WP No. 503 of 2011
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
ORIGINAL SIDE
LGW Limited
Versus
Union of India & Others
Before:
The Hon'ble Justice Indira Banerjee
Date: 18th May 2011
Appearance:
Mr. S. N. Mookherjee, Sr. Advocate
Mr. Pradip Ghosh, Sr. Advocate
Mr. Arunava Ghosh, Advocate
appear for the petitioner
Mr. P. K. Tarafdar, Advocate
Mr. I. Dasgupta, Advocate
appear for the respondents
In exercise of power under Section 5 of the Foreign Trade
Development and Regulation Act, 1992 (hereinafter referred to as
“Foreign Trade Act“) the Central Government has formulated
Foreign Trade Policy for the years 2009-2014. With a view to
facilitate and encourage imports and exports, the foreign trade
policy contains duty exemption and duty remission schemes, one of
which is the Duty Entitlement Pass Books Scheme (DEPB Scheme).
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Under the DEPB Scheme, customs duty paid on imported
inputs used in a product which is later exported, is given duty
credit upon export. Imported inputs on cotton yarn was earlier
entitled to the benefit of the DEPB Scheme. By a notification being
Public Notice No. 57/2009-2014 New Delhi dated 21st April 2010
issued by the Directorate General of Foreign Trade, the schedule of
DEPB rates has been amended and the benefit of the DEPB
Scheme withdrawn in respect of cotton yarn.
A further Public Notice No. 45(RE-2010)-2009-2014 dated
21st March 2011 has been issued which inter alia provides that
export of cotton shall not be entitled for DEPB benefit even under
DEPB entry serial 22c and 22d of the product group “misc.” with
respect to shipments made on or after 21st April 2010.
Prima facie, the DEPB benefit has been taken away with
retrospective effect by notification and/or government order, which
is not permissible in law. The petitioner and other similar
circumstanced exporters and importers have already availed of the
DEPB benefit. Paragraph 3 of the notification dated 31st March
2011 is set out hereinbelow for convenience:
“Benefit under DEPB scheme encourages export
of concerned commodity. Hence when the intention of
3the Government is not to encourage exports of specific
commodity, DEPB benefit on such a commodity would
be contradictory to its intention. Accordingly, this Public
Notice clarifies that DEPB benefit on export of cotton
shall not be available. DEPB benefit on export of cotton
yarn was withdrawn with effect from 21.4.2010,
therefore, DEPB benefit on cotton (the basic raw
material of cotton yarn) has been disallowed for
exports made from 21.4.2010 onwards.”
Prima facie the Directorate General of Foreign Trade has
proceeded on the basis that withdrawal of DEPB benefit on cotton
is consequential to the withdrawal of DEPB benefit on export of
cotton yarn with effect from 21st April 2010. As indicated in
notification itself cotton is the basic raw material for cotton yarn.
Cotton and cotton yarn are not the same.
Prima facie benefits already availed by the petitioner under
the DEPB scheme cannot be withdrawn with retrospective effect.
There will, therefore, be an interim order restraining the
respondents from giving any effect and/or further effect to the
impugned communication dated 25th April 2011. The respondents
are restrained from giving further effect to the impugned Public
Notice dated 31st March 2011 in so far as the petitioner is
concerned. It is made clear that this interim order will not prevent
the Directorate General of Foreign Trade from issuing a fresh
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notification withdrawing the DEPB benefits in respect of cotton or
any other item, in accordance with law, with prospective effect.
Affidavit-in-opposition be filed within three weeks after
ensuing summer vacation; reply thereto, if any, within a week
thereafter. The matter will appear for hearing on 7th July 2011. The
interim order shall continue till 31st July 2011 or until further
order whichever is earlier.
All parties are to act on a signed photocopy of this order on
the usual undertakings.
(Indira Banerjee, J.)
R. Bose
AR(CR)