TMI Blog2012 (10) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... nses as well. Since the main objective of both the licenses is to earn foreign exchange, which is achieved even when sales are made to foreign tourists, the plea of the respondents that deemed exports can be done only in case of REP license cannot be accepted. In the facts and circumstances it is clear that the respondents have turned a blind eye to the genuine problem faced by the petitioners, the real cause for the termination of the export order, and the subsequent foreign exchange earned by the petitioner, beyond the export obligations attached to the advance license has not been denied. Thus solely on the technical ground that the petitioners had not sought the permission of the competent authority before affecting the deemed exports, and that the DEEC Books were not maintained, such strict mechanical application of the provisions of Import and Export Policy in the facts and circumstances cannot be accepted, when the substantive intent behind the issuance of the advance license has been achieved by the petitioners. In these circumstances imposition of any penalty on the petitioners will be iniquitous and not justifiable considering the objective of the policy. Thus, for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nse to the petitioner on 5th January, 1982 for only half the quantity applied for by the petitioners i.e. license was given for the import of 212.8 metric tonnes of stainless steel or the CIF value of Rs. 45,43,280/- only. One of the conditions for the issuance of the advance license was that a bank guarantee for the sum of Rs 90, 86,500/-was to be given by petitioner no.1 and also that the goods exported against the Advance License were to be utilized in accordance with the provisions of the customs notifications, as amended from time to time. It was further stipulated that in case the petitioner failed to export the utensils manufactured out of the imported steel, then it would be liable to pay to the customs authorities the amount of duty which otherwise would have been payable on the imported material of which the corresponding export was not made. The petitioners were, however, not liable to pay any duty on the stainless steel imported by them against the above-mentioned license for the manufacture of utensils etc. if such utensils/ cutlery of the value of Rs. 45,43,289/- were actually exported and consequently, foreign-exchange was earned by the country. The petitioners howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s cancelled and a request was made to dispose of the goods to some other party or to at least delay the supplies till May, 1983. According to the petitioner since the goods were manufactured as per the special specifications laid down by M/s V K Topline, it was not acceptable to any other foreign exporter in bulk and thus the petitioners were constrained to fulfill their export obligation by resorting to the officially recognized method of effecting 'deemed exports' of the entire lot of the utensils manufactured by them, out of the quantity of the stainless steel which was actually imported. Therefore, the petitioners sold the said goods to foreign tourists on temporary visits to India, against the foreign exchange paid by them, through M/s. Deepamani, Bombay, which is a registered foreign exchange dealer, duly licensed by the Reserve bank of India. As a result of this measure, the Petitioner No.1 was able to earn foreign exchange of Rs.59,32,271.75/- for the country, by the sale of 157.09 metric tons of steel against the official expectations of earning foreign exchange of Rs. 53,24,000/- 6. After effecting the exports from July 1983 to February/March 1984 the petitioner, by l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dutiable, on account of non furnishing of any proof of fulfillment of the export obligation. Thereafter a written statement was filed in response to the show cause notice dated 1st January, 1985 issued to the petitioner and the counsel for the petitioners also appeared before respondent no.3 on 18th January, 1985 and submitted that the export effected by the petitioner falls under the category of deemed export . According to the petitioner the respondent was also satisfied regarding the aspect of deemed export however, the only objection raised at the time, was with respect to the fact that no entries were made in the DEEC of the exports effected by the petitioners. On account of this objection, a clarification was also sought by the petitioners by a letter dated 24th January, 1985 on the objection raised by respondents no.4, who, by official letter dated 28th January, 1985 informed the petitioner that no entries are required to be made in the DEEC book relating to Deemed exports to foreign tourists against foreign exchange. The petitioner communicated the letter dated 28th January, 1985 to the respondents, however, by letter dated 28th February, 1985 respondent no.2 stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also placed reliance on the decision of Supreme Court in the case of M/s Liberty Oil Mills and Others vs. Union of India and Others (Civil Appeal No. 274 of 1984), wherein the Apex Court had interpreted clause 8(B) of the Import(Control) Order, 1955 and contended that without extending the period of abeyance, the respondents are treating the petitioner as under abeyance, which was not in existence at the time, thereby, leading to serious public injury, as substantial amount of foreign exchange is being lost and a large number of workers of the petitioner's are being rendered liable to retrenchment. It was also submitted that after filing the writ petition before this Court, the petitioner supplied 190,18 Shaper machines to Vocational Training Project, which was aided by the World Bank. Under the 1992-97 EXIM Policy, a supply of equipment to World Bank aided projects fell within the ambit of deemed exports . According to the petitioners supplied were made from the period of 9th July, 1993 to 18th July, 1995 and a total amount of Rs. 14,06,000/- was refundable towards Terminal Excise Duty, for which order have to be passed by the DGFT. The petitioner also executed two other orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty exemption Scheme, was applicable in the case of supplies to projects in India against contracts entered with IBRD/IDA, Bilateral, Multilateral external assistance, ONGC, OIL, GAIL, these supplies were treated as deemed exports, however, this does not mean that sales to foreign tourists would also be deemed exports automatically covered under the duty exemption scheme for advance licenses, when the said scheme specifically provides for import of duty-free material required for the manufacture and the export of the said goods outside the country. 11. The learned counsel for the respondents has contended that "Deemed Exports , "Tourist sale as well as advance license are all separately defined and that the exporter had the option to opt for any scheme as per his requirement and since the petitioners opted for the duty exemption scheme under the advance license and enjoyed the benefits under the said scheme, such as high premium on imported inputs they cannot take the plea of discrimination now. It is also pointed out that the petitioners were required to export goods physically out of the country, whereas, they have simply diverted the imported raw material and sold the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the export obligation, and thereby contravened the provisions of the IMPEX Act and Customs Act. 13. The Respondent also submitted that the petitioner, instead of approaching this court, should have in the normal course filed the reply to the show cause notice and represented before the adjudicating authority. The respondent have justified the abeyance order dated 13th December, 1984 vide order number 33/84 85/ASR under The Import (Control) Order, 1955 on the ground that the same was passed in public interest as the petitioner did not export any of the goods, and instead they sold the same to the foreign tourists in the domestic market to give it a color of export which is in violation of the provisions of the duty exemption scheme. According to respondent it is a case of fraudulently availing high premium on duty-free imported inputs and abusing the legal process for 25 years by delaying the payment of custom duty with interest. 14. The petitioners, thereafter, have filed a rejoinder dated 7th August, 2006 against the pleas and contentions raised by the respondent by contending inter alia that it is the respondents who have delayed the proceeding, as they filed their counte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per export obligation. The allegation of availing huge premiums on imported raw material was also denied by the petitioners and it was urged that the petitioner no.1 is a reputable company and that it has never entered into any illegal activities and that the respondents themselves have failed to substantiate these allegations by way of documentary proof. 15. This Court has heard the learned counsel for the parties, and examined the writ petition, reply of the respondents and the documents filed by the parties and the provisions of the Import Policy April 1981-March1982 and the Handbook of Import-Export Procedures 1981-1982. It is clear from the pleas and contentions that the main issue that needs to be adjudicated in the present matter is whether or not deemed exports by sale of goods to foreign tourists will be covered under the scheme of Advance License especially in the present facts and circumstances of the petitioners. The learned counsel for the respondents has contended that sale to foreign tourists cannot be accepted as exports for the fulfillment of export obligation against an advance license which requires that physical export of the goods takes place outside the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d spreads, bed covers, Cotton stoles, scarves, shawls and Cotton furnishing material, (f) Ready-made garments, (g) Silk fabrics and made-up articles, including furnishing material, (h) Consumer electronics items, (i) Disc records, (j) Books/stationery, and (k) Stainless steel utensils/cutlery. 17. Thus, it is clear on examining the said provisions, that there is no such stipulation that deemed exports by sale to foreign tourists would only be covered under REP Licenses and not Advance Licenses or any other licenses, as has been asserted by the learned counsel for the respondents. Para 157 merely specifies that sale to foreign tourists in respect of the certain goods which would qualify for import replenishment under the Import Policy for Registered Exporters. It is thus apparent that under the Import Policy, Registered Exporters have the option of either availing an REP License, Advance License, or an Imprest License. It is also cannot be disputed that the petitioner no.1. is a certified registered user, and consequently he is covered under the provisions of Chapter 17 titled as Import Policy for Registered Exporters of the Import policy April 1981-March1982. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e intent behind the two schemes is the same, even though the procedural technicalities might differ, due to the difference in the stages at which they are applicable. That the two schemes are similar in their substantive intent is also clear from the fact that REP Licenses are inter-changeable or convertible to Advance Licenses. This is evident from the contents of Para 10, Pg 20 of the Handbook of Import Export Procedures 1981-1982 which states that in incase of applying for a fresh license under the scheme, it will also be open to the exporter to get any of the following types of licenses, which includes Import Replenishment (REP) Licenses, converted into advance license under the scheme, provided the items to be imported are covered by the license. The learned counsel for the respondents, however, has heavily relied on the subsequent endorsement in Para 10 stating that for conversion of the other licenses to advance license, the exporter will be required to follow the same procedure as if he were to apply for a fresh advance license, to contend that this clearly proves that the two licenses are entirely different. However, this court does not accept such inference as drawn by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mport Policy 1981-82 gave the Government the power to appropriately deal with the Policy relaxations on a case to case basis. Para 167 is reproduced as follows: Relaxation of Policy 167. Cases for relaxation of the existing policy where it creates genuine hardship or where a strict application of the existing policy is likely to affect the export effort adversely will be considered by CCI E on merits. 24. In the present facts and circumstances it is not disputed that the petitioner had obtained an advance license for 212.8 Metric Tons of the CIF value of Rs. 45,43,280/-, against which the petitioner had actually imported only 180 Metric Tons of the stainless steel of the CIF value of Rs. 35,50,192.70/-. Thereafter, on account of conflict between the President and the Managing Director of the Foreign importer, which couldn't be resolved in the near future, the export order on the basis of which the advance license was obtained had been terminated. However, the petitioners had already utilized the imported stainless steel and made the products of the unique specifications demanded by the Foreign Company, due to which reason they were faced with the predicament of finding anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case it is clear that the hardship suffered by the petitioner was bonafide, which was verified by the respondents as well, and that inspite of the dire circumstances, the petitioners sought to dispose of their export obligations by making genuine sales to foreign tourists and getting consideration for sale in foreign exchange which was the primary and main objective of the scheme. 26. The respondents have failed to negate the veracity of the documents appended to the writ petition in proof of the foreign exchange earned by the petitioner, or establish any illegality to the documentary proof given by them. Their only stand at every stage has been that the sale made to the foreign tourists who paid the consideration in foreign exchange cannot be accepted as exports for the fulfillment of export obligation against advance license. In the facts and circumstances, however, the respondents have failed to establish as to how when the petitioners had earned the foreign exchange of Rs. 59,30,000/- against the estimated export obligation of Rs. 53,00,000/-, they have not fulfilled their export obligation. 27. The learned counsel for the respondents has also taken up another techn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the legal provisions, in order to negate arbitrariness or discrimination. Procedures cannot negate the substantive intent of the policies and cannot be restricted to become mere technicalities. Procedures have to construed in a manner as to promote and achieve the object of the policy, rather than allow it to destroy substantive intent of it. 30. In Pasupuleti Venkateshwarlu v. The Motor and General Traders (AIR 1975 SC 1409) it was observed by the Apex Court that procedure is the handmaid and not the mistress of the judicial process and that equity justifies bending the rules of procedure, where no specific provision or fair play is violated, with a view to promote substantial justice subject of course, to the absence of other disentitling factors or just circumstances. 31. In Mangalore Chemicals Fertilizers v. Deputy Commissioner of Commercial Taxes (1991) 83 STC 234 the Supreme Court had enunciated the principle that a distinction between the provisions of a statute which are of substantive character and were built-in with certain specific objectives of the policy on the one hand and those which are merely procedural and technical in their nature on the other must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort Policy, rather than a restrictive view on the ground of procedural compliance, is in principle very pertinent to the facts of the present case. In the circumstances it is apparent that the petitioners had a bona fide hardship, which they tried to overcome and meet the requirement of export liability by effecting deemed exports and did earn the requisite foreign exchange, though not in the manner as had been envisaged by the respondents. The allegation that the petitioners earned huge premium has remained unsubstantiated and it is rather a reckless allegations made by the respondents without any factual and legal basis. Thus solely on the ground that permission was not sought before making the sale to the foreign tourists from the competent authority, especially since the respondents were very much aware of the fact that the foreign importer had cancelled the export order, and that all documentary proof was provided to substantiate the foreign exchange ultimately earned by the petitioners, it cannot be held that the petitioners had not discharged their export obligation and the petitioners are thus liable to pay the duty demanded by the impugned order. 34. From the above discu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cific assertion by the petitioners, the respondents have failed to explain the calculation or the basis on which the said amount was imposed on the petitioners, as duty to be paid in view of non-fulfillment of export obligation. In any case since it has been established that the export obligation of the advance license had been fulfilled by the petitioners, therefore, the order dated 30th January, 1985 deserves to be set aside. 37. The Respondents have also submitted that the petitioner, instead of approaching this court, should have in a normal course filed the reply to the show cause notice and represented before the adjudicating authority, and that thus this Court ought to refrain itself from interfering under Article 226 of the Indian Constitution. However, from the record it is clear that the petitioner had replied to the show cause notice issued against him, along with many applications, however, ultimately respondent no. 2 had passed the order dated 14th May, 1986 holding that the petitioner had not complied with the export obligation and thus was liable for the payment of custom duty of Rs. 88,55,966.58 with 18% interest without giving a reasonable opportunity to the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In para 69 and 70 at page 211, the Court had held as under;- "69. We are not impressed by the submission. It is a true and very well established proposition of law that when an alternative and equally efficacious remedy is open to a litigant he should be required to pursue that remedy and not to invoke the special jurisdiction of the High Court under Article 226 of the Constitution of India. It is equally well settled that the existence of a statutory remedy does not affect the jurisdiction of the High Court to issue a writ. It may be one of the factors that may have to be taken into consideration in the matter of granting writs. It is a rule of self imposed limitation, a rule of policy, and discretion rather than a rule of law. The Court in exceptional cases can always issue a writ such as a writ of certiorari, notwithstanding the fact that the statutory remedies have not been exhausted. There are at least two well-recognised exceptions to the doctrine with regard to the exhaustion of statutory remedies. In the first place, it is well settled that where proceedings are taken before a Tribunal under a provision of law, which is ultra vires, it is open to a party aggrieved thereb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and merits. In Coffee Board, Bangalore v. Joint Commissioner Tax Officer, Madras and Anr, AIR 1971 SC 870 , it was held in a case where demand of tax was not backed by valid law, the petitioner would have a right to move the Supreme Court for enforcement of fundamental rights. In light of the prepositions laid down by the various Courts it cannot be held that the writ petition will be barred, as alternative remedy is available to the petitioners. 42. In any case the petitioners have taken an alternative plea also that they became entitled to the REP License for 50% of the deemed export of Rs. 59,50,072.45. The petitioners were therefore, entitled to exemption from the duty on goods of a value of approx. Rs. 29,75,362 against which the petitioner has imported goods of value Rs. 33,53,228.60. Therefore the petitioner is at the most liable to pay duty of 220% on the differential amount of Rs. 3,78,192.35, which amounts to a duty of Rs. 8,32,023.17 only. However, since this Court has already held that the petitioners had met their export liability, the petitioners shall not be liable for this amount, in case their liability is construed in this manner. 43. The petitioner has fur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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