We understand that the Customs are not allowing utilisation of Status Holder Incentives Scrips (SHIS) for import of second-hand capital goods on the basis of a letter issued by the Director General of Foreign Trade (DGFT) to a party stating that, as the objectives of the SHIS scheme is upgradation of technology, second-hand capital goods cannot be allowed under SHIS scheme. How can we overcome this objection?
I have seen a copy of the letter you refer to and think it is misconceived, because it is quite possible for someone to upgrade his technology through investment in and procurement of second-hand capital goods. Secondly, it is well-established that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words. The entire matter is governed wholly by the language of the notification. If the tax payer is within the plain terms of the exemption it cannot be denied its benefit by calling in aid any supposed intention of the exempting authority, as held by the Supreme Court in the case of Hemraj Gordhandas v H H Dave, Asst. Collector of Central Excise & Customs [1978 (2) E.L.T. (J350) (S.C.)].
Also, in the case of Atul Commodities Ltd. [2009 (235) ELT 385 (SC)], the Supreme Court held that any restriction to importation of second-hand capital goods could be placed only by an amendment in Policy by the Central Government and not by Policy Circulars issued by DGFT. I believe that you can move the courts on the grounds that no bar on utilisation of SHIS for import of second-hand capital goods has been spelt out in the Foreign Trade Policy (FTP) or the related Customs exemption notification.
We have a 'Zero Duty EPCG Authorisation' issued in 2011-12, bearing endorsement that 50 per cent of export obligation can be fulfilled by exports of a group company as per Para 5.5 (i) of the FTP for that period. Can we fulfil 50 per cent of the export obligation in the first block of four years through the exports of a group company and the remaining export obligation of 50 per cent through our own exports in the next block of fifth and sixth year?
FTP does not specifically deal with such a situation. The normal rule of interpretation is that any ambiguity in a beneficial legislation must be resolved in favour of the citizen.
We refer to your reply that TED refund is not available for supplies against International Competitive Bidding (BS - July 15, 2014.). We have successfully argued cases against DGFT before the Gujarat and Delhi High Courts on connected issues. So, can you advise your readers that they can approach the courts challenging the DGFT Policy Circular no. 16 dated March 15, 2013?
Since you have, despite my request, not shared either the court decisions or the grounds agitated in the cases you claim to have argued successfully, I am unable to add anything more to the reply already given on the issue.
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