Bombay High Court
Plot No.2 vs The Union Of India Through The } on 23 July, 2012
Author: J.P. Devadhar
Bench: J.P. Devadhar, R.Y. Ganoo
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATR JURISDICTION
WRIT PETITION NO.7033 OF 2011
Steelco Gujarat Limited, a public limited }
company having its Regd. Office at }
Plot No.2, G.I.D.C. Estate, Palej, }
Dist. Bharuch-392 220, Gujarat } ..Petitioner.
V/s.
1. The Union of India through the }
Secretary, Ministry of Finance, }
Department of Revenue, North Block, }
New Delhi - 110 001. }
}
2. The Union of India through the }
Secretary, Ministry of Commerce, }
Udyog Bhavan, New Delhi-110 001. }
}
3. The Commissioner of Customs (Export) }
New Custom House, Ballard Estate, }
Mumbai - 400 001. }
}
4. The Assistant Commissioner of Customs }
(Export) License Verification Section }
New Customs House, Ballard Estate, }
Mumbai - 400 001. }
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5. The Joint Director General of Foreign }
Trade, Jilla Panchayat Bhavan, }
Rajmahal Road, Near Polo Club, }
Baroda - 390 001. } ..Respondents.
Mr. V. Sridharan, senior Advocate i/b. PDS Legal for the petitioner.
Mr. Pradeep S. Jetly with Ms. S.V. Bharucha for the respondent Nos.1,
2 & 5.
CORAM : J.P. DEVADHAR AND
ig R.Y. GANOO, JJ.
DATED : 23RD JULY, 2012`
ORAL JUDGMENT (PER J.P. DEVADHAR, J.)
1) Rule. Rule, returnable forthwith.
2) By consent, the petition is taken up for final hearing.
3) Although various reliefs are claimed by the petitioner in this
Writ Petition, counsel for the petitioner has restricted his argument only to challenge the office memorandum issued by the Central Board of Excise & Customs ('CBEC' for short) on 22nd February, 2011.
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4) By the said office memorandum dated 22nd February, 2011, the CBEC has held that where the Cenvat credit is availed in respect of the goods exported under the Duty Free Import Authorisation ('DFIA' for short), it shall be treated that the assessee has availed the credit even if the credit is reversed or paid back along with interest after clearance of the goods.
5) The relevant facts are that on obtaining the DFIA dated 29 th October, 2009, the petitioner became entitled to import various inputs required in the manufacture of the "cold rolled full hard CRCA" with an obligation to export the manufactured goods upto the quantity specified therein.
6) It is the case of the petitioner that though no credit of duty has been taken in respect of duty free import of raw materials, they have availed Cenvat credit of duty paid on the consumables which were used in the manufacture of the final product, as it was not possible to identify as to whether the manufactured goods would be cleared for exports or cleared to the domestic market.
7) Immediately after the manufactured final products were exported under the DFIA, the petitioner has reversed the Cenvat credit sas 3/7 ::: Downloaded on - 09/06/2013 18:50:46 ::: wp7033-11 with interest. On fulfillment of the export obligation, the petitioner applied for transfer of DFIA by making a statement to the effect that the Cenvat credit has not been availed on the imported / domestic inputs used in the final products manufactured by the petitioner so that the benefits under 4.2.6 of the Foreign Trade Policy, 2009-2014 are available to the transferee even after the DFIA is transferred.
8. Para 4.2.6 of the Foreign Trade Policy, 2009-2014 reads as under:-
" 4.2.6 Transferability Once export obligation has been fulfilled, request for transferability of Authorisation or inputs imported against it may be made before concerned RA. Once, transferability is endorsed, Authorisation holder may transfer DFIA or duty-free inputs, except fuel and any other item(s) notified by DGFT. However, for fuel, import entitlement may be transferred only to companies which have been granted authorisation to market fuel by Ministry of Petroleum and Natural Gas.
Once transferability is endorsed, imports / domestic procurement against authorisation or transfer of imported inputs / domestically procured inputs shall be subject to payment of applicable additional customs duty / excise duty. While endorsing transferability, authorisation would bear a note as to liability of such additional customs duty / excise duty. However, in case sas 4/7 ::: Downloaded on - 09/06/2013 18:50:46 ::: wp7033-11 where CENVAT facility has not been availed, exemption from additional customs duty / excise duty would be available even after endorsement of transferability on DFIA."
Thus, as per para 4.2.6 of the policy, duty free import of inputs under DFIA is permissible even to a transferee provided Cenvat facility has not been availed by the original licence holder.
9) After considering the application made by the petitioner for transfer of DFIA, the Deputy DGFT, Baroda by his communication dated 30th December, 2010 informed the petitioner that the Directorate has no objection in accepting the request of the petitioner, however, thought it fit to seek clarification from the Trade and Industry, Department of the Revenue.
10) By the impugned office memorandum dated 22 nd February, 2011, the CBEC has held that for the purposes of DFIA, the Cenvat credit once availed is to be treated as availed, even if the said credit without being utilised is reversed or paid back along with interest after the goods are cleared for export.
11) The Apex Court in the case of Commissioner of C. Ex., Mumbai V/s. Bombay Dyeing & Mfg. Co. Ltd. reported in 2007 (215) sas 5/7 ::: Downloaded on - 09/06/2013 18:50:46 ::: wp7033-11 E.L.T. 3 (S.C.) while dealing with a similar provision has held that the Cenvat credit taken if reversed before its utilisation, it amounts to not taking the credit. Based on the aforesaid decision of the Apex Court, the CBEC has issued a Circular on 8 th November, 2007 to the effect that if the credit taken on inputs used in the manufacture of the goods cleared under Notification No.14/2002-C.E. or Notification No.30/2004- C.E. is reversed before utilisation, it would amount to credit not having been taken.
12) Counsel for the revenue sought to distinguish the aforesaid decision as also the Circular dated 8 th November, 2011 on the ground that they relate to Notification No.14/2002-C.E. or Notification No.30/ 2004-C.E. and hence cannot be applied to the facts of the present case.
13) In our opinion, the argument of the revenue cannot be accepted, because, even though the Apex Court dealt with the issue in the context of two notifications, the ratio laid down therein would apply with equal force to the facts of the present case. The language used in para 4.2.6 of the Foreign Trade Policy is not in any way different from the language used in the notifications which were considered by the Apex Court in the case of Bombay Dyeing & Mfg. Co. Ltd. (supra).
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14) Therefore, in the light of the judgment of the Apex Court in the case of Bombay Dyeing & Mfg. Co. Ltd. (supra), we hold that in the case of DFIA if the credit availed on inputs used in the manufacture of final products is reversed before it is utilised either by reversing the credit or by cash payment with interest, then, it should be treated that the assessee has not availed the credit and accordingly, the benefits under para 4.2.6 of the Foreign Trade Policy 2009-2014 cannot be denied while transferring the DFIA.
16) Rule is made absolute in the above terms with no order as to costs.
(R.Y. GANOO, J.) (J.P. DEVADHAR, J.) sas 7/7 ::: Downloaded on - 09/06/2013 18:50:46 :::