Court quashes denial of import licenses & EODCs, orders fair reconsideration

The court found that the denial of fresh import licenses and Export Obligation Discharge Certificates (EODC) to the petitioners was in violation of natural justice principles. Orders were quashed, and respondent No.1 was directed to reconsider the matters ensuring fair procedures. The court instructed respondent No.1 to make a final decision on the EODC applications promptly and communicate reasons if not granting them. The petitioners were directed to appear for further proceedings, and the petitions were disposed of with these directions.

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Issues Involved:
1. Non-grant of fresh licences for imports.
2. Non-granting of Export Obligation Discharge Certificate (EODC).

Summary:

Issue 1: Non-grant of fresh licences for imports

The petitioners, manufacturer exporters, applied for fresh licences for duty-free imports of inputs used in manufacturing export goods. Their requests were denied based on a letter from the Directorate of Revenue Intelligence (DRI) alleging that the petitioners lacked the necessary manufacturing facilities. The DRI's investigation suggested that the petitioners had no capacity and machinery to process the imported yarn, and the 100% Export Oriented Units (EOUs) to which the petitioners supplied goods were non-functional. Consequently, the Joint Director of Foreign Trade issued a show-cause notice and eventually declared the petitioners as defaulters, placing them on the denied entities list and refusing further licences.

The court found that the orders were passed in gross violation of principles of natural justice. The respondent No.1 relied heavily on the DRI report without sharing it with the petitioners, thus breaching the requirement of a fair hearing. The court emphasized that any adverse material must be shared with the petitioners, and they must be given an opportunity to respond. The court quashed the impugned orders and directed respondent No.1 to reconsider the matter, ensuring compliance with principles of natural justice.

Issue 2: Non-granting of Export Obligation Discharge Certificate (EODC)

The petitioners claimed to have fulfilled their export obligations and applied for EODC to liquidate their bank guarantees. However, their applications remained pending since 2005/2006 due to ongoing DRI investigations. The court noted that such an issue cannot be kept pending indefinitely and directed respondent No.1 to take a final decision on the applications. If respondent No.1 is not inclined to grant the certificate, he must communicate tentative reasons to the petitioners and allow them to make representations.

Directions:

1. The orders impugned in Special Civil Applications No.10600/2012, 10602/2012, 10605/2012, and 10607/2012 are quashed. Respondent No.1 is to reconsider and dispose of the proceedings in accordance with law, ensuring that any adverse material is shared with the petitioners.
2. Respondent No.1 shall take a final decision on the show-cause notice proceedings by 28-2-2013, and depending on the outcome, process the applications for fresh advance licences expeditiously.
3. In Special Civil Applications No.10601/2012, 10604/2012, 10606/2012, and 10609/2012, respondent No.1 is directed to decide on the applications for EODC within three months, providing tentative reasons if not inclined to grant the certificate and allowing the petitioners to make representations.
4. The petitioners shall appear before respondent No.1 on 8th November, 2012, for further proceedings.

The petitions are disposed of with these directions.

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