M/S GOOD ONE TRADERS PVT LTD v. DIRECTORATE GENERAL OF FOREIGN TRADE

1. The grievance of the petitioners in these petitions is similar and, therefore, the petitions were heard together.

2. The petitioners are aggrieved by the action ofthe Directorate General of Foreign Trade (hereafter 'liie DGFT') in recovering duty credit scrips issued to the petitioners under the Focused Product Scheme (FPS) pursuant to Policy Circular No. 42 (R}^-2010)/2009-14 dated 21.10.2011 (hereafter 'the Policy Circular'). In terms ofthe Policy Circular, DGFT had concluded that only 33 items were eligible for FPS benefits under the heading 'Technical Textile' at

┌───────────────────────────────────────────────────────────────┐
│          TABLE 4; NEW FOCUS PRODUCTS                          │
│          SL.     FPS          rrc          DESCRIPTION        │
│          NO.     PRODUCT      (HS)                            │
│                  CODE         CODE                            │
│          Xxxx    xxxx         xxxx         xxxx               │
│                                    •   1                      │
│           TECHNICAL TEXTILES PRODUCTS                         │
│           xxxx   xxxx         xxxx         xxxx               │
├───────────────────────────────────────────────────────────────┤
│           33     33 ,   •     5407         lECI-INICAL        │
│                                            TEXTILES - WOVEN   │
│                                            FABRICS       OF   │
│                                            SWfHETIC           │
│                                            FILAMENT YARN      │
└───────────────────────────────────────────────────────────────┘

4. The petitioners claim that their products fell within the scope ofentry 33 ofTable 4 ofAppendix 37D ofHoPvl and, therefore, the exports made by them were eligible for FPS benefits. The relevant extract ofTable 4 of Appendix 37D is setoutbelov/;- TABLE 4; NEW FOCUS PRODUCTS SL. NO.

FPS PRODUCT CODE rrc (HS)

CODE DESCRIPTION Xxxx xxxx xxxx • 1 xxxx TECHNICAL TEXTILES PRODUCTS xxxx xxxx xxxx xxxx 33 33, • 5407 lECI-INICAL TEXTILES - WOVEN FABRICS OF SWfHETIC FILAMENT YARN

5. By the Policy Circular, the DGFT sought to restrict the FPS benefits to only 33 items as per the list appended along with the PoHcy Circular. Further, the Policy Circular was made applicable with retrospective effect from 01.04.2011 and, accordingly, directions were issued for recoveiy of FPS benefits already granted to certain exporters.

6. InMalik TanningIndustries {suprci), this Court examined thepowers of the DGFT and held as under:- "In view of the aforesaid, neither the central govemiTient, nor DGFT. would have the power to amend the Foreign Trade Policy or withdraw any export benefit with retrospective effect. The impugned circular inasmuch as it seeks to restrict the list of eligible items under entry 33 of Table 4 of Appendix 37D ofthe Handbook-I with retrospective effect is. set aside. Accordingly, the impugned letters of demand are also set aside."

7. This Court also considered the scope of the Entry 33 "Technical Textiles - Woven Fabrics ofSynthetic Filament Yarn" and held as under:- "Appendix 37D of the Handboolc-I, has to be viewed in the backdrop ofthe aforesaid legal framework. Entry 33 ofTable 4 ofAppendix 37D ofHandbook-I contains the entry "Technical Textiles - Woven Fabrics ofSynthetic Filament Yarn" under the heading "Teclinical Textiles Products". The ITC (HS) code specified for the said entry is 5407, A reference to the published ITC (HS) Code 5407 indicates that it includes several items, which are specifically listed. Concededly, ITC (HS) Codes have been adopted by DGFT for export-import operations. In my view, plainly, the product exported by the petitionerspolyester printed and dyed fabrics, would fall within the said entry, first and foremost, for the reason that the language of the entry "woven fabrics of synthetic filament yarn" is unambiguous. Secondly, it is not disputed that the products fall within the entry of IIC (HS) Code 5407, which has been adopted by DGFT for the purposes of import-export operations. Thirdly, it is admitted that export ofpolyester printed and dyed fabrics were considered eligible for FPS prior to 01.04.2011."

8. There is no dispute that ifEntry 33 ofTable 4 ofAppendix 37D of HoPvl is interpreted in the manner as held in Malik Tanning Industries {supra), the products exported by the petitioners would fall within the said entry.

9. In view of the above, the present petitions are allowed and the respondents are directed to refund the amount of duty credit scrips and the / /./ interest recovered from the petitioners. As conceded by the learned counsel for the petitioners during the course ofarguments, the said refund may not necessarily be made in cash but can also be effected by issuance ofduty credit scrips.

VIBHU BAKHRU, J JANUARY 09,2018 pkv