Gujarat High Court
Messers Lubi Industries Llp vs Union Of India on 5 March, 2020
Author: Harsha Devani
Bench: Harsha Devani, A. P. Thaker
C/SCA/14109/2018 IA ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
MISC. CIVIL APPLICATION (FOR EXTENSION OF TIME) NO. 1 of 2020
In R/SPECIAL CIVIL APPLICATION NO. 14109 of 2018
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MESSERS LUBI INDUSTRIES LLP Versus UNION OF INDIA ========================================================== Appearance:
MR PARESH M DAVE for the PETITIONER(s) No. MR NIKUNT K RAVAL for the RESPONDENT(s) No. 1,2 MR PARTH BHATT for the RESPONDENT(s) No.3 ========================================================== CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI and HONOURABLE DR.JUSTICE A. P. THAKER Date : 05/03/2020 IA ORDER (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI)
1. Rule. Mr. Nikunt Raval, learned senior standing counsel, waives service of notice of rule on behalf of the respondents No.1 and 2 and Mr. Parth Bhatt, learned senior standing counsel waives service of notice of rule on behalf of the respondent No.3.
2. By this application, the applicants (original petitioners) (hereinafter referred to as "the petitioners") seek extension of two months and one day in respect of Advance Authorization No.0810090670 dated 21.7.2010 for fulfillment of export obligations, and further seek a direction to the office of the Additional/Joint Director General of Foreign Trade, Ahmedabad (the second Respondent herein), to order regularization of fulfillment of export obligation in respect of Advance Authorization No.0810090670 dated 21.7.2010.Page 1 of 8 Downloaded on : Sun Jun 14 06:21:03 IST 2020
C/SCA/14109/2018 IA ORDER
3. Being aggrieved by the decisions of the first and the second respondents herein in not substituting the name and Import-Export Code number (IEC number) of the first petitioner in two Advance Authorizations bearing Nos.0810086954 dated 3.3.2010 and 0810090670 dated 21.7.2010, the petitioners had approached this court by way of the captioned petition. By a judgment and order dated 22.2.2019, passed in the captioned petition, this court directed the Joint Director General of Foreign Trade, Ahmedabad, to substitute the name and IEC number of the first petitioner in the above referred two authorizations with extension of export obligation period by six months from the date of such substitution. Pursuant to the above directions, the office of the Additional Director General of Foreign Trade, Ahmedabad has issued Licence Amendment Sheets for the above referred authorizations on 24.4.2019, and substituted the name of the first petitioner with the first petitioner's IEC in the authorizations, and extended the period of export obligation upto 23.10.2019.
3.1 Accordingly, the petitioners were required to fulfill pending export obligations in respect of the above referred two authorizations on or before 23.10.2019. The export obligation in respect of Advance Authorization No.0810086954 dated 3.3.2010 had been 1,38,758 kilograms in terms of quantity and F.O.B. value of the exported goods being Rs.5,70,61,700/-. In case of the other Authorization No.0810090670 dated 21.7.2010, the export obligation in terms of quantity had been 2,77,517 kilograms and the F.O.B. value of the goods to be exported was Rs.11,71,84,650/-.
3.2 It is the case of the petitioners that they have fulfilled the export obligations for both the authorizations in terms of Page 2 of 8 Downloaded on : Sun Jun 14 06:21:03 IST 2020 C/SCA/14109/2018 IA ORDER quantity as well as in terms of F.O.B. value. However, the petitioners have taken a little more time over and above six months allowed by this court for fulfillment of export obligations for one of the authorizations, viz., advance authorization No.0810090670 dated 21.7.2010. The petitioners have approached this court seeking extension of the time limit for fulfillment of export obligation and also ordering regularization for fulfillment of the export obligation in respect of the above referred Authorization No.0810090670 dated 21.7.2010 by granting suitable extension in the interest of justice.
4. Mr. Paresh Dave, learned advocate for the applicants/ petitioners reiterated the grounds set out in the memorandum of application by submitting that the petitioners had taken some more time for fulfillment of the export obligation because of unprecedented weather conditions that prevailed in the regions where the petitioners have been regularly exporting the goods, namely, power driven pumps for handling water. It was submitted that the petitioners have been allowed substitution of the new name of the firm and IEC only on 24.4.2019, whereas the petitioners were expecting to get such substitution by the end of February, 2019 or beginning of March, 2019; and if that had happened, then the petitioners could have exported power driven pumps during March and April, 2019, which are the months when requirement of the goods in question in the foreign countries (where the petitioners have been regularly exporting the goods) is ordinarily higher, but the exports against two authorisations in question could commence only in the last week of April, 2019;
and then monsoon that set in by the beginning of June, 2019 continued for a longer period. It was submitted that the Page 3 of 8 Downloaded on : Sun Jun 14 06:21:03 IST 2020 C/SCA/14109/2018 IA ORDER petitioners, however, have made all out efforts for fulfillment of export obligations of both the authorizations, and have completed them as committed before this court. However, time of two months and one day more was taken for fulfillment of the export obligation for one of the authorizations, viz., AA No. 0810090670 dated 21.7.2010, and hence, the court may condone the same by allowing extension of two months and one day's time and thereby regularizing the exports made by the petitioners in respect of the said authorization.
4.1 The attention of the court was invited to paragraph 4.42 of the Hand Book of Procedures, to submit that under clauses
(b) and (c) thereof, the regional authority is allowed to consider a request for one extension of export obligation period upto six months from the date of expiry of export obligation period subject to payment of composition fee of 0.5% of the shortfall in export obligation; and under clause (c) a further extension of six months can be granted subject to the conditions stipulated therein. However in view of the fact that by the judgment and order dated 22.02.2019, this court has granted extension of export obligation period by six months from the date of substitution of IEC number of the petitioner, the said authority would not be in a position to exercise such power, and hence, the petitioners have been constrained to approach this court by way of the present application. It was, accordingly, urged that the relief as prayed for be granted.
5. Opposing the application, Mr. Parth Bhatt, learned senior standing counsel for the respondent No.3, submitted that paragraph 4.42 of the Handbook of Procedures, does not give power to extend beyond a particular period. It was submitted Page 4 of 8 Downloaded on : Sun Jun 14 06:21:03 IST 2020 C/SCA/14109/2018 IA ORDER that in this case initially the export obligation was required to be fulfilled within the period granted by the authority and since such period has expired a considerable time ago, it is not permissible to extend such period by resorting to the provisions of para 4.42 of the Handbook of Procedures. It was submitted that, therefore such extension would amount to relaxation and hence, the matter would have to be referred to the Committee under para 2.58 of the Foreign Trade Policy.
6. This court has also heard Mr. Nikunt Raval, learned senior standing counsel for the respondents No.1 and 2.
7. From the facts and contentions as noted hereinabove, it is evident that the petitioners have fulfilled the export obligation under the advance authorisations; however, in case of Authorisation No.0810090670 there has been a delay of two months and one day in fulfilling the export obligation. From the averments made in the memorandum of application as referred to hereinabove, this court is of the considered view that sufficient cause has been shown by the petitioners for not fulfilling the export obligation within the time specified by this court.
8. At this juncture, reference may be made to paragraph 4.42 of the Handbook of Procedures, which reads as under:-
"4.42 Export Obligation (EO) Period and its Extension:
(a) Period of EO fulfilment under an Advance Authorisation shall commence from date of issue of Authorisation, unless otherwise specified. The period of EO fulfilment is given in paragraph 4.22 of FTP.Page 5 of 8 Downloaded on : Sun Jun 14 06:21:03 IST 2020
C/SCA/14109/2018 IA ORDER
(b) Regional Authority may consider a request of Advance Authorisation holder for one extension of EO period upto six months from the date of expiry of EO period subject to payment of composition fee of 0.5% of the shortfall in EO. Authorisation holder will have to submit a self declaration to RA stating that unutilised imported/domestically procured inputs are available with the applicant.
(c) Request for further extension of six months after first extension as in (b) above can be considered by Regional Authority, provided Authorisation holder has fulfilled minimum 50% export obligation in quantity as well as in value, on pro-rata basis. This will be subject to payment of composition fee @ 0.5% per month on unfulfilled FOB value of export obligation. No further extension shall be allowed by Regional Authority. This provision shall also be applicable to Advance Authorisations issued during FTP 2009-2014. However, only two extensions of six months each as given in sub-para (b) and in this sub-para can be allowed subject to payment of composition fee and under no circumstance Regional Authority shall allow any extension beyond 12 months from date of expiry of EO period. At the time of filing application for second extension, authorisation holder will have to submit a certificate to RA from an independent Chartered Accountant/Chartered Engineer certifying that unutilised imported/domestically procured inputs are available with the applicant.
(d) However, extension in EO period in respect of an Advance Authorization issued for import of an input listed under Appendix 4J of HBP 2015-2020 or Appendix 30A of Hand Book of Procedures 2009-14 shall not be permitted by RA.
(e) Whenever a ban / restriction is imposed on export of any product, export obligation period in respect of Advance Authorisation already issued prior to imposition of ban, would stand automatically extended for a period equivalent to the duration of ban, without any composition fee."Page 6 of 8 Downloaded on : Sun Jun 14 06:21:03 IST 2020
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9. On a perusal of the provisions of paragraph 4.42 of the Handbook of Procedures, it appears that clause (b) thereof provides for extension of export obligation period upto six months from the date of expiry of the export obligation period subject to payment of composition fee of 0.5% of the shortfall in export obligation; and clause (c) thereof, provides for further extension of six months after first extension as in clause (b) can be considered by regional authority, provided authorisation holder has fulfilled minimum 50% export obligation in quantity as well as in value, on pro rata basis. This would be subject to payment of composition fee at the rate of 0.5% per month on unfulfilled F.O.B. value of export obligation.
10. Thus, there is an enabling provision which permits the regional authority to extend the export obligation period in the two contingencies as provided under clause (b) and clause (c) of para 4.42 of the Handbook of Procedures; however, in the facts of the present case in view of the fact that the Joint Director General of Foreign Trade has allowed substitution of name of the new entity and its IEC number with extension of export obligation period by six months under the directions of this court, it is not possible for him to extend such period on his own at the request of the petitioners. It is in these circumstances, that though the power of extension is vested in the regional authority, he may not be in a position to exercise such power unless permitted by this court. Therefore, it would be necessary for this court to issue appropriate directions to the concerned authority.
11. On behalf of the petitioners it has been submitted that the present case would fall within the ambit of clause (b) of Page 7 of 8 Downloaded on : Sun Jun 14 06:21:03 IST 2020 C/SCA/14109/2018 IA ORDER paragraph 4.42 of the Handbook of Procedures, whereas Mr. Bhatt, learned senior standing counsel for the respondent has contended that the case would fall under clause (c) of para 4.42 of the Handbook of Procedures. This court, however, is of the view that it is not necessary for it to enter into the merits of such argument, leaving it open for the concerned authority to decide the appropriate clause under which the present case would fall.
12. In the above view of the matter, the application is allowed. The second respondent Joint Director General of Foreign Trade is directed to allow extension of appropriate period under paragraph 4.42 of the Handbook of Procedures upon charging of composition fee as applicable either under clause (b) or clause (c), as the case may be, and intimate the petitioners about the amount payable by them. Upon such intimation being received, the petitioners shall deposit such amount of composition fee within ten days of receipt of such communication. Thereupon the exports made by the petitioners from 24.10.2019 to 23.12.2019 for fulfillment of export obligation in respect of Advance Authorisation No.810090670 dated 21.7.2010 may be regularised by extending export obligation period under the relevant clause of paragraph 4.42 of the Handbook of Procedures. Rule is made absolute accordingly, with no order as to costs.
(HARSHA DEVANI, J) (A. P. THAKER, J) Z.G. SHAIKH Page 8 of 8 Downloaded on : Sun Jun 14 06:21:03 IST 2020