2024 (7) TMI 76 - HC - Customs

EPCG Scheme - Levy of fiscal penalty of Rs. 1, 00, 00, 000/- in addition to the notional customs duty and interest thereon under section 11(2) of Foreign Trade (Development Regulation) Act 1992 read with Foreign Trade (Development Regulation) Amendment Act 2010 - failure to submit necessary documents like Appendix-9A as per Para 5.13 of Hand Book of Procedures 2002-2007 report on fulfillment of export obligation and installation certificate issued by the Central Excise Authority or Chartered Engineer. HELD THAT - The specific contention of the petitioner is that the petitioner had made direct exports and 3rd party exports towards Export obligation and Annual Average they had not maintained the Annual Average from the period of issue of license till the period of fulfillment of specific export obligation. That apart the bills produced by the petitioner shown towards maintenance of Annual Average were also duplicated reflecting in specific export obligation fulfillment statement which contravenes the condition of maintenance of Annual Average and fulfillment of export obligation over and above the Annual average export performance. That apart the request made by the petitioner for considering exports made by them for the subsequent periods 2010-11 2013-14 to 2015-16 are not covered under export obligation period. Further the order impunged in this writ petition dated 04.05.2021 has been passed under Foreign Trade (Development Regulation) Act 1992 read with Foreign Trade (Development Regulation) Amendment Act 2010 (Notification dated 20.08.2010) thereby imposed penalty under section 11(2) of Foreign Trade (Development Regulation) Act 1992 read with Foreign Trade (Development Regulation) Amendment Act 2010 (Notification dated 20.08.2010) as amended from time to time. As against the said order there is provision for appeal clause under section 15 of Foreign Trade (Development Regulation) Act 1992 read with Foreign Trade (Development Regulation) Amendment Act 2010 within a period of 45 days from the date of issuance of adjudication order on condition that the petitioner shall pay the entire penalty amount imposed under this Act - However the petitioner without exhausting the appeal remedy directly approached this Court under Article 226 of Constitution of India in order to avoid the deposit of entire penalty. This writ petition is devoid of merits and liable to be dismissed - petition dismissed.

Summary

Issues:
Challenging fiscal penalty under Foreign Trade Act, 1992 for non-compliance with export obligations and related documentation.

Analysis:
The petitioner was granted an Export Promotion Capital Goods (EPCG) license with specific export obligations, including submitting export documents and installation certificates within set timeframes. Failure to comply led to the imposition of a fiscal penalty by the respondent. The petitioner argued efforts were made to fulfill requirements, including direct and 3rd party exports, and requested a reduction in the Annual Average maintenance. The respondent's counter affidavit highlighted deficiencies in document submissions by the petitioner, leading to show cause notices and multiple opportunities for the petitioner to rectify the issues. However, the petitioner failed to provide the necessary documents, leading to the imposition of the penalty.

The respondent contended that despite reminders and opportunities for personal hearings, the petitioner consistently failed to submit required documents, displaying delay tactics. The adjudicating authority imposed a penalty of Rs. 1,00,00,000/-, which was challenged in court. The court previously remanded the issue for fresh consideration and a fair hearing, which was conducted. The petitioner's request to consider exports from subsequent periods not covered under the original obligation was rejected as per scheme conditions. The court noted that the penalty was imposed under the Foreign Trade Act, 1992, with an appeal provision within 45 days of the adjudication order issuance. However, the petitioner directly approached the court under Article 226 of the Constitution to avoid paying the penalty.

In conclusion, the court found the writ petition lacking merit and dismissed it, closing the connected miscellaneous petition without costs. The judgment upheld the imposition of the fiscal penalty under the Foreign Trade Act, 1992, emphasizing the importance of compliance with export obligations and documentation requirements under the EPCG scheme.