2014 (9) TMI 1134 - HC - Customs

Penalty - non-performance/non-compliance of Past Performance Entitlement - Held that - Though the appellant even before us has not furnished the copy of the said reply dated 15th September, 2005 but the counsel for the appellant has in this regard drawn our attention to the order dated 19th October, 2006 of the First Appellate Committee where the plea of the appellant of the short shipment being due to Embargo Cat. 338 is noticed. We may however note that the said contention was not accepted by the First Appellate Committee. We may further notice that even the Second Appellate Committee held that there is no justification in the said contention of the appellant for short shipment, because there was a facility for surrendering balance unutilized quota for the exporter in case of embargo and which was not availed of by the appellant - to enable the appellant to succeed on the said plea, it was incumbent upon the appellant to establish that the shortfall was only in quota items of US 338 and not in other quota of different countries code but which the appellant had failed to do and thus the said plea could not be believed. If the non-fulfilment of the export quota allocated to the appellant was on account of any ban or embargo put on exports, the appellant ought to have surrendered the unfulfilled quota. The appellant admittedly did not do so and now cannot be permitted to wriggle out of his liability for penalty on the said ground. Appeal dismissed with certain cost to be borne by appellant - decided against appellant.

Summary

Issues:
Challenge to the order imposing penalty for non-performance of Past Performance Entitlement quota allocated by Apparel Export Promotion Council in 2004.

Detailed Analysis:

1. The appeal before the Delhi High Court challenged the order imposing a penalty of Rs. 11,14,424 on the appellant for non-performance of the Past Performance Entitlement quota allocated for the year 2004 by the Apparel Export Promotion Council (AEPC). The appeal was filed after the dismissal of the writ petition by the Single Judge of the Court, which was preferred against the orders of the Second Appellate Committee and the First Appellate Committee of the Government of India.

2. The Court noted that the appellant had failed to appear during the proceedings, leading to the dismissal of the appeal in default. However, upon application by the appellant, the appeal was restored. Subsequently, the appellant sought permission to file an additional document, being a statement of objections filed by the AEPC in a related case before the High Court of Karnataka.

3. The appellant's argument primarily relied on the additional document, claiming that the AEPC had admitted to stopping exports due to increased demand in 2004, which impacted the appellant's ability to fulfill the export quota. The appellant contended that the penalty imposed should be revoked based on this ground.

4. The Court examined the appellant's plea and found that the appellant had not produced any evidence to support the claim that the unfulfilled export allocation was solely for exports to the USA. The Court highlighted that the appellant failed to establish that the shortfall was limited to a specific category of exports affected by the embargo, as claimed.

5. The Court emphasized that the appellant's failure to surrender the unfulfilled quota, despite any alleged embargo, was a crucial factor. Referring to legal precedents, the Court reiterated the obligation of exporters to fulfill export obligations or surrender entitlements for reallocation to other exporters.

6. Ultimately, the Court upheld the penalty imposed on the appellant, dismissing the appeal and ordering the appellant to pay costs of Rs. 10,000 to the AEPC within six weeks. The Court found no merit in the appellant's arguments and affirmed the decisions of the lower authorities and the Single Judge regarding the penalty for non-performance of the export quota.

7. The Court's decision was based on the lack of evidence supporting the appellant's claim of embargo-related non-performance, the failure to surrender unfulfilled quotas, and the legal obligations of exporters to fulfill export quotas or surrender entitlements for reallocation.

8. The judgment highlighted the importance of factual findings by statutory authorities and emphasized the need for exporters to comply with export obligations or face penalties for non-performance, irrespective of external factors such as embargoes.