TaxTMI 
TaxTMI 
2010 (1) TMI 472
X X X X Extracts X X X X
X X X X Extracts X X X X
....recommendations of the Board for Industrial Finance and Reconstruction (hereinafter referred to as the "BIFR" for brevity) provide only for waiver of customs duty and did not concern the fiscal penalty imposed under the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as the '1992 Act' for brevity). 3. The background to this is that the petitioner which is a company under the Companies Act, 1956 is a manufacturer of bulk drugs at its factory in Tubinakere, Mandya District in the State of Karnataka. It manufactures amongst others, Dextramethorphan Hydro Bromide USP/BP and exports the same. It had obtained an Export Promotion Capital Goods Licence during March 1996 from the third respondent which enabled the pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ioner's case, declared it as a sick unit and appointed IDBI as the Operating Agency. The rehabilitation proposal having been submitted and on long deliberations, a revised proposal was also submitted. The Operating Agency submitted its report on 25-7-2002, with the petitioner's proposal before the Board. The Board, after considering the report, circulated the Draft Rehabilitation Scheme and obtaining consent of all concerned including the JDGFT, Bangalore. The scheme was finally sanctioned as per Annexure-B to the writ petition. The Commissioner of customs had thereafter issued a Demand-cum-Show-cause Notice for the differential customs duty of Rs. 5,38,525/- which was said to be payable on the goods imported under the licence and it als....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent of the Supreme Court in Hindustan Steel Limited v. State of Orissa, 1978 (2) E.L.T. 159 (S.C.) has held that no penalty can be imposed under Section 11(2) of the 1992 Act in the circumstances where non-fulfillment of export obligation was attributable to the factors beyond the control of the assessee and where there is no violation of the provisions of the 1992 Act at the time of importation and the counsel would submit that this decision would apply on all fours to the present case on hand. The counsel also places reliance on Section 16 of the 1992 Act which reads as follows : "16. The Central Government, in the cash of any decision or order, not being a decision or order made in an appeal, made by the Director General, or the Direc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....forced as against the petitioner of being waived and once such a relief is granted, the question of implementation by the concerned entity is axiomatic for otherwise, the very relief granted by way of rehabilitation is set at naught and would submit that the BIFR having taken into consideration the customs duty liability arising under the 1992 Act and that customs duty having been waived in terms of the rehabilitation package that was approved by the Board and recommendations having been made in this regard for waiver of the customs duty, penalty, which is inextricably linked with the liability to pay customs duty, it would follow that it would also stand waived and it is for the competent authorities to implement the same as a matter of co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Sea Port and not by the DGFT. 8. Having heard the submissions made by those present in the review hearing and after taking into account, the material facts on record, the Bench directed as follows : (i) the company would submit on an immediate basis a draft proposal for the merger of KMBL and EBPL after obtaining concurrence from the UTI, SBI and KIADB who have not yet accorded their concurrence in the said merger. IDBI (MA) will examine and send it to the Board; (ii) the company would liquidate the arrears amounting to Rs. 46,49,293/- by making the due payment to KIADB within a period of one month from today, as agreed to by ld. Counsel for the company at the hearing; and (iii) para 8(E)(ii) of the Sanctioned Scheme needs to be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lty is to be considered by the Ministry of Finance or such other competent authority and is not within the competence of the DGFT. Having regard to this position, in the opinion of this court, the very object of the Sick Industrial Companies (Special Provisions) Act, 1985 and the recommendations of the BIFR made insofar as the petitioner is concerned, would be set at naught if the petitioner is not granted the benefit of waiver of the fiscal penalty that is imposed. Since the recommendation made by the BIFR has attained finality, it is as a matter of course that the concerned authority would have to pass appropriate orders for waiver of the penalty for otherwise, the very relief granted under the Act is set at naught and the object of the A....