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2003 Supreme(Del) 219
High Court Of Delhi
MUKTA SONS - Appellant
Versus
UNION OF INDIA - Respondent
Civil Writ 7380 of 2001
Decided On : 02/28/2003
Ajay Bhatnagar, Navin Chawla
The court upheld the authority to impose a penalty under Section 11(2) of the Act for failure to fulfill export obligations and affirmed the composition of the Appellate Committee as per the Notification dated 31st December, 1993.
Headnote:
Foreign Trade - Export Obligation - Foreign Trade (Development and Regulation) Act, 1992, Section 11(2) - Para 88 C of Export Promotion - Clause 152(1) of Hand Book of Procedures- Volume-1 - Notification dated 31st December, 1993
Fact of the Case:
The petitioner failed to fulfill its export obligation of gold jewellery due to the epidemic of plague in India, resulting in the banning of air flights and subsequent cancellation of the export contract. The petitioner sought extensions for export but was unable to comply with the orders, leading to the imposition of a penalty.
Finding of the Court:
The court found that the petitioner's appeal was dismissed due to non-compliance with the order to furnish a bank guarantee. The court also dismissed the petitioner's arguments regarding violation of principles of natural justice and the authority to impose a penalty under Section 11(2) of the Act. Additionally, the court held that the composition of the Appellate Committee was in accordance with the Notification dated 31st December, 1993.
Issues: Opportunity of hearing, imposition of penalty, composition of the Appellate Committee
Ratio Decidendi: The court ruled that there was no violation of principles of natural justice, the imposition of penalty was justified under Section 11(2) of the Act, and the composition of the Appellate Committee was in accordance with the Notification dated 31st December, 1993.
Final Decision: The writ petition was dismissed for being devoid of merit.
( 1 ) UNDER the provisions of Foreign Trade (Development and Regulation) Act, 1992 (for short `the Act ), respondent No. 1 notified the Export and Import Policy for the period 1992-97 (hereinafter referred to as `the EXIM Policy), under the provisions of para 88 C of this EXIM Policy a total quantity of 3 kgs. of gold from the Minerals and Metals Trading Corporation (MMTC) on 1st July, 1994 vide contract No. L-0963 dated 30th June, 1994. It may be mentioned that in para 88 various schemes for export of gold/silver jewellery and articles are stipulated. Para 88 C deals with
" Gold and Silver jewellery and articles Export Promotion and Replenishment Scheme" and reads as under: "88 C. Gold and Silver jewellery and articles Export Promotion and Replenishment Scheme:" against export of gold/silver jewellery and articles, the scheme provides for replenishment of gold/silver through the designated branches of SBI or any other agency nominated by the Ministry of Commerce, at a price indicated in the certificate issued by the SBI/agency after purchase of gold/silver. The scheme shall be limited to exports which are supported by irrevocable letter of credit, payment of cash on delivery basis or advance payment in foreign exchange. Export of gold jewellery may also be allowed on collection basis (documents against acceptance ). The exporter has the option to obtain gold/silver from SBI in advance. On presentation of required documents, appropriate Release Order and Gem Replenishment Licence may be issued by the licensing authority. The value addition will be calculated with reference to the value of gold content (including wastages) and silver content (without wastages) at the price at which the gold and silver is booked by SBI. The minimum value addition for gold and silver jewellery/articles shall be 15% and 25% respectively. "
( 2 ) IN terms of the aforesaid scheme, after getting the gold from the MMTC, the petitioner was required to export the gold jewellery made from the said supply of gold, within a period of 120 days, i. e. , from 1st July, 1994 to 27th October, 1994. For fulfillment of its obligation, the petitioner furnished a bank guarantee of Rs. 12 lacs which was the actual cost of gold prevailing on the date of advance as fixed by the MMTC. Another bank guarantee in the sum of Rs. 2,70,000/- was also furnished for difference between domestic and international price of gold and other Government duties/levies and customs duty leviable on that quantity which is not exported. Clause 152 (1) of the Hand Book of Procedures- Volume-1 states the procedures which is to be followed for exporting gold jewellery under the Scheme specified in para 88 C of Export Promotion. As per clause 152 (1), export against an export order shall pertain to a single buyer overseas. This export was allowed by air freight and Foreign Post Office through the Customs House at Bombay, Calcutta, Madras, Delhi, Jaipur, Bangalore and Kochi as mentioned in para 152 (7 ).
( 3 ) IT is the case of the petitioner that it manufactured in time the gold jewellery articles for exports to a single buyer in United Arab Emirates (UAE) in terms of clause 152 (1) of the Hand Book of Procedure- Volume-I as per scheme stipulated in para 88 C. It is further alleged that when the petitioner was in the process of export of the manufactured plain jewellery out of the gold supplied by the MMTC to the single buyer in UAE , the epidemic of plague in India in September, 1994 spread like wild fire resulting in banning of air flights to India by a number of foreign countries. This unprecedented crisis due to spread of killer disease created considerable anxiety worldwide, while also exacting a heavy economic toll in India. In financial terms the plague s toll was much greater, costing the Indian economy excess of $ 600 million. Many countries stopped air and ship traffic to and from India. The foreign buyer was from UAE where the air flights from India were not permitted to la
