Gujarat High Court

M/S Maruti Printers vs Union Of India on 19 February, 2021

Bench: Sonia Gokani, Sangeeta K. Vishen

             C/SCA/11170/2019                            JUDGMENT




           IN THEHIGHCOURTOF GUJARATAT AHMEDABAD
            R/SPECIALCIVILAPPLICATIONNO. 11170of 2019
FORAPPROVALANDSIGNATURE:
HONOURABLEMS. JUSTICESONIAGOKANI
and
HONOURABLEMS. JUSTICESANGEETAK. VISHEN
==========================================================

1    Whether Reporters of Local Papers may be allowed                  YES
     to see the judgment ?

2    To be referred to the Reporter or not ?                           YES

3    Whether their Lordships wish to see the fair copy                  NO
     of the judgment ?

4    Whether this case involves a substantial question                  NO
     of law as to the interpretation of the Constitution
     of India or any order made thereunder ?

==========================================================
                                M/SMARUTIPRINTERS
                                       Versus
                                   UNIONOF INDIA
==========================================================
Appearance:
MRHARDIKP MODH(5344)for the Petitioner(s)No. 1
MRDEVANGVYAS(2794)for the Respondent(s)No. 2,3
MRNIRALR MEHTA(3001)for the Respondent(s)No. 1
MRPY DIVYESHVAR(2482)for the Respondent(s)No. 4
MS VACHAJ NANAVATI(6588)for the Respondent(s)No. 4
==========================================================

 CORAM: HONOURABLE MS. JUSTICE SONIA GOKANI
        and
        HONOURABLE MS. JUSTICE SANGEETA K. VISHEN

                                  Date: 19/02/2021

                            ORALJUDGMENT

(PER: HONOURABLEMS. JUSTICESONIAGOKANI)

1. This petition is preferred under Article 226

of the Constitution of India, where M/s Maruti

C/SCA/11170/2019 JUDGMENT

Printers is the proprietary concern and Shri

Bhadresh Shah is the proprietor of the firm. The

petitioner is engaged in business of printing

press from the premise and respondent Nos.2 and 3

are the officers of respondent No.1, exercising

powers and discharging the duties cast upon them

under the provisions of the Foreign Trade

(Development & Regulation), Act, 1992. Respondent

No.4 is the Principal Commissioner of Customs

posted at the Nhava Sheava Custom House, duly

appointed under the provisions of the Customs

Act, 1962.

2. Brief facts leading to the present

petition are as follows:

2.1 The Central Government issued various

promotional/incentive schemes to

accelerate growth of export goods for the

country to earn the foreign exchange.

Chapter IV and V of the Foreign Trade

Policy ('the FTP' for short) contains the

provisions relating to Duty Exemption

C/SCA/11170/2019 JUDGMENT

Scheme. These are the schemes for

extending incentive to exporters.

2.2 One such scheme is import of capital

goods under Export Promotion Capital Goods

('the EPCG Scheme' for short). Under the

said scheme, the importers are allowed to

import capital goods at Zero rate of duty

or at the rate of 3% of the duty. This is

to ensure that at affordable price the

exporters are allowed to import the

capital goods and good quality of final

product can be made out from the same. The

EPCG Scheme allowed import of capital

goods for preproduction, production and

postproduction, subject to the condition

that the exporters fulfill Export

Obligation equivalent to eight times of

duty on capital goods imported under the

EPCG Scheme within a period of eight years

or the period as extended by DGFT

thereafter, reckoned from the date of

C/SCA/11170/2019 JUDGMENT

issuance of the authorisation. In other

words, as averred by the petitioner, there

is a compulsion on the business

houses/persons to bring in foreign

currency which is equivalent to 800% of

the duty saved on such importation

measured in domestic currency. This EPGC

Scheme has been set out under Chapter 5 of

the Foreign Trade (Development &

Regulation) Act, 1992.

2.3 The Central Government in exercise

of powers conferred by Section 25(1) of

the Customs Act, 1962 issued a

Notification No.97/2004CUS dated

17.09.2004 as amended from time to time;

whereby the capital goods imported, under

valid authorisation issued under the EPCG

Scheme in terms of Chapter V of the FTP is

exempted from so much of the duty of

Customs leviable thereon which is

specified in the First Schedule to the

C/SCA/11170/2019 JUDGMENT

Customs Tariff Act, 1975. This would be in

excess of the amount calculated at the

rate of 5% ad valorem, and the whole of

additional duty leviable under Section 3

of the Customs Tariff Act,1975 with the

conditions as provided under the said

Notification.


2.4            The          petitioner               was         eventhough

  granted                   the              EPCG           Authorisation

  No.0830002618                   dated            09.09.2008           by        the

  respondent               No.2         under        the      EPCG          Scheme

  formulated               by     the            Ministry      of       Commerce

under the FTP in the year 2008, for import

of printing machines with a condition to

export of leaflets, booklets, brochures,

commercial banners, books, calenders and

similar matters classifiable under ITC

49011020 and 49029020 worth of US$

9,29,268.71; pursuant to the said EPCG

Authorisation, the petitioner imported

capital goods such as Ryobi Multi Colour

C/SCA/11170/2019 JUDGMENT

Offset Printing Press (without Blanket

washing & without air compressor), having

total assessable value of Rs.2,46,96,480/

vide Bill of Entry No.607474 dated

17.09.2008, availing concession of the

Customs Duty of Rs.63,09,755/.

2.5 The petitioner was required to

export the goods valued at US$ 9,01,164.04

within the period of eight years or

further period as may be extended by the

DGFT which is the Licensing Authority.

2.6 It is the say of the petitioner that

due to the global economic slowdown and

due to the consequent lack of orders, the

petitioner could manage to export the

goods totally worth US$ 2,74,686/

equivalent to sum of Rs.1,68,25,375/.

2.7 As the complete Export Obligation

had not been fulfilled by the petitioner,

extension was sought from the respondent

C/SCA/11170/2019 JUDGMENT

No.2 and during the pendency of such

application of EOP, further export of

goods totally valued at US$ 1,33,075/

(worth Rs.77,54,572/) was made. Although,

the said export was not considered towards

fulfillment of Export Obligation; as the

application of the petitioner was pending

and the Export Obligation Period ('the

EOP' for short) had expired when the said

goods were exported.


2.8            Respondent               No.2      by     an       amendment

  sheet                  No.2           issued            from               File

  No.08/36/160/00206/AMI9                          dated        27.08.2018

had extended the time for fulfillment of

Export Obligation upto 09.09.2018 for the

first block period; however, no Export

Obligation could be discharged by the

petitioner, as the letter granting

extension of the time for Export

Obligation was received only a month

before the extended period expired. The

C/SCA/11170/2019 JUDGMENT

petitioner also tried to fulfill the

Export Obligation through the third party

exports as defined under para 9.6 of the

FTP and permitted under Para 5 of the FTP.

Although, what was required was that the

goods were actually to be manufactured on

the imported capital goods w.e.f. April,

2015, the petitioner did not claim the

benefit of such exports.

2.9 Because of this, the petitioner

applied for second extension which was

granted by an Amendment Sheet No.3 issued

from File No.08/36/160/00233/AMI9 dated

10.09.2018, whereby the second block

period for fulfillment of Export

Obligation by the petitioner was extended

to 09.09.2020.

2.10 In the meantime, the Directorate of

Revenue Intelligence ('the DRI' for short)

initiated investigations into dutyfree

imports of the petitioner. During the

C/SCA/11170/2019 JUDGMENT

course of investigation, statement of the

petitioner was recorded. Although, the

application seeking extension of Export

Obligation was pending before the

licensing authority and the petitioner

being eligible for second extension on

payment of fees as payable the said

capital goods imported under the EPCG

scheme, pursuant to the seizure of the

imported capital goods, the petitioner

sought provisional release after

furnishing bank guarantee of

Rs.27,52,042/ and Bond for the full value

of the imported capital goods. Upon

furnishing the Bank guarantee and the

Bond, the machine was released

provisionally by the respondent No.4.

2.11 The petitioner was directed to

submit the original copy of the EPCG

licence issued to them within a period of

two days without providing any details

C/SCA/11170/2019 JUDGMENT

vide communication dated 24.12.2018

allegedly for no rhyme or reason. The

petitioner requested respondent No.2 to

clarify the matter as to why the licence

was required to be submitted.

2.12 The respondent No.3 vide letter

dated 22.01.2019 unilaterally cancelled

the extension granted for fulfillment of

Export Obligation without responding to

the said letter dated 02.01.2019 nor did

it bother to explain the reason for

demanding original EPCG licence.

2.13 Request for personal hearing also

was made pursuant to the communication

dated 22.01.2019; however, the same was

also not granted. It also enclosed the

EPCG licence issued to the petitioner

along with the letter. Upon completion of

the investigations, a show cause notice

dated 05.03.2019 was issued to the

petitioner, where, the petitioner was

C/SCA/11170/2019 JUDGMENT

directed to show cause to the respondent

No.4 as to why the duty of Rs.45,87,584/

should not be demanded from him along with

interest and consequent penalty.

2.14 Holding this unilateral action as

arbitrary and contrary to law, it is

lamented by the petitioner that although

the extension of Export Obligation period

was allowed by the respondent No.2 on

10.09.2018 after duly examining all facts

and considering that the obligations have

also been fulfilled by the petitioner and

also considering the provisions of FTP

governing the issue, fees of Rs.8000/ of

such extension has also been paid. The

respondent No.3 had no business to

unilaterally suspend the said extension

without granting any opportunity of

hearing to the petitioner.

2.15 According to the petitioner, it is a

settled position of law that the DGFT is

C/SCA/11170/2019 JUDGMENT

the final authority in the matters

concerning FTP as provided in para 2.57 of

the FTP and licences, such as the EPCG

licence issued to the petitioner. Despite

the said position, respondent No.4

intervened in the process and prevented

the petitioner from enjoying the benefit

of the extension of the EOP granted to

the petitioner as is permissible under the

law. It is lamented by the petitioner that

the DGFT permission once granted cannot be

withdrawn. Resultantly, the present

petition with the following prayers:

"12.

(a) this Hon'ble Court be pleased to issue writ of Mandamus or any other appropriate writ, order or direction under Article 226 of the Constitution of India, ordering and directing the Respondents, their subordinate servants and agents to forthwith-

(i) Withdraw the letter dated 22.01.2019 suspending the Amendment Sheet No.3 (Annexure G) and extend the Export Obligation Period for 2 years

C/SCA/11170/2019 JUDGMENT

prospectively, so as to enable the Petitioner to complete their Export Obligation under the EPCG Authorisation issued to them as stipulated under Foreign Trade Policy;

(ii) The Extension given by Respondent No.2 vide licence Amendment sheet dated 27.11.2018, expiring on 09.09.2020 may be extended or made applicable for a period of 2 years prospectively from the date of communication of the order of extension or from the date of Order of this Hon'ble Court;

(III) Stay the operation/adjudication of the Show Cause Notice dated 05.03.2019 (Annexure I) issued to the Petitioner, till such time the extension of Export Obligation period is granted and valid;

(iv) Not to take coercive action against the Petitioner till the expiry of the extended period of EOP.

(B)this Hon'ble Court be pleased to issue a Writ of Certiorari, or a Writ in the nature of Certiorari, or any other appropriate Writ, Order or direction, calling for the papers and proceedings leading to the letter dated 22.01.2019 issued by Respondent No.3 suspending the Amendment Sheet No.3 (Annexure G) and after looking into the same and

C/SCA/11170/2019 JUDGMENT

the legality thereof this Hon'ble Court be pleased to quash and set aside the said letter dated 22.01.2019 (Annexure G);

(c) that pending the hearing and final disposal of the present petition,this Hon'ble Court be pleased to direct the Respondents, their servants, agents, officers and subordinates

(i) not to take coercive steps to recover the duty and consequent levies involved on the Capital Goods involved in the EPCG Authorization from the petitioner;

                  (ii)         Stay the operation/adjudication
                  of     the    Show     Cause       Notice   dated

05.03.2019 issued to the petitioner (Annexure I),

(D) for interim and ad-interim relief in terms of prayer clause (c) above;

(E)for costs of this petition;

(F) for such further and other reliefs be granted to the Petitioners as this Hon'ble Court may deem proper and fit in the nature and circumstances of the case."

3. This Court had issued the notice for final

disposal on 02.07.2019 and thereafter, once again

fresh notice came to be issued on 10.07.2019.

            C/SCA/11170/2019                                         JUDGMENT



4.     Affidavitinreply                   is           filed               by          the

respondentCommissioner                      of          Customs,                  NSII,

Customs     and        Excise       Department,                 denying              every

allegations          and      averments.                According               to       the

respondent, the Notification No.97/2004CUS dated

17.09.2004 is not applicable in the present case.

The Notification 64/2008CUS dated 09.05.2008 is

applicable in the present case and the same is

also mentioned in the EPCG authorisation

No.0830002618 dated 09.09.2008 issued to the

petitioner.

           4.1.          It   is     further              the        say        of       the

           respondent              that            out        of        the          total

shipping bills, the petitioner had only

14 shipping bills for export of goods

totaling worth US$ 2,54,266.14

equivalent to Rs.1,57,08,787.73

mentioned towards fulfillment of their

obligation towards EPCG authorisation

No.0830002618. It is further contended

by the respondent that the petitioner in

C/SCA/11170/2019 JUDGMENT

connivance with M/s.Quarterfold

Printabilites indulged in fraudulent

activity of getting their names and EPCG

licence number mentioned as supporting

manufacturer in the 9 shipping bills

filed by M/s.Quarterfold Printabilites

without manufacturing and supplying any

goods to M/s.Quarterfold Printabilites

with an intent to submit them to DGFT

towards their Export Obligation

fulfillment to obtain EODC against the

EPCG authorisation No.0830002618.

According to the respondent, the capital

goods were seized on 15.09.2018 as no

extension for fulfillment of Export

Obligation for EPCG authorisation

No.0830002618 was granted by the DGFT

after 09.09.2018.

5. It is further contended that the allegations

made by the petitioner are false and baseless as

DRI has sent communication to DGFT, Ahmedabad

C/SCA/11170/2019 JUDGMENT

giving the details of case and statements

recorded in case of M/s.Maruti Printers in the

year 2018. According to the respondent, the

prayer to stay the operation/ adjudication of

the show cause notice dated 05.03.2019 is

granted till such time the extension of EOP or

his valid merit would not require to be

considered. It is the connivance of the

petitioner with the third party without

manufacturing or supplying any goods to the

third party version exporter on the contrary

should require strict directions.

6. The affidavitinrejoinder is filed by the

petitioner which would be regarded at an

appropriate place.

7. This Court has heard extensively the learned

advocate, Mr.Hardi P. Modh appearing for the

petitioner and learned Central Government

Standing Counsel, Mr.Parth Divyeshvar appearing

for the respondent, who have argued along the

line of the respective pleadings. On careful

C/SCA/11170/2019 JUDGMENT

examination of the entire material and on

thoughtfully considering the rival claims of the

parties, for reasons to follow hereinafter, this

petition merits no consideration.

8. It is urged fervently by the learned

advocate, Mr.Hardik Modh that essential purpose

of granting of EPCG licence is to bring foreign

currency in India. According to him,

communication dated 22.01.2019 issued by the

respondent No.3, extended time upto 09.09.2020

for fulfillment of Export Obligation against

EPCG authorisation dated 09.09.2008. It is his

grievance that this has been unilaterally

suspended without granting any opportunity of

hearing or providing any reasons.

8.1 He fervently urged that there is

a need for restoration of the time limit

granted by the respondent No.3. He has

also further urged that the petitioner

made an attempt to get export orders

from the foreign buyers. He also

C/SCA/11170/2019 JUDGMENT

received the export order on 12.01.2019

from United Kingdom. The order came on

12.01.2019 and the export was to be made

in three months' period. There had been

suspension of the amendment on

22.01.2019. According to him, he had no

option but to export and therefore,

against the invoice of 15.04.2019, he

exported 10% of the quantity, and he

did not mention the authorisation number

in the export document, as it was not

viable for the petitioner to export the

ordered quantity as his authorisation

was suspended to cancel the order, and

did not supply further material towards

purchase order on 12.01.2019.

8.2 He has lamented further that as it

was not financially viable to supply the

material since the export was not to be

counted towards fulfillment of Export

Obligations against the authorisation.

C/SCA/11170/2019 JUDGMENT

According to the learned advocate, the

petitioner has not shown even a single

rupee of sales to M/s.Quarterfold

Printabilites in the books of accounts.

Against the Export Obligation of US$

2,54,244.14 he has been able to fulfill

such obligation of US$ worth of

Rs.4,01,481. He completed 43% of his

obligation and is ready to so do it, so

therefore, if the real objective of such

export, if is looked at, he should be

provided an opportunity. He emphasised

that once the extension is granted, the

same cannot be revoked without any valid

reason. According to him, the show cause

notice for misuse of EPCG licence is

still pending for adjudication.

Therefore, till then, he should be

permitted the export by restoring the

time limit extended by 27.11.2018.

9. Learned Central Government Standing Counsel,

C/SCA/11170/2019 JUDGMENT

Mr.Parth Divyeshwar has emphasised that the show

cause notice is still alive and 43% of export is

already carried out; however, 57% of export is

still remaining. The obligations of his since

have remained unfulfilled, no purpose is likely

to be served in granting the extension of the

time against the EPCG authorisation

No.0830002618 dated 09.09.2008, since the same

had been suspended. Having noticed that,

continuing the same, is of no use when the

petitioner has not fulfilled his obligations as

were required to be done at his end.

10. Having thus heard both the sides and also

having considered the material on the record,

the question that dragged the attention of this

Court is as to whether the extension as sought

for of the authorisation needs to be given to

the petitioner in wake of the pendency of the

show cause notice dated 05.03.2019 and in total

set of facts and circumstances?

11. Undisputed facts in the instant case are that

C/SCA/11170/2019 JUDGMENT

the petitioner applied for and was granted EPCG

authorisation on 09.09.2008 by the office of

respondent No.2 under the EPCG scheme formulated

by the Ministry of Commerce under the FTP in the

year 2008. The EPCG authorisation No.0830002618

was for import of printing machines with a

condition to export leaflets, booklets,

brouchers, commercial banners, books, calenders,

etc. They were all classifiable under ITC 4901

1020 and 49029020 worth of US$ 929,268,.71.

12. It is the case of the petitioner that it

imported capital goods such as Ryobi Multi

Colour Offset Printing Press (without Blanket

washing & without air compressor), having total

assessable value of Rs.2,46,96,480/ vide Bill

of Entry No.607474 dated 17.09.2008 and the

concession of the Customs Duty made available to

him was to the tune of Rs.63,09,755/. He,

therefore, was required to export the goods

valued at US$ 9,01,164.04 within the period of

eight years or further period as could be

C/SCA/11170/2019 JUDGMENT

extended by the Licensing Authority i.e. DGFT.

13. The petitioner could export the goods

totaling worth US$ 2,74,686/ out of the

required export of goods of US$ 9,01,164.04. The

petitioner was unable to fulfill complete Export

Obligation and therefore, sought further

extension of period for fulfilling the

obligation of export. Such a request was made to

respondent No.2 and during the pendecy of this

request, he further exported the goods worth US$

1,33,075/ (worth Rs.77,54,572/). It is to be

noted that this could not be considered towards

the fulfillment of his Export Obligation as his

EOP had already expired by then.

14. The respondent No.2 on 27.08.2018 extended

the time for Export Obligation to 09.09.2018 for

the first block period. As such letter was

received only a month before the extended period

expired, nothing could be done by the

petitioner. He attempted to fulfill this through

the third party exports as defined under para 5

C/SCA/11170/2019 JUDGMENT

and 9.6 of the FTP. He again applied for second

extension, which was granted on 10.09.2018 and

the time was granted upto 09.09.2020.

15. What is required of the petitioner was that

the imported capital goods are to be utilized

for the purpose of manufacturing and since the

petitioner had exported goods at US$ 2,54,266.14

(FOB) against the Export Obligation of US$

9,29,268.71 (FOB) till 09.09.2018 under EPCG

licence No.0830002618 dated 09.09.2008 and had

not fulfilled the Export Obligation on FOB basis

equivalent to six times of the duty saved within

stipulated Export Obligation period of 10 days

(8+2 extended) from the date of issuance of the

EPCG licence, on the ground that it had violated

condition mentioned in Para No.(3) of the

Notification No.64/2008CUS dated 09.05.2008, a

show cause notice was issued on 05.03.2019. The

condition in Para No.5 of Notification

No.64/2008CUS dated 09.05.2008 requires the

importer to furnish the details of Export

C/SCA/11170/2019 JUDGMENT

Obligation fulfilled in two Blocks i.e. 50%

Export Obligation in Block of 1st to 6th year and

remaining 50% Export Obligation in Block of 7th

to 8th year with evidence before the Customs

Authorities within a period of 30 days of expiry

of each Block. The respondent authorities could

not find any evidence that within the stipulated

time period, the Export Obligation of each Block

had been fulfilled.

16. It also appears that the search operation was

conducted on 15.09.2018 at the office cum

factory premises of the petitioner at Abhay

Estate, Tavdipura, Shahibaug, Ahmedabad where

printing machines imported under the EPCG

licence No.0830002618 dated 09.09.2008 was

installed. During the course of the search

operation conducted, the statements of the

proprietor of the petitioner, the proprietor of

M/s.Singh Road Carrier, Ahmedabad, General

Manager of M/s.Quarterfold Printabilities,

Production Incharge of Scratch Card unit of the

C/SCA/11170/2019 JUDGMENT

petitioner, etc. have been recorded. It is

alleged in the said show cause notice that in

connivance with M/s.Quarterfold Printabilities

and the consultant of M/s.Quarterfold

Printabilites, the petitioner indulged in

fabricating the export documents, i.e. Tax

Invoices, Lorry Receipt, Eway Bills, Custom

Invoices, Packing List, SHIpping Bills, etc.

This is only to masquerade as the goods having

been transported through factory premise of the

petitioner to M/s.Quarterfold Printabilites,

Navi Mumbai and further exported by

M/s.Quarterfold Printabilites. This is alleged

to be the fraudulent manner of getting the name

and EPCG Number of the petitioner as supporting

manufacturer. The shipping bills filed by

M/s.Quarterfold Printabilites showing the FOB

value of US$ 4,65,074.07 allegedly are without

manufacturing and supplying any goods to

M/s.Quarterfold Printabilites, with an intent to

further submit these documents to DGFT towards

fulfillment of their Export Obligation and to

C/SCA/11170/2019 JUDGMENT

obtain EODC against the said EPCG licence

No.0830002618 dated 09.09.2008.

17. As could be noticed from the counter

affidavit of the respondent Nos.1 to 3 the EOP

extension in respect of EPCG Authorisation,

which was granted to the petitioner by the

respondent No.2 upto 09.09.2020 has been

cancelled on account of instructions received

from the DRI, Ahmedabad that the petitioner was

indulging in misuse of the EPCG Scheme by

fraudulently attempting to show bogus export

towards fulfillment of their Export Obligation

against EPCG Authorisation. The DRI has also

alleged that in respect of the shipping bills of

M/s.Quarterfold Printabilites, the petitioner

had shown the said firm as its supporting

manufacturer and had used the petitioner's name

and EPCG Authorisation number in the shipping

bills of the firm to show them as its exports.

It is thus prima facie clear that the required

condition of EPCG Authorisation that the goods

C/SCA/11170/2019 JUDGMENT

exported needed to be manufactured out of the

capital goods imported by the petitioner has not

been complied with as per the informations given

by the DRI and therefore, the respondent No.2

had cancelled the EOP extension granted to the

petitioner upto 09.09.2020, in respect its EPCG

authorisation. It is the stand of the respondent

that it is not mandatory to extend the said

period of Export Obligation since the DRI had

found the indulgence of the petitioner in the

misuse of the EPCG scheme by making the use of

shipping bills of other firms and using it

before its own export. The Foreign Trade

(Development & Regulation) Act, 1992 and the

Rules made thereunder requires the personal

hearing for the authority to propose imposition

of the penalty and it also involves adjudication

of the confiscation.

18. We notice that the extension has been firstly

provided of the EOP by respondent No.2 on

10.09.2018 and thereafter, this has been

C/SCA/11170/2019 JUDGMENT

suspended by the respondent No.3 on 22.01.2019.

It is to be noted that the petitioner was

directed to submit the original copy of the EPCG

with the enclosure in two working days by a

communication dated 24.12.2018. Yet another

communication dated 22.01.2019, which is

impugned here states that since the

communication dated 24.12.2018 calling for

authorisation for amendment had not been

complied with nor had he availed any personal

hearing to explain the noncompliance, the

amendment in the Sheet No.3 dated 27.11.2018

stood suspended. It was further directed to

furnish the original EPCG No.0830002618 within a

period of seven days, failing which the action

under Foreign Trade (Development & Regulation)

Act, 1992 had been proposed. The show cause

notice has been issued on 05.03.2019 after

nearly two months of this communication. It is

not out of place to make a mention that the

search operation was carried out on 15.09.2018

at the office cum factory premises of the

C/SCA/11170/2019 JUDGMENT

petitioner where these suspicious documents had

been found and therefore, immediately the

original EPCG No.0830002618 had been called for.

As the same was not furnished, as directed,

there was a suspension of the same on

22.01.2019.

19. Challenge in this petition is to this

suspension of amendment sheet No.3, which had

extended two years of Export Obligation period

with a further request to prospectively grant it

for two years. We could notice that the

suspension on the part of the respondent

authority is in wake of nonfulfillment of the

directions on the part of the petitioner to the

communication dated 24.12.2018. After nearly a

month from the noncompliance on 22.01.2019,

there had been a suspension of the amendment

sheet No.3 dated 27.11.2018. It is to be noted

that this communication clearly speaks of the

suspension if not the cancellation or rejection

of grant of the extension of the Export

C/SCA/11170/2019 JUDGMENT

Obligation. This had come in wake of the inputs

received from the DRI. The show cause notice

pursuant to the said search operation and

subsequent to the suspension of this is already

given on 05.03.2019. Any indulgence on the part

of the Court at this stage, would amount to

entertaining the matter and indulging into the

merit at the stage of show cause notice, which

is impermissible.

20. Apt would be to refer to the decision of the

Apex Court rendered in case of Union of India

vs. Indalco Industries, reported in 2003 (3) SCR

377, its relevant findings and observations are

as follow :

"There can be no doubt that in matter of taxation, it is inappropriate for the High Court to interfere in exercise of jurisdiction under Article 226 of the Constitution either at the stage of show cause notice or at the stage of assessment where alternative remedy by way of filing a reply or appeal, as the case may be, is available but these are the limitations imposed by the courts themselves in exercise of their jurisdiction and they are not matters of jurisdictional factors.

Had the High Court declined to interfere at the stage of show cause notice, perhaps this court would not have been inclined to entertain

C/SCA/11170/2019 JUDGMENT

the special leave petition; when the High Court did exercise its jurisdiction, entertained the writ petition and decided the issue on merits, we do not think it appropriate to upset the impugned order of the High Court under Article 136 of the Constitution on a technical ground.

The second contention urged by Mr. T.L.V. Iyer is that under Section 11A, the authority did have power and the High Court had itself found in regard to paragraphs (1) to (13) and directed inquiry in respect of the clandestine removal of the goods. The assessee could have been directed to file a reply in regard to the matters concerning the incorrect valuation and the High Court ought not to have interfered. We are unable to accept the contention of the learned counsel for reasons more than one. First, as submitted by Mr. K.K. Venugopal, if an authority which has jurisdiction in regard to one aspect takes upon itself to make enquiry into a matter in respect of which it had no jurisdiction then merely because in regard to one aspect it has jurisdiction, the court cannot ignore the fact of lack of jurisdiction and allow the Tribunal to proceed with the matter in respect of which it has no jurisdiction to make inquiry. Secondly, the position, stated above, namely, that valuation once accepted under clause (a) and there being no vitiating factor, no recourse can be had to valuation under clause (b) is a settled position of law. Therefore, at this stage, if the party is directed to go back to the authority, it would be directing it to undergo a futile exercise.

For these reasons, we find no merit in the appeal. The civil appeal is dismissed but in the facts and circumstances of the case, we make no order as to costs. "

20.1            Similar view has been taken by the





         C/SCA/11170/2019                                 JUDGMENT



Apex       Court           in    case       of    Divisional         Forests

Officer and Ors. Vs. Ramalinga Redd, reported

in 2007 (9) SCC 286, of which relevant

paragraph of this decision are as follow:

"13. In Management of Express Newspapers (Private) Ltd., Madras v. The Workers and Ors., AIR (1963) SC 569, it was opined:

"15. The High Court undoubtedly has jurisdiction to ask the Industrial Tribunal to stay its hands and to embark upon the preliminary enquiry itself. The jurisdiction of the High Court to adopt this course cannot be, and is indeed not disputed. But would it be proper for the High Court to adopt such a course unless the ends of Justice seem to make is necessary to do so? Normally, the questions of fact, though they may be jurisdictional facts the decision of which depends upon the appreciation of evidence, should be left to be tied by the Special Tribunals constituted for that purpose. If and after the Special Tribunals try the preliminary issue in respect of such jurisdictional facts, it would be, open to the aggrieved party to take that matter before the High Court by a writ petition and ask for an appropriate writ. Speaking generally, it would not be proper or appropriate that the initial jurisdiction of the Special Tribunal to deal with these jurisdictional facts should be circumvented and the decision of such a preliminary issue

C/SCA/11170/2019 JUDGMENT

brought before a High Court in its writ jurisdiction.

We wish to point out that in making these observations, we do not propose to lay down any fixed or inflexible Rule; whether or not even the preliminary facts should be tried by a High Court in a writ petition, must naturally depend upon the circumstances of each case and upon the nature of the preliminary issue raised between the parties. Having regard to the circumstances of the present dispute, we think the court of appeal was right in taking the view that the preliminary issue should more appropriately be dealt with by the Tribunal. The appeal court has made it clear that any party who feels aggrieved by the finding of the Tribunal on this preliminary issue may move the high Court in accordance with law. Therefore, we are not prepared to accept Mr. Sastris argument that the Appeal court was wrong in reversing the conclusion of the trial Judge insofar as the trial Judge proceeded to deal with the question as to whether the action of the appellant was a closure or a lockout."

14. In State of Uttar Pradesh v. Brahm Datt Sharma and Anr., AIR (1987) SC 943 : [1987] 2 SCC 179, this Court held:

"9. The High Court was not justified in quashing the show cause notice. When a show cause notice is issued to a government servant under a statutory provision calling upon him to show cause, ordinarily the government servant

C/SCA/11170/2019 JUDGMENT

must place his case before the authority concerned by showing cause and the courts should be reluctant to interfere with the notice at that stage unless the notice is shown to have been issued probably without any authority of law. The purpose of issuing show cause notice is to afford opportunity of hearing to the government servant and once cause is shown it is open to the Government to consider the matter in the light of the facts and submissions placed by the government servant and only thereafter a final decision in the matter could be taken. Interference by the court before that stage would be premature, the High Court in our opinion ought not have interfered with the show cause notice."

15. This Court in Special Director and Anr. v. Mohd. Ghulam Ghouse and Anr., [2004] 3 SCC 440 stated the law, thus:

"5. This Court in a large number of cases has deprecated the practice of the High Courts entertaining writ petitions questioning legality of the showcause notices stalling enquiries as proposed and retarding investigative process to find actual facts with the participation and in the presence of the parties. Unless the High Court is satisfied that the showcause notice was totally non est in the eye of the law for absolute want of jurisdiction of the authority to even investigate into facts, writ petitions should not been entertained for the mere asking and a matter of route, and the writ petitioner should invariably be directed to respond

C/SCA/11170/2019 JUDGMENT

to the showcause notice and take all stands highlighted in the writ petition. Whether the showcause notice was founded on any legal premises, is a jurisdictional issue which can even by urged by the recipient of the notice and such issues also can be adjudicated by the authority issuing the very notice initially, before the aggrieved could approach the court. Further, when the court passes an interim order it should be careful to see that the statutory functionaries specially and specifically constituted for the purpose and are denuded of powers and authority to initially decide the matter and ensure that ultimate relief which may or may not be finally granted in the writ petition is not accorded to the writ petitioner even at the threshold by the interim protection granted."

16. This aspect of the matter has recently been considered by this Court in Union of India and Anr. v. Kunisetty Satyanarayana, (2006) 12 SCALE 262. "

21. Once having extended the period on

27.11.2018, without availing the opportunity,

the grant of extension of Export Obligation

period, cannot be cancelled. However, if there

are certain suspicious documents noticed by the

DRI, the authority concerned, if has chosen to

C/SCA/11170/2019 JUDGMENT

suspend the same and has sought the detail from

the petitioner, no interference is desirable. If

the petitioner is given a clean chit in the

proceedings of the show cause notice, it may

request the concerned authority to consider the