File No.9/235/AM-15/ECA Date: ORDER IN ORIGINAL

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1 Government of India MINISTRY OF COMMERCE & INDUSTRY OFFICE OF THE JOINT DIRECTOR GENERAL OF FOREIGN TRADE 6 TH FLOOR, RESHAM BHAWAN, LAL DARWAJA, SURAT surat-dgft@nic.in File No.9/235/AM-15/ECA Date: ORDER IN ORIGINAL Any person/party aggrieved by this order, may under Section 15 of the Foreign Trade/(Development & Regulation) Act, 1992, as amended, file an appeal against the same to the appropriate authority viz. the Addl. Director General of Foreign Trade, office of the Additional DGFT, Nishta Bhavan, 48, New Marine Lines, Mumbai Appeal shall be filed within 45 days from the date of receipt of this order and shall bear a Court fee stamp as per Court Stamp fee Act. Appeal must be accompanied by a copy of this order in original duly affixed court fee stamp thereon with all documents of evidence in the form of Annexure to the appeal relied upon in support of the appeal under intimation to this office. 1 Any person/party desirous of filing an appeal against this order shall deposit the amount along with the appeal to the Appellate Authority failing which the appeal is liable to be rejected for non-compliance of the provisions of Section 15 of the Foreign Trade (Development & Regulation) Act, 1992 as amended. 2 M/s. Suryanarayan Synthetics Pvt. Ltd., 5101, B Wing, 3 rd Floor, Raghukul Textile Market, Ring Road, Surat was issued following two Duty Credit Scrips under Focus Product Scheme of Chapter-3 of Foreign Trade Policy from the office of Joint Director General of Foreign Trade, Surat, in respect of export products claimed to be Technical Textile Products. S.No. FPS Number FPS date File Number Duty Credit value in (Rs.) /02/ /21/087/00543/AM11 14,98, /04/ /21/087/00024/AM ,32,161 3 A Show Cause Notice of even number dated was issued by this office to M/s. Suryanarayan Synthetics Pvt. Ltd., 5101, B Wing, 3 rd Floor, Raghukul Textile Market, Ring Road, Surat having IEC No , under Section 10 of the Foreign Trade (Development & Regulations) Act, 1992 as amended. Vide the said notice, the noticee firm was asked to show cause as to why the impugned Duty Credit Scrips issued under Focus Product Scheme mentioned as Para 2 above should not be cancelled ab-initio as per Section 9 and 11 of FT (D&R) Act. 1992, as amended read with Rule 10 of Foreign Trade (Regulations) Rules, By

2 this notice, the noticee firm was granted the opportunity of Personal Hearing on , before the undersigned. 4 Whereas the noticee firm through their authorised representative Shri Akhileshwar Sharma vide his letter dated requested for extension of time by three weeks. Hence they were granted another personal hearing on The cause of the notice arose as it was brought to the notice of this office that M/s. Suryanarayan Synthetics Pvt. Ltd., 5101, B Wing, 3 rd Floor, Raghukul Textile Market, Ring Road, Surat had revealed voluntarily to DRI, Ahmedabad that they had exported textile fabrics which were other than Technical Textiles and thus ineligible for benefits under Focus Product Scheme. It was therefore, found prima facie that the noticee firm has availed benefits under Focus Product Scheme by mis-declaring the export products as Technical Textiles whereas the goods actually exported were not classifiable as Technical Textiles. 6 The noticee firm vide letter dt through their representative Shri Akhileshwar Sharma submitted a written reply wherein he had denied all the allegations levelled in the Show Cause Notice. He prayed for quashing of Show Cause Notice by making following submissions:- (i) The FPS scrips were issued by this office after examining the applications as per Foreign Trade Policy and the power to review the cases already issued is vested in the person of Director General of Foreign Trade who can call for records of any of case pending with or decided by an officer subordinate to him and pass such orders as he may deem fit. (ii) The Show cause notice is time barred since it is issued after a lapse of more than three years from the date of issue of FPS scrips. The validity of the said FPS scrips has expired more than a year prior to the SCN. There is no provision to cancel a licence where the validity period has expired and the licence is no more a licence after the expiry of its validity since it turns into a mere piece of paper which can not be lawfully used for the purpose for which it was issued by the licensing authority. iii The FPS scrips are freely transferable and hence all the FPS scrips were already transferred before the date of issue of SCN and at present they are not the holder of the FPS scrips. The persons affected by the proposed cancellation are the transferees who are the holders of the FPS scrips and so the SCN for cancellation has to be given to them. iv The SCN proposes to recover the full amount of duty credit availed against the FPS scrips and they have not availed the benefit of duty contained in the said licences. The benefit can be availed only when the FPS licences are presented to customs at the time of imports and they have not presented these licences to customs for availing duty benefit. v The licensing authority is empowered to cancel the licence and they do not have statutory power to recover the customs duty for and on behalf of the customs. vi The standard/ prescribed declaration and undertaking have been singed in bonafied belief of being true and in accordance with the interpretation of the Foreign Trade Policy, Hand Book of Procedures and Appendix in so far as it relates to FTP scheme under ITC(HS) code 5407 and as per their

3 vii understanding and explanation of DGFT in respect of exports made prior to All application has been made in the prescribed form alongwith all documents as prescribed namely export promotion copy of shipping bill dutry certified by Csutoms showing the description of export products at eight digit level of ITC (HS) code and corresponding bank certificate of exports. The FPS scips were issued based on document and not on declaration. The ANF- 3C is to be filed online wherein on selecting the ITC (HS) code 5407, the DGFT software automatically gives the default description Technical Textileswowen Fabrics of Synthetic Filament Yarn. The licensing authority has to examine the specific description of export products as given on the custom certified shipping bill in reference to the default generic description as appearing in ANF 3C to form an opinion that the description on shipping bill is covered under the generic description and therefore eligible for FPS. The items are classified under different level of specification from four digitr ITC(HS) code which represents the last level of classification being most specific description. The sub-heading technical textiles in Table-4 contain 17 products eligible for FPS. These 17 items are classified at various levels, some with a broad category at four digit level of ITC(HS) code to some at most specific description at eight digit level of ITC(HS) code. The FPS scrips are against product which is listed at Sr.No.33 of said Table where the product is classified at four digit level of ITC(HS) code. It is the discretion of DGFT to notify items at broad category of four digit level or the most specific category of eight digit level of ITC(HS) code. The licensing authority is not at liberty to read a four digit broad classification to mean a more specific and restricted classification at six or eight digit level of ITC(HS) code by excluding certain items which are otherwise covered at four digit ITC(HS) code. The intention of DGFT was amply clear that all products notified at four digit level of ITC (HS) code would be covered for the FPS benefit. The DGFT decided to restrict the number of products for FPS benefits by defining the product at eight digit level of ITC (HS) code from four digit level of 5407 for exports made w.e.f DGFT in the Policy Circular No. 42 (RE-2010)/ dated 21 st October 2011 specifically clarified that the eight digit level of ITC (HS) product would be applicable for exports made w.e.f It was further clarified that recovery, if any, is to be made from the exporters who have obtained FPS licence against export made w.e.f but not conforming to the eight digit level of ITC (HS) code product. The show cause notice is issued at the behest of some of the officers of customs working in the western zone who based on their interpretation believe that the licensing authority at Jt.DGFT, Surat have erred in the interpretation of the Foreign Trade Policy and Hand book of procedures by grant FPS licences. JNPT, Nhava Sheva forcibly collected an amount equivalent to the duty credit of the same FPS licences which are part of the show cause notice. The customs coerced to agree their illegal demand to pay to the customs the amount equivalent to FPS licences which they paid under protest. The customs refused to refund the said amount despite numerous representations and only when a petition in the Hon ble Bombay High Court vide Writ Petition No.2089 of 2013 was filed the customs decided to examine the representation for refund of duty credit amount. The writ petition was withdrawn after the customs ordered to refund the duty credit amount. Hence no recovery can be made in view of the above said reasons.

4 FINDINGS I have examined the arguments of the firm s representation and the reply submitted in response to SCN of this office and observed that the policy for grant of FPS benefits under Sr.No.33 of Table-4 of Appendix-37D was exclusively for the Technical Textile Products and any clarification whether it was through policy circular or otherwise was meant for the Technical Textile Products only. But any deviation or departure from the description of the words Technical Textile Products would mean the misinterpretation of the policy. The circular No. 42 dt intends to speak about the Technical Textile Products only and we should not allow the party to read the description as per their convenience. 7 Documents submitted by M/s. Suryanarayan Synthetics Pvt. Ltd., 5101, B Wing, 3 rd Floor, Raghukul Textile Market, Ring Road, Surat for issue of scrips under Focus Product Scheme in the files referred in Para 2 above have been examined and seen that description of export goods indicated in all the shipping bills is Polyster Fabrics-dyed and/or printed fabrics made out of 100% polyster filament yarn with or without embroidery and with or without metalised yarn. The firm has, however, in the application for duty credit scrips under FPS scheme mis-declared the description of the export goods as Technical Textiles and misled this office to release the ineligible benefits under FPS scheme. 8 The argument of noticee that all products falling under CTH 5407 were classifiable as Technical Textiles is fallacious and misleading. Many items under CTH 5407 such as polyester sarees, lungis and dhotis, are by no stretch of imagination classifiable as Technical Textiles. Technical Textiles are in fact textile products manufactured for non-aesthetic purpose where functionality is the primary criterion. Technical Textiles, thus include textiles for automotive applications, medical textiles, geotextiles, agrotextiles and protective cloting like heat and radiation protection for fire fighter clothing, molten metal protection for welders, stab protection and bulletproof vests and spacesuits etc. Products exported in these cases are dyed and/or printed fabric made from 100% polyester filament yarn with or without embroidery and with or without metallised yarn/filament. These products in no way meet the criterion of Technical Textiles as illustrated above. 9 The firm s contention that the licensing authority which has issued the subject FPS scrips cannot review the cases decided by it is not acceptable. Their attention is invited to para 9.13 of Hand Book of Procedures Vol-I The said para reads as :- DGFT may, on his own or ortherwise, call for records of any case pending with or decided by an officer subordinate to him or an officer of any EPC/FIEO including a Group/ Committee of officers nominated, appointed or authorized by him and pass such orders as he may deem fit.

5 DGFT, New Delhi has directed this office in a communication to this office to review all the cases including this case for taking action for recovering the amount of duty appropriately. 10 Documents submitted by M/s. Suryanarayan Synthetics Pvt. Ltd., 5101, B Wing, 3 rd Floor, Raghukul Textile Market, Ring Road, Surat for issue of scrips under Focus Product Scheme in the files referred in Para 3 above clearly indicate the description of export goods in the shipping bills being Polyester Fabrics-dyed and/or printed fabrics made out of 100% polyester filament yarn with or without embroidery and with or without metalised yarn. As stated in the foregoing paragraph, this item does not qualify for being classified as Technical Textiles. The noticee has thus misled this office to get the ineligible benefit under FPS issued. 11 Since the firm has failed to justify substantially to prove that the items of exports are Technical textile Products and their attributes, I do not agree with the contention of the firm and order that an amount of Rs. 36,31,157/- total duty credit amount availed by them by way of FPS scrips along with interest of Rs. 18,11,707/- against all the files be recovered from them. Their request for withdrawing SCN cannot be agreed to. 12 In view of the foregoing, I hold the firm guilty in terms of provisions of Section 11(2), 11(3) of FT (DR) Act, 1992 as amended and Rule 10(b) of Foreign Trade (Regulation) Rules 1993 as amended, and accordingly in exercise of the powers vested in me under section 13 of the Foreign Trade (D & R) Act, 1992, do hereby pass the following order: O R D E R 13. i) Both the duty credit scrips mentioned in Para 2 above are cancelled ab initio in terms of Section 9(4) of FT (DR) Act, 1992, as amended. ii) The entire amount of duty credit granted against these scrips i.e. Rs.36,31,157/- ( Rupees Thirty six lakhs thirtyone thousand one hundred and fifty seven ) be recovered forthwith. iii) An interest amount of Rs. 18,11,707 ( Rupees eighteen lakhs eleven thousand seven hundred and seven ) be recovered forthwith. 14 This order is issued without prejudice to any other action that may be taken against the noticee under any other Law/Act/Rule for the time being in force. (Beg Raj Singh) Jt. Director General of Foreign Trade To, 1 M/s.Suryanarayan Synthetics Pvt. Ltd., 5101, B Wing, 3 rd Floor, Raghukul Textile Market, Ring Road, Surat

6 2 Shri Jugal Biyani, 803 Brijvatika Appts, B/h Gokul Row House, Umra North, Choryasi, Surat Smt. Monika Biyani, 803 Brijvatika Appts, B/h Gokul Row House, Umra North, Choryasi, Surat

File No.9/229/AM-14/ECA Date: ORDER IN ORIGINAL

File No.9/229/AM-14/ECA Date: ORDER IN ORIGINAL Government of India MINISTRY OF COMMERCE & INDUSTRY OFFICE OF THE JOINT DIRECTOR GENERAL OF FOREIGN TRADE 6 TH FLOOR, RESHAM BHAWAN, LAL DARWAJA, SURAT-3953 E-mail : surat-dgft@nic.in File No.9/229/AM-4/ECA