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2016 (8) TMI 971 - GUJARAT HIGH COURT

2016 (8) TMI 971 - GUJARAT HIGH COURT - 2016 (341) E.L.T. 17 (Guj.) - Validity of statutory provisions - Imposition of penalty on company and directors - section 11(2) of the Foreign Trade (Development and Regulation) Act, 1992 section 11(3) of the act - Article 14 of the Constitution of India statutory guidelines vesting of discretionary power in the executive to impose penalty but with certain safeguards Held that: - various acts makes detailed provisions for the Central Government to .....

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annot be put in the same bracket. Thus, the legislature while in view of such situation has granted discretion to the executive, at the same time, provided for sufficient guidelines and safeguards so that such discretion does not convert into arbitrary or discretionary exercise of powers petition disposed off decided against petitioner. - Special Civil Application No. 12597 of 2016 - Dated:- 12-8-2016 - Akil Kureshi And A. J. Shastri, JJ. For the Petitioner : Mr Paresh M Dave, Advocate ORDER .....

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₹ 2.97 crores imposed under section 11(2) of the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter to be referred to as 'the said Act' for short) for customs duty involved being merely ₹ 1.91 lacs. The petitioners also contend that in the show cause notice, there is not even a proposal for imposition of penalty under section 11(2) of the said Act. 2. In the context of such background, the petitioners have also challenged the constitutional validity of subsecti .....

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ating this ground, submitted that the statutory provisions in question provide for a range of penalty which would be not less than ₹ 10,000/but could be as much as five times the value of the goods or the services or technology, in respect of which, contravention is made or attempted to be made. He submitted that there are no guidelines in the statute as to how such discretion should be exercised. Such discretionary powers, without any statutory guidelines, would be abdicating essential le .....

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ional validity of the power conferred by law came to be decided from yet another angle in the case of Air India v. Nergesh Meerza wherein it was held that a discretionary power may not necessarily be a discriminatory power but where a statute confers a power on an authority to decide matters of moment without laying down any guidelines or principles or norms, the power has to be struck down as being violative of Article 14. ii) In case of M/s. Devi Das Gopal Krishnan etc. v. State of Punjab & .....

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4. It can thus, be seen that the principle that the legislature cannot abdicate its essential legislative function into the executive is all too well accepted principle. At the same time, looking to the wide range and complex nature of activities that a welfare State engages itself into, there is a degree of tolerance to vesting of discretionary powers in the executive within the range or boundaries laid down in the legislation. 5. In case of Union of India and others v. M/s. Bhanamal Gulzarima .....

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; steel available for equitable distribution at fair prices. It is not difficult to appreciate how & why the Legislature must have thought that it would be inexpedient either to define or describe in detail all the relevant factors which have to be considered in fixing the fair price of an essential commodity from time to time. In prescribing a schedule of maximum prices the Controller has to take into account the position in respect of production of the commodities in question, the availabi .....

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icy of the Legislature having been clearly indicated by S. 3 in that behalf. The object is equitable distribution of the commodity, and for achieving the object the delegate has to see that the said commodity is available in sufficient quantities to meet the demand from time to time at fair prices. In our opinion, therefore, if cl. 11B is considered as a part of the composite scheme evidenced by the whole of the Order and its validity is examined in the light of the provisions of Ss.3 and 4 of t .....

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delegation. We have referred to this aspect of the matter at some length because it appears to have influenced the final conclusion in the judgment under appeal. As we will presently indicate the argument before us has, however, centred on the question as to whether the clause has violated Art. 19 of the Constitution. 6. In case of Vasanlal Maganbhai Sanjanwala and Anr. v. The State of Bombay, reported in AIR 1961 (SC) 4, a constitutional Bench of the Supreme Court observed that it is well settl .....

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eded such limits, cautioned that such liberal construction should not be carried out by the Court to the extent of always trying to discover a dormant or latent legislative policy to sustain an arbitrary power on executive authorities. 7. While we are examining the virus of an Act enacted by the parliament, we must recognize that the same can be struck down only on the ground of legislative incompetence or the law being violative of any of the fundamental rights or the other provisions of the Co .....

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proposition governing onus of proof and it is unjustified in the charge that the record discloses no evidence to show the necessity of the new, rule. There is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles.(1) A rule cannot be struck down as discriminatory on any a priori reasoning. "That where a party seeks to impeach the validity of a rule .....

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ion"(2). In G. D. Kelkar v. Chief Controller of Imports and Exports (?), Subba Rao C.J. speaking for the Court has cited three other decisions of the Court in support of the proposition that "unless the classification is unjust on the face of it, the onus liesupon, the party attacking the classification to show by pleading the necessary material before the court that the said classification is unreasonable and violative of Art. 16 of the Constitution." 8. With this background, we .....

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t and regulation in the foreign trade by facilitating imports and increasing exports. Section 5 empowers the Central Government to formulate and announce by notification in the official gazette the foreign trade policy and amend the same as may be required. 10. Under subsection (1) of section 6 of the Act, the Central Government may appoint a person as Director General of the Foreign Trade for the purposes of the Act. As per section 7, no person could make any import or export except under an im .....

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. Section 10 thereof empowers the Central Government to authorize a person to carry out search and seizure. Section 11 pertains to contravention of provisions of the Act, Rules, Orders and foreign trade policy. Relevant portion thereof reads as under: 11. Contravention of provisions of this Act, rules orders and foreign trade policy (1) No export or import shall be made by any person except in accordance with the provisions of this Act, the rules and orders made thereunder and the foreign trade .....

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made, signed or used, any declaration, statement or document submitted to the DirectorGeneral or any officer authorised by him under this Act, knowing or having reason to believe that such declaration, statement or document is forged or tampered with or false in any material particular, he shall be liable to a penalty of not less than ten thousand rupees or more than five times the value of the goods or services or technology in respect of which such declaration, statement or document had been .....

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enalty or confiscation and he is allowed to make representation in writing, for which, reasonable time would be granted. He may also be heard in the matter if he so desires. 12. It can thus, be seen that the said Act makes detailed provisions for the Central Government to lay down a foreign policy and conditions for import and export. As noted, section 3 empowers the Government to lay down import/export policy. Further, section 7 provides that no person would make any import or export except und .....

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ade policy for the time being in force. No restriction would be effective unless contravention thereof can be visited by penal consequences. It is in this respect, subsection (2) of section 11 provides that where any person makes or abates or attempts to make any export of import in contravention of any provision of the Act or the Rules or orders or the foreign trade policy, he would be liable to penalty. By very nature of things, such penalty has to be discretionary with a sufficiently wide ran .....

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