2016 (9) TMI 1350 - HC - Customs

Export of black pepper oleoresins and black pepper oil manufactured out of the imported pepper - As per the conditions stipulated under the Authorization, the petitioner was under obligation to export black pepper oleoresins and black pepper oil manufactured out of the imported pepper within a period of four months from the date of such import - the petitioner sought for relaxation of time for export - whether the Committee has considered the claim for relaxation in a proper perspective or not? - Held that - It is apparent from the facts on record that when the Committee had with due application of mind extended the period by four months for complying with the Export Obligation, I do not think that this Court should sit in judgment over the said opinion expressed by the Committee unless there is any patent illegality or perversity in the said direction - The Committee was sure about two facts. One is that there is a specific reason for limiting the period to comply with the Export Obligation and the time can be extended if there is genuine hardship being caused. Merely for the reason that the buyer had delayed the shipment cannot be a genuine reason at all - It is not in dispute that if there is non-compliance of Export Obligation, the DGFT has the power to place the petitioner and its Directors under th e DEL order. Since the said orders had been passed during the pendency of WP (C) Nos. 5752/2016 and 5728/2016, I am of the view that an opportunity should be granted to the petitioner to show cause to avoid the DEL order dated 26-5-2016. The petitioner shall file objection to the show cause notice issued against them within 4 weeks and the matter shall be heard afresh by the competent authority after giving an opportunity to the petitioner - matter on remand.

Summary

Issues:
1. Compliance with Export Obligation under Authorizations
2. Petitioner's request for relaxation by Policy Relaxation Committee
3. Placement of petitioner and directors under Denied Entities List
4. Power of Policy Relaxation Committee in granting relaxation
5. Judicial review of Committee's decisions

Compliance with Export Obligation under Authorizations:
The petitioner, a company dealing with spices, imported black pepper under Authorizations with an obligation to export related products within a specified time frame. While the petitioner exported black pepper oil within the stipulated time, exporting black pepper oleoresins faced delays due to buyer-related issues. The Policy Relaxation Committee (PRC) initially rejected the petitioner's application for regularization, which was later reconsidered. The petitioner contended that they complied with the Export Obligation, albeit not within the specified time, as confirmed by the Spices Board.

Petitioner's request for relaxation by Policy Relaxation Committee:
The petitioner approached the PRC seeking relaxation for delayed exports, which was initially rejected but later extended by four months under certain conditions. Despite a typing error in the final order, the Committee granted an extension for fulfilling the Export Obligation. The petitioner challenged the Committee's decisions, arguing that they had not engaged in any improper trading activities and had manufactured goods for export purposes.

Placement of petitioner and directors under Denied Entities List:
During the proceedings, the Directorate General of Foreign Trade (DGFT) placed the petitioner and its Directors under the Denied Entities List (DEL) for non-compliance with Export Obligations, leading to a halt in granting further Authorizations. The petitioner attributed the DEL order to non-payment of customs duty for the Authorizations.

Power of Policy Relaxation Committee in granting relaxation:
The petitioner contended that the PRC had the authority to provide relief to exporters facing genuine hardships, emphasizing that they had utilized imported materials for manufacturing export goods. The Committee's role was to prevent diversion of imported goods to the local market and ensure timely exports, a condition crucial for granting Authorizations.

Judicial review of Committee's decisions:
The High Court acknowledged the statutory Export Obligation and the petitioner's delays in meeting them. While the Committee extended the Export Obligation period by four months considering genuine hardship, the Court refrained from interfering unless there was a clear legal error or irrationality in the Committee's decisions. The Court emphasized the importance of honoring Export Obligations and granted the petitioner an opportunity to contest the DEL order by showing cause.

In conclusion, the Court dismissed some writ petitions while allowing others, setting aside the DEL orders and providing the petitioner with a chance to defend against them. The detailed analysis of the issues highlighted the significance of complying with Export Obligations, the discretion of the Policy Relaxation Committee, and the limited scope of judicial review in such matters.