2024 (10) TMI 336 - HC - Customs

Failure to fulfil export obligation - rejection of appeal on the ground that the Petitioner did not produce proof of export made - invocation of jurisdiction of this Court seeking to direct the Respondents to regularize the exports made by Petitioner during the valid EOP and extended EOP - HELD THAT - It emerges that the Petitioner failed to submit the original shipping bills to substantiate the claimed exports, instead providing photocopies, which were not accepted for meeting the export obligation. Of the seven shipping bills for which photocopies were submitted, two fell outside the extended export obligation period, and two were Drawback Shipping Bills, for which the customs authority had rejected the conversion request. The Petitioner also claimed that the Duty Exemption Entitlement Certificate Book No. 10967 had been lost but was unable to provide a satisfactory explanation for this before the Appellate or Reviewing Authority. Consequently, the Petitioner has not submitted the required documents to demonstrate compliance with the export obligation. The Petitioner did not provide a written response to the stated objections but, through a communication dated 22nd September 2013, requested a personal hearing to explain the issues raised by the Appellate Authority. However, as noted in the order issued by the Appellate Authority, despite being granted several opportunities for a personal hearing and directed to submit the required export documents, the Petitioner failed to comply. Thus, it is evident that the Petitioner has failed to provide the necessary documents to demonstrate that the Customs Authority had agreed to convert the shipping bills from Drawback Shipping Bills to DEEC Shipping Bills. Furthermore, they have not submitted the required documents to prove fulfilment of the export obligation, nor have they paid the prescribed customs duty. Under these circumstances, the three orders rejecting the review petition cannot be deemed arbitrary, nor do they provide sufficient grounds for this Court to exercise its jurisdiction under Article 226 of the Constitution of India, 1950 - no interference by this Court is warranted, as the reasoning provided in the afore-mentioned orders appears to be reasonable and justified based on the facts presented. Petition dismissed.

Issues Involved:

1. Non-compliance with the conditions of the Advance Import Licence.
2. Submission of inadequate documentation to substantiate export obligations.
3. Failure to convert Drawback Shipping Bills to DEEC Shipping Bills.
4. Denial of extension of Export Obligation Period (EOP).
5. Imposition of penalty under the Foreign Trade (Development and Regulation) Act, 1992.
6. Jurisdiction of the High Court under Article 226 of the Constitution of India.

Issue-wise Detailed Analysis:

1. Non-compliance with the conditions of the Advance Import Licence:

The core issue revolves around the Petitioner's failure to comply with the conditions of the Advance Import Licence. The Petitioner was granted a licence to import brass scrap with a corresponding export obligation. However, they did not fulfill the export obligation within the stipulated period, leading to the imposition of a penalty by the Director General of Foreign Trade (DGFT). The Court noted that the Petitioner failed to submit original shipping bills and instead provided photocopies, which were not accepted as valid proof of fulfilling the export obligation.

2. Submission of inadequate documentation to substantiate export obligations:

The Petitioner submitted photocopies of seven shipping bills, out of which two were outside the extended Export Obligation Period (EOP), and two were Drawback Shipping Bills. The customs authority had rejected the conversion request for these bills. The Petitioner also claimed the loss of the Duty Exemption Entitlement Certificate Book but failed to provide a satisfactory explanation. Consequently, the Petitioner was unable to demonstrate compliance with the export obligation, as required by the authorities.

3. Failure to convert Drawback Shipping Bills to DEEC Shipping Bills:

The Petitioner attempted to convert certain Drawback Shipping Bills into DEEC Shipping Bills, which was necessary to fulfill the export obligation under the Advance License. However, the customs authority rejected this conversion request. The Petitioner did not provide any subsequent document showing that the customs authorities agreed to convert these bills, thus failing to meet the required export documentation standards.

4. Denial of extension of Export Obligation Period (EOP):

Although the Petitioner sought extensions for the EOP through multiple applications, the authorities did not regularize the exports made outside the EOP. Despite public notices granting extensions, the Petitioner failed to provide proof of export within the extended period. The Court found that the Petitioner did not submit any proof that the EOP was further extended, which was crucial for regularizing their exports.

5. Imposition of penalty under the Foreign Trade (Development and Regulation) Act, 1992:

Due to the non-fulfillment of export obligations and inadequate documentation, a penalty of INR 10,00,000/- was imposed on the Petitioner under Section 11(2) of the FTDR Act. The Court upheld this penalty, noting that the Petitioner did not pay the prescribed customs duty and applicable interest to the full extent required for regularizing the Advance License.

6. Jurisdiction of the High Court under Article 226 of the Constitution of India:

The Petitioner sought the intervention of the High Court under Article 226, challenging the orders of the DGFT and the Appellate Authority. However, the Court found no arbitrariness in the orders passed by the authorities. The absence of essential documentation and failure to meet export obligations justified the decisions of the authorities. Consequently, the Court dismissed the petition, stating that there were no sufficient grounds to exercise its jurisdiction.

Conclusion:

The High Court dismissed the petition, affirming the orders of the DGFT and the Appellate Authority. The Court concluded that the Petitioner failed to provide necessary documentation to substantiate their claims and fulfill the export obligations under the Advance License. The imposition of the penalty was deemed justified, and no interference by the Court was warranted.

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