2016 (12) TMI 829 - HC - Customs

Mis-declaration of value - non-fulfilment of stipulated export obligation specified for the first block - cancellation of EPCG authorisation - jurisdiction of Director General of Foreign Trade - licence issued at behest of Director General, Directorate of Revenue Intelligence - Held that - For the present and when there is no challenge to the statutory power, then, merely because the impugned show cause notice refers to the communication from the Directorate of Revenue Intelligence, it will not be possible for us to agree, on the strength of this alone, with Mr. Shroff that it is the Directorate of Revenue Intelligence which is dictating to the Director General of Foreign Trade as to how the powers under the FTDR Act should be exercised. We do not think that on the present material it can be concluded that the show cause notice is issued only at the behest of the Directorate of Revenue Intelligence. It would not be proper to record any conclusive findings. EPCG licence - Held that - We are also not impressed at this stage by the argument that the EPCG licences and their terms and conditions are not violated and still a show cause notice is issued only to please the Directorate of Revenue Intelligence. If indeed the EPCG terms and conditions are not violated, then, it will be open for the petitioner to produce such material as is permissible in law. Merely because the show cause notice is issued does not mean that it would result in imposition of penalty. Once all the opportunities are available, then, we do not think that we should interfere with the show cause notice. Petition dismissed - decided against petitioner.

Summary

Issues:
Challenge to show cause notice under the Foreign Trade (Development and Regulation) Act, 1992.

Analysis:
1. The petitioner challenged a show cause notice issued by the Additional Director General of Foreign Trade under the FTDR Act. The petitioner argued that the notice was based on communication from the Directorate of Revenue Intelligence, exceeding jurisdiction and not based on independent satisfaction. The petitioner highlighted the compliance with EPCG licenses and the alleged mis-declaration of value. The petitioner sought quashing of the notice, claiming it was issued at the behest of the Revenue Intelligence. The respondent argued the petition was premature and should be dismissed.

2. The show cause notice alleged non-fulfillment of export obligations under Zero Duty EPCG Scheme. The notice referred to violations of Foreign Trade (Regulation) Rules and Regulations, indicating a violation of rules attracting provisions of the FTDR Act. The notice highlighted the obligation to export goods within a specified period and the absence of required documents. The notice recorded a prima facie opinion based on the Directorate of Revenue Intelligence's communication.

3. The FTDR Act aims to regulate foreign trade by facilitating imports and exports. The Central Government has the power to make orders for foreign trade policy, including prohibiting, restricting, or regulating imports and exports. The Act empowers the appointment of the Director General of Foreign Trade, responsible for policy implementation. The Act provides for penalties under Section 11, requiring compliance with natural justice principles. The show cause notice process involves representation and hearing opportunities.

4. The Court declined to interfere at the current stage, citing available appeal remedies and the need for due process. The Court emphasized the importance of substantiated contentions during adjudication, ensuring a speaking order. The petitioner can raise concerns regarding the Directorate of Revenue Intelligence's influence, which will be addressed in the adjudication process. The Court emphasized the availability of appellate remedies and the need for proper adjudication before challenging an adverse order.

5. The Court dismissed the writ petition, stating that without a challenge to statutory power, the mere reference to the Revenue Intelligence in the show cause notice does not warrant interference. The Court highlighted the importance of evidence and legal compliance in addressing allegations. The Court emphasized the need for due process and proper adjudication before concluding on the validity of the show cause notice. The Court refused to entertain the petition, with no costs imposed.