2015 (9) TMI 32 - HC - Customs

Court clarifies import/export obligations, penalties, and authority's powers on pending appeals

M/s. Flexion Imaging Solutions Private Limited Versus The Commissioner of Customs, Chennai IV Commissionerate, The Deputy Commissioner of Customs, Chennai II Commissionerate

The court clarified the obligations and consequences concerning advance authorizations for imports, export obligations, penalties for non-compliance, and ... Imposition of penalty for non-fulfilment of export obligation – ADGFT passed order vide their proceedings, stating that since appeal preferred by petitioner was pending and not disposed of, Assistant Commissioner was directed not to stop exports as long as items are freely exportable – Show cause notice proposing to impose penalty on petitioner for non-fulfilment of export obligation on ground that petitioner did not submit necessary documents to prove fulfilment of export obligation and export business of petitioner was stopped in view of order passed by JDGFT – Held that:- Order of ADGFT, was very clear and explicit in directing Assistant Commissioner not to stop exports of petitioner as long as items were freely exportable, as appeal preferred them was pending and not disposed of – Hence, since appeal preferred by petitioner is also pending, respondents directed to remove alert in Electronic Data Interchange (EDI) System issued against petitioner – Petition disposed of. Issues:1. Interpretation of advance authorization for import of synthetic fabric.2. Fulfillment of export obligation.3. Imposition of penalty for non-fulfillment of export obligation.4. Appeal against penalty imposed.5. Direction to stop exports by Joint Director General of Foreign Trade.6. Order of the Additional Director General of Foreign Trade, Chennai.7. Relief sought by the petitioner.Detailed Analysis:1. The petitioner company claimed to have obtained an advance authorization to import synthetic fabric without payment of duties for manufacturing a specific fabric called 'cubelite' and exporting it within 24 months. Despite being authorized to import 114687 sq. mtrs., they imported only 11487.57 sq. mtrs. The petitioner fulfilled the export obligation by exporting 'cubelite' and paying duty for the excess import. They applied for a redemption certificate to prove fulfillment of the export obligation.2. The Joint Director General of Foreign Trade issued a show cause notice for non-fulfillment of export obligation, leading to the imposition of a fiscal penalty of Rs. 5,25,000 under Section 11(2) of the Foreign Trade Act. The petitioner appealed the penalty, which was pending before the Additional Director General of Foreign Trade in Delhi. The petitioner's export business was halted due to the penalty, but an order from the Additional Director General of Foreign Trade, Chennai, directed not to stop exports as long as they were freely exportable.3. The respondents sought time to verify the conditions of the order dated 28.07.2014. However, the court, considering the clear direction of the Additional Director General of Foreign Trade, Chennai, ordered the removal of the alert in the EDI system against the petitioner. The court's decision was subject to the outcome of the pending appeal before the concerned authority, and the writ petition was disposed of without costs.This judgment clarifies the obligations and consequences related to advance authorizations for imports, export obligations, imposition of penalties for non-compliance, and the authority's power to issue directions regarding export activities pending appeal processes.