ROTOMAC ELECTRICALS LTD. Vs. UNION OF INDIA

JUDGEMENT

(1.) The petition impugns (i) the adjudication order dated 5th April, 2010 of the Deputy Director General of Foreign Trade in exercise of powers under Section 11(2) read with Section 11(4) of the Foreign Trade (Development and Regulation) (FTDR) Act, 1992 imposing penalty of Rs.3,46,30,500/ - on the petitioner and its directors; (ii) order dated 5th January, 2015 of the Additional Director General of Foreign Trade in exercise of powers under Section 15 of the FTDR Act dismissing the appeal preferred by the petitioner; and, (iii) the order dated 21st / 24th August, 2015 of the Reviewing Authority and Director General of Foreign Trade (DGFT) in exercise of powers under Section 16 of the FTDR Act of rejecting the review application filed by the petitioner.

(2.) Notice of the petition was issued, though no interim relief granted. Counter affidavit has been filed by the respondents. The petitioner did not opt to file rejoinder. Counsels were heard on 2nd December, 2015 and judgment reserved.

(3.) It is the case of the petitioner (i) that it is engaged in the business inter alia of repair and manufacture of traction motors and their spare parts, insulation materials, tapes and mica products; (ii) that it made an application dated 28th January, 1999 to the DGFT for issuance of an advance licence under the Duty Exemption Scheme under the FTDR Act and commenced exporting the goods as the petitioner already had export orders in hand; (iii) that on 22 nd December, 1999 the petitioner was issued advance licence for Rs.69,26,100/ - under the Duty Exemption Scheme and which licence was subject to the condition that the petitioner shall fulfil an export obligation of Rs.1,07,58,600/ - as Free on Board(FOB) value within the stipulated period which was mentioned of "18 months", meaning, that there was no cut -off date before which export could not have been made; (iv) the petitioner submitted the requisite Bank Guarantee (BG)/Legal Undertaking (LUT) with the Customs Authority inter alia providing that in the event of default in meeting the export obligation, the petitioner shall be liable to pay an amount equivalent to the amount of duty with 15% interest per annum from the date of import of the first consignment till the date of payment; (v) the petitioner fulfilled the export obligation within the stipulated period i.e. by 20th April, 1999; (vi) the petitioner was issued three Bank Certificates of Export and Realisation (BCER) of a total value of more than the export obligation required to be fulfilled by the petitioner; (vii) that the petitioner was also issued shipping bills dated 16th February, 1999, 29th January, 1999 and 20th April, 1999 against the aforesaid BCER; (viii) the petitioner however misplaced the original shipping bills and though requested the Customs Authorities for duplicates thereof but to no avail; (ix) that the petitioner as per para 7.25 of the Handbook of Procedure (1997 -2002), as proof of fulfilment of export obligation was required to submit the BCER and the Duty Entitlement Exemption Certificate (DEEC) book containing details of exports and imports; (x) that by mistake the petitioner could not get the entries of the exports aforesaid made / entered in the DEEC book but since the DEEC book is nothing more than a reflection of entries of the relevant shipping bills, the same is not material; (xi) that the petitioner received show cause notice dated 31st April, 2004 for purported non -fulfillment of export obligation under the licence aforesaid; (xii) the petitioner submitted a reply dated 19 th May, 2004 to the show cause notice; (xiii) another notice dated 16th December, 2004 was served on the petitioner and to which a reply dated 31 st December, 2004 was submitted; and, (xiv) that yet further show cause notices dated 25th May, 2005, 1st December, 2009 and 1st January, 2010 were served on the petitioner and to which replies dated 14th June, 2005, 8th December, 2009 and 19th January, 2010 were submitted.