The main legal point established in the judgment is that if the licensing authority has not questioned the veracity of transactions, the Customs authorities cannot refuse exemption based on misrepresentation. The judgment also emphasizes that issuing show cause notices after exoneration by the licensing authority constitutes an abuse of process.

S. Muralidhar, J.

1. Petitioner No. 1, FNS Agro Foods Limited, and its directors (Petitioner Nos. 2 to 5) have filed these two writ petitions seeking to challenge the impugned show cause notice (“SCN”) dated 28th March 2014 issued by the Commissioner, Central Excise, Noida on behalf of the Commissioner of Customs (Preventive), Delhi (Respondent No. 1) and SCN dated 19th February 2015 issued by the Commissioner of Customs (Export), Navi Mumbai, Maharashtra again on behalf of Respondent No. 1.

Background Facts

2. The background to these writ petitions is that Petitioner No. 1 is engaged in the export of frozen boneless buffalo meat falling under ITC (HS) Code No. 02023000 of Export Import Policy 2009-14 and Chapter sub-heading 02023000 of Customs Tariff Act, 1975 (“CTA”). It is stated that the Petitioner has been issued IEC No. 0595040144 by the Director General of Foreign Trade (“DGFT”), New Delhi on 14th November 1995.

3. It is stated that the meat processing plant of Petitioner No. 1 is located at Manesar, Gurgaon (Haryana) and its corporate and registered office is at Sarva Priya Vihar, New Delhi. It is stated that the meat processing plant is duly approved and registered by Agriculture and Processed Food Products Export Development Authority (“APEDA”) under registration certificate dated 3rd September 1996. It is stated that Petitioner No. 1 availed export incentives for the export of frozen buffalo meat under Duty Exemption Pass Book Scheme (“DEPB”) and Vishesh Krishi and Gram Upaj Yojena (“VKGUY”).

4. It is further stated that under Serial No. 21 of Chapter 2 of Export Policy, 2009-14 (“Export Policy”), the export of frozen boneless buffalo meat is permissible subject to the following conditions:

(i) export allowed on production of a certificate from the designated veterinary authority of the State from which the meat or offals emanate, provided they are from buffaloes not used for breading and milch purposes.

(ii) quality control and inspection under Note 3 and 4 respectively as well as condition stipulated at Note 6 and 8 of the Export Policy have to be fulfilled.

5. It is stated that the issue concerning the suspension and cancellation of Importer-export Code (IEC) is governed under Sections 7 and 8 of the Foreign Trade (Development and Regulation) Act, 1992 (“FTDR Act”) respectively and Rules 9 and 10 of the Foreign Trade (Regulation) Rules, 1993 (“FTR Rules”). The DGFT or an officer authorized by him (licensing authority) is the competent authority to issue suspension and cancel any licence certificate, scrip or any instrument bestowing financial or fiscal benefits to the importer or exporter.

6. Under Sections 13 and 14 of the FTDR Act, the DGFT or an officer authorized by him is empowered to adjudicate contravention of provisions of FTDR Act, Rules, Order and Foreign Trade Policy and impose penalties upon the exporter/importer/beneficiary of license certificate after following the principles of natural justice.

7. Petitioner No. 1 procures dressed carcasses in four pieces in refrigerated trucks from the Government of Rajasthan’s slaughter house situated at Jaipur, for the purpose of processing of frozen boneless buffalo meat. The consignments are accompanied by the ante mortem report of the Veterinary Doctor, i.e., designated veterinary authority of the State as well as receipt of the slaughter house, certifying that the meat or offals are from buffalo not used for breeding and milch purposes. The dressed carcasses are processed and converted into pieces of desired sizes according to the requirement of the buyer, packed and stored at minus 18 degree C temperature at the meat processing plants of Petitioner No. 1.

8. By its letter dated 18th January 2006, Petitioner No. 1 requested the Deputy Director Animal Husbandry, Gurgaon, Haryana to draw samples of meat processed by it for bacteriological test etc. in order to comply with the condition set out in para 21 of Chapter 2 of the Export Policy. This request was declined