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2019 Supreme(Telangana) 40
HIGH COURT FOR THE STATE OF TELANGANA
T. AMARNATH GOUD, J.
SURYA LAKSHMI COTTON MILLS LTD - Appellant
Versus
JOINT DIRECTOR GENERAL OF FOREIGN TRADE - Respondent
Writ Petition No. 33702 of 2011
Decided on : 01-03-2019
Advocate Appeared:
Vikram Pooserla, Adv., Anjali Agarwal, Adv.
Point of Law :
Powers and duties vested upon the officers under the Foreign Trade (Development and Regulation) Act, 1992 and the Customs Act, 1962 are different and distinct. Chapter II of the Customs Act, 1962, deals with class of officers of Customs and Section 3 of the said chapter
Headnote:
Constitution of India, 1950 - Articles 19(1) and 300A - Issue of Duty Free Credit Certificate - Competent authority - Violation of rights - As per FTP prevailing at time of making application for TPS by petitioner, provisions of para 9.28 of FTP provided three alternatives and independent criteria and satisfaction of any one of three alternatives is sufficient for consideration of Bronze Logistics Private Limited (BLPL) as a group company of petitioner.
Facts of the case : Seeking to declare order-in-original passed by first respondent, as confirmed by 2nd respondent, by his order as illegal, unjust and contrary to the provisions of law and violation of rights guaranteed under Articles 19(1) and 300A of Constitution - First petitioner is engaged in the business of manufacture and export of Yarn and Denim fabrics, while the second petitioner is its Managing Director. For the purpose of convenience, petitioners herein are referred to as the petitioner - The petitioner has filed an application for Duty Free Credit under Target Plus Scheme (TPS), which is one of export promotional schemes, made available in Chapter 3 of the Foreign Trade Policy (FTP) - Whether the petitioner is eligible for exemption of customs duty on the imports and exports of its goods under Target Plus Scheme - Whether the first respondent has got jurisdiction to cancel the said benefit and impose penalty on the petitioner company.
Finding of the court: The action of the first respondent is without jurisdiction, unjust and contrary to the provisions of law and also against the principles of natural justice - This Court, by order while granting stay of the impugned order, directed the petitioner to deposit a sum of Rs.2.5 crores on or before 15.2.2012 and another sum of Rs.2.5 crorers on or before 31.3.2012 and in the event of default in compliance with said condition, the respondents shall be free to take appropriate action for recovery of the amount - In due compliance of the above order, the petitioner has paid said amount and accordingly, the interim stay granted was made absolute
Result: - Writ petition is allowed
T. AMARNATH GOUD, J.
1. This writ petition is filed seeking to declare the order-in-original dated 30-12-2010 passed by the first respondent, as confirmed by the 2nd respondent, by his order dated 13-12-2011, in Ref.F.No.113382010-11/ECA.I/2853, as illegal, unjust and contrary to the provisions of law and violation of rights guaranteed under Articles 19(1) and 300A of the Constitution of India.
2. The case of the petitioner, in brief, is as follows:-
(a) The first petitioner, M/s. Suryalakshmi Cotton Mills Limited, is engaged in the business of manufacture and export of Yarn and Denim fabrics, while the second petitioner is its Managing Director. For the purpose of convenience, the petitioners herein are referred to as 'the petitioner'.
(b) The petitioner has filed an application for Duty Free Credit under Target Plus Scheme (TPS), which is one of the export promotional schemes, made available in Chapter 3 of the Foreign Trade Policy (FTP). The Duty Free Credit means a certificate issued to the eligible exporters as a reward/benefit, based on which, the scrip holder can import capital goods and other eligible items without payment of Customs Duty. In other words, the Duty Free Scrip can be considered as equivalent to cash paid to the exporters, which, they would, otherwise, have to pay the amount in the form of Customs Duties for the import of goods at the time of clearance. The petitioner has executed necessary undertakings before the competent authority in connection with and for the purpose of issuance of the Duty Free Credit Certificate.
(c) The first respondent, based on the applications filed by the petitioner, and the undertaking executed by it, issued necessary certificates. In effect, the first respondent considered two applications filed by the petitioner for a value of Rs.9,02,45,941/- and Rs.1,62,04,039/- respectively. Based on the certificates/scrips issued by the competent authority, the petitioner availed the benefit of adjusting the value of scrips against the customs duty payable on the import of goods.
(d) Subsequently, the Chief Commissioner of Customs, Central Excise and Service Tax, Hyderabad Zone, Hyderabad, has addressed a letter dated 18.11.2009 to the first respondent, stating that the petitioner has misused the TPS, basing on which, the Director of Revenue, Intelligence, Hyderabad (DRI) initiated investigation and recovered certain documents from the registered office of the petitioner on 25.09.2009.
(e) Based on the information received from the DRI, vide letter dated 11.1.2010, a show-cause notice dated 25.2.2010 was issued alleging that:
(i) The noticee has fraudulently availed the benefits of the TPS;
(ii) The noticee is not eligible to include in their export turnover the exports made by M/s.Bronze Logistics Pvt.Ltd. (BLPL), as the definition of 'Group Company' as given in para 9.28 of the Foreign Trade Policy is not satisfied;
(iii) Based on the statements of Shri Paritosh K.Agarwal it is alleged that M/s.BLPL was in existence only for 17 months;
(iv) Export turnover of the BLPL is Rs.19.11 crores only and not Rs.85.66 crores.
(f) The petitioner submitted a detailed reply, stating that there is no violation of the principles of natural justice as copies of the statements of Shri Paritosh K.Agarwal, Managing Director of the petitioner and letter dated 11.01.2010 of the DRI, have not been supplied to him.
(g) As per the FTP prevailing at the time of making application for TPS by the petitioner, the provisions of para 9.28 of the FTP provided three alternatives and independent criteria and the satisfaction of any one of the three alternatives is sufficient for consideration of Bronze Logistics Private Limited (BLPL) as a group company of the petitioner. The petitioner has satisfied all the clauses of para 9.28 of the FTP. As the TPS is not a licence, the provisions of Foreign Trade (Development an
