Back
2019 Supreme(Del) 1124
IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, J.
Holoflex Limited and Anr. – Appellants
Versus
Union of India and Ors. – Respondents
Writ Petition (Civil) No. 1816 of 2019; Civil Miscellaneous No. 8499 of 2019, 8500 of 2019
Decided On : 22-02-2019
Abhijeet Sinha, Adv., Mrkumarjit Banerjee, Adv., Gaurav Gupta, Adv., Sanchari Chakraborty, Adv., Ripu Daman Bhardwaj, Adv.
The central legal point established in the judgment is the significance of complying with procedural requirements, submitting necessary documents, and fulfilling export obligations as mandated by the relevant laws and regulations.
Headnote:
Export Obligations - Foreign Trade Development and Regulation Act,1992 - Section 16, Section 15 - Rule 7 of the Foreign Trade (Regulation) Rules, 1993 - Section 11(2) - Special Economic Zone Rules, 2006 - Rule 30
Fact of the Case:
The case involves a dispute over the discharge of export obligations by the petitioner under the Foreign Trade Development and Regulation Act,1992. The petitioner claimed to have fulfilled its export obligations by supplying goods to a Special Economic Zone (SEZ) unit, but the authorities rejected this claim due to the lack of necessary documents.
Finding of the Court:
The court found that the petitioner failed to submit the required documents to substantiate the fulfillment of its export obligations, as mandated by the relevant rules and regulations. The court also noted that the petitioner did not comply with the conditions specified in the EPCG authorization and the Special Economic Zone Rules, 2006.
Issues: The key issues revolved around the submission of necessary documents to prove the discharge of export obligations, the interpretation of procedural requirements under the relevant rules, and the compliance with EPCG authorization conditions and Special Economic Zone Rules.
Ratio Decidendi: The court held that the petitioner's failure to submit the required documents and comply with the conditions specified in the EPCG authorization and Special Economic Zone Rules led to the dismissal of the petition. The court emphasized the importance of adhering to procedural requirements and fulfilling the specified export obligations.
Final Decision: The petition was dismissed, and no relief was granted to the petitioner.
Vibhu Bakhru, J.
The petitioners have filed the present petition impugning an order dated 13.12.2018 (hereafter "the impugned order") passed by the Director General of Foreign Trade (DGFT), wherein the review petition preferred by the petitioner under Section 16 of the Foreign Trade Development and Regulation Act,1992 (hereafter "FTDR Act"), against an order dated 05.03.2018, was rejected. By the said order, the Additional DGFT had rejected petitioner no.1's appeal preferred under Section 15 of the FTDR Act, against an order dated 21.11.2014 passed by the Joint DGFT, Kolkata.
2. The principal controversy involved in the present petition relates to the discharge of the export obligations by petitioner No.1 (hereafter "Holoflex"). Whereas, Holoflex claims that it has discharged its export obligations by making supplies to a Special Economic Zone (SEZ) unit, the respondents have rejected the same on the ground that it has failed to file the necessary documents to evidence fulfillment of its export obligations.
3. Holoflex had obtained an authorisation under the Export Promotion Capital Goods Scheme (EPCG Authorisation No. 0230000858 dated 27.01.2005) for import of capital goods for manufacturing its products. In terms of the said authorisation, Holoflex had saved import duty, amounting to a sum of Rs. 2,17,317,25/- and had undertaken an export obligation of an aggregate value (FOB) of Rs. 17,38,538/- (US$37508.91), over and above its average exports. The said exports were to be completed within a period of eight years from the date of issue of the EPCG Authorisation.
4. The said period expired on 27.01.2013. Admittedly, prior to the expiry of the said period, Holoflex did not submit any documents to substantiate that it had exported goods of the stipulated FOB value over and above the average export turnover prior to import of the capital goods in question. Since Holoflex did not obtain the necessary Export Obligation Discharge Certificate (EODC) and also failed to submit the necessary documents for establishing discharge of its obligation, the respondent authorities issued several show cause notices.
5. The first show cause notice, under Rule 7 of the Foreign Trade (Regulation) Rules, 1993, was issued on 26.04.2013 whereby Holoflex was called upon to show cause why action should not be taken against it and its directors under the FTDR Act. This was followed by another notice dated 22.01.2014 calling upon the petitioner to show cause why a fiscal penalty should not be imposed under Section 11(2) of the FTDR Act.
6. Holoflex responded to the said show cause notice by a letter dated 29.01.2014 claiming that it had fulfilled its export obligations. It also sent several documents in support of its contention. It is averred in the petition that Holoflex had supplied goods to a unit of Nokia India Pvt. Ltd. (hereafter "Nokia"), which was an Indian subsidiary of a Finnish Telecom Company and had established a unit in Special Economic Zone, Sriperumbudur, near Chennai. The additional DGFT responded to the aforesaid communication by a letter dated 26.02.2014 by observing that the supplies referred to, in two of the bills, appeared to be to an SEZ Unit and the same required submission of Bill of Exports and realisation from SEZ accounts of the unit. He sought clarification in this regard.
7. It does not appear from the record that Holoflex issued any such clarification as sought. However, the petitioners assert that petitioner no.2 had apprised the respondent authorities that no Bill of Exports had been issued in respect of the goods supplied to Nokia.
8. Thereafter, on 26.06.2014, the Joint DGFT issued a Circular directing further license and renewal of expired license to be refused in terms of Section 9(2) of the FTDR Act. The petitioner sent a letter dated 16.09.2014 representing against the said Circular.
9. Thereafter, on 04.09.2014, the Joint DGFT issued another show cause notice calling upon Holoflex and its directors to show cause
