Gujarat High Court
M/S Adani Gangavaram Port Limited vs Union Of India on 4 April, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/3555/2025 ORDER DATED: 04/04/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 3555 of 2025
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M/S ADANI GANGAVARAM PORT LIMITED
Versus
UNION OF INDIA & ORS.
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Appearance:
MR HARDIK P MODH WITH MR AMIT LADDHA (5344) for the Petitioner(s)
No. 1
MR PRADIP D BHATE(1523) for the Respondent(s) No. 1
SHASHVATA U SHUKLA(8069) for the Respondent(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 04/04/2025
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr. Hardik P. Modh appearing for the petitioner and learned advocate Mr. Shashvata U. Shukla appearing for the respondents on advance copy.
2. By this petition under Articles 226 and 227 of the Constitution of India, the petitioner has prayed for the following reliefs:
"14. The Petitioner, therefore, prays that:
A. That this Hon'ble Court be pleased to declare that Impugned Policy Circular No.06/2018 dated 22.05.2018 (Annexure-I) is ultra vires to the provisions of the Page 1 of 11 Uploaded by PATEL ILA KANTIBHAI(HC00194) on Thu Apr 24 2025 Downloaded on : Sat Apr 26 03:31:43 IST 2025 NEUTRAL CITATION C/SCA/3555/2025 ORDER DATED: 04/04/2025 undefined Foreign Trade (Development & Regulation _) Act, 1992 and the Foreign Trade Policy 2015-2020, as it unlawfully inserts additional conditions that curtail the benefits rightly claimed by the Petitioner under the extant policy provisions;
B. That this Hon'ble Court be pleased to issue a Writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate writ, order or direction calling for the records of the present case and, after going through the legality and validity thereof be pleased to quash and set aside the Impugned Circular bearing No.06/2018 dated 22nd May 2018 issued by Respondent No.3 (Annexure-I);
C. That this Hon'ble Court be pleased to issue a Writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate writ, order or direction calling for the records of the present case and, after going through the legality and validity thereof, be pleased to quash and set aside the Show Cause Notice dated 21.06.2024 issued by Respondent No.2 (Annexure-S) as the same is issued without any legal basis;
D. That pending Notice, admission and final disposal of this Petition, this Hon'ble Court may be pleased to direct the Respondents, their sub-ordinates, agents or their representatives;
To not to adjudicate the impugned Show Cause Notice dated 21.06/2024 issued by Respondent No.2 (Annexure-S);
To stay the operation of the impugned Show Cause Notice 21.06.2024 issued by Respondent No.2 (Annexure-S);
E. That this Hon'ble Court pleased to issue a Writ of Mandamus, or a Writ in the nature of Mandamus, or any other appropriate Writ, Order or direction, directing the Respondents to forthwith refund the amount (equal to duty forgone by utilizing the SEIS Scrip and interest thereon) deposited by the petitioner upon insistence of the DRI alongwith interest @15% from the date deposit of such amount till date of refund;Page 2 of 11 Uploaded by PATEL ILA KANTIBHAI(HC00194) on Thu Apr 24 2025 Downloaded on : Sat Apr 26 03:31:43 IST 2025
NEUTRAL CITATION C/SCA/3555/2025 ORDER DATED: 04/04/2025 undefined F. for ad-interim relief in terms of prayer (D) above;
G. for costs of the petition/application and others thereon and;
H. for such further and other reliefs, as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case."
3. Brief facts of the case are as under:
3.1. The petitioner provides various port services and cargo handling services to various foreign companies/persons from its ports.
3.2. During the course of the business, the petitioner entered into 'Cargo Handling Service Agreement' with the customers for providing various services like co-ordination with Master/Agent of the vessel for berthing of vessels at the port, custom documentation, discharging cargo etc. 3.3. The petitioner also entered into separate Marine Operation Services Agreement for rendering the partial services pursuant to the 'Cargo Handling Service Agreement' entered with its customers with various parties.Page 3 of 11 Uploaded by PATEL ILA KANTIBHAI(HC00194) on Thu Apr 24 2025 Downloaded on : Sat Apr 26 03:31:43 IST 2025
NEUTRAL CITATION C/SCA/3555/2025 ORDER DATED: 04/04/2025 undefined 3.4. The Director General of Foreign Trade initiated proceedings by issuing the show cause notice to cancel the scrips issued to the petitioner under the scheme notified as Service Export from India Scheme (SEIS). 3.5. The DGFT, relying upon the Circular No.6 of 2018 dated 22/05/2018, initiated the investigation on the ground that the petitioner is not entitled to the benefits under the SEIS. It is the case of the petitioner that during the course of investigation, a letter dated 25/11/2020 was issued by the DRI Hyderabad relying upon the said Circular No.6 of 2018 calling upon the petitioner to provide various documents to justify the rights for availment of SEIS scrips. The statements of the petitioner were recorded under Section 108 of the Customs Act, 1962. The petitioner thereafter received the impugned show cause notice dated 21/06/2024 after completion of the DRI investigation in pursuance to the show cause notice issued by the DGFT to pay the custom duties as well as interest under Section 28AAA of the Customs Act, 1962 and penalty under Section 114AB of the Act. The proceedings under the CESS pursuant to impugned show cause notices are under the adjudication process. During the course of Page 4 of 11 Uploaded by PATEL ILA KANTIBHAI(HC00194) on Thu Apr 24 2025 Downloaded on : Sat Apr 26 03:31:43 IST 2025 NEUTRAL CITATION C/SCA/3555/2025 ORDER DATED: 04/04/2025 undefined investigation by the DRI, the DGFT has adjudicated the show cause notice dated 23/10/2023 and passed order-in-original dated 16/04/2024 cancelling the scrips amounting to Rs.1,81,24,518/- and also levied the penalty of Rs.50,00,000/-. 3.6. According to the petitioner, the said order is under process of being challenged before the appropriate forum.
4. Learned advocate Mr. Hardik Modh for the petitioner submitted that the impugned show cause notice is issued mainly on the basis of the interpretation of Circular No.6 of 2018 by the respondent authorities in addition to the adjudication made by the DGFT in the order dated 16/04/2024 cancelling the scrip. It was therefore submitted that the impugned show cause notice was issued invoking the provisions of Section 28AAA of the Customs Act, 1962 in consequence of the order-in-original passed by the DGFT. The same was also issued on the basis of Circular No.6 of 2018. It was therefore submitted that the respondent Custom Authorities should be restrained from proceeding further with the impugned show cause notice. He submitted that the impugned Circular No.6 of 2018 is already cancelled by Page 5 of 11 Uploaded by PATEL ILA KANTIBHAI(HC00194) on Thu Apr 24 2025 Downloaded on : Sat Apr 26 03:31:43 IST 2025 NEUTRAL CITATION C/SCA/3555/2025 ORDER DATED: 04/04/2025 undefined following two decisions:
(1) Decision of Bombay High Court in case of Atlantic Shipping Private Limited v. Union of India and others reported in 2021 (3) TMI 444.
(2) Decision of Karantaka High Court at Bengaluru in case of M/s ECL Puyvast India Pvt Ltd. vs. Union of India and others reported in 2024-TIOL-1741-HC-
KAR-CUS.
5. It was therefore submitted that the impugned show cause notice is without jurisdiction and liable to be quashed and set aside.
6. On the other hand, learned advocate Mr. Shashvata Shukla appearing for the respondents on advance copy raised the preliminary objection with regard to maintainability of the petition in view of the facts of the case as the impugned show cause notice is issued under Section 28AAA of the Customs Act, 1962 after the DGFT passed the order-in-original dated 16/04/2024 cancelling the SEIS scrips. It was therefore submitted that the impugned show cause notice is a consequence to the order-in-original passed by the DGFT and therefore no interference may be made at this stage as the order-in-original passed by the DGFT is not either stayed or Page 6 of 11 Uploaded by PATEL ILA KANTIBHAI(HC00194) on Thu Apr 24 2025 Downloaded on : Sat Apr 26 03:31:43 IST 2025 NEUTRAL CITATION C/SCA/3555/2025 ORDER DATED: 04/04/2025 undefined set aside by any competent forum. It was further submitted that the contention of the petitioner regarding the reliance placed on the Circular No.6 of 2018 by the respondent authority is concerned, the same is required to be considered as per the decision passed by the DGFT while passing the order-in-original cancelling the SEIS scrips in question as the DGFT also has placed reliance upon the said Circular No.6 of 2018. It was therefore submitted that the petition is a premature petition and no interference may be made at this stage.
7. Considering the submissions made by learned advocates appearing for both the sides, it appears that the impugned show cause notice is based upon Circular No.6 of 2018 as well as the order-in-original passed by the DGFT whereby the SEIS scrips allotted to the petitioner are cancelled relying upon Circular No.6 of 2018.
8. The impugned show cause notice is issued under Section 28AAA of the Customs Act, 1962. Section 28AAA of the Act reads as under:
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NEUTRAL CITATION C/SCA/3555/2025 ORDER DATED: 04/04/2025 undefined "28AAA. Recovery of duties in certain cases (1) Where an instrument issued to a person has been obtained by him by means of --
(a) collusion; or
(b) wilful mis-statement; or
(c) suppression of facts, for the purposes of this Act or the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992), by such person or his agent or employee and such instrument is utilised under the provisions of this Act or the rules made or notifications issued thereunder, by a person other than the person to whom the instrument was issued, the duty relatable to such utilisation of instrument shall be deemed never to have been exempted or debited and such duty shall be recovered from the person to whom the said instrument was issued:
PROVIDED that the action relating to recovery of duty under this section against the person to whom the instrument was issued shall be without prejudice to an action against the importer under section 28.
Explanation 1: For the purposes of this sub-section, instrument means any scrip or authorisation or licence or certificate or such other document, by whatever name called, issued under the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992), with respect to a reward or incentive scheme or duty exemption scheme or duty remission scheme or such other scheme bestowing financial or fiscal benefits, which may be utilised under the provisions of this Act or the rules made or notifications issued thereunder.
Explanation 2: The provisions of this sub-section shall apply to any utilisation of instrument so obtained by the person referred to in this sub-section on or after the date on which the Finance Bill, 2012 receives the assent of the President, whether or not such instrument is issued to him prior to the date of the assent.Page 8 of 11 Uploaded by PATEL ILA KANTIBHAI(HC00194) on Thu Apr 24 2025 Downloaded on : Sat Apr 26 03:31:43 IST 2025
NEUTRAL CITATION C/SCA/3555/2025 ORDER DATED: 04/04/2025 undefined (2) Where the duty becomes recoverable in accordance with the provisions of sub-section (1), the person from whom such duty is to be recovered, shall, in addition to such duty, be liable to pay interest at the rate fixed by the Central Government under section 28AA and the amount of such interest shall be calculated for the period beginning from the date of utilisation of the instrument till the date of recovery of such duty.
(3) For the purposes of recovery under sub-section (2), the proper officer shall serve notice on the person to whom the instrument was issued requiring him to show cause, within a period of thirty days from the date of receipt of the notice, as to why the amount specified in the notice (excluding the interest) should not be recovered from him, and after giving that person an opportunity of being heard, and after considering the representation, if any, made by such person, determine the amount of duty or interest or both to be recovered from such person, not being in excess of the amount specified in the notice, and pass order to recover the amount of duty or interest or both and the person to whom the instrument was issued shall repay the amount so specified in the notice within a period of thirty days from the date of receipt of the said order, along with the interest due on such amount, whether or not the amount of interest is specified separately.
(4) Where an order determining the duty has been passed under section 28, no order to recover that duty shall be passed under this section.
(5) Where the person referred to in sub-section (3) fails to repay the amount within the period of thirty days specified therein, it shall be recovered in the manner laid down in sub-section (1) of section 142."
9. On perusal of the above provisions, it is clear that the impugned show cause notice is in nature of recovery of consequential proceedings to the order passed by the DGFT Page 9 of 11 Uploaded by PATEL ILA KANTIBHAI(HC00194) on Thu Apr 24 2025 Downloaded on : Sat Apr 26 03:31:43 IST 2025 NEUTRAL CITATION C/SCA/3555/2025 ORDER DATED: 04/04/2025 undefined which still holds the field and as such the respondent authorities are required to adjudicate the show cause notice in the facts of the case and no interference is called for at this stage.
10. The Hon'ble Supreme Court in catena of decisions has held that the Court should not interfere at the stage of issuance of show cause. Whereas in the facts of the case when the impugned show cause is consequential to the order in original passed by the DGFT, any observation or interference by this Court may hamper further challenge to such order-in-original passed by DGFT before appropriate forum.
11. In view of the above facts, no interference is made at this stage as the petition is filed at a premature stage in view of the fact that the very issue of challenge to the impugned Circular No.6 of 2018 shall be the subject matter of challenge by the petitioner or to challenge the order-in-original passed by the DGFT and therefore in such circumstances, the petition is not entertained and accordingly dismissed in limine. Page 10 of 11 Uploaded by PATEL ILA KANTIBHAI(HC00194) on Thu Apr 24 2025 Downloaded on : Sat Apr 26 03:31:43 IST 2025
NEUTRAL CITATION C/SCA/3555/2025 ORDER DATED: 04/04/2025 undefined
12. It is clarified that we have not gone into the merits of the matter and the respondents shall adjudicate upon the show cause notice independently in accordance with law.
(BHARGAV D. KARIA, J) (D.N.RAY,J) ILA Page 11 of 11 Uploaded by PATEL ILA KANTIBHAI(HC00194) on Thu Apr 24 2025 Downloaded on : Sat Apr 26 03:31:43 IST 2025