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M/s Supreme Castings Ltd. Versus Joint Director General of Foreign Trade, Green Field, Ludhiana And Another

2016 (9) TMI 776 - PUNJAB & HARYANA HIGH COURT

Cancellation of DEPB license - Section 9(4) of the 1992 Act - imposition of penalty under Section 11(2) of the Foreign Trade (Development and Regulation) Act, 1992 - export of consigmnent of hand tools - Bank Certificate of Export Realization - licence as defined in Section 2 (g) - issue, suspension and cancellation of licence - Section 9 - Chapter 7 of the Export and Import Policy, 1997-2002 - Notification No. 1(RE-99)/1997-2202 dated 31-3-2000 - validity of DEPB licence - Held that: - the DEPB .....

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All these actions are after the expiry of the period of validity of the DEPB. - Once the period of validity of the DEPB has expired no action to cancel or withdraw it can be taken because then there is no ‘DEPB' in existence to be cancelled and on which the cancellation order can operate. Cancellation of DEPB in such a situation is a meaningless order and can have no consequence. - Section 9(4) enables the Director General or officer authorised by him to cancel or suspend the licence - .....

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gh Sidhu, J. This writ petition has been filed praying for quashing the order dated 30.11.2004 (Annexure P-3) whereby the DEPB No. 3010005384 dated 25.8.2000 for ₹ 9,30,514/- was cancelled and a penalty of ₹ 2,00,000/- imposed on the petitioner and the order dated 07.02.2006 (Annexure P-6) whereby the appeal of the petitioner against that order has been dismissed. 2. The petitioner is a public limited company and is stated to be engaged in the manufacture of hand tools. It exported a .....

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e three shipping bills issued a common DEPB of ₹ 9,30,515/- on 25.8.2000. 4. Respondent No. 1, issued a show cause notice dated 20.10.2003 proposing to impose penalty under Section 11(2) of the Foreign Trade (Development and Regulation) Act, 1992 (for short the ₹ 1992 Act'). It was alleged therein that the petitioner in connivance with the custom officials had got ante-dated copy of shipping bill. The specific allegation was that the material was actually exported on 04.04.2000 w .....

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Foreign Trade- Respondent No. 1, the DEPB dated 25.8.2000 for ₹ 9,30,514/- was cancelled. The cancellation order was passed in exercise of powers under Section 9(4) of the 1992 Act. Besides, a penalty of ₹ 2,00,000/-was imposed in exercise of the powers under Section 13 of the 1992 Act. 5. The petitioner filed an appeal against the aforesaid order before the Additional Director General of Foreign Trade- Respondent No. 2 which was dismissed vide order dated 07.02.2006. 6. Hence the wr .....

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her permission issued or granted under the Act. It was only later by The Foreign Trade (Development and Regulation) Amendment Act, 2010 that the term licence has been substituted with the words ' licence, certificate, scrip or other instrument bestowing financial or fiscal benefits' in Section 9(1), (3), (4) and (5). This amendment is not retrospective. Hence, it is after this amendment that the Director General can be said to have power to cancel the DEPB which is a scrip. (ii) The vali .....

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the petitioner was entitled to DEPB of ₹ 1,00,980/- as against ₹ 2,72,752/- obtained by it. Hence, if at all, the cancellation should have been in respect of the disputed amount for one shipping bill only and not the whole of the DEPB. 8. Mr. IPS Doabia Ld. Counsel for the respondents by referring to the order (Annexure P-6) states that the petitioner neither complied with the condition of mandatory pre-deposit before filing the appeal, nor despite sufficient opportunities being giv .....

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perused the record. 11. At the outset it would be necessary to refer to the relevant provisions of the 1992 Act and the 2010 amendment . The term licence is defined in Section 2 (g), which as under: licence means a licence to import or export and includes a customs clearance permit and any other permission issued or granted under this Act; 12. Section 9 deals with the issue, suspension and cancellation of licence. This section is reproduced below: 9. Issue, suspension and cancellation of licence .....

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r recording in writing his reasons for such refusal. (3) A licence granted or renewed under this section shall - (a) be in such form as may be prescribed; (b) be valid for such period as may be specified therein; and (c) be subject to such terms, conditions and restrictions as may be prescribed or as specified in the licence with reference to the terms, conditions and restrictions so prescribed. (4) The Director General or the officer authorised under subsection (2) may, subject to such conditio .....

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on 9 by the 2010 Amendment Act is as under: 9. Amendment of Section 9.-In Section 9 of the principal Act,- (a) in sub-sections (1), (3), (4) and (5) for the word licence , wherever it occurs, the words licence, certificate, script or any instrument bestowing financial or fiscal benefits shall be substituted; (b) for sub-section (2), the following sub-section shall be substituted, namely- (2) The Director General or an officer authorised by him may, on an application and after making such inquiry .....

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ernment in Notification No. 1(RE-99)/1997-2202 dated 31-3-2000. The relevant Paras 7.14, 7.15, 7.16 and 7.38 which explain the objective, period of validity, the manner of making application etc. are extracted hereinbelow: 7.14. For exporters not desirous of going through the licensing route, an optional facility is given under DEPB. The objective of Duty Entitlement Pass Book Scheme is to neutralise the incidence of customs duty on the import content of the export product. The neutralisation sh .....

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king material, etc. The holder of Duty Entitlement Pass Book Scheme (DEPB) shall have the option to pay additional customs duty, if any, in cash as well. 7.15. Validity DEPB shall be valid for a period of 12 months from the date of issue. 7.16. DEPB and/or the items imported against it are freely transferable. The transfer of DEPB shall however be for import at the port specified in DEPB which shall be the port from where exports have been made. However, imports from a port other than the port o .....

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buying rate, prevalent on the date of negotiation/purchase/collection of document. DEPB rate of credit shall be applied on the FOB value so arrived. In case of advance payment, the FOB value in free foreign exchange shall be converted into Indian rupees as per the authorised dealer s T/T buying rate, prevalent on the date of receipt of advance payment. 15. As is clear from a reading of Para 7.14 the objective of Duty Entitlement Pass Book Scheme is to neutralise the incidence of customs duty on .....

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fic amount to be utilised for payment of customs duty. The amount for which DEPB scrip is issued depends upon the rate for a particular export product. The Ministry of Commerce notifies DEPB credit rates for export of an item. The DEPB scrip is freely transferable and can be used to debit the payment of duty at the time of clearance of goods except capital goods and goods mentioned in negative list. 17. In Liberty India v. CIT, (2009) 9 SCC 328, Hon'ble Court the Supreme Court explained that .....

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table commodities. It was observed thus: 59. We are afraid, we find the submission unacceptable. We are unable to see DEPB either as a debt or as a beneficial interest in movable property not in possession of the claimant. To us it is plain that DEPB like REP licence has its own intrinsic value and the purchaser, on payment of consideration, buys something for its value. DEPB credit is thus clearly goods within the meaning of sales tax laws and its sale is clearly exigible to tax. 60. We may obs .....

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black money into white is not completely unknown!) In buying the prize-winning lottery ticket the purchaser would pay the consideration for the value that the piece of paper has acquired and in that situation we fail to see how that ticket can be described as anything else but goods . 61. If any more analogies are to be given one might compare DEPB with prepaid meal tickets or prepaid petrol coupons or accumulated flying miles. A meal ticket, a petrol coupon or flying miles credit has its own in .....

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intrinsic value that makes it a market commodity. Therefore, DEPB, like REP licence qualifies as goods within the meaning of the sales tax laws of Delhi, Kerala and Mumbai and its sale is exigible to tax. 19. As per Para 7.15 of the Export Import Policy, the DEPB shall be valid for a period of 12 months from the date of issue. The DEPB in this case was issued on 25.8.2000. Thus, it remained valid only till 24.8.2001. The show cause notice for imposition of penalty u/s 11(2) of the 1992 Act was i .....

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d that the DEPB could be cancelled even under the un-amended Section 9(4) as argued by the Ld. Counsel for the respondent, the question is could DEPB be cancelled ab initio after the expiry of its period of validity? If the answer to this question is in the negative then we may not need to consider the contentions No. (i) and (iii) raised by the Ld. Counsel for the petitioner. 21. The DEPB whether considered as goods' or as a scrip' (which is defined in Black's Law Dictionary 9th Edi .....

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y defacing or obliterating it<she canceled her will by marking through it>. 2. To terminate a promise, obligation, or right <the parties canceled the contract>. {Cases: Contracts 251.} suspend vb. (14c) 1. To interrupt; postpone; defer< the fire alarm suspended the prosecutor's opening statement>. 2. To temporarily keep (a person) from performing a function, occupying an office, holding a job, or exercise a right or privilege<the attorney's law licence was suspended .....

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(P) Ltd. Vs. State of Haryana (2009) 20 VST 62 (P&H) a Division Bench of this Court was considering the question as to whether an eligibility certificate granted under Rule 28-A of the Haryana General Sales Tax Rules, 1975 could be withdrawn or cancelled after the benefit thereunder has been availed of or the currency of the eligibility certificate had expired. With reference to Rule 8(a) of the Rules, as per which, the eligibility certificate granted to an industrial unit was liable to be .....

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ld be availed of that is ₹ 1,63,66,999/- for the period from 28.3.1998 to 27.3.2005 respectively. It is further evident from condition No.4 of the eligibility certificate, as extracted above, that the eligibility certificate shall cease to be operative with effect from the date the unit reaches the ceiling of deferred/exempted amount of tax prescribed in the eligibility certificate, meaning thereby, the eligibility certificate will become inoperative on two conditions, firstly, when the ma .....

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which enables the withdrawal of an eligibility certificate at any time during its currency. Once the currency of the eligibility certificate is over, power under Sub rule 8 of Rule 28A of the Rules cannot be exercised on the ground it is sought to be exercised by the respondents that is mis-statement or concealment of facts by the petitioner. The plea of the respondents that proceedings for withdrawal of eligibility certificate had been initiated during the currency of the same, have just, to be .....

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he aforesaid decision was dismissed by Hon'ble the Supreme Court on 13.12.2007. Though there is no Rule comparable to Rule 28 A, in the Export Import Policy, but the judgment supports the conclusion that once the period of validity of the DEPB has expired no action to cancel or withdraw it can be taken because then there is no DEPB' in existence to be cancelled and on which the cancellation order can operate. Cancellation of DEPB in such a situation is a meaningless order and can have no .....

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orted regulations, thus, could not have been given retrospective effect or retroactive operation as it is now well settled that in absence of any provision contained in the legislative Act, a delegatee cannot make a delegated legislation with retrospective effect. 20. In Mahabir Vegetable Oils (P) Ltd. v. State of Haryana this Court stated: (SCC p. 633, paras 41-43) 41. We may at this stage consider the effect of omission of the said note. It is beyond any cavil that a subordinate legislation ca .....

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ee is bound to act within the four corners of the delegation and not beyond the same. 77. Delegation of power in favour of an authority under a statute must also be tested in terms of the statutory provisions. No provision under the Act or the Regulations has been brought to our notice which empowers the delegatee to alter the terms and conditions of the contract with retrospective effect. The purported policy decision must, therefore, be tested not only having regard to the provisions of the st .....

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n Trade, Amritsar, informed the petitioner that names of Pakistan and Afghanistan were deleted from the licence with effect from the date of issue of licence. He was informed that this action had been taken under Para 8 of Foreign Trade (Regulation) Rules, 1993. Aggrieved by the retrospective amendment of its licence, the petitioner therein approached the Court through a Writ Petition. 32. A Division Bench of this Court held that as there was no provision in the Foreign Trade (Development and Re .....

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or otherwise without the grant of any opportunity to the importer? (iii) Is the action of the respondents in initiating proceedings for the confiscation of the goods legal and, thus, tenable? Regarding (i): 9. With the object of providing for the development and regulation of foreign trade, the Parliament has enacted the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as the Act). The primary object of this Act is to facilitate imports into and augment export from .....

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ecified therein. Terms, conditions and restrictions can also be imposed. The provision also authorises the competent authority to suspend or cancel a licence. Section 19 authorises the Central Government to make rules for carrying out the provisions of the Act. 10. In exercise of the powers conferred by the Act, the Central Government has framed the rules called the Foreign Trade (Regulation) Rules, 1993. Rule 8 is material for the purposes of this case. It provides as under:- Rule 8: Amendment .....

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