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TMI Blog2002 (11) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... may import without payment of duty all types of goods including capital goods as defined in the EXIM policy required for its activity. The export oriented unit may procure goods required by it or in connection with its activity without payment of duty from bonded warehouses in the domestic tariff area set up under the policy and the Unit is permitted to effect Domestic Tariff Area sale of its products up to a percentage of the FOB value of the export. The petitioners have set up the EOU (Export Oriented Unit) for the manufacture of HDPE plastic bags, sheets, tapes and rolls for which the duty free import of raw material is virgin plastic granule. The petitioners have established export performance earning foreign exchange to a considerable extent. The petitioners have earned a total Domestic Tariff Area sales permission to the extent of Rs. 30.87 crores under several orders on the export of the manufactured goods. 4. It is claimed that the petitioners have established the foreign exchange realisation by the production of the Export Invoices, Bank Statement etc. The bank has also certified the earnings of foreign exchange by exports. The export performance is also supported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-9-1998 to 12-1-2001 while the DTA sales have been authorised for the prior period from 1996-97 to 1997-1998 and therefore it cannot be proceeded against or suspended. The suspension is per se illegal and violative of the policy and liable to be quashed. It is further contended that if the suspension is not quashed the petitioner will be put to serious hardship and loss. The petitioners are effecting DTA sales as per the existing policy and the privilege had been earned and by sale of rejects or waste, no prejudice will be caused to the respondents. There is no provision in the EXIM policy or Handbook by which the impugned order can be passed. Hence the present writ petition. 10. The first respondent filed a counter affidavit. According to the respondent 100% EOU scheme provides for grant of permission for setting up a new undertaking/unit which is valid for three years and the undertaking not being established within three years, a further extension of time for another three years is permissible. The permission would be granted subject to certain conditions stipulated in the Annexures to the permission. In the case of the petitioners such permission for manufacture and E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xports itself is in doubt, the question of permitting DTA sale does not arise. The DTA sale permission under Para 9.9(b) of the EXIM policy 1997-2002 entailed only concessional duty, this would have resulted in heavy loss of revenue to Government. 13. According to the second respondent the total customs duty thus evaded by the assessee is Rs. 16,13,10,303 and the Central Excise duty is Rs. 4,65,456/-. In view of the serious nature of allegations the first respondent initiated action suspending the DTA sale permission. But the first respondent has not stopped the imports and exports and normal function of the company, but has only passed order suspending the DTA sale on concessional duty, which is supported by Para 6 of the Legal Undertaking given by the petitioner. DTA sales have been granted only for a periods 1996-97 and 1997-98, the validity of the DTA sale permission would have expired on 31-3-2002 and 31-3-2001 respectively and the same is no longer available. The petitioners are not restrained from doing its normal activities of import and export which is the object of the licence granted as a 100% EOU. Only DTA sales have been suspended and not cancelled. There are a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards rejects. Clause 9.9(e) enables an Export Oriented Unit to sell finished products which are freely importable under the Policy in the DTA over and above the levels permissible under sub-paragraphs (b) and (c) of this Chapter against payment of full duties, provided they have achieved on an annual basis, the stipulated NFEP and export obligation. Clause 9.15 enumerates the various benefits for EOU/EPZ Units. The same Chapter provides for bonding and debonding in respect of bonded warehouse. Chapter X provides for deemed exports. Chapter XI provides for exports. 17. There is no doubt that in terms of the EXIM policy the petitioners have established a EOU Unit. The Foreign Trade (Development and Regulation) Act, 1992 provides for development and regulation of foreign trade by facilitating imports into, and augmenting the exports from, India and for matters connected therewith or incidental thereto. Section 2(g) defines the expression "licence". Section 2(h) defines the expression "order" and Section 2(i) defines the expression "prescribed" as prescribed by rules made in the Act. Under Section 3, the Central Government may make provision for development and regulation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es do not apply and the communication of suspension which is only an interim suspension is valid and it is not liable to be interfered by this Court under Art. 26 of the Constitution. 21. The EXIM policy lays down establishment of EOU Units, import of goods without levy of duty, export of goods and after achieving the export obligation it also enables the EOU to dispose off part of its products in the local market. The said three limbs of the policy or licence form part of the licence. A licence cannot be divided into compartments as it is a bundle of rights which confers the privilege or obligation in respect of EOU under the Export and Import Policy. The policy has been framed by virtue of the statutory powers conferred under Section 5 of the Foreign Trade (Development and Regulation) Act. Therefore, the policy as notified is also impressed with the character of a statutory notification and hence there cannot be any controversy in this respect. 22. As seen from the policy, the EOU is established in terms of the EXIM policy. Under the policy EOU is permitted to import goods free of duty. The EOU has to export, which export is free of various levies or duties or tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aragraphs (a), (b), (c) and (d) of Paragraph 9.9 or of Paragraph 9.20 of the EXIM policy, dated 1st April, 1997. The material portion of the notification reads thus :- "Exemption to all excisable goods produced in 100% EOU, FTZ, EHTP or STP Units when sold in India. - In exercise of the powers conferred by sub-section (1) of Section 5A of the Central Excises and Salt Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all excisable goods (hereinafter referred to as the said goods) specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and produced or manufactured in a hundred per cent export oriented undertaking or a free trade zone or an Electronic Hardware Technology Park (EHTP) unit or a Software Technology Parks (STP) Unit and allowed to be sold in India under and in accordance with the provisions of sub-paragraphs (a), (b), (c) and (d) of paragraph 9.9 or of Paragraph 9.20 of the Export and Import Policy, 1st April, 1997 till 31 March, 2002, from so much of the duty of excise leviable thereon under Section 3 of the said (Central Excise Act) as is in excess of the amount calc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting before suspending the licence. Such suspension could be imposed for good and sufficient reasons as it is a restriction on the licence and that part of DTA sales already earned. 30. In the present case, admittedly, the petitioner has not been given a reasonable opportunity of being heard. Section 9(4) makes no difference between a suspension of a licence as a substantial order of penalty or an interim suspension. Under section 19 of the Foreign Trade (Development and Regulation) Act, 1992, Rules have been framed. Rule 9 provides for suspension of a licence. The licence could be suspended under sub-rule (1) of Rule 9, if an order of detention has been made under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, or if such an order of detention has been passed against a partner or a Managing Director of Partnership firm or a Private Limited Company being grantee of a licence, sub-rule (2) of Rule 9 provides that the Director General or an Authorised Officer may suspend the operation of any licence under the Rules when proceeding for cancellation of such licence has been initiated under Rule 10. 31. In the present case sub-rule (1) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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