Horizon Aerospace (INDIA) PVT LTD vs. Union Of INDIA & Ors.

Facts

The Petitioner, Horizon Aerospace (India) Pvt Ltd, a company engaged in aircraft maintenance and repair, supplied goods to M/s. Dedienne Aerospace, France, based on a purchase order dated June 7, 2017, for EUR 2,655,372.20. The goods were transferred to M/s. Siddhartha Logistics Co. Pvt. Ltd. for export. A shipping bill was raised on July 19, 2018, listing the Petitioner as the exporter and Dedienne Aerospace as the client, with Siddhartha Logistics accepting the consignment on behalf of the client. The Petitioner received foreign remittance for the total consideration, confirmed by bank certificates. The Petitioner claimed entitlement to Duty Credit Scrips (MEIS Scrips) under the Foreign Trade Policy (2015-2020). The MEIS Scrip was initially granted on June 11, 2021, but subsequently cancelled by the Assistant Director General of Foreign Trade (CLA) via a show cause notice dated July 14, 2021, and an order dated September 17, 2021. An appeal to the Additional Director General of Foreign Trade (CLA) was dismissed by an order dated January 31, 2022. The Petitioner challenged these orders before the High Court.

Held

The Court held that the Petitioner was eligible for MEIS Scrips. The Court found that M/s. Siddhartha Logistics was merely a FTWZ logistics company in Andhra Pradesh, providing logistical support for the shipment to the French customer, Dedienne Aerospace. It was not involved in the manufacture or the entire sale transaction. The Court noted that Siddhartha Logistics had issued a no-objection for the Petitioner to claim drawback benefits. The Court reasoned that the description in the shipping bills, whether as exporter or client, did not alter the actual fact of who exported the goods and received consideration. The Court found that the Petitioner's case was clearly covered by the FTP, and none of the exclusionary clauses were applicable. The Court relied on the judgments in Jindal Drugs (supra) and M/s Ashwini Ashish Dighe (supra), finding them applicable. The Court concluded that the cancellation of MEIS Scrips was erroneous and that the Petitioner was rightly issued the scrips initially. The impugned orders were set aside, and the Respondent was directed to revalidate the MEIS scrips for the Petitioner to encash them.

Key Issues

1. Whether the Petitioner is eligible for MEIS Scrips under the Foreign Trade Policy (FTP) 2015-2020, specifically in light of clauses 3.02, 3.03, and 3.06, given that the goods were handled by a logistics company (M/s. Siddhartha Logistics) within India before export to France? (Question of law and mixed fact and law, turning on FTP clauses 3.02, 3.03, 3.06(i), 3.06(vii)). Petitioner's arguments: The Petitioner contended that the transaction was a pure export to France and not an export within India from a Domestic Traffic Area (DTA) unit to a Special Economic Zone (SEZ)/Free Trade Warehouse Zone (FTWZ) unit. They argued that M/s. Siddhartha Logistics was merely a logistics provider and not involved in the sale transaction, and that exclusionary clauses 3.06(i) and (vii) of the FTP do not apply. They relied on the judgments in Jindal Drugs Pvt. Ltd. v. Union of India & Ors. (Madras High Court) and M/s Ashwini Ashish Dighe v. Union of India & Ors. (Bombay High Court). Respondent's arguments: The Respondent contended that since the export appeared to be between two entities in India, the Petitioner was not entitled to MEIS Scrips.