Court Orders Petitioner to Deposit Rs. 1 Crore, Respondents Must Register Duty Credit Scrips Promptly

The court directed the petitioner to deposit Rs. 1 crore and provide security for the remaining amount. The respondents were ordered to register the duty credit scrips within 15 days of compliance. The court emphasized that the respondents' actions must align with their prior concessions and legal obligations.

---

---

Issues Involved:
1. Withholding of export incentives by DGFT due to DRI's directions.
2. Petitioner's request for registration of duty credit scrips issued under MEIS and ROSCTL.
3. Allegations of fraud and overvaluation by the petitioner.
4. Legal propriety of non-registration of duty credit scrips despite issuance.
5. Conditions for registration of duty credit scrips.

Detailed Analysis:

1. Withholding of Export Incentives by DGFT Due to DRI's Directions
The petitioner, a partnership firm engaged in the manufacture and export of knitted textile garments, sought a writ of mandamus to direct the respondents to register duty credit scrips issued under the Merchandise Exports from India Scheme (MEIS) and Rebate of State and Center Taxes and Levies (ROSCTL). The Directorate of Revenue Intelligence (DRI) had searched the petitioner's factory and seized records, leading to the petitioner's name being placed on the Denied Entity List (DEL) by the Directorate General of Foreign Trade (DGFT) without prior notice. Despite the DRI permitting the petitioner to continue exports, the DGFT withheld export incentives based on DRI's alerts.

2. Petitioner's Request for Registration of Duty Credit Scrips Issued Under MEIS and ROSCTL
The petitioner previously filed CWP No. 16214 of 2020, seeking the release of export incentives. The DGFT, in response to a letter from DRI indicating no objection, removed the petitioner from the DEL and issued the duty credit scrips. However, the petitioner's grievance was that the respondents had not registered these scrips, impacting their validity and usability.

3. Allegations of Fraud and Overvaluation by the Petitioner
The DRI opposed the petition, alleging that the petitioner committed fraud by overvaluing exports to obtain undue benefits and misusing the IGST refund facility. The DRI stated that an ongoing investigation revealed fraudulent benefits amounting to Rs. 3.5 crores. Despite the petitioner depositing Rs. 50 lakhs towards potential liabilities, the DRI argued that the petitioner should not benefit from their own wrongdoings.

4. Legal Propriety of Non-Registration of Duty Credit Scrips Despite Issuance
The court noted that the DRI had previously issued a no-objection letter, leading to the issuance of the duty credit scrips. The DGFT's affidavit in the earlier litigation confirmed the removal of the petitioner from the DEL and the issuance of scrips. The court held that the respondents' failure to register the scrips, despite their prior concession, was unjustified. The respondents did not seek to review or recall the earlier court order, and thus, could not backtrack from their affidavit.

5. Conditions for Registration of Duty Credit Scrips
The court acknowledged the substantial turnover of the petitioner and the lack of any show cause notice or pending proceedings against them. Given the ongoing investigation by the DRI, the court balanced the interests by directing the petitioner to deposit an additional Rs. 1 crore within 30 days and provide security for the remaining amount of the scrips. The court ordered the respondents to register the duty credit scrips within 15 days of compliance with these conditions.

Conclusion:
The court disposed of the writ petition by directing the petitioner to deposit Rs. 1 crore and provide security for the remaining amount. The respondents were ordered to register the duty credit scrips within 15 days of compliance. The court emphasized that the respondents' actions must align with their prior concessions and legal obligations.

---