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2022 (2) TMI 747 - HC - CustomsSeeking direction to respondents to register duty credit scrips issued under Merchandise Exports from India Scheme (MEIS) and Rebate of State and Center Taxes and Levies (ROSCTL) by the Directorate General of Foreign Trade, Ludhiana - HELD THAT - It is the admitted case of the parties that after the DRI had searched the factory premises of the petitioner on 17-6-2019 and had issued an alert and had also directed the DGFT and the other authorities not to grant/release the export benefits to the petitioner, the petitioner had approached this court by filing CWP No. 16214 of 2020. It is also admitted between the parties that during the said proceedings a letter was issued by the DRI to the Additional DGFT granting its no objection to the DGFT for releasing the export scrips. The DGFT in turn had submitted an affidavit in the said proceedings clearly stating that the petitioner s name was withdrawn from the Denied Entity List (DEL) and that the scrips have already been issued to the petitioner on 28-10-2020. They had further stated that the benefits already stand transferred to the petitioner. On the basis of the said affidavit, the earlier writ petition had been rendered infructuous. The respondents did not choose to file application for review/recalling of the said order by explaining the facts, which are now sought to be explained when the petitioner has filed the present writ petition - the said approach of the respondents-authorities is not in accordance with law, inasmuch as, in case on the basis of certain factors, the respondents had the understanding that they could have still denied the relief to the petitioner, then they should have moved an application in the first writ petition detailing all the facts. However, the respondents-authorities have chosen to withdraw the benefit which, at one stage, had been conceded to by them in the earlier writ petition. The said proceedings are binding on the petitioner as well as the respondents and thus, once the respondents-authorities had chosen to issue the scrips then the non-registering of the same cannot be justified. The duty credit scrips issued in the present case are for a value of ₹ 3,25,43,947/- and since the petitioner has already deposited ₹ 50 lakhs, thus, we find the offer of further deposit of ₹ 1 crore to be very just and fair, in the facts and circumstances of the present case. The orders relied upon by the Learned Counsel for the respondents were passed on the basis of consensus. However, in the present case no such consensus has been reached. The petitioner is directed to pay an amount of ₹ 1 crore within a period of 30 days from today. The said amount would be over and above the amount of ₹ 50 lakhs, which the petitioner has already paid - petitioner is also directed to provide security for the balance amount of the scrips i.e. ₹ 1,75,43,947/-, by furnishing personal surety duly supported by personal guarantees of two other persons within a period of 1 month from today - Petition disposed off.
Issues Involved:
1. Withholding of export incentives by DGFT due to DRI's directions. 2. Petitioner's request for registration of duty credit scrips issued under MEIS and ROSCTL. 3. Allegations of fraud and overvaluation by the petitioner. 4. Legal propriety of non-registration of duty credit scrips despite issuance. 5. Conditions for registration of duty credit scrips. Detailed Analysis: 1. Withholding of Export Incentives by DGFT Due to DRI's Directions The petitioner, a partnership firm engaged in the manufacture and export of knitted textile garments, sought a writ of mandamus to direct the respondents to register duty credit scrips issued under the Merchandise Exports from India Scheme (MEIS) and Rebate of State and Center Taxes and Levies (ROSCTL). The Directorate of Revenue Intelligence (DRI) had searched the petitioner's factory and seized records, leading to the petitioner's name being placed on the Denied Entity List (DEL) by the Directorate General of Foreign Trade (DGFT) without prior notice. Despite the DRI permitting the petitioner to continue exports, the DGFT withheld export incentives based on DRI's alerts. 2. Petitioner's Request for Registration of Duty Credit Scrips Issued Under MEIS and ROSCTL The petitioner previously filed CWP No. 16214 of 2020, seeking the release of export incentives. The DGFT, in response to a letter from DRI indicating no objection, removed the petitioner from the DEL and issued the duty credit scrips. However, the petitioner's grievance was that the respondents had not registered these scrips, impacting their validity and usability. 3. Allegations of Fraud and Overvaluation by the Petitioner The DRI opposed the petition, alleging that the petitioner committed fraud by overvaluing exports to obtain undue benefits and misusing the IGST refund facility. The DRI stated that an ongoing investigation revealed fraudulent benefits amounting to ?3.5 crores. Despite the petitioner depositing ?50 lakhs towards potential liabilities, the DRI argued that the petitioner should not benefit from their own wrongdoings. 4. Legal Propriety of Non-Registration of Duty Credit Scrips Despite Issuance The court noted that the DRI had previously issued a no-objection letter, leading to the issuance of the duty credit scrips. The DGFT's affidavit in the earlier litigation confirmed the removal of the petitioner from the DEL and the issuance of scrips. The court held that the respondents' failure to register the scrips, despite their prior concession, was unjustified. The respondents did not seek to review or recall the earlier court order, and thus, could not backtrack from their affidavit. 5. Conditions for Registration of Duty Credit Scrips The court acknowledged the substantial turnover of the petitioner and the lack of any show cause notice or pending proceedings against them. Given the ongoing investigation by the DRI, the court balanced the interests by directing the petitioner to deposit an additional ?1 crore within 30 days and provide security for the remaining amount of the scrips. The court ordered the respondents to register the duty credit scrips within 15 days of compliance with these conditions. Conclusion: The court disposed of the writ petition by directing the petitioner to deposit ?1 crore and provide security for the remaining amount. The respondents were ordered to register the duty credit scrips within 15 days of compliance. The court emphasized that the respondents' actions must align with their prior concessions and legal obligations.
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