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TMI Blog2021 (9) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... th such import and export of goods - Sub Section 3 to Section 11 would be coming into operation only if any person submits a document, statement to the Director General or any officer authorized by him and such documents are subsequently found forged or tampered with or false in any material particular. Therefore, the circumstances of invoking the provisions for issuance of show cause notice would arise only if any person submits a document or statement etc., as contemplated under sub-section (3) to Section 11 and such documents are found to be false, forged or fraudulent. Close reading of the scheme of the Act would reveal that the Power of review is exercisable if an order of suspension or cancellation of license is passed by following the procedures as contemplated under the other sections - In the present case, the redemption certificate issued by the third respondent states that based on the statement of exports made by the petitioner, the certificate was issued. The competent authority issued a certificate, stating that export obligation has been fulfilled and such a certificate issued cannot be considered as an order passed after adjudication of issues. Redemption certifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ences, if any - Petition dismissed. - W.P.No.26863 of 2016 And W.M.P.No.23073 of 2016 - - - Dated:- 24-8-2021 - Honourable Mr.Justice S.M.Subramaniam For the Petitioner : Mr.Vijay Narayan Senior counsel For M/s.Hari Radhakrishnan For the Respondents : R1 M/s.S.Venkataswamy Babu Senior Panel counsel ORDER The writ on hand is instituted, questioning the legal validity of the show cause notice dated 20.07.2016 issued by the second respondent. 2. The petitioner is a company, engaged in the business of mining services. In the course of their business, the petitioner had obtained 38 Export Promotion Capital Goods (EPCG) authorisations, during the period 2004 to 2010. The said EPCG licences were used to import certain capital goods at concessional rate of duty and the petitioner had a corresponding export obligation to mine iron ore using these capital goods and export the same and thereby earn foreign exchange. The capital goods imported under the above EPCG authorisations were installed in the addresses mentioned and declared to the licencing authority viz., the Joint Directorate General of Foreign Trade, Coimbatore. 3. The petitioner had obtained the rede ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed an order on 02.09.2020 in W.P.Nos.21689 to 21696 of 2016, wherein the learned Single Judge of the High Court of Madras relied on the judgment of the High Court of Gujarat cited supra and relied on the judgments of M/s.Simplex Infrastructures Limited Vs. Union of India others in W.P.(c).No.4455 of 2013, decided by the Delhi High Court and allowed the writ petition on the ground that the order issued beyond the period of two years under Section 16 was without jurisdiction. 8. The relevant paragraphs of the judgment dated 02.09.2020 in W.P.Nos.21689 to 21696 of 2016 are extracted hereunder: 4. Secondly, he submitted that the impugned notices have been issued after about 10 years from the issuance of the EOD Certificate which is contrary to the limitation prescribed under the proviso to Section 16 of the Act, which prescribes a period of two years for such a power to review. 7. As rightly pointed out by the learned counsel for the petitioner, Section 16 of the FTDR Act empowers the Director General to review any decision or order made by the Joint Director of Foreign Trade. The power of review of any decision or order is only under Section 16. 8. As and when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roviso. however, says that no decision or order shall be varied under section 16 so as to prejudicially affect any person unless such person has, within a period of two years from the date of such decision or order, received a notice to show cause why such decision or order shall not be varied and has been given a reasonable opportunity of making representation, and, if he so desires, of being heard in defence. ... 33.We, thus, find that although specifically prohibited under Section 6 of the Act, the DGFT has been illegally vested with the power to intervene in the subject matters coming within the purview of Sections 3, 5, 15, 16 and 19 in clear violation of sub section(3) of Section 6 of the FTDR Act. In other words, what is specifically prohibited by the FTDR Act, by taking aid of the HOP, the D.G.F.T has assumed such power in colourable exercise of the power conferred upon it. 10. Following the aforesaid decision in Alstom India Limited, a Division Bench of the Delhi High Court in Simplex Infrastructure Ltd., Vs. Union of India others in WP.(c) No.4455 of 2013 had held that Joint DGFT has no powers to review his own orders in view of Section 16 of the FTDR A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady issued based on certain documents filed by the Petitioner. In view of the fact that the show cause notice is the original action initiated pursuant to the report submitted by the Directorate of Revenue intelligence, the same cannot be compared with the review provision for review under Section 16 of the Act. 12. The learned Senior Panel counsel referred Section 11 of the Act, which stipulates Contravention of provisions of this Act, rules, orders and foreign trade policy . Sub-section (2) and Sub-section (3) to Section 11 of the Act reads as under: (2) Where any person makes or abets or attempts 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 be made, signed or used, any declaration, statement or document submitted to the Director General or any officer authorized by him under this Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , statement or document is forged or tampered with or false in any material particular, he shall be liable to a penalty 16. Therefore, the question of traceability of such forged or tampered with or false document would arise only if any contra materials are made available to the Department. In the present case, the Director of Revenue Intelligence submitted a report that fraudulent activities were identified and further, directed to initiate action for cancellation of redemption certificate already issued. Thus, the cause of action arose for initiation of action based on the Intelligence report, which states that certain forged and fraudulent activities were carried out and by the petitioner. The original redemption certificate was issued based on the documents furnished by the petitioners in a usual manner and there was no adjudication as such in respect of these aspects at the time of issuing redemption certificate at the first instance. When routine procedures are followed in issuing certain certificate based on the informations and details furnished by the person concerned and subsequently, the authorities came to understand that such certificate or document are forged or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cancellation of certificate based on the Intelligence report is to be construed as an order, which is to be reviewed under Section 16 or to be taken as a fresh cause of action for the purpose of initiation of further proceedings by issuing a show cause notice under Section 14 of the Act. 20. The arguments as advanced by the learned Senior counsel for the petitioner that the redemption certificate is a proceedings issued by the third respondent in the present case and for cancellation of such redemption certificate, the power of review under 16 alone is exercisable and show cause notice under Section 14 would not lie. 21. In reply, the learned Senior Panel counsel said that it was not an order passed after adjudication and redemption certificate was issued based on the informations furnished by the petitioner and such certificate cannot be construed as an adjudicated order for all purposes in order to exercise the power of review under Section 16 of the Act. 22. The scheme of the Act provides Power relating to Search and Seizure under Section 10 of the Act. The Central Government shall authorize any person to enter into the premises, where the goods are kept, stored or pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the licence a reasonable opportunity of being heard but such person shall be given a reasonable opportunity of being heard within six months of such order and thereupon the Director General or the officer so authorised may, if necessary, by order in writing, confirm, modify or revoke such order. After Section 14-D of the Act, Section 16 would come into picture. Section 16 contemplates Review and therefore, such Review is exercisable in respect of an order passed, suspending or cancelling the license and before passing any such suspension or cancellation of license, Section 14, Giving of an opportunity became mandatory. 25. Close reading of the scheme of the Act would reveal that the Power of review is exercisable if an order of suspension or cancellation of license is passed by following the procedures as contemplated under the other sections as discussed in the aforementioned paragraphs. 26. In the present case, the redemption certificate issued by the third respondent states that based on the statement of exports made by the petitioner, the certificate was issued. The competent authority issued a certificate, stating that export obligation has been fulfilled and such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Intelligence wing submitted a report, based on the materials gathered that the petitioner had submitted some false statement or forged documents and obtained certificate, then it is necessary to provide an opportunity to the person, enabling him to defend his case. If at all, the report of the Directorate of Intelligence is incorrect on facts or otherwise, the petitioner is bound to defend his case by producing the documents and evidences to establish his innocence or otherwise. 28. Presuming that if the provisions of the Act is interpreted as if the unadjudicated redemption certificate issued based on the informations furnished by the petitioner is accepted as final, then there no possibility of unearthing such fraudulent or false certificate, if any produced by any such person during the course of importing or exporting. Thus, the purpose of the Act is to be interpreted constructively and more so, a purposive interpretation is to be adopted in a pragmatic manner, so as to ensure that the circumstances as contemplated are dealt with in a manner for the purpose of achieving the legislative intention. It may appears to be that Section 16 would be relevant in such circumstances, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 of the Act. 31. The impugned show cause notice issued by the respondent on 20.07.2016 categorically states that Show Cause Notice under Section 14 for action under Section 10 11(2) of FT (D R) Act, 1992 and Section 14D of Foreign Trade (Development and Regulation) Amendment Act, 2010 for cancellation of EODCs . Thus, the intention as well as the purpose for which such show cause notice was issued have been categorically stated in the show cause notice itself. The respondents have initiated action by issuing a show cause notice under Section 14 of the Act for the purpose of continuing action for cancellation of EODCs by exercising the powers under 14-D of the Act and for that purpose, the opportunity is provided to the petitioner. When the respondent could able to establish that there is a fresh cause of action after issuing the redemption certificate arose due to the report of the Director of Revenue Intelligence, and such report is the cause for issuing a show cause notice under Section 14 for the purpose of initiating action under Section10 11 (2) of FT (D R) Act, 1992, thereafter, if necessary, an order under Section 14-D is to be passed, then Section 16 Review would a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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