The present legal case involves the appellant challenging the High Court of Rajasthan’s decision regarding the Scheme for the year 2006-2007 on export incentives. The appellant, involved in manufacturing/trading Guar Gum products domestically and for export, contested a Circular dated 21 January, 2009 which clarified the Scheme. The case raises questions on the exclusion of 100% export-oriented units from benefits and eligibility for incentives. Stay tuned to know more about the implications of this case.
Facts
- Challenge in the present appeal is to an order passed by the High Court of Rajasthan dismissing the writ petition filed by the appellant.
- The Scheme for the year 2006-2007 had clauses 3.8 and 3.8.2.2 which were later changed.
- Writ petition challenged a Circular dated 21 January, 2009 on the ground of being contrary to the Foreign Trade Policy 2004-2009.
- The Circular of 21 January, 2009 was issued to clarify the scheme for the year 2006-07.
- The appellant is involved in manufacturing/trading Guar Gum products domestically and for export.
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Arguments
- The appellant argues that the Scheme has a statutory force and cannot be amended or modified by the Executive through the impugned Circular.
- Referring to Sections 3 and 5 of the Act, it is argued that 100% export-oriented units were excluded from the benefit of the Scheme upon notification on 7th April, 2006.
- The appellant claims that while the Scheme excludes DTA units from the benefit of exports under the Focus Market Scheme, there is no such exclusion in the Yojna, indicating differential treatment by the Revenue.
- The appellant contends that the incentive for exports is not available if the exports are made by EOU or units in SEZ, clarifying that they are not part of either category as the expression used is ‘exports made by’ EOU and SEZ Unit and not ‘through’ them.
- The appellant has sought the quashing of the Circular on the grounds that it is contrary to the Policy notified on 7th April, 2006.
- The appellant is a purchaser from a 100% export-oriented unit and is claiming benefits under the Scheme for exports made by them.
- There was ambiguity regarding whether purchasers from 100% export-oriented units are entitled to benefits under the Scheme.
- It is argued that since the export-oriented units themselves are not entitled to benefits under the Scheme, their purchasers should also not be entitled to such benefits.
- The principle of not being able to do indirectly what cannot be done directly is cited in this context.
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Analysis
- Government reserves the right to specify export products not eligible for entitlement calculation.
- Circular dated 21 January, 2009 is not illegal as it aligns with the scheme notified under the Act.
- Exports made through Export Oriented Units are not entitled to incentives as per the Foreign Trade Policy.
- Circular clarifies that 100% export-oriented units cannot indirectly benefit from incentives.
- Purpose of the scheme is to not grant incentives to 100% Export Oriented Units or units in Special Economic Zones.
- FTC provides various schemes for incentives which require modification or amendment by publication, not just clarifications.
- Export-oriented units cannot use the appellant for export under the Scheme and claim benefits.
- The Scheme excludes the benefit of exports by units in DTA.
- DTA was not excluded from claiming exemption under clause 3.8.2.2 related to Yojna.
- Such export-oriented units are specifically excluded from the Scheme in Para 3.8.2.2.
- The appellant, being a purchaser from a 100% export-oriented unit, cannot be used to avoid the intended purport of the policy for the year 2006-07.
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Decision
- Appellant challenged the change in the Policy ‘Vishesh Krishi Upaj Yojna’
- 100% export units were denied exemption under the revised policy
- Appellant argued that the policy is discriminatory as direct tariff areas were excluded
- Appellant is a 100% export-oriented unit
- High Court found no error in the findings and dismissed the appeals
Case Title: M/S NOLA RAM DULICHAND DAL MILLS PARTNER Vs. UNION OF INDIA (2020 INSC 186)
Case Number: C.A. No.-010636-010636 / 2010
