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TMI Blog2016 (6) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... med under section 5 of the Foreign Trade (Development and Regulation) Act, 1992. Various licences had been granted to the petitioners by the respondents herein and the petitioners had also utilised licence by importing materials and goods. It is the case of the petitioners that the export obligations flowing from such licences have also been discharged by the petitioners in compliance with the provisions of the Exim Policy. It appears that the respondents herein received instructions from the Directorate of Revenue Intelligence (hereinafter referred to as "the DRI") not to issue any further licences to the petitioners herein and, therefore, when the petitioners applied for an advance licence in the prescribed form on 12th December, 2005, by a communication dated 16th December, 2005, the respondent informed the petitioners that the application/request for advance licence could not be considered in terms of the letter received from DRI, Ahmedabad. By another letter dated 16th December, 2005, the petitioners were informed that their request for advance licence could not be considered in view of the letter of the DRI and that the petitioners should take up the matter with the concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir pending files in respect of licences allotted in past and also for issuing/granting new licences considering the petitioners' application on merits; however, there was no response. In the aforesaid premises, the petitioners once again approached this court by way of a writ petition, being Special Civil Application No.10600/2012, praying that the defaulter order and the decision of the Joint DGFT in not issuing/granting any licences to the petitioners' firm under the Exim Policy be quashed and set aside. It appears that a group of eight petitions had been filed and by a common judgment and order dated 1st November, 2012, all the eight petitions came to be disposed of in the following terms:- "22. Under the circumstances, the petitions are disposed of with following directions:- (1) The orders impugned in Special Civil Applications No.10600/2012, 10602/2012, 10605/2012 and 10607/2012 are quashed. The proceedings are placed back before the respondent No.1 for fresh consideration and disposal in accordance with law. It is directed that if the respondent No.1 desires to place reliance on any material which is adverse to the petitioners, the same shall be supplied to the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal before the Additional DGFT, Bombay. By the impugned order dated 16th February, 2015, the Additional DGFT, Bombay upheld the order passed by the Joint DGFT, Surat and further imposed fiscal penalty of Rs. 25 crores on the petitioner firm under section 11(2) of the Foreign Trade (Development and Regulation) Act, which has given rise to the present petitions. 4. Mr. Paresh Dave, learned advocate for the petitioners vehemently assailed the impugned order by submitting that the same is wholly illegal and without jurisdiction, inasmuch as, penalty thereunder is imposed on the petitioner firm without there being any proposal to impose penalty on the petitioner firm in the proceedings. It was submitted that the proceedings against the petitioners are concluded in gross contravention and violation of the directions issued by this court and, therefore, there is an abuse of the process of law on the part of the respondents. It was urged that the specific directions issued by this court for taking a final decision in the matter not later than 28th February, 2013 has been violated with impunity by the respondents and that the specific direction to supply to the petitioners any material on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the court relegated the petitioners to the proceedings before the second respondent, it was not permissible for the second respondent to issue the second show-cause notice, that too, beyond the period stipulated by the court for concluding the matter and hence, the second notice is wholly without jurisdiction. It was submitted that in the aforesaid premises, the impugned orders passed by the respondents are required to be set aside. It was argued that in view of the fact that the business of the petitioners have been closed down, the question of issuing fresh licences may not arise; however, the EODCs applications made by the petitioners are to be decided independently and expeditiously. 5. Opposing the petitions, Ms. Maithili Mehta, learned standing counsel for the respondents placed reliance upon the contents of the affidavit-in-reply filed on behalf of the respondents wherein their stand is that the petitioner herein by not joining the Directorate of Revenue Intelligence or the Central Excise authorities had tried to obtain undue advantage. It is the case of the respondents in the affidavit-in-reply that inquiries made by the DGFT, Surat reveal that M/s. Khan Garments with wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the illegalities committed by the petitioners, the penalty imposed under section 11(2) of the Foreign Trade (Development and Regulation) Act, 1992 is wholly justified. It was, accordingly, urged that the respondents have duly complied with the directions issued by this court while passing the impugned order and hence, there is no warrant for interference by this court. 6. From the facts noted hereinabove, it is apparent that in connection with the show-cause notice issued by the respondents, the petitioners had approached this court by way of writ petitions being Special Civil Application No.10600/2012 and allied matters. Such petitions came to be disposed of by this court by issuing the directions which have been extracted hereinabove, The facts as emerging from the record reveal that pursuant to the order dated 1st November, 2012 passed by this court, the second respondent after a considerable delay and much beyond the time stipulated by this court, by an order dated 14th August, 2013 decided not to issue any licences/authorizations and EODCs to the petitioner firm. According to the said respondent, the investigation conducted by DRI, Ahmedabad had been communicated in the showc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, Hyderabad and from the Development Commissioner, Vishakhapatnam. In paragraph 23, reference is made to the report dated 8th September, 2006 of the Central Excise office to DGFT, Surat and the subsequent paragraph refers to independent investigation carried out by the Joint DGFT and the report received from the Development Commissioner, SEZ, Vishakhapatnam vide letter dated 19th October, 2006. Having regard to the dates of the reports referred to in these paragraphs, it is evident that all this material relates to a period much before Special Civil Application No.10600/2012 and allied matters came up for hearing before the High Court. In paragraph 25 of the impugned order, reference is made to the above reports and the statement of Nirmal Tarachand Sharma as recorded by the DRI under section 108 of the Customs Act, 1962. In the next paragraph, reference is made to the DRI findings and in paragraph 27, reference is made to the adjudication order dated 7th May, 2014 made by the customs authorities pursuant to the show-cause notice issued by DRI on 5th February, 2007. It may be noted that the order-in-original which was subject matter of challenge before the first respondent is dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resultant Products to 100% EOUs nor have they fulfilled the AU condition. Further, the Commissioner of Customs during his investigation has found that the imported material on which duty waiver has been taken by the appellant has been sold in the local market violating AU condition. 31. I, therefore, hold the appellants guilty of contravening the provisions of Rule 13(2) of the Foreign Trade Regulations Rules, 1993 i.e. for disposing the materials imported duty free against the advance licences in a manner contrary to the conditions in violation of the terms and conditions of the advance licences." In the light of the above findings recorded by her, the first respondent has upheld the order-in-original passed by the second respondent and considering the gravity of the offence and the fraud committed by the first petitioner, in exercise of powers vested in her under section 15(2) of the Foreign Trade (Development and Regulation) Act, 1992, imposed a fiscal penalty of Rs. 25 crores on the company under section 11(2) of the said Act. 9. On a plain reading of the impugned order and more particularly, considering the findings recorded by the first respondent, it is evident that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firms. Thereafter, the concerned central excise office sent a letter dated 18th March, 2013 to the DGFT, Surat confirming that all ARE-3 are verified and found correct. DGFT, Surat wrote a letter on 22nd April, 2013 to the central excise office for further verification of ARE-3 and it was found that in reply to a DGFT letter dated 28th August, 2006, a reply dated 8th September, 2006 was received from the office of the Superintendent of Customs and Central Excise, Patancheru, which revealed that M/s. Khan Garments with whom the petitioner was carrying business only on paper is defunct and not in operation for a long period and no person is available at the said address etc. Evidently therefore, contradictory information has been received by the respondents from the Central Excise authorities at Surat and from the authorities at Patancheru. However, no explanation is forthcoming as to why the reports of the Central Excise authorities at Surat confirming the supplies made by the petitioners are sought to be discarded and the inquiry made from the Customs and Central Excise authorities at Patancheru is found to be more reliable. Thus, it appears that all material in favour of the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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