TMI Blog2021 (5) TMI 737X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the petitioner an opportunity of personal hearing. It was clarified that depending upon the outcome of the said proceeding, the show cause notice dated 04.09.2013 issued by the Directorate of Revenue Intelligence would be adjudicated. When respondent No.1 adjudicated the show cause notices, it noted the proceedings before the Andhra Pradesh High Court but only stated that public notice No.47 dated 18.05.2011 indicated that the 'actual user' condition was made non-mandatory with effect from 18.05.2011. Either the stand taken by Union of India and Director General of Foreign Trade before the Andhra Pradesh High Court was not brought to the notice of respondent No.1 or he had conveniently overlooked the stand so taken. Be that as it may, respondent No.1 took the stand that it was beyond the purview of the adjudicating authority to adjudicate on the legality of the conditions imposed in the import licences and therefore, he refrained from deciding on the matter of legality of the 'actual user' condition. However, after referring to the said condition and the provision of rule 13 of the Foreign Trade (Regulation) Rules, 1993, respondent No.1 held that petitioner h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehalf of the petitioner. An alternative prayer has been made by the petitioner to remand the matter back to respondent No.1 to adjudicate the matter afresh after quashing the above orders dated 14.02.2014, 24.07.2015 and 04.11.2015. 3. Relevant facts as has been pleaded and which can be culled out from the documents on record may be briefly encapsulated as under. 4. Petitioner as a trading house was incorporated in the year 1919. In the year 1997, it was incorporated into a private limited company. It is basically engaged in the business of export of rice, oil seed, food grains and pulses. In this connection, petitioner has been granted trading house certificate by the appropriate authority. Petitioner is also engaged in the import of green peas, yellow peas and corn directly as well as canalized through public sector undertakings. Petitioner is having its registered office at Nagpur in the State of Maharashtra. 5. Respondent No.4 is a public sector undertaking and is a recognized state trading enterprise for import of maize (corn). Maize (corn) is an item the import of which was allowed under the tariff rate quota scheme. 6. On 20.11.2009, petitioner approached respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made that in view of the two notifications, the customs authorities were not entitled to claim any customs duty on import of maize (corn) by the petitioner through respondent No.4. During pendency of the writ petition, show cause notices were issued by respondent No.1 on 30.08.2013 alleging breach of the actual user condition in the licences by the petitioner. Directorate of Revenue Intelligence also issued show cause notice dated 04.09.2013 as to why customs duty of ₹ 3,05,70,953.00 should not be recovered on the ground that the import of maize (corn) was in breach of the actual user condition. Besides petitioner was called upon to show cause why the amount of ₹ 2,96,80,536.00 deposited during investigation should not be adjusted towards the demand. 11. In view of issuance of such show cause notices, amendment wasmade in the writ petition to challenge the legality and validity of the above show cause notices as well. 12. This Court by the order dated 20.11.2013 disposed of Writ Petition (L) No.2520 of 2013 by observing that show cause notices dated 30.08.2013 issued by respondent No.1 and the show cause notice dated 04.09.2013 issued by the Directorate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Regulation) Act, 1992. In the light of the above, respondent No.1 imposed penalty of ₹ 1,50,00,000.00 on the petitioner, however dropping further action under rule 7 of the Foreign Trade (Regulation) Rules, 1993. It was clarified that the fiscal penalty so imposed was over and above the amount of customs duty paid or payable by the petitioner. 15. It may be mentioned that Writ Petition (L) No.306 of 2014 was filed by the petitioner before this Court challenging the decision of respondent No.1 not to adjudicate validity of actual user condition in the two licences. Notwithstanding pendency of the said writ petition, respondent No.1 proceeded to adjudicate the matter and passed the order-in-original dated 14.02.2014. When Writ Petition (L) No.306 of 2014 was taken up for consideration on 20.02.2014, this Court noted that the earlier writ petition of the petitioner was not entertained by the Court on the ground that the adjudicating authority should first decide the show cause notices on all issues after affording the petitioner an opportunity of personal hearing. It was also noted that petitioner found itself in a situation where its main contention was neither decided b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lized bank to cover the demand. It was clarified that subject to such compliance, no coercive steps should be taken to recover the amount. 21. On 14.09.2016, this Court admitted the writ petition as prima facie arguable questions were found. However, respondents were granted liberty to encash the bank guarantee which would be subject to outcome of the writ petition. 22. It is seen that against such order dated 14.09.2016, petitioner had approached the Supreme Court by filing S.L.P. No.28268 of 2016. By order dated 03.10.2016, Supreme Court dismissed the Special Leave Petition but granted liberty to the petitioner for approaching the High Court to fix a date of hearing. 23. Thereafter on civil application being filed by the petitioner before this Court, the hearing was expedited on 06.06.2017. However, for one reason or the other, the matter could not be heard. Ultimately, the matter was heard on 01.02.2021 and 02.02.2021. 24. Respondents have filed reply affidavit through Shri. Varun Singh, Deputy Director General of Foreign Trade working in the office of Additional Director General of Foreign Trade, Mumbai. A preliminary objection has been raised as to maintainability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court upheld the public notice. 24.3. As regards insertion of actual user condition in the licenses, it is submitted that petitioner was aware of the same right from issuance of the two licenses. Petitioner and respondent No.4 had entered into agreement for complying with various conditions including that of actual user condition. Petitioner tried to create documentary evidence to show that it had processed the imported maize (corn) after import and thereafter sold the same. According to the respondents, challenge to the actual user condition is an after thought. Petitioner having accepted the licences and having acted on the same is now debarred from assailing the conditions in the licences including the actual user condition. 24.4. Reference has been made to Rule 13 of the Foreign Trade (Regulation) Rules, 1993 to contend that a licensee is required to comply with all the conditions of the licence. It is asserted that the actual user condition was valid till 18.05.2011 when public notice No.47 was issued whereafter it became non-mandatory. 24.5. In the circumstances, respondents seek dismissal of the writ petition. 25. Petitioner has filed rejoinder af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide for such a condition so also the Foreign Trade (Regulation) Rules, 1993. He submits that conditions present in a licence have to conform to the statute. Those cannot be outside the statute. Mr. Nankani has also referred to the reply affidavit filed by the Director General of Foreign Trade and its subordinate authorities before the Andhra Pradesh High Court where a clear cut stand was taken that the 'actual user' condition was non-mandatory under the tariff rate quota scheme since the year 2003. Public Notice No.47 dated 18.05.2011 issued under the Export Import (EXIM) Policy clarified that the 'actual user' condition was non-mandatory for allocation of quota under the tariff rate quota scheme. He has also referred to the decision of this Court dated 20.11.2013 and submits that in violation of the direction of this Court, respondent No.1 declined adjudication on the 'actual user' condition causing serious prejudice to the petitioner. 26.1. Elaborating on his submissions Mr. Nankani submits that paragraph 2.59 of the Foreign Trade Policy 2004-2009 contains the tariff rate quota scheme. This scheme provides for import of goods into India with quantity re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that petitioner not only accepted the said condition but also acted upon the same. Conduct of the petitioner post import to justify compliance with the 'actual user' condition is highly questionable as evidently there was no processing or actual use of the imported goods by the petitioner. Fictitious documents were created to show compliance with the 'actual user' condition. In such circumstances, he submits that petitioner is estopped from challenging the 'actual user condition contained in the two licences. 27.1. Referring to the Export Import (EXIM) Policy, he submits that it is not a statutory law. Therefore, it cannot be contended that the subject licences being not in conformity with the policy become unsustainable in law. 27.2. Mr. Govilkar has placed reliance on the decision of the Supreme Court in Union of India Vs. M/s. Anglo Afghan Agencies, AIR 1968 SC 718 on the point of estoppel. 28. In his reply Mr. Nankani submits that the basic issue is the power to impose penalty. If a penalty is sought to be imposed, there must be a violation of the law. Without violation of law, no penalty can be imposed. In this connection, he poses a questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petition (L) No.2520 of 2013 besides demanding refund of customs duty paid by the petitioner under protest. During pendency of the writ petition, show cause notices dated 30.08.2013 were issued by respondent No.1 under section 13 of the Foreign Trade (Development and Regulation) Act, 1992 (briefly 'the Act' hereinafter) alleging breach of the 'actual user' condition in both the licences. Directorate of Revenue Intelligence also issued show cause notice dated 04.09.2013 contending that petitioner was not entitled to benefit of customs notification No.21/2002 - Customs dated 01.03.2002 in view of breach of 'actual user' condition in the licences and thus demanding customs duty of ₹ 3,05,70,953.00, besides calling upon the petitioner to show cause as to why the paid amount of ₹ 2,96,80,536.00 should not be adjusted towards the demand. 32. Petitioner brought the above show cause notices on record in the pending writ petition and those were also put to challenge. 33. By the order dated 20.11.2013, a Division Bench of this Court disposed of Writ Petition (L) No.2520 of 2013. This Court noted that all the show cause notices emanated from the alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 29.04.2003, a decision was taken to remove the 'actual user' condition to make the tariff rate quota scheme prioritized in terms of need base of the applicants. Accordingly, it was stated that the 'actual user' condition was made non-mandatory under the procedure for import of all items under the tariff rate quota scheme and in this connection, public notice No.7 / 2002-07 dated 09.05.2003 was issued specifying that eligible state trading enterprises could avail the quota as per request of the applications received. 34.2. Proceeding further the counter affidavit stated that as per provisions of public notice No.38/2002-07 dated 04.10.2002 imports under the tariff rate quota by eligible state trading enterprises on behalf of actual users were allowed. But as per decision taken in an interministerial meeting held on 29.04.2003 'actual user' condition was made non-mandatory under the procedure for import of all items under the tariff rate quota scheme and public notice No.7/2002-07 dated 09.05.2003 was issued specifying that eligible state trading enterprises could avail the quota as per request of the applications received. 34.3. To further clarify th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present respondent No.1 but respondent No.3 and that the decision of the competent authority was different from the views of Ms. Shubhra, we may point out that respondent No.1 is an officer subordinate to respondent No.3, who is appointed by the central government under section 6 of the Act. Respondent No.1 cannot take a view which is different from respondent No.3. So far reference to competent authority is concerned, it is not understood as to who is referred to as the competent authority - respondent No.1 or respondent No.3. 37. Be that as it may, the moot point is while before the Andhra Pradesh High Court, Union of India and Director General of Foreign Trade had taken the stand that the 'actual user' condition was nonmandatory since the year 2003 and that this position was clarified by way of the public notice No.47/2009-2014 dated 18.05.2011, in the reply affidavit filed in the present case on behalf of the respondents by Shri. Varun Singh, Deputy Director General of Foreign Trade, the stand taken is that the 'actual user' condition has been made non-mandatory with effect from 18.05.2011 only and that the 'actual user' condition was valid till 18.05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t No.1 to adjudicate the show cause notices dated 30.08.2013 on all issues after giving the petitioner an opportunity of personal hearing. 'All issues' would include validity of the 'actual user' condition in the licences or whether such a condition was mandatory or non-mandatory. This is because this Court had noted that the show cause notices had emanated from the actual user condition which was impugned in the said writ petition. Validity of the actual user condition or whether it was mandatory or not is the central issue. Refusal of respondent No.1 to adjudicate on this issue is not only violative of the directions of this Court as contained in the order dated 20.11.2013 but also amounts to non-exercise of jurisdiction vested in him. As rightly pointed out by this Court in the order dated 20.11.2013 the core issue is the insertion of 'actual user' condition in the two licences - whether such insertion is legally permissible or without entering into this aspect, whether such condition is directory or mandatory are issues which are required to be gone into by respondent No.1. Failure to do so has occasioned non-exercise of jurisdiction. 40. Thus upo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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