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FNS Agro Foods Ltd. & Others Versus Commissioner of Customs (Preventive) Delhi & Another

Validity of SCN dated 28th March 2014 and 19th February 2015 - Export of frozen boneless buffalo meat - Availed export incentives for the export of frozen buffalo meat under Duty Exemption Pass Book Scheme (‘DEPB’) and Vishesh Krishi and Gram Upaj Yojena (‘VKGUY’) - Contravention of provisions of the ITC (HS) read with Export (Quality Control and Inspection) Act, 1963 the 1992 Rules and Order issued vide S.O. 203 dated 15th January 1993 - Confiscation in lieu of redemption fine and imposition of .....

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ch the Petitioners had been exonerated by the DGFT after a detailed enquiry. Therefore, the very exercise of issuing the impugned SCNs stood vitiated. - Held that:- the impugned SCNs do not refer to alleged violations of the Act that are not consequential upon the alleged violations of the FTDR Act or FTR Rules. As already noticed, this aspect has already been examined thoroughly by the Dy DGFT while passing the order dated 24th September 2012. In fact, as can be seen from the body of the or .....

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ame allegations, is nothing but a harassment of the Petitioners and an abuse of the process of law. Therefore, the SCN dated 28th March 2014 issued by the Commissioner, Central Excise, Noida and the SCN dated 19th February 2015 issued by Commissioner of Customs (Export), Navi Mumbai, Maharashtra and all the proceedings consequent thereto are quashed. - Decided in favour of petitioner - W.P.(C) 6114/2014 & CM No. 14851/2014, W.P.(C) 10709/2015 & CM No. 27485/2015 - Dated:- 11-5-2016 - S. Muralidh .....

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nt No. 1) and SCN dated 19th February 2015 issued by the Commissioner of Customs (Export), Navi Mumbai, Maharashtra again on behalf of Respondent No. 1. Background Facts 2. The background to these writ petitions is that Petitioner No. 1 is engaged in the export of frozen boneless buffalo meat falling under ITC (HS) Code No. 02023000 of Export Import Policy 2009-14 and Chapter sub-heading 02023000 of Customs Tariff Act, 1975 ( CTA ). It is stated that the Petitioner has been issued IEC No. 059504 .....

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that Petitioner No. 1 availed export incentives for the export of frozen buffalo meat under Duty Exemption Pass Book Scheme ( DEPB ) and Vishesh Krishi and Gram Upaj Yojena ( VKGUY ). 4. It is further stated that under Serial No. 21 of Chapter 2 of Export Policy, 2009-14 ( Export Policy ), the export of frozen boneless buffalo meat is permissible subject to the following conditions: (i) export allowed on production of a certificate from the designated veterinary authority of the State from whic .....

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and 10 of the Foreign Trade (Regulation) Rules, 1993 ( FTR Rules ). The DGFT or an officer authorized by him (licensing authority) is the competent authority to issue suspension and cancel any licence certificate, scrip or any instrument bestowing financial or fiscal benefits to the importer or exporter. 6. Under Sections 13 and 14 of the FTDR Act, the DGFT or an officer authorized by him is empowered to adjudicate contravention of provisions of FTDR Act, Rules, Order and Foreign Trade Policy a .....

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eceipt of the slaughter house, certifying that the meat or offals are from buffalo not used for breeding and milch purposes. The dressed carcasses are processed and converted into pieces of desired sizes according to the requirement of the buyer, packed and stored at minus 18 degree C temperature at the meat processing plants of Petitioner No. 1. 8. By its letter dated 18th January 2006, Petitioner No. 1 requested the Deputy Director Animal Husbandry, Gurgaon, Haryana to draw samples of meat pro .....

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drawn by the Veterinary Officers of Meerut Division in Uttar Pradesh ( UP ) and thereafter get it tested at Animal Husbandry Disease Diagnostic Laboratory, National Capital Territory of Delhi ( NCT of Delhi ). It is stated that this permission was given and pursuant thereto a request was made to the Veterinary Department of Meerut Division to draw samples from the meat processing unit of Petitioner No. 1 and send it for testing to the diagnostic laboratory in the NCT of Delhi. 10. It is stated t .....

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o avail the benefit of DEPB and VKGUY Scheme. 11. On receipt of 'intelligence' that Petitioner No. 1 has been exporting frozen buffalo meat without valid veterinary health certificates, and without any inspection of the export goods or the ante mortem or post mortem reports of the animals slaughtered and that there was a resultant contravention of the Export of Raw Meat (Chilled/Frozen) (Quality Control and Inspection) Rules, 1992 ( the 1992 Rules'), the Customs officers conducted si .....

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of the investigation Respondent No. 1, statements were recorded under Section 108 of the Customs Act, 1962 ('Act') of several witnesses including Veterinary Assistant Surgeon, Incharge of Disease Diagnostic Laboratory, Palam, Delhi; Veterinary Officer, Noida (UP) and one at Meerut. The statement of a Director of Petitioner No. 1 was also recorded. 13. It is stated that upon conclusion of the investigation, Respondent No. 1 by his letter dated 26th March 2012 requested the Joint Director .....

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forcement Section of Jt. DGFT. A SCN was issued to Petitioner No. 1 by the Dy. DGFT on 10th April 2012. The crux of the SCN was that Petitioner No. 1 had not complied with the statutory provisions in the ITC (HS), Export Schedule-2, Chapter-2 of the Export Policy concerning the export of frozen buffalo meat and offals. The further allegation was Petitioner No. 1 had been hiring the services of two veterinary doctors of UP who had no jurisdiction whatsoever in relation to the meat processing plan .....

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vernment slaughter houses. There was no certificate issued by the said slaughter houses certifying ante and post mortem report of the animals. It was accordingly alleged that non-adherence to the restrictions prescribed in ITC (HS), prima facie have rendered exports of M/s. F.N.S. Agro Foods Limited unauthorized. It was further stated that no claim under the DEPB/VKGUY Scheme was, therefore, also inadmissible to Petitioner No. 1. Accordingly, Petitioner No. 1 was asked to show cause why its IEC .....

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ad in fact approached the Deputy Director Intensive Cattle Development Project, Gurgaon for designating a Veterinary Officer. The Director of Petitioner No. 1 appeared before the Dy. DGFT on 15th May 2012 and 7th June 2012 and submitted the relevant documents. 16. The Dy. DGFT on 23rd May 2012 sought a status report from Respondent No. 1. In response thereto, the Additional Commissioner of Customs (Preventive), Delhi informed the Dy. DGFT that they were in the process of issuing a SCN to Petitio .....

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t available in the respective exporting state then how exporters will export the goods after getting testing certificate on the basis of sample drawings. Has Custom issued any instructions to deal with such cases? If yes, then a copy of the same may please be provided to this office. (b) Has custom notified the name and address of authorized slaughter house for Haryana State, if yes then a copy of the same may please be supplied to this office? If name has not been notified by custom then, is th .....

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n the very policy making body (DGFT in this case) to devise alternatives in case authorized Government doctor(s) is/are not available in the respective exporting State and as to how the exporter will export goods in such a situation. The Customs has at no point of time, issued any instructions to deal with such cases presumable due to the fact that we do not frame Import/Export Policy not being our Charter of duties. 19. As regards question (b) it was simply stated that nothing prevents the expo .....

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on 5th September 2012, was replied to by Petitioner No. 1 on 11th September 2012 informing that they had submitted the necessary certificate dated 19th June 2008 issued by the designated Veterinary Authority, Jaipur from where the subject meat or offal emanated and which showed that the animal is male and cannot be used for milching and breeding. Thus they had fulfilled Condition No. 1 of Sl. No. 23 of Chapter 2 of Export Policy. It was clarified that there was no government designated veterina .....

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(2) & (4) read with Section 13 of the FTDR Act. Thus, all the charges against the Petitioners were dropped. SCN by the Customs Commissionerate at Noida 22. After waiting for more than a year and half, the Commissioner of Customs, Central Excise and Customs, Noida issued the impugned SCN dated 28th March 2014 asking Petitioner No. 1 and its directors (Petitioner Nos. 2 to 5) to show cause why (i) Frozen boneless buffalo meat valued at ₹ 28,69,97,814 exported through ICD Dadri during th .....

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n terms of the provisions of Section 125 of the Act; (iii) Customs duty equivalent to VKGUY/DEPB credit amounting to ₹ 1,14,70,689 already sold in open market by Petitioner No. 1 as detailed in RUD-12 should not be demanded from it by treating them as deemed importer under provisions of Section 28 of the Act read with Notification No. 41/2005-Customs 9.5.2005 and provisions and conditions on the VKGUY/DEPS licence as the case may be. (iv) Further why the proviso to Section 28 (1)/28(4) for .....

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bited goods. (vii) Penalty should not imposed upon Mr. M. Salim Khatri, Mr. Fazlu Rehman Khatri, Mr. Abdul Nasir Khatri and Mr. Naushad Khatri, all the directors of Petitioner No. 1 under Sections 114 and 114AA of the Act for various acts of omissions and commissions by them as aforesaid, relating to fraudulent exporting of prohibited goods. 23. The Petitioners replied to the said SCN on 17th April 2014 requesting for copies of the relied upon documents ( RUDs ) without which a proper reply coul .....

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to the Commissioner of Customs, Noida. While till then the Collector of Customs at Bombay had not issued any SCN in view of the earlier decision of the Dy. DGFT, the Commissioner of Customs, Noida had issued the impugned SCN. Counter affidavit and rejoinder-affidavit have been filed by the Respondents and Petitioners respectively in Writ Petition (Civil) No. 6114 of 2014. 25. During the pendency of W.P. (Civil) No. 6114 of 2014, the Collector of Customs (NS-II), Navi Mumbai, Maharashtra issued t .....

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e Petitioner 27. The principal submission of Mr. Gautam is that in respect of the very same issue which forms the subject matter of the impugned SCNs, the Dy. DGFT passed a detailed adjudication order exonerating the Petitioners from any violation of the FTDR Act or the FTR Rules. Therefore, on the same set of allegations no further SCN could have been issued by Respondent No. 1, i.e., the Commissioner of Customs (Preventive), Delhi. Mr. Gautam pointed out that the alleged violation of the Act a .....

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Finance, Government of India dated 3rd June 1997 which had clarified that as regards DEPB Scheme the role of the Customs authorities is confined to verification of correctness of exporter s declaration regarding description, quality and F.O.B. value of the export product and that the question of violation of the requirements of the Hand-Book of Procedure in terms of the Export and Import Policy should be examined by the DGFT. He referred to Section 9 of the FTDR Act which questioned the DGFT pow .....

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CN and participate in the adjudication proceedings and thereafter pursue their remedies in accordance with law. 30. According to Mr Satish Kumar, the Petitioners had contravened Rule 5 of the 1992 Rules since they failed to obtain a valid veterinary health certificate from the designated veterinary of the State Animal Husbandry Department, Government of Haryana. He submitted that the Petitioners had contravened Section 50 of the Act since they had made incorrect declarations before the Customs a .....

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sion of the Supreme Court in Chengalvaraya Naidu v. Jagannath AIR 1994 SC 853. According to the Respondents, the entire DEPB credit and VKGUY benefit availed by the Petitioners during the past five years were payable by them along with interest and penalty under Sections 114 and 114A of the Act. Analysis and Reasons 31. The Court has carefully perused the impugned SCNs dated 28th March 2014 issued by the Customs Commissioner, Noida and 19th February 2015 issued by the Customs Commissioner at Nha .....

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f the impugned SCNs read as under: (A) Provisions under ITC for export of meat and meat products (B) Provisions of the Export of Raw Meat (Chilled/Frozen) (Quality Control and Inspection), Rules 1992 (C) Directorate of Animal Husbandry of all State Governments recognized as agencies for the inspection of Raw Meat (Chilled/Frozen) (D) Government of India Order issued by S.O. 203 dated 15th January 1993 (E) Specification in Schedule VII of the Government of India Order issued by S.O. 203 dated 15t .....

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rt Incentives which again sets out the same allegation of violation by the Petitioners of the FTDR Act and the requirement of submitting certificates. The further discussion is on the other violations of the provisions of Export (Quality Control and Inspection) Act, 1963. The SCNs refers to the statement during the investigation. This is the very same material which was sent by the Customs Authorities to the DGFT on the basis of which SCN was issued by the Dy DGFT on 10th April 2012 and which re .....

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