Case Note & Summary
The petitioner, M/s. Essel Mining & Industries Ltd., an Export House recognized by the Director General of Foreign Trade, engaged in the manufacture of Ferro molybdenum (falling under Heading 72.02 of the Central Excise Tariff) at its factory in Vapi, and also in mining and export of iron ore. Under the Target Plus Scheme (Chapter 3 of the Foreign Trade Policy 2004-09), Star Export Houses achieving incremental export growth were entitled to duty credit based on the percentage growth. The petitioner claimed duty credit for the licensing year 2005-06 for exports of Ferro molybdenum. The respondents (Union of India and others) denied the claim on the ground that Ferro molybdenum was not covered by the Standard Input-Output Norms (SION) and therefore the duty credit could not be utilized for importing inputs. The petitioner challenged this denial by way of a writ petition. The court analyzed the provisions of the Target Plus Scheme, particularly paragraphs 3.7.1, 3.7.3, and 3.7.6. It noted that the scheme was a reward for export growth and did not require the exported product to be covered by SION. The duty credit could be used for importing any freely importable items, including inputs, capital goods, etc. The court held that the denial was arbitrary and contrary to the policy. The writ petition was allowed, and the respondents were directed to process the petitioner's claim for duty credit in accordance with the Target Plus Scheme.
Headnote
A) Foreign Trade Policy - Target Plus Scheme - Duty Credit Entitlement - Paragraphs 3.7.1, 3.7.3, 3.7.6 of Foreign Trade Policy 2004-09 - The petitioner, an Export House, claimed duty credit under the Target Plus Scheme for incremental exports of Ferro molybdenum. The respondents denied the claim on the ground that the product was not covered by the Standard Input-Output Norms (SION). The court held that the Target Plus Scheme does not require the exported product to be covered by SION; the scheme is a reward for export growth and not an input-output scheme. The denial was arbitrary and contrary to the policy. (Paras 2-6)
Issue of Consideration
Whether the denial of duty credit under the Target Plus Scheme to the petitioner, an Export House, on the ground that the exported product (Ferro molybdenum) was not covered by the Standard Input-Output Norms (SION) was valid.
Final Decision
The writ petition is allowed. The respondents are directed to process the petitioner's claim for duty credit under the Target Plus Scheme in accordance with the Foreign Trade Policy.
Law Points
- Interpretation of Foreign Trade Policy
- Target Plus Scheme
- Duty Credit Entitlement
- Export House Benefits
- Input-Output Norms
