2009 (1) TMI 209 - HC - Customs

Post Export Transferable Duty Free Import Authorisation license Cancellation - As per the provision of para 4.4.2 of the Foreign Trade Policy, the authorisation can be issued either to a manufacturer Exporter or a merchant Exporter tied to a supporting manufacturer - the petitioner has procured the items from some trader and is trying to bring in misleading provisions - The petitioner has claimed her category as Manufacturer Exporter not only in the E. Commerce (online Application) but also in the manual application submitted by her - it is the further case of the respondents that the petitioner herself has stated that she has exported the goods by procuring them from the open market (dealers) and that the Duty Free Import Authorisation (DFIA) obtained was not in conformity the provisions held that the authorities have rightly looked into the matter and accordingly cancelled the DFIA licence granted to the petitioner.

Issues Involved:
1. Validity of the cancellation order of the Duty Free Import Authorisation (DFIA) license.
2. Compliance with the provisions of the Foreign Trade Policy (FTP) and relevant customs notifications.
3. Requirement of tie-up with a supporting manufacturer for merchant exporters.
4. Applicability and interpretation of Policy Circular No. 17 dated 24-8-2006.
5. Procedural fairness in the appellate authority's decision-making process.

Detailed Analysis:

1. Validity of the cancellation order of the Duty Free Import Authorisation (DFIA) license:
The petitioner challenged the cancellation order dated 5-4-2007 issued by the 2nd respondent and confirmed by the 1st respondent on 29-5-2008. The petitioner argued that the cancellation was arbitrary and failed to consider the clarifications provided by the Directorate General of Foreign Trade (DGFT). The court found that the cancellation was based on the petitioner's failure to furnish the requisite details of the supporting manufacturer, which was a condition under para 4.4.2 of the FTP.

2. Compliance with the provisions of the Foreign Trade Policy (FTP) and relevant customs notifications:
The respondents contended that the petitioner did not comply with para 4.4.2 of the FTP, which mandates that a merchant exporter must have a tie-up with a supporting manufacturer. The petitioner procured goods from a trader, not a manufacturer, violating the FTP provisions. The court upheld the respondents' stance, emphasizing that the petitioner's DFIA license was issued based on mis-declared facts and not in conformity with the FTP.

3. Requirement of tie-up with a supporting manufacturer for merchant exporters:
The core issue was whether the petitioner, as a merchant exporter, was required to have a tie-up with a supporting manufacturer. The petitioner argued that as per Policy Circular No. 17, documentary evidence of such a tie-up was not required. However, the court noted that the petitioner herself admitted procuring goods from a trader, which contradicted the requirement of having a tie-up with a manufacturer. Thus, the petitioner did not meet the eligibility criteria under the DFIA scheme.

4. Applicability and interpretation of Policy Circular No. 17 dated 24-8-2006:
The petitioner relied on Policy Circular No. 17, which exempts the submission of documentary evidence of supporting manufacturers for DFIA. The court clarified that while the circular provided exemptions, it did not override the fundamental requirements of the FTP. The petitioner's procurement from a trader without a direct tie-up with a manufacturer did not satisfy the FTP's conditions, rendering the circular inapplicable in this context.

5. Procedural fairness in the appellate authority's decision-making process:
The petitioner argued that the appellate authority did not apply its mind and failed to consider the clarifications provided. The court reviewed the appellate authority's decision and found that it acted within its powers under Section 15 of the Foreign Trade (Development and Regulation) Act, 1992. The appellate authority considered all relevant factors, including the petitioner's failure to provide necessary details of the supporting manufacturer, and upheld the cancellation order.

Conclusion:
The court dismissed the writ petition, concluding that the petitioner did not make out a case for entitlement to the DFIA license for the export of fabrics. The petitioner's admission of procuring goods from a trader and not having a direct tie-up with a manufacturer was crucial. The court found no legal infirmity in the appellate authority's order and upheld the cancellation of the DFIA license. The court, however, allowed the petitioner to approach the competent authorities with necessary documents to support her claim, directing the authorities to consider the request in accordance with the law.

← Previous Next →