2002 (10) TMI 111 - HC - Customs

Summary

Issues Involved:
1. Quashing of the order maintaining the penalty of Rs. 5 lacs.
2. Restraint on the respondents from recovering the penalty amount.
3. Validity of the show cause notice.
4. Justification for maintaining the penalty of Rs. 5 lacs.
5. Consideration of extenuating circumstances.

Summary:

1. Quashing of the order maintaining the penalty of Rs. 5 lacs:
The petitioner sought quashing of the order dated August 4, 1998, by the Appellate Committee, Ministry of Commerce, which maintained a penalty of Rs. 5 lacs for non-fulfilment of export obligations. The petitioner argued that the impugned order did not provide any reason for maintaining the penalty.

2. Restraint on the respondents from recovering the penalty amount:
The petitioner also sought a restraint on the respondents from recovering the penalty amount of Rs. 5 lacs.

3. Validity of the show cause notice:
The respondents issued a show cause notice on 27-2-1996, under Section 4(1) of the Imports and Exports (Control) Act, 1947 read with Section 20(2) of the Foreign Trade (Development and Regulation) Act, 1992, alleging non-fulfilment of export obligations. The petitioner claimed the notice was vague and did not mention the specific provisions contravened.

4. Justification for maintaining the penalty of Rs. 5 lacs:
The petitioner argued that the appellate committee, while reducing the penalty from Rs. 20 lacs to Rs. 5 lacs, did not provide any reason for retaining the penalty. The petitioner contended that there was no deliberate or contumacious violation of any statutory provisions, citing judgments like Pratibha Processors v. Union of India and Akbar Badruddin Jiwani v. Collector of Customs to support their claim.

5. Consideration of extenuating circumstances:
The petitioner highlighted factors beyond their control, such as an accidental fire, labour unrest, and competition from China, which prevented them from achieving the export targets. The appellate committee considered these extenuating circumstances and reduced the penalty from Rs. 20 lacs to Rs. 5 lacs but maintained the penalty without providing specific reasons.

Court's Decision:
The court found merit in the respondents' submissions, noting that the petitioner had availed benefits under the scheme and was bound by its terms, including the penalty provision. The court held that the non-mentioning of specific provisions in the show cause notice was not fatal and that the petitioner's failure to meet export obligations warranted the penalty. The appellate committee had already considered the extenuating circumstances and reduced the penalty accordingly. The petition was dismissed, and no order as to costs was made.