GOKALDAS EXPORTS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner, a manufacturer/garment exporter when allotted export entitlements under New Investors Entitlement, Non-quota Transfer, Post Performance Transfer, quota in country category US-3410, US/ 342, US/2gr, EU/8, EU/27, CA/2gr during the year 1998, in terms of the Government Export entitlement policy 1996-1998 for short 'policy', exported 84. 37% of the entitlement, resulting in the 3rd respondent Apparel Export Promotion Council (for short 'aepc'), Bangalore, forfeiting Rs. 36,10,378/- by order dated 17-12-1999 Annexure-"c", confirmed in First Appeal by order dated 12-2-2002 Annexure-"d" of the First Appellate Authority and dismissal of the Second Appeal by order dated 14-9-2002 Annexure-"e'" of the Second Appellate Committee. Hence, this writ petition.

(2.) PETITION is opposed by filing Statement of objections dated 7-1-2003 of the 3rd respondent and Statement of objections dated 1-6-2004 of Respondents 1 and 2. In the Statement of objections of Respondents 1 and 2, it is contended that export of textile and clothing from India is based on bilateral agreements entered into between Government of India and Governments of developed countries under the aegis of the erstwhile Multi Fibre Arrangement (MFA) governing international textile trade from the year 1974. The Textile Importing countries are referred to as "quota countries" who have placed restraints on import of specified textile categories "quota items" within the annual levels prescribed in the bilateral agreement and that the coming into force of the World Trade Organisation (WTO) in 1995, quantitative restrictions known as "import quotas" in the bilateral agreements were changed under the WTO relating to Agreement on Textiles and Clothing (ATC ). The quotas also known as export entitlements are allocated amongst individual exporters, for which a system of allocation of quotas is formulated so as to optimize the export revenue in the economic interest of the country. It is stated that in furtherance of the said aim, the Government of India framed policies from time to time known as "export Entitlement (Quota) Policies" and allocations of quotas are mainly done under the following categories in case of readymade garments. a) 70% quota based on past performance of the exporter under the Past Performance entitlement (PPE); b) 15% quota based on new investments made for modernization of machinery under the New Investors Entitlement (NIE), to encourage investments in industry; c) 5% under Non-quota export (NQE) entitlement to encourage diversification of exports to non-quota countries; d) 10% on First Come First Serve (FCFS) to provide equal opportunities to all exporters on basis of High Value Realisation. The framing of policies, it is said, is in exercise of power conferred under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (No. 22 of 1992) and Item No. 8 of Appendix-I Schedule-2 of ITC (HS) Classification of Export and Import published under the Export and Import policy. It is further stated that in order to implement the policy, an Apparel Export Promotion Council (AEPC) headed by Director General is designated as Quota Administering Authority, on behalf of the Government, responsible for allocation of quota in terms of the policy. The availability of quota, it is said, vastly over strips the demand and in view of the restricted availability, commands a premium. Major importers of textile garments being the quota countries, it is essential to ensure quotas are fully utilised and are not allowed to go waste due to speculative trading by unscrupulous elements and therefore, the policy envisages utilisation of the quota by 30th September of the relevant year and failure to do so, the ex-porter is required to surrender the quota and seek revalidation of unutilised quota allocated in the categories, in the manner and procedure as laid down in the policy. Revalidation of quota beyond 30th September and upto 31st December of the relevant year is in the form of a Bank guarantee or a fixed deposit receipt or Demand Draft while the policy in operation till the year 2000, star exporters cover the amount of EMD by a letter of undertaking or post dated cheques. The condition imposed for revalidation is that an exporter who exports not less than 90% of the export entitlement, its EMD shall be released in full. In case of utilisation upto 75% of fast moving items and upto 50% in case of slow moving items, EMD is forfeited in proportion to the shortfall of utilization. If an exporter is aggrieved by any order of forfeiture, it could maintain an appeal to the First Appellate Committee and thereafter to a Second Appellate Committee. The Appellate Committees rejected the petitioner's claim of force-majeure, as no relevant material constituting substantial legal evidence of the fact that failure to fulfil the export obligation was due to acts beyond the control of the exporter. It is further stated that during the pendency of appeals, the practice is not to effect any recovery and therefore, it is profitable for exporters to delay the recovery as long as possible since no interest clause is provided in the quota policy.

(3.) THE Statement of objections of the 3rd respondent raises almost identical contentions as are advanced by Respondents 1 and 2 in their Statement of objections. In addition, it is contended that the exporter having taken the benefit of the garment export entitlement policy, sought for extension of time by furnishing a bank guarantee and having failed to export garments in terms of the quota provided, cannot be permitted to approbate and reprobate. It is stated that the petitioner is estopped from contending that no amount could be forfeited. The further contention of the 3rd respondent is that the exporter did not place relevant material in support of its claim of force-majeure.