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2024 (8) TMI 963 - HC - CustomsJurisdiction - whether the demand for interest can be subject matter for adjudication by the adjudicating authority? - HELD THAT - The Adjudicating Authority i.e. JDGFT purporting to exercise powers under Section 13 of the FT Act called upon the petitioner to pay interest on this amount which the respondent had paid to the petitioner as per the order of the Supreme Court. It is already referred to the definition of 'Adjudicating Authority' and also dealt with Section 13 in the earlier part of this order. As per Section 13 what can be imposed is any penalty or any confiscation may be adjudged under the FT Act. Section 1 1 of the FT Act deals with contravention of provisions of FT Act, rules, orders and foreign trade policy. In the present case, the Supreme Court held that the petitioner was exporting a product which was inadmissible as per Appendix 12 of Exim Policy. Consequently, the petitioner was not entitled to the benefits of the claim of cash amount of 20% premium that would be paid against the additional licence. The contravention of the provisions of the FT Act, rules, orders and foreign trade policy lead to the consequences provided under the FT Act. The demand by the respondent is for payment of interest on the amount of Rs. which according to the respondent was utilized by the petitioner to which they were not legally entitled to. The respondent may have a claim against the petitioner for payment of interest but in our opinion the same cannot be adjudicated under the provisions of the FT Act, 1992. Under the provisions of the FT Act, any penalty may be imposed or any confiscation may be adjudged. We do not find any provision in the FT Act providing for adjudication of a claim of interest on the amount as is the subject matter in the present petition. It is not found that any provision in the FT Act for levy of interest on such delayed payment moreso when the amounts were paid under the orders of the Supreme Court subject to furnishing of a bank guarantee. The interest cannot be construed to be a penalty to confer jurisdiction on the adjudicating authority to adjudicate the claim for payment of interest. The Supreme Court in INDIA CARBON LTD. VERSUS STATE OF ASSAM (AND OTHER APPEALS) 1997 (7) TMI 566 - SUPREME COURT has held that the interest can be levied and charged on delayed payment of tax only if the statute that levies and charges tax makes a substantive provision in this behalf. This Court cannot overlook the competency of the authority in adjudicating the claim for grant of interest. The claim for interest has to be enforced before a forum competent to award interest. It is made clear that it is held that in the facts of the present case, the adjudicating authority under the FT Act has no authority/jurisdiction to adjudicate the claim for payment of interest. It is open for the respondents to enforce the claim for payment of interest as against the petitioner in accordance with law. The respondents are further restrained from putting the Importer-Exporter Code number (IEC) of the petitioner on the Denied Entity List (DEL) and in case already done, the respondents are directed to remove the petitioner from the said list - the petition is allowed.
Issues Involved:
1. Legality of the impugned order dated 09.02.2024. 2. Demand for interest at the rate of 15% on Rs. 1,21,69,200/-. 3. Jurisdiction of the JDGFT to adjudicate and enforce the claim for interest. 4. Preliminary objection regarding the availability of an alternate remedy under Section 15 of the FT Act. 5. Legality of placing the petitioner's Importer-Exporter Code (IEC) on the Denied Entities List (DEL). Detailed Analysis: 1. Legality of the Impugned Order Dated 09.02.2024: The petitioner sought to quash the impugned order dated 09.02.2024, which directed the forfeiture of the bank guarantee of Rs. 1,21,69,200/- and demanded the remaining amount of Rs. 2,43,68,823/- within 10 days. The court found that the JDGFT's demand for interest and subsequent actions were beyond its jurisdiction under the FT Act, as the Act does not provide for adjudication of interest claims in such circumstances. 2. Demand for Interest at the Rate of 15% on Rs. 1,21,69,200/-: The court examined whether the demand for interest could be considered a penalty under the FT Act. It was concluded that the demand for interest on the amount paid to the petitioner by the respondents as per the Supreme Court's order cannot be included in the term "penalty" and thus cannot be adjudicated under the FT Act. The court emphasized that there was no provision in the FT Act for the levy of interest on such delayed payment, especially when the amounts were paid under the orders of the Supreme Court subject to furnishing a bank guarantee. 3. Jurisdiction of the JDGFT to Adjudicate and Enforce the Claim for Interest: The court scrutinized the jurisdiction of the JDGFT under Section 13 of the FT Act, which allows for the imposition of penalties or confiscation but does not extend to adjudicating claims for interest. The court rejected the argument that the JDGFT could exercise powers of a Civil Court under Section 17 of the FT Act to claim interest, stating that the adjudicating authority is not a court within the meaning of the Interest Act, 1978. The court held that the JDGFT had no jurisdiction to demand interest in this case. 4. Preliminary Objection Regarding the Availability of an Alternate Remedy Under Section 15 of the FT Act: The respondents raised a preliminary objection, arguing that the petitioner should have pursued an appeal under Section 15 of the FT Act. The court dismissed this objection, stating that the demand for interest does not fall under the penalties or confiscations that can be appealed under Section 15. The court cited various precedents to reinforce that the rule of exhausting alternative remedies is a rule of discretion and not compulsion, especially when no effective remedy is available under the statute. 5. Legality of Placing the Petitioner's Importer-Exporter Code (IEC) on the Denied Entities List (DEL): The court found that placing the petitioner's IEC on the DEL was unjustified as the JDGFT had no jurisdiction to adjudicate the interest claim. Consequently, the court restrained the respondents from putting the petitioner's IEC on the DEL and directed the removal of the petitioner from the list if already placed. Conclusion: The petition was allowed in terms of prayer clause (b), quashing the impugned order dated 09.02.2024. The court restrained the respondents from placing the petitioner's IEC on the DEL and directed the removal of the petitioner from the list if already done. The court held that the JDGFT had no jurisdiction to adjudicate the claim for interest and that the petitioner could seek redressal for the interest claim through appropriate legal channels. No order as to costs was made.
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