TMI Blog2021 (7) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, the petitioner s contention that the entire 5 years period be taken into consideration, is in the teeth of such statutory provisions as contained in Annexure I of the Special Economic Zone Rules, 2006. Although this submission is labeled as a legal submission, it appears to be an argument in desperation and in the present facts an unwarranted hairsplitting. It was for such reason that this argument was never advanced before the authorities below. In any event, it is not the petitioner s case that exclusion of the period beyond 4 years in any manner could have brought about a different situation namely of a position that the petitioner demonstrating that it had complied with the prescribed NFE obligations for the block period. The fact remains that for the total block period of 5 years, the mandatory NFE obligation of the petitioner had remained in the negative - It cannot be overlooked that the show cause notice was issued to the petitioner only after completion of 5 years block period which came to an end on March 31, 2015, as the show cause notice itself was issued on June 24, 2015. Also the original authority has recorded the findings of fact that the petitioner was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings, which prescribed that the petitioner should achieve positive Net Foreign Exchange (for short NFE ) as per the SEZ Rules, failing which the petitioner shall be liable for penal action under 1992 Act. The said condition reads thus: 2(ii) It is noted that you have projected export turnover of US$1,31,30,430/- (US$ One crore Thirty one lakhs thirty thousand four hundred thirty only) and Net Foreign Exchange Earnings of US$83,48,910 (US$ Eighty three lakhs forty eight thousand nine hundred ten only) for the period 2010-11 to 2014-15. However, you are required to achieve positive Net Foreign Exchange (NFE) as prescribed in the Special Economic Zone Rules, 2006 failing which you shall be liable for penal action under the Foreign Trade (Development and Regulation) Act, 1992. 3. It appears that the petitioner could not comply with the approval conditions and the SEZ Rules. Hence, a show cause notice dated June 24, 2015 was issued to the petitioner with the subject Non-functioning of its unit . The show cause notice interalia recorded that there was less activity in the unit of the petitioner and there were no exports six months prior to the issuance of the show caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et condition, namely, that the market accepted Chinese products which had affected production of jewellery. In paragraph 6 of the reply, the petitioner pointed out that its projections were made in anticipation and on the basis of market expectations, however, according to the petitioner, everything went wrong due to the recession and heavy global competition, hence the petitioner could not achieve the project turnover. 5. The original authority, however, did not find favour with the contentions as urged on behalf of the petitioner in reply to the show cause notice. The original authority, considering the facts and figures, observed that the performance of the petitioner was very disappointing, as the petitioner had not achieved exports of even 1% of the projection and that the NFE of the unit was in the negative for all four years of the block period 2010-15. The original authority also observed that the petitioner had submitted wrong and misleading information to show positive NFE. It was observed that the units working in the SEZ were effecting clearances on self declaration and hence the petitioner was expected to comply with the rules and regulations of SEZ. It was observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant urged that the penalty amount be lessened. No other issue was urged. The Review Committee considering the record confirmed the findings as recorded by the earlier authorities, namely, that the appellant had admitted that NFE for the years 2010-11, 201112 and 2012-13 was in the negative. It also observed that the appellant did not reflect sale of CAD machine in the APR for the year 2011-12. Accordingly, the review authority rejected the petitioner s review application. 7. In assailing the impugned orders, Mr. Shah, learned counsel for the petitioner has limited submissions. The principal contention of Mr. Shah is that the very foundation of the proceedings in issuing the show cause notice was without any basis inasmuch as that the authorities ought to have awaited for the entire block period from 2010-11 to 2014-15 to be over and only at the end of block period, such show cause notice ought to have been issued, if the authority was to be of the opinion that the petitioner had not achieved the positive NFE as prescribed under the SEZ Rules, 2006. Mr. Shah would submit that it was clear from the show cause notice that the authority had taken into consideration the NFE s for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssarily is that the entire block period of 5 years ought to have lapsed and only then a show cause notice should have been issued for the entire period, for non-fulfilling the NFE conditions. This contention as urged on behalf of the petitioner cannot be accepted considering the provisions of law and would be required to be rejected on the plain purport of what has been provided for in Annexure-I framed under Rule 54 which lays down the statutory guidelines for annual monitoring of performance of units in Special Economic Zones. Annexure-I prescribes that a show cause notice can be issued if the unit continues to be Net Foreign Exchange negative by the end of 3rd year and if the negative performance continues in the 5th year, the Development Commissioner is entitled to initiate penal action as per the provisions of Rule 25. Thus, the petitioner s contention that the entire 5 years period be taken into consideration, is in the teeth of such statutory provisions as contained in Annexure I of the Special Economic Zone Rules, 2006. Although this submission is labeled as a legal submission, it appears to be an argument in desperation and in the present facts an unwarranted hairsplit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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