Edp Finance And Mgt. Consultants ... vs Appellate Committee M/O Commerce ...
2007 Latest Caselaw 1764 Del

JUDGMENT

S. Ravindra Bhat, J.

1. The petitioner seeks certiorari for quashing of an order dated 16.7.1996 (i.e. 'the appellate order') as well as of the order dated 8.1.1993 (hereinafter 'the order in original').

2. The admitted facts are that the petitioner applied and was issued license under the erstwhile Import and Export Control Act, 1947 (hereafter 'the Act') for importing computer peripherals/equipments valued at Rs. 21,31,406/- on 23.6.1980. The license was subject to the following conditions:

i) The system would be obtained through outright purchase;

ii) The maintenance of the system would be carried out either in house or by the Computer Maintenance Corporation;

iii) The system would be utilised essentially for software development for export as well as for use in the country and generally for the applications as approved in terms of Government Policies;

iv) spare parts, tools and test equipments, required for the systems either at the time of import or at a later date would also carry a similar 200% export obligation;

v) quarterly return with supporting evidence from the Reserve Bank of India regarding export of software packages/services.

3. The petitioner was unable to import the goods in terms of the license within the time; it applied successively for revalidation of license, which was granted. It is not in dispute that the initial period of license and the revalidated period expired after 48 months, i.e., on 22.6.1984. The petitioner was unable to import the entire quantity, it imported goods worth Rs. 11,21,412/-. According to the terms of license initially the export obligation was fixed at Rs. 1.6 crores. However, the limits were fixed erroneously, as in terms of the policy, the obligation ought to have been fixed at 200% of the imported value.

4. The respondent issued a show cause notice on 13.5.1992 alleging violation of conditions of the license by the Petitioner and thereby contravening Clause 8 of the Imports (Control) Order, 1955. The notice also proposed exercise of power under Section 4.K of Import and Export Act. 1947.

5. The order in original was made after affording the opportunity to the petitioner. The Petitioner had contended before the Additional Chief Controller that it was unable to import the entire goods, and whatever was imported or brought into the country was insufficient for the purpose of creating software, i.e. the product to be ultimately exported. In these circumstances, the petitioner requested that the proceedings pursuant to the show cause notice be dropped.

6. The order in original proceeded under the premise that the petitioner's imports were completed to the extent of Rs. 11,21,412/-. The order, for the first time, admitted that the export liability had to be fixed at Rs. 22,42,824/-. It, however, held the petitioner to be a defaulter vis-a-vis compliance with the export obligation; it also imposed penalty of Rs. 12 Lacs on the firm as well as upon its Directors.

7. The order in original to that extent is relevant for present performance is hereby extracted:

8. The license dated 23.6.1980 was initially valid for 24 months i.e. up to 22.6.1982. During this period they had imported goods for Rs. 11,21,412/- and requested this office for revalidation of the license for a period of 12 months up to 22.6.1983. The request was considered and accordingly the license was revalidated. Subsequently, the license was further revalidated for a period of 12 months. Thus, the validity of the license was allowed 48 months including 24 months of initial validity. Even then the notices in response to the show cause notice stated that they were not granted revalidation which in the light of the above facts is evidently a false statement. The notice firm contended that they had imported the main computer system. But it is seen from the record that they have commissioned their production or the basis of the imprts already effected on 5.2.1982. As they failed to complete the export obligation they were declared defaulter by the office of Joint Chief Controller of Imports and Exports, Central Licensing Area, New Delhi on 28.5.1991. They did not contest the forfeiture order. According to the special conditions subject to which the license was issued the noticee company has to discharge export obligation to the extent of 200% of the parts imported. In this case they had imported such goods for Rs. 11,21,412/- and accordingly they had to export fro Rs. 22,42,924/-. However, they have not been able to do so. Under the circumstances, I hold the guilty or contravening Clause 8(1)(f) and (g) of the Imports (Control) Order, 1955 and Section 4-I(1)(a) of the Imports and Exports (Control) Act, 1947. In exercise of the powers vested in under Clause 8 of the aforesaid Imports (Control) Order, I hereby debar M/s. E.D.P. Finance and Management Consultants Pvt. Ltd., New Delhi and its directors Shri S. Khanna and Smt. R. Khanna, Smt. M. Khanna and Smt. K.K. Khanna from receiving any import licenses, customs clearance permits, obtaining allotment of imported goods from any canalising agency and/or from importing any goods from 4.1.1993 to 31.3.1995. Further, in exercise of the powers conferred upon me under Section 4-K of the above said Act, I hereby impose a fiscal penalty of Rs. 12,00,000/- (Rupees twelve lakhs only) on the said form and their directors.

9. The penalty amount is to be deposited under the Head of Account 1453 Foreign Trade and Export Promotion Minor Head 102- Other receipts Fines and Penalties etc. Imports and Exports Trade Control Organisation.

10. Any person/party aggrieved by this order may appeal against the same to the appropriate appellate authority mentioned in Section 4-M of the Imports and Exports (Control) Act, 1947 as amended i.e. Appellate Committee in the Ministry of Commerce within 45 days from the date of communication of this adjudication order.

11. Any person/party desirous of filing an appeal against this order shall deposit the penalty amount and produce proof of payment of penalty amount Along with appeal failing which the appeal is liable to be rejected for non-compliance of the provisions of Section 4-M of Imports and Exports (Control) Act, 1947 as amended by Imports and Exports (Control) Amendment Act, 1976.

8. The petitioner appealed to the Central Government against the order in original. The Appellate Authority after considering the material and affording opportunity rejected the request. The first part of the order recited the facts of the case; the operative part of the order is however unreasoned and stipulative. No rationale was put forward to sustain the opinion of the Appellate Body; it did not even discuss the contentions raised. However, it accepted the petitioners plea that its Directors could not be fixed with liability. The order in original to that extent was modified. The relevant part of the Appellate Order reads as follows:

The Committee after hearing the party and on the basis of written submission accepted the pleas of the party that there should not have been any penalty on the Directors. The Directors of the company are only policy makers and can't be made solely responsible for not fulfillling the export obligation, hence the penalty on the Directors are waived, however penalty on the firm will stay. The party was requested to forward Bank Guarantee duly validated from 20.2.96 to 4.4.96.

9. It is contented on behalf of the petitioner that the impugned order was not sustainable; counsel relied upon the findings that the imported equipment was worth Rs. 11.21 Lacs and they were insufficient for the purpose of writing software, which had to be exported to fulfilll the export obligation.

10. The counsel contended that the Petitioner's contention unfortunately, has not dealt with. The order in original merely went by the determination of default; a forfeiture order had been made. The Additional chief Controller, concluded that since forfeiture order had attained finality, the petitioner could not defend the show cause notice. Learned Counsel further contended that liability to penalty had to be with reference to Section 4-I and 4-K premise upon misuse of the imported goods or such other conditions as are spelt out in Section 4-I. Counsel submitted that in a case like this where manufacturer or importer was faced with inability to comply with the condition of license because of lack of necessary capital goods, i.e., the computers and the peripherals, there was no question of penalty and if at all, the authorities could have sought recourse under Clause 8 of the Import Control Order which empowered them to debar the importing for specified period.

11. Learned Counsel for the respondent resisted proceedings and contended that there were sufficient materials to justify the order and that the impugned orders were made after affording adequate opportunity to the petitioners. It was contended that the power to impose penalty is independent from the power to order of debarring under Clause 8.

12. From the above material I find no dispute in the facts. The order in original does not anywhere conclude the petitioner's culpability with regard to inability to import the required goods; there is no contrary finding or assertions that the goods which were imported were of such character as to render the export obligation capable of performance. The Additional Chief Controller has premised his order on the basis of an earlier forfeiture order. There is also some merit in the petitioner's contention that the export obligation was, for the first time reduced in the finding recorded in the order in original. The licenses had fixed a higher amount, but the same reduced to Rs. 22,42,824/.

13. In view of above facts and circumstances, I am of the opinion that without recording a contrary finding that the petitioner was in any way culpable or that the facts confirmed to the situation provided for under Section 4-I of the Act, the controller found that the petitioner had used the goods on materials imported under any license for, otherwise then in accordance with the conditions. The penalty therefore in this case ought not to have been imposed. It was done mechanically, ignoring relevant facts.

14. In view of the above, the petition deserves to be partly allowed. The impugned order is hereby quashed and the matter is remitted back to the adjudicating authority to consider the issue of appropriate order under Clause 8 of the Import and Export Control Orders Proceedings in that regard shall be completed as expeditiously as possible after issuing the notice to the petitioner in any case within 4 months from today. Rule is made absolute, in the above terms.