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TMI Blog2016 (2) TMI 476X X X X Extracts X X X X X X X X Extracts X X X X ..... the Certificates. Pertinently, the conditions at page 83 and the power to impose them are not challenged. Unable to agree with Mr. Chagla that a conjoint reading of these provisions in the 1992 Act together with the Customs Act, 1962, would not empower the Director General in this case to impose penalty. As we have already held, the Reserve Bank of India has enough powers and, therefore, there is no basis for the complaint that it lacks jurisdiction or authority to regulate the dealings in foreign exchange. In the instant case, the Reserve Bank of India is doing precisely this and, therefore, it neither interferes nor takes over the powers of the competent authority either under the Act of 1992 or the Customs Act, 1962. Once the certificates in favour of the petitioners were subject to the provisions of the Foreign Trade Policy and the procedure laid down thereunder, the Reserve Bank of India guidelines and Customs Rules and Regulations, then the import of 550 kgs of gold was governed by the same. The show-cause notice alleged that from the import of 550 kgs of gold only 350 kgs of gold was exported and as per the export details 200 kgs of gold was supplied to the domestic u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof dated 14th January, 2015. It is prayed that these be quashed and set aside. 3. The facts lay in a narrow compass. The petitioners claim to be one of the largest bullion dealers and petitioner No.1 is an Associate Member of the London Bullion Market Association and a member of the Bombay Bullion Association. It claims to be recognized as a Premier Trading House by the Government of India, Ministry of Commerce and Industry through the Office of the Zonal Joint Director General of Foreign Trade, which is valid till 31st March, 2016. On the basis of this certificate of recognition, a certificate as Nominated Agency is also granted every year to the petitioners by the authorities under the Foreign Trade (Development and Regulation) Act, 1992 (for short Act of 1992 ). All this enables the petitioners to import precious metals in terms of paragraph 4A.4 of the Foreign Trade Policy. The Nominated Agency certificate (for short NAC ) is also claimed to be valid and subsisting. 4. The petitioners, namely, the company, its Vice President and Directors have sued the Union of India, the Reserve Bank of India, Foreign Exchange Department, Central Office, Mumbai and the Additiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nitoring mechanism and the format of Certificate for the said purpose, were also provided in the said Policy Circular. Annexure-E to the petition is a copy of the said Policy Circular no. 77 (RE-2008)/2004-2009 issued by DGFT. Subsequently Policy Circular 24(RE-2009-2014) was issued. Annexure-F to the petition is copy of the said Circular. Both these circulars were withdrawn vide Policy Circular 14(RE-2010)/2009-14 dated 1.02.2011, thereby relaxing the norms and doing away, inter alia, with the requirement of sale of 15% quantity to exporters. Annexure-G to the petition is a copy of the said Policy Circular 14(RE-2010)/2009-14 dated 1st February, 2011. 8. On 8th August, 2011, the petitioner No.1-Company was awarded status of Premier Trading House by the Ministry of Commerce. Prior thereto, the petitioner was awarded Certificate of Recognition as Star Trading House on 09.09.2009. Annexure-H to the petition is a copy of the said Premier Trading House Status Certificate awarded by the Ministry of Commerce. 9. On 18th May, 2010, a Certificate as Nominated Agency was granted to the petitioner No.1 by the DGFT for direct import of Precious Metals in terms of Para 4A.4 of Foreig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier handed over the shipment at 4.30 p.m. and 4:35 p.m. (UAE time) to Brinks Global Services, the renowned International Logistic Company handling Precious Metals, for onward transport to destination, for which Collection Notes were also issued by the said Brinks Global Services evidencing the delivery time. Annexures-Q and R to the petition are copies of the Collection Notes issued by the said Brinks Global Services evidencing handing over shipment at 4.30 p.m. and 4.35 p.m. on 22nd July, 2013. 14. The Customs procedure was completed in respect of the two shipments at Dubai time 18.00 hrs. and 18.05 hrs. and consequently, two airway bills bearing numbers 17652586273 (for Ahmedabad shipment) and 17652586262 (for Hyderabad shipment) both dated 22nd July, 2013 were issued at 19:21 hrs and 21:13 hours (both UAE time). Annexures-S, T-1 and T-2 to the petition are copies of the certificate issued by Brinks Global Services showing time for completion of customs procedure at Dubai, for Airway bills bearing Nos. 17652586273 (for Ahmedabad shipment) and 17652586262 (for Hyderabad shipment) both dated 22nd July, 2013. 15. Subsequently, on the same day, the impugned Circular bearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment of India will be issuing separate instructions, if any, to the customs authorities / DGFT to operationalize and monitor the above requirements for import of gold. 21. Consequently, in order to operationalize the RBI Circular no. 25 dated 14th August, 2013, the Central Board of Excise and Customs issued Instructions on 04.09.2013, which were made applicable with the repeated usage of word henceforth . Annexure-Z to the petition is a copy of the said Instructions dated 4th September, 2013 issued by CBEC operationalizing the RBI Circular No. 25 dated 14th August, 2013. 22. No corresponding Instructions issued in this regard by the DGFT have been brought to the notice of the petitioner. 23. On or about 27th September, 2013, the Directorate General of Export Promotion, Department of Revenue, Ministry of Finance issued instructions inter alia clarifying that gold imported between 22nd July, 2013 and 14th August, 2013, if pending clearance, should be cleared under the amended and clarified position in terms of RBI Circular dated 14th August, 2013 and CBEC Circular dated 4th September, 2013. Annexure-AA to the petition is a copy of the said Instructions dated 27th Sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... numbers 2783704 2784490 both dated 23rd July, 2013 with reference to directives of the RBI Circular dated 22nd July, 2013. Annexure-FF to the petition is a copy of the said letter dated 17th July, 2014 issued by the office of the Respondent No.3. 31. On or about 25.08.2014, the petitioner No.1 submitted a letter dated 20.08.2014 seeking time of a fortnight for submitting the reply, as the concerned person was out of town and was to resume the office in the first week of September 2014. Annexure-GG to the petition is a copy of the said letter dated 20th August, 2014, issued by the petitioner No.1. 32. On or about 1st September, 2014, the petitioners submitted various details to the office of the Respondent No.3 with documentary evidence of time and negotiation, and delivery of shipment for further transportation to India. It was placed on record that the consignments covered vide the subject two bills of entry, were cleared by the Customs Authorities after verification and being satisfied about the correctness of the declaration and claims of the petitioners, upon payment of applicable customs duties. It was also pointed out that the remittances for the two shipments effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31st October, 2014, an addendum to the show cause notice dated 14th October, 2014, was received at 3.42 p.m. from the office of the Respondent No.3 by fax. The said addendum to show the cause notice proposed cancellation of the Nominated Agency certificate dated 5th May, 2014 in terms of Section 9(4) of Act of 1992 and Rule 10 of FTR Rules, 1993. 38. As per the said addendum the personal hearing was scheduled for 11th November, 2014 at 11.30 a.m. 39. In none of the imports made by the petitioner No.1 except the aforesaid two shipments of 22nd July, 2013, whether before or after 14th August, 2013, any objection has been raised by the Respondent No.3. Even in regard to these 2 shipments the Customs Authorities were satisfied that RBI Circular had no applicability and hence permitted clearance thereof without obtaining any bond otherwise required to be submitted. Similarly, even the Authorized Dealer had permitted foreign remittances against the said two shipments on being satisfied that the restrictions placed if any vide Circular dated 22nd July, 2013 were inapplicable for the said two shipments. There is no proceeding issued against the petitioner in this regard by either RBI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 45. It is pursuant to the above show-cause notice and the allegations therein that the third respondent passed an order on 14th January, 2015 and which was communicated by fax on 15th January, 2015, to the petitioner. It is aggrieved by the above that the present Writ Petition has been filed. There are two affidavits-in-reply which have been filed by the contesting respondents. There is also an affidavit-in-reply filed by the respondent No.2 Reserve Bank of India. The petitioners have filed their rejoinder affidavits. 46. The justification for the action in the affidavit-in-reply of the third respondent has been set out in detail, but prior thereto, the third respondent in the affidavit-in-reply filed in this Court on 12th March, 2015, has submitted that the issue of illegality of the Circulars can be raised by the petitioner before the Appellate Authority. Therefore, when the petitioners have an alternate and equally efficacious remedy of filing an appeal in terms of section 15 of the Foreign Trade (Development and Regulation) Act, 1992, then, this Writ Petition should not be entertained. 47. Thereafter it is urged that the condition for import of any item has to be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. If the date and time of despatch of shipment in this case is only after issuance of the above Circular and after it was uploaded on the website, then, this Circular has been clearly violated. 50. For renewal of the Nominated Agency Certificate for the period 2014-2015, it is stated that it came to the notice of the Additional Director General of Foreign Trade, Mumbai, on 9th May, 2014 that his office had inadvertently and by oversight renewed this certificate. That was without due diligence as required under the provisions of para 4A.35 of the Handbook of Procedures. The NAC was renewed on 5th May, 2014, by the office of the Director General of Foreign Trade without verifying the half yearly return for the period 1st March, 2013 to 31st March, 2014. Further, it was observed that 550 Kgs. of gold had been imported by the petitioners between 22nd July, 2013 and 31st March, 2014. The Additional Director General of Foreign Trade on 9th May, 2014, sent a copy to the Director General of Foreign Trade Headquarters stating that it was necessary to check the shipping bills, bills of entry and domestic invoices for satisfying as to whether the petitioners exported the gold imported b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imports were permitted exclusively for export purpose. In other words, Premier Trading Houses were under an obligation to export the resultant product to the extent of 100% of imported gold. By issuance of this Circular a clear line was drawn among the Nominated Agencies with one set of Nominated Agencies being put under obligation to export resultant product to the extent of 20% while another set of Nominated Agencies were subject to export 100% of resultant product out of the imported gold. The Petitioners being Premier Trading House were under an obligation to export 100% quantity of imported gold, as such they were not allowed to divert the imported material into domestic market. 54. All allegations with regard to the alleged unfairness or bias of the Adjudicating Authority have been denied in paragraph 20 of this affidavit. The details of the personal hearing are then set out and it is submitted that the Reserve Bank of India is authorised to regulate the trade of precious metals, including gold. Under the Foreign Exchange Management Act, 1999 (For short FEMA ), the Reserve Bank or India has full authority to regulate remittances and this Act read with the provisions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsistent with the above stand eventually the affidavit prays for dismissal of the petition also on merits. 59. To this affidavit with annexures, we find a rejoinder of one Mahendra Bafna. It is a joint rejoinder to the affidavit-in-reply of 12th March, 2015 and the additional affidavit-in-reply of 8th June, 2015. Before we make reference to this rejoinder affidavit, it would be necessary to refer to the additional affidavit-in-reply. According to the Joint Director of Foreign Trade, the additional affidavit-in-reply filed on 8th June, 2015, was necessitated in view of the developments during the pendency of the petition. It was also necessitated because, according to this deponent, the Director General of Foreign Trade was required to place before the Court, a further fact that the petitioners imported 550 Kgs. of gold 100% of which had to be exported after making value addition as per the provisions of the RBI Circular No.15 dated 22nd July, 2013. However, out of these 550 Kgs. of gold, the petitioners exported 350 Kgs. only. There were no exports from the balance 200 Kg. of gold and this also violates the circular. The circular was issued to address the problem of the Current ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dismissed for availability of alternate efficacious remedy. It is urged that the same is not an absolute bar for entertaining this petition. It is submitted that as a fundamental question of illegality and validity of the Circular applied by the Director General of Foreign Trade is concerned, then, the Writ Petition be entertained and this Court should give authoritative pronouncement in that regard. It is reiterated that there is no power, authority and jurisdiction conferred in the Reserve Bank of India by FEMA or its predecessor enactment, viz. The Foreign Exchange Regulation Act, 1973, (for short FERA ) to issue the subject circular seeking to restrict import of gold / bullion by a nominated agency. The various provisions of the said Act and that of The Foreign Trade Act, 1992, are relied upon to support this contention. Then, it is urged that there is no reasonable explanation or justification for passing the impugned order and imposing a penalty on the petitioner-company of ₹ 100 crore when the petitioners had paid total customs duty of ₹ 4,08,94,132/- for the consignments in question to the satisfaction of the proper officer of Customs at Ahmedabad for home co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f FEMA. In these circumstances, it is denied that the import would be governed by the impugned RBI Circular. 63. It is then urged that assuming without admitting that the bill of entry was filed post the uploading of the impugned Circular on the RBI s website, that Circular itself provided that till the instructions were not issued by the Government of India, the Customs/Director General of Foreign Trade cannot operationalise the import restriction. In the absence of separate instructions issued by the Government of India, no proceedings could have been initiated by the Director General of Foreign Trade/Customs. Then it is urged that the petitioners have never contended that the date and time of despatch of shipment as indicated in the Airway bills is the date of import. Thus, alternate and without prejudice contentions have been raised essentially to support the primary plea. The other part of the Rejoinder is nothing but denials of what is said to the contrary by the petitioners. 64. The respondent No.2 Reserve Bank of India has also filed an affidavit-in-reply in which in paragraphs 5 and 6, it is stated as under : 5. I say and submit that the Reserve Bank (herein a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultation with the Government of India to curb the above deficit. 66. It is urged that the Nominated Agency Certificate was issued to the petitioner on the condition that it will abide by the guidelines issued by the Reserve Bank of India. Thus, the certificate issued by the Director General of Foreign Trade to the petitioners from time to time designating it as a Nominated Agency under para 4A.4 of the Foreign Trade Policy for the purpose of direct import of precious metal was subject to the provisions of Foreign Trade Policy and the procedure laid thereunder, the RBI guidelines and the Customs Rules and Regulations. The affidavit states that paragraph 4 of the Policy Circular No.39 (RE-2010)/2009-14 dated 19th August, 2011, regarding Consolidated Guidelines for import of precious metal by the Nominated Agencies issued by DGFT provides that The Policy and Procedure for import of precious metal shall be as per the guidelines stated in Foreign Trade Policy (FTP) and the relevant RBI Guidelines . This circular also states that the Nominated Agencies may refer the RBI Guidelines as stated in A.P. (DIR Series) Circular No.2 dated July 9, 2004, paragraph B 15 of part III of Master C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Reserve Bank of India has no jurisdiction to regulate import of bullion. Mr. Chagla has invited our attention to page 253 of the paper book which is Annexure-UU, namely, a copy of the Order-in-Original which is impugned in the petition. Mr. Chagla would submit that the Order-in-Original proceeds on the footing that the petitioners had supplied 200 Kgs of imported gold vide bill of entry dated 23rd July, 2013 to domestic units. Thus, they failed to comply with the conditions of RBI Circular No.15 dated 22nd July, 2013. They have also violated the conditions of the Nominated Agency Certificate dated 9th April, 2013, and, therefore, violated Rule 13(2) of the Foreign Trade (Regulation) Rules, 1993, which attracts section 9(4) and 11(2) of the Foreign Trade (Development Regulation) Act, 1992, as amended. Mr. Chagla submits that the petitioners were also held guilty for violation of the conditions of the NAC because in terms of paragraph 4A.35 of the Handbook of Procedures 2009-2014, they were not eligible for renewal of the NAC for the period 2014-2015. That certificate is declared to be ab initio void. 70. Mr. Chagla submits that the findings in the impugned order would show t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is a Policy Circular No.77/2004-2008 dated 31st March, 2009, directed to all Regional Authorities, all Commissioners of Customs and the Exporting Community. That is containing guidelines for import of precious metal by the Nominated Agencies. It is submitted by Mr. Chagla that the Premier Trading Houses are entitled for direct import of precious metal and the monitoring mechanism provided therein vide paragraph 3 would make it clear that the only obligation is that at least 10% of the imports of each entity shall be supplied to the exporters. The Policy and procedure for import of precious metal shall be as per the guidelines stated in the Foreign Trade Policy and the relevant RBI guidelines. However, there were no RBI guidelines either in the form of Circular or otherwise when the imports by the petitioners took place. The petitioners have entered into the transaction prior to the Circular dated 22nd July, 2013 being issued. In these circumstances, Mr. Chagla would submit that, the impugned order insofar as it relies upon the above material cannot be sustained and must be quashed and set aside. The Joint Director General of Foreign Trade has acted beyond the jurisdiction ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms, Cochin 2009 (235) ELT 385 (SC) which outlines the power of the Government to make amendments to Foreign Policy. It is the Central Government which can, according to Mr. Chagla, make any changes or amendment in the foreign policy. Mr. Chagla has then relied upon a Division Bench judgment delivered by this Court to which both of us have been parties in the case of Alfa Laval (India) Ltd. vs. Union of India 2014 (309) ELT, 17 (Bom.). Mr. Chagla has also placed reliance upon the addendum to the show-cause notice dated 30th October, 2014, and to submit that the same tries to improve upon the original allegations and thus make out a new case for the department. 73. Mr. Chagla would submit that sections 13 to 17 of FERA came to be amended later on and in that regard he submits that the words marked by asterisk in sub-section (1) any gold or silver or were omitted by Act 29 of 1993 with effect from 8th January, 1993. Similarly, the words gold, jewellery or precious stones were omitted from sub-section (2) of section 13 of FERA by the same Amendment Act and with effect from the same date. This is relevant and germane, according to Mr. Chagla, for understanding the controversy. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies to Notification No.88 dated 22nd February, 2009, wherein additional Nominated Agencies had been notified under para 4A.4 of the Foreign Trade Policy for the purpose of direct import of precious metal for making it available to all concerned, in particular the exporting community requiring the metal for manufacture of its product. The guidelines cover the export of precious metal by Premier Trading Houses. Reference is made to para 4A.4 of the Foreign Trade Policy and Mr. Dada would submit that in clause 4 of these guidelines it is stated that the policy and procedure for import of precious metal shall be as per guidelines set out in the Foreign Trade Policy and relevant RBI guidelines. It is submitted that by Annexure-2 which is appended to Policy Circular No.77 dated 31st March, 2009, there is a reference in Note 4 to Nominated Agencies. They are obliged to follow the RBI guidelines and particularly, Circular No.2 dated 9th July, 2004 as amended from time to time. Mr. Dada would submit that the guidelines for import and supply of precious metal by Nominated Agencies may have been withdrawn by the Director General of Foreign Trade on 1st February, 2011, by Policy Circular No.14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he show-cause notice and in that regard our attention is invited to page 53 of the paper-book by Mr. Dada. He would submit that by the addendum to this showcause notice, it is amplified as to what are the violations and breaches committed by the petitioners. Mr. Dada would submit that in answer to these allegations, the petitioners do not question the authority of the RBI, but state that there is no violation of the subject Circular No.15 dated 22nd July, 2013, as the import was complete prior to the uploading of the same. For these reasons Mr. Dada would submit that every argument to the contrary should not be countenanced and the petition be dismissed. 77. Mr. Dada has relied upon the Foreign Trade Policy and the guidelines monitoring the import of precious metal by Nominated Agencies. He has also relied upon the Master Circular No.13 / 2013-2014 dated 1st July, 2013. Mr. Dada has also relied upon the Foreign Exchange Management (Current Account Transactions) Rules, 2000 and finally he would submit that the RBI Circular dated 28th January, 2014, would denote as to how the prior Circulars, particularly Circular No.25 dated 14th August, 2013, stand withdrawn with immediate effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of gold and silver or foreign exchange. By sub-section (12) which is substituted with effect from 21st July, 1978 by Act 24 of 1978, the Reserve Bank of India can transact the business of purchase and sale of gold or silver coins and gold and silver bullion and foreign exchange and the opening of gold account with the Principal Currency Authority of any foreign country or the Bank For International Settlements or any International or Regional Banks or Financial Institutions formed by such Principal Currency Authority or by authorities of the Government of any foreign country. Chapter III titled as Central Banking Function, apart from obliging the bank to transact Government business and vesting it a right in that behalf, the RBI has also a right to issue bank notes and for that purpose, by section 23 it has an Issue Department. The issue of bank notes shall be conducted by the bank in an Issue Department which shall be separated and kept wholly distinct from the Banking Department and the assets of the Issue Department shall not be subject to any liability other than the liabilities of the Issue Department in terms of section 34. By section 33, the assets of the Issue Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Act, 1999. That is an Act to consolidate and amend the law regulating certain payments, dealings in foreign exchange and security transactions indirectly affecting foreign exchange and the import of currency for the conservation of foreign exchange resources of the country and a proper utilisation thereof in the interest of the economic development of the country. Mr. Chagla makes much capital of the omission of the words and bullion from the preamble and from sections 13(1) and 13(2). So far as section 13(1) is concerned, the omission is of the words any gold or silver and gold, jewellery or precious stones . However, we do not think that such omission can have any impact or would affect the controversy raised before us. It is clear that so long as the dealings in foreign exchange and securities transactions indirectly affecting foreign exchange and the import and export of currency so also conservation of foreign exchange resources of the country and the proper utilisation thereof in the interest of the economic development of the country are the common objects in both FERA and FEMA, then, that element necessarily brings in the Reserve Bank of India and the Ministry of Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eserve Bank is satisfied that - (a) it is in public interest so to do; or (b) the authorised person has failed to comply with the condition subject to which the authorisation was granted or has contravened any of the provisions of the Act or any rule, regulation, notification, direction or order made thereunder: Provided that no such authorisation shall be revoked on any ground referred to in clause (b) unless the authorised person has been given a reasonable opportunity of making a representation in the matter. (4) An authorised person shall, in all his dealings in foreign exchange or foreign security, comply with such general or special directions or orders as the Reserve Bank may, from time to time, think fit to give, and, except with the previous permission of the Reserve Bank, an authorised person shall not engage in any transaction involving any foreign exchange or foreign security which is not in conformity with the terms of his authorisation under this section. (5) An authorised person shall, before undertaking any transaction in foreign exchange on behalf of any person, require that person to make such declaration and to give such information as w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich such contravention continues. 88. A perusal of these provisions and jointly with other sections of the Act would reveal as to how firstly the Reserve Bank of India on an application made to it can authorise any person to be known as Authorised Person to deal in foreign securities as an authorised dealer, money-changer or off-shore banking unit or in any other manner as it deems fit. Sub-sections (2), (3), (4) and (5) of section 10 would enable us to hold that the Reserve Bank of India can monitor, regulate and control the activities of such Authorised Person and the dealings that he undertakes in foreign exchange. It is also able to check the unauthorised dealings in foreign exchange. Secondly, for all the above purposes the Reserve Bank of India is empowered to issue directions to the Authorised Person. That direction is in regard to making of payment or the doing or desist from doing any act relating to foreign exchange or foreign security. By section 12, the Reserve Bank of India is empowered to inspect an Authorised Person. The other argument that penalties and which are to be imposed vide section 13 in Chapter IV of the FEMA can be imposed by the Reserve Bank of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India and for matters connected therewith or incidental thereto. After the definitions are set out in Chapter-I which include that of import and export, by Chapter II powers have been conferred in the Central Government to make order and announce foreign trade policy. Section 3 confers a specific power and the Central Government, therefore, can make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. Once this order in relation to foreign trade policy is published in the Official Gazette that indicates the policy. The Central Government by order published in the Official Gazette may also make provision for prohibiting, restricting or otherwise regulating in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the order, import or export of goods or services or technology. By sub-section (3) of section 3 it is clarified that all goods to which any order under sub-section (2) applies shall be termed to be goods, the import or export of which has been prohibited under section 11 of the Customs Act, 1962 and all the provisions of that Act shall have affect accordingly. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through its Ministry of Commerce and Zonal Director General (Joint) of Foreign Trade acted. It was empowered to impose conditions while granting or issuing the Certificates. Pertinently, the conditions at page 83 and the power to impose them are not challenged. 92. By Chapter IIIA, quantitative restrictions can be imposed by the Central Government and by Chapter IV search, seizure, penalty and confiscation is contemplated. By section 11, contravention of provisions of the 1992 Act, rules, orders and foreign trade policy is made punishable and sub-sections (2) and (3) of section 11 read as under : 11. Contravention of provisions of this Act, rules orders and foreign trade policy.- (1) (2) Where any person makes or abets or attempt to make any export or import in contravention of any provision of this Act or any rules or orders made thereunder or the foreign trade policy, he shall be liable to a penalty of not less than ten thousand rupees and not more than five times the value of the goods or services or technology in respect of which any contravention is made or attempted to be made, whichever is more. (3) Where any person signs or uses, or causes to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h that the agencies and entities mentioned in this Circular are entitled for direct import o precious metal. One of them is a Premier Trading House. Mr. Dada, therefore, is right in relying upon this Circular and to urge the the monitoring mechanism therein would permit and enable the Director General of Foreign Trade to direct that the policy and procedure for import of precious metal shall be as per the guidelines stated in the Foreign Trade Policy and the relevant Reserve Bank of India guidelines. 95. Upon a reference to these Circulars what the petitioners state that both these Circulars were withdrawn by a further Circular bearing No. 14 dated 1st February, 2011. That relaxes the norms for doing away, inter-alia, with requirement of sale of 15% quantity to exporters. Annexure F is a copy of this Circular. It is evident that this relaxes the rigour of serial number 3(c) of the Circular No.1 dated 27th August, 2009 and to a certain extent of the Circular dated 31st March, 2009 (77 of 2009). However, the petitioners refer to the status of Premier Trading House granted by the Ministry of Commerce. It also refers to the certificate of recognition as Star Trading House dated 9th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and exercise by the Reserve Bank of India is through the Authorised Dealer. The petitioners being importers, the Authorised Dealer remits foreign exchange abroad on behalf of its constituents, namely, the importer. It is in these circumstances that the petitioners are aware of what provisions of law they were required to comply and in terms of the Nominated Agency Certificate. All terms and conditions as imposed by the NAC would have to be fulfilled by them. Any breach thereof, therefore, would empower issuance of a showcause notice and demanding penalty. 96. The petitioners are aware that there was a Circular issued by the Reserve Bank of India on 22nd July, 2013. 97. With the assistance of the advocate appearing for the Reserve Bank of India we have perused the Circular issued on 13th May, 2013 by the Reserve Bank of India on the subject of import of gold by Nominated Banks / Agencies. These circulars read as under : RESERVE BANK OF INDIA Foreign Exchange Department Central Office Mumbai 400 001 RBI/2012-13/499 A.P. (DIR Series) Circular No.103 May 13, 2013 To, All Scheduled Commercial Banks which are Authorised Dealers in Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extend the provisions of this circular to all nominated agencies/ premier / star trading houses who have been permitted by Government of India to import gold. Accordingly, any import of gold on consignment basis by both nominated agencies and banks shall now be permissible only to meet the needs of exporters of gold jewellery. 2. It has further been decided that all Letters of Credit (LC) to be opened by Nominated Banks / Agencies for import of gold under all categories will be only on 100 per cent cash margin basis. Further, all imports of gold will necessarily have to be on Documents against Payment (DP) basis. Accordingly, gold imports on Documents against Acceptance (DA) basis will not be permitted. These restrictions will however not apply to import of gold to meet the needs of exporters of gold jewellery. 3. The above instructions will come into force with immediate effect. ADs may bring the contents of this circular to the notice of their constituents and customers concerned. They are also advised to strictly ensure that foreign exchange transactions effected by / for their constituents are compliant with these instructions in letter and spirit. 4. All other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y I Banks are advised to strictly ensure that foreign exchange transactions effected by / for their constituents are compliant with these instructions. 4. All other instructions relating to import of gold issued from time to time shall remain unchanged. 5. The above instructions will come into force with immediate effect. Ads may bring the contents of this circular to the notice of their constituents and customers concerned. 6. The directions contained in this circular have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law. Yours faithfully, (Rudra Narayan Kar) Chief General Manager 97A. In the series of Circulars would appear the subject Circular, namely, Circular dated 22nd July, 2013, which reads as under : RESERVE BANK OF INDIA Date: Jul 22, 2013 Import of Gold by Nominated Banks / Agencies/ Entities RBI/2013-14/148 A.P. (DIR Series) Circular No.15 July 22, 2013 To All Scheduled Commercial Banks which are Authorised Dealers (Ads) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of exports only. 4. AD Category I Banks are advised to strictly ensure that foreign transactions effected by / for their constituents are compliant with the above instructions. Head offices of nominated agencies/International Banking Divisions of banks would be responsible for monitoring operations of the revised scheme taking into account transactions put through different centres. 5. Government of India will be issuing separate instructions, if any, to the customs authorities / DGFT to operationalize put through different centres. 6. The above instructions will come into force with immediate effect. Authorised dealers may please bring the contents of this circular to the notice of the notice of their constituents and customers concerned. 7. Instructions contained in this circular have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act (FEMA), 1992 (42 of 1999), and are without prejudice to permissions / approvals, if required under any other law. Yours faithfully (Rudra Narayan Kar) Chief General Manager-in-Charge Annex An example of the working of the scheme. 1. Nominated agency ABC imports ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uses. Both these Circulars are containing a clause for import of gold exclusively for export. The petitioners being a Nominated Agency and on account of being Premier Trading House were subject to 100% export condition. The petitioners imported 550 kgs of gold during the period 22nd July, 2013 to 31st March, 2014. In paragraph 32 of the affidavit-inreply, the import of four consignments with the details of the bills of entries have been referred. The petitioners and as a matter record, imported 200 kgs of gold evidenced by the bill of entry dated 23rd July, 2013 and they were not exported by the petitioners. Therefore, the show-cause notice. It was also alleged in the show-cause notice that there is a violation of the Circular dated 22nd July, 2013. This Circular was also, on the petitioners own showing, uploaded on the website on 22nd July, 2013, at 19:47 IST. We are not entering into the controversy whether because this Circular came into force with immediate effect and, therefore, corresponded with the time at Dubai, namely, 18:47 Hrs. The affidavit-in-reply points out the reference to the Airway bills and claims that these were handed over to the Airlines only after uploading o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rove and establish import of gold and diversion of 200 kgs therefrom in the domestic market / sector. We have no reason, therefore, to reject this finding of fact. It is based on appreciation and appraisal of all relevant and germane materials placed on record. This is not a case of an order based on no evidence. It is an order based on appreciation and appraisal of the relevant and material documents before the Adjudicating Authority. The findings of fact cannot be termed as perverse or vitiated by any error of law apparent on the face of the record either. The petitioners are aware that the relevant date and time is that of filing of bill of entry and not the date and time of shipment of goods. The import into India and the above act of filing of Bills of entry are, therefore, rightly relied upon to enter a factual finding against the petitioner on the point of applicability of RBI Circular dated 22nd July, 2013. 101. We have, therefore, no hesitation in concluding that none of the contentions as raised before us by the petitioners have any merit. 102. Mr. Chagla s reliance on the judgments rendered by the Hon ble Supreme Court is of no assistance. In the first decision in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances and having been satisfied that there is no attempt to create anti dated bills of lading or contract documents that the Division Bench on the strength of the genuine material available on record directed that the Director General of Foreign Trade must consider the matter afresh. It must consider whether it was justified in refusing permission to complete the contract within the stipulated period. Pertinently, each of the factual materials were found to be genuine and bona fide. There was no attempt as before us to demonstrate that the Circular would not apply to the imports and that it is prior thereto. The present petitioners raise conflicting pleas and versions only to avoid compliance with the conditions and which are invited by them on their own. The conditions as imposed on them in the Nominated Agency Certificate and which is issued in their favour right from 2010 have never been questioned. In these circumstances, they cannot place any reliance on the Division Bench judgment. 104. In the view that we have taken, it is not necessary to deal with the argument of Mr. Dada that there is a remedy of an appeal and which alternate remedy is equally efficacious and h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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