TaxTMI 
TaxTMI 
2020 (11) TMI 637
X X X X Extracts X X X X
X X X X Extracts X X X X
....he manufacturer in India, mainly situated at Ludhiana, who manufactures the same and thereafter, these are supplied by the petitioner to the foreign buyers. 3. The petitioner further claims that its goods have also been examined by the Directorate of Revenue Intelligence (DRI) and were cleared as no discrepancy was found. 4. The petitioner further claims that pursuant to the Circular No. 16/2019-Customs dated 17.06.2019 issued by the Director, Customs, Central Board of Indirect Taxes and Customs with regard to IGST refund, the exports made by the petitioner were subjected to 100% examination and no discrepancy was found in the same. It is further claimed that even the export proceeds against these exports and other exports have been realised by the petitioner. 5. The petitioner further gives reference to the search conducted by the DRI, Ludhiana at the office of M/s Sadagati Clearing Services Pvt. Ltd., in which it is claimed that the Managing Director of the petitioner is one of the Directors. The petitioner thereafter goes on to make various averments regarding this search and proceedings thereafter, however, as this petition is not concerned with the proceedings initiat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and 7(n) of the Foreign Trade (Regulation) Rules, 1993, as amended from time to time, and 4. In case you desired to be heard-in-person you may appear before the undersigned on any working day before 13.11.2019 with all documentary evidence is support of your reply to this show cause notice. 5. In case, nothing is heard from your end by 13.11.2019. In this regard, it will be presumed that you have nothing to say in the matter and action as per FTDR Act 1992 (as amended) and the rules in force shall be taken against you. 6. This is without prejudice to any other action that may be taken against you as per law in force." 8. The petitioner sent a response dated 14.11.2019 to the Show Cause Notice inter alia contending that it had received the same only on 14.11.2019 and hence, could not avail of the opportunity of hearing. It was further contended that the petitioner had not claimed any benefit under the Merchandise Exports from India Scheme (MEIS). The petitioner also asked for being supplied a copy of the communication received from the DRI. For sake of completeness, the reply is quoted below:- "Please refer to your letter File No. 5/MISC3/AM20/....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., in fact, submit that there is no separate order dated 10.01.2020 and therefore, the occasion of separately supplying the same to the petitioner did not arise. 13. The petitioner has challenged the Show Cause Notice dated 08.11.2019 on the ground that it is vague as it does not spell out the exact nature of violation for which the petitioner is sought to be proceeded against. 14. The petitioner challenges the Impugned Order dated 10.01.2020 on the ground that the same has been passed without supplying the petitioner the documents sought to be relied upon for proceeding against the petitioner and without affording an opportunity of hearing to the petitioner. The petitioner further asserts that the respondents have failed to supply a copy of the Impugned Order to the petitioner and now, with the admission of the respondents that there is no separate order, the Impugned Order is also liable to be set aside on the ground of it being unreasoned. 15. On the other hand, the learned counsel for the respondents asserts that the respondents had received a communication/letter dated 04.09.2019 from the DRI with respect to the petitioner, stating as under:- "This office is c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....with complete disclosures. The present petition cannot therefore, be dismissed on this ground alone. 19. The learned counsel for the respondents further asserts that the present petition is liable to be dismissed as the petitioner has an equally efficacious remedy in form of an Appeal under Section 15 of the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as the Act). 20. In my opinion, this preliminary objection must also fail as the petitioner has premised the present petition on the grounds of violation of Principles of Natural Justice. In Whirlpool Corporation v. Registrar of Trade Marks & Ors., (1998) 8 SCC 1, the Supreme Court has held that the availability of an alternative remedy cannot operate as a bar to the maintainability of a petition under Article 226 inter alia where there has been a violation of the Principles of Natural Justice. In the present case, as would be explained later, in fact, there is no order which can be challenged in appeal. 21. On the merits of the petition, reference needs to be first made to the 'Guidelines for Maintaining the Denied Entities List (DEL)' dated 31st December, 2003, which provides inter-alia as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....usal, suspension or cancellation of licenses will also require, as is the case while exercising any executive authority under the statues, strict adherence to the principle of natural justice. Implying thereby that licensing authority will refuse, suspend or cancel any license after giving the holder of license a reasonable opportunity of being heard and thereafter by passing a reasoned order to be recorded in writing. D. DEL management procedures: 1. The DEL order will explicitly mention that an appeal against the refusal of license will lie under Section 15 of the Act. 2. The DEL maintained by port offices will contain names of the firms, their registered office address including those of branch offices, names of their partners, proprietor, directors and their residential addresses along with IEC No. of the firm and will be maintained as a computerized database. Licensing benefits will not only be denied to the firms as legal entities but also to the individuals/persons owning/controlling these entities." 22. A reading of the above Guidelines clearly indicates that where a recommendation to suspend/cancel licenses of a firm is received by the respond....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he DGFT website. The relevant shipping bills and e-BRC have to be linked with the on-line application. Further, to simplify the process of implementation of the 'Foreign Trade Policy' Schemes, Trade Notices No.30/2018-19 dated 11.09.2018 and No.03/2015-2020 dated 03.04.2019 were issued. In terms of Clause 2 (ii) (a) of Trade Notice dated 11.09.2018, online module would not accept the submission of the MEIS application, if the applicant firm is in the Denied Entry List/Suspended IEC/Cancelled IEC and in terms of Trade Notice dated 03.04.2019, even the issue of physical copy of MEIS scrips has been discontinued w.e.f. 10.04.2019 and therefore, as of today, the entire system from 'end to end' under MEIS operates digitally, online and without any human intervention. 26. She submits that the petitioner having allegedly realised the export proceeds, would just need to log in online on the DGFT website and claim the digital scrips under the MEIS and the only way to stop the petitioner from claiming the said benefit is to place it under the 'Denied Entry List' till a final order is passed, which is done vide the Impugned Order dated 10.01.2020. The said order has placed the petitioner i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Central Excise, Gauhati & Ors., (2015) 8 SCC 519, in support of her submissions. 29. Placing reliance on Director General of Foreign Trade & Anr. v. Kanak Exports & Anr., (2016) 2 SCC 226, she submits that the allegation against the petitioner being grave, the petitioner cannot claim any relief from this Court under Article 226 of the Constitution. 30. To appreciate the above submissions, certain provisions of the Act and the Rules need to be considered. Section 9 of the Act provides for the issue, suspension and cancellation of licence, and reads as under:- "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 licence, certificate, scrip or any instrument bestowing financial or fiscal benefits of in respect of any licence, certificate, scrip or any instrument bestowing financial or fiscal benefits 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, grant or renew or refuse to grant or re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....quoted herein below: 7. Refusal of licence.- (1) The Director General or the licensing authority may for reasons to be recorded in writing, refuse to grant or renew a licence if - (a) the applicant has contravened any law relating to customs or foreign exchange; (b) the application for the licence does not substantially conform to any provision of these rules; (c) the application or any document used in support thereof contains any false or fraudulent or misleading statement; (d) it has been decided by the Central Government to canalise the export or import of goods and distribution thereof, as the case may be, through special or specialised agencies; (e) any action against the applicant is for the time being pending under the Act or rules and Orders made thereunder; (f) the applicant is or was a managing partner in a partnership firm, or is or was a Director of a private limited company, having controlling interest against which any action is for the time being pending under the Act or rules and Orders made thereunder; (g) the applicant fails to pay any penalty imposed on him under the Act; (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ect in respect of the aforesaid person or, as the case may be, the partnership firm or company, when the order of detention made against such person, - (i) being an order of detention to which the provisions of section 9 of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974) do not apply, has been revoked on the report of Advisory Board under section 8 of that Act or before receipt of the report of the Advisory Board or before making a reference to the Advisory Board; or (ii) being an order of detention to which the provisions of section 9 of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974) apply, has been revoked on the report of the Advisory Board under section 8 read with sub-section (2) of section 9 of the Act or before receipt of such report; (iii) has been set aside by a court of competent jurisdiction. (2) The Director General or the licensing authority may by an order in writing suspend the operation of any licence granted under these rules, where proceedings for cancellation of such licence has been initiated under rule 10. 34. Rule 10 of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and how they have been dealt with and appreciated by the Authority. In fact, it gives no reason except stating that the "Firm is under D.R.I Ludhiana Investigation". In terms of the Guidelines reproduced hereinabove, the same cannot be a sufficient reason as the respondent/Authority is to apply its independent mind to the allegations against the petitioner. The respondent admits that barring receiving a reference/request dated 04.09.2019 from the DRI, it has no other material to proceed against the petitioner. The reference/request itself is cryptic. 39. The Show Cause Notice was for "availing Special MEIS benefits fraudulently by mis-declaration and forgery of documents". The petitioner in its reply had categorically submitted that it had not claimed or submitted any documents for grant of Special MEIS benefits till date. The petitioner had also requested for a copy of the communication received from DRI to understand the background for the proposed action. The Impugned Order dated 10.01.2020 does not show any application of mind to these submissions as the order contains no reasons. 40. The Impugned Order dated 10.01.2020 is liable to be set aside on this short ground itse....