By TIOL News Service

AHMEDABAD, AUG 04, 2016: THE petitioner is a manufacturer of textile goods like yarns. The petitioners had applied for various licences under the Exim Policy and also the Export Obligation Discharge Certificates in respect of the past licences. However, based on the instructions received from the DRI, officers of DGFT informed the petitioners that their request could not be considered. The petitioner approached the High Court and the petitions came to be disposed of by quashing the impugned orders and restoring the matter back on the file by directing the DGFT authorities to dispose of the same in accordance with law.

After the above directions of the High Court, a further show-cause notice came to be issued by the Joint DGFT, Surat heavily relying on the intensive and serious investigation carried out by the officers of the DRI and calling upon the petitioners to show-cause as to why action as proposed in the notice should not be taken against them. By an Order-in-Original, the Joint DGFT, Surat held that no licences/authorizations and EODCs were to be issued in favour of the petitioner firm. Being aggrieved, the petitioners preferred an appeal before the Additional DGFT, Bombay. By the impugned order, the Additional DGFT, Bombay upheld the order passed by the Joint DGFT, Surat and further imposed fiscal penalty of Rs.25 crores on the petitioner firm under section 11(2) of the Foreign Trade (Development and Regulation) Act, against which, the present Petitions have been filed.

After hearing both sides, the High Court held:

+ On a plain reading of the impugned order and more particularly, considering the findings recorded by the first respondent (AD, DGFT), it is evident that the first respondent has placed reliance upon the investigation carried out by the Commissioner of Customs, JNCH as well as by the Development Commissioner, SEZ, Vishakhapatnam. However, it is the specific case of the petitioners that these reports have not been furnished to the petitioners. This court in its order dated 1st November, 2012 made in Special Civil Application No.10600/2012 had specifically directed that in case that respondent seeks to place reliance on any material which is adverse to the petitioners, the same shall be supplied to the petitioners permitting the petitioners to make their representation thereon. The aforesaid directions appear to have been totally ignored by the respondents herein while passing the impugned orders, inasmuch as, both the respondents have placed reliance upon the investigation carried out by the DGFT through its own sources, which has not been furnished to the petitioners. Evidently therefore, the impugned orders suffer from the breach of principles of natural justice.

+ The respondents in the impugned orders have placed reliance upon the investigation carried out by the DRI and the investigation carried out independently by the DGFT, Surat. However, in neither of the orders have either of the said respondents referred to or discussed any of the material which has been placed on record by the petitioners. No explanation is forthcoming as to why the reports of the Central Excise authorities at Surat confirming the supplies made by the petitioners are sought to be discarded and the inquiry made from the Customs and Central Excise authorities at Patancheru is found to be more reliable. Thus, it appears that all material in favour of the petitioners has been discarded and only that material which points against the petitioners has been considered by the authorities. Therefore, the impugned order also suffers from the lack of fair play on the part of the authorities.

+ The stand of the respondents appears to be that the DRI has instructed them that the petitioners' EODC applications should not be considered. In the opinion of this court, the respondents herein, namely, the Additional Director General of Foreign Trade and the Joint Director General of Foreign Trade are independent authorities constituted under the Foreign Trade (Development and Regulation) Act, 1992 and are not governed by the directions of the Central Excise or the Customs authorities. Therefore, the respondent authorities are not justified in acting as per the dictates of the DRI, Ahmedabad instead of carrying out independent inquiry on its own and acting in terms thereof. When the respondents decide the applications of the petitioners, they are expected to consider the same independently without in any manner being swayed by any instructions issued by the DRI. It is evident, therefore, that the impugned orders have not been passed independently but appear to have been passed under the dictates of the DRI whereby the DRI authorities have directed the authorities not to grant the EODC applications made by the petitioners. The impugned orders, which suffer from various legal infirmities as discussed hereinabove, therefore, cannot be sustained.

Accordingly, the High Court quashed the impugned orders and restored the matter to the file of DGFT for a fresh decision.

(See 2016-TIOL-1630-HC-AHM-CUS)