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Showing contexts for: eou in Director General Of Foreign Trade vs M/S Kanak Exports on 27 October, 2015Matching Fragments
19) Such EOUs/EHTPs/STPs are permitted to export goods through status holder, as specifically provided in para 6.10 and we reproduce hereunder:
Export through 6.10 An EOU/EHTP/STP unit may export Status Holder goods manufactured/software developed by it through a merchant exporter/status holder recognized under this Policy or any other EOU/EHTP/STP/SEZ unit.
32) We would like to mention at this stage itself that as per the Government rationale for the amendment brought out by Notification No.28 dated 28.01.2004 and Public Notice No.40 dated 28.01.2004 are as under:
S. No. Exclusion Rational for exclusion
Note 1 Re-export of imported Such goods are imported under the
(i) goods or exports customs bond and re-exported with
made through little value addition. Such exports
transshipment; come from country A and go to
country B via India and are only pass
through exports and not considered
exports made in India.
(ii) Export turnover of DFCE would be of no use to
units operating Export Oriented Units (EOU) as
under SEZ/ they are already entitled to import
EOU/EHTP/STPI duty free. And since a firm is not
Schemes or allowed to transfer or sell its DFCE
products entitlements or goods, it cannot
manufactured by benefit from it. Notification 28 and
them and exported Public Notice 40, kept the above
through DTA units; logic in mind while excluding
100% EOU from the said scheme.
EXIM Policy makes a very clear
distinction between the exports
from an Export Oriented Units
(EOU) and other exports (called
Domestic Tariff Area or DTA
exports) primarily because of the
difference in nature of support
required by the two sectors. EOUs
have been allowed zero duty
facilities, besides availing
industrial licensing exemptions.
Since these exemptions are not
available to DTA exporters,
specific schemes like DFCE been
formulated.
(iii) Deemed exports Goods do not leave the country and
are not considered physical exports.
(iv) Service exports The DFCE scheme was available
only for physical goods.
(v) Supplies made by The benefits of DFCE Scheme
one status holder to were not applicable to all the
another status status holders but only to those
holder; status holders meeting the growth
and turnover criteria.
(vi) Export performance More than 1300 crores of the
made by one status exports of M/s Adani Exports were
holder on behalf of accounted by the supplies taken
other status holder from the status holders who
will not be eligible supplied to the petitioners
20. It appears that till 2002-2003 the petitioners' export performance was going down steadily. In 2002-2003 the export of the petitioners was hardly Rs.27 crores. In the year 2002-2003 India's export increased by 22% whereas as compared to the petitioners' export of about Rs.27 crores in 2002-2003, it catapulted to more than Rs.1000 crores. The national export growth rate was only 22% while the petitioners' exports grew at more than 3800%. It is obvious that this growth is merely a paper growth and not incremental growth within the meaning of the scheme. Notification dated 28th January 2004 does not make any third party export illegal or entirely ineligible for getting incentives under the Exim Policy. However, the basic intention of the amended scheme was to encourage the export of products manufactured by small scale units who do not have access to the international market because of lack of required international marketing expertise and optimum resources to have presence in the international marketing arena. The scheme was not intended to encourage the status holder/export house to pool the exports made by other exporters for the purpose of showing incremental growth in the export. The clarification issued by the impugned Notification in so far as it provides that supplies made by one status holder to another status holder or export performance made by one status holder on behalf of another status holder shall not be eligible for entitlement is in consonance with the basic object of the scheme. The export turnover of the units operating under STZ/EOU/EHTP schemes was also excluded as these units are getting all facilities for import without payment of duty on various types of goods including capital goods required by them for their activities. The intention of the makers of the scheme was not to confer double benefit under para 3.7.2.1. Further an exporter is required to export himself and not benefit from export capabilities of STZ/EOU/EHTP etc. This would be only paper growth and amount to abuse of the scheme. Reliance placed by the petitioners on Circular No. 16 dated 24tth December 2002 is also of no assistance as the said Circular stating that 3 rd party exports are eligible for all the export promotion schemes was issued long before the special incentive scheme was announced on 31st March 2003. In our opinion, the provisions contained in the impugned Notification dated 28th January 2004 are merely clarificatory and cannot be treated as amendment to the scheme.” In the process, the High Court rejected the contention of the writ petitioners that the said Notification was unreasonable and irrational. The Court held that in complex economic matters every decision is necessarily empiric and is based on experimentation of what one may call trial and error method and, therefore, its validity cannot be tested on any rigid prior considerations or on the application of any straightjacket formula.
Hence, there is no substance in the challenge to a Notes 1 and 2 read with note 4.”
83) Sub-note (ii) of Note 1 now provides that export turnover of units pertaining to SEZ/EOU/EHTP/STP or products manufactured by them and exported through DTA units are not to be included and taken into account for the purpose of calculating the value of exports. Both the High Courts in the impugned judgments have held it to be clarificatory on the ground that such export turnover was excluded as these units, namely, those pertaining to SEZ/EOU/EHTP/STP schemes are getting all facilities for import without payment of duty on various types of goods including capital goods required by them for their activities and there was no intention in the original scheme also to confer double benefit under para 3.7.2.1. This question by the writ petitioners by referring to paras 6.10, 7.1 and 7.8 of the EXIM Policy which permitted, inter alia, export through status holders. On that basis, it was argued by the learned counsel appearing for these writ petitioners that sub-note (ii) of Note 1 which stipulated that such exports would not be counted for the purpose of entitlement was not clarificatory but an amendment to the scheme. It is difficult to accept the aforesaid submission. No doubt, such EOU/EHTP/STP schemes are allowed to export goods manufactured by them through a merchant exporter/status holder recognised under the EXIM Policy. Likewise, SEZ is also authorised to export its goods through a status holder. The permission to make exports through status holder is one thing. Taking into account these exports by the status holders for the purpose of calculating the value of exports for availing the benefits of the entitlement given under the scheme is altogether different thing. The counsel for the petitioners could not refute or deny that such SEZ/EOU//EHTP/STP are getting the benefit of the exports made by them in the form of facilities for import without payment of duty on various types of goods including capital goods required by them for their activities. Therefore, exactly the same benefit which is sought to be given to the status holders for achieving incremental growth as provided in the scheme was already conferred upon. Obviously, purpose of the scheme was not to give double benefit for same exports. In fact, if that is allowed, it would be a clear case of misuse of the scheme inasmuch as for the same export turnover units operating under SEZ/EOU/EHTP/STP would get the certain incentives and the status holders also manage to extract the same benefits exploiting the scheme by exporting the goods manufactured by these STZ/EOU etc. On considering the issue in this hue, we agree with the opinion of the High Court that such a sub-note (ii) was merely clarificatory in nature.