Back
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Akil Kureshi, Harsha Devani, JJ.
SAURASHTRA CEMENT LTD. & 2 - Petitioner(s)
Versus
COMMISSIONER OF CUSTOMS & 1 - Respondent(s)
SPECIAL CIVIL APPLICATION No.13397, 13399 of 2006
Decided on : 25/07/2012
Customs Act, 1962 - Section 111(d) and Section 111(o), Section 112 & Section 114A, Section 28 - Petitions have been filed by two companies registered under the Companies Act having common Directors and are, therefore, referred to as companies belonging to same group. The petitions call in question legality and validity of two separate orders passed by the Settlement Commission on applications made by the respective companies under the provisions of the Customs Act, 1962 - Held, Gujarat Sidhee Cement and its two Directors were habitual offenders is not based on any material on record. In fact, such conclusion is based on consideration of defaults made by Saurashtra Cement in the past. The decision of the Tribunal to impose heavy penalty and enhance the penalty imposed by the Commissioner by more than three times was based solely on this factor. Under the circumstances, we are of the opinion that the decision of the Commission in this respect is required to be reconsidered. As is well-settled, the court is not concerned with the ultimate decision but the decision-making process. We find that the process is vitiated on account of irrelevant considerations having weighed with the Commission - Petition disposed of
Facts of the Case:
petitioner No.1 Saurashtra Cement Ltd., is a company registered under the Companies Act. The petitioners No.2 and 3 are the Managing Director and President respectively of the said company. Saurashtra Cement is engaged in the business of manufacturing cement and also produces "Clinker". Such product the company sells not only in the domestic market but also in the international market through exports. The Government of India with intent to boost the exports has been framing various incentive schemes. One of them was Duty Exemption Entitlement Certificate ('DEEC', for short). Under such scheme, an exporter could import certain inputs required for its export product without payment of duty on the condition that within the time specified, the importer shall discharge its export obligation. Such imports, of course, were permitted subject to conditions provided in the DEEC scheme.
Finding of the Court:
Gujarat Sidhee Cement and its two Directors were habitual offenders is not based on any material on record. In fact, such conclusion is based on consideration of defaults made by Saurashtra Cement in the past. The decision of the Tribunal to impose heavy penalty and enhance the penalty imposed by the Commissioner by more than three times was based solely on this factor. Under the circumstances, we are of the opinion that the decision of the Commission in this respect is required to be reconsidered. As is well-settled, the court is not concerned with the ultimate decision but the decision-making process. We find that the process is vitiated on account of irrelevant considerations having weighed with the Commission
Result : Petition disposed of
1. These writ petitions involve similar questions. Though there are certain factual differences, central legal issues are common. The petitions have been filed by two companies registered under the Companies Act having common Directors and are, therefore, referred to as companies belonging to same group. The petitions call in question legality and validity of two separate orders passed by the Settlement Commission on applications made by the respective companies under the provisions of the Customs Act, 1962.
2. The facts may be noted at the outset.
2.1 In Special Civil Application No.13397/2006, the petitioner No.1 Saurashtra Cement Ltd., is a company registered under the Companies Act. The petitioners No.2 and 3 are the Managing Director and President respectively of the said company. Saurashtra Cement is engaged in the business of manufacturing cement and also produces “Clinker”. Such product the company sells not only in the domestic market but also in the international market through exports. The Government of India with intent to boost the exports has been framing various incentive schemes. One of them was Duty Exemption Entitlement Certificate ('DEEC', for short). Under such scheme, an exporter could import certain inputs required for its export product without payment of duty on the condition that within the time specified, the importer shall discharge its export obligation. Such imports, of course, were permitted subject to conditions provided in the DEEC scheme.
2.2 With the intention of exporting “Clinker”, Saurashtra Cement imported certain raw material namely, steam coal during the period between June, 1997 to November, 1997. Details of such imports and the duty foregone on such imports under the DEEC scheme are as under:-
Licence Port of Commodity Bill of Quantity CIF Value Duty
No. & Import Entry (MTS) (Rs.) Foregone
Date No. & (Rs.)
Date
1993/ Porbandar Steam F-14/ 20000 29628040 3626827
3-6-97 Coal 11-6-97
20037/ Porbandar Steam F-29 23776 36766541 5570131
29-8-97 Coal 24-11-97
Porbandar Steam F-45 224 360670 54642
Coal 18-2-98
Total Duty Foregone 9251600
2.3 It is not in dispute that the company was required to export agreed quantity of Clinker against such imports of raw material within 18 months from the import.
2.4 It is not in dispute that Saurashtra Cement did not fulfil the full export obligation against such imports. The export obligation of clinker against the imports of raw material allowed in terms of quantity and FOB value of exports were as under:-
Licence No Import Allowed Export Obligation
Item Qty. CIF Item Qty. FOB
(MTS) Value (MTS) Value
(Rs.)
19993 Coal 20000 34413330 Clinker 100000 108565520
20037 MR 36 38343002 Clinker 120000 137894400
Bricks 24000
Coal
2.5 Against such export obligation, the company could fulfil only part of the obligation, details of which are as under:-
Licence No Port of Commodity Quantity FOB Value
& Date Shipment (MTS) (Rs.)
19993/3-6-97 Porbandar & Clinker 71347 78783192
Okha
2.6 From the above, it emerges that against the commitment of export of 1,00,000 metric tonnes of clinker in respect of Advance Licence No.19993, the company exported only 71347 metric tonnes of Clinker. It further emerges that against the export obligation of 1,20,000 metric tonnes of Clinker related to Advance Licence No.20037, the company made no exports at all.
2.7 When such irregularities were unearthed by the Customs Department, a show-cause notice came to be issued on 26-3-2001 by the Commissioner of Customs, Ahmedabad. In such show-cause notice, it was pointed out that Saurashtra Cement Ltd. had been granted licence to import steam coal and MR Bricks without payment of duty on the condition that the final product namely, Clinker to the extent specified in such licences would be exported within the time permitted. It was further alleged that against such export obligation of 1,
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
