Page 149 - ELT_1st September 2020_Vol 373_Part 5

2020 ] KANAK EXPORTS v. UNION OF INDIA 587

Whether, in the cases of these exporters, the exports shown by them can be
treated as actual exports entitling them to avail the benefit of the Scheme?
(110) This issue would be inter-twined with other related issue, namely,
whether the notification has retroactive operation or it is retrospective in
nature. Both these aspects are to be dealt with simultaneously in order to
provide suitable and right answer to the question posed. The case of the
exporters, as noticed above, is that since they had already fulfilled the re-
quirement of ‘incremental growth in exports’ which they were required to
fulfil between April 1, 2003 to March 31, 2004, a vested right accrued in
their favour to get the special incentive in terms of the scheme which, of
course, was to be availed from April 1, 2004. The case of the Government,
on the other hand, is that the benefit was to accrue to these exporters only
from April 1, 2004 and before that it was withdrawn and, thus, no vested
right accrued in their favour. It was also argued that in the policy, which
provides special incentives to status holder, the term “incremental growth
in export” was not defined/clarified at the time when the policy was is-
sued. By the impugned notification, the blanks/gaps were filled and the
term incremental growth in export was defined and it was clarified as to
how the incremental growth in export is to be actually worked out. This
was also done before the question of actual working out of the incremental
growth in exports arose and hence, no retrospective effect.
(111) An astute and penetrative examination of the record, with reference
to the results of the investigation, which had prompted the Central Gov-
ernment to issue these Notifications, provides a very tidy answer to the
question posed above is that the so-called targets achieved were only on
paper through fraudulent means and, therefore, it cannot be said that any
vested right accrued in favour of these exporters.
(112) We have referred to such material in detail while upholding the con-
tention of the Union that Notifications were issued in public interest to en-
sure that their misuse is not allowed. To recapitulate, the inquiry conducted
by the Government revealed that there were exports of rough diamonds
even though India is not a rough diamond producing country. These ex-
ports stopped the moment DFCE benefits in respect of rough diamond
were disallowed. It was also found that cut and polished diamonds were
imported, stored inside a bond and re-exported with artificial value addi-
tion. Many of these exporters exported to their own counterparts in Dubai
and Sharjah and when this consignments reached those destinations, they
were declared as scrap to avoid import duty. Following statistics given by
the Government in respect of so-called exports by these exporters makes
out startling revelations :
Growth exceeding 2000% for two petitioners came from 100% ex-
port of gold coins and plain jewellery.

Firm Turnover Turnover % Share of Gold
2002-03 2003-04 Growth coins and Plain
jewellery in
total exports
Rajesh Exports, 112 2372 2017 100
Bangalore
Kanak Exports, 27 1070 3816 100
Mumbai

EXCISE LAW TIMES  1st September 2020  149