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

2016 (9) TMI 776 - PUNJAB & HARYANA HIGH COURT - 2016 (342) E.L.T. 176 (P & H) - 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 .....

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sed cancelling the DEPB imposing penalty of ₹ 2,00,000/- on the petitioner. 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 .....

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e petitioner Mr. I.P.S. Doabia, Advocate for the respondent JUDGMENT Harinder Singh 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 co .....

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e DGFT after examining the copies of the shipping bills and BCER in respect of the 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. Th .....

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ereto, vide order dated 30.11.2004 (Annexure P-3) of the Jt. Director General of 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- .....

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licence to import or export including a customs clearance certificate and any other 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 Gen .....

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of the three shipping bills. As per the respondents for one of the shipping bills 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 .....

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there was no power to cancel the DEPB. 10. Heard Ld. Counsel for the parties and 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. T .....

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nce to import or export such class or classes of goods as may be prescribed, after 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 Gen .....

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peal against an order would lie under Section 15. 13. The amendment made to Section 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 .....

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apter 7 of the Export and Import Policy, 1997-2002 as notified by the Central Government 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 o .....

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in this behalf, for import of raw materials, intermediates, components, parts packing 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 .....

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xchange shall be converted into Indian rupees as per the authorised dealer s T/T 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 Dut .....

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nder this Scheme the exporters are issued DEPB scrips which allows them the specific 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 I .....

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trol coupons or accumulated flying miles which have intrinsic value and are marketable 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 .....

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of fact, clandestine sale of the prize-winning lottery ticket for conversion of 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 f .....

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he three-Judge Bench decision in Vikas1 continues to hold the field. DEPB has an 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 .....

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the term licence and that the 2010 amendment was only clarificatory in nature and 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 good .....

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ictionary- 9th Edition as under: Cancel, vb. 1. To destroy a written instrument by 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, .....

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s no longer a DEPB but a piece of paper of no worth. 25. In M/s Stella Industries (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 w .....

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to the petitioner was fixed and also maximum period during which the benefit could 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 eligib .....

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so, no action possibly could be taken under Sub Rule 8 of Rule 28A of the Rules, 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 .....

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f Sub Rule 8 of Rule 28A of the Rules. SLP (Civil) No.11053 of 2007 challenging the 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 .....

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on the Executive Council to make a regulation with retrospective effect. The purported 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 om .....

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of a statute, cannot apply his own decision with retrospective effect. A delegatee 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 decis .....

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rkey and Australia. 31. On December 8, 1998, the Joint Director General of Foreign 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 C .....

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import licence? (ii) Can the respondents amend an import licence retrospectively 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 .....

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tion 9 has to be in a prescribed form. It is valid for the period which may be specified 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 .....

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