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TMI Blog2025 (2) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... ck period, the petitioner has been permitted to carry out export and import transactions and ultimately, the petitioner company achieved positive NFE which was submitted along with the letter dated 02.03.2012 before the respondent. It would, therefore, germane to refer the condition of achieving NFE by the SEZ unit as per Rule 53 as it existed prior to 2019. As per sub-rule (2) of Rule 54 of the SEZ Rules, SEZ unit is liable for penal action under the provisions of the FTDR Act in case the Approval Committee come to the conclusion that the a unit has not achieved positive Net Foreign Exchange Earning or stipulated Value Addition as specified in Rule 53 or such unit has failed to abide by any of the terms and conditions of the Letter of Approval or Bond-cum-Legal Undertaking. In the facts of the case on hand, there is no dispute that the petitioner unit has achieved positive NFE for the block of 5 years, i.e. from 2005-06 to 2009-10. Therefore, no penalty could have been imposed upon the petitioner unit, more particularly when Rule 54 (2) of the SEZ Rules only stipulates for achieving the positive NFE. It is also pertinent to note that the petitioner unit has also provided valid r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eased to issue a Writ of Certiorari and/ or Mandamus or a Writ in the nature of Certiorari/ Mandamus or any other Writ or Order or Direction quashing and setting aside the impugned order dated 24.03.2019 passed by the Appellate Authority (at Annexure-A hereto) and thereby consequently quash and set aside the order dated 23.09.2013 passed by Development Commissioner-KASEZ imposing penalty of Rs. 17.10 Lacs (at Annexure-T hereto);" 6. The Court (Coram: Hon'ble Ms. Justice Harsha Devani and Hon'ble Ms. Justice Sangeeta K. Vishen) passed the following order on 18.10.2019: "1. Mr. Nandish Chudgar, learned advocate for the petitioner invited the attention of the court to the appellate order dated 12.3.2013 passed by the Appellate Committee, to point out that it is recorded therein that the representative of the Deputy Commissioner, KASEZ agreed that the unit achieved positive NFE in the extra time which was provided to them. It was submitted that thus it was an admitted position that extra time was granted to the petitioner and that the petitioner has achieved positive NFE during that period. It was submitted that subsequently in the remand, the Deputy Commissioner has stated that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years, i.e. from 2005-06 to 2009-10 and there was deficit of Rs.114 lakhs. 7.4 The respondent Development Commissioner, SEZ-KASEZ, therefore, issued a show cause notice dated 27.12.2010 to the petitioner company under section 13 read with section 11 of the Foreign Trade (Development and Regulation) Act, 1992 (for short 'FTDR Act') and Rule 54 (2) of Special Economic Zones Rules, 2006 (for short 'SEZ Rules') calling upon the petitioner to show cause as to why the penalty should not be imposed upon the petitioner unit for not achieving positive NFE for the said block of 5 years commencing from 20.03.2005. 7.5 It appears that the order-in-original was passed by the respondent suspending all the activities of the petitioner unit and other exports on 12.08.2011. The petitioner thereafter represented before the respondent to protect the petitioner unit to carry out the activities of the export and import subject to various conditions. Accordingly, after undertaking was filed by the petitioner company to the effect that the petitioner company would complete the export assignments before 31.12.2011 so as to neutralize the negative NFE of Rs. 114 lakhs for block / phase ending on 31.03.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her there is case for imposition of penalty. If yes, then quantum may be decided." 7.10 Pursuant to the aforesaid order, the respondent Development Commissioner again adjudicated the issue of levy of penalty and provided an opportunity of hearing to the representative of the petitioner company. The respondent Development Commissioner, after considering the facts of the case, came to the conclusion that there was no extension of three months as contended by the petitioner as there was no extension upto October 2011 and the petitioner had filed undertaking to clear the negative NFE upto 31.12.2011 which was never granted and no order to that effect was available on record. It appears that the respondent taking lenient view reduced penalty of Rs. 17.10 lakh. 7.11 Being aggrieved by the order-in-original dated 23.09.2013, the petitioner preferred an appeal before the Appellate Authority who, by order dated 24.04.2019, rejected the appeal observing as under: "6.0 I have considered the Adjudication Order dated 23.09.2013 passed by DC, KASEZ, oral/written submissions made by the appellant, comments of office of the DC, KASEZ and all other aspects relevant to the case. It is noted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority, would reduce the assets of the company which is facing financial hardships, for which insolvency proceedings are initiated. 9. On the other hand, learned advocate Mr. P.Y. Divyeshvar for the respondent Development Commissioner submitted that the petitioner company did not approach the Development Commissioner with clean hands and in spite of the fact that there is no extension granted by the respondent, undertaking dated 13.09.2011 was submitted stating that the petitioner company would achieve positive NFE by 31.12.2011 accordingly. It was, therefore, submitted that the respondent was justified in taking lenient view by reducing Rs.114.98 lakhs to Rs. 17.10 lakhs keeping in mind the fact that the petitioner company fulfilled the condition of achieving positive NFE for the block period from 2005-06 to 2009 to 2010. It was submitted that the Appellate Authority considering the facts of the case has rightly not interfered with the discretion exercised by the respondent Development Commissioner for imposition of penalty as per provisions of section 13 read with section 11 of FTDR Act and Rule 54 (2) of SEZ Rules. It was, therefore, submitted that no interference is called fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Value Addition as specified in rule 53 or failed to abide by any of the terms and conditions of the Letter of Approval or Bond-cum-Legal Undertaking, without prejudice to the action that may be taken under any other law for the time being in force, the said Unit shall be liable for penal action under the provisions of the Foreign Trade (Development and Regulation) Act, 1992." 13. As per sub-rule (2) of Rule 54 of the SEZ Rules, SEZ unit is liable for penal action under the provisions of the FTDR Act in case the Approval Committee come to the conclusion that the a unit has not achieved positive Net Foreign Exchange Earning or stipulated Value Addition as specified in Rule 53 or such unit has failed to abide by any of the terms and conditions of the Letter of Approval or Bond-cum-Legal Undertaking. 14. However, in the facts of the case on hand, there is no dispute that the petitioner unit has achieved positive NFE for the block of 5 years, i.e. from 2005-06 to 2009-10. Therefore, no penalty could have been imposed upon the petitioner unit, more particularly when Rule 54 (2) of the SEZ Rules only stipulates for achieving the positive NFE. It is also pertinent to note that the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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