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Kim Chemicals Limited, Bhagwan Chandnani Versus Union of India, Policy Relaxation Committee, Directorate General of Foreign Trade, Additional Director General of Foreign Trade

2016 (10) TMI 565 - BOMBAY HIGH COURT

Refusal for allowing advance authorisation and a duty free import authorisation (DFIA) - Failure to fulfill export obligation - claim of unconditional relaxation - recognised Export House - It is evident from the petition itself that they aware of the defaults and which had occurred - Principles of natural justice - writ of certiorari - Held that: - Once relaxation is not a right and nothing accrues in the petitioners' favour to apply and seek unconditional relaxation, then, all the more we do n .....

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and properly accorded for as per norms - also considered as to how the exercise of clubbing at the instance of the petitioners firstly enabled the petitioners to prolong the period for fulfillment of the export obligation and secondly, that the petitioners were aware that the first of such authorisation can be taken into consideration for relaxing the period within which the export obligation has to be completed - Petition dismissed - Writ Petition No. 2325 of 2015 - Dated:- 6-9-2016 - S. C. Dha .....

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d by the respondent No.2 and after considering the validity and legality thereof, particularly in relation to a condition imposed therein, that condition be quashed and set aside. The prayer in the alternative is that of a mandamus directing the concerned authorities to club two authorisations of July 2008 and March 2009 for the purpose of compliance with export obligation. This relief is sought because the authorisation issued in March, 2009 casts certain obligations in relation to this export .....

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ade Act"). 4 The petitioners complain that they are a small scale industry / unit. They have been in the business of manufacturing and export of pharma products and cosmetics since last 15 years. They are a recognised Export House and that recognition is granted by the Ministry of Commerce, Government of India. They have won several awards for export performance. The petitioners then point out that the business is very competitive. They face tough competition from countries like China and T .....

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is the power to amend it. In order to liberalise the imports and boost exports, certain policies were introduced and we are concerned here with the Foreign Trade Policy of 2004-2009. That enables the Central Government to provide for duty exemption. Thereunder duty free inputs can be imported and these imports can go into the final or finished products meant for export. The duty exemption scheme consists of an advance authorisation and a duty free import authorisation (for short "DFIA" .....

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dvance authorisation dated 14th July, 2008, having validity of 24 months and export obligation period of 24 months. The quantity of inputs that was allowed to be imported has been set out in paragraph 4.9 as against which there is an obligation to export a minimum quantity of finished goods. Annexures F and G are copies of the authorisation and a statement disclosing the details of import of inputs and export of finished goods carried out under this authorisation. It is the claim of the petition .....

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s H, I and J. The validity of the authorisation of March, 2009 was till March, 2011. Then the petitioners realised during the course of the present proceedings that the Director General of Foreign Trade had issued a public notice whereby the export obligation period of advance authorisation was increased from 24 months to 36 months. Yet, it is their complaint, that the 2009 March authorisation stipulates a period of 24 months. The public notice dated 26th February, 2009, is relied upon and based .....

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2012. The petitioners, therefore, claim that due to the error on the part of respondent No.4, they were unable to take the benefit of exporting goods under this authorisation for about seven months from April 2011 to October, 2011. In the light of cut-throat competition and stiff business resistance, the petitioner No.1 was unable to fulfill this export obligation by March, 2012. Thereafter, the petitioners rely upon another public notice dated 13th October, 2011, amending certain clauses of th .....

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/ extension of the export obligation on 30th May, 2012. It is their case that there is a Committee and which interprets the policy during the course of its validity and implementation. Therefore, the case of the petitioners is that such Committee approved their request in a meeting held on 4th September, 2012. However, the information regarding approval was communicated on 7th December, 2012, by amendment No.2. The petitioners were informed that the authorisation was valid till 6th June, 2013 an .....

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e, failing which, the authorities would proceed to take action, more particularly referred therein. 8 A reply was given by the petitioner No.1 and they submitted that while its July 2008 authorisation has expired, it was in the process of carrying out further exports under the other authorisations and thereafter apply for clubbing of the other authorisations with the July 2008 authorisation. 9 The petitioners could not obtain the details so as to enable them to undertake this exercise. They also .....

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ation would be taken into consideration while calculating the fulfillment of the export obligation of that authorisation and that so long as the petitioner No.1 fulfills the conditions set out in paragraph 4.20 of the Handbook of Procedures 2009-2014, their application for clubbing of two or more authorisations would be accepted. The petitioners submit that they have fulfilled the necessary conditions set out in this paragraph of the Handbook of Procedures. It is in these circumstances that it i .....

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plication was filed on 9th December, 2013, That was taken up on 11th February, 2014. The request for clubbing was allowed, but the condition imposed was that exports made within 48 months from the date of the earliest authorisation upto 31st July, 2012, shall alone be taken into consideration for export obligation fulfillment. This order was passed on 18th March, 2014, and copy of which is Annexure-Q. 10 The petitioners then submit that this condition could not have been imposed. The result of t .....

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1 months. However, by the condition imposed only the exports made during the period of the earliest authorisation would be taken into consideration for the purpose of accounting of the export obligation, namely, the exports made till July, 2012. Therefore, the exports made between August 2012 to April 2013 would not be taken into consideration. That is how the very purpose of the granting the relaxation is rendered redundant. That is how the petitioners applied for information under the provisio .....

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s that the refusal order dated 16th April, 2015, came to be communicated and that rejects the request for failure to submit documents showing fulfillment of the export obligation for redemption of the bank guarantee / letter of undertaking in respect of the March 2009 authorisation. This could not have been done, according to the petitioners, for their request for clubbing was pending. If the refusal order dated 16th April, 2015, is in respect of the July 2008 authorisation, then, the documents .....

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. 11 The petitioners submit that the 16th April, 2015 refusal pertains to a show cause notice dated 12th May, 2011, which is in connection with the March 2009 authorisation, but this show cause notice was never received. They did not participate in the proceedings pursuant to the show cause notice. Yet, such without prejudice contentions were raised. 12 Thus, the claim of the petitioners is that the earlier two refusal orders have been rescinded or cancelled. The petitioners applied for an advan .....

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within 48 months from the date of earliest authorisation upto 31st July 2012, cannot be a condition as there is no provision in the Foreign Trade Policy / Handbook of Procedures which enables or requires the second respondent to impose the impugned condition. Rather, these documents enable granting relaxation taking into account the peculiar facts and circumstances of each case. In two other cases the clubbing was allowed without imposition of the impugned condition. That is why Mr. Mistry would .....

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axation. In all other cases, that was granted but the petitioner was singled out for such a treatment. The refusal to rescind these orders / conditions was, therefore, unjustified given the fact that the Handbook of Procedures was amended so as to enable the exporters to fulfill their obligation in an extended period. 14 On the other hand, our attention is invited to the affidavit-in-reply. It is submitted that there is no substance in the arguments that the principles of natural justice were no .....

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009-2014. If the authorisation holder violates any condition of such authorisation or fails to fulfill export obligation or fails to deposit the requisite amount within the period specified in the demand notice he shall liable for action in accordance with the Foreign Trade Act. He can also be held liable under any other law for the time being in force. The power to grant exemption whether absolute or conditional on account of genuine hardships and adverse impact on trade to any person or commis .....

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ns during the period of the Foreign Trade Policy 2009-2014 from 1st April, 2009 to 31st March, 2014. On failure to fulfill the stipulated export obligation within the prescribed time against the authorisation dated 13th March, 2001, the petitioner submitted the request before the Policy Relaxation Committee for extension of the export obligation for revalidation of the said authorisation on 30th May, 2012. This was considered on 4th September, 2012, by the Policy Relaxation Committee and it exte .....

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axation Committee in December 2013, with a new request for clubbing of the advance authorisation dated 14th July, 2008, and advance authorisation dated 13th March, 2009, which request was considered by the Policy Relaxation Committee in its meeting held on 11th February, 2014. It granted the clubbing, subject to the condition that exports made within four months from the date of the earliest authorisation dated 14th July, 2008 upto 31st July, 2012, shall be taken into consideration for export ob .....

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her units, but the Committee observed in its decision that these cases are different from that of the petitioners. Hence, the petitioners' request was rejected. 15 Thereafter, the petitioners made a request on 22nd May, 2015, for grant of a personal hearing and on 9th June, 2015, that personal hearing was granted. The second petitioner appeared before the Committee and after considering the oral and written submissions, a speaking order was passed on 29th June, 2015, rejecting the request an .....

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herein for imposing any condition. The petitioners, therefore, reiterate the contents of the petition and also rely on two decisions of this Court, more particularly referred to at page 162 of the paper-book to submit that principles of natural justice have not been followed. 17 On the above material, we have heard the learned counsel appearing for the respondent as well and with the assistance of the counsel appearing for both sides, we have perused the writ petition, the annexures thereto and .....

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ar circumstances, sought identical relief of clubbing according to the petitioners. However, on the facts and circumstances and which are peculiar to the petitioners case, the respondents have, in the impugned orders, copies of which are from pages 43 to 48 of the paper-book, duly informed the petitioners that the clubbing of the two advance authorisations as referred particularly by us in the foregoing paragraphs is allowed. This is only for recognition of exports already effected and closure p .....

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is directed to examine the case in terms of Para 4.1.6 of FTP and ensure value addition of minimum 15%. The 15% value addition for evaluating entitlement is to be applied on the entire FOB and CIF of the authorisations to be clubbed. RA should ensure proper accounting of the duty free inputs with reference to the export product while clubbing the Authorisations. 19 On a perusal of this condition, we do not find that the petitioners have been treated unfairly and inequitably. A person who has not .....

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ion Committee cannot be quoted as a precedent in another case as the extent and genuineness of hardship may vary from case to case. Policy relaxation by its very nature is for relaxing normal policy / procedural provisions and cannot be claimed as of right. The Policy Relaxation Committee has extensively considered the case of the petitioner. It found that it got 51 months effectively for completing the export obligations, but the commitment made was not honoured. It is in these circumstances th .....

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imposed in the relaxation or exemption. The above conclusion of the Committee cannot be said to be perverse or based on no material. We do not think that the Committee has failed to apply its mind to the relevant facts and circumstances of the petitioner's case. The petitioners cannot go on improving their version as originally projected by relying on some information available to them after an application made under the Right to Information Act, 2005, was invoked by them. By its very natur .....

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ree with Mr. Mistry that the additional documents that have been relied upon would enable us to interfere with the impugned conditional exercise. We have, with his assistance, perused the additional documents and compilation which he tendered in that regard. The petitioner's reliance on the Handbook of Procedures and in particular the paragraphs enabling clubbing of authorisations for granting facility by itself would enable us to conclude that it is a facility. All imports and exports of mo .....

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nizing the administrative or quasi judicial orders impugned before it to conclude that the exercise of power is not arbitrary. Further that the discretion is exercised on relevant grounds. That also ensures accountability and transparency of public bodies. The principles are salutary and their application cannot be placed in a strait-jacket formula. We do not think that the present exercise and undertaken as projected in the subject petition can be faulted for there are reasons and which are cle .....

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