M/S M.K. Exim (India) Limited vs Union Of India
2021 Latest Caselaw 7757 Raj/2

       HIGH COURT OF JUDICATURE FOR RAJASTHAN
                   BENCH AT JAIPUR

               D.B. Civil Writ Petition No. 6753/2021

M/s M.k. Exim (India) Limited, Having Registered Office At
G1/150, Garment Zone, E.p.i.p. Sitapura, Tonk Road, Jaipur-
302022 Through Its Manager Sh. Raj Kumar Jain
                                                                   ----Petitioner
                                   Versus
1.     Union Of India, Through Secretary, Ministry Of Commerce
       And Industry, Government Of India, Rajpath Area, Central
       Secretariat, New Delhi-110011.
2.     The Director General Of Foregin Trade, Office Of The
       Directorate General Of Foreign Trade, Udyog Bhawan, H-
       Wing, Gate No.2, Maulana Azad Road, New Delhi-110011.
3.     The Deputy Director General Of Foreign Trade, Office Of
       The Joint Director General Of Foreign Trade, 3Rd Floor,
       Udhyog Bhawan, Tilak Marg, C-Scheme-302005
                                                                ----Respondents

For Petitioner(s)        :    Mr. Anil Balani with
                              Mr. Daksh Pareek &
                              Mr. Arjun Singh
For Respondent(s)        :    Mr. Anand Sharma


      HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI
         HON'BLE MR. JUSTICE UMA SHANKER VYAS

                                    Order

17/12/2021

The petitioner has prayed for a direction to remove the name

of the petitioner from the Denied Entity List ('DEL' for short)

forthwith. The petitioner has further prayed for accepting the

online application for availing the benefit of Merchandise Export

from India Scheme ('MEIS' for short) for which the last date for

making application for receiving benefits prescribed is 31.12.2021

(2 of 8) [CW-6753/2021]

as per the notification of the Government of India Ministry of

Commerce and Industry dated 16.09.2021.

Brief facts are as under:-

The petitioner is a company registered under the Companies

Act. During the period between May, 2002 to March, 2003 the

petitioner had made certain exports under advance authorization

lisence. A show-cause notice was issued to the petitioner by

Directorate of Revenue Intelligence ('DRI' for short) on

18.07.2006 alleging that the petitioner had failed to fulfill its

export obligations. Primarily allegations against the petitioner

were that the raw material imported by the petitioner was without

payment of duty and which was to be utilised for the purpose of

manufacturing of goods for export, was clandestinely diverted in

the local market and the export goods were manufactured with

the aid of locally produced raw material (copper rods). The

petitioner resisted the show cause notice. The Joint Director

General of Foreign Trade passed an order on 15.09.2014 in which

he directed the petitioner to pay customs duty with interest to the

extent of utilisation of the licence and 1% of TR and further

payments including penalty of one time of CIF value on a

particular consignment. The petitioner has challenged the said

order passed by the Deputy Director General of Foreign Trade.

Such appeal is pending.

Parallelly the Customs Department also issued a show-cause

notice against the petitioner for the same transaction and this

culminated into an order in original being passed by the

Commissioner of Customs Nhava Sheva on 22.01.2019. He

confiscated copper rods imported by the petitioner during the said

period but offered fine in lieu of such confiscation. He also

(3 of 8) [CW-6753/2021]

imposed custom duty of Rs.45,25,531/-towards the duty forgone

at the time of import. Such amount would be paid with interest

and penalty. He also imposed personal penalties. This order also

the petitioner has challenged and the appeal is pending before the

appellate authority.

On account of the involvement of the petitioner in the said

case, the Assistant Director General of Foreign Trade, Jaipur

passed an order on 27.07.2005. This order is not produced on

record, copy of which tendered today is taken on record. This

order records that petitioner had obtained an advance licence in

the year 2002. The petitioner was asked to furnish the proof of

export obligations being discharged which the petitioner failed to

do. Therefore it was ordered that issuance of further licences to

the petitioner-firm should be denied till further orders. On

06.05.2010 the authorities of DGFT also passed a formal order

placing the petitioner in Denied Entity List. This order is not

produced on record but we are informed that petitioner has

challenged the same in the appeal and the appeal is pending.

The reason for the petitioner to approach this Court at this

stage appears to be fast advancing last date under MEIS for

making application for receiving export incentives under the said

scheme. The department has issued a trade notice on 11.09.2018

which pertains to making online applications for MEIS under the

system driven approval mechanism. This trade notice specifically

provides that this facility will not be available besides others, to

those applicant-firms who are placed in the denied entity list or

suspended IEC or cancelled IEC. This is where the shoe pinches so

far as the petitioner is concerned.

(4 of 8) [CW-6753/2021]

Learned counsel for the petitioner submitted that on one

hand the department has taken a long time in giving final

adjudication on the show-cause notices issued. The appeals in

both the cases decided by DGFT and Custom Department are

pending. The decision to deny the export benefits to the petitioner

were taken on 27.07.2005 and thereafter on 06.05.2010. More

than ten years later without any further progress in the

petitioner's challenge to the orders in original, the petitioner is

being denied the benefit of export incentives in relation to entirely

different transactions. He submitted that after 31.12.2021 since

the scheme is being discontinued, if the petitioner is not allowed

to apply for the benefit of export incentives such benefits would be

lost forever.

On the other hand learned counsel for the department has

opposed the petition contending that export incentive is not a

vested right of an exporter. It is a concession granted by the

Government of India and depends on its discretionary exercise of

powers. Our attention was drawn to Section 9 of the Foreign Trade

(Development and Regulation) Act, 1992 and Rule 7 of the Foreign

Trade Regulation Rules 1993 in support of this contention. He

submitted that the petitioner is involved in serious case of

avoidance of duty by clandestine diversion of goods meant for

export, in local market. The petitioner has not discharged the duty

and financial liabilities imposed by the adjudicating authorities. In

view of such facts the petitioner cannot be granted export

incentive under the scheme. He argued that petitioner has not

challenged the trade notice dated 11.09.2018.

As is well known, to encourage exports in order to earn

foreign exchange and to make the export goods originating from

(5 of 8) [CW-6753/2021]

the country cost competitive in international market, the

Government of India comes up with the export incentives from

time to time which are framed in different mechanisms. It is

undoubted that the export incentives are in the nature of waiver of

duty by the Government of India and cannot be claimed by any

exporter as a matter of right or dehors the terms of the scheme.

So much is sufficiently well established through the series of

judgment of Supreme Court and statutory provisions. However

once an export scheme is framed and implemented by the

Government of India, an exporter must get the benefit under the

scheme as long as the terms and conditions for claiming the

incentives are satisfied. The petitioner in the present case is

interested in receiving the export benefits under MEIS. The only

reason why the petitioner is blocked from making application for

such purpose is that on account of alleged past misdeeds, the

petitioner has been placed in the denied entity list which would be

sufficient to disqualify the petitioner to claim any other benefit of

MEIS.

We have noted the relevant facts. To sumarise such facts,

we may recall that on the allegations of the unauthorized diversion

of imported goods in the local market during the period 2002-

2003 the DGFT as well as custom authorities have passed the

orders in original in the year 2014 and 2019 respectively. Against

both these orders the petitioner has filed appeals and which

appeals are pending. In the meantime the Assistant Director

General of Foreign Trade on 27.7.2005 discontinued the facility of

granting further licences to the petitioner. On 06.05.2010 the

name of the petitioner was placed in denied entity list. Before

passing of these two orders neither any notice or opportunity of

(6 of 8) [CW-6753/2021]

hearing was granted to the petitioner. Be that it may, as long as

these orders stand, their impact would undoubtedly fall within the

spheres of its applicability. In other words the department would

not give any further advance authorization license to the petitioner

and thus would be open for the department to deny the petitioner

the facility of making imports of raw materials for the purpose of

export without payment of duty, going by the petitioner's past

track record. However to project such events into the petitioner's

future exports and for which the Government of India has

announced duty incentives, would not be permissible unless the

scheme itself so provides. Any other view would result into the

petitioner being placed in a black list and before which no hearing

or opportunity was granted.

Nothing has been brought to our notice from the MEIS

scheme suggesting that for any past unrelated events of dispute

between the department and the petitioner, export incentive in the

presentie would be denied to the exporter. The contention that

without challenging the condition contained in the trade notice

dated 11.09.2018 the petitioner cannot finally succeed is too

technical and in any case is not a valid one. The trade notice

pertains to the facility for applying the benefit under MEIS under

the system driven approval mechanism. This part is totally

procedural and this trade notice cannot decide the rights of the

petitioner under the scheme. It may be that for those who are

placed in denied list or suspended list, the fast tracked procedure

of system driven approval mechanism may not be made available.

This is not the same thing as to suggest that such entities for

unrelated events could be denied the benefit of export incentives

under the scheme if all conditions are satisfied.

(7 of 8) [CW-6753/2021]

We have also perused the guidelines issued by the Directorate

General of Foreign Trade under circular dated 31.12.2003 for

maintaining the denied entities list. It records that most common

instance of action leading to refusal of licenses occurs when firms

default in export obligation fulfillment under various export

promotion schemes. The licensing authorities in such cases will

place the firm in DEL after serving a demand notice for fulfilling

the obligation within a reasonable time. In cases relating to fraud

and mis-declaration licensing authority would also examine that

there was any connivance of the department officials. Basically the

intention and effect of placing an entity in DEL is to deprive the

facility of granting advance authorization license to it.

The contention that unless and until the petitioner pays up

the entire duty and penalty imposed under the orders passed by

the DGFT and custom authorities the petitioner cannot claim any

export incentive under the new scheme is completely

unacceptable. Both the orders are under challenge before the first

appellate authorities. Respective statutes require pre-deposit of

certain amounts upon which rest of the recoveries would be

suspended. If the petitioner has no such protection under law, the

department can recover the amounts through coercive means and

perhaps even from the petitioner's entitlement of intensives under

the export promotion scheme in quest. But once this mechanism

is statutorily put in place and followed by the assessee, the

Government of India cannot seek coercive recovery of the

remaining amounts in indirect manner by blocking the export

incentives under unrelated schemes and future consignments.

Before closing we may record that since the petitioner has

challenged the order dated 06.05.2010 by filing appeal and in any

(8 of 8) [CW-6753/2021]

case such order is not available on record before us, we do not go

into the petitioner's first prayer for deleting the name from denied

entity list and leave it to the petitioner to pursue the appeal.

In view of the above discussion it is directed that the

respondents shall permit the petitioner to make an application

within the time envisaged in the scheme for the incentive under

MEIS scheme and consider the same on merits in terms of the

provisions made under the scheme.

The petition is disposed of accordingly.

                                   (UMA SHANKER VYAS),J                                              (AKIL KURESHI),CJ

                                   KAMLESH KUMAR /N.GANDHI/S-93









Powered by TCPDF (www.tcpdf.org)