SAM MARINE EXPORTS Vs. UNION OF INDIA

JUDGEMENT

(1.) This writ petition is filed seeking for a declaration that the first petitioner/partnership firm and its partners have no obligation to pay any amount to the respondents in terms with Ext. P8 notice and Ext. P10 order and for quashing the same. Facts involved in the writ petition would disclose that the Director General of Foreign Trade had given an Export Promotion Capital Goods Authorisation (EPCG) licence to the 3rd respondent M/s. Oceanic Fisheries (India) Ltd. as per authorization, dated 27-4-2001 for a value of US$ 4,82,310/- with an obligation to export marine products worth US$ 24,11,550/- within a period of 8 years from the date of issue of licence. The 3rd respondent did not furnish any documents for fulfillment of export obligation and notices issued were returned un-served. Though show cause notices were issued under Section 14 of the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as 'the Act') proposing action under Section 11(2) and 11(4) of the Act to the 3rd respondent as well as its directors, there was no reply. The Department conducted an inspection in the factory premises of the 3rd respondent and it was found that the same was occupied by the 1st petitioner firm. They assumed that the 1st petitioner firm has purchased the factory premises including the machinery from the 3rd respondent and had taken over all the assets and liabilities of the 3rd respondent. In that premise, the 2nd respondent has issued Ext. P8 notice, dated 29-6-2012 to the 1st petitioner under Section 14 of the Act calling upon the 1st petitioner to show cause why they should not be called upon to pay customs duty of Rs. 1,03,49,071/- with 24% interest against the EPCG authorisation for non-fulfillment of export obligation and violation of paragraph 6.2/6.8 of Exim Policy, 1997-2002. Petitioner submitted a reply to the show cause notice inter alia contending that the 1st petitioner firm was constituted on 15-8-2008 as a partnership firm. They have no title to the property in which they were conducting business. They have taken the property only as per lease deed, dated 5-6-2009. The owners of the property has purchased the property from M/s. Oceanic Products Exporting Company, another partnership firm. The said firm M/s. Oceanic Products Exporting Company has purchased different items of land from various persons during 1965, 1978 and 1990. Smt. Rabecca Biju purchased 24.70 Acres as per sale deed, dated 3-6-2008 and Sri. Philomin Antony purchased an extent of 22.32 Acres as per sale deed, dated 3-6-2008. The deeds were executed by Oceanic Products Exporting Company, the partnership firm. Further, Sri. Philomin Antony purchased 6 cents of property from one Akhil Johny who is a purchaser from the firm as per sale deed No. 3679/2003. It is further stated that at the time when they purchased the property, the unit was not functioning in the property as the same was closed several years back when the electricity connection was dismantled and the Factories and Boilers Department had withdrawn the licence. It is further contended that as far as the 1st petitioner is concerned, it has repaired and renovated the buildings, new machineries were purchased and installed and the unit started functioning afresh. According to them, they have no connection whatsoever with the 3rd respondent. The owners have purchased the property from a partnership firm M/s. Oceanic Products Exporting Company and not from the 3rd respondent. On this basis, it was contended that the petitioners have no obligation to pay any amount to the 2nd respondent, as demanded.

(2.) By Ext. P10 order, dated 4-7-2013, the 2nd respondent has directed 3rd respondent and its Directors to pay the department penalty of Rs. 4,01,77,788/-. Further, the 1st petitioner and its partners have also been made liable to pay the penalty amount along with the Directors of the 3rd respondent company jointly on the ground that the liability for fulfillment of export obligation was a charge on the property transferred by the 3rd respondent to the 1st petitioner. It is inter alia observed in Ext. P10 that the petitioner/partnership firm is the family arrangement of Mr. Solomon Antony. Mr. Solomon Antony is the father of Mr. Philomin Antony, whose wife Mrs. Tresa Jose, is a partner of the 1st petitioner firm. Mr. Biju Sebastian another partner is the husband of Mrs. Rabecca Biju who is another buyer of the property from the 3rd respondent. The contention regarding lease is not accepted due to the fact that the son and daughter of managing partner Mr. Solomon Antony were the purchasers of the property. It is further observed that M/s. San Marine Export is also engaged in the same business of processing and export of marine sea food products which was also the business conducted by the 3rd respondent which proves that all the land, buildings and assets have been transferred and used by the 1st petitioner firm. Therefore, it is found that the liability of the seller that is the 3rd respondent is a charge on the property that belonged to them.

(3.) This order is impugned by the petitioners inter alia contending that they have absolutely no connection whatsoever with the 3rd respondent. That apart, 3rd respondent was not the owner of the property. The property originally was owned by a partnership firm from whom subsequent assignments have been made. The 3rd respondent company had stopped operations during 2003-2004 and therefore, there is no reason to impose any penalty on the petitioners.