TaxTMI 
TaxTMI 
2014 (2) TMI 1013
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....-est law. [c] Be pleased to hold that Para 7 of the declaration attached with ANF-8 form read with the provisions of HOP does not grant power to the Respondent No.2 or its subordinates to re-verify or re-determine the duty drawback benefits once such benefits are approved to the claimant. [d] Such further and other relief, order or direction which may be just, fit, proper and equitable in the facts and circumstances of the petition." 2. The case made out by the petitioner may be summed up thus:- 2.1 The petitioner has been claiming "deemed export benefits" on various power projects and, therefore, has an interest in the legality and propriety of various powers exercised by the respondent no 2, the Director General of Foreign Trade [DGFT] and its subordinates in connection with the processing and grant of the deemed export benefit. The respondent no.1 is the Union of India, responsible for the formulation of the Foreign Trade Policy [FTP] under which the deemed export benefits are available to the petitioner. 2.2 Section-3 of the Foreign Trade (Development and Regulation) Act, 1992 ("FTDR Act") empowers the Central Government to make provision for the development and regulation....
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....2014 New Delhi dated 5th June, 2012 which is in the form of an administrative guideline. 2.8 Para 8.3.1 of the HOP provides that to claim duty drawback benefits, a claimant has to fill an ANF-8 form. Para 7 of the declaration of ANF-8 form requires an undertaking from the claimant that in case of re-determination and re-verification, the claimant shall refund the amount paid in excess. 2.9 Para 8.3.6 of the HOP provides that subject to the procedures laid down in the HOP, Customs and Central Excise Duty Drawback Rules, 1995 shall apply mutatis mutandis to deemed exports. 3. In the aforesaid background, according to the petitioner, the aforesaid provisions i.e. Para 2.3 of the FTP, Para 8.3.6 of the HOP and Para 7 of the ANF-8 form are in gross violation of Article 14 and 19[1] [g] read with Articles 246 and 265 of the Constitution of India and the provisions of FTDR Act and the FTP on the following grounds: 3.1 The Respondent No.2 through Para 8.3.6 of the HOP has incorporated by reference the provisions of Duty Drawback Rules mutatis mutandis to the FTP and HOP. The HOP is nothing but an administrative guideline as can be discerned from the reading of Para 2.4 of the FTP read ....
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....on of India. 3.2 The power granted to the Respondent No.2 under Para 2.4 of the FTP is to lay down the procedure and therefore, the same cannot be used to introduce substantive law i.e. Duty Drawback Rules. Therefore, Para 8.3.6 of the HOP is liable to be set aside. 3.3 The FTDR Act or FTP does not grant power to the Respondent No.2 and its subordinates to re-determine or re-verify the deemed export benefits once such benefits have been approved or granted as per the provisions of the FTP. In the absence of power under FTDR Act or FTP, the Respondent No.2 and its subordinates cannot assume quasi-judicial power such as power to re-determine or re-verify under administrative guidelines i.e. Para 7 of the ANF-8 Form. Therefore, Para 7 of the ANF-8 is usurpation of quasi-judicial power by the Respondent No.2 and its subordinates and thus, travels beyond the provisions of the FTDR Act as well as FTP and hence, liable to be struck down. 3.4 Merely because such declaration is required to be signed by the claimant cannot confer power to re-determine and re-verify on the Respondent No.2 and its subordinates where such power is otherwise not available in law. It is a settled principle of ....
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.... of India Act, 1935 granted an exclusive power to the Centre to legislate on the subject. But no specific enactment was passed by the Central Legislature. During the Second World War, under the compulsive necessity created by the scarce foreign exchange resources and the acute shortage of shipping space in the Indian ports, a notification under the Defence of India Rules was issued in 1939, bringing under control the import of 68 commodities. Steadily other notifications were issued bringing more items under control. In July, 1943 a consolidated notification was issued covering a wide range of controlled items. With the end of the Second World War, the Defence of India Rules lapsed but the provisions regarding import control instructions were continued by virtue of the Emergency Provisions (Continuance) Ordinance, 1946 which was replaced, in so far as the imports and exports control is concerned, by the Imports and Exports (Control) Act, 1947. It came into force for a period of three years but was extended from time to time. In 1971 it became a permanent statute. By the Imports and Exports (Control) (Amendment) Ordinance, 1975, changes of farreaching character were made in the Impo....
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....t, 2010 which is brought into effect by virtue of Notification S.O. 2099 (E) dated 27th August, 2010. Some important provisions of the Statutes which have bearing on the contentions urged in the petition. 4.5 Section 2(a) of the said Act defines "adjudicating authority" to mean the authority specified in, or under section 13. Section 2(d) defines "Director General" to mean the Director General of Foreign Trade appointed under Section 6. 4.6 Section 2(e) defines "import" and "export" respectively as "bringing into, or taking out of, India any goods by land, sea or air". 4.7 Section 2(h) defines "Order" as "any order made by the Central Government under section 3". 4.8 Section 3 enables the Central Government to make provisions for the development and regulation of foreign trade by facilitating imports and increasing exports. It is therefore trite to submit that any policy framed by virtue of exercise of power under Section 3(1) must be so interpreted to further the statutory intention as manifest by virtue of Section 3(1). Similarly, under Section 3(2) Central Government is empowered to make provision for prohibiting, restricting or otherwise regulating in all cases or in speci....
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....ctions 3,5,15,16 and 19) may also be exercised, in such cases and subject to such conditions, by the Director General or such other officer subordinate to the Director General, as may be specified in the Order. However, this very provision makes it clear that powers under Sections 3, 5, 15, 16 and 19 conferred on the Central Government cannot be delegated. That under Section 13 of the Act "adjudicating authority" is empowered to impose any penalty or adjudge any confiscation. This power can be exercised by the Director General as adjudicating authority or subject to such limits as may be specified, by such officer as the Central Government may, by notification in the Official Gazette, authorize in this behalf. 4.12 Only powers which are exercised by the adjudicating authority under Section 13 either by the Director General or subordinate officer empowered by the Central Government are made subject matter of appeal under Section 15(1) of the Act. Provision of sub-section (1) of Section 15 is clear since appeal can be preferred by any person aggrieved by any decision or order made by the adjudicating authority under the said Act. Orders that adjudicating authority can pass are those....
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....ication of any item in ITC (HS) or HOP, Vol. I or II or Schedule of DEPB rates including content, scope or issue of an authorization there under, the said question or doubt shall be referred to the DGFT whose decision thereon shall be final and binding. The above power is wide and untrammelled to interpret any provision of the FTP. It is, therefore, within the jurisdiction, power and authority of the DGFT to interpret the provisions of FTP. In other words, maintaining the provision of the Policy as it is, power conferred on the DGFT under para 2.3 in regard to interpretation is wide enough to determine the eligibility of any person claiming hereunder. 4.16 Para 2.4 of the FTP provides that DGFT may specify procedure to be followed for an exporter or importer or by any licensing or any other competent authority for the purpose of implementing the provisions of the Act, the Rules and the Orders made there under and FTP. Such procedures shall be published by means of a Public Notice, and may, in like manner, be amended from time to time. Bare perusal of the above provision makes it clear that the Director General has the power to specify the procedure to be followed by an exporter fo....
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....alidity of various powers exercised by the Director General of Foreign Trade (respondent no.2) and its subordinate officers that are processing the applications for grant of deemed export benefit and by saying so the petitioner has explained the filing of the present petition, challenging the vires of para 8.3.6 and para 2.3 of the Foreign Trade Policy, on the apprehended alleged correctness and soundness of the proposed action of the respondents pursuant thereof. Thereafter, the petitioner has further averred in paragraph 11 that it is likely to be affected by the assumption of jurisdiction by the respondent no.2 and its subordinates within territorial limits of this Court. All these averments apart from being wholly mischievous suffer from suppression of material facts that the petitioner had instituted Special Civil Application No.2569 of 2013, inter-alia, praying for the following relief:- "(a) To issue a writ of order / direction, setting aside impugned order dated March 21, 2011 passed by the respondent no.3 and order dated April 13, 2012 passed by the respondent no.4 in appeal and instructions contained in the minutes dated March 15, 2011 and September 09, 2011 of PIC as il....
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....date of personal hearing and communicate such decision forthwith thereafter. This Court has observed in para 6.0 (iv) that all contentions and defence which would be available to the respective parties, more particularly the petitioner, are kept open to be dealt with and considered by the Director General of Foreign Trade in accordance with law and on merits for which this Court has not expressed anything in favour of either of the party. This Court has also observed in para 6.0(v) that in case of any adverse decision it will be open for the petitioner to challenge the same before appropriate court / forum which shall be considered in accordance with law and on merits. This order has also been suppressed from this Court. The Petitioner has suppressed the vital facts that in compliance of the above directions, it has submitted its fresh representation and hearing thereof is underway. 4.22 While disposing of the above said Special Civil Application No.2569 of 2013, this Court has in paragraph 2 of the decision dated 26th June, 2013 observed that number of submissions have been urged by the learned Counsel appearing on behalf of respective parties with respect to the power of the Joi....
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....onduct of the petitioner by itself is sufficient to decline the exercise of discretionary and equitable jurisdiction of this Court. 4.24 There is yet another mala fide intention of the petitioner in preferring present petition. The petitioner - Alstom India had been appointed as an independent contractor in respect to the erection and commission of a Non-Mega Power Project of Gujarat State Electricity Corporation Limited (GSECL). That a dispute about eligibility of GSECL, who had by itself is an importer, having itself imported several goods and paid custom duty at a concessional rate of duty is pending before this Court as regards eligibility to claim Deemed Export Benefits in regard to the said transaction. The said amount is sought to be claimed as a duty drawback on the ground that such import of goods by said GSECL in view of a contract being given through international competitive bidding ( ICB ) to Alstom is eligible for consideration and grant of deemed export benefit under Chapter VIII of the present Foreign Trade Policy. The Union of India and the Director General of Foreign Trade, which have passed order denying such claim, are resisting such a prayer of GSECL. This iss....
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....nd the lack of bona fides. The cause of action for the petitioner to challenge the Foreign Trade Policy would arise only and only if there is a decision which is adverse to the petitioner if decided by the Director General of Foreign Trade, in compliance of the directions contained in the order dated 26th June, 2013 rendered in Special Civil Application No.2569 of 2013. At present, the Director General of Foreign Trade is hearing the proceedings and is cognizant of the proceedings and, therefore, there is no cause of action for the petitioner to institute present petition. 4.26 If the submissions made in Para 11 are perused, then the petitioner has merely stated very vaguely that the petitioner is likely to be affected by the assumption of jurisdiction by respondent no.2 and its subordinate authorities, by patently illegal reading of provisions of the FTP, within the territorial limits of this Court. On that basis the petitioner asserts that this Court has jurisdiction to entertain the petition. There is no specific cause of action pleaded by the petitioner. No cause of action has at present arisen within the jurisdiction of this Court. From the cause title of the present petition....
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....d and empowered the DGFT to be responsible for carrying out the FTP. Being an executive body does not super impose the restriction that it cannot frame guidelines or procedures in order to shoulder its responsibilities. Rather, in terms of Section 6 of the Act, the executive body becomes bound to devise a suitable mechanism to fulfil the enshrined responsibility. 5.1.1 The DGFT has not legislated the stipulation at para 8.3.6 of the HOP Vol. I by incorporating the reference ".........Customs and Central Excise Duty draw Back Rules, 1995 shall apply mutatis mutandis to deemed exports." It is not only the Para 8.3.6 of the HOP Vol. I that has been devised, rather for each and every aspect of the scheme which is a part of the FTP, the DGFT has devised suitable documents and procedures. Para 8.3.6 of the HOP Vol. I contains the stipulation in the existing form, as, in the opinion of the DGFT, there is no need of any other innovative stipulation/provision/procedure, since the provisions contained in the Customs and Central Excise Duty Draw Back Rules, 1995 are sufficiently in consonance with the intended purpose of the DGFT. No additional purpose would be served even if the existing st....
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....ory for which clarification/interpretation has been offered by the DGFT. Regional Authorities of the Directorate General of Foreign Trade, with whom the applicants had submitted the Declarations as per the para 7 of ANF 8, and based upon which the Regional Authorities had provided the deemed export reimbursement, thus, reviewed these cases, as per the clarification given by the DGFT through exercise of power by the DGFT under para 2.3 of the FTP. 5.4 Para 5: Para 2.3 of the FTP in itself is abundantly absolute and unambiguous. The utility, validity and sanctity of para 8.3.6 of the HBP Vol. I has already been contended at para 1 above. 5.5 Paras 6 to 8: These paras are a matter of records, hence no comments. 5.6 Para 9: The petitioner has contended that provisions contained in Para 2.3 of the FTP, Para 8.3.6 of the HOP Vol. I and para 7 of the ANF 8 are in gross violation of Article 14 and 19 (1) (g) read with Articles 246 and 265 of the Constitution of India and the provisions of FTDR Act and the FTP. The petitioner has not explained as to on what grounds the gross violation has been contended. 5.7 Para 10: In view of the facts as submitted in the foregoing paras, this Court s....
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.... orders passed by the Respondent No.2 or its subordinate officers to the extent they are adverse to the interest of the petitioner have been challenged separately before the appropriate forum. The adjudication of the legal issues raised in the present petition have no bearing on the judicial determination of such challenges pertaining to merits of individual transactions. 6.5 PRELIMINARY OBJECTION The affidavit has not been filed by the Respondent No.2. Instead, the affidavit has been filed by an officer subordinate to the Respondent No.2 holding the designation of Jt. DGFT. In the affidavit, no averments have been made, which remotely indicate that the deponent has been specifically authorized by the Respondent No.2 on his behalf to submit the said affidavit nor has any appropriate authorization letter been annexed thereto. The Jt. DGFT is neither a party impleaded nor a proper party or necessary party for the purpose of the present petition, and in that sense is a stranger to the present legal proceedings. Therefore the affidavit filed by a person alien to the proceedings should not be considered by this Court and the affidavit should be directed to be taken off the record of t....
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....e DGFT, an appeal lies before the DGFT. This is, therefore, an illustration of an illusory and almost futile adjudicatory exercise that is likely to take place under the scheme of the FTP breaching all the established principles of judicial process in view of the following: 7.4.1 The subordinate authorities, while exercising their power to adjudicate under Section 13 of the FTDR Act are bound by the interpretation of the provision of the FTP by the Respondent No.2 under Para 2.3 of the FTP and therefore, have no choice but to follow the interpretation so adopted by the superior officer [i e. DGFT] in discharging their quasi-judicial function thereby militating the requirement of independent application of mind. 7.4.2 The adjudication order so passed by the subordinate officer on appeal shall lie before the Respondent No.2 under Section 15 of the FTDR Act who having interpreted the FTP in a certain manner would certainly not take a view contrary to such interpretation adopted by him, thereby making the entire appellate procedure a sham one. It is also a classic case of violation of the trite principle of judicial process i e. nemo judex in causa sua. 7.4.3 Therefore, unless the p....
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.... legislate to any third party including the Respondent No.2. On analysis of the scheme of the FTDR Act and the principles of the administrative law stated above, it would be appropriate to state that the mother legislation [i.e. FTDR Act] has bestowed the power on the Central Government to formulate the delegated legislation [i.e. FTP] and further subordinate legislations by way of rules pursuant to Section 19 of the FTDR Act. However, no power can be seen to have been granted to the Respondent No.2 to legislate and therefore, the power conferred on the Respondent No.2 under Para 2.4 of the FTP, to specify procedures has to be interpreted strict senso to mean "only administrative guidelines" and none other. If in discharge of such power and, in the garb of laying down the procedures, the Respondent No.2 incorporates by reference any substantive law, [as has been done in Para 8.3.6 of the HOP by incorporating the Customs and Central Excise Duty Drawbacks Rules, 1995 ["duty drawback rules"] it would be an action fraught with impropriety for reasons of having travelled beyond the power conferred on it and breaching the fundamental principle of administrative law and violating the basi....
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....w of legality of the source of power. 7.11.4 The challenge in the said petition of orders adverse to the interest of the petitioner was premised essentially on the principles of estoppel and violation of the principles of natural justice. It was the action of the officers of reopening assessments which have already been completed that was challenged on the ground that they do not possess any power under the FTDR Act read with the FTP for such reopening. One of the key points that the petitioner had highlighted before the Division Bench was that it is an established principle of law that once assessment is complete, such assessment cannot be reopened. Instead, a proper procedure is to file an appeal against such an assessment order and an authority having passed an order becomes functus officio and cannot recall his order. 7.11.5 While as part of one of its alternate arguments, legitimacy of the power of the Respondent No.2 to interpret the FTP was raised [as merely an alternative argument] however, no relief whatsoever was prayed for by the petitioner with respect to challenging the vires of the said provision. 7.11.6 A bare perusal of the order passed by the Division Bench of t....
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....etencies and jurisdiction of the DGFT and is entirely motivated to deny substantive justice to the petitioner. 7.13 Consequently, the pleadings of the Respondent No.2 that the petitioner deserves to be saddled with exemplary costs while dismissing the petition in limine is a reflection of their mala fide intention to deny the petitioner's legitimate right to challenge the vires/legality or otherwise of any piece of legislation before this Hon'ble Court. 7.14 The contents of Para 2[B] [i] of the affidavit are incorrect as the petitioner never challenged the vires of Para 2.4 of the FTP in the other writ petition. The subsequent averments by the Jt. DGFT on behalf of the Respondent No.2 of the said paragraph do not in any manner establish that the action of the petitioner in filing this petition was ever mischievous and/or suffers from the vice of suppression of material facts. Except bald allegations, which as demonstrated herein above are bereft of any substance and are absolutely reckless, the Respondent No.2 has not been able to show the manner in which the petitioner has committed any legal mischief or how the petitioner has suppressed relevant and material facts which....
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....icated in the affidavit "that the Hon'ble High Court at Para 6[iv] and [v] have rightly directed that all contentions and defences available to the parties more particularly to the petitioner have been kept open for consideration afresh by the DGFT and that the division bench is not expressing anything in favour of either parties and that should adverse decision be passed by the DGFT it is open for the petitioner to challenge the same before the appropriate court forum". The said directive of the High Court cannot be interpreted to mean that the High Court has directed the DGFT to rule on the vires of the various provisions of the FTP - for the reason that the DGFT does not possess such power. Instead, the true and correct interpretation of the above directive can only be that the DGFT has been directed to examine the petitioner's eligibility to claim duty drawback on merits and all other aspects that the DGFT has jurisdiction to rule on. Therefore, these vital aspects clearly demonstrate that the substratum of both the petition is different. 7.17 The contents of Para 2[B][iv] of the affidavit does not require any comment as it is a matter of fact and instead supports the ....
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....f qualifying as being insinuating in nature without appreciating the relevant facts and circumstances pertaining to the dispute in the case of GSECL and the petitioner, for the reasons more fully described below: 7.19.1 To the best of the petitioner's knowledge, GSECL's claim for duty drawback [which was denied by Respondent No.2 and is thus subject matter of Civil Application No. 15706 of 2011] pertains to the equipment purchased and imported by them. Alstom India Limited, i.e., the petitioner has no role or interest into the duty drawback claim of GSECL with respect to such imports. 7.19.2 Consequently, the allegation that - Alstom India Limited, i.e. the present petitioner is substantially and vitally interested in those proceedings, inasmuch as, if duty drawback is ordered to be granted to GSECL by the High Court, then Alstom India Limited would claim the reimbursement of such amount from GSECL demonstrates lack of knowledge of facts and the law on the part of the deponent. The conduct of the deponent in filing affidavits without verifying the facts is deplorable. 7.19.3 On the contrary, Alstom India Limited is an Indian company engaged in the manufacture of equipmen....
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....No.2 that "the cause of action for the petitioner to challenge the Foreign Trade Policy would arise only and only if there is a decision which is adverse to the petitioner if decided by the Director General of Foreign Trade, in compliance of the directions contained in the order dated 26th June, 2013 rendered in Special Civil Application No. 2569/13" betrays possession of rudimentary knowledge of law and highlights absolute non-application of mind on the part of the deponent. 7.21.1 The contention raised by the petitioner about lack of territorial jurisdiction of this Court in entertaining the present petition is devoid of any merit and hence, denied. Even though the registered office of the petitioner company is in State of Maharashtra, the petitioner company has a significant investment in the form of full-fledged manufacturing plant in the State of Gujarat. It is from the said plant that the petitioner supplies equipments to various power projects. In respect of such supplies, the petitioner files claims for duty drawback with the office of the DGFT at Vadodara. The above fact clearly demonstrates the territorial nexus the petitioner has with the State of Gujarat. 7.21.2 The p....
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....adly of what governmental institutions should stand for. Exemplary costs and strictures, if any, should be deserved by the deponent of the affidavit for repeatedly making false allegations and attempting to misguide this Bench to intentionally cause harm to the interest of the petitioner and scuttle its legitimate right to approach this Court and seek relief subject to the Court's discretion. 7.26 The contents of Para 2C of the affidavit are denied. The preliminary objections raised by the respondent are frivolous and without any substance. There is no suppression of any material fact which would have a bearing on the adjudication of legality of the provisions questioned in the present petition. 7.27. The allegations of Para 3 of the affidavit are denied which state that the petitioner has apparently sought to surreptitiously file an appeal before this Bench against the order of the Division Bench of this High Court rendered in the Special Civil Application No. 2569 of 2013 are denied on the following grounds: 7.27.1 A petition can be considered as an Appeal against an earlier order only if such other order has been impugned in the subject petition. In the present petition, ....
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.... extent it states that the HOP Vol. I is a consolidated compilation of the methodology necessary for execution and implementing the FTP and also the averment that the Respondent No.2 being an executive body is entrusted to carry out the FTP and can frame guidelines or procedures for this purpose is admitted. However, the subsequent averments made therein with respect to the specific comments made qua the nature and characteristics of the provisions contained in Para 8.3.6 of the HOP Vol I in elation to which it has been stated in the affidavit that the DGFT has merely provided these as procedural guidelines as these duty drawback rules are sufficiently in consonance with the intended purpose of DGFT are denied for the reasons more fully described below: 7.30.1 The duty drawback rules have been formulated by the Central Government by way of a delegated legislation pursuant to Section 75 of the Customs Act, Section 37 of the Central Excise Act, Section 93A read with Section 94 of the Finance Act and therefore it is not merely an administrative guideline but partakes the character of law/legislation. 7.30.2 Section 75[2] of the Customs Act provides that the Central Government may ma....
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....rules Substantive 18. 18 It provides for repeals and savings Substantive 7.30.4 From a bare perusal of scheme of duty drawback rules it can be clearly noticed that the same deals largely with substantive aspects [i e. 13 Rules] and only few provisions deal with procedural matters [i e. 5 Rules]. 7.30.5 Under these circumstances, when an executive incorporates the duty drawback rules by reference, such incorporation by reference as has been done in Para 8.3.6 of the HOP is clearly a colourable device aimed at incorporating substantive law in the garb of mere procedural guidelines. 7.30.6 Such an action by the executive which amounts to nothing but legislation, goes against the very grain of separation or power between the executive and the legislature, particularly where the executive [i.e. the DGFT] has not been delegated any power to legislate by the mother legislation. 7.31 The averment of the Respondent No.2 in Para 6[1] of the affidavit to the extent that it states that the ANF-8 has been devised for the purpose of documentation which is used by the exporters for filing the duty drawback claims is admitted. However, the subsequent averments made qua declaration at Para 7 o....
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....42 In regard to Para 6[13] of the affidavit, the petitioner requests this Court to allow the writ petition filed by the petitioner. 8. Mr Harin Raval, the learned Senior Advocate appearing on behalf of the Union of India, has, at the outset, taken a preliminary objection as to the maintainability of the present Special Civil Application on the ground of suppression of material facts. According to Mr. Raval, the petitioner has attempted to mislead this Court by mischievous averments as well as suppression of true and correct facts. According to Mr. Raval, the petitioner is guilty of not disclosing the order passed by this Court in an earlier petition filed by the petitioner being Special Civil Application No: 2569 of 2013 disposed of by order dated 26th June, 2013 by the Division Bench of this Court (Coram : M.R.Shah and Ms. Sonia Gokani, JJ.). Mr. Raval further submits that the petitioner is also guilty of suppressing the fact that pursuant to the above order rendered by this Court, the issues sought to be raised in the present petition are directed to be considered by the Director General of Foreign Trade, and thus, the present petition is a complete abuse of the process of law, ....
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....at the same being disposed of by order dated 26th June, 2013 and the further fact that an order having been passed on 21st March, 2011 by the Joint Director General of Foreign Trade, rejecting the claim for grant of deemed export benefit which led to filing of earlier petition being Special Civil Application No.2569 of 2013 and filing of a departmental appeal and the same having been dismissed by order dated 13th April, 2012, have been suppressed from this Court. According to Mr. Raval, suppression of above material facts alone is sufficient to dismiss the present writ-petition. 8.3 Mr. Raval has further contended that the petitioner has even not disclosed before this Court that pursuant to the order dated 26th June, 2013 passed in Special Civil Application No.2569 of 2013, the petitioner has been directed to submit fresh detailed representation for reconsideration of the decision dated 21st March, 2011 of the Joint Director General of Foreign Trade as well as in support of their case that they are eligible to duty drawback with respect to the goods in question under the relevant Export Import Policy/Foreign Trade Policy and rest of other grounds which may be available to it withi....
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....t fresh detailed representation to the Director General of Foreign Trade in support of their claim that they are entitled to and eligible to duty draw back with respect to the goods in question under relevant Export and Import Policy / Foreign Trade Policy and has also recorded the request to make suitable observation that Director General of Foreign Trade may take a fresh decision on such representation to be made by the petitioner against the decision of the Joint Director General of Foreign Trade dated 21st March, 2011 and also with respect to eligibility of duty draw back with respect to the goods in question by the petitioner, independently with open mind and without in any way being influenced by their earlier decision inclusive of the decision of the Policy Interpretation Committee (PIC). 8.5 All the above mentioned facts, according to Mr. Raval, are suppressed by the petitioner with mala fide intention and ulterior motive of delaying the proceedings before the Director General of Foreign Trade which have been directed to be concluded as per the direction of this Court contained in its order dated 26th June, 2013. Mr. Raval further submits that pursuant to the said directio....
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....ed on various grounds including the applicability of the Foreign Trade Policy and the very provisions, namely, para 8.3.6 and para 2.3. According to Mr. Raval, apart from suppressing the above mentioned facts, the present petition, which is lacking in bona fides, is filed with the mala fide intention of causing an impediment to the smooth hearing and decision of the said petition which is pending and is in session of another Bench which has the requisite determination to deal with it according to the present roster. Mr. Raval further submits that the said matter was fixed in the presence of the present petitioner on 30th July, 2013. According to Mr. Raval, the present petition has been instituted with a view to derail and delay the hearing of the said petition before another Division Bench of coordinate jurisdiction and with a view to make a prayer that both the said petitions being Special Civil Application No. 15706 of 2011 and the present petition be heard together. 8.7 According to Mr. Raval, at present, no cause of action has arisen to the petitioner to institute the present petition and institution of the present petition by suppression of relevant facts and circumstances, i....
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....oner by the DGFT. According to Mr. Ghosh, the relief prayed in the said petition did not pertain to seeking the High Court's intervention to rule on the vires of the provisions of the FTP or HOP unlike what has been prayed for and pleaded in the present petition. Mr. Ghosh contends that the subject-matter of the aforesaid petition was solely the challenge of the propriety of certain orders passed and actions of the Jt. DGFT and the Respondent No.2 within the framework of the legislative provision on a bona fide assumption of power by the authority was legal and proper in view of legality of the source of power. Mr. Ghosh contends that the challenge in the said petition of orders adverse to the interest of the petitioner was premised essentially on the principles of estoppel and violation of the principles of natural justice and it was the action of the officers of reopening assessments which have already been completed that was challenged on the ground that they do not possess any power under the FTDR Act read with the FTP for such reopening. According to Mr. Ghosh, one of the key points that the petitioner had highlighted before the Division Bench was that it is an established pri....
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....cial Civil Application No. 15706 of 2011 nor has the said writ petition transferred to this Court. 9.3 Mr. Ghosh further contends that the contention of the Respondent No.2 that cause of action for the petitioner to challenge the Foreign Trade Policy would arise only if there is a decision which is adverse to the petitioner if decided by the Director General of Foreign Trade, in compliance of the directions contained in the order dated 26th June, 2013 rendered in Special Civil Application No. 2569/13" betrays possession of rudimentary knowledge of law and highlights absolute non-application of mind on the part of the respondent No.2. 9.4 Mr. Ghosh lastly contends that the dispute raised as regards the territorial jurisdiction of this Court is equally devoid of any merit. Mr. Ghosh contends that even though the registered office of the petitioner company is in State of Maharashtra, the petitioner company has a significant investment in the form of a full-fledged manufacturing plant in the State of Gujarat. It is from the said plant that the petitioner supplies equipments to various power projects. In respect of such supplies, the petitioner files claims for duty drawback with the ....
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....r, merely because such authority has recovered the amount by virtue of ultra vires adjudication, cannot be a factor standing in the way of the assessee to challenge the provisions as ultra vires just as in a Civil Litigation after suffering a decree, the judgment debtor in the executing proceedings can pray for declaration that the decree sought to be executed is a nullity for want of inherent jurisdiction without preferring any appeal against the original decree (See CHIRANJILAL SHRILAL GOENKA VS. JASJIT SINGH reported in (1993) 2 SCC 507). 12. Moreover, we find substance in the contention of Mr. Ghosh, the learned counsel appearing for the petitioner, that in the earlier proceedings before the Division Bench, pursuant to the directions given by the Division Bench, there was neither any adjudication on the question involved in this writ-application nor was there any scope of giving direction upon the respondent No.2 to decide the question of vires of the provisions challenged in this writapplication. Therefore, the fact that in the past, the petitioner has filed another Special Civil Application on the question of merit of an order by assuming the provision to be valid, cannot st....
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.... and the finality attached to it was a relevant fact which has not been clearly disclosed before the Supreme Court by the petitioner and, according to the respondent, in view of the suppression, the Special Leave to Appeal should not be granted to the petitioner. The Supreme Court in paragraph 45 of the judgment made a categorical finding that the order dated 2nd May 2003 was very much material and in that context in paragraph 46 made the following observations:- "46. It is not for a litigant to decide what fact is material for adjudicating a case and what is not material. It is the obligation of a litigant to disclose all the facts of a case and leave the decision making to the Court. True, there is a mention of the order dated 2nd May, 2003 in the order dated 24th July, 2006 passed by the JCC, but that is not enough disclosure. The petitioners have not clearly disclosed the facts and circumstances in which the order dated 2nd May, 2003 was passed or that it has attained finality." 13.3 In the case before us, we have held that existence of the earlier proceeding and the order passed therein are not material for the disposal of the questions raised before us in this application a....
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....enrichment of such ill-gotten money by defrauding others. In effect, such attempts made by invoking the extraordinary jurisdiction of the writ Courts of many such challenges, mostly result in rejection of such challenges. However, at the same time, while taking advantage of the long time gap involved in the pending proceedings, such unscrupulous litigants even while suffering the rejection of their stand at the end as to the vires of the provisions, always try to wriggle out of their liabilities by stating that the time lag had created a situation wherein those persons who were lured to part with huge sums of money are either not available to get back their money or such unscrupulous petitioners themselves are not in a position to refund whatever money collected from those customers or investors. It is, therefore, imperative and worthwhile to examine at the threshold as to whether such challenges made are bonafide and do require a consideration at all by the writ courts by applying the principle of 'lifting the veil' and as to whether there is any hidden agenda in perpetrating such litigation. With that view, we lay down some of the criteria to be kept in mind whenever a challenge ....
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....he provisions were taken in order to delay the proceeding or to obstruct the judicial proceeding and in that context, made the aforesaid observations. The said observations cannot have any application to a case where the Court, on consideration of the materials on record, holds that a particular provision really ultra vires the provision of the Constitution or the Act itself. We have already pointed out that there is no waiver of a constitutional provision going to the root of the power of a statutory authority. The above observations, in our opinion, should be borne in mind while entertaining a writ application challenging the vires of the statutory provision and for the purpose of granting interim order. But by taking aid of that observation the State cannot legitimately contend that although the statutory provisions challenged is violative of the provisions of the Constitution and the statute itself resulting in abuse of the power by a statutory authority, the same should be dismissed on the ground of mere delay or waiver. We, thus, find that the aforesaid two decisions are of no avail to the Union of India. 13.6 We, thus, find that non-mentioning of the above facts cannot stan....
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....bout the consideration of cases of eligible and qualified bidders in pursuance of the order passed by the High Court in review and confirmed by the Supreme Court. The true facts, however, were just contrary to what was sought to be placed before the Court. A notice was issued by SAIL to the appellant, he received the notice, intimated in writing to SAIL that he had authorized R to appear on his behalf, R duly appeared at the time of consideration of bids. The bid of the respondent No.2 was found to be lower and was accepted and the contract was given to him. In the above facts, the Supreme Court observed that the appellant had not placed all the facts before the Court clearly, candidly and frankly and has not come forward with all the facts. 16. The ratio of the decisions in the cases of SUNIL PODDAR [supra] and K.D. SHARMA [supra], thus, have no application to the present case, where the petitioner has raised a pure question of law as to the legality of a provision as ultra vires the Constitution of India and the Statute and at the same time, not suppressed any material fact. Therefore, the principle laid down in the said decisions cannot have any application to the facts of the ....
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....tions which is not the case before us. 19. In the case of PRESTIGE ENGINEERING (INDIA) LTD. v. COLLECTOR OF CENTRAL EXCISE, MEERUT AND OTHERS reported in (1994) 6 SCC 465, the question was as regards interpretation of the Notification No. 119/75-C.E. dated 30th April 1975 issued by the Central Government under rule 8(1) of the Central Excise Rules, 1994. The said notification partly exempted goods falling under Item No. 68 manufactured in a factory as "job work" and included under the explanation, the articles returned after manufacturing process by the "job worker". In such circumstances, the Supreme Court, applying the statutory, and not the ordinary/normal meaning of the explanation "manufacture" and referring to the dictionary meaning of the expression "job work" held that the expression "manufacture" contemplated by the notification was not confined to those processes alone which were "incidental or ancillary to the completion of the manufactured product" but extended to the work where "job workers" contributed mainly their labour and skill as distinct from contributing their own material to the article supplied by the customer. It was further held that addition or applicatio....
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....nce such benefits are granted to the claimant is ultra vires the FTDR Act. 24. In order to appreciate the aforesaid questions, it would be profitable to refer to Sections 3, 5, 6, 15, 16, and 19 of FTDR Act which are quoted below: "Section 3. Powers to make provisions relating to imports and exports - (1) The Central Government may, by Order published in the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. (2) The Central Government may also, by Order published in the Official Gazette, make provision for prohibiting, restricting or otherwise regulating, in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the Order, the import or export of goods or services or technology. Provided that the provisions of this sub-section shall be applicable, in case of import or export of services or technology, only when the service or technology provider is availing benefits under the foreign trade policy or is dealing with specified services or specified technologies. (3) All goods to which any Order under sub-section (2) applies shall be deemed to ....
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....ellant was prevented by sufficient cause from preferring the appeal within the aforesaid period, allow such appeal to be preferred within a further period of thirty days : Provided further that in the case of an appeal against a decision or order imposing a penalty or redemption charges, no such appeal shall be entertained unless the amount of the penalty or redemption charges has been deposited by the appellant : Provided also that, where the Appellate Authority is of opinion that the deposit to be made will cause undue hardship to the appellant, it may, at its discretion, dispense with such deposit either unconditionally or subject to such conditions as it may impose. (2) The Appellate Authority may, after giving to the appellant a reasonable opportunity of being heard, if he so desires, and after making such further inquiries, if any, as it may consider necessary, make such orders as it thinks fit, confirming, modifying or reversing the decision or order appealed against, or may send back the case with such directions, as it may think fit, for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary : Provided that an order enhanci....
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....p or any instrument bestowing financial or fiscal benefits may be granted under sub-section (3) of section 9; (e) the conditions subject to which licence, certificate, scrip or any instrument bestowing financial or fiscal benefits may be suspended or cancelled under sub-section (4) of section 9; (ea) the matter in which goods the import of which shall be subject to quantitative restrictions, may be identified and the manner in which the causes of serious injury or causes of threat of serious injury in relation to such goods may be determined under sub-section (3) of section 9A; (f) the premises, goods (including the goods connected with the service or technology), documents, things and conveyances in respect of which and the requirements and conditions subject to which power of entry, search, inspection and seizure may be exercised under sub-section (1) of section 10; (g) the class or classes of cases for which and the manner in which an amount, by way of settlement, may be determined under sub-section (4) of section 11; (h) the requirements and conditions subject to which goods (including the goods connected with the service or technology) and conveyances shall be liable to c....
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....f drawback obtained by us in excess of any amount/rate which may be re-determined by Government as a result of post verification." 26. After hearing the learned counsel for the parties and after going through the provisions quoted above, we find that Section 3 of the FTDR Act empowers the Central Government to make appropriate provisions for development and regulation of foreign trade. Similarly, Section 5 of the FTDR Act gives powers to the Central Government to formulate and announce, by way of notification in the Official Gazette, the export and import policy which may be amended from time to time. Pursuant to such power conferred under Section 5 of the FTDR Act, the FTP is issued by the Central Government generally for five years and the same is revised or amended by means of annual supplement each year. At present, the policy which is in force is FTP 2009-2014. 26.1 Section 6 of the FTDR Act empowers the DGFT to advise the Central Government in the formulation of the Export and Import Policy and the said DGFT shall be responsible for carrying out that policy. Section 6 (3) provides that the Central Government may, by Order published in the Official Gazette, direct that any p....
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....thing but an administrative guideline as would appear from a combined reading of Para 2.4 of the FTP and Section 6 of the FTDR Act. We have already pointed out that Section 3 of the FTDR Act grants power to the Respondent No.1 to make provisions relating to imports and exports and the Respondent No.1 under Section 5 of the FTDR Act can formulate and announce the foreign trade policy. It further appears from Section 6(3) of the FTDR Act that of the powers conferred upon the Respondent No.1 under the FTDR Act, except those provided in Sections 3,5,15,16 and 19, all others can be delegated to the Respondent No.2 by order published in the Official Gazette. We find that the Respondent No.2 through Para 8.3.6 of the HOP has sought to incorporate the provisions of Duty Drawback Rules to deemed exports mutatis mutandis which is not permissible in view of the fact that no power has been granted to the DGFT under the FTDR Act to legislate either directly or by way of incorporation by reference. It is now a settled law that the separation of power between the legislature and executive forms part of the basic structure of the Constitution of India and any attempts by the executives to legislat....
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....No.2 or its subordinates to re-determine or re-verify the deemed export benefits if such benefits have been approved or granted as per the provisions of the FTDR Act except by way of review as provided in Section 16. In the absence of any power under FTDR Act, the Respondent No.2 or its subordinates cannot assume quasi-judicial power for instance, the power to re-determine or re-verify under the administrative guidelines i.e. Para 7 of the ANF-8 Form. Therefore, by virtue of Para 7 of the ANF-8, the Respondent No.2 is deriving the quasi-judicial power which is beyond the provisions of FTDR Act. We have already pointed out that according to Section 6 of the FTDR Act, the Respondent No.2 or the officer subordinate to him cannot usurp the power under Sections 3, 5, 15, 16 and 19 of the FTDR Act. According to Section 3, it is for the Central Government which may, by Order published in the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. The Central Government may also, by Order published in the Official Gazette, make provision for prohibiting, restricting or otherwise regulating, in all cases or in spec....
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....ction 16 so as to prejudicially affect any person unless such person has, within a period of two years from the date of such decision or order, received a notice to show cause why such decision or order shall not be varied and has been given a reasonable opportunity of making representation and, if he so desires, of being heard in defence. 32.2 Section 19 of the Act gives the Central Government the power to make rules for carrying out the provisions of the Act. 33. We, thus, find that although specifically prohibited under section 6 of the Act, the DGFT has been illegally vested with the power to intervene in the subject-matters coming within the purview of Sections 3, 5, 15, 16 and 19 in clear violation of sub-section 3 of Section 6 of the FTDR Act. In other words, what is specifically prohibited by the FTDR Act, by taking aid of the HOP, the DGFT has assumed such power in colourable exercise of the power conferred upon it. 34. In this connection, Mr. Ghosh also drew our attention to the provisions contained in three different statutes, viz: Section 119 of the Income Tax Act, 1961, Section 37B of the Central Excise Act, 1944 and Section 151A of the Customs Act, 1962. For the sa....
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....l other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board : Provided that no such orders, instructions or directions shall be issued-- [a] so as to require any income-tax authority to make a particular assessment or to dispose of a particular case in a particular manner; or [b] so as to interfere with the discretion of the Commissioner [Appeals] in the exercise of his appellate functions. [2] Without prejudice to the generality of the foregoing power,-- [a] the Board may, if it considers it necessary or expedient so to do, for the purpose of proper and efficient management of the work of assessment and collection of revenue, issue from time to time [whether by way of relazation of any of the provisions of sections 115P, 115S. 115WD, 115WE, 115WF, 115WG, 115WH, 115WJ, 115WK, 139, 143, 144, 147, 148, 154, 155, 158BFA, sub-section [1A] of section 201, sections 210, 211, 234A, 234B, 234C, 271 and 273 or otherwise, general or special orders in respect of any class of incomes or fringe benefits or class of cases, setting forth directions or instructions [not being prejudicial to assessees] as to the guideline....
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.... authority under those Acts to make a particular assessment or to dispose of a particular case in a particular manner or to interfere with the discretion of the quasi judicial authorities prescribed under those Acts. Mr. Ghosh, thus, contends that the power conferred under para 2.3 of FTP by empowering the respondent No.2 to interpret FTP should not be applicable to the functionaries acting quasi judicially under the provisions of the Act. 35. On a plain reading of the provisions contained in paragraph 2.3 of the FTP, we find that the interpretation of any provisions in the FTP or in the matter of classification of any item in the ITC [HS] or in the HOP should, no doubt, bind the authorities under him in exercise of the provisions of the FTDR Act; but if such guidelines are in conflict with the view or interpretation given by the judicial authorities such as the High Courts or the Supreme Court, in our opinion, the authorities functioning quasi judicially under the FTDR Act should be bound by the interpretation of the High Courts and the Supreme Court. In the event, an existing order or interpretation issued by the respondent no. 2 is in conflict with the law laid down by the High....
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....es under the Act. 38. We now propose to deal with some relevant decisions relied upon by the learned counsel for the parties. 38.1 In the case of KUNJ BEHARI LAL BUTAIL & ORS. VS. STATE OF H.P. & ORS. reported in AIR 2000 SC 1069, a three- Judge Bench of the Supreme Court repeated the well settled proposition of law that a delegated power to legislate by making rules for carrying out the purpose of the Act is a general delegation without laying down any guidelines and in such circumstances, such power cannot be exercised so as to bring into existence substantive rights or obligations or disabilities not contemplated by the provision of the statute itself. By relying upon the above decision, Mr Ghosh, in our opinion, rightly contended that the HOP cannot create any substantive right in favour of the Respondent no. 2 by taking aid of delegated power and, therefore, we should declare the provisions mentioned in this application as ultra vires as it is for the Central Government to make substantive right by virtue of the delegation provided in the Act itself but the DGFT has not been given any power to legislate. 38.2 In the case of UNION OF INDIA VS. INTERCONTINENTAL (INDIA) report....
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....the Govt. shall be final and would have an over-riding effect. 14. There is no warrant in our opinion in trying to read down the provisions of Section 59A. The works (sic) of the said provision are clear and unambiguous. The said section gives absolute power to the Govt. to decide any question regarding the rate of tax leviable on the sale or purchase of goods any manner it deems proper and finality is given to such a decision. 15. Section 59A enables the Govt. to pass an administrative order which has the effect of negating the statutory provisions of appeal, revision etc. contained in Chapter VII of the Act which would have enabled the appellate or reversion authority to decide upon questions in relation to which an order Under Section 59A is passed. Quasi-judicial or judicial determination stands replaced by the power to take an administrative decision. There is nothing in Section 59A which debars the Government from exercising the power even after a dealer has succeeded on a question relating to the rate of tax before an appellate authority. The power Under Section 59A is so wide and unbridled that it can be exercised at any time and the decision so rendered shall be final. I....