2009 (3) TMI 81 - HC - Customs

Court sets aside penalties, orders fresh proceedings under Foreign Trade Act. Bank guarantee to remain effective.

The court allowed the writ petitions, setting aside penalties imposed under the old Act and directing fresh proceedings under the Foreign Trade ... Illegal obtaining of Replenishment Licence or fraudulent sale of Exim Scrips - FTDR Act, 1992 (Earlier Imports and Exports (Control) Act, 1947) - old Act viz., 1947 Act being repealed by the new Act, viz., 1992 Act - petitioner claim petitioner is that under the new Act, the procedure in dealing with the alleged offence is entirely different so they will have to be proceeded only under the new Act – petitioner also submitted that since no statutory proceedings were initiated before new Act and what is saved was only the penalty, confiscation, punishment in respect of any contravention under the old Act - matter is remitted back to the Secretary, Ministry of Commerce, Union of India for fresh disposal in accordance with the provisions of the Central Act 22 of 1992 i.e. FTDR Act, 1992 Issues Involved:1. Legality of the penalty imposed under the old Act versus the new Act.2. Involvement of the intermediary in the fraudulent acquisition of Exim Scrips.3. Applicability of the Foreign Trade (Development & Regulation) Act, 1992 versus the Imports and Exports (Control) Act, 1947.4. Validity of the adjudication and appellate proceedings.Detailed Analysis:1. Legality of the Penalty Imposed Under the Old Act Versus the New ActThe petitioner contended that the Exim Scrips were dated 03.7.1992 and issued after the Foreign Trade (Development & Regulation) Act, 1992 came into force on 19.6.1992. They argued that the penalty should be as per the new Act, which limits penalties to Rs.1000/- or five times the value of the goods. The respondents, however, relied on both the old and new Acts, leading to confusion. The court accepted the petitioner's argument that penalties should be imposed under the new Act since the show-cause notice was issued after the new Act came into force.2. Involvement of the Intermediary in the Fraudulent Acquisition of Exim ScripsThe petitioner claimed that Murali Krishna, an intermediary, fabricated documents and obtained Exim Scrips fraudulently. The respondents countered that the petitioner was aware of and involved in the fraudulent activities, as confirmed by the adjudicating authority. The court noted that the petitioner's involvement in the fraud was established but emphasized that penalties should be imposed under the new Act.3. Applicability of the Foreign Trade (Development & Regulation) Act, 1992 Versus the Imports and Exports (Control) Act, 1947The petitioner argued that any action should be taken under the new Act since the old Act was repealed. The respondents cited Section 6 of the General Clauses Act, 1897, to argue that the repeal does not affect previous operations under the old Act. The court agreed with the petitioner, stating that proceedings should be under the new Act, which prescribes different procedures and penalties.4. Validity of the Adjudication and Appellate ProceedingsThe petitioner challenged the validity of the adjudication and appellate proceedings, arguing that they were conducted under the old Act, which was no longer applicable. The court set aside the impugned orders and remitted the matter back to the Secretary, Ministry of Commerce, Union of India, for fresh disposal under the new Act. The bank guarantee provided by the petitioner was to be kept alive pending the outcome of the new proceedings.Conclusion:The court allowed the writ petitions to the extent indicated, setting aside the penalties imposed under the old Act and directing fresh proceedings under the Foreign Trade (Development & Regulation) Act, 1992. The bank guarantee was to remain in effect until the new orders were passed. There was no order as to costs.