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2019 (4) TMI 1541 - HC - CustomsCancellation of Letter of Undertaking - Grant of a license for setting up an industrial unit in the Noida Export Processing Zone (NEPZ) for the manufacture of Colour Televisions - It was alleged that the petitioner had indulged in wrongful activities and has been persistently violating the provisions of the SEZ Act, 2005 - HELD THAT - A plain reading of the impugned decision of the BoA indicates that the petitioner s appeal had been rejected on the ground that the petitioner had not furnished details of import, export and sales in the domestic tariff area in the prescribed format. It is also observed that the petitioner had failed to provide details of Free Foreign Exchange received from overseas and, therefore, it was not possible to ascertain the Net Foreign Exchange (NFE) position. This Court considers it apposite that the BoA re-examine the petitioner s contention in the light of the decision rendered by the CESTAT. It would also be apposite for the BoA to consider the petitioner s contention that it had in fact achieved a positive NFE if the petitioner places the necessary documents to establish the same. The matter is remanded to the BoA to consider the petitioner s appeal afresh.
Issues Involved:
1. Cancellation of the Letter of Approval (LoA) by the Unit Approval Committee (UAC). 2. Alleged violations of the Special Economic Zones Act, 2005, and SEZ Rules, 2006. 3. Mis-declaration of goods in Bills of Entry. 4. Petitioner's contention of achieving positive Net Foreign Exchange (NFE). 5. Bias in the decision-making process due to the involvement of the Development Commissioner in both UAC and BoA. 6. Petitioner's inability to provide required documents due to seizure by the Directorate of Revenue Intelligence (DRI). 7. Rejection of the petitioner's appeal by the Board of Approval (BoA). Detailed Analysis: 1. Cancellation of the Letter of Approval (LoA) by the Unit Approval Committee (UAC): The petitioner challenged the minutes of the UAC meeting dated 06.01.2016, which resulted in the cancellation of the LoA issued to the petitioner. The UAC's decision was based on findings that the petitioner had not been manufacturing items or undertaking trading activities as per the amended LoA dated 30.06.2003. Instead, the petitioner was found to be mis-declaring goods in Bills of Entry and failing to meet export obligations, operating mainly as a channel for domestic importers. 2. Alleged violations of the Special Economic Zones Act, 2005, and SEZ Rules, 2006: The UAC and BoA concluded that the petitioner persistently violated the SEZ Act, 2005, SEZ Rules, 2006, and the terms of the LoA/Bond-cum-LU. The UAC observed that the petitioner had not achieved positive NFE and had been working against the objectives of the SEZ Act by indulging in wrongful activities and trading primarily in the Domestic Tariff Area (DTA). 3. Mis-declaration of goods in Bills of Entry: The UAC noted instances of mis-declaration of goods in three Bills of Entry (BoE NSEZ008568 dated 05.10.2015, BoE NSEZ0008457 dated 30.09.2015, and BoE NSEZ0008527 dated 03.10.2015). The petitioner admitted to the mis-declaration and deposited ?50 lakhs as duty/penalty/fine. This admission and the subsequent penalty payment were significant factors in the UAC's decision to cancel the LoA. 4. Petitioner's contention of achieving positive Net Foreign Exchange (NFE): The petitioner claimed to have achieved positive NFE, but the UAC and BoA found that the petitioner failed to provide the necessary details to verify this claim. The BoA noted that the petitioner did not furnish details of import, export, and DTA sales in the prescribed format, making it impossible to ascertain the NFE position. 5. Bias in the decision-making process due to the involvement of the Development Commissioner in both UAC and BoA: Initially, the petitioner argued that the decision of the BoA was vitiated due to bias, as the Development Commissioner of NOIDA SEZ was a member of both the UAC and BoA. However, this ground was not pressed by the petitioner's counsel during final arguments, and thus, it was not considered by the court. 6. Petitioner's inability to provide required documents due to seizure by the Directorate of Revenue Intelligence (DRI): The petitioner contended that its records had been seized by the DRI, which hindered its ability to provide the required documents to support its claims. However, the BoA did not accept this explanation, stating that details of payments from the EFFC account or overseas buyers could be provided through normal banking channels. 7. Rejection of the petitioner's appeal by the Board of Approval (BoA): The petitioner's appeal against the UAC's decision was rejected by the BoA on 09.11.2016. The BoA upheld the UAC's findings and noted that the petitioner had not furnished the required details to determine the NFE position. The BoA also took an adverse view of the petitioner's mis-declaration of goods and the payment of ?50 lakhs as duty/penalty/fine. Conclusion: The court set aside the impugned order and remanded the matter to the BoA for fresh consideration in light of the petitioner's claims and the decision rendered by the CESTAT. The petitioner was given the liberty to file further documents to support its claim of achieving positive NFE within two weeks. The petition was disposed of accordingly, along with the pending application.
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