Gujarat High Court
Koshambh Multitred Private Limited vs Union Of India on 19 April, 2018
Author: Akil Kureshi
Bench: Akil Kureshi, B.N. Karia
C/SCA/23368/2017 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 23368 of 2017
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KOSHAMBH MULTITRED PRIVATE LIMITED
Versus
UNION OF INDIA
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Appearance:
MR SP MAJMUDAR(3456) for the PETITIONER(s) No. 1
MR NIKUNT K RAVAL(5558) for the RESPONDENT(s) No. 1
NOTICE SERVED(4) for the RESPONDENT(s) No. 2,3
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE B.N. KARIA
Date : 19/04/2018
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. The petitioner has challenged decisions dated 27.9.2016 and 3.1.2017 passed by respondent no.3 and one dated 22.6.2016 passed by respondent no.1 in the following background.
2. The petitioner is a company registered under the Companies Act and is engaged in manufacturing and export. The petitioner was issued Duty Credit Scrip ("DCS" for short) by the respondent authorities on 31.7.2013. This certificate could be utilised by the petitioner for payment of excise duty on domestic procurement upto the extent of duty credit which in case of the petitioner happened to be Rs.26,04,733/. The limit for the purpose of such clearance was 18 months. In other words, the last date of validity of the scrip was 31.1.2015. As per the scheme, Page 1 of 6 C/SCA/23368/2017 ORDER such DCS had to be registered with the Customs authorities. According to the petitioner, such scrip was handed over to the petitioner's Customs House Agent ("CHA" for short) on 12.8.2014 for registration. However, the original was lost by CHA on 14.8.2014. An FIR to this effect was also lodged on 19.9.2014. The petitioner therefore, made an application to the concerned authority on 26.9.2014 requesting for issuance of duplicate DCS. Certain queries were raised by the concerned authority on 24.11.2014, particularly asking the petitioner to supply the utilisation certificate from the Customs authority. On 24.11.2014 itself, the petitioner therefore, applied to the Deputy Commissioner of Customs, Mundra Customs and SEZ, to issue nonutilisation certificate of DCS. Such non utilisation certificate was provided by the petitioner to DGFT on 15.12.2014 and on the basis of which the said authority cancelled DCS issued to the petitioner on 31.7.2013. On 9.1.2015, Foreign Trade officer, Vadodara, issued a duplicate DCS to the petitioner. Such DCS was sent by the petitioner to CHA on 22.1.2015 for registration and on 29.1.2015, the same was duly registered. However, the validity of the duplicate certificate being coterminus with the original one, expired on 31.1.2015. The petitioner therefore on 17.4.2015 wrote to the Joint Director General of Foreign Trade, Vadodara, and requested to extend the validity of duplicate DCS. It was pointed out that duplicate certificate was issued on 9.1.2015. The petitioner could not utilise the same nor find a buyer looking to extremely short period of time between its registration and the date of expiry. On 29.12.2015, the petitioner wrote to the Foreign Trade Development authority reiterating the request for Page 2 of 6 C/SCA/23368/2017 ORDER extension of the validity of duplicate DCS urging that the authorities had necessary power to do so. Such request came to be rejected by the Policy Relaxation Committee under the Director General of Foreign Trade which in its meeting dated 27.9.2016 had recorded as under :
"Decision :
The committee observed that the submissions made by the applicant do not establish the fact that there was any delay on the part of the concerned Regional Authority or any other Government Department in issuance of documents for issue of duplicate scrip. Duty credit scrip is a freely transferable instrument. The Committee therefore, did not accede to the request."
3. On 31.12.2016, the petitioner made a detailed representation and urged the respondent authorities to grant extension of the validity period. Case of the petitioner was reconsidered by the Committee in its meeting held on 3.1.2017 when the petitioner was also afforded personal hearing. Oral as well as written submissions were considered. The Committee however, reiterated its earlier decision making the following observations :
"Decision : The Committee observed that the duty credit scrip is a transferable instrument having specific validity. The applicant had clear option to sell/transfer it within its validity. However, it is observed that the applicant did not make any efforts to use it within initial 12 months. The said scrip was stated to have been registered with customs after one year and lost by CHA thereafter. The applicant was aware of the procedure for getting duplicate scrip but did not submit complete documents to RA in time. No case of genuine hardship is noticed in this case, as no justification for not utilising the same for 12 months is given. Hence, the Committee decided to maintain its earlier decision taken in PRC Meeting No.19/AM17 dated Page 3 of 6 C/SCA/23368/2017 ORDER 27.09.2016 and did not accede to the request."
4. At that stage the petitioner has approached this Court.
5. In background of such facts, learned counsel for the petitioner extensively referred to the documents on record and the Foreign Trade Policy 2015 to 2020 to contend that respondent no.3 Committee had ample powers to extend the period of validity of the scrip. The petitioner had made out good grounds for exercise of such powers. The scrip was lost in transit while it was sent for registration which was one of the requirements under the policy. The petitioner had applied for issuance of duplicate scrip which was granted after some delay by DGFT authorities. By the time scrip was revalidated and same was also registered with the Customs authorities, barely couple of days were left before its expiry. In such a short span it was not possible for the petitioner to either utilise the scrip or to transfer the same to intended purchasers.
6. On the other hand, learned counsel Shri Nikunt Raval for the department opposed the petition contending that the Committee has taken a proper decision after considering all relevant aspects of the matter. The later decision of the Committee was rendered after granting personal hearing to the representative of the petitioner company. Proper reasons were cited at both times. No interference is called for.
7. We have perused the materials on record and in particular, the provisions contained in Foreign Trade Policy 2015 to 2020 and various circulars issued by the Government Page 4 of 6 C/SCA/23368/2017 ORDER pursuant to the same. We do not find any lack of power on part of respondent no.3 Committee to extend the validity period of the expired DCS. However, the question is, did the facts justify such extension and whether the Committee committed a serious error in refusing to exercise such powers? We must realise that DCS and similar scheme are in the nature of exporter incentives in order to encourage export, providing the exporters with certain additional benefits in terms of credit which could be utilised for making imports in future. Such scrips are often times freely transferable. In order to manage the fund flow, scrips would necessarily have validity period. Such incentive cannot be made available with no reference to the period before which the utilisation must be made. In this context, we may recall in the first decision, the Committee had interalia cited the reason that the petitioner did not establish that there was any delay on part of the concerned Regional authority or any other Government department for issuance of the documents of duplicate scrip. While reconsidering the petitioner's request and after granting personal hearing, the Committee in its later decision dated 3.1.2017 cited additional reasons namely, the duty credit scrip is a transferable instrument having specific validity. The petitioner had the option to sale or transfer it within its validity period. The petitioner did not do so initially for a period of over 12 months. The petitioner did not apply for issuance of duplicate scrip with all necessary documents. No genuine hardship is noticed. No justification for not utilising the scrip for 12 months is given. The Committee therefore, reiterated its earlier decision.
Page 5 of 6 C/SCA/23368/2017 ORDER8. While recognising the powers of the Committee to re validate the period of scrip, we must recognise its discretionary nature. As noted, when the scrip gives certain financial benefits to an exporter as an incentive, simultaneously, the policy makers having provided a specific period of validity of utilisation thereof, the extent of discretion of the concerned authority to extend the period of validity or not gets considerably enlarged. Unless it is shown that the exercise of such power borders to the level of perversity, the Court would show a healthy restraint in such matters. In the present case, it may be that some time was consumed by the Government bodies in responding and granting duplicate DCS, nevertheless, we cannot lose sight of the fact that after its first issuance, the petitioner did not utilise or transfer it for over one year out of total period of six months. Once again it was the petitioner or its CHA who was responsible for loss of the scrip. Finally even after expiry of period of validity of 31.1.2015, the petitioner applied for extension of the validity period only on 17.4.2015. At all stages the petitioner had thus shown a degree of slowness.
9. Under the circumstances, though some of the observations of the committee may not be entirely accurate, when it comes to exercise of discretionary powers, we see no infirmity.
10. In the result, petition is dismissed.
(AKIL KURESHI, J) (B.N. KARIA, J) raghu Page 6 of 6