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TMI Blog2013 (11) TMI 1001X X X X Extracts X X X X X X X X Extracts X X X X ..... ere the exports are covered by restraints under the provisions of Agreement on Textile and Clothing. Similar policy was notified by the Government for previous years as well. Under the said policy, export of garments and knit-wears to certain countries such as USA, Canada and European Union known as „Quota Countries" could be undertaken only on the basis of quota allotted to the exporters by the respondents - Apparel Export Promotion Council (AEPC) which was to function as Quota Administering Authority, in terms of the said notification. The quota for the export for each allotment was to be allocated under the following system at the rate indicated against each of them: System of Allotment Percentage of Annual Level (a) Past Performance Entitlement (PPE) System (out of which HVE) 70%(5%) (b) New Investor‟s Entitlement (NIE) System 15% (c) Non Quota Entitlement (NQE) System 5% (d) First Come First Served (FCFS) System 10% Total 100 (ii) Quantities that become available from time to time on account of surrenders, flexibilities or otherwise shall also be allocated under the First Come First Served (FCFS) System. The allotment of quota was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arnishes the image of the country and affects bilateral agreement on account of such non-utilization, AEPC used to release additional quantities of quota so as to ensure optimum utilization. 4. In case the quota utilization was above 90%, AEPC did not forfeit any part of BG. There was proportionate forfeiture of BG in case the utilization was between 75% to 90% of the quota, whereas the entire bank guarantee was forfeited in case the utilization was less than 75%. Before forfeiting BG/EMD, the AEPC had to issue show cause notice to the exporter and it has been passing an adjudication orders after giving opportunity of reply and hearing to them. The order of adjudication could also be challenged before the prescribed Appellate Authorities. While applying for quota, as well as seeking its revalidation, the exporter give an undertaking to utilize the entire quota without fail. 5. In W.P(C) No.1218/2008, a show cause notice dated 26.6.2002 was issued to the said petitioner on account of non-utilization of FCFS quota for the year 2001. After considering its reply and finding failure to undertake export, the adjudication order dated 11.9.2002 was passed forfeiting a sum of Rs.2,31,377 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uota utilized was only 58.13%. One of the second appeals filed by the petitioner was dismissed whereas the other second appeal was partly allowed vide order dated 30.9.2003. The petitioner filed a writ petition before the Karnataka High Court which came to be dismissed for want of territorial jurisdiction. 8. In W.P(C) No.1216/2008, a show cause notice dated 11.4.2005 was issued to the petitioner on account of non-utilization of quota for the year 2004 and seeking forfeiture of a sum of Rs.1,19,539/-. Since no reply was furnished, the Adjudicating Authority after considering the matter upheld forfeiture of the entire amount vide order dated 31.8.2005. In the first appeal, the petitioner alleged late receipt of quota for the second cut-off and also claimed that the buyer did not extend the shipment date and, therefore, they honoured the order by using PPE Quota. The said appeal, however, was dismissed vide order dated 23.11.2005. The second appeal filed by the petitioner came to be dismissed vide order dated 27.2.2006 since no one appeared for the petitioner and the plea taken in the appeal did not find favour with the Second Appellate Authority. The petitioner filed a writ petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned orders have been assailed by the petitioners on the following three grounds:- i. Quotas are allotted by individual countries for each category. For example, if USA is allotting quota of one lakh pieces to India then the Quota Issuing Authority in India cannot issue quota for more than one lakh pieces. As per Garment Export Entitlement Policy, the said allocation is distributed in various hands and though there can be variation of each quantity against each head, the total quantity cannot exceed the quantity allocated by the importing country. AEPC, however, has been allocating excess quota and such act of AEPC being ultra vires the Garment Export Entitlement Policy, it has no right to impose penalty in terms of the said policy; ii. For the purpose of computing quota utilization, AEPC is calculating the percentage of extended quantity alone, i.e., the quota extended up to 31st December of the year and is not taking into consideration the quantity exported during the whole of the year as a result, if a person exports say 900 pieces prior to 30th September, takes extension for 100 pieces and then exports 50 out of those 100 pieces up to 31st December, his utilization is ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he quota up to 31st December is only a concession given to the exporters who are otherwise expected to utilize the first part up to 31st May and the second part up to 30th September of the year. The aforesaid extension granted to the exporters has no linkage with the quota released by AEPC to the exporters and is given on a specific undertaking give by the exporters to utilize the said quota up to 31st December of the relevant year. As noted earlier, the exporter, while obtaining such extension unequivocally and unconditionally guarantees to utilize the said quota and furnish proof of shipment of goods to AEPC. He also agrees unconditionally that in the event his failing to utilize the export entitlement and furnish its proof to AEPC, he would pay the amount of EMD/BG, without any demur and without raising any controversy with respect to the demand raised by AEPC on account of such a default. Nothing prevents the exporters from surrendering the quota which he could not utilize till 30th September and he is under no obligation to seek extension from AEPC on the condition of furnishing BG/EMD which is liable to be forfeited in case of default being committed by them. Having failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill 30th September, which can be extended up to 31st December of the year on payment of EMD/BG at the specified rates. There is no extension of the first part of the quota which is valid till 31st of May. Therefore, for the purpose of computing the quota utilization, AEPC is required to take into consideration only the export undertaken after such extension and not the export undertaken during the whole of the year. The extension of time to fulfil the export obligation being confined to quota valid till 30th September of the year, AEPC is fully justified in not considering the exports against the quota which was not the subject matter of extension. The view taken by AEPC in this regard is fully justified not only under the policy of the Government, but also under its contractual obligations with the exporter. 16. A similar contention was rejected by this Court in Gokaldas Images Ltd. Ors. vs. Union of India and Anr.116(2005) DLT 47. The contention of the petitioners in that case finds mention in para 13 and 14 which reads as under:- "13. The second issue raised by learned senior counsel for the petitioners is about the methodology to determine utilization of the export entitlemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ior period. This is the methodology adopted by the respondents while determining the performance of the exporter dependent on the extended quota and rightly so." Thus, this issue is no more res integra. 17. I find no merit in the last contention of the petitioners as well. As noted earlier, despite releasing additional quota to the exporters, the Government could not achieve the desired results and, therefore, imposing penalty on the defaulting exporters in terms of the undertaking given by them to AEPC sub-serves a valid public interest. In the absence of such penalty, there may be further shortfall in the quota utilization as there would be no pressure on the exporters to achieve the desired target. In any case, there is no material before the Court to show that in the years in which there was shortfall in utilization of second part of the quota on the part of the petitioners, the country was able to achieve 100% or at least 89% capacity utilization. The plea taken by the petitioners, therefore, is liable to be rejected. 18. For the reasons stated hereinabove, I find no merit in the writ petitions and the same is hereby dismissed. Interim order, if any, stand vacated. No orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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