Page 151 - ELT_1st September 2020_Vol 373_Part 5

2020 ] KANAK EXPORTS v. UNION OF INDIA 589

rough diamond producing country. These exports stopped the
moment DFCE benefits were disallowed.
Export of such rough diamonds earlier has never been part of
the normal commercial operations and has taken place just to
take advantage of the Scheme.
According to Gems and Jewellery Export Promotion Council,
“India is not a rough exporting country. Rough diamonds
which are unsustainable for cutting in India are re-exported.”
Such exports stopped the moment benefit was explicitly with-
drawn.
(ii) In the present case also the respondent M/s. Adani Ex-
ports Limited had stopped exporting the rough diamonds the mo-
ment the Notification was issued in January, 2004 and according to
Gems and Jewellery Export Promotion Council, “Party has not ex-
ported rough diamonds during January/March, 2004”.
(iii) Cut and polished diamonds were imported, stored inside
a bond and re-exported with artificial value addition. Few large
firms including the petitioners exported these products to buyers
directly related to them.
(iv) According to reliable information the same sets of dia-
monds were rotating and these never entered the Indian domestic
territory or to the end consumers abroad. The value of such exports
in the past two years may exceed Rs. 15,000 crores. Government has
detailed report of the modus operandi of the firms involved.
(v) Most notorious misuse of the Scheme was carried out by
few firms who exported Gold medallion and studded jewellery.
Key firms included M/s. Kanak Exports, M/s. Rajesh Exports Ltd.
and M/s. Adani Exports Ltd.
(vi) Many of these exporters exported to their own counter-
parts in Dubai and Sharjah. Since the jewellery attracted 5% import
duty at Dubai, the consignments which were declared as jewellery
in India were declared as scrap in Dubai to avoid the import duty.
(vii) As it was difficult for them to achieve the value addition
prescribed by the Policy through craftsmanship, they added extra
gold to get the value addition. However, in this process strangely
enough per unit price of the gold exported was less than per unit
price of gold imported.
(viii) Few exporters including petitioners have purchased ex-
ports of other firms to inflate their turnover. Contracts have been
signed between the petitioners and other exporters that petitioner
will provide marketing and other services and act as third party ex-
porter. According to reports status holders were purchasing exports
made by other parties at a premium with a view to show incremen-
tal growth of 25% or more in exports without having actually
achieved such growth.
(114) In such a scenario, a sagacious approach with practical sense leads us
to conclude that these writ petitioners/exporters had actually achieved the
targets set down in the original Scheme and thereby acquired any “vested
right”. It was pernicious and blatant misuse of the provisions of the Scheme

EXCISE LAW TIMES  1st September 2020  151