2019 (3) TMI 1241 - HC - Customs

Permission to operate as an Export Oriented Unit - Non-compliance of the obligations arising under the Foreign Trade Policy - failure to fulfill the obligations arising out of the Letter of Permission and the standard conditions - unit shall export its entire production, excluding rejects - unit not commenced production of their own and was merely carrying out job works for entities in the domestic tariff area or the local market though it had availed of duty free imports and also exemption u/s 10(B) of the Income Tax Act. Held that - There is no denying fact that the petitioner has failed to comply with any of the obligations that have been imposed on it under the Letter of Permission. The Letter of Permission, treating the unit as an Export Oriented Unit, being a conditional one subject to the condition imposed under Clause (vi) of paragraph 2 of the letter, this Court does not find any error or perversity in the reasoning assigned by the Original Authority or the Appellate Authority to arrive at the conclusion rendered by them. No material is demonstrated or placed before this Court by the petitioner for this Court to conclude contrary to the finding of fact rendered by the Original Authority as confirmed by the Appellate Authority. Petition dismissed.

Summary

Issues:
Petitioner challenging order upholding non-compliance with export obligations under Foreign Trade Policy.

Analysis:
The petitioner contested the order dated 15.06.2015 upholding the decision of the Development Commissioner, Chchin Special Economic Zone (CSEZ), Bengaluru, regarding non-compliance with export obligations. The petitioner was granted a Letter of Permission in 2007 to operate as an Export Oriented Unit for manufacturing Cups and Cones. The permission included conditions, notably exporting the entire production for five years from the start of commercial production. Despite availing benefits like duty-free imports and tax exemptions, the petitioner allegedly failed to fulfill export commitments. The Letter of Permission was valid for three years, requiring project implementation and commercial production commencement within that period.

The Original Authority issued a show cause notice in 2012 due to perceived non-compliance. The petitioner replied, stating they processed Cups and Cones for a specific client in the SEZ, which ultimately exported the final products. However, it was found that the petitioner did not meet the export obligations as per the Foreign Trade Policy. Consequently, the Letter of Permission was canceled, and a penalty was imposed. The petitioner's appeal was rejected by the Appellate Authority, leading to the current challenge before the High Court.

The High Court noted the petitioner's failure to comply with the export obligations stipulated in the Letter of Permission. Considering the conditional nature of the permission and the lack of evidence to dispute the findings of the lower authorities, the Court upheld the decisions. The Court found no error or perversity in the reasoning of the Original and Appellate Authorities. As the petitioner did not present any material to contradict the factual findings, the petition was deemed meritless and rejected.