Nirmal Exports vs Union Of India (Uoi) And Ors.
2005 Latest Caselaw 98 Del

JUDGMENT

Manmohan Sarin, J.

1. Petitioner M/s Nirmal Exports seek a writ of certiorari for quashing and setting aside Order No. 12013/3/94-ADJ/AC dated nil passed by Shri Ishwar Singh, Under Secretary to the Government of India, Ministry of Commerce, Appellate Committee Cell, purportedly as the Appellate Authority.

2. By the impugned order, the appeal of the petitioner against the adjudication order dated 21st October, 1992 passed by Additional Chief Controller of Imports and Exports was dismissed. By the said order, petitioner who claims to have imported brass scrap under OGL had sold the same to M/s Himachal Arts on a high sea sale. The allegation against M/s Himachal Arts, was contravention of Section 4-I(1)(a) of the Impex Act, 1947 and clause 8 of the Imports (Control) Order, 1955. M/s Himachal Arts were holding Duty Free Advance license and are stated to have failed to fulfill their export obligation and mis utilized the imported goods. By the adjudication order, petitioner were also held guilty of abetment in the misuse of import policy provision by M/s Himachal Arts and penalty of Rs. 10 lakhs was imposed upon petitioner. Petitioner was further debarred from importing goods, receiving import licenses and receiving imported goods from any canalising agencies for a period of one year from 1.1.1992 to 31.10.1993.

3. This case has a checkered history. It was dismissed in liming and in appeal, it was remanded back to the writ court for disposal after issuance of notice and ascertaining the stand of the respondents. I have heard Mr. Arvind Nigam, learned counsel for the petitioner in support of the writ petition and Mr. Sidharth Mridul, learned counsel for respondents in opposition.

4. From the documents on record, following facts with regard to which there is no controversy, may be noticed:-

Petitioner had opened a letter of credit bearing No. 8224 dated 4.8.1982 for US $ 2,21,210 equivalent to Rs. 21,43,508 in favor of one M/s Morrica International (Inc.). Petitioner had also remitted a sum of US $ 1,27,715.72 from the Corporation Bank, Foreign Exchange Section to the importer. The case of the petitioner is that it had duly placed the order for import of goods i.e brass scrap but the same were sold to M/s Himachal Arts on high sea sale. The imports being under OGL, there was no restriction or fetter to such a disposal. Copies of Bills of Lading have been produced on record and perusal of Bills of Lading, as produced, shows that there was an endorsement by the Corporation Bank in favor of petitioner M/s Nirmal Exports and an endorsement by M/s Nirmal Exports in favor of M/s. Himachal Arts. Further M/s Himachal Arts also made an endorsement in favor of Clearing Agent Mr. Chandulal H. Mehta who it appears presented the Bills of Lading. Similarly photocopy of Bill of Entry also shows name of exporter M/s Himachal Arts with name of M/s Nirmal Exports having been scored off. Further import is shown against license No. P K/2958665/C/XX/84/2/82 dated 18.9.1982. These prima facie tend to support the petitioner's case that they had placed an order for import under OGL Scheme. But the same were sold on high sea sale to M/s Himachal Arts and it was M/s Himachal Arts which had cleared these goods.

5. The respondents in the adjudicating order or impugned order had proceeded on the basis that goods in question had been imported by the petitioner under Letter of Authority for the benefit of M/s Himachal Arts. It is on this basis that the petitioner was found to be have aided and abetted mis utilization and diversion of the imported goods and the contravention of section 4-I(1)(a) of the Impex Act, 1947 and clause 8 of the Imports (Control) Order, 1955, was alleged.

6. Mr.Sidharth Mridul has persuasively attempted to urge, by relying on internal note that import was on the basis of Letter of Authority by M/s Normal Exports. The said Letter of Authority has not been produced by the respondents. Petitioner has consistently maintained all through that they acted on their own in importing under OGL and sold the goods high sea sale basis and they had not acted as agents of M/s Himachal Arts and no Letter of Authority had ever been furnished by them and was ever issued in their favor by M/s Himachal Arts for import.

7. Mr. Nigam is right in his submission that the Adjudicating Authority as well as Appellate Authority had mis-directed themselves in holding that the petitioner had failed to substantiate in the appeal that they were not the LA holders for M/s Himachal Arts and further that since they had imported the material under OGL and sold the same to M/s Himachal Arts on high sea sale basis, they had also played role in the alleged fraud committed by M/s Himachal Arts. They were thus held guilty of abetment in the misuse of Import Policy provisions. The said findings are without any basis or foundation. The onus of showing that M/s Nirmal Exports had acted on the basis of Letter of Authority was on the respondents who had cleared the goods on the basis of Letter of Authority through customs clearance. Petitioner could not be asked to prove the negative. Similar is the finding that since goods were imported under OGL and sold to M/s Himachal Arts, petitioner was party to fraud and misutilization by the latter.

8. The Appellate Authority appears to have proceeded under misconception that under the import policy provisions prevalent then, the imports under OGL were subject to actual user condition. Mr. Mridul when confronted with this, very fairly states that this observation of the Appellate Authority was not correct.

9. In view of the foregoing discussion, writ petition is allowed and the impugned orders No. 12013/3/94-ADJ/AC dated nil passed by Shri Ishwar Singh, Under Secretary to the Government of India, Ministry of Commerce, Appellate Committee Cell purportedly as the Appellate Authority and Order No. 9/18/85-ECA.III dated 21.10.1992 passed by Additional Chief Controller of Imports and Exports, Government of India are set aside.

The Guarantee Bonds filed by the petitioner shall stand discharged. Originals be returned to petitioner as per rules.