9911796707
TMI Blog2013 (8) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... der the GR-I Category which was readily available without any premium, actually exported items covered under the GR-II Category which was widely sought after and commanded a premium in the market by forging Visas obtained under the GR I category and making them appear as Visas obtained under GR II category; and (ii) Having obtained a quota under the GR II category the Petitioner did not undertake actual exports but fabricated bank realisation certificates of the Bombay Mercantile Cooperative Bank for establishing the utilization of the quota. 3. Under the WTO agreement on Textiles and Clothings, export of certain textile product categories from India to the United States, member countries of the European Union and to Canada was circumscribed within specified annual quantitative restraints, called Textile Quota limits. The Union Government was regulating exports falling in such textile product categories through Export Entitlement (Quota) Policies which were notified under the provisions of the Exim Policy. On 12 November 1999 the Union Government, in the Ministry of Textiles, notified a policy for allotment of entitlements for the years 2000 to 2004 in respect of exports of yarn f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined under GR I Category to appear as Visas under GR II Category and; (ii) The Petitioner obtained a Quota under GR II Category (Bed Linen/Bed Sheets/Pillow cases); yet it did not undertake actual exports, but submitted false and forged bank documents while proving the utilization of the quota." The Petitioner, who was exporting textile products under the Quota Policy for 2000 and 2004, was allotted quotas in respect of both of Group I and Group II textiles. Quotas for Group II covered items such as Bed Linen which were in high demand. According to the allegation, the Petitioner forged export documents and utilized the quota allotted under Group I to actually export goods which fell in Group II. As a result, the quota which could have been legitimately utilized for exporting products falling in Group II was fully used up resulting in an embargo being imposed by the U.S. Authorities. All subsequent exports in Group II textile to the U.S. were prevented. Other legitimate exporters who could have utilized their allotted quotas in Group II were unable to fulfil their export contracts. Moreover the Petitioner, having obtained quotas under the Group I failed to fully utiliz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted back to the 1st Respondent for considering afresh the question as to whether payment of compensation could be ordered, penalties could be levied and directions to the Petitioner to deposit various amounts could be issued by the 1st Respondent together with a recommendation to the Director General of Foreign Trade to suspend the import export code number issued to the Petitioner. 7. The judgment of the Division Bench would indicate that what was left open for determination on remand was whether the 1st Respondent in the course of its adjudication had the power to impose a penalty, to order the payment of compensation and to issue recommendations to the Director General of Foreign Trade. After the order of remand was passed by this Court, a supplementary notice to show cause was issued by the Respondents on 4 August 2010. The notice laid bare the allegations made against the Petitioner in regard to the forgery of shipping documents and falsification of documents. The Petitioner was called upon to show cause as to why the following amounts should not be recovered in terms of the notification dated 12 November 1999 and 9 November 2004 and under the Foreign Trade (Development and R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and the Appellate Authority in confirming those findings has not acted in accordance with law. 10. On the other hand, it is urged on behalfe of the Respondents that : (i) The notification dated 12 November 1999 is issued by the Union Government in pursuance of the provisions of the Exim Policy and the statutory source of power is to be found in Section 3(2) and Section 5 of the Foreign Trade (Development and Regulation) Act, 1992; (ii) The function of the Enforcement Committee is to deal with cases involving fraudulent activities, misrepresentation of facts and falsification of documents or forgery amongst other things in connection with obtaining, utilising or proving the utilization of quotas; (iii) The conferment of the power is all encompassing and is in the widest possible terms and when it deals with cases involving fraudulent activities or misrepresentation of facts, the Enforcement Committee must have all incidental and ancillary powers to deal with wrong doing; (iv) Para 17(v) of the notification dated 12 November 1999 is not exhaustive of the powers of the Enforcement Committee. To hold that the Enforcement Committee merely has the power to debar an exporter from obta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e export and import policy and to amend the policy. Section 7 stipulates that no person shall make any import or export except under an Importer-exporter Code Number granted by the Director-General or the officer authorised by him. Section 8 provides for suspension and cancellation of the Importer-exporter Code Number. Section 9 provides for issue, suspension and cancellation of licenses. Section 11(1) provides that no export or import shall be made by any person except in accordance with the Act or the rules and orders made thereunder and in accordance with the export import policy for the time being in force. Section 11(2) provides that where any person makes or abets or attempts to make any export or import in contravention of the Act, rules, orders or the policy, he shall be liable to a penalty of not less than ten thousand rupees and not more than five times the value of the goods in respect of which any contravention is made or attempted to be made, whichever is more. Under Section 13 any penalty may be imposed or a confiscation can be adjudged under the Act by the Director-General or subject to such limits as may be specified, by such other officer as the Central Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31 December 2004. The Union Government considered it necessary in the public interest and national interest that though the quota regime was to come to an end, to continue the applicability of the earlier notification with a view to (i) continue the appeal and review provisions in respect of EMD forfeiture orders, and (ii) continue with the existing mechanism to deal with cases of non-performance and short performance of quota obligations. Consequently, by a subsequent notification dated 9 November 2004 it was provided that the cessation of the earlier notification shall not affect the residuary functions of the notification, particularly in certain specified matters. The relevant provisions in that regard were as follows :- "(1) The cessation of Notification No. 1/129/99-Exports-I dated 12th November 1999 (including its amendments) and the predecessor Notifications concerning Yarn, Fabrics & Made-ups Export Entitlement (Quota) Policy on 31st December 2004 shall not affect the operation of the residuary functions of these Notifications, and in particular, of the following provisions contained therein :- (a) Provisions relating to the Quota Administering A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nistration v. Ram Singh - AIR 1962 SC 63. This view has also been taken by the Supreme Court in the Constitution Bench judgment of Sachidananda Benerji v. Sitaram Agarwal - AIR 1966 SC 955 (See para 18) = 1999 (110) E.L.T. 292 (S.C.) "Deal with" is an expression of wide import and ambit. When the quota policy confers the substantive power on the Enforcement Committee to deal with cases involving, inter alia, fraudulent activity misrepresentation of fact and falsification of documents or forgery, all incidental and ancillary powers necessary to achieve the substantive object, must be regarded as being vested in the Enforcement Committee. Evidently, the Enforcement Committee was constituted specifically to deal with cases involving serious malpractices and fraud and, therefore, it would be natural to expect that the conferment of power to deal with those cases was accompanied by the vesting of the authority in the Enforcement Committee to take necessary action to deal with abuse or malpractice. Clause (v) of Para 17 states that where a Committee holds an exporter guilty of fraud or other irregularities, it is entitled to debar the exporter from obtaining entitlements and from partici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication stipulates that a penalty, confiscation or punishment may be imposed as if the earlier notification continued to remain in force and the provisions of the Act would be applicable to the notification. The subsequent notification, therefore, leaves no manner of doubt that the ambit of the earlier notification was broad and was not confined to the action which could be adopted by the Committee under clause (v) of Para 17. Clause (v) of Para 17 is illustrative of the nature of the powers which could be exercised by the Enforcement Committee but the Committee was entitled to act independently under clause (iii) of Para 17 when it deals with cases involving serious malpractices of the nature adverted therein. 16. In the present case, the earlier order of the Division Bench dated 7 May 2010 concluded, as the judgment holds, the issue of debarment of the Petitioner as well as the acts and omissions which constitute the foundation for debarment. That aspect, as a matter of fact, was not challenged before the Division Bench. The finding of fact which has been recorded against the Petitioner is that the Petitioner having obtained the benefit under the GR I category which was availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 2005. The Committee noted that the exporter had all along prepared and kept separate documents with the wilful intention of fraudulently getting the EMD released on the basis of forged documents. Significantly, the Committee noted that none of the Bank realization certificates contained in the CD had been issued by the Bombay Mercantile Co-operative Bank while the entire set of bogus documents submitted for proving the utilization of quotas was shown as having been issued by that Bank. As we have noted earlier, the finding of fabrication and/or fabrication of documents was confirmed by the earlier judgment of the Division Bench which had attained finality. But quite independent of that, the Committee has, in our view, reiterated the findings of fact in its impugned order which is sustainable on the basis of the material on record. 18. The Committee in the first instance made a demand of compensation in the amount of Rs. 5.68 crores which represents the amount which the exporter would have spent on obtaining quotas from the open market for a total quantity of 7.57 Million Square Meters shipped unauthorisedly during the period January-October 2004. This figure has been arrived at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any monies due and payable under the said circulars and/or demand allotment letters and/or a statement by Texprocil that the obligor has committed such breach or has committed such default shall be binding on the parties hereto, and the surety shall forthwith on demand pay without demur and without questioning or challenging the sum or sums demanded to Texprocil." The finding against the Petitioner is that it was on the basis of fabricated documents that the Petitioner obtained a release of the EMD. But for the wrong doing on the part of the Petitioner, the Union Government would have been in a position to invoke the bank guarantees. Thus, the demand for payment of Rs. 3.05 crores is in order to set right the consequences which emanated from the wrong doing of the Petitioner. 20. The Committee has imposed a penalty in the amount of 25% of the amounts which the Petitioner has been directed to bring back namely Rs. 5.69 crores and 3.05 crores respectively. As we have noted earlier, the notification dated 12 November 1999 is clearly relatable to the statutory power of the Union Government under Section 3(2) of the Foreign Trade (Development and Regulation) Act, 1992. In imposing a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
