Case Note & Summary
The petitioner, M/s. Bhilwara Spinners Ltd., a company engaged in the manufacture and sale of yarn, obtained a zero duty Export Promotion Capital Goods (EPCG) licence dated 14/1/1998 with an obligation to export goods six times the CIF value of imported capital goods. The licence required a minimum CIF value of Rs. 20 crores for import of capital goods under the zero duty scheme, as per Para 6.3 of the Foreign Trade Policy and condition No.5 of Notification No.29/97. The petitioner could not import capital goods worth Rs. 20 crores and sought revalidation, which was granted up to 31/7/2001, but still could not meet the condition. The petitioner then applied for amendment of the licence to convert it from a zero duty EPCG licence to a 10% basic duty EPCG licence, which would have a lower minimum CIF value requirement. The licensing authorities rejected the application, and the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) upheld the rejection, holding that licensing authorities do not have the power to amend a licence with retrospective effect. The petitioner challenged this decision before the Bombay High Court. The court considered the legal issue of whether licensing authorities have the power to amend an EPCG licence retrospectively. The petitioner argued that the power to grant a licence includes the power to amend it, and there is no prohibition in the Foreign Trade Policy or the Customs Act against retrospective amendment. The respondents contended that the licence conditions were fixed and could not be altered retrospectively. The court analyzed the relevant provisions and held that the licensing authorities do have the power to amend the licence with retrospective effect, as the power to grant includes the power to amend, and no statutory provision bars such amendment. The court set aside the CESTAT decisions and directed the licensing authorities to consider the petitioner's application for amendment on its merits.
Headnote
A) Customs Law - Export Promotion Capital Goods Licence - Amendment with Retrospective Effect - Licensing authorities have the power to amend an EPCG licence with retrospective effect - The court held that the power to grant a licence includes the power to amend it, and there is no bar in the Foreign Trade Policy or the Customs Act against retrospective amendment - The decision of the CESTAT that licensing authorities do not have such power was set aside (Paras 1-10).
Issue of Consideration
Whether the licensing authorities have the power to amend an Export Promotion Capital Goods (EPCG) licence with retrospective effect.
Final Decision
The court allowed the writ petition, set aside the impugned decisions of CESTAT dated 18/1/2008 and 11/5/2010, and directed the licensing authorities to consider the petitioner's application for amendment of the EPCG licence on its merits in accordance with law.
Law Points
- Licensing authorities have power to amend licence with retrospective effect
- Foreign Trade Policy provisions
- EPCG licence conditions
- duty exemption
- revalidation of licence
Case Details
2011 LawText (BOM) (03) 104
WRIT PETITION NO.9259 OF 2010
J.P. DEVADHAR, MRS. R.S. DALVI
Mr. V.Shridharan with Mr. Prakash Shah, Advocates i/b. PDS Legal for the petitioner, Mr.A.J.Rana, Senior Advocate with Mr. A.S.Rao for the respondent No.6, Mr. Pradeep Jetly, Advocate for the respondent Nos.1 to 5
M/s. Bhilwara Spinners Ltd.
Union of India through the Secretary, Ministry of Commerce & Industry, Customs, Excise & Service Tax Appellate Tribunal, The Commissioner of Customs (Export) Mumbai, The Commissioner of Customs (EP) ACC Mumbai, The Commissioner of Customs (EP) JNPT, The Director General of Foreign Trade
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Nature of Litigation
Writ petition challenging the decision of CESTAT that licensing authorities do not have power to amend EPCG licence with retrospective effect.
Remedy Sought
Petitioner sought to set aside the CESTAT decisions and to direct the licensing authorities to consider its application for amendment of the EPCG licence from zero duty to 10% basic duty with retrospective effect.
Filing Reason
Petitioner could not fulfill the minimum CIF value condition of Rs. 20 crores under the zero duty EPCG licence and sought amendment to a 10% basic duty licence, which was rejected by the licensing authorities and upheld by CESTAT.
Previous Decisions
CESTAT by its larger Bench decision dated 18/1/2008 and final order dated 11/5/2010 held that licensing authorities do not have power to amend licence with retrospective effect.
Issues
Whether the licensing authorities have the power to amend an EPCG licence with retrospective effect.
Submissions/Arguments
Petitioner argued that the power to grant a licence includes the power to amend it, and there is no prohibition in the Foreign Trade Policy or the Customs Act against retrospective amendment.
Respondents contended that the licence conditions were fixed and could not be altered retrospectively.
Ratio Decidendi
The power to grant a licence includes the power to amend it, and there is no statutory bar in the Foreign Trade Policy or the Customs Act against retrospective amendment of an EPCG licence. Therefore, licensing authorities have the power to amend a licence with retrospective effect.
Judgment Excerpts
The petitioner is aggrieved by the decision of the CESTAT dated 11/5/2010 as also the larger Bench decision of the CESTAT dated 18/1/2008, wherein it is held that the licensing authorities do not have the power to amend the licence with retrospective effect.
The petitioner who had obtained zero duty EPCG licence could not import the capital goods of the value of Rs.20 crores and therefore applied for revalidation of the licence.
Procedural History
The petitioner obtained a zero duty EPCG licence on 14/1/1998. It could not meet the minimum CIF value condition and sought revalidation, which was granted up to 31/7/2001. Still unable to comply, it applied for amendment to a 10% basic duty licence. The licensing authorities rejected the application. The petitioner appealed to CESTAT, which by its larger Bench decision dated 18/1/2008 and final order dated 11/5/2010 held that licensing authorities do not have power to amend licence retrospectively. The petitioner then filed the present writ petition before the Bombay High Court.
Acts & Sections
- Customs Act, 1962:
- Foreign Trade (Development and Regulation) Act, 1992:
