TaxTMI 
TaxTMI 
2014 (6) TMI 124
X X X X Extracts X X X X
X X X X Extracts X X X X
....dition of licence, petitioner-Company was to fulfill export obligation of FOB (Free on Board), value of U.S. Dollars 2,27,344/- (INR Rs. 72,75,000/-). The import period of licence was one year from the date of issuance and export period was three years from the date of issuance of licence. The goods imported against advance licence was to be utilized in accordance with provisions of import and export policy for 1992 to 1997. 3. The petitioners claimed to have complied with aforesaid obligation and also did export as per export obligation under licence through 11 shipping bills. It is also claimed by petitioners that they submitted original shipping bills alongwith Bank realization certificates, with the department, as and when the trade was carried out. 4. In 2003 petitioner-Company suffered huge losses and was registered with the "Board of Industrial and Financial Reconstruction" (hereinafter referred to as the "BIFR") under Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as the "Act, 1985"), who declared it sick on 28.04.2003. The manufacturing activities of Company came to a halt in 2006. The employees and other officials left the job sinc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the provisions of Act, 1992 or the terms and conditions of licence. In absence of any finding in respect of mens rea, penalty could not have been imposed. (iv) Lastly, there was no valid notice issued to petitioners before passing impugned adjudicatory order imposing penalty and, therefore, entire proceedings including impugned order of penalty is void ab initio being in violation of principles of natural justice read with the procedure prescribed under the statute. 10. Per contra, Sri Singhal argued that order of penalty has been passed by Deputy Director General, who was competent to pass such order. Enough opportunity was given to petitioners but they failed to avail. An order of penalty cannot be subjected to period of limitation when none is prescribed in statute and in the present case non-compliance of conditions of export licence per se demonstrate mens rea unless proved otherwise by petitioner. 11. I have heard learned counsels for the parties and perused the record. 12. Act 1992 was enacted to provide for development and regulation of foreign trade by facilitating imports and augmenting exports from India and for matters connected therewith or incidental there....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of value of goods in respect of which any contravention is made or attempted to be made, whichever is more. Sub-section (3) to (6) of Section 11 are in the nature of procedure including the provision akin to compounding and also relating to seizure and release of goods. 16. Sub-section (3) of Section 11 provides that a person, who has contravened the mandate under Section 11(1) and admits such contravention, such person or class of persons may be subjected to penalty which may be determined by way of settlement as per the procedure prescribed and the adjudicating authority may decide such amount by way of settlement. Sub-section (4) talks of recovery of amount of penalty, if not paid for and sub-section (5) talks of confiscation of goods which are subject matter of such contravention. 17. Section 12 provides that penalty imposed or confiscation made shall not prevent imposition of any punishment to which persons contravening such provision is liable under any other law for the time being in force. Therefore, penalty in Section 11 is in addition to other penal provisions, if any, available in any other law. 18. Section 13 talks of authority who may impose such penalty and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....thout wilful mistake or without suppression of facts, or without any collusion, or without fraud and forgery, or without an intent to cause loss of foreign exchange; or (ii) where the person importing the goods has not met the requirements of the actual user conditions as specified in the policy and has not misutilised the said imported goods; or (iii) where the person importing the goods has not fulfilled the export obligation and has not misutilised the said imported goods. (2) Where a person has opted for settlement under sub-rule (1), the settlement made by the Adjudicating Authority shall be final." 24. Now I come to the first question, whether Deputy Director General was competent to pass the order of penalty or not since it goes to the very root of the matter and renders entire proceedings without jurisdiction if this issue is decided in favour of petitioners. It depends on the interpretation of Section 13 of Act, 1992. A perusal of above provision shows that a penalty may be imposed or any confiscation may be adjudged by the Director General, or, subject to such limits, as may be specified, by such other officer as the Central Government may by notification in t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....port Processing Zone under their jurisdiction 26. What he submits is that in table, column no. 2 deals with designation of officer while in column no. 3, instead of quantum of penalty or the amount of penalty the Central Government has provided limit in respect of value of goods, in relation to which power is to be exercised and, therefore, he endevours to pursue this Court to hold that this notification itself is not consistent with Section 13 and, therefore, bad in law, meaning thereby the authorization made to various authorities other than Director General is patently void. 27. Having gone through the various provisions of Act, 1992 including Section 13, read with the above notification, I find myself unable to agree with above submissions. This Court has seen that quantum of penalty which may be imposed under Section 11 is with reference to value of good in respect of which contravention is made. The minimum amount of penalty is Rs. 1000/- or five times of the value of goods in respect of which any contravention is made or attempted to be made in view of use of the word, "whichever is more". Therefore, wherever the value of goods is more than Rs. 201/- the penalty under ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... make any endeavor to make the power exercised invalid either by process of interpretation so as to narrow down the scope of statute or otherwise. The Central Government has made authorization with reference to value of goods and I find no per se illegality therein. It is within the scope of Section 13. 29. That being so, since value of goods in respect of which contravention has been alleged was more than Rs. 45 lacs but less than Rs. 1 crore, therefore, the Deputy Director General of Foreign Trade was well within his competence to take action under Section 11 and pass order of penalty. It thus cannot be said that order of penalty is without jurisdiction. The submission raised otherwise on behalf of petitioners is, therefore, rejected. 30. Then comes the second question, that a penalty order cannot be passed after more than one decade. 31. The pleadings of the parties in the case in hand show that the licence having been issued on 10.02.1994, petitioners were to complete export obligation upto February, 1995 and import obligation upto February, 1997. So far as export obligation is concerned, he was also under an obligation to produce requisite documents in respect of expo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ceived back undelivered. Therefore, they could not take any action. 36. Be that as it may, Section 11 is a penal provision and no period of limitation has been prescribed. It is no doubt true that normally an action must be taken within a reasonable time but in a case where penal provision exists, without any provision providing limitation, it would not be justifiable on the part of Court to legislate by interpretation so as to introduce a period of limitation in such a statute. 37. Learned counsel for the petitioners has relied on a Division Bench decision of Punjab and Haryana High Court in Neeldhara Weaving Factory Vs. DGFT, New Delhi, 2007(210) ELT 658 wherein penalty was imposed in 2006 in respect of certain export obligations which are said to have been violated in 1988 and the Court held that belated penalty is bad. I have carefully gone through the aforesaid judgment. The Court relied on four judgments of Apex Court, i.e., Government of India Vs. Citedal Fine Pharmaceuticals, 1989(42) ELT 515; State of Gujarat Vs. Patel Raghav Natha, AIR 1969 SC 1297; Ibrahimpatnam Taluk Vyavasaya Collie Sangham Vs. K. Suresh Reddy and others, AIR 2003 SC 3592; and, State of Himachal ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o consider the question whether, in the facts and circumstances of the case, the notice of demand for recovery was made within a reasonable period. No hard and fast rule can be laid down in this regard as the determination of the question will depend upon the facts of each case." 39. The aforesaid decision, in my view, does not further case of petitioners on the point and issue involved in the present case. 40. In State of Gujarat Vs. Patel Raghav Natha (supra) the dispute relates to grant of permission under Section 65 of Bombay Land Revenue Code, 1879. The Collector granted permission on 02.07.1960 to petitioner, M/s Patel Raghav Natha and others to use some land for non-agricultural purposes but the same was cancelled by Commissioner vide order dated 12.10.1961. Therein the Court found that an order passed by Collector under Section 65 though was revisable by Commissioner under Section 211 and no period of limitation was prescribed but such revisional power ought to have been exercised within a reasonable time. Looking to the scheme of statute the Court in para 14 of the judgment said: "14. It seems to us that Section 65 itself indicates the length of the reasonable tim....
X X X X Extracts X X X X
X X X X Extracts X X X X
....suo-motu power could be exercised reckoning or starting from a particular date advisedly and contextually. Exercise of suo-motu power depended on facts and circumstances of each case. In cases of fraud, this power could be exercised within a reasonable time from the date of detection or discovery of fraud. While exercising such power, several factors need to be kept in mind such as effect on the rights of the third parties over the immovable property due to passage of considerable time, change of hands by subsequent bona fide transfers, the orders attaining finality under the provisions of other Acts (such as Land Ceiling Act). Hence, it appears without stating from what date the period of limitation starts and within what period the suo-motu powers is to be exercised, in sub-section (4) of Section 50-B of the Act, the words "at any time" are used so that the suo-motu power could be exercised within reasonable period from the date of discovery of fraud depending on facts and circumstances of each case in the context of the statute and nature of rights of parties. Use of the words "at any time" in sub-section (4) of Section 50-B of the Act cannot be rigidly read letter by letter. It....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Holdings Act, 1972 came to be considered. Therein Commissioner had exercised power under Section 20 sub-section (3) after 15 years of the order of Collector. The power was appellate in nature as observed in para 5 of the judgment. The Court said that though no period has been prescribed in sub-section (3) but that does not mean that there could be no time limit or it is in infinity. It further said: "6. . . . . . All that is meant is, that such powers should be exercised within a reasonable time. No fixed period of limitation may be laid but unreasonable delay in exercise of the power would tend to undo the things which have attained finality. It depends on the facts and circumstances of each case as to what is the reasonable time within which the power suo moto action could be exercised. For example, in this case, as the appeal had been withdrawn but the Financial Commissioner had taken up the matter in exercise of his suo moto power, well it could be open for the State to submit that the facts and the circumstances were such that it would be within reasonable time but as we have already noted the order of the Collector which has been interfered with, was passed in January 197....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ive years and in case the respondents desire to proceed against the Agents, action must be taken before the expiry of the period. The bond should not be kept alive for all time to come and must be limited for a duration of five years from the date of execution." 49. The Madras High Court's judgment in Wilco and Co. Vs. Union of India (supra) also relates to the nature of goods which were subject to spillage and shrinkage. There the Court found that delay in imposing penalty could not be explained by department at all and in that view of the matter the Court in exercise of its jurisdiction under Article 226 of the Constitution found it expedient to interfere with the order of penalty passed under Section 116 of Customs Act. 50. In the present case the facts, as already discussed, show that since very beginning the department has been pursuing petitioners to furnish requisite documents and several letters and notices were issued. Therefore, it cannot be said that there was an extraordinary undue delay or on account of such delay, petitioners were not in a position to furnish requisite material on account of weeding or loss etc. or for any other valid reason. It thus cannot ....