Appellate Authority's discretion to deny waiver of penalty pre-deposit under FTDR Act Section 15 upheld; post-obligation financial hardship irrelevant.

For Petitioner :Mr. N.Prasad For Respondents :Mr.AR.L.Sundaresan, ASG Asst.by Mr.B.Rabumanohar, SCGSC COMMON ORDER (Order of the Court was delivered by Dr.G.Jayachandran,J.)

The writ petitioner S and S Power Switchgear Limited before us is engaged in the manufacture and sale of vacuum circuit breakers, disconnectors and other engineering goods. On receiving an export order from the foreign buyer at Malaysia, the petitioner sought an advance licence to import raw materials for the fulfilment of its export obligation. The same was granted to the writ petitioner vide order dated 26.06.1997 and

31.03.1997.

2.The writ petitioner was unable to fulfil the export obligation in full and sought for extension of time which was also granted. However, even after the extension of time, it was not able to complete the export obligation in full. Consequently, the order- in-original came to be passed on 02.08.2004 by the Adjudicating Authority, which reads as below:

“9.The Notice Firm’s actions of failing to appear for the Personal Hearing and also by their default in fulfilling the conditions of the licence have gone against them and they have not fulfilled the conditions of the licence. Therefore, in terms of para 13 of the FT (D & R)Act, I hereby impose a total penalty of Rs.83,63,653/- (Rupees eight three lakhs sixty three thousand six hundred and fifty three only) which is equivalent to 1% of unfulfilled. FOB value plus customs duty saved plus 15% on CD saved for 6 years plus a personal penalty of Rs.10,000/-, on the Notice Firm as per the powers vested in me under Section 13 of the FT (D&R) Act, 1992. This amount should be paid within 15 days from the date of this order, in the form of a Demand Draft drawn in favour of “The Zonal Joint Director General of Foreign Trade, Chennai”.

3. It is pertinent to note that the said order was passed after issuing a show cause notice and giving an opportunity of personal hearing to the writ petitioner. Being aggrieved by the said order, the writ petitioner has approached before the Additional Director General of Foreign Trade by way of an appeal under Section 15 of the Foreign Trade (Development & Regulation) Act, 1992 and sought waiver of depositing the penalty amount levied under Section 11 of the Foreign Trade (Development & Regulation) Act, 1992 as pre-condition to file the appeal. The Appellate Authority, after considering the merits of the case, declined to grant waiver of paying the penalty amount as pre-condition to entertain the appeal and consequently, dismissed the appeal vide order dated 20.10.2005.

4. The operative portion of the order of the Appellate Authority dated 20.10.2005 reads as below:

“5.I have gone through the facts of the case available on record and the submissions made by the appellant in the appeal. So far as registration of case with BIFR, is concerned, I am amazed as to how two cases of the same company are registered, one in the year 2000 and another in 2003. The proceedings before me are in respect of the licence taken by the appellant company on 26.06.1997, export obligation period of which expired on 31.12.1998. Hence, these proceedings pertains to the period prior to the company going to BIFR and hence, I am not inclined to give any relief on this ground. Further, the appellants have not submitted any other fact which were not considered by the Adjudicating Authority. They themselves have accepted that they have not completed the export obligation. Hence, I do not find any reason to interfere with the Adjudication Order. Accordingly, in view of the powers vested in me in terms of the provisions of Section 13 read with Section 15 of the Foreign