As on today also, I am very often perturbed while dealing with the Indian bureaucracy that whether I am dealing with a policy maker or the gatekeeper for the simple reason that when the policymakers are caught cheating, they simply pretend that they do not even understand the very basics ! The Prime Minister & the Finance Minister are on record that there is no place for retro-respective amendments affecting the vested rights of the beneficiaries & this is for the obvious reason. Therefore, if retro-respective amendments are to be undertaken, then extreme caution should be exercised. If the written word of the law cannot be honoured then the law in itself is worthless. However, since there is no sense of responsibility visible in the Indian bureaucracy & no accountability exists in the rotten system, the whims & fancy of the policymakers rule. This is the basic reason that exports from India have not been able to grow & sustain at a healthy pace. If you will see the website of the DGFT & the Act of Parliament then you will note that DGFT is a facilitator but then DGFT is the biggest stumbling block! The DGFT is not prepare to understand the very basic that between exports & exporter the only difficult thing to achieve should be that of getting an export order & once the exporter gets an order, it is the prime responsibility of the DGFT to ensure that the export order is executed successfully. Though the DGFT is the designated nodal authority & given commensurate authority to resolve the issues with any other authorities, the conduct of the DGFT in itself is under serious doubt?

The readers will agree that corruption is a pervert state of mind to abuse the discretions at the level of the policymakers knowing very well that the exploitation will result in rip off of the exchequer. The Indian bureaucracy is absolutely comfortable drafting a very loosely worded law prone to interpretations for abuse. One of the recent phenomenons is that the bureaucracy has become extremely insensitive & stubborn to the extent that they would not accept the wrongs & rectify the same gracefully (to err is human). The DGFT simply prefers to trample the exporters & kill them. If you will look for very recent examples of outright exploitation then you will realize that introduction of pre-import condition in case of Advance Authorisation stands out. I had taken up the matter with the DGFT & I was surprised to note that the (DGFT is the policymaker as settled by the Apex Court) DGFT had no qualms in saying that the DGFT was following the stipulation because of the CBIC. The moot question is why the DGFT should prefer to be a stooge rather than show spine & formulate an Export Promotion Policy in favour of the exporter. There is reportedly already a judgement of Madurai bench discarding this frivolous stipulation. However, if you will see the minutes of the PRC then you will observe that the DGFT & PRC were trying to abuse the system through this stipulation at their will. The pre-import condition is a very sophisticated & pre-mediated tool to milk the exporters. There are lynching in the street but what about sophisticated lynching carried out by these white collared criminals! The readers should see this in proper perspective i.e. the exporter is doing a service to this nation by earning foreign exchange but just because he did not conduct imports prior to exports for valid reasons beyond his control, he is saddled with not only the payments of the taxes but interest & penalty also? Is this conduct then acceptable? How such stooges are then allowed to continue is difficult to understand? To put things in perspective, early in my life, I formulated a sales promotion scheme & then one of the executive came to me to tell me that we can introduce certain conditions so that we can rob the beneficiaries of their entitlement as such. Such mental attitude is a sickness & intolerable & I had to then simply ask that person to quit because cheating is impermissible.

Now, coming to the issue of retro-respective amendments, I had taken up the issue with the DGFT regarding clubbing & redemption to be carried out as per the policy prevailing as on the date of issue of the Advance Authorization. This is for the simple reason that the exporter will operate under the policy framework made available at that point of time to conduct its imports & exports. It cannot be the case of the policymakers that the export promotion policy is the manifestation of the whims & fancy of the DGFT in position & the new incumbent can discard the old provisions without any responsibility & accountability though the same is not permissible. The simple reason & common sense being that the amendments are prospective in nature & not retro-respective as such unless stipulated otherwise. A Public Notice brings about the amendment in any policy/procedure from the date of the issue as such & its publication in the official gazette. However, there is simply no end to mischief in bureaucracy & the DGFT simply takes a position that clubbing & redemption is not a policy. This is simply an advancement of idiocy because by way of clubbing provisions, validity of the Advance Authorizations as well as Export Obligation Period (Validity & Export Obligation Period are policy issues) stands amended therefore this cannot be termed as not being a policy change. Putting it the other way round, if this is not the case then the Public Notice will never result in denial of entitlement available to the exporter under the previous stipulation? Is the DGFT trying to say that there was a loophole ridden policy, which has been changed! If yes, then can it be done retro-respectively?  Therefore, as a policymaker, one needs to be clear in their mind about what they are putting forward & think twice before indulging into idiocy? The DGFT then says that clubbing is a facility but then duty exemption to imports related to exports is also a facility only? What is the distinguishing feature between a policy & facility in terms of Duty exemption or clubbing for that matter?  Further, another aspect is that can in the name of facility whims & fancy of the official in position be allowed to rule? These are very basic issues but then, the DGFT prefers to keep them hanging & make the life of the exporters miserable after completing the exports as per the existing legal provisions & for doing a service to the nation? Is this conduct then acceptable? However, there is no way to hide when you are trying to cheat & that is really the case. In the paragraph 4.38 (i) of the HBP, the DGFT signs the fact that clubbing of AAs issued before 27.8.2009 shall be governed by paragraph 4.20 of HBP (2009-14). If this is only a facility then why such protection is stipulated? Is it just whimsical! If yes, even then why this protection is not made available when further drastic changes are being made? Not only the above, there exists another provision in the HBP contained in paragraph 9.12 (B), which reads as under:Quote:

(B) However, wherever Procedural / Policy provisions have been modified to disadvantage of exporters, the same shall not be applicable to consignments already handed over to Customs for examination and subsequent exports up to Public Notice / Notification date.

Thus, once again, the DGFT needs to comprehend that even if it is presumed that clubbing is a facility or procedure then too the exporter is granted protection against any adverse change made to the disadvantage of the exporter after the goods are handed over to the customs for examination & subsequent exports up to Public Notice/Notification Date. The readers may please mark the words ‘Procedural’ & ‘Public Notice’ in the paragraph therefore there is absolutely no scope for manipulation by interpretation in any case. Please note that the HBP protects the exporters in respect of any adverse change whether related to the policy or procedure as such.

Lastly, as conveyed in the title, why should the DGFT undermine the commitment of the Prime Minister that retro-respective amendments are things of the past! If the Prime Minister of the country has made a promise to the citizens then it is the bounden duty of the policymaker to ensure that, that promise is honoured in true letter & spirit so that people have faith in the written word of the law & are encouraged for compliance with the law. The DGFT should really think that if you backstab the exporters then such Export Promotion Authority need not exist! Finally, as per the mandate of the Parliament, the DGFT is the facilitator but where is the semblance of facilitation visible in all this? At the very least, the DGFT needs to be aware of what appears as written word of the law duly authenticated under the seal & signatures of the DGFT by way of published FTP & HBP. If the DGFT is not even able to uphold common sense, rationale & Basic tenets of the law as appearing in the FTP/HBP then where & how facilitation is being implemented? These moot questions need to looked into seriously & addressed by the DGFT.

It is not out of place to point out dichotomy of conduct of the DGFT. In clubbing, the DGFT is hell bent upon retro-respective implementation to make the life of the exporters miserable & kill them whereas in the case of 20:80 Gold Import scheme, the DGFT does not even want to reveal the complete details of the beneficiaries i.e. the names & the exact quantum of imports i.e. those who have caused a loss of several thousand crores to the exchequer. On the other hand the DGFT is whipping the Modi & Choksi (poster boys whose quantum of transactions is not large) to distract attention from the other culprits read beneficiaries, who seems to be more influential than Modi & Choksi! Why the DGFT is not willing to disgorge these thousand of Crores from these wrong doers? Is it just because everybody had a fair share of the spoils? The readers will note that the dichotomy in conduct is reprehensible?

In conclusion, the DGFT may please note that making the life of exporters miserable by pretending not to understand even the very basics is a measure of incompetence of the export promotion policy & not success but then you can blame it on the education system because the system gives you a degree & not really teaches you the application of mind. To put things in perspective, please note that if the exporter fails to get the legitimate dues then that is a failure of the export promotion policy & the DGFT. I am ashamed that such issues prevail in this country even today. The incompetence rises to the top because we do not reason why but sign even a FTP/HBP/Public Notice/Notification etc. without understanding the implications of it because the policymakers think, they are the law unto themselves & cannot be held accountable. This cheating is truly the bane of the Indian exporters. However, it is important to remind that the greatness lies in accepting the error & rectification thereof & this die hard optimist still believes that the DGFT would just do that like in several cases in the past. If you are still not sure then just refer this to the ministry of law or get the case study done in any of the business schools for good sense to prevail.

(Author can be reached at [email protected])

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4 Comments

  1. Rajiv Gupta says:

    Dear Mr. vaidya,

    Only those responsible can force the hand of the government i.e. the business & industry. Until & unless we become less selfish & take up the matters seriously even if it is hurting the interest of any/single exporter & only then the government can be compelled to act responsively.
    Please remember, the main principle of clubbing & redemption is to take care of a mismatch in exports & imports & the DGFT does not even comprehend that. When you are out to cheat, the result is bizarre.

  2. Dattatraya Vasudeo Vaidya says:

    An excellent article. May be some one can arrange to sent it to PMO Office. So far whatever I have sent to PMO, is never replied, not even acknowledged. May be I am approaching the wrong office or at wrong address. Unless these Babus are held responsible and puninshed, India can never improve and all hard-working honest citizens will keep suffering. May sending it to Press may help.

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