2006 (3) TMI 165 - HC - Customs

Issues Involved:
1. Imposition of fiscal penalty of Rs. 1,00,00,000/-.
2. Debarment order and its affirmation.
3. Non-fulfillment of export obligation.
4. Validity and sufficiency of the surrendered REP licenses.
5. Justification for the imposition of fiscal penalty despite the surrender of REP licenses.
6. Recovery of penalty with interest.

Detailed Analysis:

1. Imposition of Fiscal Penalty of Rs. 1,00,00,000/-:
The petitioner challenged the order dated 19th August 1991, which imposed a fiscal penalty of Rs. 1,00,00,000/- by the Additional Chief Controller of Imports and Exports. The penalty was for not fulfilling the export obligation linked to an imprest licence for importing uncut and unpolished diamonds worth Rs. 1,30,00,000/-. The appellate authority upheld this order on 12th May 1994.

2. Debarment Order and Its Affirmation:
The petitioner initially contested the debarment order dated 25th September 1991 and its affirmation on 16th March 1992 by the appellate authority. However, due to the long passage of time, the petitioner decided not to press the grievance concerning these orders.

3. Non-fulfillment of Export Obligation:
The petitioner received an imprest licence on 29th March 1985, with an obligation to export cut and polished diamonds worth Rs. 2,00,00,000/- within six months from the clearance of the first consignment. The petitioner failed to discharge this obligation, leading to a show-cause notice dated 7th November 1990 under Section 4-I of the Imports and Exports (Control) Act, 1947.

4. Validity and Sufficiency of the Surrendered REP Licenses:
In response to the show-cause notice, the petitioner argued that the delay in fulfilling the export obligation was due to the late import of goods and subsequent cancellation of orders by foreign clients. The petitioner surrendered valid REP licenses equivalent to the value of the imprest licence utilized, claiming this should discharge their obligation.

5. Justification for the Imposition of Fiscal Penalty Despite the Surrender of REP Licenses:
The Additional Chief Controller of Imports and Exports found that the petitioner did not account for the imported raw materials valued at Rs. 1,30,00,000/-. The authority concluded that the petitioner sold the imported raw materials and surrendered the REP licenses to cover the misutilization. The authority held the petitioner guilty of willful default with ulterior motives and imposed a fiscal penalty of Rs. 1,00,00,000/-. The court upheld this decision, noting that the petitioner's failure to fulfill the export obligation was due to deliberate lapse or slackness.

6. Recovery of Penalty with Interest:
The court noted that the petitioner had not paid the penalty for over ten years, despite no stay order from the court. Consequently, the court ruled that the respondents are entitled to recover the penalty of Rs. 1,00,00,000/- with simple interest of 6% from 12th May 1995.

Conclusion:
The court found no justification to interfere with the impugned orders. The writ petition was dismissed with costs quantified at Rs. 10,000/-. The petitioner was held liable for the fiscal penalty and interest due to the non-fulfillment of export obligations and misutilization of imported goods.

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