EMBIO LIMITED Vs. DIRECTOR GENERAL OF FOREIGN TRADE

JUDGEMENT

(1.) The appellant filed a Writ Petition under Article 226 of the Constitution of India before the Karnataka High Court, challenging the order imposing a penalty of Rs.23,38,882.00 under the provisions of Sec. 11(2) of the Foreign Trade (Development and Regulation) Act, 1992 (for short, 'the FT Act'). The said Writ Petition was dismissed. By the impugned judgment, a Writ Appeal against the order of the learned Single Judge was dismissed.

(2.) The appellant was formerly known as Emmellen Biotech Pharmaceuticals Limited, which amalgamated with Karnataka Malladi Biotics Limited based on an order of the Bombay High Court dtd. 24/3/2009.

(3.) A few factual aspects will have to be set out. Karnataka Malladi Biotics Limited (for short, 'Karnataka Biotics') obtained an Export Promotion Capital Goods Licence (for short, 'the licence'), which enabled it to import certain capital equipment at a concessional rate of customs duty. Under the licence, Karnataka Biotics was permitted to import capital goods worth Rs.23,38,882.00 equivalent to US$ 64,987 CIF value, subject to the condition of the appellant exporting the finished goods worth US$ 2,59,948 and earning an equivalent amount in a freely convertible foreign currency within five years from the date of the licence. Karnataka Biotics imported goods as permitted under the licence and commenced commercial production. However, the Board for Industrial Finance and Reconstruction (for short, 'BIFR'), in its meeting dtd. 11/8/1999, declared Karnataka Biotics as a sick unit under Sec. 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short, 'SICA'). The said company submitted a rehabilitation proposal to the operating agency. As Karnataka Biotics had enjoyed the benefit of concessional duty, a demand notice was issued by the Commissioner of Customs on 3/4/2002, making a demand for the differential duty of Rs.5,38,525.00 from Karnataka Biotics. As the said company could not pay the demanded amount, a sum of Rs.4,86,800.00 was recovered by enforcing the bank guarantee furnished by the said company.