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TMI Blog2024 (1) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... te authority could only be the authority which issued the license viz., DGFT and not the customs authorities. In the instant case on hand, the principle laid down in Titan Medical Systems (P) Ltd v. Collector of Customs, New Delhi would only be applicable. It is an undisputed fact that Director General of Foreign Trade [DGFT] has issued the license under Section 9 of Foreign Trade Development and Regulation Act, 1992 [FTDR Act] and thereby issued SEIS Scrips [Service Exports from India Scheme]. Though DGFT has issued show cause notices on various dates viz., 1st SCN on 21.10.2020, 2nd SCN and 3rd SCN on 03.02.2021 and an order dated 23.10.2020 came to be passed by DGFT placing the petitioner under the Denied Entities List, the same were withdrawn in entirety by virtue of letter dated 20.09.2021. It is also undisputed that till date, DGFT has not initiated any steps to cancel the license issued by them and hence, this Court is of the considered view that the show cause notice dated 24th November 2020 issued by the second Respondent is without any jurisdiction. This Court is of the considered view that the show cause notice dated 24th November 2020 issued by the second Responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed placing the petitioner under the Denied Entities List. Further, the Deputy Director General of Foreign Trade, Mumbai also issued two show cause notices [2nd SCN and 3rd SCN], both dated 03.02.2021 proposing to cancel the SEIS Scrips issued to the petitioner. However, during the course of the proceedings, the Deputy Director General of Foreign Trade informed the petitioner that the 1st SCN dated 21.10.2020, Order dated 23.10.2020, 2nd and 3rd SCN dated 03.02.2021 were withdrawn by virtue of a letter dated 20.09.2021 and it was further stated that a detailed show cause notice would be issued, if required, after thorough examination of the material available on record. 5. Learned counsel appearing on behalf of the petitioner would contend that in terms of the circular issued by the Department of Revenue, Ministry of Finance vide Circular No.334/1/2012-TRU dated 01.06.2012, the respondent will have to issue show cause notice to recover the duties in accordance with Section 28 AAA of the Customs Act from the person to whom an instrument such as SEIS Scrips was issued and where such instrument was obtained by means of collusion or wilful misstatement or suppression of facts for w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in (2015) 10 SCC 581 will apply to the facts of the present case, however it is to be noted that in the aforesaid case the Hon'ble Apex Court has not followed the principle laid down in the case of Titan Medical Systems (P) Ltd v. Collector of Customs, New Delhi reported in (2003) 9 SCC 133. 8. Heard the learned counsel appearing on behalf of the petitioner and the learned counsels appearing on behalf of the respondents. 9. The petitioner has come before this Court challenging the impugned show cause notice dated 24.11.2020 issued by the second respondent. According to the petitioner, notice has been issued under the provisions of Section 28 AAA of the Act without any jurisdiction. The impugned notice is contrary to the Circular No.334/1/2012-TRU dated 01.06.2012. Only the officers of DGFT have the jurisdiction to enquire into the eligibility and validity of SEIS Scrips and not the second respondent who had issued the impugned show cause notice. Notices have been caused against the petitioner by two different departments pertaining to the very same issue. 10. It is the contention of the learned counsel appearing on behalf of the petitioner that Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the said provision. Field formation are advised to issue demands as soon as DGFT/concerned regional Authority initiates action for cancellation of an instrument but the matter may be decided only after the instrument has been cancelled by DGFT. 12. A reading of the above circular shows that the Customs authorities can initiate action for recovery in terms of Section 28AAA of the Customs Act, 1962 if the Scrips was obtained by means of collusion or willful misstatement or suppression of facts. However, action can be initiated for recovery of duty only after DGFT initiates action for cancellation of an instrument but the matter may be decided only after the instrument has been cancelled by DGFT. 13. In the instant case, though DGFT has issued show cause notices on various dates viz., 1st SCN on 21.10.2020, 2nd SCN and 3rd SCN on 03.02.2021 and an order dated 23.10.2020 came to be passed by DGFT placing the petitioner under the Denied Entities List, the same were withdrawn in entirety by virtue of letter dated 20.09.2021. The DGFT is the proper authority to issue license under Section 9 of Foreign Trade Development and Regulation Act, 1992 [FTDR Act] and to issue SEIS Scrip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regards the contention that the appellants were not entitled to the benefit of the exemption notification as they had misrepresented to the licensing authority, it was fairly admitted that there was no requirement for issuance of a licence that an applicant set out the quantity or value of the indigenous components which would be used in the manufacture. Undoubtedly, while applying for a licence, the appellants set out the components they would use and their value. However, the value was only an estimate. It is not the respondents' case that the components were not used. The only case is that the value which had been indicated in the application was very large whereas what was actually spent was a paltry amount. To be noted that the licensing Authority has taken no steps to cancel the licence. The licensing authority has not claimed that there was any misrepresentation. Once an advance licence was issued and not questioned by the licensing authority, the customs Authorities cannot refuse exemption on an allegation that there was misrepresentation. If there was any misrepresentation, it was for the licensing authority to take steps in that behalf.' 16. In the above case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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