Page 147 - ELT_1st September 2020_Vol 373_Part 5

2020 ] KANAK EXPORTS v. UNION OF INDIA 585

(c) Food grains sourced from central pool maintained by FCI
(d) Items exported under free shipping bills
3. In terms of Para 3.2.5 of Handbook of Procedures (Volume 1) the fol-
lowing items would not be allowed for imports under Duty Free
Credit Entitlement Certificate for Status Holders :
(a) Agricultural products which fall under Chapters 1-24 of ITC
(HS) Classification of Export and Import items.”
12. By a subsequent Notification No. 38/(RE 2003)2002-2007, dated
21-4-2004, Notes 6 and 7 were inserted in Paragraph 3.7.2.1., after sub-paragraph
(vii) of the Policy and read as under :
“Note 6. - The export of the following products and categories of products
would not be permitted for counting entitlement under the Duty Free Enti-
tlement Certificate for Status Holders,
(a) Rough, uncut and semi-polished diamonds.
(b) Gold, silver in any form including plain jewellery thereof
(c) Food grains sourced from central pool maintained by FCI
(d) Items exported under free shipping bills.
Note 7. - The following items would not be allowed for imports under Duty
Free Credit Entitlement Certificate for Status Holders :
Agriculture products, which fall under Chapters 1-24 of ITC (HS) Classifi-
cation of Export and Import items.”
13. By Notification No. 40/(RE 2003)/2002-2007, dated 23-4-2004, a mi-
nor correction was made in the Notification No. 38 (RE-2003)/2002-2007, dated
21-4-2004.
14. Adani Exports Ltd. filed a writ petition before the High Court of
Gujarat, being Special Civil Application No. 1676 of 2004, inter alia challenging
the validity of the Notification No. 28 as also the Public Notice No. 40, dated
28-1-2004. The High Court by its judgment dated 23-7-2004, partly allowed the
said writ petition. The High Court concluded that the main purpose of the Noti-
fication dated 28-1-2004 was to prevent transfer of the export orders from one
group company to another company belonging to the same group in order to
show enhanced export performance of such another company and, therefore, it
was clarificatory in nature. It further rejected the submission of the petitioner
therein that the Notification or the Public Notice had the effect of the taking
away of the vested right of the petitioner, stating that they merely sought to ex-
clude exports which were never intended in the first place to be covered by the
Special Scheme; misuse of the said scheme by mere paper growth in exports is
not to be countenanced.
15. It further held that the DGFT had no power to exclude exports of
certain products as done by the Public Notice dated 28-1-2004, however, as the
same effect was given by the Notification dated 21-4-2004 read with the Notifica-
tion dated 23-4-2004, the same being retrospective in nature, were applicable for
all exports made from April 1, 2003 and such exclusion was therefore, valid. The
High Court, however, held the exclusion of the following exports from the bene-
fits of the duty-free import entitlement for the exports by Status Holder to be nei-
ther clarificatory nor in public interest and therefore, bad in law;
(1) items exported under Free Shipping Bills; and

EXCISE LAW TIMES  1st September 2020  147