TaxTMI 
TaxTMI 
2010 (10) TMI 55
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....Cell (ACC), Respondent No. 2 upholding the above order. 2. The Petitioner applied to the Secretariat of Industrial Approvals ("SIA"), Department of Industrial Development, Ministry of Industry, Government of India in July 1985 for setting up a 100% export oriented unit („EOU‟) for the manufacture of video-cassette shells. By a letter dated 4th November 1985 the SIA permitted the Petitioner to establish a 100% EOU with a capacity of 6 lakh pieces of video cassette shells per annum. Among the conditions in the said allotment letter was that the unit should achieve a value addition of 45% with the value of imported capital goods being set at Rs.30.08 lakhs. The further condition was that the entire production should be exported. The letter also set out the list of capital goods permitted to be imported. 3. On a representation by the Petitioner the SIA by a letter dated 30th January 1987 reduced the value addition from 45% to 31.7% and enhanced the value of imported goods/capital to Rs.50,16,000/-. 4. The Petitioner states that between October 1989 and August 1991 it manufactured and exported video cassette shells valued at Rs. 20,04,675.28 with a value addition of....
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....t July 1995 the Assistant Collector of Central Excise, Division 1, Bombay-II granted the Petitioner permission for debonding of raw material, semi-finished goods, finished goods and scrap and waste. The capital goods were also permitted to be cleared at depreciated value after payment of applicable rate of duty. Although in para 16 of the petition the Petitioner had submitted that due to its poor financial condition it could not at the time of filing the petition pay the 10% penalty, during the course of hearing learned counsel for the Petitioner stated that the said penalty amount had since been paid. 6. Thereafter the impugned order dated 22nd April 1996 was passed by the ADGFT levying a penalty of Rs. 55 lakhs on the Petitioner for violation of Section 4-I IEC Act. The said order indicated that a show cause notice dated 17th August 1995 had been issued to the Petitioner. In response to the above order, the Petitioner replied on 14th May 1996 denying receipt of the show cause notice. Further it was pointed out that since a penalty of 10% of the value of imported goods had already been imposed by the SIA no further penalty should be imposed by the ADGFT. The Petitioner then fil....
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....of the IEC Act applied considering what was issued to the Petitioner was a letter permitting import of capital goods and raw material. There can be no doubt that it was only on account of the letter dated 4th November 1985 that the Petitioner was permitted to import under 100% EOU scheme for the manufacture of video cassette shells. Following this a formal agreement was entered into between the Petitioner and the Government of India whereby the Petitioner agreed to comply with the above conditions. Significantly the third para of the preamble to the agreement notes that the import was to be of capital goods valued at Rs. 55.35 lakhs, raw materials and components etc. free of import duty. The fifth para of the preamble further states that "whereas as a condition of the licence granted to the unit, the Government has stipulated that the unit must earn foreign exchange by exporting 100% of the production of the export product, namely video cassette shells for a period of ten years ......." Clause 6 of the said agreement reads as under: "6. In the event of the unit failing to fulfill the export obligation undertaken by it as aforesaid, except when the fulfillment of such obligation ....
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....er the provisions of the IEC Act as well. Consequently, this Court finds no error having been committed by the ACC which held that permission letter issued by the Petitioner should be construed as an import licence and for any failure to comply with the conditions attached thereunder action could be independently taken by the SIA as well as the office of the ADGFT under the IEC Act. 13. The next question that arises for consideration is whether the impugned order of the ADGFT levying penalty of Rs. 55 lakhs on the Petitioner, which has been affirmed by the impugned order of the ACC is sustainable in law. A perusal of the order passed by the ADGFT it shows that it was an ex parte order. Service was presumed to have been effected on the Petitioner. There was no discussion of any of the provisions of the IEC Act at all. Merely because the firm did not avail of the opportunity of personal hearing, the ADGFT straightway proceeded to hold the Petitioner guilty of the contravention of Section 4-I of the IEC Act read with Section 4-K of the IEC Act and imposed a penalty of Rs. 55 lakhs. There was no mention in the said order as to which particular clause of Section 4-I IEC Act stood att....
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....h or agrees to acquire, sell or otherwise part with, any imported goods or materials in contravention of the terms of any allotment made by any recognized agency; or (f) contravenes any direction given under a control order with regard to the sale of goods or materials which have been imported under any licence or letter of authority or which have been received from, or through, a recognized agency, shall be liable to a penalty not exceeding five times the value of the goods or materials have been confiscated or are available for confiscation. Explanation - For the purposes of this section, "value" has the meaning assigned to it in sub-section (1) of Section 14 of the Customs Act, 1962. (2) If any person abets the commission of any act or omissions, which act or omission would render any person liable to a penalty under sub-section (1) or attempts to commit any act aforesaid, the person so abetting or attempting should be made to a penalty not exceeding five times the value of the goods or materials in respect of which such abetment or attempt has been made, or one thousand rupees, whichever is more whether or not such goods have been confiscated or are available for confi....