Case Note & Summary
The petitioner, Piramal Glass Limited (formerly Gujarat Glass Limited), a manufacturer, challenged a communication dated 03/05/2010 from the Director General of Foreign Trade (DGFT) and 11 orders in original dated 26/11/2010 passed by the Joint DGFT, Mumbai. The DGFT communication directed that for the period 2004-05, Duty Free Replenishment Certificates (DFRC) should be issued based on the Standard Input Output Norms (SION) notified on the date of exports, not subsequent SION. Consequently, the Joint DGFT demanded duty and penalty for 'Formers' imported duty free under DFRC, claiming they were not covered by the SION on the export date. The petitioner argued that the DFRC scheme entitles an exporter to import duty free inputs as per SION in force at the time of export, and subsequent changes cannot apply retrospectively. The court, while noting that ordinarily it would relegate the petitioner to alternate remedy, entertained the writ petition as the validity of the DGFT communication was directly challenged. The court held that the SION applicable on the date of export must govern the DFRC entitlement, as the exporter cannot be subjected to norms not in existence at the time of export. The impugned communication and orders were quashed, and the respondents were directed to issue DFRC based on the SION as on the date of export.
Headnote
A) Foreign Trade - Duty Free Replenishment Certificate - Standard Input Output Norms - Applicability - The issue was whether DFRC should be issued based on SION notified on the date of export or subsequent SION - The court held that the SION as on the date of export must govern the entitlement, as the exporter cannot be subjected to norms not in existence at the time of export - The DGFT communication directing use of later SION was quashed (Paras 3-5).
Issue of Consideration
Whether the Standard Input Output Norms (SION) applicable for issuance of Duty Free Replenishment Certificates (DFRC) should be those notified on the date of export or those notified subsequently.
Final Decision
The court allowed the writ petition, quashed the communication dated 03/05/2010 and the 11 orders in original dated 26/11/2010, and directed the respondents to issue DFRC based on the SION as on the date of export.
Law Points
- Duty Free Replenishment Certificate (DFRC) scheme
- Standard Input Output Norms (SION)
- date of export vs. date of notification
- Foreign Trade Policy
- Section 14A of Customs Act
- 1962
Case Details
2011 LawText (BOM) (03) 105
WRIT PETITION NO.10079 OF 2010
J.P. Devadhar, Mrs. Mridula Bhatkar
Mr. V. Sridharan with Mr. Prakash Shah and Mr. Jas Sanghvi i/b. PDS Legal for the appellant; Mr. D.J. Khambata, Additional Solicitor General with Mr. Rui Rodriques and Mr. A.S. Rao for the respondents
Piramal Glass Limited (formerly known as Gujarat Glass Limited)
Union of India, Director General of Foreign Trade, Zonal Joint Director General of Foreign Trade, Foreign Trade Development Officer, Commissioner of Customs (Export Promotion)
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Nature of Litigation
Writ Petition challenging communication and orders demanding duty and penalty under DFRC scheme.
Remedy Sought
Quashing of DGFT communication dated 03/05/2010 and 11 orders in original dated 26/11/2010.
Filing Reason
The DGFT directed that DFRC be issued based on SION notified on date of exports, not subsequent SION, leading to demand of duty and penalty.
Issues
Whether the SION applicable for DFRC should be those notified on the date of export or subsequent SION.
Submissions/Arguments
Petitioner argued that DFRC entitlement is based on SION in force at the time of export, and subsequent changes cannot apply retrospectively.
Respondents argued that the DGFT communication was correct in directing use of SION as on date of export.
Ratio Decidendi
The Standard Input Output Norms (SION) applicable for issuance of Duty Free Replenishment Certificates (DFRC) are those notified on the date of export, not subsequent norms, as the exporter's entitlement crystallizes on the date of export.
Judgment Excerpts
By communication dated 03/05/2010 the DGFT has informed the Jt. DGFT, Mumbai that during the period 2004-05, Duty Free Replenishment Certificates ('DFRC' for short) ought to have been issued to the petitioner, for import of duty free inputs which were set out in the Standard Input Output Norm (SION) notified by the DGFT on the date of exports and not as per the SION notified subsequent to the exports.
Ordinarily, we would have relegated the petitioner to avail the alternate remedy of appeal against the orders in original dated 26/11/2010 which are impugned in this Writ Petition. However, since the said orders in original are based on the communication issued by the DGFT on 3/5/2010 and the validity of the said communication is challenged, we have deemed it proper to entertain the Writ Petition and decide the issue on merits.
Procedural History
The petitioner filed a writ petition in the Bombay High Court challenging a DGFT communication dated 03/05/2010 and 11 orders in original dated 26/11/2010. The court entertained the petition despite alternate remedy due to the challenge to the communication's validity.
Acts & Sections
- Customs Act, 1962: Section 14A
