Lok-Beta Pharmaceutical India Pvt. Ltd. v. Union Of India And ORS.
$~50 *
IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 3202/2018 LOK-BETA PHARMACEUTICAL INDIA PVT. LTD.
..... Petitioner Through:
Ms Anjali J. Manish and Ms Nidhi Saini, Advocates.
versus UNION OF INDIA AND ORS.
..... Respondents Through:
Mr Kirtiman Singh, CGSC with Mr Prateek Dhanda, Mr Waize Ali Noor and Ms Shruti Dutt, Advocates.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
O R D E R
% 23.05.2019 1.
The petitioner has filed the present petition impugning the decision of respondent no.3 (Policy Relaxation Committee - PRC), taken in its meeting dated 08.08.2017 in Case No.2, whereby the petitioner's request to review an order dated 15.10.2013 was rejected.
2.
The grievance of the petitioner, essentially, relates to the nonextension of the export obligation period beyond a period of six months in respect of Advance Authorization bearing no. 0310525292. 3.
The petitioner is a merchant exporter, inter alia, engaged in purchase and sale of pharmaceutical products. The petitioner states that it had entered into an agreement with a Russian Company for supply of a drug named Amikacin, which is used to prevent/treat drug resistant Tuberclosis. It is
stated that the said Russian Company intended to supply the said drugs to the Russian Government pursuant to a tender invited by the Russian Government.
4.
The petitioner applied for an Advance Authorization for importing the bulk drugs for the purposes of supplying the same to the Russian Company after repackaging the drug for retail trade and exporting the same. Pursuant to the petitioner's application, it was issued an Advance Authorisation No. 0310525292 dated 22.06.2009. In terms of the said Advance Authorization, the petitioner was entitled to import the specified inputs for exporting the drug, "Amikacin Sulphate USP". The petitioner claims that it utilised the said Advance Authorization for importing 176.13 kgs of bulk Amikacin Sulphate USP under the bill of entry bearing no.145797 dated 09.07.2009. 5.
According to the petitioner, it exported 180 kgs of "Amikacin Sulphate Injection USP 250mg/4 ml" at FOB value of ₹5040139.19/- against the Advance Authorization in question. The said exports were made in five consignments. The first consignment was sent on 27.07.2007; second consignment was exported on 06.02.2010; third consignment was exported on 23.04.2010; fourth consignment was sent on 13.07.2010; and the last consignment was exported on 06.08.2010. It is stated that the petitioner has also realised the payment for the said consignments. 6.
On 08.08.2011, the petitioner sent a letter requesting for issuance of Export Obligation Discharge Certificate (EODC), as it had already fulfilled its export obligations related to the Advance Authorisation in question. In response to the aforesaid letter, the Foreign Trade Development Officer sent a letter dated 26.09.2011 to the petitioner pointing out certain deficiencies
including that all the consignments exported by the petitioner except the consignment dated 27.07.2009, were beyond the export obligation period. 7.
Thereafter, the petitioner filed another representation dated 22.01.2013 to the Additional DGFT dealing with the deficiencies pointed out by the Foreign Trade Development Officer and once again requesting for issuance of EODC.
8.
On 20.06.2013, a deficiency letter was issued by the Regional Office of Foreign Trade, Mumbai stating that the export - consignments dated 13.07.2010 and 06.08.2010 - were outside the export obligation period. Thereafter, the petitioner also sent a letter to the local Regional Office for relaxation of export obligation period. The said Authority directed the petitioner to approach the PRC for regularising its case. 9.
Accordingly, the petitioner filed an application dated 07.09.2013 stating that the last two consignments - fourth consignment dated 13.07.2010 and the fifth consignment dated 06.08.2010 - exported by the petitioner were beyond the export obligation period. In the circumstances, the petitioner sought an extension of the export obligation period. 10.
The petitioner's request was considered by the PRC in a meeting held on 15.10.2013 and it extended the export obligation period for a further period of six months.
Accordingly, the export obligation period was extended upto 31.07.2011. The said extension was subject to payment of composition fee at the rate of 0.5% of the FOB value of exports made beyond the initial export obligation period and minimum value addition of 15%. Further, the condition for providing re-export/Destruction Certificate for exports made beyond the export obligation period, as required under
Policy Circular no.18 dated 30.10.2007, was waived. 11.
Since, the last consignment was exported on 06.08.2010 - which was six days beyond the extended export obligation period - the petitioner filed an application dated 21.05.2015 requesting the PRC to review its decision and to extend the export obligation period for a further period of six days. 12.
In the meantime, the petitioner also paid the composition fee as stipulated by the PRC, at the rate of 0.5% of the FOB value of the exports made beyond the export obligation period. Thereafter, the petitioner filed an application dated 09.01.2017 requesting the PRC to review its decision dated 15.10.2013 and to extend the export obligation period by six days. 13.
The petitioner's application was taken up by the PRC at its meeting held on 08.08.2017 and the same was rejected. The PRC held that it had already allowed an extension of six months and in this view, it decided not to accede to the petitioner's request and maintained its earlier decision. The said decision of the PRC is impugned in the present petition. 14.
At the outset, it is relevant to note that the petitioner had imported the drugs in question from an unregistered source and therefore, in terms of the relevant policy circulars, the petitioner had no option but to either use the said products as an input and exporting the resultant product or to reexport/destroy the imported product. Under no circumstances, the drugs imported by the petitioner could be used or sold to consumers in India. There is no dispute that the petitioner had fulfilled its export obligations and, therefore, the question of calling upon the petitioner to re-export or destroy the products imported under the Advance Authorization in question, does not arise.
In this view, the PRC has rightly acceded to the petitioner's
request for waiver of such a condition.
15.
The only other issue to be considered by the PRC was regarding extension of the export obligation period. As noticed above, the petitioner had fulfilled its export obligations by exporting five consignments. The first three consignments were, admittedly, exported within the export obligation period. The relaxation sought by the petitioner was in context of the last two consignments, which were exported on 13.07.2010 and 06.08.2010, respectively. Admittedly, the fourth consignment was also exported subsequently within the export obligation period, as extended by the PRC. However, the fifth consignment was exported six days beyond the extended export obligation period.
16.
At this stage, it is also relevant to examine the powers of the PRC for granting exemptions from any procedure or policy. Paragraph 2.5 of the Foreign Trade Policy 2009-2014 (FTP 2009-2014) expressly empowers the Director general of Foreign Trade (DGFT) to grant exemptions from policy/procedure. The said paragraph is relevant and is set out below:- "2.5 Exemption from Policy/Procedure DGFT may pass such orders or grant such relaxation or relief, as he may deem fit and proper, on grounds of genuine hardships and adverse impact on trade. DGFT may, in public interest, exempt any person or class or category of persons from any provision of FTP or any procedure and may, while granting such exemption, impose such conditions as he may deem fit.
Such request may be considered only after consulting committees as under:
Sl.No.
Description Committee (i) Fixation/modification of Norms
product norms under all Schemes Committee (ii) Nexus with Capital Goods (CG) and benefits under EPCG Schemes EPCG Committee (iii) All other issues Policy Relaxation Committee (PRC) 17.
It is clear from the above that the PRC could recommend grant of relaxation on the grounds of genuine hardship. In the present case, the last tranche of the exports was made just six days beyond the extended period of the export obligation period.
18.
At this stage, Mr Kirtiman Singh, learned counsel appearing for the DGFT states, on instructions, that given the mitigating circumstances of this case and considering that the balance part of the export obligation was discharged just three days beyond the extended period of the export obligation period, the DGFT/PRC would reconsider its decision. He requests that the matter be remanded to the DGFT/PRC for reconsideration. 19.
In view of the above, the impugned order dated 08.08.2017 rendered in Case No.2 is set aside and the DGFT/PRC is directed to reconsider the petitioner's request for extension of the export obligation period. 20.
The petition is disposed of in the aforesaid terms. VIBHU BAKHRU, J MAY 23, 2019/MK