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2015 (6) TMI 816 - MADRAS HIGH COURT

2015 (6) TMI 816 - MADRAS HIGH COURT - 2015 (322) E.L.T. 452 (Mad.) - Confiscation of goods - Enhancement of value of goods - DGFT Notification No. 65(RE-2010)/2009-2014 dated 04.08.2011 - Held that:- DGFT has not resorted to change of categorization of items, i.e. from the category of free export to category of restricted export , but as a sequel to earlier notification No.18, which fixed the floor price of US $ 50 per square meter, the present impugned Notification has been issued. Therefore, .....

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Act, the Central Government is only empowered to formulate and announce the export and import policy.

Therefore, when the DGFT Notification dated 04.08.2011 allowed free import of marble blocks/tiles provided the CIF value is US $ 60 and above per sq. mt., the petitioners were expected to declare the same, however, contrary to the same, they have declared below the US $ 60 and thereby, the authority has rightly confiscated the same and therefore, confiscation of the goods is justified .....

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4 dated 04.08.2011 issued in F.No.01/89/ 180/Misc-06/AM-08/PC-2(A) by the Director General of Foreign Trade (DGFT), the second respondent herein and quash the same and also quash the consequential orders passed by the third respondent. 2. The petitioner companies are engaged in the business of import and trading in marbles, granites and other stones. It appears that the petitioner companies had imported the marbles, polished slabs at the declared unit price of below US$ 60 per sq.mtr. However, t .....

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n option to redeem on payment of duty. 3. Consequently, the third respondent initiated proceedings under Section 124 of the Customs Act 1962 (in short The Act ) and passed the impugned orders dated 19.12.2011, 19.12.2011 and 28.08.2014 respectively, by imposing penalties as mentioned therein. Aggrieved by the same, the petitioners have come forward with the present Writ Petitions, challenging the DGFT Notification No.65(RE-2010)/2009-2014 dated 04.08.2011. 4. A counter affidavit has been filed o .....

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on import of items falling under Chapter 68. While announcing the importable policy for the year 2011-2012, the floor price under Chapter 68 was reviewed and increased from US$ 50 per sq.mtr. to US$ 60 per sq.mtr. vide Notification No.65 dated 04.08.2012, after a period of three years. The second respondent, on behalf of the Central Government, is fully empowered to frame and amend the Foreign Trade Policy under Section 3 and 5 of the Foreign Trade (Development and Regulation Act 1992) (in short .....

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para 2.1 is to be read with para 1.3 of Foreign Trade Policy with detailed conditions prescribed for import of rough marble, for the purpose of section 9(2) of the Act. 6. It is also stated that as against the order passed by the third respondent, the petitioners are having appeal remedy and without exhausting of the same, the petitioners have come forward with these Writ Petitions, which are not maintainable. Hence the respondents 1 and 2 sought for dismissal of the Writ Petitions. 7. A counte .....

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ention of import policy and thus the imported goods become liable for confiscation under Section 111(d) of Customs Act, 1962 read with Section 3(3) of the FTDR Act, for importing the same in violation of the above said Notification No.65(RE-2010)/2009-2014 dated 04.08.2011. The importers have also become liable for penal action under Section 112(a) of the Customs Act, 1962 for having rendered the goods liable for confiscation. 8. In view of the violation of the above said provisions, the goods w .....

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n No.65(RE-2010)/2009-2014 dated 04.08.2011 as well as the impugned orders of confiscation and penalty, passed by the third respondent, Mr.Hari Radhakrishnan, the learned counsel appearing for the petitioners would contend that the impugned notification has been issued by the Director General of Foreign Trade who has no jurisdiction to issue the notification, since Section 5 of the FTDR Act only empowers the Central Government to formulate and announce the export and import policy and also to am .....

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o contended that the power of prohibition, restriction or regulation of the imports and exports is conferred on the Central Government by virtue of Section 3 of the FTDR Act and Section 3(2) states that the power has to be exercised by a way of an order published in the official gazette and while so, by virtue of impugned notification, the Central Government has sought to restrict the import of the marbles, which can only be done by way of issuing an order under Section 3 and not by way of notif .....

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ng the value of goods can be done only under the Customs Act and Customs Tariff Act. Therefore, the learned Counsel sought for setting aside the impugned notification and orders passed by the third respondent. 10. Heard the learned counsel on either side and perused the documents available on record. 11. In exercise of its powers under Section 5 of the said Act, the Central Government has been announcing and publishing EXIM Policy from time to time and for the period 2009-2014, the EXIM Policy a .....

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of the policy. Para 2.4 of Chapter 2 empowers the DGFT to specify the procedure to be followed by an exporter or importer or by any licensing/regional authority in implementing provisions of FTDR Act and the Orders made thereunder and FTP and that, such procedures or amendments if any, shall be published by means of a public notice. Under the said para, DGFT is empowered to amend the procedure and publish the same by way of public notice. 12. The FTDR Act is enacted to provide for the developmen .....

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he Central Government is empowered from time to time to formulate and announce by a notification in the Official Gazette the EXIM Policy and it may also amend that policy from time to time. Under Section 6, DGFT is empowered to advise the Central Government in the formulation of EXIM Policy and shall be responsible for carrying out that policy. Under Section 6(3) of the Act, 1992 only the Central Government is empowered to amend Foreign Trade Policy. 13. As already stated, under Para 2.3 of FTP .....

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FTP is exclusively vested in the Central Government whereas the power to clarify is vested in DGFT. 15. Section 5 of the FTDR Act contemplates amendment to FTP. It empowers only the Central Government to amend the policy. This power is not given to DGFT. In "Atul Commodities (P) Ltd., versus Commissioner of Customs", having noted the fact that the circulars issued by the DGFT, by which, the import policy itself was given effect to by changing the categorisation of items from the categ .....

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from Section 6 of the FTDR Act which is primarily to advise the Central Government in formulation of the Foreign Trade Policy with further responsibility to carry out the same. Sub-section 3 of Section 6 of the FTDR Act put a fetter on the Central Government to delegate any power on the DGFT exercisable under Section 3, 5, 15, 16 & 19 of the FTDR Act. It is relevant to quote Section 6 which reads thus: "6. Appointment of Director General and his functions.- (1) The Central Government ma .....

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to such conditions, by the Director-General or such other officer subordinate to the Director General, as may be specified in the Order." 17. A conjoint reading of the aforesaid provisions would indicate that the power to formulate and announce the Foreign Trade Policy vests in the Central Government and the functions of the DGFT is to advise the Central Government at the time of formulation of the Foreign Trade Policy and responsibility for carrying out the same. The power of prohibition, .....

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ernment may also, by Order published in the Official Gazette, make provision for prohibiting, restricting or otherwise regulating, in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the Order, the import or export of goods or services or technology: Provided that the provisions of this sub-section shall be applicable, in case of import or export of services or technology, only when the service or technology provider is availing benefi .....

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ary for import or export of any goods, nor any goods shall be prohibited for import or export except, as may be required under this Act, or rules or orders made thereunder." 18. Reverting to the case on hand, during August, 2005, the Central Government has introduced a floor price on processed marble products classified under Chapter 68 and a floor price of US$ 2700 per cubic meter was imposed on processed marble products such as tiles, monumental blocks, slabs etc., vide Notification No.23 .....

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.mtr. to US$ 60 per sq.mtr. vide Notification No.65 dated 04.08.2012, after a period of three years. 19. It is to be noted that the petitioners have come forward with the present Writ Petitions challenging only the Notification No.65, dated 4.8.2012 by which, it seems that the petitioners are aggrieved by imposition of floor price at US $60 per sq.mt. and they had no grievance in respect of earlier Notifications, which imposed US $50 per sq.mt. As discussed above, it is no doubt true that the DG .....

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per square metre. This was given effect to by the DGFT by the Notification No.65 (RE-2010)/2009-2014, which has been impugned in these writ petitions. In fact, the Notification announcing the Foreign Trade Policy, 2009-2014 was published under the aegis of the DGFT who is also an Ex-Officer Additional Secretary to the Government of India. Therefore, the DGFT not only assumes the power as a delegatee of the Central Government under Section 6 of the FTDR Act, but also competent as an authorized o .....

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