2016 (3) TMI 339 - HC - Customs

Court grants fresh hearing to challenge penalties for non-utilization of advance licenses, emphasizing procedural fairness

Afloat Textile (India) Ltd. Versus Union of India, through Secretary, Ministry of Commerce & Anr.

Afloat Textile (India) Ltd. Versus Union of India, through Secretary, Ministry of Commerce & Anr. - 2016 (332) E.L.T. 769 (Bom.) Issues:Challenging orders dated June and July 2008, Lack of opportunity of hearing, Non-utilization of advance licenses, Delay in presenting petition, Authority imposing penalty under FTDR Act, Petition for winding up, Recall of winding up order, Setting aside adjudication orders, Fresh opportunity for petitioners before Adjudicating Authority.Analysis:The Petitioners challenged the orders dated June and July 2008, contending that they were not given an opportunity of hearing when these orders were passed. They are merchant exporters engaged in import and export activities, recognized as an export house. They imported raw materials duty-free against advance licenses but claim to have duly discharged their export obligations. The Petitioners stated that the advance licenses in question were not utilized for import or export due to subsequent adverse developments, including a petition for winding up. The Court noted the appointment of a Provisional Liquidator and subsequent recall of the winding up order.Regarding the delay in presenting the petition, the Respondents argued that the Petition should be dismissed as it was filed in June 2014, despite the impugned orders being from July 2008. The Respondents contended that the management could have taken steps to defend themselves even with a Provisional Liquidator appointed. The Court examined the correspondence between the parties and noted the lack of response from the Petitioners, leading to the imposition of penalties by the Joint Director General of Foreign Trade.The Court acknowledged the unique circumstances of the case, considering the financial difficulties faced by the Petitioner leading to the winding up recommendation. The Court set aside all adjudication orders and granted the Petitioners a fresh opportunity to appear before the Adjudicating Authority. The Petitioners were directed to present themselves or their authorized representative before the Authority to assert that the advance licenses were not utilized, thus challenging the imposition of penalties. The Adjudicating Authority was instructed to make a fresh order by a specified date, ensuring compliance with the principles of natural justice.In conclusion, the Court allowed the Petition in the specified terms without expressing any opinion on the contentions raised by the Petitioners. No costs were awarded in the matter. The judgment provided a detailed analysis of the issues raised by both parties and offered a fair opportunity for the Petitioners to present their case before the Adjudicating Authority, ensuring procedural fairness and adherence to legal principles.