plead and prove such facts by evidence which must
appear from the writ petition and if he is the respondent,
from the counter-affidavit. If the facts are not pleaded or
the evidence in support of such facts is not annexed to the
writ petition or the counter-affidavit, as the case may be,
the court will not entertain the point. In this regard there
is a distinction between a pleading under the Code of
Civil Procedure and a writ petition or a counter-affidavit.
While in a pleading, that is, a plaint or a written
statement, the facts and not evidence are required to be
pleaded, in a writ petition or in the counter affidavit not
only the facts but also the evidence in proof of such facts
have to be pleaded and annexed to it."
A similar view has been reiterated by the Apex Court in Larsen
& Toubro Ltd. Vs. State of Gujarat,3 National Buildings Construction
1988 4 SCC 534 : AIR 1988 SC 2181
(1998) 4 SCC 387 : AIR 1998 SC 1608
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Corpn. Vs. S. Raghunathan,4 Ram Narain Arora Vs. Asha Rani,5 Chitra
Kumari Vs. Union of India,6 State of U.P. v. Chandra Prakash Pandey,7
Rajasthan Pradesh Vaidya Samiti Vs. Union of India,8 and Indian
Young Lawyers Assn. Vs. State of Kerela.9
11.10. In the case at hand, the Petitioner has pleaded in the
Petition about its transaction for export of goods with the Overseas
Buyer but has not produced a single document evidencing the said
transaction / authorization from the Overseas Buyer.
12. In view of absence of documentary evidence, and the
findings and discussion hereinabove, the Petitioner cannot be granted
MEIS benefit merely on the basis of pleadings which are prima facie
insufficient on the face of record. Hence the Petition must fail.
12.1. The impugned order dated 03.06.2020 deserves to be
upheld. However, since it is the Petitioner's case that it has received
consideration in foreign exchange from its overseas buyer against the
export goods and is eligible for MEIS benefit, the Petitioner is given
one more final opportunity to approach the Respondents by filing a
(1998) 7 SCC 66 : 1998 SCC (L&S) 1770
(1999) 1 SCC 141
(2001) 3 SCC 208
(2001) 4 SCC 78 : 2001 SCC (L&S) 661
(2010) 12 SCC 609
(2019) 11 SCC 1
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fresh application for seeking MEIS benefit along with the entire
documentary evidence pertaining to the Petitioner's transaction with
Technocraft Engineering LLC, that is the Petitioner's purported
overseas buyer, located in Dubai, UAE, along with: (i) Bills of Receipt;
(ii) Bills of Export of Goods; (iii) Export Invoices; (iv)
Authorization/Transaction with the Overseas Buyer to deliver the
goods to the FTWZ unit; (v) Statements of Bank Realization (BRC)
evidencing the receipt of monies in US Dollars in the Petitioner's bank
account in India; (vi) Confirmation that the FTWZ unit has neither
claimed nor been granted benefit under MEIS in regard to the instant
transaction; (vii) Shipping Bills; (viii) Purchase Orders; and, (ix) Tax
Invoices. Petitioner shall make the application within two weeks from
the uploading of the copy of this judgement and order. In the event
such an application is made, the same shall be considered strictly in
accordance with law by the Competent Authority / Respondents by
according an opportunity of personal hearing to the Petitioner and a
speaking order shall be passed.
12.2. The Writ Petition stands disposed of with the above
directions.
[ MILIND N. JADHAV, J. ] [ CHIEF JUSTICE ]
AJAY
Digitally signed
by AJAY
TRAMBAK
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TRAMBAK UGALMUGALE
UGALMUGALE Date:
2022.01.20
12:18:46 +0530
