By TIOL News Service

NEW DELHI, MAY 19, 2016: THE respondent DGFT have vide adjudication order dated 5th April, 2010 supra imposed penalty of Rs.3,46,30,500/- on the petitioner for the reason of the export obligation period of the petitioner having expired on 21st June, 2001 and the petitioner having not submitted export details in the requisite manner supported with the bank certificate/documents towards fulfillment of export obligation and treating the petitioner as 100% defaulter in the fulfillment of export obligation.

The Appellate Authority vide impugned order dated 5th January, 2015 dismissed the appeal.

The petitioner availed of the statutory review but which was rejected vide impugned order dated 21st / 24th August, 2015 on the grounds of inadmissibility observing (i) that the petitioner before the Review Authority also, inspite of dismissal of the statutory appeal for non-submission of documents had only produced copy of MODVAT non-availment certificate; and, (ii) no ground for review was made out.

In their petition, the petitioner inter alia submitted that the show cause notice dated 31st March, 2004 did not contain any proposal for levying penalty; that what is imposed for non-fulfilment of export obligation is penalty and thus if the export obligation is shown to have been fulfilled, no question of penalty arises; and in view of the apex court decision in Hindustan Steel Limited = 2002-TIOL-148-SC-CT-LB the proceedings are in the nature of quasi criminal proceedings and penalty cannot ordinarily be imposed unless there is deliberate defiance of law or dishonest conduct.

The respondents inter alia pleaded that the power of judicial review can extend only to the decision making process and not to the decision; that without the petitioner fulfilling the mandatory requirement of DEEC book (Part-II) logged for exports and signed by the Customs showing fulfillment of export obligation in quantities terms with FOB value and original BRCs showing that foreign exchange has been realized, it is not possible to ascertain how much import and export in terms of quantity wise has been made by the petitioner; that export obligation has to be fulfilled both in terms of quantity wise and value wise as per condition no.5 of the Advance Licence.

The High Court, after considering the elaborate submissions, observed -

++ what immediately becomes vivid on encapsulation as aforesaid of the controversy is, that the petitioner also admits that what it was required as per the Rules to submit in proof of fulfillment of export obligation, it has not submitted. The petition does not also challenge the Rules requiring the petitioner to submit particular documents in fulfillment of export obligation and which the petitioner is unable to submit.

++ however what the petitioner wants this Court to do, without challenging the Rules and without fulfilling the requirement thereof, is to nevertheless relieve the petitioner of the rigors of non-fulfillment of export obligation. Significantly it is also not the case of the petitioner that even if it is found to be in non-fulfillment of the export obligation it is not liable for the demand imposed on it. What the petitioner further wants this Court to do in exercise of its power of judicial review under Article 226 of Constitution of India is to sit in appeal over the concurrent finding of fact of the Adjudicating Authority, Appellate Authority and the Reviewing Authority, of the documents submitted by the petitioner not establishing fulfillment by the petitioner of the export obligation under the Advance Licence.

++ the scope of the jurisdiction of this Court, in exercise of power of judicial review does not extend to, without quashing the Rule aforesaid, granting relief to the petitioner even though it is non-complaint therewith or to interfere with the factual finding of the three Statutory Authorities.

++ once the authorities, for admitted non-furnishing by the petitioner of documents prescribed, have in accordance with the said Rule concluded that the petitioner has not fulfilled the export obligation, no fault can be found therewith. This Court under Article 226 is not to distribute reliefs, to which the petitioner in accordance with law and Rules is not entitled to. The power under Article 226 is only to ensure that the authorities whose action is subject matter of judicial review, have acted in accordance with law.

The High Court also observed that the case laws cited by the petitioner do not apply to the facts of the case.

It was further observed –

++ the exports against which the petitioner wants his export obligation under Advance Licence dated 22nd December, 1999 to be fulfilled are stated to have taken place on 16th February, 1999, 29th January, 1999 and 20th April, 1999.

++ i fail to see how the exports effected prior to the date of Advance Licence, imposing obligation to effect export within 18 months thereof, can be said to be against the Advance Licence. Obviously the petitioner, even before the Advance Licence was issued, could not have the DEEC book and it is clear as sky that the exports even if made were not against the Advance Licence and the petitioner is clearly in violation of its obligation thereunder and there is no reason for interference with the orders impugned.

Adverting to the apex Court decision in S.B. International Limited Vs. Assistant Director General of Foreign Trade (1996) 2 SCC 439 & which was followed in Larsen and Toubro Ltd. Vs. Union of India - 2005-TIOL-11-SC-EXIM the High Court concluded that the export effected by the petitioner prior to the date of issuance of Advance Licence cannot be considered in fulfillment of Export Obligation under the Advance Licence and, therefore, there was no error in the factual finding of the Statutory Authorities, of the petitioner having not fulfilled the Export Obligation.

The petition was dismissed with costs of Rs.25,000/- to the respondents.

(See 2016-TIOL-974-HC-DEL-CUS)