Madras High Court
Madura Coats Private Ltd vs The Director General Of Foreign Trade on 28 February, 2014
Author: M.M.Sundresh
Bench: M.M.Sundresh
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 28.02.2014 CORAM THE HONOURABLE MR.JUSTICE M.M.SUNDRESH W.P.(MD)No.18266 of 2013 and M.P.No.1 of 2013 Madura Coats Private Ltd., Rep by its Manager - Excise & Legal, New Jail Road, P.O.Box No.35, Madurai 625 001, Tamil Nadu. ... Petitioner Vs. 1.The Director General of Foreign Trade, Ministry of Commerce, Udgyog Bhawan, New Delhi 110 011. 2.The Chairperson, Policy Relaxation Committee [PRC], Directorate General of Foreign Trade, Ministry of Commerce, Udyog Bhawan, New Delhi 110 011. 3.The Joint Director of General of Foreign Trade, Plot No.117, First Main Road, K.K.Nagar, Madurai 625 020. 4.The Assistant Commissioner of Customs, Office of the Assistant Commissioner of Customs, 166/2B, Harbour Express Bye Pass Road, Tuticorin 628 008. ... Respondents PRAYER Writ Petition is filed under Article 226 of the Constitution of India for the issue of a Writ of Certiorarified Mandamus to call for the records calling for the records pertaining to the order passed by the first respondent in F.No.01/60/162/06/AM12/EFGC [PRC]/307, dated 24.10.2013 [signed on 29.10.2013], quash the same and consequently direct the first respondent to direct the third respondent to issue revalidation and enhancement in the value of the above 5 advance Authorizations viz., (i).Advance Authorization No.3510018818, (ii).Advance Authorization No.3510020677, (iii).Advance Authorization No.3510020678, (iv).Advance Authorization No.3510020679, (v).Advance Authorization No.3510020837 and pass orders. !For Petitioner ... Mr.Sriram Panchu Senior Counsel For Mrs.D.Geetha ^For Respondents ... Mr.K.K.Senthilvelan Assistant Solicitor General of India :ORDER
*********** FACTS IN BRIEF:-
The Directorate General of Foreign Trade, who has been impleaded as respondent No.1 in this Writ Petition, functions as a Nodal Agency of the Ministry of Commerce and Industry, Government of India. It is also the competent authority under the Foreign Trade Development and Regulation Act, 1992, to announce the Foreign Trade Policy. The Foreign Trade Policy announced by the respondent No.1 contains various schemes for promoting exports. The Duty Exemption Scheme is one of such schemes. The scheme prescribes a concession for an exporter, by which the duties levied are exempted in imports with a corresponding obligation to export the resultant products. This has been formulated for the purpose of achieving the value addition as fixed by the competent authority. Therefore, the scheme intends to compensate the value addition in exports for the revenue foregone in terms of the customs duty.
2. An exporter, seeking an import authorization, will have to make an application, and such authorization given would be subject to the condition imposed by the Regional Authority. The Writ Petitioner herein, being an exporter, had obtained five advance authorization under the scheme for the purpose of importing raw materials, without payment of duties. The validity for the import of raw materials permitted in the authorization was for a period of 24 months from the date of issue. The authorizations given in favour of the Writ Petitioner are re-produced hereunder:-
S.No. Advance Authorization Date of issue Valid up to Nos.
1 3510018818 8/6/06 7/6/08 2 3510020677 28.03.2007 27.03.2009 3 3510020678 28.03.2007 27.03.2009 4 3510020679 28.03.2007 27.03.2009 5 3510020837 24.04.2007 23.04.2009
3. The petitioner made applications, covering all the five advance authorizations, on 16.02.2011, seeking re-validation for a period of six months.
The petitioner has given reasons for the belated request for re-validation stating that in view of the software upgradation in its unit, the request could not be made within time. The request of the petitioner was rejected by the Policy Relaxation Committee, as well as by the respondent No.1, and thereafter, the respondent No.1 has called for export documents, as per Paragraph No.4.24.1 of the Hand Book of Procedures. Since the petitioner did not furnish the documents sought for, show cause notices were issued, on 31.08.2012, directing the petitioner to appear for the personal hearing.
4. The petitioner made a request once again for re-validation. It was placed before the Policy Relaxation Committee Meeting, held on 11.09.2012. Reiterating the earlier stand, it was once again rejected. Thereafter, the petitioner was asked to furnish the export documents. The petitioner once again approached the Policy Relaxation committee, which, in turn, rejected the same again. Challenging the said decision of the Policy Relaxation Committee, dated 05.02.2013, the petitioner preferred W.P.[MD].No.2865 of 2013. The petitioner also filed a Miscellaneous Petition seeking interim injunction. The said Miscellaneous Petition for interim injunction was dismissed by this Court, on 22.02.2013. Challenging the same, the petitioner filed W.A.[MD].No.229 of 2013. Thereafter, both the Writ Petition and the Writ Appeal were clubbed together and heard by a Division Bench of this Court. While disposing of the said Writ Petition and the Writ Appeal, on 29.07.2013, the Division Bench directed the respondents to give a personal hearing to the petitioner, as per the Notification No.8, dated 22.04.2013 and decide the issue, on merits. Thereafter, the order impugned has been passed, once again rejecting the request of the petitioner on the following grounds:-
(i). The cases relied upon by the petitioner are not applicable to the present case.
(ii). The case relied upon by the petitioner pertains to the years 2006 - 2007.
(iii). There is a lack of diligence on the part of the petitioner.
(iv). There is a change in the approach of the respondents in the last three years.
(v). The petitioner, being responsible for the delay, cannot seek a relief, unless there is a force majeure condition.
(vi). Out of 23 cases, pertaining to the re-validation of advance authorization, only one case was permitted, that too, for a period of three months, as the applicant therein was not in a position to utilize the advance authorization due to the transmission error. In the said case, the inability to utilize the advance authorization was due to the Government Agency.
(viii). As the advance authorization has expired, there is no question of enhancement in the value of advance authorization by way of re-validation.
5. Challenging the said order passed by the respondent No.1, the present Writ Petition has been filed.
6. SUBMISSIONS OF THE PETITIONER:-
6.1. The learned Senior Counsel appearing for the petitioner submitted that what is sought for is one of entitlement, and therefore, the Writ Petition will have to be allowed. The respondent No.1 has not taken into consideration of the object and the rational behind the scheme. When there is an excess export, the entitlement would be automatic. As per Paragraph No.9.3 of the Hand Book of Procedures, the application of the petitioner ought to have been considered, after imposing a late cut on the entitlement. If the contention of the respondents is accepted, then, in the absence of any last date fixed for the purpose of receiving an application, the question of limitation does not arise.
When similarly placed persons having given the benefits, based upon the applications made after a considerable time, the petitioner alone cannot be treated differently. The respondents have taken a contrary stand in relying upon a force majeure condition, as well as the fault on the part of the Government, while exercising the discretion under Paragraph No.2.5 of Chapter II. Therefore, it is submitted that the Writ Petition will have to be allowed. In support of his contention, the learned Senior Counsel has relied upon the decision rendered in Collector of Central Excise Jaipur, Vs. Raghuvar [India] Ltd., reported in 2000 (118) ELT 311 (SC).
7. SUBMISSIONS OF THE RESPONDENTS:-
7.1. The learned Assistant Solicitor General of India appearing for the respondents submitted that what has been given by way of advance authorization is only a concession. The petitioner, as a matter of right, cannot seek for re-
validation. As per Paragraph No.2.9 of Chapter II of the Foreign Trade Policy, no person may claim license/authorization, as a matter of right. The petitioner is only entitled for a further period of six months, as per Paragraph No.4.23 of the Hand Book of Procedures, provided, the petitioner satisfies the respondents. The petitioner, having failed to make a request for enhancement, as per Paragraph No.4.21 of the Hand Book of Procedures, cannot maintain the applications. The requirement under Paragraph No.4.21 of the Hand Book of Procedures has not been followed, inasmuch as the petitioner has not furnished the required documents.
7.2 The grant of advance authorization itself is subject to the satisfaction of the conditions. The case of the petitioner is entirely different from the other case, relied on by the petitioner. The order impugned has been passed, by taking into consideration of the relevant materials. Paragraph No.9.3 of the Hand Book of Procedures does not have any application, as rightly discussed in the order impugned. It would apply to a case, where a time limit is fixed for the applications. The respondent No.1 has rightly exercised the power under Paragraph No.2.5 of Chapter II of the Foreign Trade Policy. When there is any dispute on the interpretation of the provisions, the decision of the respondents is final, as per Paragraph No.2.3 of Chapter II of the Foreign Trade Policy. In support of his contentions, the learned Assistant Solicitor General of India has relied upon the Judgment of the Hon'ble Supreme Court in S.B.International Ltd., Vs. Asstt. Director General of F.T., reported in 1996 (2) SCC 439.
8. I have considered the above submissions made by the learned Senior Counsel appearing for the petitioner, the learned Assistant Solicitor General of India appearing for the respondents and perused the records carefully.
9. DISCUSSION:-
9.1. In order to appreciate the submissions made, it is imperative to go through various provisions, governing Chapter II and Chapter IV of the Foreign Trade Policy as well as Chapter IV of the Hand Book of Procedures. An advance authorization has been defined under Paragraph No.4.1.3 of Chapter IV of the Foreign Trade Policy. It has been issued to allow duty free import of inputs, which are physically incorporated in the export product. Under Paragraph No.2.12 of Chapter II of the Hand Book of Procedures, the validity of the authorization shall be for a period of 24 months. Paragraph No.2.13 of Chapter II of the Foreign Trade Policy deals with re-validation. As per the said Paragraph, permission can be granted for re-validation of imports by the Regional Authority concerned for a period of six months. The said Paragraph makes it clear that the discretion lies with the authority concerned. Such a discretion has to be exercised on merits. Therefore, it is not a matter of course that a re-
validation can be given. The said Paragraph does not stop with that. It reckons the period of six months, being outer limit from the date of expiry of the validity period. Therefore, the period of six months will have to be extended by the Regional Authority under Paragraph No.2.13 of Chapter II of the Hand Book of Procedures only for a maximum period of six months, which would start from the date of expiry of the original validity period. This shows that beyond the period of six months, the power under Paragraph No.2.13 of Chapter II of the Hand Book of Procedures cannot be exercised by the Regional Authority concerned. If one reads this Paragraph with Paragraph No.2.9 of Chapter II of the Foreign Trade Policy, wherein it has been stated that no person may claim a license/certificate/permission as a matter of right, then, it would be clear that an applicant is governed by the Foreign Trade Policy as well as the Hand Book of Procedures. Paragraph No.2.9 of Chapter II of the Foreign Trade Policy also states that the Regional Authority shall have the power to refuse to grant authorization.
9.2. Now, coming to Paragraph No.4.24 of Chapter IV of the Hand Book of Procedures, it mandates an authorization holder to submit a requisite evidence in discharge of the export obligation. Any failure on the part of the authorization holder would warrant action under Paragraph No.4.21 of Chapter IV of the Hand Book of Procedures. Therefore, under the above said provisions, there is a corresponding duty imposed upon the authorization holder and the power available to the Regional Authority on such failure. Paragraph No.4.23 of Chapter IV of the Hand Book of Procedures deals with the power of the Regional Authority to consider the request of the original authorization holder. As per the said provision, a maximum period of six months is provided from the date of expiry of the original authorization. It also states, in specific terms, that such an authorization holder is entitled for only one re-validation. Like Paragraph No.2.13 of Chapter II of the Hand Book of Procedures, the Regional Authority may consider such a request only for a period of six months from the date of expiry of the original authorization. Therefore, there is no power available for the Regional Authority concerned, while exercising the power under Paragraph No.4.23 of Chapter IV of the Hand Book of Procedures to consider a request for re-validation, after a period of six months from the date of expiry of the original authorization, that too, for a maximum period six months. Apart from the above, such a request can be considered only for one re-validation.
9.3. Paragraph No.2.5 of Chapter II of the Foreign Trade Policy deals with the power of exemption from the policy or the procedure as the case may be. This power has been given to the respondent No.1. This power can only be exercised for the purpose of relaxing the provisions of the policy or any procedures, as the case may be. Such a power cannot be exercised for any other reason, except on genuine hardship to the applicant or that a strict application of the policy or the procedure is likely to have an adverse impact on trade. Therefore, a perusal of Paragraph No.2.5 of Chapter II of the Foreign Trade Policy would show that the said power is extraordinary, which could be exercised outside of other provisions. Under the said provisions, a person, who violates the other provisions, cannot be made entitled to the benefits of the same, as it is an exception. The said provision also makes it clear that a hardship simplicitor cannot, by itself, be a ground seeking to invoke the power vested therein. It also says that the respondents may pass such orders meaning thereby while discretion is given to the said authority, a request is not bound to be considered. The words "genuine hardship to the applicant" will have to be read in Ejusdem Generis to the following words, viz., "that a strict application of the policy or the procedure is likely to have an adverse impact on trade". Therefore, such a power will have to be exercised by taking into consideration of the general prevailing factors and not when applicant commits mistake, and thereafter, seeks a relief. While exercising powers under this Paragraph, it is well open to the respondent No.1 to make a reasonable clarification on intelligible differentia.
9.4. Paragraph No.9.3 of Chapter IV of the Hand Book of Procedures deals with the financial cut for the belated applications. It comes under the Heading "Miscellaneous Matters" in Chapter IX of the Hand Book of Procedures. It deals with the applications received, after the expiry of the prescribed period. Therefore, the said Paragraph does not deal with a request made for re- validation, as there is no time limit fixed. In other words, a request for re- validation will have to be made at least within a period of six months, after the expiry of the original authorization. Such an interpretation would be logical, practical and appropriate, as there is no power, which lies with the Regional Authority to extend the time beyond the said period. This is due to the reason that a separate procedure has been adopted for validation as well as re- validation.
10. CASE SITUATION:-
10.1. Admittedly, in the case on hand, the petitioner has made applications rather belatedly. It is also not in dispute that the delay is attributable on the part of the petitioner. It is further to be seen that the petitioner has not, admittedly, complied with Paragraph No.4.24 of the Hand Book of Procedures in not producing the export documents, at least till the issuance of show cause notices.
11. ANALYSIS:-
11.1. On a proper analysis of the provisions discussed above, as well as the facts, narrated above, it is clear that the petitioner is not entitled for the relief sought for. As rightly submitted by the learned Assistant Solicitor General of India, the petitioner has been given a concession by way of free import duty. The concession is coupled with the duties on the part of an intending exporter. As long as such an exporter complies with the conditions, then, he is entitled for such benefit of concession. It is one thing to say that the concession given to the petitioner cannot be taken away, contrary to the law, but another thing to say that such a concession will have to be extended, as he likes, notwithstanding the period fixed. Admittedly, in this case, the petitioner has not made any such request either for enhancement of validation or for re-validation within the period of validation. Even though a re-validation for a period of six months is not an automatic one, as discussed above, the petitioner, for the reasons known, has not made an application within such time.
11.2. This Court is of the view that the Paragraph No.9.3 of Chapter IV of the Hand Book of Procedures does not have any application to the case of the petitioner. A re-validation given would expire on the last day mentioned therein. Thereafter, the only option open to the original authorization holder is to make a request. Therefore, the question of making any application does not arise. Hence, this Court is of the view that the Paragraph No.9.3 of Chapter IV of the Hand Book of Procedures does not have any application to the case of the petitioner.
11.3. The only other provision, upon which the request of the petitioner can be considered is under Paragraph No.2.5 of Chapter II of the Foreign Trade Policy. The respondent No.1 did consider the case of the petitioner, on merits. When the petitioner makes a request for exemption from the policy/procedures, then, he has to substantiate that there exists a genuine hardship. It is not in dispute that the petitioner is having a hardship, but that would be the case involving every other entity. A hardship will have to be a genuine, particularly, when it pertains to seeking a concession on a validation, which has already expired. As discussed above, the petitioner is not entitled for re- validation, as a matter of right. When under the policy/procedure, the petitioner is not entitled to by his own conduct, then, in the absence of any genuine hardship, he is also not entitled for the exemption from the policy/procedures.
11.4. The reliance made by the petitioner on the similar cases have been dealt with by the respondent No.1, while passing the order impugned. According to the respondent No.1, the fact situation is different. It has been specifically stated that there is a change in the perception regarding the consideration of request for re-validation. It is not as if the petitioner has been singled out as against the others. The petitioner made an application only in the year 2011. The case, in which a re-validation was considered for a period of three months stands totally a different footing, as the applicant therein, for no fault of its part, could not utilize the advance authorization due to transmission error. All other requests, like that of the petitioner, were rejected. Therefore, the petitioner does not have a case even on that ground. Thus, such a classification is perfectly in order and permissible in law.
12. DECISIONS RELIED ON:-
12.1. Now, coming to the decision relied on by the learned Senior Counsel for the petitioner, this Court is of the view that the decision rendered in Collector of Central Excise Jaipur, Vs. Raghuvar [India] Ltd., reported in 2000 (118) ELT 311 (SC) does not have any application to the case on hand. In the said decision, the Hon'ble Apex Court had an occasion to deal with the period of limitation. The said Judgment was rendered in the context of interpretation of Section 11(A) of the Central Excise Act, 1944. Therefore, this Court is of the view that the said decision has no application to the case of the petitioner.
Similarly, this Court does not find any applicability of the decisions rendered in M/s.Darshan Oils Pvt., Ltd., Vs.Union of India and others reported in 1995 (1) SCC 345 and P.T.R.Exports [Madras] Pvt., ltd., Vs.Union of India, reported in 1996 (5) SCC 268, relied on by the learned Assistant Solicitor General of India, as they deal with the judicial review over the policy decision. In S.B.International Ltd., Vs. Asstt. Director General of F.T., reported in 1996 (2) SCC 439, it has been stated that it is a facility, provided by the Government, being an incentive, there is no right to advance licence apart from the policy. No citizen has a fundamental right to import, much less import free of duty. The said decision relied on by the learned Assistant Solicitor General of India governs the case on hand as well.
13. In view of the foregoing discussion, this Court is of the view that no case is made out for allowing the Writ Petition. Accordingly, the Writ Petition is dismissed. No costs. Consequently, connected Miscellaneous Petition is also dismissed.
NB To
1.The Director General of Foreign Trade, Ministry of Commerce, Udgyog Bhawan, New Delhi 110 011.
2.The Chairperson, Policy Relaxation Committee [PRC], Directorate General of Foreign Trade, Ministry of Commerce, Udyog Bhawan, New Delhi 110 011.
3.The Joint Director of General of Foreign Trade, Plot No.117, First Main Road, K.K.Nagar, Madurai 625 020.
4.The Assistant Commissioner of Customs, Office of the Assistant Commissioner of Customs, 166/2B, Harbour Express Bye Pass Road, Tuticorin 628 008.