Madras High Court
M/S. Tatia Intimate Exports Ltd vs The Director General on 10 March, 2023
W.P.No.13281 of 2016
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 10.03.2023
CORAM :
THE HON'BLE MR.JUSTICE S.M.SUBRAMANIAM
W.P.No.13281 of 2016 and
W.M.P.No.11656 of 2016
M/s. Tatia Intimate Exports Ltd.
No.81-B, 2nd Main Road, Ambattur
Industrial Estate, Chennai – 600 058.
(Now known as Tatia Global Venture Limited)
Rep. by its Director
Shri Bharat Jain Tatia .. Petitioner
vs
1. The Director General
Directorate General of Foreign Trade
Ministry of Commerce & Industry
Department of Commerce
Udyog Bhavan, New Delhi – 110 001.
2. The Foreign Trade Development Officer
O/o The Director General of Foreign Trade
Ministry of Commerce & Industry
Department of Commerce
Udyog Bhavan, New Delhi – 110 001.
3. The Foreign Trade Development Officer
O/o The Zonal Joint Director General of Foreign Trade
Ministry of Commerce & Industry
Department of Commerce, Shastri Bhavan Annex
4th & 5th Floor, No.26, Haddows Road
Chennai – 600 006. .. Respondents
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W.P.No.13281 of 2016
Prayer: Petition filed under Article 226 of the Constitution of India praying
for a writ of Certiorarified Mandamus, calling for the records in and
connected with F.No.20/418/AM95 EPCG-I/144 dated 14.12.2015 passed
by the first respondent, quash the same and forbear the respondents from
taking any coercive action against the petitioner entity under the provisions
of the Foreign Trade (Development & Regulation) Act, 1992 and for such
other orders.
For the Petitioner : Mr.B.Satish Sundar
For the Respondents : Mr.K.Srinivasa Murthy
Additional Central Government
Standing Counsel
for respondents 1 to 3
ORDER
The order impugned dated 14.12.2015 passed by the Director General
of Foreign Trade is sought to be quashed in the present writ petition.
2. On 25.11.1994, the petitioner was issued with EPCG license for
import of machineries and capital goods for its export unit. The CIF value
with regard to import is made in USD 5,30,800.12. The export obligation to
be fulfilled is USD 18,75,383 within five years from the date of utilization of
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W.P.No.13281 of 2016
the license. The actual utilization of the license for import cost is USD
4,68,845.67. The petitioner sought for extension of time on 25.10.1999 for
fulfillment of export obligation. The petitioner reiterated its request on
27.09.2000 for fulfillment of export obligation. Since there was no response,
once again the petitioner sought for an extension of time for fulfillment of
the export obligation on 15.10.2001. On 11.07.2022, the DGFT issued a
policy circular in 7/2002, stipulating certain conditions in case of third party
exports, which are:
(i) No Objection Certificate from the 3rd party(s) for
accepting the subject exports for fulfillment of EO
against the EPCG license obtained by the license
holder.
(ii) An affidavit / undertaking in a stamp paper, duly
certified by an independent CA, declaring that
neither the license holder nor the 3rd party(s) has
counted / shall count in future, the exports shown
against a particular EPCG license towards
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W.P.No.13281 of 2016
fulfillment of EO against any other EPCG license.
(iii) List of EPCG licenses obtained by the license
hlder as well as by the 3rd party(s).
(iv)A declaration from the 3rd party(s) in a stamp
paper, duly certified by an independent CA,
declaring that the products exported for fulfillment
of EO by them on behalf of the license holder as
per details given in the statement of exports, were
manufactured by the license holder.
(v) This would be subject the condition that the
relevant shipping bills contain both the names of
the 3rd party(s) and the license holder.
3. On 10.05.2006, a demand notice was issued to the writ petitioner
by the second respondent, directing the petitioner to pay customs duty
forgone proportionately with respect to the utilisation of the license on
account of non-fulfillment of export obligation. The petitioner responded on
23.05.2006 stating that the export obligation to the tune of USD 6,36,025
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W.P.No.13281 of 2016
had been fulfilled and further time is required for fulfillment of its export
obligation.
4. However, the petitioner and its Directors were declared as
defaulters in proceedings dated 22.06.2006 by the second respondent. The
petitioner had stated that they have completed a part of the export obligation
by themselves by making exports to the tune of USD 6,44,925.40 and had
exported ready-made garments, including third party exports for the period
01.04.2005 to 30.06.2006 to the tune of USD 22,29,328.15. Further
representation is made to the respondents by the petitioner. The petitioner
filed an addendum letter to the second respondent on 30.08.2006 directing
the petitioner to approach the Grievance Redressal Committee of the
Department of Commerce for considering its claims. Accordingly, the
petitioner approached the Grievance Redressal Committee. The petitioner
made further request on 20.10.2006. The Grievance Redressal Committee
fixed date for hearing on 28.03.2007.
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W.P.No.13281 of 2016
5. The petitioner made a detailed representation to the Grievance
Redressal Committee. The Committee, advised the petitioner to discuss with
the concerned officer of the DGRT, as to the applicability of the notification
of DGRT circular for the consideration of the case of the petitioner for
counting the 3rd party exports even when shipping bills of 3rd party do not
bear the EPCG licence number and date. A detailed notice was subsequently
issued once again to the petitioner.
6. Finally, the petitioner filed W.P.No.34201 of 2007, challenging the
decision taken in proceedings dated 03.10.2007 by the second respondent,
informing the petitioner that the 3rd party exports do not fall within the scope
of policy circular 7/2002 and requested to consider the case of the petitioner
for exemption to comply with the export obligation. W.P.No.34201 of 2007
was allowed on 03.04.2009 set asiding the order impugned and the matter
was remitted back to the authorities for reconsideration afresh. On
21.08.2009, the third respondent passed an ex parte order
rejecting the case of the petitioner.
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W.P.No.13281 of 2016
7. Challenging the said order, again the petitioner filed W.P.No.26769
of 2009. The said writ petition was disposed of by this Court on 27.03.2014
and the impugned order dated 28.08.2009 was quashed and again the matter
was remitted back to the authorities for fresh consideration. Pursuant to the
orders of the High Court, the petitioner made further application to the office
of the first respondent for reconsideration of the case of the petitioner. On
10.02.2015, the petitioner was directed by the authorities to submit copies of
the shipping bills. The petitioner responded to the above request and
submitted full set of documents. However, without considering the request of
the petitioner, the claim was rejected through the impugned order dated
14.12.2015.
8. The learned counsel for the petitioner mainly contended that the
circular No.7/2002 is applicable to the case of the petitioner and the
petitioner has already submitted all the relevant documents and thus, there is
no reason, whatsoever, to reject the claim of the petitioner based on the said
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W.P.No.13281 of 2016
circular No.7/2002. The respondents rejected the case on the ground that the
petitioner failed to comply with the clause (v), stipulated in the policy
scheme No.7/2002 dated 11.07.2002. In respect of the said clause (v), the
learned counsel for the petitioner relied on the judgment of the Hon'ble
Supreme Court of India in the case of Mangalore Chemicals & Fertilizers
Ltd. Vs Deputy Commissioner reported in [1991 (55) E.L.T. 437 (SC)]
wherein, the Apex Court made the following observations:
“12. Shri Narasimhamurthy again relied on
certain observations in Collector of Central Excise,
Bombay-1 & Anr. v. M/s. Parle Exports (P) Ltd., [1989]
1 SCC 345 in support of strict construction of a
provision concerning exemptions. There is support of
judicial opinion to the view that exemptions from
taxation have a tendency to increase the burden on the
other unexempted class of tax-payers and should be
construed against the subject in case of ambiguity. It is
an equally well-known principle that a person who
claims an exemption has to establish his case. Indeed,
in the very case of M/s. Parle Exports (P) Ltd. relied
upon by Sri Narasimhamurthy, it was observed:
"While interpreting an exemption clause, liberal
interpretation should be imparted to the language
thereof, provided no violence is done to the language
employed. It must, however, be borne in mind that
absurd results of construction should be avoided."
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W.P.No.13281 of 2016
The choice between a strict and a liberal construction
arises only in case of doubt in regard to the intention of
the Legislature manifest on the statutory language.
Indeed, the need to resort to any interpretative process
arises only where the meaning is not manifest on the
plain words of the statute. If the words are plain and
clear and directly convey the meaning, there is no need
for any interpretation. It appears to us the true rule of
construction of a provision as to exemption is the one
stated by this Court in Union of India & Ors. v. M/s.
Wood Papers Ltd. & Ors., [1991]JT(1) 151at 155.
" ...... Truly, speaking liberal and strict construction
of an exemption provision are to be invoked at different
stages of interpreting it. When the question is whether a
subject jails in the notification or in the exemption
clause then it being in nature of exception is to be
construed strictly and against the subject but once
ambiguity or doubt about applicability is lifted and the
subject falls in the notification then full play should be
given to it and it calls for a wider and liberal
construction .... "
(Emphasis
supplied)”
9. In M/s.YSI Automotive India Pvt. Ltd., vs Commissioner of
Customs in W.P.Nos.3591 of 2019 and 9046 of 2020, the learned Single
Judge of this Court has observed that;
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W.P.No.13281 of 2016
“5. The legal issue to be answered would be
whether the mention of the EPCG license number on the
shipping bill was mandatory or whether the petitioner
could seek to explain, by virtue of other
contemporaneous and supporting evidences, the factum
of export. This could be done by the petitioner by any
number of methods, including confirmations from
Glovis, correspondences and other documents at its
disposal, among others. No doubt, it is for the
petitioner to establish that its exports through Glovis
have, in fact, taken place. However, such opportunity
does not appear to have been extended to the petitioner
and the first respondent has merely rejected the claim
not adverting to this aspect of the matter at all.”
10. Relying on the above judgments, the learned counsel for the
petitioner reiterated that the petitioner could able to explain and establish his
case through the supporting documents, wherein, all required details are
made available. That being the factum, the exemption is to be granted in
accordance with the policy circular No.7/2002 dated 11.07.2002. The
rejection order and the reasons stated are untenable, since it is running
counter to the principles laid down by the Courts, that the supporting
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W.P.No.13281 of 2016
documents would be sufficient enough to grant exemption by invoking the
policy circular No.7/2002.
11. The learned Central Government Standing Counsel appearing on
behalf of the respondents, strenuously objected the said contention by
stating that, no doubt, the conditions are to be fulfilled, which is not
disputed even by the petitioner. The five conditions are stipulated in the
policy circular No.7/2002. It is not in dispute between the parties that the
first four conditions were fulfilled by the petitioner and the fifth condition
alone has not been fulfilled. In the present case, even through the supporting
documents, the petitioner failed to establish his case and thus, the authorities
have rejected the case of the petitioner for grant of exemption and thus, there
is no infirmity as such and consequently, the writ petition is to be rejected.
12. Let us consider clause (v) of the policy scheme No.7/2002, which
reads as “this would be subject to the condition that the relevant shipping
bills contain both the names of the 3rd party(s) and the license holder”.
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W.P.No.13281 of 2016
Therefore, the exemption is subject to the condition that the relevant
shipping bills containing both the names of the 3rd party and the license
holder must be produced. The findings of the authority in the impugned
order with reference to condition (v) is that “ condition (v) of policy circular
No.7/2002 dated 11.07.2002 clearly states that, condonation of procedural
lapse of not mentioning EPCG license number and date on third party
shipping bills relating to the exports for fulfilment of EO under EPCG
scheme may be allowed, subject to the condition that the relevant shipping
bills contain both the names of the 3 rd party(s) and the license holder. It is
evident that in order to relax the condition of mentioning the EPCG license
number and date of license, the name of EPCG license holder must be
endorsed on the shipping bill. The petitioner has repeatedly failed to produce
copies of the shipping bills relating to 3rd party exports made by them in
order to ascertain whether this condition has been fulfilled by him.”
13. The findings are to be read with reference to the conditions
imposed in the policy scheme. The conditions imposed in the policy scheme
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W.P.No.13281 of 2016
is unambiguous that the relevant shipping bills should contain both the
names of the 3rd party and the license holder. The findings of the competent
authority reveals that in order to relax the conditions, EPCG license number,
date of the license and the name of the EPCG license holder should be
endorsed in the shipping bills. However, the authority found that the
petitioner repeatedly failed to file the copies of the shipping bills relating to
the 3rd party exports made by them. In order to ascertain whether the
condition has been fulfilled or not, ample opportunities were provided to the
petitioner to ship his goods with reference to the name of the EPCG license
holder, which must be endorsed on the shipping bill. In respect of the
opportunity granted, the petitioner could not establish the same through
documents and thus, the authorities had no option but to reject the claim of
the writ petitioner to grant of exemption.
14. It is not as if the authorities have not considered the case of the
writ petitioner, the authorities have gone into the documents filed by the
petitioner and admitted to call out an opportunity in order to comply with
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W.P.No.13281 of 2016
clause (v) of the police scheme. Since, the requisite particulars are not
available in the documents produced by the petitioner, they were not able to
consider the case of the petitioner for grant of exemption positively. This
being the factum, the case of the petitioner is to be considered only if the
shipping bills contain these particulars and are produced before the
authorities along with the application and not otherwise.
15. This being the factum established, this Court do not find any
infirmity in respect of the order passed by the respondents and accordingly,
the writ petition stands dismissed. There will be no order as to costs.
Consequently, the connected miscellaneous petition is also closed.
Index : Yes/No 10.03.2023
Neutral Order:Yes/No
drm
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W.P.No.13281 of 2016
To:
1. The Director General
Directorate General of Foreign Trade
Ministry of Commerce & Industry
Department of Commerce
Udyog Bhavan, New Delhi – 110 001.
2. The Foreign Trade Development Officer
O/o The Director General of Foreign Trade
Ministry of Commerce & Industry
Department of Commerce
Udyog Bhavan, New Delhi – 110 001.
3. The Foreign Trade Development Officer
O/o The Zonal Joint Director General of Foreign Trade
Ministry of Commerce & Industry
Department of Commerce, Shastri Bhavan Annex
4th & 5th Floor, No.26, Haddows Road
Chennai – 600 006.
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W.P.No.13281 of 2016
S.M.SUBRAMANIAM,J.
(drm)
W.P.No.13281 of 2016 and
W.M.P.No.11656 of 2016
10.03.2023
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