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TMI Blog2025 (2) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... e Mr. P.Y. Divyeshvar waives service of notice of rule on behalf of respondent No. 1. 4. Having regard to the controversy in narrow compass and with the consent of learned advocates for the respective parties, this petition is taken for final hearing. 5. By this petition under Article 226 of the Constitution of India, the petitioners have prayed for the following reliefs: "24A. Your lordships may be pleased to issue a Writ of Certiorari and/ or Mandamus or a Writ in the nature of Certiorari/ Mandamus or any other Writ or Order or Direction quashing and setting aside the impugned order dated 24.03.2019 passed by the Appellate Authority (at Annexure-A hereto) and thereby consequently quash and set aside the order dated 23.09.2013 passed by Development Commissioner-KASEZ imposing penalty of Rs. 17.10 Lacs (at Annexure-T hereto);" 6. The Court (Coram: Hon'ble Ms. Justice Harsha Devani and Hon'ble Ms. Justice Sangeeta K. Vishen) passed the following order on 18.10.2019: "1. Mr. Nandish Chudgar, learned advocate for the petitioner invited the attention of the court to the appellate order dated 12.3.2013 passed by the Appellate Committee, to point out that it is recorded therein t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner company were severely damaged and were not worthy of exports and amounted to wastage, as a result, the petitioners had to clear such goods as wastage by way of the Domestic Tariff Area Sale. It is the further case of the petitioner unit that due to such situation, there was huge negative NFE in the year 2008-09 and therefore, the petitioner could not achieve positive NFE for the blocks of 5 years, i.e. from 2005-06 to 2009-10 and there was deficit of Rs.114 lakhs. 7.4 The respondent Development Commissioner, SEZ-KASEZ, therefore, issued a show cause notice dated 27.12.2010 to the petitioner company under section 13 read with section 11 of the Foreign Trade (Development and Regulation) Act, 1992 (for short 'FTDR Act') and Rule 54 (2) of Special Economic Zones Rules, 2006 (for short 'SEZ Rules') calling upon the petitioner to show cause as to why the penalty should not be imposed upon the petitioner unit for not achieving positive NFE for the said block of 5 years commencing from 20.03.2005. 7.5 It appears that the order-in-original was passed by the respondent suspending all the activities of the petitioner unit and other exports on 12.08.2011. The petitioner there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to them. 11. After discussing the matter and going through the facts, records and submissions, the Committee decided to remand back the case to DC to reconsider the same on the following issues: (i) Why an extension of three months was given to achieve positive NFE (Net Foreign Exchange)? (ii) If time was extended and the unit had achieved the shortfall then why penalty was imposed? (iii) Whether there is case for imposition of penalty. If yes, then quantum may be decided." 7.10 Pursuant to the aforesaid order, the respondent Development Commissioner again adjudicated the issue of levy of penalty and provided an opportunity of hearing to the representative of the petitioner company. The respondent Development Commissioner, after considering the facts of the case, came to the conclusion that there was no extension of three months as contended by the petitioner as there was no extension upto October 2011 and the petitioner had filed undertaking to clear the negative NFE upto 31.12.2011 which was never granted and no order to that effect was available on record. It appears that the respondent taking lenient view reduced penalty of Rs. 17.10 lakh. 7.11 Being aggrieved b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent authority. It was submitted that the respondent authority has not justified the quantum of penalty of Rs. 17.10 lakhs taking lenient view in the matter. It was submitted that the petitioner is required to protect the assets of the company as per the provisions of section 25 (2) (b) of the Code and therefore, if any penalty is confirmed, as confirmed by the respondent and upheld by the Appellate Authority, would reduce the assets of the company which is facing financial hardships, for which insolvency proceedings are initiated. 9. On the other hand, learned advocate Mr. P.Y. Divyeshvar for the respondent Development Commissioner submitted that the petitioner company did not approach the Development Commissioner with clean hands and in spite of the fact that there is no extension granted by the respondent, undertaking dated 13.09.2011 was submitted stating that the petitioner company would achieve positive NFE by 31.12.2011 accordingly. It was, therefore, submitted that the respondent was justified in taking lenient view by reducing Rs.114.98 lakhs to Rs. 17.10 lakhs keeping in mind the fact that the petitioner company fulfilled the condition of achieving positive NFE for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54 of the SEZ Rules provides for monitoring of performance of the SEZ unit and reads as under: "54. Monitoring of performance.- (1) Performance of the Unit shall be monitored by the Approval Committee as per the guidelines given in Annexure appended to these rules. (2) In case the Approval Committee come to the conclusion that a Unit has not achieved positive Net Foreign Exchange Earning or stipulated Value Addition as specified in rule 53 or failed to abide by any of the terms and conditions of the Letter of Approval or Bond-cum-Legal Undertaking, without prejudice to the action that may be taken under any other law for the time being in force, the said Unit shall be liable for penal action under the provisions of the Foreign Trade (Development and Regulation) Act, 1992." 13. As per sub-rule (2) of Rule 54 of the SEZ Rules, SEZ unit is liable for penal action under the provisions of the FTDR Act in case the Approval Committee come to the conclusion that the a unit has not achieved positive Net Foreign Exchange Earning or stipulated Value Addition as specified in Rule 53 or such unit has failed to abide by any of the terms and conditions of the Letter of Approval or Bond-cu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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