Gujarat High Court
Deepak Fertilisers And Petrochemicals ... vs Union Of India on 3 April, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 3828 of 2025
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
==========================================================
Approved for Reporting Yes No
✓
==========================================================
DEEPAK FERTILISERS AND PETROCHEMICALS CORPORATION
LIMITED
Versus
UNION OF INDIA & ORS.
==========================================================
Appearance:
MR MIHIR JOSHI , SENIOR ADVOCATE WITH MR DIGANT POPAT for the
Petitioner(s) No. 1
MAUNIL G YAJNIK(9346) for the Respondent(s) No. 2,3
MR PRADIP D BHATE(1523) for the Respondent(s) No. 1
==========================================================
CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 03/04/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned Senior Advocate Mr.
Mihir Joshi with learned advocate Mr.
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
Digant Popat for the petitioner and
learned advocate Mr. Maunil Yagnik for the
respondents.
2. Learned advocate Mr. Maunil Yagnik has
tendered the affidavit-in-reply on behalf
of the respondent. The same is taken on
record.
3. By this petition under Article 227 of
the Constitution of India, the petitioner
has challenged the impugned
communications/orders dated 06.02.2025 and
12.03.2025 passed by the Assistant
Commissioner of Customs, rejecting the
application for license for Private
Warehouse under section 58 of the Customs
Act, 1962 (For short "the Customs Act") as
per the provisions of para no. 3(2)(c) of
Private Warehouse Licensing Regulations,
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
2016 ( For short "the Regulations").
4. Brief facts of the case are that the
petitioner filed an application dated
18.11.2024 for obtaining a private bonded
warehouse license under section 58 of the
Customs Act along with permission to carry
out the manufacturing activities under
section 65 of the Customs Act read with
Manufacture and other Operations in
Warehouse Regulations, 2019 (for short
'the Regulations').
5. The said application was rejected by
the Commissioner of Customs, Ahmedabad by
impugned order dated 06.02.2025 quoting
the provisions of para no. 3(2)(c) of the
Regulations.
6. The petitioner thereafter addressed
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
letter dated 11.02.2025 to the office of
Assistant Commissioner of Customs,
Ahmedabad requesting for grant of license
contending that the petitioner is not
penalised for any offence under the
Customs Act,1962 or the Central Excise
Act, 1944 or Finance Act, 1994. The
petitioner also provided confirmation with
respect to the Central Goods and Services
Tax Act, 2017 and the Integrated Goods and
Services Tax Act, 2017 and the Goods and
Service Tax (Compensation to State) Act,
2017. The petitioner also clarified that
there are multiple ongoing litigations
which are under appeal in accordance with
the applicable indirect tax laws along
with an undertaking with the said letter.
7. The petitioner thereafter had written
various letters to the respondent
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
authorities for grant of license under the
regulations declaring that there is no
penalty for offences levied against the
petitioner.
8. The respondent Principal Commissioner
again by communication/order dated
12.03.2025 rejected the application of the
petitioner for the second time as per the
provision of para 3(2)(c) of the
Regulations.
9. Being aggrieved, the petitioner has
preferred the present petition.
10. Learned Senior Advocate Mr. Mihir
Joshi for the petitioner submitted that
rejection of the application for Private
Warehouse made by the petitioner has
significantly impacted the petitioner and
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
financial viability of the project to be
undertaken by the petitioner company by
making huge investment as unfeasible
because major consignments of the
petitioner are currently stranded at the
load Port in Germany, pending the issuance
of the license and MOOWR permission.
11. It was submitted that the petitioner
is incurring demurrage cost due to the
delay in shipment on the request of the
petitioner. It was further submitted that
the grounds given by the respondent for
rejecting the application of the
petitioner as per the provision of para
3(2)(c) of the Regulations is not
applicable in the facts of the case as
none of the litigation pending against the
petitioner involve the offences under any
of the indirect tax laws.
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
12. Learned Senior Advocate Mr. Mihir
Joshi invited the attention of the Court
to the details of the pending litigation
against the petitioner under various
indirect tax laws as enumerated in para
no. 7.8 and 7.9 of the memo of the
petition.
13. On perusal of the said details, it
appears that none of the litigation
involve the penalty for any offence as per
any of the provisions either of Customs
Act, Central Excise Act or GST Act, as
such litigation pertains only to
contravention of general provisions of the
respective Acts and none of the matters
involve proposal/imposition of penalties
for offences as per the provision of para
3(2)(c) of the Regulations.
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
14. It was therefore, submitted that the
impugned communication rejecting the
application for license for Private
Warehouse may be quashed and set aside by
directing the respondents to issue such
license, as the provision of para 3(2)(c)
of the Regulations regarding penalty for
offences under the Central Excise Act,
Finance Act and Customs Act are not
applicable in the facts of the case.
15. On the other hand, learned advocate
Mr. Maunil Yagnik for the respondent has
relied upon Circular No.26/2016 - Customs
dated 09.06.2016 issued by the Central
Board of Indirect Taxes and Customs laying
down the standard operating procedures for
verification of antecedents of the
applicant for issuance of license of
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
Private Warehouse under the regulations.
16. It was further pointed out from para
4.1 of the said circular that in order to
minimise the time lag for verification of
the antecedents of the applicant, it was
proposed that a centralised system of
verification be followed by referring the
name of the applicant and Directors/
Partners/ Proprietor to DRI(HQ) and
DGCEI(HQ) for checking antecedents and the
existence of any past cases instead of
referring to all formations. It was
therefore, submitted that the respondents
have considered the past cases of the
petitioner to reject the application for
Private Warehouse license.
17. Thereafter, learned advocate Mr.
Yagnik referred to Circular No.34/2019-
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
Customs dated 01.10.2019, more
particularly, Annexure-A thereto
prescribing the application for license
for a private bonded warehouse. It was
pointed out by learned advocate Mr. Yagnik
that clause 11 of the format of
application refers to the declaration and
petitioner therefore, was required to
declare that the petitioner was not
convicted for any offence under any law
and the petitioner was neither being
penalised or convicted nor are being
prosecuted for any offense under the
Customs Act, Central Excise Act, Finance
Act, GST Act etc. It was therefore,
submitted that the petitioner did not
furnish any undertaking or declaration and
thereafter the petitioner has submitted
part details with regard to pending
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
litigation in various forums. It was
therefore submitted that the respondent
has rightly rejected the application made
by the petitioner for private warehouse
license as per the provision of para 3(2)
(c) of the Regulations in view of pending
cases.
18. Considering the submissions made by
learned advocate for the respective
parties, it would be germane to refer to
the provisions of para 3(2)(c) of the
Regulations which reads as under:
"3. Licensing of private warehouse
xxx
(2) The Principal Commissioner of
Customs or the Commissioner of
Customs, as the case may be, shall not
issue a licence to an applicant if,-
(a) he has been declared an insolvent
or bankrupt by a Court or Tribunal;
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
(b) he has been convicted for an
offence under any law for the time
being in force;
(c) he has been penalised for an
offence under the Act, the Central
Excise Act, 1944 (1 of 1944) or
Chapter V of the Finance Act, 1994 (32
of 1994);
(d) he is of unsound mind and stands
so declared by a competent court; or
(e) the Principal Commissioner of
Customs or the Commissioner of
Customs, as the case may be, is
satisfied that-
(i) the site or building of the
proposed private warehouse is not
suitable for secure storage of
dutiable goods;
(ii) the site or building of the
proposed private warehouse is not
suitable for general supervision by
officers of customs;
(iii) bankruptcy proceedings are
pending against the applicant; or
(iv) criminal proceedings are pending
against the applicant ant the offences
involved are of such nature that he is
not a fit person for grant of
licence."
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
19. On perusal of para 3(2)(c) of the
Regulations, the Principal Commissioner of
Customs or Commissioner of Customs as the
case may be is precluded from issuance of
license to an applicant if the applicant
has been convicted for offence under the
provisions of the Central Excise Act, 1944
or Chapter V of the Finance Act, 1994.
20. Therefore, the question arises as to
what is the offence under the provisions
of the Cental Excise Act or Customs Act.
Chapter 16 of the Customs Act provides for
offences and prosecution comprising from
section 132 to 140A of the Act. On perusal
of the litigation pending against the
petitioner, none of the provisions of
section 132 to 140A of the Customs Act are
alleged to have been violated or any
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
litigation is subject to the provisions.
The list of offences/litigation pending
against the petitioner as per para no. 7.8
and 7.9 enumerated in the petition reads
as under:
"7.8 Below is a summary of all pending
cases against the petitioner under
Customs Act, 1962, Central Excise Act
1944 and Chapter V of Finance Act 1994
(as required under though Regulation
3(2)(c) of the Warehouse Regulations)
wherein the order in any proceeding
against the Company has either been
stayed through an order of the
appellate authority.
Sr. Show Cause Legilatio Issue in Legal Penalty Current Comme
No. Notice No. & n under brief Provisio section status nts
Date which ns invoked
issued invoked in the
order
(1) (2) (3) (4) (5) (6) (7) (8)
1 Show Cause Custom 1. Sections Section Appeal That
Notice F. s Act Demurr 28 read 112(a) No.C/50 SCNs
NO. age with rule (ii) of 697;202 have
DRI/KZU/CF charger 3(1) and Custom 4- been
/ENQ- s Rule s Act, CU(DB) issued
63(INT-43)/2 2. 10(2)(a) 1962 pending by
016/7245 Classific and (e) with invoking
TO 7249 DT ation of of Section CESTA Sections
29/03/2017 Phosph Custom 112(a) T New 28 of
received oric Acid s (ii) of Delhi the
from DRI and Valuatio Custom Custom
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
Kolkatta Anhydro n s Act,s Act
Zonal Uni us (Determi 1962 is
read
Ammoni nation of a with rule
a under Value of penalty3(1) and
Custom Importe for Rule
s Tariff d contrave
10(2)(a)
Heading Goods) ntion notand (e)
2809/28 Rules, an of
14 2007 offence
Custom
2 DRI/MZU/CI- Custom CVD on Under Section Appeal s
Valuatio
06/2012/674 s Act import Section 114A of is
DATED of 28 read Custom pending n
1801.2012 fertilizer with s Act, before (Determi
s section 1962 CESTA nation of
Value of
28AA, T,
111(o) Section Mumbai Importe
d
of the 114A of
Goods)
Custom Custom
Rules,
Act, s Act,
1962 1962 is
and
a
Section
penalty
28AA,
for
111(o)
contrave
of the
ntion,
Custom
not an
Act,
offence
which
are
general
in these
matters
demand
s have
been
propose
d by the
Departm
ent by
issuing
a SCN.
Further
Penalty
have
been
imposed
under
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
section
112 and
114A of
the
Custom
s Act.
Thus,
these
Sections
are
invoked
for
alleged
contrave
ntion of
the
provisio
ns of the
Custom
s Act.
Therefor
e, it can
be said
that the
Compan
y has
not
been
issued
SCNs
for
penalisa
tion for
offences
under
Chapter
XVI of
the
Custom
s Act.
3 F No. CUS Custom Finalisat Section No Appeal That
(M&P)/ABC/ s Act ion of 18(2) penalty is SCN
PNP/63/201 the bills has pending has
5 PT-I dated of entry imposed before invoked
30.03.2018 CESTA Section
T, 18(2)
Mumbai [i.e.
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
Provisio
nal
Assess
ment] of
the
Custom
s Act
which is
general
in
nature
i.e. from
which
demand
is
propose
d by the
Departm
ent by
issuing
a SCN.
Thus
this
section
is
invoked
for
alleged
contrave
ntion of
the
provisio
ns of the
Custom
s Act.
Therefor
e, it can
be said
that the
Compan
y has
not
been
issued
SCN for
penalisa
tion for
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
any
offences
under
Chapter
XVI of
the
Custom
s Act.
4 21-22/ Excise Demand Section No Departm That
SHH(21- Act in 11A of penalty ent has SCN
22)/PC/RG/ respect Excise has filed an has
2015-16 of Act read imposed Appeal invoked
dated naptha with as first No. Section
08.10.2015 used in Rule Appeal E/85148 11A of
the 6(3A) of order /2016 the
generati the was in before Excise
on of Cenvat favour the Act,
steam Credit of the Hon'ble which is
Rules, compan CESTA general
2004 y T, in
Mumbai nature
i.e. from
which
demand
is
propose
d by the
Departm
ent
issuing
a SCN.
Thus,
the
section
is
invoked
for
alleged
contrave
ntion of
the
provisio
ns of the
Excise
Act.
Therefor
e, it can
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
be said
that the
Compan
y has
not
been
issued
SCN for
penalisa
tion of
any
offences
under
Section
9 of the
Excise
Act.
5 PUNE- Service ITC Section Rule Appeal That
EXCUS-001- Tax availabl 73(1) of 15(3) of is these
APP- (Financ e in the the the CC pending SCNs
0041/2019- e Act, ISD Finance Rules, before have
20 1994) ledger Act, 2004 CESTA invoked
was not 1994 read T, Section
reported read with Mumbai 73 of
in the with Section the
ST-3 Rule 14 78(1) of Finance
Return of the the Act,
CCR, Finance 1994,
2004 Act, which is
and 1994 general
174(2) in
of the Rule nature
CGST 15(3) of i.e.,
Act, the CC from
2017 Rules, which
2004 demand
read is
with propose
section d by the
78(1) of Departm
the ent by
Finance issuing
Act, SCNs.
1994 is Futher,
a penalty
penalty has
for been
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
contrave imposed
ntion, under
not an Rule 15
offence of the
6 VADEXCUS Service ITC Section Rule Appeal Cenvat
Credit
-002 APP- Tax denial in 73 of 15(2) of is
208-2020-21 (Financ regard Finance the CC pending Rules,
dated e Act, to the Act, Rules, before 2004.
25.02.2021 1994) setting 1994 2004 CESTA Thus,
the
up of read read T,
the with with Ahmeda Section
and
compan Rule Section bad
Rules
y's plant 14(1)(ii) 11AC of
have
of the the
been
Cenvat Central
invoked
Credit Excise
for
Rules, Act,
alleged
contrave
Rule
ntion of
15(2) of
the
the CC
provisio
Rules,
ns of the
Finance
read
Act,
with
1994.
section
Therefor
11AC of
e, it can
the
Central be said
that the
Excise
Compan
Act, is a
y has
penalty
not
for
been
contrave
issued
ntion,
the
not an
SCNs
offence
for
7 PUN- Service Admissi Section Rule Departm penalisa
EXCUS-003- Tax bility of 73 read 15(3) of ent has tion of
COM-029- (Financ Cenvat with the CC filed an any
13-14 dated e Act, credit on Rule 14 Rules, Appeal offences
29 Nov 2103 1994) input of CC 2004 No,.203 under
services Rules, read of 2019 Section
and 2004 with before 89 of
capital Section the the
goods 78 of Hon'ble Finance
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
used for the Bombay Act,
construc Finance High 1994.
tion and Act, Court
operatio 1994
n of the
mall Section
77(1)(c)
of the
Finance
Act,
Rule
15(3) of
the CC
Rules,
read
with
section
78 of
the
Finance
Act,
1994 is
a
penalty
for
contrave
ntion,
not an
offence
7.9 A perusal of Column No(6) of the
aforesaid table makes it amply clear
that the penalty proposed/imposed in
all the above matters, is only for
contravention of general provisions of
the respective Acts and none of the
matters involve any
proposal/imposition of "penalty for
offences."
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
21. Similarly, none of the offences as
per the provisions of the Central Excise
Act as well as Service Tax Act or GST Act
are pending against the petitioner.
22. It appears that the respondents have
failed to consider the offences under
various indirect taxes Act and mixed up
with the concept of contravention or
breach of any of the provisions of the Act
with the offences as enumerated in various
Acts. Therefore, merely because the
litigation is pending for any
contravention of any of the provisions of
the Act, same cannot be considered as an
offence and there is a distinction between
the "contravention" and "offence" of the
Act which can be distinguished as under.
23. As per Black's Law Dictionary,
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
"offence" is defined in context of crime
or criminal offence being a violation of
law as under:
"offense (ə-fents). 1. A violation
of the law; a crime, often a minor
one. See CRIME. Also termed
criminal offense. [Cases: Criminal
Law 1. C.J.S. Affray §§ 2-12;
Criminal Law §§ 2-8, 13.]
"The terms 'crime,' 'offense,' and
'criminal offense' are all said to
be synonymous, and ordinarily used
interchangeably. 'Offense' may
comprehend every crime and
misdemeanor, or may be used in a
specific sense as synonymous with
'felony' or with 'misdemeanor,' as
the case may be, or as signifying
a crime of lesser grade, or an act
not indictable, but punishable
summarily or by the forfeiture of
a penalty." 22 C.J.S. Criminal Law
§ 3, at 4 (1989)."
24. The word "contravention" is from the
word controvert and as per Black's Law
Dictionary word "controvert" is defined as
under:
"Controvert - To dispute or contest
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
esp to deny (as an allegation in a
pleading) or oppose in argument the
allegations in Peck's pleadings were
never adequately controverted"
25. Therefore, contravention is nothing
but disputing or denying or opposing the
claim or eligibility of the petitioner
under the provisions of various Acts.
26. Therefore, considering the
litigations pending against the petitioner
in the appellate forum, none of the
provisions can be said to be an offence
which can be considered falling under
clause(c) of para 3(2) of the Regulation.
27. It is also pertinent to note that the
petitioner or any of the officers,
director etc. of the petitioner has never
been penalised for an offence under the
Act as the same is not even disputed by
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
the respondents by invoking the provisions
of said para 3(2)(c) of the Regulation.
The respondents in both the occasions i.e.
while rejecting the applications dated
06.02.2025 and 12.03.2025 has only
referred to the provisions of para 3(2)(c)
of the Regulations referring that there
are three cases pending against the
petitioner under the Customs Act and 9
cases under other Acts i.e. Central Excise
Act and GST Act without considering as
none of the cases are pending for
penalising the petitioner or any officer
of the petitioner company for the offences
under the Customs Act 1962 and other Acts.
28. In view of the foregoing reasons, the
petition succeeds and is accordingly
allowed. The impugned orders are hereby
quashed and set aside. The respondents are
NEUTRAL CITATION
C/SCA/3828/2025 JUDGMENT DATED: 03/04/2025
undefined
directed to issue the license under the
provisions of the Regulation as prayed for
by the petitioner if further conditions
are fulfilled except para 3(2)(c) of the
Regulation. Such exercise shall be
completed within a period of two weeks
from the date of receipt of a copy of this
order
29. Rule is made absolute to the
aforesaid extent. No order as to costs.
Direct service is permitted.
(BHARGAV D. KARIA, J)
(D.N.RAY,J)
RAGHUNATH R NAIR
