Partly allowed

M/S.Universal Oleoresins v. the Director General of Foreign Trade

Kerala HC5 Sept 2016WP(C)/5728/2016

Case brief

AI extract

What is this about?

The High Court dismissed writ petitions challenging the rejection of relaxation of export obligation periods but allowed connected petitions challenging Denied Entities List (DEL) orders by setting them aside to grant the petitioner an opportunity to show cause before enforcing the denial. The court held that since the DEL orders were passed during the pendency of the principal writs, a hearing wa

What did the court decide?

WP(C) Nos. 5752/16 and 5728/16 dismissed; WP(C) Nos. 21000/16 and 21008/16 allowed; DEL orders set aside; petitioner granted opportunity to show cause within 4 weeks.

M/S.Universal Oleoresins Vs the Director General of… — Service and Employment | Kerala HC (2016)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE

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MONDAY, THE 5TH DAY OF SEPTEMBER 2016/14TH BHADRA, 1938

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WP(C).No. 5728 of 2016 (m)

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PETITIONER:

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M/S.UNIVERSAL OLEORESINS, VII/946, NAVARATNA HOUSE, JAWAHAR ROAD, COCHIN, PIN 682002, REP BY PARTNER JAI SHAH

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BY ADVS.SRI.ANIL D. NAIR SRI.M.BALAGOPAL SRI.R.SREEJITH SMT.O.A.NURIYA KUM.SOUMYA PRAKASH KUM.MEKHALA M.BENNY

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RESPONDENTS:

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1. THE DIRECTOR GENERAL OF FOREIGN TRADE, UDYOGABHAVAN, NEW DELHI - 110001.

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2. THE JOINT DIRECTOR GENERAL OF FOREIGN TRADE, KENDRIYA BHAVAN KAKKANAD, COCOHIN - 37.

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3. THE ASST. COMMISSIONER OF CUSTOMS, WILLINDON ISLAND, COCHIN - 9.

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R1 & R2 BY SRI.N.NAGARESH, ASST. SOLICITOR GENERAL BY ADV.SMT.MINI R.MENON, ADDL.CGSC R3 BY ADV. SRI.P.R.SREJITH, SC BY ADV. SRI.THOMAS MATHEW NELLIMOOTTIL,SC

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 30-08-2016 ALONG WITH WPC.5752/2016 & CONNECTED CASES, THE COURT ON 05-09-2016 DELIVERED THE FOLLOWING:

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mbr/

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WP(C).No. 5728 of 2016 (m)

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APPENDIX

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PETITIONER(S)' EXHIBITS:

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P1:-	TRUE COPY OF THE ADVANCE AUTHORIZATION NO.1010035409/5/03/00 DTD 25/9/2009 ALONG WITH CONDITIONS.
P2:-	TRUE COPY OF THE MINUTES OF THE POLICY RELAXATION COMMITTEE(PRC)DTD 3/9/2013.
P3:-	TRUE COPY OF THE MINUTES OF THE POLICY RELAXATION COMMITTEE (PRC)DTD 22/9/2015.
P4:-	TRUE COPY OF APPLICATION DTD 3/1/2012 ALONG WITH RELEVANT ANNEXURES.
P5:-	TRUE COPY OF THE MINUTES OF THE POLICY RELAXATION COMMITTEE(PRC)DTD 12/1/2016.
P6:-	TRUE COPY OF THE SHOW CAUSE NOTICE DTD 19/5/2014.
P7:-	TRUE COPY OF THE PETITIONERS REPLY DTD 27/5/2014.
P8:-	TRUE COPY OF THE NOTICE DTD 2/2/2016.
P9:-	TRUE COPY OF THE SHOW CAUSE NOTICE DTD 8/1/2016.
P10:-	TRUE COPY OF THE PETITIONERS REPLY DTD 20/1/2016.

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RESPONDENT(S)' EXHIBITS:

NIL

//TRUE COPY//

P.S. TO JUDGE

mbr/

A.M. SHAFFIQUE, J.

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=============== W.P. (C) Nos. 5728, 5752, 21000 & 21008 of 2016

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==================

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Dated this, the 5^th day of September, 2016

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J U D G M E N T

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These writ petitions have been filed by a common petitioner which concern issues similar and are heard and decided together.

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Petitioner, a company carrying on the business of import/manufacture and export of spices, oleoresins, spices oil etc., obtained Authorisation for importing 20 Metric Tons of light black pepper as per order dated 5/8/2009 of the Joint Director General of Foreign Trade and another 20 Metric Tons as per Authorisation dated 25/9/2009. As per the conditions stipulated under the Authorization, the petitioner was under obligation to export black pepper oleoresins and black pepper oil manufactured out of the imported pepper within a period of four months from the date of such import. According to the petitioner, they have exported black pepper oil within the

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W.P(C) No.5728/16 & conn.cases

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specified time as contemplated under the Advance Authorization. However, black pepper oleoresins could be exported only in a phased manner which could be completed after a period of 7½ months from the last date mentioned to comply the Export Obligations.

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Petitioner approached the Policy Relaxation Committee (PRC) for regularization of the exports made within the extended period. Though the application was rejected initially, the same came to be reconsidered. In WP (C) No. 5752/16, Ext.P2 is the decision by which the PRC rejected the application. Again the petitioner approached the Committee, which was again rejected as per Ext.P3 dated 13/8/2015. However, by Ext.P5, the Committee extended the period by another four months. In WP(C) No. 5728/2016, the Committee extended the date of Export Obligation for a further period of four months on certain conditions. There was a typing error and the final order has been issued as Ext.P3 dated 22/9/2015 after correcting the mistake.

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W.P(C) No.5728/16 & conn.cases

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-:3:-

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The main contention urged by the petitioner is that the authority had not exercised the power in accordance with the procedure prescribed. As far as the petitioner is concerned, petitioner had complied with the Export Obligation, but not within the time as specified under the Authorization. The reason for specifying such time for complying with the Export Obligation is to ensure that the importers do not conduct trade in domestic market with the imported material. In so far as the petitioner is concerned, the Spices Board had clearly indicated that the petitioner had manufactured the entire products required for export and they were unable to export oleoresins only on account of the fact that the buyer delayed shipment.

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The petitioner therefore challenged the orders passed by the Committee failing to grant relaxation as sought for. During the pendency of the above writ petitions, DGFT passed an order placing the petitioner and its Directors under Denied Entities List (DEL), by virtue of which

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W.P(C) No.5728/16 & conn.cases

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the Authorization is not to be granted until the Export Obligation is met. Ext.P10 is the order dated 26/5/2016 for not complying with the Export Obligation as stipulated in Authorization dated 5/8/2009. A similar order had been passed with reference to the non compliance of the Authorization dated 25/9/2009. Ext.P12 is the said order dated 26/5/2016 in WP(C) No. 21008/2016.

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According to the petitioner, the DEL order had been passed only on account of the fact that the petitioner had not remitted the customs duty for non compliance with the Authorization letters referred above.

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Learned counsel for the petitioner submits that it is well within the power of the Policy Relaxation Committee to give relaxation or relief to any exporter/importer on grounds of genuine hardship and adverse impact on trade. In so far as the petitioner had not involved in any mala fide act, which would result in any trading activity being carried on with the imported material during the relevant time, and

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W.P(C) No.5728/16 & conn.cases

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the entire goods were utilized for manufacture of export goods which had subsequently been exported, a reasonable approach ought to have been taken by the Committee.

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Counter affidavits have been filed by the respondents in the above cases supporting the stand taken by the Committee and inter alia contending that the petitioner is not entitled for any relaxation on account of non compliance of the conditions stipulated in the Advanced Authorization issued by DGFT. It is submitted that the Advanced Authorization is given to ensure that diversion of imported goods do not go to local market and the main condition is to export the quantity corresponding within a specified time.

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Heard the learned counsel for the petitioner and the learned standing counsel appearing on behalf of the respondents.

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There is no dispute about the statutory obligation vested with the petitioner in regard to the Export Obligation

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W.P(C) No.5728/16 & conn.cases

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to be met. There is also no dispute about the fact that there was delay on the part of the petitioner in exporting the goods in respect of the two Authorizations that had been issued in their favour. The only question is whether the Committee has considered the claim for relaxation in a proper perspective or not.

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In WP(C) No.5752/16, Ext.P3 is the decision of the Committee. The Committee rejected the claim of the petitioner on the ground that no new facts are brought on record. The matter was taken before the Chairman, Grievance Redressal Committee wherein the issue was considered as per Ext.P5. It is observed by the Committee that exports of spice must be made within four months from the date of import. The objective of putting shorter period in such cases is to prevent diversion of the imported goods into the domestic market. However, taking into consideration the genuine hardship, the Committee has been allowing equivalent period of extension in such cases. Accordingly, it

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W.P(C) No.5728/16 & conn.cases

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was decided that the Export Obligation period be extended by four months, i.e., upto 31/5/2010 and subject to payment of composition fee. It was also mentioned that the exports made after 31/5/2010 shall not be accounted towards discharge of Export Obligation and shall be regularised on payment of customs duty plus interest.

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In WP(C) No. 5728/16 also, by Ext.P2, a decision was taken to extend the time for export by four months from the original period of expiry subject to certain conditions. Though an application was submitted for extending time by another eight months, the same came to be confirmed limiting the extension upto 4 months as per Ext.P5 decision.

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It is apparent from the facts on record that when the Committee had with due application of mind extended the period by four months for complying with the Export Obligation, I do not think that this Court should sit in judgment over the said opinion expressed by the Committee unless there is any patent illegality or perversity in the said

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W.P(C) No.5728/16 & conn.cases

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direction. The Committee was sure about two facts. One is that there is a specific reason for limiting the period to comply with the Export Obligation and the time can be extended if there is genuine hardship being caused. Merely for the reason that the buyer had delayed the shipment cannot be a genuine reason at all. Learned counsel for the petitioner places reliance upon a letter issued by the Spices Board indicating that the petitioner had not indulged in any domestic trading whereas the entire material was made ready for shipment. When the Committee have already taken appropriate decision in the matter, it may not be worthwhile for this Court to reconsider the same by exercising power of judicial review. It is not in dispute that if there is non compliance of Export Obligation, the DGFT has the power to place the petitioner and its Directors under the DEL order. Since the said orders had been passed during the pendency of WP(C) Nos. 5752/16 and 5728/2016, I am of the view that an opportunity should be granted to the

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W.P(C) No.5728/16 & conn.cases

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petitioner to show cause to avoid the DEL order dated 26/5/2016.

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In the result, these writ petitions are disposed of as under:-

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(i) WP(C) Nos. 5752/16 and 5728/16 are dismissed. (ii) WP(C) Nos.21000/16 and 21008/16 are allowed.

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Ext.P10 in WP(C) No. 21000/16 and Ext.P12 in WP(C) No. 21008/16 are set aside. The petitioner shall file objection to the show cause notice issued against them within 4 weeks and the matter shall be heard afresh by the competent authority after giving an opportunity to the petitioner to defend the proceedings and appropriate orders shall be passed thereafter.

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Sd/- A.M. SHAFFIQUE, JUDGE

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//True Copy//

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P.S to Judge

M/S.Universal Oleoresins v. the Director General of Foreign Trade

Case brief

What is this about?

What did the court decide?

M/S.Universal Oleoresins v. the Director General of Foreign Trade

Case brief

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