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TMI Blog2014 (9) TMI 963X X X X Extracts X X X X X X X X Extracts X X X X ..... ned unserved. Though show cause notices were issued under Section 14 of the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as 'the Act') proposing action under Section 11(2) and 11(4) of the Act to the 3rd respondent as well as its directors, there was no reply. The Department conducted an inspection in the factory premises of the 3rd respondent and it was found that the same was occupied by the 1st petitioner firm. They assumed that the 1st petitioner firm has purchased the factory premises including the machinery from the 3rd respondent and had taken over all the assets and liabilities of the 3rd respondent. In that premise, the 2nd respondent has issued Ext. P8 notice, dated 29-6-2012 to the 1st petitioner under Section 14 of the Act calling upon the 1st petitioner to show cause why they should not be called upon to pay customs duty of Rs. 1,03,49,071/- with 24% interest against the EPCG authorisation for non-fulfilment of export obligation and violation of paragraph 6.2/6.8 of Exim Policy, 1997-2002. Petitioner submitted a reply to the show cause notice inter alia contending that the 1st petitioner firm was constituted on 15-8-2008 as a partnershi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the husband of Mrs. Rabecca Biju who is another buyer of the property from the 3rd respondent. The contention regarding lease is not accepted due to the fact that the son and daughter of managing partner Mr. Solomon Antony were the purchasers of the property. It is further observed that M/s. San Marine Export is also engaged in the same business of processing and export of marine sea food products which was also the business conducted by the 3rd respondent which proves that all the land, buildings and assets have been transferred and used by the 1st petitioner firm. Therefore, it is found that the liability of the seller that is the 3rd respondent is a charge on the property that belonged to them. 4. This order is impugned by the petitioners inter alia contending that they have absolutely no connection whatsoever with the 3rd respondent. That apart, 3rd respondent was not the owner of the property. The property originally was owned by a partnership firm from whom subsequent assignments have been made. The 3rd respondent company had stopped operations during 2003-2004 and therefore, there is no reason to impose any penalty on the petitioners. 5. Statement has been filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent and they alone are responsible for complying with the export obligation. As far as the petitioners are concerned, they have no direct involvement in the matter and under normal circumstances, no penalty can be imposed on them for non-compliance of an export obligation by another person. Therefore, fixing the liability on a third person who had acquired the property, which again is disputed, should be based on some statutory provision. To consider the question of jurisdiction of the 2nd respondent in initiating action against the petitioners, it will be useful to refer to the following statutory provisions. 10. Section 11 of the Act relates to Contravention of provision of the Act, Rules, Orders and Foreign Trade Policy which reads as under : "11. Contravention of provisions of this Act, rules, orders and foreign trade policy. - (1) No export or import shall be made by any person except in accordance with the provisions of this Act, the rules and orders made thereunder and the foreign trade policy for the time being in force. (2) Where any person makes or abets or attempts to make any export or import in contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms, as if the said amount is payable under the Customs Act, 1962 (52 of 1962); or (d) if the amount cannot be recovered from such person in the manner provided in clauses (a), (b) and (c) - (i) the Director General or any officer authorised by him may prepare a certificate signed by him specifying the amount due from such person and send it to the Collector of the District in which such person owns any property or resides or carries on business and the said Collector on receipt of such certificate shall proceed to recover from such person the amount specified thereunder as if it were an arrear of land revenue; or (ii) the Director General or any officer authorised by him [including an officer of Customs who shall then exercise his powers under the Customs Act, 1962 (52 of 1962)], and in accordance with the rules made in this behalf, detain any movable or immovable property belonging to or under the control of such person, and detain the same until the amount payable is paid, as if the said amount is payable under the Customs Act, 1962; and in case, any pert of the said amount payable or of the cost of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had made any export or import or has abetted the making of any export or import or had attempted to make any export or import. Therefore, Section 11(2) has no application. At best, it may only apply to the 3rd respondent. 12. Therefore, the first question that may arise would be, even assuming that the petitioners have purchased the assets of the 3rd respondent, can a penalty be imposed on the petitioner. Perusal of the Act or the Rules does not give any such power to the 2nd respondent to impose penalty on a third person merely for the reason that he or she had purchased the property of a defaulter. The adjudicating authority by exercising power under Section 13 forms an opinion that the amount to be recovered from the 3rd respondent is a charge on the property. First of all, there is no statutory provision which indicates that the property of an exporter or importer who violates the provisions of the Act or Rules will be a charge for the amount of penalty to be recovered or for any amount due. When the Statute has clearly provided for a mechanism for recovery of the amounts by a process as envisaged under Section 11, and when the statutory provision does not indicate anywh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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