Denial of benefit of SFIS scheme when imported goods are received after expiry date of authorization certificate.

PJ/Case Laws/2012-13/1523

Case: - P. S. G. STEEL PVT. LTD. Versus UNION OF INDIA

Citation: - 2013 (288) E.L.T. 338 (Del.)

Brief Facts: -The Appellant claims a direction in the nature of mandamus to the first respondent to issue instructions to revalidate its scrip which entitled it to customs duty concessions for a period of six months in terms of Serve From India Scheme (SFIS). The beneficiaries of that policy, like the Appellant are entitled to exemption from customs duty in respect of capital goods imported during the period of the scrip's authorization. In this case, the scrip was issued to the Appellant on 15-4-2009 and was valid in terms of the scheme till 30-4-2011. The Appellant, who had availed of the facility of the customs duty exemption in terms of the SFIS, had apparently entered into contract for purchase of certain equipment from Italy on 18-4-2011. The goods were shipped on 18-4-2011 from Antwerp and landed at the Inland Container Depot, Faridabad on 26-5-2011. By this time, the validity of the scrip had expired (on 30-4-2011). The Appellant was, therefore, required to pay duty. It is urged that the Appellant was asked to seek revalidation of the scrip under the SFIS which it did. Apparently, the request for revalidation was turned down by the Policy Relaxation Committee (PRC) on 29-8-2011.

Appellant Contention:- The Appellant contended that the shipment ought to have been cleared duty free as the validity in terms of the said advertisement would extend till that time the goods landed.

Respondent Contention: - The Respondent contended that terms of the scrip were clear as was evident from the reading of the Handbook of Procedure. In response, it is further argued that the validity period and revalidation is in terms of paragraph 3.11.7 which reads as follows:-
"3.11.7 Duty Credit scrip shall be valid for a period of 24 months. Revalidation of Duty Credit scrip shall not be permitted unless covered under paragraph 2.13.1 or paragraph 2.13.2A of HBP v1."
Counsel also relies upon paragraph 2.13.1 which is in the following terms :-
"However, revalidation of freely transferable Authorization/Duty credit scrips and stock and sale Authorization shall not be permitted unless validity has expired while in custody of Customs authority/RA."

Reasoning of Judgment: -We have considered the both sided parties. The terms of the SFIS and the authorization issued under it were clear i.e. that the benefits could be availed for the period of two years. In case of shipment on high seas, the policy provided the extension of concession if the validity period lapsed when the shipment had landed at any Indian port. In other words, in the present case, if the goods had reached in the India by the date of expiry of the authorization i.e. 30-4-2011, the Appellant could have qualified for extension to facilitate their clearance. However, such was not the case. The goods in fact reached on 26-5- 2011, a fact known to the Appellant when it booked them after entering into contract with the foreign supplier, on 18-4-2011. Having regard to these circumstances, the respondents' action directing payment of full duty and refusal to give the benefit cannot be characterized as unreasonable. It was brought to the notice of the Court that the order of the Policy Relaxation Committee (PRC) is appealable under Section 15 of the Foreign Trade Development Act, 1992 to the Central Government. This Court is of the opinion that the Appellant should be permitted to avail of that remedy. In case there is any delay, the said authority shall consider the appeal on its merits provided the Appellant approaches it within a period of two weeks from today. In view of the above conclusions, this Court is of the opinion that the relief claimed cannot be granted. The Writ Petition is accordingly dismissed but subject to the above directions.

Decision: -Appeal Dismissed.

Comment:- The analogy drawn from this case is that benefit of concessional duty under SFIS is not available when the imported goods reached India after the expiry of authorisation certificate. However, extension could have been granted if the goods reached India on the expiry date itself which was not the case.

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PJ/Case Laws/2012-13/1523

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