Court upholds Rs. 20,00,000 penalty under Foreign Trade Act, rejects challenge on lack of reasons

The court upheld the order imposing a penalty of Rs. 20,00,000 under the Foreign Trade Act, rejecting the petitioners' challenge based on lack of reasons in the appellate authority's order. The court found the appellate authority's discretion to require a 10% pre-deposit reasonable, noting the petitioners failed to demonstrate financial inability. The writ petition was dismissed, giving the petitioners seven days to comply with the pre-deposit directive to proceed with the appeal.

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Issues:
Challenge to order imposing penalty under Foreign Trade Act, Application for waiver of pre-deposit, Lack of reasons in appellate authority's order, Interpretation of provisions regarding pre-deposit in appeals.

Analysis:
The petitioners challenged an order imposing a penalty of Rs. 20,00,000 under the Foreign Trade (Development & Regulation) Act, 1992, by filing an appeal under section 15 of the Act. The Additional Director General of Foreign Trade advised the petitioners to deposit 10% of the penalty amount or provide 100% bank guarantee within seven days. The petitioners contested this directive in a writ petition, primarily on the grounds of lack of reasons provided in the order.

During the proceedings, the petitioners relied on a Division Bench decision of the Bombay High Court to argue that the appellate authority's order should be set aside due to its silence on why complete waiver of pre-deposit was not granted. The relevant provisions of section 15(1) of the Act were examined, highlighting that the appellate authority has the discretion to dispense with pre-deposit either unconditionally or subject to conditions.

Upon reviewing the impugned order, it was found that a penalty of Rs. 20,00,000 was imposed on the petitioners, who contended in their appeal that their financial condition did not allow them to deposit this amount. The appellate authority, after considering this plea, directed the petitioners to pay 10% of the penalty amount for the appeal to be entertained. The court noted that there was no evidence to prove the petitioners' financial inability to make this pre-deposit.

The court concluded that the discretion exercised by the appellate authority was not arbitrary or capricious, hence no interference was justified. The writ petition was dismissed without costs, and the petitioners were given seven days to make the pre-deposit as directed. Failure to comply would result in the appeal being dismissed. If the payment was made within the stipulated time, the appellate authority was instructed to proceed with the appeal on its merits, provided it was otherwise in order.

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