TMI Blog2014 (10) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... he shortfall in the achievement of target. We are concerned with serious allegations made in the show cause notice. Therefore, what applies to a genuine exporter under the circular bearing No.12/2008, cannot be used as a shield by the petitioner. Hence, the first writ petition challenging the show case notice is liable to be dismissed. There is one more reason as to why the first writ petition deserves to be dismissed. The show cause notice impugned therein is dated 18.4.2011. The petitioner kept on dillydallying for a period of more than a year seeking time to submit objections. It is only in August 2012, after a gap of about 16 months of dillydallying, that the petitioner came up with the first writ petition. Therefore, there are no bona fides in the challenge made by the petitioner to the show cause notice. The first respondent issued the impugned show cause notice to the petitioner as well as the transferees. In the event of the first respondent fixing the responsibility jointly and severally upon all of them, the petitioner can always proceed against the transferees in accordance with the terms and conditions of the contract that they have with the transferees. Since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Foreign Trade Policy, 2004-2009. As per the letter of permission so granted, the petitioner was entitled to import capital goods worth ₹ 2500 lakhs, by availing the benefits of Notification No.153/93 dated 13.8.1993. But, the goods and services were to be used for the purpose of export of software and IT services by the STP Units located within the infrastructure facility at the park. The permission for import of items was valid for a period of two years from the date of issue of the letter of permission. 5. On 31.1.2007, the petitioner entered into an agreement with the Software Technology Park of India, binding itself to the obligations and conditions of the letter of permission and a green card was issued to the petitioner on 31.1.2007. In pursuance of the above, the premises was declared as a private bonded warehouse by the Department of Central Excise. Therefore, the petitioner caused import of capital goods availing the benefit of the exemption Notification. 6. Thereafter, the petitioner handed over Block-1 of the IT Park to the two transferee companies such as E-lights Technopark Private Limited and Pacifica Infrastructure Company Private Limited in March ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Information Technology of the Ministry of Communications and Information Technology. Upon receipt of a copy of the minutes of the meeting, the petitioner submitted a supporting document to the Director of Software Technology Parks of India. But thereafter nothing had happened. 10. Therefore, the petitioner has come up with the second writ petition namely W.P.No.31308 of 2012 seeking the issue of a Writ of Mandamus to direct the Software Technology Parks of India to give effect to the orders of the second respondent dated 24.7.2012 in accordance with the decision taken by the Inter Ministerial Standing Committee in its meeting held on 5.7.2012. In this writ petition, notice was ordered on 22.11.2012. Thereafter, both the writ petitions were clubbed together. 11. I have heard Mr.B.Kumar, learned Senior Counsel appearing for the writ petitioners, Mr.T.Chandrasekaran, learned Standing Counsel for the Department of Central Excise, Mrs.R.Maheswari, learned Senior Central Government Standing Counsel for the Software Technology Parks of India and Mr.G.Balasubramaniam, learned counsel for the impleaded party, which is one of the transferee companies. 12. At the outset, it shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the transfer of their 74% undivided interest in the land and building. Subsequently, the petitioner also entered into one more agreement on 7.12.2005 with Pacific Infrastructure Company Private Limited and another agreement dated 25.1.2006 with E-lights Technopark Private Limited. I do not know how, after entering into an agreement for the transfer of the property rights, the petitioner could have submitted a proposal. 17. The first letter of approval of the Government for setting up of infrastructure facility for STP Units under the STP Scheme was conveyed by the Government only on 22.12.2006. It is under this approval that the petitioner was permitted to import goods valued at ₹ 2,500 lakhs as per the Customs Notification dated 13.8.1993. By this time, the petitioner had already transferred their rights in favour of two companies. There is nothing on record to show that the petitioner informed the Government of India about the transfer to the two companies. In fact, the letter of approval requires the petitioner to furnish progress reports for the implementation of the project on a quarterly basis. This condition could have never been complied with by the petitioner i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility to levy penalty would arise only as against the transferees, the petitioner can always take up this issue in reply to the show cause notice. 23. As a matter of fact, the impugned show cause notice has three consequences for the noticees. They are (i) declaration that the imported goods are not entitled to the exemption Notification; (ii) confiscation; and (iii) levy of penalty. If the petitioner had already transferred the capital goods to the special purpose vehicle and the other company, the declaration as well as the confiscation would naturally fall upon the goods, in respect of which, the petitioner has ceased to be the owner. Therefore, the petitioner will be left with only one issue namely levy of penalty. The petitioner can always give a reply to the show cause notice and point out that they are not responsible. 24. It is relevant to point out that disputes have arisen between the petitioner and the transferee companies and they have already invoked arbitration proceedings. Therefore, even if the first respondent passes an order holding the petitioner or the transferees jointly or severally liable, the petitioner can always seek appropriate remedies against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner. The requirement of a definite conclusion by the Development Commissioner before Customs/Central Excise Authorities can initiate action, at times, causes inordinate delay in effecting duty recovery from a unit in the event of non fulfillment of export obligation as no action can be initiated till a conclusion is arrived at by the Development Commissioner. C AG in Chapter I of Audit Report No.7 of 2007 (Indirect Taxes - Performance Audit) on 'Hundred percent Export Oriented Units' has observed adversely on the delay in recovery of duty from the defaulting EOUs. This issue has been reviewed in consultation with the Department of Commerce. It has been decided that after the block of 5 years, final decision would be taken by the Development Commissioner with respect to fulfillment of export obligation as far as possible within 6 months but positively within one year. An amendment to this effect has also been made in Para 3(ii) of Part (A) of Appendix 14-I-G to HBP. Thus, duty, if any, may be demanded in the event of default in achieving NFE from a unit after a block of 5 years in accordance with the conclusion arrived at by the Development Commissioner/D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rees in accordance with the terms and conditions of the contract that they have with the transferees. Since the exemption was granted only to the petitioner on condition that the petitioner fulfills an export obligation, the petitioner cannot turn around and say that the transferees are the beneficiaries of the exemption and that the responsibility to fulfill export obligation should be fixed only upon the transferees. Therefore, the first writ petition deserves to be dismissed. 33. Accordingly, W.P.No.23259 of 2012 is dismissed. No costs. Consequently, the above MP is also dismissed. 34. However, if an order of confiscation and imposition of penalty is passed against the petitioner, it is always open to them to proceed against the transferees, subject to the defenses available to the transferees, in a manner known to law. The mutual rights and obligations between the petitioner and their transferees can be worked out in those collateral proceedings, after the Commissioner of Central Excise passes an order pursuant to the impugned show cause notice. 35. Coming to the second writ petition, it is seen that the prayer therein is for a Mandamus to direct the first respondent t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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