2016 (5) TMI 891 - HC - Customs

Imposition of penalty - 100% default in fulfillment of export obligation - export obligation period of the petitioner expired on 21st June, 2001 and the petitioner not submitted export details in the requisite manner supported with the bank certificate/ documents. Held that - nothing on record leads to the conclusion least suggest that export obligation has indeed been fulfilled. Rather the case of the petitioner is of having fulfilled the export obligation even prior to the date of issuance of the Advance Licence. I fail to see how the exports effected prior to the date of Advance Licence, imposing obligation to effect export within 18 months thereof, can be said to be against the Advance Licence. A perusal of the Advance Licence shows that against the column category of licence the words Quantity Based Advance Licence were entered. Customs Notification No.48/99-Customs, dated 29th April, 1999 and 50/2000-Customs and 51/2000-Customs, both dated 27th April, 2000 providing that in order to ensure proper monitoring and utilisation of inputs imported against Advance Licences, a DEEC book is issued along with Advance Licence and at the time of import and export against the Advance Licence entries are made in the DEEC book by Customs to keep record of import/export made against it. Obviously the petitioner, even before the Advance Licence was issued, could not have the DEEC book and it is clear as sky that the exports even if made were not against the Advance Licence and the petitioner is clearly in violation of its obligation thereunder and there is no reason for interference with the orders impugned. Therefore, it is clear that the export effected by the petitioner prior to the date of issuance of Advance Licence cannot be considered in fulfillment of Export Obligation under the Advance Licence. The whole case of the petitioner was premised on said edifice and fails. There is no error in the factual finding of the Statutory Authorities, of the petitioner having not fulfilled the Export Obligation. Resultantly, the impugned demand is justified. - Decided against the petitioner

Summary

Issues Involved:
1. Impugned adjudication order imposing penalty.
2. Dismissal of the appeal by the Additional Director General of Foreign Trade.
3. Rejection of the review application by the Reviewing Authority.
4. Compliance with the export obligation under the Duty Exemption Scheme.
5. Submission of requisite documents to prove export fulfillment.
6. Jurisdiction and scope of judicial review under Article 226 of the Constitution of India.

Detailed Analysis:

1. Impugned Adjudication Order Imposing Penalty:
The adjudication order dated 5th April 2010 by the Deputy Director General of Foreign Trade imposed a penalty of ?3,46,30,500/- on the petitioner and its directors under Section 11(2) read with Section 11(4) of the Foreign Trade (Development and Regulation) (FTDR) Act, 1992. The penalty was imposed because the petitioner failed to submit export details in the requisite manner supported with the bank certificate/documents, treating the petitioner as a 100% defaulter in fulfilling the export obligation.

2. Dismissal of the Appeal by the Additional Director General of Foreign Trade:
The statutory appeal was dismissed on 5th January 2015. The Appellate Authority found that the petitioner did not submit the original DEEC book (Part-II) of exports and other necessary documents, such as the MODVAT non-availment certificate and original BRCs. The authority concluded that the petitioner did not have the requisite documents to prove fulfillment of the export obligation.

3. Rejection of the Review Application by the Reviewing Authority:
The review application was rejected on 21st/24th August 2015. The Reviewing Authority observed that the petitioner failed to submit the necessary documents even during the review process and found no grounds for review.

4. Compliance with the Export Obligation Under the Duty Exemption Scheme:
The petitioner claimed to have fulfilled the export obligation within the stipulated period and submitted three Bank Certificates of Export and Realisation (BCER). However, the petitioner misplaced the original shipping bills and did not get the entries made in the DEEC book. The respondents argued that without the DEEC book and original BRCs, it was not possible to ascertain the fulfillment of the export obligation in terms of quantity and value.

5. Submission of Requisite Documents to Prove Export Fulfillment:
The petitioner contended that the BCERs and copies of shipping bills should suffice to prove export fulfillment. However, the respondents insisted on the submission of the DEEC book and original BRCs as per the Handbook of Procedure (1997-2002). The court noted that the petitioner admitted to not submitting the required documents and did not challenge the rules requiring such submissions.

6. Jurisdiction and Scope of Judicial Review Under Article 226 of the Constitution of India:
The court emphasized that its jurisdiction under Article 226 is limited to ensuring that authorities act in accordance with the law. The court cannot grant relief if the petitioner does not comply with the rules or challenge them. The court upheld the concurrent findings of the Adjudicating Authority, Appellate Authority, and Reviewing Authority that the petitioner failed to prove fulfillment of the export obligation.

Conclusion:
The court dismissed the petition, finding no merit in the arguments presented by the petitioner. The court held that the petitioner did not fulfill the export obligation as per the Advance Licence and the Handbook of Procedure. The court also rejected the contention that the orders against the directors were bad due to the absence of a show cause notice to them. The petition was dismissed with costs of ?25,000/- to the respondents.