Jindal Drugs Private Limited Vs Union of India (Madras High Court)
In this case, supply has been made by the petitioner to FTWZ for onward shipment at the behest of the purchaser, UTEXAM, to a location of its choice. This modus operandi is supported by the documentation placed on record by the petitioner.
Thus, DHL logistics, the FTWZ, merely offers a facility to the petitioner to warehouse its consignments that are to be exported. The destination is decided by UTEXAM, which is the ultimate purchaser, which has paid the petitioner in USD for the consignment. The stipulation in Clause (vii) deals with exports made by a unit in the FTWZ. DHL, the FTWZ does not export the consignments but only facilitates such exports. The exports are thus, by the petitioner through DHL to a destination abroad.
To a query as to why the transaction was so structured, the petitioner explains stating that the consignments in question were, purchases by UTEXAM on behalf of Colgate Palmolive for supply at any number of the units of the latter. As and when the destination is decided, DHL is intimated of the same and the consignments shipped to that destination.
The exports in this case have already taken place at the point when the petitioner executes the relevant documents and the consignments are stored in the FTWZ, awaiting confirmation of the destination. This would avoid the circuitous route of shipment to UTEXAM at Ireland, and then onward to a final destination accompanied by multiple transportation costs and logistical complications. The role of DHL in this transaction is that of a warehouse and nothing more. The concept of ‘ship to’ and ‘bill to’, as used in this case, has been recognised under the GST regime, as commercial compulsions dictate, that transactions are to be structured in the most economical and least cumbersome manner in terms of time, procedure and expense involved.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
W.P.Nos.28778, 28783 and 28784 of 2019 pray for a direction to the Deputy Commissioner of Customs/R2 to register scrips bearing No.0319167227 dated 28/05/2018 for Rs.45,03,800.00 (scrip No.1), No.0319191300 dated 10/10/2018 for Rs.4,41,870/- (scrip No.2) and No.0319170001 dated 13/06/2018 for Rs.16,31,840/- (scrip No.3) and issue Telegraphic Release Advise under paragraph 3.08 of Hand Book of Procedure.
2. W.P.No.28777 of 2019 prays for issuance of Writ of Certiorari to quash communication dated 09.07.2019 passed by the Authorised Officer Free Trade Zone, Mannur Village, Sriperumbudur (JM FTZ SEZ/ Mannur) Kancheepuram – 602 105/R2.
3. Since the scrips in question were issued by the Additional Director General of Foreign Trade, Mumbai, the aforesaid authority has been impleaded as R3 by order of this Court dated 01.10.2019.
4. The brief facts that are germane to the disposal of the issues arising from these Writ Petitions are as follows:
i) The petitioner is an exporter of menthol and natural essential oils.
ii) The instant transactions form part of the supply of the commodities to various purchasers, who in turn supply the same to Colgate Palmolive.
iii) The petitioner admittedly claims benefits under the Customs Act, 1962 and allied policies, such as duty drawback as well as benefits under the Goods and Services Tax Act, 2017 (in short ‘GST Act’), such as input tax and other available
iv) The petitioner, wishing to avail the benefit under the Merchandise Exports from India Scheme (MEIS) which was part of the Foreign Trade Policy, effective 01.04.2015, made an application to R3 and was issued scrips 1, 2 and 3 by R3. These scrips were current for the period 2018 to 2020 and have not been cancelled at any time. Benefit under the MEIS Scheme is computed on the basis of 2% Free on Board (FOB) of the value of the transaction which is set-off against future imports. Thus, no cash refunds are contemplated.
v) A request was made for registration of scrip Nos.1 and 3 on 11.06.2018 and 19.06.2018 respectively. The original scrips and all required details were submitted. R2 was requested to issue a Telegraphic Release Advise (TRA) to the
vi) Certain other documents were called for in connection with the application and a personal hearing was also afforded to the
vii) R3, in the meanwhile, sought the details of the supplies made against all bills of exports confirming those in respect of which MEIS benefit had been sought.
viii) Detailed responses were filed by the petitioner to the effect that the supplies made were not covered under any of the ineligible categories of exports stipulated under the relevant provisions of the Foreign Trade Policy.
ix) There was a further exchange of communication inter se R3 and the petitioner and detailed submissions made in the course of personal hearing.
x) As there was no progress thereafter, the petitioner sought return of the scrips sent for registration in order to ensure their safety. The scrips were returned without registration.
xi) A similar request was made for registration of scrip No.3 on 04.07.2019 and again all originals and annexures were enclosed. This scrip was also returned by R2 without registration, accompanied by the impugned order dated 09.07.2019, wherein the request of the petitioner for registration has been rejected.
xii) Thus, in summary, scrips1 and 3 have been returned by R3 without registration and scrip No.2 by R2 also without registration with the impugned order rejecting the request for registration of scrip No.2.
xiii) Though no specific rejection has been made in regard to the applications for registration in regard to scrip1 and 3, there is no dispute on the question that the stand adopted by R2 for rejection of registration of scrip No.2 applies on all fours to scrip Nos.1 and 3 as well.
5. The arguments of Mr.Prakash Shah, learned counsel appearing for Mr.S.Muthu Venkataraman, learned counsel for the petitioner are as follows:
i) All three scrips have been validly issued after due application of mind and enquiry by R3. Thus the rejection of the application for registration by R2 is not just contrary to law but amounts to review of the original order passed, for which there is no provision under either the policy or any regulation.
ii) The scrips have not been cancelled at any time till their expiry or even thereafter and hence in the absence of cancellation, for which a specific procedure is statutorily provided, R2 has no authority to have rejected registration and TRA.
iii) Reference is made to Section 9(4) of Foreign Trade (Development and Regulation) Act, 1992 (in short ‘FTDR Act’), which provides for a procedure for cancellation of Admittedly, this procedure has not been invoked and hence the scrips, being valid, ought to have been registered as requested by the scrip holder.
iv) In response to the argument put forth by R2 to the effect that the original document (two scrips) have been taken back by the petitioner, the petitioner would state that it is only for the purpose of ensuring their safety. In any event it is not the case of the revenue that had they been allowed to be retained by the respondents, R2 would have registered the same. In fact, there is no dispute that the impugned order of rejection would apply in regard to all three scrips.
v) As regards the question of ineligibility to the benefit of MEIS Scheme, the petitioner relies on paragraphs 3.04/Chapter 3 of the Merchandise Exports from India Scheme, reading as follows:
PART –I
Foreign Trade Policy
Chapter 3
