2019 (5) TMI 87 - HC - Customs

Advanced Authorization Scheme - Export Obligation not fulfilled - whether the petitioner is entitled to clubbing of its three licenses in question? - declaring the petitioner to be a defaulter and placing the petitioner under the Denied Entry List - HELD THAT - The petitioner was required to discharge its export obligations under the advance license dated 27.08.2004 within a period of 18 months (as is apparent from the copy of the license annexed alongwith the petitioner). However, according to the counter affidavit filed on behalf of the DGFT, the said obligation is required to be completed within a period of 36 months. Admittedly, the petitioner was required to submit documents to evidence fulfillment of the export obligation within a period of two months from the date of the expiry of the said period. However, the petitioner failed and neglected to do so. It was not in response to the show cause notice but an independent request for providing clubbing facility and approval for extension of the export obligation. Thus, concededly, the petitioner had not discharged its export obligations as required - the decision of DGFT to pass an order under Rule 7.1(k) of the Foreign Trade (Regulation) Rules, 1993 cannot be faulted. Thus, no interference with the impugned order dated 14.10.2014 is warranted. Petition dismissed.

Issues Involved:
1. Validity of the order dated 14.10.2014 declaring the petitioner a defaulter and placing them on the "Denied Entry List".
2. Denial of the petitioner's request for extension of the period for discharging export obligations and for clubbing of licenses by the Policy Relaxation Committee (PRC).

Issue-Wise Detailed Analysis:

1. Validity of the Order Dated 14.10.2014:
The petitioner challenged the order dated 14.10.2014, issued by the Assistant Director General of Foreign Trade (respondent no. 3), which declared the petitioner a defaulter and placed them on the "Denied Entry List". This order implied that all pending and future applications filed by the petitioner for benefits or authorizations under the Foreign Trade Policy 2009-14 would be refused. The petitioner argued that the order was based on the erroneous premise that no documents were available on record to prove the fulfillment of export obligations. The petitioner claimed to have submitted all relevant documents, including a letter dated 23.08.2011, which provided details of the export obligations and requested clubbing and extension of the advance authorizations.

The court found that the petitioner had failed to discharge its export obligations within the stipulated period and did not submit the required documents despite reminders and a show cause notice. The court concluded that the decision of the DGFT to pass the order under Rule 7.1(k) of the Foreign Trade (Regulation) Rules, 1993, was justified and warranted no interference.

2. Denial of Extension and Clubbing of Licenses:
The petitioner sought an extension of the period for discharging export obligations and clubbing of three advance authorizations dated 22.07.2003, 27.08.2004, and 21.06.2010. The petitioner argued that they were entitled to clubbing under paragraph 4.20 of the Handbook of Procedures (Volume-1) (HoPv1) for the period 2009-14, as applicable on the date of their application (29.08.2011). The PRC denied the request, citing the substantial gap between the authorizations.

The court examined the relevant provisions of the HoPv1, including paragraphs 4.20, 4.20.3, and 4.20.4. It found that paragraph 4.20.4 explicitly prohibited clubbing of authorizations if exports were effected beyond the export obligation extension period of the earlier authorization. The court noted that the petitioner had not applied for an extension of the export obligation period for the license dated 22.08.2004 within the permissible period. Consequently, the facility of clubbing was unavailable to the petitioner.

The court also addressed the petitioner's contention that the amendment introduced by Public Notice No. 79 dated 13.10.2011, which restricted clubbing to authorizations issued within 36 months, was inapplicable to their case. The court found that even prior to the amendment, clubbing was not permitted if exports were made beyond the export obligation extension period of the earlier authorization.

The court upheld the PRC's decisions dated 01.11.2011, 01.10.2012, and 30.04.2013, which denied the petitioner's requests for extension and clubbing of licenses. The court found no infirmity in the PRC's reasoning and concluded that the petitioner's application for clubbing was rightly rejected.

Conclusion:
The court dismissed the petition, finding it unmerited. The court upheld the validity of the order dated 14.10.2014, declaring the petitioner a defaulter and placing them on the "Denied Entry List". The court also upheld the PRC's decisions denying the petitioner's requests for extension and clubbing of advance authorizations. The pending application was disposed of accordingly.

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