TMI Blog2018 (8) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... gible for the GSP certification as goods of Indian origin. The petitioner had earned “undue profit”, at the risk and peril of the country‘s reputation. Wrong and fraudulent certification could have affected our credibility and sanctity of GSP certification issued and stamped by Indian authorities. It could have resulted in withdrawal of benefits under the GSP scheme. Consequences and impact were far-reaching and immense - The Appellate Authority has rightly observed that the petitioner cannot wash away its responsibility and failure to furnish correct information and declaration on the origin of goods. Petitioner had made false declaration to procure wrong GSP certification. They were beneficiaries of the wrong declaration, which had jeo-pardised and harmed the country‘s prestige and reputation - Penalty was justified. Petition dismissed - decided against petitioner. - Writ Petition (Civil) No. 3909/2013 - - - Dated:- 30-7-2018 - MR. SANJIV KHANNA AND MR. CHANDER SHEKHAR JJ. Petitioner Through: Mr. Prashant Kumar, Mr. Rajeev Singh and Mr. Amit Singh, Advs. Respondents Through: Mr. Vikram Jetly, CGSC for Union of India. SANJIV KHANNA, J. M/s XTRAA Cleanci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian origin. 8. Subsequently, on 11th November, 2011 intelligence inputs were received from the Export Inspection Council of India ('EIC', for short) expressing doubts on the true origin of the consignments of biodiesel. 9. Consequent investigation, as per the Respondents, had confirmed that the petitioner had manufactured only 5700.647 MT of biodiesel in the VSEZ unit which was then moved to customs bonded warehouse in October, 2009 and February, 2010 for temporary storage prior to export. Balance 19299.644 MT of biodiesel was a non-SEZ manufactured cargo of American origin imported by the petitioner in December, 2009. The petitioner was not entitled to and had wrongly procured GSP certification for export to Switzerland as 19299.644 MT of American origin biodiesel was blended with 5700.647 MT of biodiesel of Indian origin manufactured by the petitioner. For GSP certification of Indian origin, blending proportion could not have exceeded 50% i.e. at least 50% of the blended biodiesel should have been of Indian origin. Petitioner had made false declaration in its application dated 29th March, 2010 pursuant to which wrong GSP Certificates of Indian origin were issued. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods or in alternative furnish suitable financial security by way of first charge on assets equal to the value of the goods. This order was challenged by the petitioner in Writ Petition (Civil) No. 1788/2012 before this High Court stating that its assets were charged with SEZ authority. Writ Petition (Civil) No.1788/2012 was disposed of vide order dated 29th March, 2012 observing that the order dated 23rd March, 2012 had required the petitioner to furnish suitable security to the satisfaction of the Development Commissioner, VSEZ and this authority should be approached with offer of security bond. 16. The petitioner had raised new/additional contentions before the Appellate Authority, including applicability of Unified Executive Instructions for issue of Certificate of Origin under Various Preferential Schemes by Export Inspection Agencies (EIAs) and whether the same were made applicable to units in SEZ. 17. The Appellate Authority vide order dated 17th April, 2012 remanded these issues to the Development Commissioner, VSEZ to examine the aforesaid aspects and whether necessary and proper checks were applied before the GSP Certificates of Indian origin were granted by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt were thereafter disposed of, on 28th May, 2012. 22. The Deputy Commissioner, VSEZ vide order dated 7th December, 2012 has held that the EIC (i.e. Export Inspection Council of India) instructions based on the requirements of the European Union and member countries for issuing GSP Certificate for Origin under GSP Scheme were binding on the SEZ, whereas the Unified Executive Instructions to form guidelines issued by the EIC to Export Inspection Agencies (EIA) and its sub-offices were mandated and required for issue of Certificate of Origin. In case of SEZ units, latter instructions were not applicable for issuance of Certificate of Origin and as per applicable rules, the GSP certificates were to be issued to the petitioner by the SEZ officer based on self declaration in terms of Rules 75 of the SEZ Rules. Relevant portion of the order dated 7th December, 2012, reads:- 4. Discussion: 4.1 Certificate of Origin is a certificate issued by any Indian Government authorised agency on a specific form which will act as an evidence of material originating in India. A certificate of origin is to be issued only if the goods are meeting the rules of origin prescribed by the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the units as they have no direct control on them. In the case of SEZ units, this is not the case, as the DC's office is in day-to-day touch with the units. The units are expected to keep this office informed of the stoppage of work etc. In this case the fact is the unit is in the business of bio-diesel and was up and running. Therefore the self-certification was presumed to be true. It very clearly therefore places the full onus of the unit to ensure that their self-certification is paramount and verified. 4.3 The Unified Executive Instructions is a guidelines given by the Export Inspection Council of India to EIA and its sub-offices for issue of Certificate of Origin. These Instructions has been issued by the Export Inspection Council of India and not by the Government of India. The Unified Executive Instructions are not applicable to SEZ officials for issuing the Certificate of Origin for SEZ cargo. The matter has also been examined and it has been, ascertained that GSP Certificates, (being export related certifications accompanying the goods exported), have been issued to the applicant M/s. Xtraa Clean cities Ltd by SEZ officer based on the self-declaration made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rights aforesaid of the petitioners (Union of India) therein. Even spite of the such order, the Applicant company has a extended its corporate guarantee of ₹ 45.00 Crores approx as against the loans availed by MIs. Nandan Cleantec Ltd. and violated the order of Hon ble High Court of Delhi. 5. Penalties: In view of the foregoing, I again confirm the Order-in-Original NO.9/SEZ/187NSEZ/2006 dated 21st December, 2011. 23. In the meanwhile Special Leave Petition (Civil) Nos. 1732317324/2012 were disposed of by the Supreme Court permitting the petitioner to file additional memo of appeal before Appellate Authority (as per correction carried out by the Supreme Court vide order dated 13th March, 2013). 24. Appellate Authority after hearing held on 2nd April, 2013 passed the impugned order dated 22nd April, 2013 upholding the factual findings against the petitioner. However, penalty imposed on the petitioner was reduced from ₹ 66.30 crore to ₹ 22.60 crore and personal penalties on the Chairman, CEO and Director of the petitioner company were waived. Import-Export code of the petitioner was to be restored only upon the recovery of the reduced penalty a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scribed, on payment by the person concerned of the redemption charges equivalent to the market value of the goods or conveyance, as the case may be. Sub-section 1 to Section 11 of the F.T. Act states that no export or import shall be made by a person except in accordance with the provisions of the Act, rules and orders made thereunder and export and import policy for the time being in force. Sub-section (2) stipulates that where a person makes or abets or attempts to make any export or import in contravention of the Act, rules, orders or export and import policy, he shall be liable to pay penalty not exceeding one thousand rupees or five times the value of the goods in respect of which any contravention is made or is attempted to be made, whichever is more. Sub-section (3) relates to cases of the person admits violation before the Adjudicating Authority and power to settle vested with the said authority. Sub-section (4) deals with recovery. Subsections (5) and (6) pertain to right of confiscation of goods, conveyance etc. and their release on payment of redemption charges equal to market value of the goods or conveyance, as the case may be. Sub-section 3 to 5 to Section 11 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2000 and specifies different officers, subject to limits as specified, who would act as Adjudicating Authority for exercising power under Section 13 read with 11 of the F.T. Act. As per serial No. 7 of the notification, Development Commissioner, Special Economic Zones have been authorised to exercise power under Section 11 of the F.T. Act without limit in respect of export oriented units and units in SEZs. 31. In terms of Notification No.102 (RE-2008) 2004-09 dated 17th April, 2009 it cannot be doubted and debated that Development Commissioner of the VSEZ, was the notified Adjudicating Authority under Section 13 empowered and authorised to pass order(s) under Section 11 of the F.T.Act. 32. The petitioner, however, rely upon Gazette of India Notification No. S.O. 76 (E) dated 13th January, 2010, issued under the SEZ Act and refers to Section 21(1) of the said Act. As per the said Notification, acts or omissions permissible under the F.T. Act have been notified as offences for the purpose of the SEZ Act. Another Notification No.SO 77(E) dated 13th January, 2010 issued by the Central Government in exercise of powers conferred under sub-section (2) to Section 21 of the SEZ Act s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under any Central Act, as notified offence for the purpose of this Act. (2) The Central Government may, by general or special order, authorise any officer or agency to be the enforcement officer or agency in respect of any notified offence or offences committed in a Special Economic Zone. (3) Every officer or agency authorised under sub-Section (2) shall have all the corresponding powers of investigation, inspection, search or seizure as is provided under the relevant Central Act in respect of the notified offences. 22. Investigation, inspection and search or seizure- The agency or officer specified under section 20 or section 21, may, with prior intimation to the Development Commissioner concerned, carry out the investigation, inspection and search or seizure in the Special Economic Zone or in a Unit if such agency or officer has reasons to believe (reasons to be recorded in writing) that a notified offence has been committed or is likely to be committed in the Special Economic Zone. Provided that no investigation, inspection and search or seizure shall be carried out in a Special Economic Zone by any agency or officer other than those referred to in sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Notification, any act or omission made punishable under any Central Act as notified offence for the purpose of the SEZ Act. Further sub-section (2) of Section 21 states that the Central Government by a general or special order can authorise an officer or agency to be the enforcement officer or agency in respect of any notified offence or offences committed in the Special Economic Zones. Such officer as per sub-section (3) of Section 21, will have all the corresponding powers of investigation, inspection, search or seizure as is provided under the relevant Central Act in respect of the notified offences. By the Notification SO No. 77(E), the Development Officers have been notified as enforcement officers of the respective SEZs. 37. Section 22 of the SEZ Act relates to investigation, inspection and search or seizure in respect of the notified offences in the SEZ or in a unit by the agency or officer specified under section 20 or section 21. Such action requires such agency or officer should record reason to believe that notified offence has been committed or is likely to be committed and prior intimation is to be sent to the Development Commissioner of the SEZ. The first proviso t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Z Act refers and uses the term offence with reference to trial before the criminal courts and civil proceedings before the Court. Proceedings under Section 11 of the F.T. Act is not a civil suit and adjudication by the designated authority under Section 13 of the F.T. Act is not adjudication by a civil court. Reference to civil courts in Section 23 of the F.T. Act is to civil court established and having jurisdiction in terms of Section 9 of the Code of Civil Procedure. Section 23 of the SEZ Act also refers to trial of an offence before the criminal court, to which provisions of the Code of Criminal Procedure, 1973 apply and not mere violations, acts and omissions punishable under Section 11 of the F.T. Act, which are to be adjudicated and punishment in nature of fine or penalty is imposed by the Adjudicating Authority i.e. the Director General or notified officer. 42. Once Section 23, does not apply there is no question of any conflict between SEZ Act and the provisions of the F.T. Act. 43. We are not dealing with the notified offence committed under the SEZ Act. We are dealing with the charges with respect to violation of foreign trade policy and the provisions relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gulations made thereunder or any notification or order issued or direction given or scheme made thereunder so far as such modification, rule, regulation, notification, order or direction or scheme relates to the matters relating to trade unions, industrial and labour disputes, welfare of labour including conditions of work, provident funds, employers liability, workmen s compensation, invalidity and old age pensions and maternity benefits applicable in any Special Economic Zones. (2) A copy of every notification proposed to be issued under sub-section (1), shall be laid in draft before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in disapproving the issue of the notification or both Houses agree in making any modification in the notification, the notification shall not be issued or, as the case may be, shall be issued only in such modified form as may be agreed upon by both the Houses. XXXX 51. Act to have over riding ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the provisions of the F.T. Act and the SEZ Act. All offences under the F.T. Act on being designated as notified offences under the SEZ Act, the two Acts in a way complement each other and ensure that there is no conflict. Notification No. SO 77 (E) dated 13th January, 2010 empowers Development Commissioners to act as enforcement officers under the SEZ Act and gives them power to investigate, conduct, search and seizure operations etc. Investigating power and adjudicating power can vest in the same authority and this is not unusual or abnormal. Quasi judicial adjudicator can at times have power to verify and investigate, especially in cases of statutory adjudication like the Income Tax Act. In the absence of repugnancy, primacy of the SEZ Act, as suggested, is not conferred by Section 51 of the SEZ Act with reference to section 11 of the F. T. Act. Section 11 read with Section 13 of the F.T. Act would continue to apply. Section 11 of the F.T. Act has not been expressly or impliedly repealed with respect to SEZ units, with enactment of the SEZ Act, or Notification Nos. SO 76 (E) and 77(E) both dated 13th January, 2010, issued for purpose of sub-sections (1) and (2) of Section 21 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.21 Certificate of Origin (CoO) - Certificate of Origin (CoO) is an instrument to establish evidence on origin of goods imported into any country. There are two categories of CoO viz. (1) Preferential and (2) Non preferential. 2.21.1 Preferential arrangement / schemes under which India is receiving tariff preferences for its exports are Generalised System of Preferences (GSP),Global System Of Trade Preferences (GSTP), SAARC Preferential Trading Agreement (SAPTA), Asia-Pacific Trade Agreement (APTA), India-Sri Lanka Free Trade Agreement (ISLFTA) and IndoThailand Free Trade Agreement. These arrangements / agreements prescribe Rules of Origin which have to be met for exports to be eligible for tariff preference. Authorised agencies shall provide services relating to issue of CoO, including details regarding rules of origin, list of items covered by an agreement, extent of tariff preference, verification and certification of eligibility. Export Inspection Council (EIC) is agency authorised to print blank certificates. Authorised agencies may charge a fee, as approved by DoC, for services rendered. Generalised System of Preferences (GSP) (a) GSP is a non-contractu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in Form A duly filled by exporters of beneficiary countries and certified by their authorized agencies. List of agencies eligible and entitled to issue GSP Certificate was mentioned. 52. Tariff concessions were exchanged by India with twelve countries on limited number of products who had signed agreement to establish evidence on origin of goods imported into the said country. EIC was the sole agency in India, authorized to issue GSP certificates of Indian origin. However, as elucidated below, in respect of SEZ units, a different and self-certification procedure was adopted. We would elaborate. 53. The petitioner has filed on record the declaration forms filled by them for issue of GSP Certificates of Indian origin filed in the office of the Development Commissioner, VSEZ. Relevant portion of the declaration form reads as under:- Procedure for claiming preference. A declarant on the certificate of origin form must be prepared by the exporter of the goods and submitted in duplicate together with a GSP application form to the certifying authority of the country of exportation which will. If satisfied certify the top copy of the certificate of origin and return it t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Order' shall be given on the basis of self Certification by the Unit: PROVIDED that goods may be sealed after examination, as per the norms prescribed for free shipping bills, at the option of the Unit, by the Authorized Officer: Provided further that if services are exported in nonphysical - form, the export value is to be furnished by the Unit on self certification basis as per the instructions of the Reserve Bank of India. Explanation : Self certification means the certification regarding sealing of container or package of goods under export-given .by the Unit and includes the certificate regarding contents and sealing of the container or package given by the owner or the working partner or the Managing Director or the Company Secretary of the said Unit or any person authorized in this behalf by the owner or company or working partner, as the case may be, on the copies of Shipping Bill stating that the package or container in respect of goods under export have been sealed in his presence; XXXXX Rule 27 (10): The Assessment of imports and domestic procurement' by a Developer or Unit, shall be on the basis of, self declaration and shall not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is factually incorrect affects the credibility of the country which is receiving the benefits under the scheme. The Committee feels that any such wrong should be dealt strongly and should act as a deterrent to others to attempt such a measure since the credibility of the country is at stake. In the present case there is no doubt that a false certificate has been issued which has also been detected by the European Union Customs Authorities. Part responsibility for such a lapse also lies on the SEZ officials who did not carry out due diligence before issue of a wrong certificate. The Committee feels that the SEZ Division in Department of Commerce should put proper system in place along with, elaborate instructions on the precautions and the procedures to be followed for issue of such certificates. The firm cannot wash away its responsibility of giving incorrect information and declaration. In the present case though the firm has indicated that they have blended the imported and indigenous product but have failed to indicate that they have crossed the threshold which is acceptable under the GSP. The Committee went through the orders dated 21 December 2011 of the Adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
