TMI Blog2011 (3) TMI 1395X X X X Extracts X X X X X X X X Extracts X X X X ..... that behalf, licensing authority has not taken any appropriate action as per the recommendations of the second respondent, it is not possible to accept the contention of the learned counsel for the second respondent as if the petitioner must be disentitled from effecting import or the petitioner should be imposed with certain burden for the purpose of effecting import, viz., requiring it to pay 50% of the customs duty. At this point of time, it is relevant to state that till date the customs duty has yet been assessed by the competent authority, writ petition succeed - W.P. No. 5120 of 2011 - - - Dated:- 31-3-2011 - P. Jyothimani, J. S/Shri B. Kumar, Sr. Counsel for M/s. B. Satish Sunder, for the Petitioner. S/Shri S. Umapathy and K. Ravi Anantha Padmanaban, Counsels, for the Respondent. [Order]. The writ petitioner is a registered partnership firm and they are dealers in Pulses, Grams, Grains etc. The firm is registered under the Tamil Nadu Value Added Tax Act and the Central Sales Act and they have also been allotted Import and Export Code by the Office of the Joint Director General of Foreign Trade, Ministry of Commerce, Government of India, Chennai. 2. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner. 6. It appears that summons have been issued to the petitioner under Section 108 of the Customs Act, 1962 (for brevity, the Act ), in response to which the petitioner has also submitted his objections. It also remains a fact that subsequent to the objections given by the petitioner, the department has not taken any further action. It is relevant to note that after such objection is received, it is always open to the department, under Section 28 of the Act, to issue show cause notice and after completing the adjudication process, effective orders can be passed, including that of confiscation and other measures which are enumerated under the provisions of the Act. In the case on hand, such steps are not yet taken and except the issuance of summons under Section 108 of the Act and receipt of objections from the petitioner, no further action has been taken as on date by the second respondent. 7. It also remains a fact that the licence issuing authority, which is the Ministry of Commerce, to whom the second respondent is stated to have complained about the conduct of the petitioner, has also not initiated any action. But the apprehension of the second respondent is that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... improper and the concession granted by the Government has been misused by the petitioner and for the present import during the year 2010-2011 also the investigation shows that there has been gross illegality. 11. According to the second respondent, on visiting the spot belonging to the petitioner, they have found that there was no machine and nothing of that sort is available so as to enable the petitioner to make the imported goods usable as per the terms and conditions and therefore, it is stated that if only the deposit is made by the petitioner to the value of 50% of the goods sought to be imported, the goods will be released, subject to further adjudication which will be effected by the authorities competent. 12. Mr. B. Kumar, learned Senior Counsel appearing for the petitioner would submit that while it is true that the summons were issued under Section 108 of the Act, for which the petitioner has given his objection, the adjudication process has not been commenced by the authorities so far and in such view of the matter, one cannot come to a conclusion as if the licence stands cancelled or that there is violation of the terms of the licence. According to him, even if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im made by it as if they are importing goods for the benefit of the public is fraudulent. According to him, the petitioner having availed concessional duty on a commodity which is eatable, is selling it to the public at a higher rate, which is not the intention of the Government notification. 17. Mr. S. Umapathy, learned counsel for the first respondent, who is the real licensee, would submit that while on the one hand the first respondent is bound by the terms of the contract entered by it with the petitioner, on the other hand, he first respondent is bound by the statutory activities of the second respondent in the form of investigation and therefore, by virtue of the investigation conducted by the second respondent, the first respondent had no other option than handing over the original licence to the second respondent and hence, the first respondent is unable to carry out he contractual terms in respect of the goods which are lying in the port. 18. I have heard the learned counsel on either side and perused the records. 19. Rival submissions have been made regarding the term actual user used in the terms of contract. In the terms of licence issued by the Department of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent is not insisting for the duty in respect of the year 2009-2010 and hence, we are only concerned about the present year 2010-2011, in which it is alleged that import has been made by breach of various conditions of licence. 24. Mr. B. Kumar, learned Senior Counsel has brought to the notice of this Court about the terms of Foreign Trade Policy issued by the Government of India and some of the definitions. The term actual user , which is defined in Clause 9.4, is as follows: 9.4. Actual User means an actual user who may be either industrial or non-industrial He has also brought to the notice of this Court the definition of the term manufacture as found in Clause 9.36, which is as follows : 9.36. Manufacture means to make, produce, fabricate, assemble, process or bring into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, re-packing, polishing, labelling, re-conditioning repair, remaking, refurbishing, testing, calibration, re-engineering, manufacture, for the purpose of FTP, shall also include agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in clause (b) may at the request of the person concerned be oral. In the absence of such proceedings having been initiated and proceeded with either by the second respondent or the licensing authority, it is not possible to accept the contention of the learned counsel for the second respondent that a presumption must be drawn that as on date there is a breach of licence conditions committed by the petitioner and in any event, that cannot be a ground for the second respondent in refusing to permit the petitioner, through the first respondent, to effect import in accordance with the terms of the licence and in accordance with the terms and conditions of the contract between the petitioner and the first respondent. 27. A Division Bench of the Bombay High Court in Commissioner of Customs (E.P.) v. Jupiter Exports, 2007 (213) E.L.T. 641 (Bom.) has held that whether the licence issued by Director General of Foreign Trade is valid or not is to be determined by the Director General of Foreign Trade and not by the Customs Authorities. The Bombay High Court, in paragraph (22), has held as follows : 22. With regard to the issue as to whether a license issued by the D.G.F.T. is valid o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication was very large whereas what was actually spent was a paltry amount. To be noted that the licensing Authority having taken no steps to cancel the licence. The licensing authority have 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 hat there was misrepresentation. If there was any misrepresentation, it was for the licensing authority to take steps in that behalf. 29. In the Division Bench judgment of this Court in Commissioner of Customs (SEA), Chennai v. CESTAT, Chennai, 2009 (240) E.L.T. 166 (Mad.) relied upon by the learned counsel for the second respondent, the Division Bench has held that the investigation agency is not precluded from initiating separate investigation regarding past imports and present imports. In that case, the Division Bench has construed the term actual user and while dealing with a case where fraudulent method has been used for getting the benefit under the notification, the Division Bench held that even after the redemption of licence is completed, the customs authorities are empowered to effect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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