TaxTMI 
TaxTMI 
2003 (4) TMI 490
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....tion of the description as well as value of the goods it has been decided to place the following firm/persons on advice memo. All licensing branches are hereby advised not to all the following firms and persons to avail of CCS/Licences of any category or any other benefit under the EXIM Policy. The IEC Section shall also not issue any IEC to the Directors/partners mentioned herein : Name of Firm Address of the Firm IEC No. Mangli Impex Ltd. 4-Safeway House D-Block, Central Market, Prashant Vihar, Delhi- 110085 0592005372 and 059306533 J.K. Impex 187, Singhal Pur Market, Shalimar Bagh, New Delhi 0598054685 Vikas Trading Corpn. 26 Shivaji Market, Narela, Delhi- 110040 0598052721 Dadri Inorganics (P) Ltd. 4/624, Ashram Road, Charkhi Dadri, Distt. Bhiwani, Haryana 3398001491 The details of CCS/Licences/any other benefits thus not allowed and hence pending disposal on account of this advice memo may be intimated to this branch as expeditiously as possible. This issues with the approval of the AEC on File." 3. Reading of this advice Memo would show that there was some investigation regarding alleged fraudulent expo....
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....to check any damage to the interest of Government of India and the practice is not only to place a particular firm/company on Denied Entity List but also its partners/Directors so that they cannot get further licences/CCS/any other benefits under the policy by floating a number of other firms/companies to defraud the Government. The respondents have further stated that keeping in view urgency of the matter the petitioners and their directors were placed under Denied Entity List without granting them opportunity of personal hearing but subsequently vide letter dated 11th September, 2001 respondent No. 3 has already replied to the advocates of petitioners about circumstances leading to placing it on Denied Entity List. In this letter dated 11th September, the respondents, inter alia, disclosed as under : "In this regard, we have received a report that matter is under investigation with DRI and CBI. As the firm has misdeclared the description of goods of exports. The firms have been kept on Advice Memo, keeping in view the provisions of Foreign Trade (Regulation) Rules, 1993, 7(1)(i)]." 6. The respondents have also stated that the matter is entrusted to the CBI and the inve....
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....d by the DGFT or the officer authorised by the DGFT in this behalf. Section 8 deals with suspension and cancellation of IE Code No. and Section 9 lays down the provision for issuing, suspension and cancellation of licences. Relevant for our purpose, is Section 9 which is in the following terms : "Section 9 : Issue, suspension and cancellation of licence. - (1) The Central Government may levy fees, subject to such exceptions, in respect of such person or class of persons making an application for a licence or in respect of any licence granted or renewed in such manner as may be prescribed. (2) The Director General or an officer authorised by him may, on an application and after making such inquiry as he may think fit to grant or renew or refuse to grant or renew a licence to import or export such class or classes of goods as may be prescribed, after recording in writing his reasons for such refusal. (3) A licence granted or renewed under this section shall - (a) be in such a form as may be prescribed; (b) be valid for such period as may be specified therein; and (c) be subject to such terms, conditions and restrict....
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....authorised by the Central Government in relation to exports made by him on the basis of any false, fraudulent or misleading statement or any document which is false or fabricated or tampered with." 13. The position which emerges from the aforesaid provisions of the Act, EXIM Policy as well as Rules can be summed up in the following manner : (a) Before a person can undertake import or export, he is to obtain IE Code Number. (b) Likewise he is to get import licence as prescribed under Section 9 of the Act. (c) Grant of such a licence is not a right as stipulated in para 4.7 of the EXIM Policy 1997-2002 and the DGFT is given power to refuse to grant or renew a licence but in accordance with the provisions of the Act and the Rules. (d) Since a person cannot import/export without such a licence and the conduct of business in import and export depends thereon, the DGFT or the licensing authority can reject the application for issue or renewal of licence. But this refusal cannot be in an arbitrary manner. That....
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....or cancelled as per provisions of Section 9(4) of the Act, principles of natural justice have to be complied with. Respondents may be right in refuting this submission by contending that Section 9(4) of the Act, had no application in the instant case as it was not a case of suspension or cancellation of the licence deed as the matter related to 'grant of licence'. However, as noted above, the effect of Advice Memo is that petitioners are precluded from making application for grant of licence and it would be a case of blacklisting/debarment and for such an action, dehors the provision of Section 9(4) of the Act, provisions of principles of natural justice would be attracted before such an action and law on this point is well settled. 18. One may refer to the judgment of the Supreme Court in the case of M/s. Erusian Equipment and Chemicals Ltd. v. State of West Bengal and another reported in AIR 1975 SC 266. In that case the Court observed : "Para 12 : Under Article 298 of the Constitution the Executive power of the Union and the State shall extend to the carrying on of any trade and to the acquisition, holding and disposal of property and the making of contracts for any p....
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....xport business and his right to do business is therefore affected which is otherwise a fundamental right guaranteed under Article 19(1)(g) of the Constitution of India. A person, therefore, cannot be deprived of such a right without observing the principles of natural justice. It is trite law that before taking any such action which has civil and evil consequences, authorities are bound to strictly observe the principles of natural justice. A Full Bench of this Court in the case of M/s. J.T. (India) Exports v. Union of India & Anr. reported in [2002 (144) E.L.T. 288 (Del.) = 2001 (78) ECC 677 (Del.)] recapitulated the legal position on this aspect after scanning important case law, Indian as well as English. Arijit Pasayat, CI (as he then was) speaking for the Court formulated the legal position in the following manner : "Para 4 : The expression natural justice and legal justice do not present a water-tight classification. It is the substance of justice which is to be secured by both, and whenever legal justice fails to achieve this solemn purpose, natural justice is called in aid of legal justice. Natural justice relieves legal justice from unnecessary technicality, grammatical....
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....ive act has withered away. Even an administrative order which involves civil consequences must be consistent with the rules of natural justice. Expression 'civil consequences' encompasses in fraction of not merely property or personal rights but of civil liberties, material deprivations, and non-pecuniary damages. In its wide umbrella comes everything that affects a citizen in his civil life. Para 12 : Natural justice has been variously defined by different Judges. A few instances will suffice. In Drew v. Drew and Lebura, 1855 (2) Macg. 1.8, Lord Cranworth defined it as 'universial justice'. In James Dunber Smith v. Her Majesty the Queen, [1877-78 (3) App. Case 614, 623 JC] Sir Robort P. Collier, speaking for the judicial committee of Privy Council, used the phrase 'the requirements of substantial justice', while in Arthur John Specman v. Plumstead District Board of Works, [1884-85 (10) App. Case 229, 240], Earl of Salbourne, S.C. Preferred the phrase 'the substantial requirement of justice'. In Vionet v. Barrett, 1885 (55) LJRD 39, 41, Lord Fasher, M.R. defined natural justice as 'the natural sense of what is right and wrong'. While, however, deciding Hookings v. Smethwick Loca....
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.... as the petitioners had misdeclared the description of goods and exports. Even here no details or particulars of the exports were given nor any details of such investigation were furnished. 23. Learned Counsel for the respondents tried to argue that principles of natural justice would not apply to a case of this nature. In support of this proposition, he referred to the judgment of the Supreme Court in the case of Liberty Oil Mills and others v. Union of India and others reported in AIR 1984 S.C. 1271. This judgment would rather advance the case of the petitioners as it answers the question posed against the respondents. That was a case under Imports and Exports (Control) Act, 1947 and the Court was dealing with provisions of Imports (Control) Order, 1955 framed thereunder. Clause 8 of this Control Order empowers Central Government or the Chief Controller of Imports and Exports to debar a person from importing goods or from receiving licences or allotment of imported goods for a specified period if such person is guilty of any of the acts of commission or omission enumerated in the clause. This power thus was almost akin to the powers to issue/cancel/suspend the licence und....
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.... interest that such action may be taken without ascertaining further details in regard to the allegations. It clearly implies that when further facts are ascertained by the authority or brought to the notice of the authority, such action may be reviewed. As we have earlier pointed out while ex parte interim orders may always be made without a pre-decisional opportunity, the principles of natural justice which are never excluded will be satisfied if a post-decisional opportunity is given if demanded. So we hold that in the case of action under Clause 8-B, it is not necessary to give a pre-decisional opportunity but a post-decisional opportunity must be given if so requested by the person affected. The next question for consideration is whether the decision to keep in 'abeyance' should be communicated to the person concerned. There can be no two opinions on this. Ours is a Constitutional Government, an open democracy founded upon the rule of law and not a cloak and dagger regiment. It is inconceivable that under our constitutional scheme a decision of the kind contemplated by Clause 8-B which may have the effect of bringing to a standstill the entire business activity of the perso....
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.... concern themselves with the sufficiency of the grounds on which action is taken or with the balancing of competing considerations, in favour of and against the action. One of the submissions very strenuously used before us was that a large number of the applications for import licences and allotments of imported goods which have been kept 'abeyance' relate to goods which are totally unrelated to beef tallow or any other animal tallow and there was no justification whatever for keeping them in 'abeyance'. But an abeyance order under Clause 8-B is directed not against any particular type of goods but against an importer, licensee or other person against whom an investigation into allegations under Clause 8 is pending. The question is not whether any particular type of goods should be allowed to be imported or allotted to any person that is a question of policy but whether it is not in the public interest that a particular person should be prevented from obtaining import licences or imported goods of any description pending investigation into the allegations under Clause 8-B. That would depend on the nature of the allegations, the extent of involvement of the person concerned and,....
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....nly this, before passing an order, giving of reasonable opportunity to the affected party was a must. 25. However, Clauses 8-A and 8-B empowered, the Central Government to pass interim orders pending investigation into the allegations under Clause 8. Licences may have already been issued and allotment of imported goods may have already been made. In such a case the authority could consider it desirable to prevent the person from importing goods pursuant to the licences or prevent him from obtaining the imported goods allotted to him through the specified agencies by making an order under Clause 8-A suspending the importation of goods, the grant of licence or the allotment of imported goods. Even in such a case, Clause 10 provided that no action under Clause 8-A could be taken without giving a reasonable opportunity to the person concerned and the Court clearly held that Clause 8-A contemplates a post-decisional hearing. Clause 8-A is analogous to Section 9 (4) of the Foreign Trade (Development and Regulations) Act, 1992. 26. However, there may be a case where licences have not yet been issued and allotment may yet have to be made. Once action under Clause 8 is initi....
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....urther added that pre-decisional natural justice is not usually contemplated when the decisions taken are of ad interim nature pending investigation or enquiry. Such an order may be made ex parte which may provide an opportunity to the aggrieved party to be heard at a later stage. 30. It is thus clear that the Advice Memo in the present case is in the nature of interim order whereby authorities have decided to keep the matter of issuance of IEC/licences in 'abeyance'. It is not a case where licences have already been given and are sought to suspended [kind of situation which Clause 8-A in Liberty Oil Mills (supra) postulates]. In a matter of this nature, Liberty Oil Mills (supra) held that pre-decisional natural justice is not usually contemplated and ad interim orders may be made ex parte. When such an order is made the aggrieved party shall have right to make an appropriate representation seeking, review of the order and asking the authorities to rescind or modify the order and principles of natural justice would be satisfied if the aggrieved party is given an opportunity at his request. 31. No doubt, in the instant case, after the impugned Advice Memo was issued,....