TaxTMI 
TaxTMI 
2002 (11) TMI 110
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....Oriented, the Unit should export goods and services etc. The export oriented unit may import without payment of duty all types of goods including capital goods as defined in the EXIM policy required for its activity. The export oriented unit may procure goods required by it or in connection with its activity without payment of duty from bonded warehouses in the domestic tariff area set up under the policy and the Unit is permitted to effect Domestic Tariff Area sale of its products up to a percentage of the FOB value of the export. The petitioners have set up the EOU (Export Oriented Unit) for the manufacture of HDPE plastic bags, sheets, tapes and rolls for which the duty free import of raw material is virgin plastic granule. The petitioners have established export performance earning foreign exchange to a considerable extent. The petitioners have earned a total Domestic Tariff Area sales permission to the extent of Rs. 30.87 crores under several orders on the export of the manufactured goods. 4. It is claimed that the petitioners have established the foreign exchange realisation by the production of the Export Invoices, Bank Statement etc. The bank has also certified the....
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....is contended further that the show cause notice itself is for the period commencing from 1-9-1998 to 12-1-2001 while the DTA sales have been authorised for the prior period from 1996-97 to 1997-1998 and therefore it cannot be proceeded against or suspended. The suspension is per se illegal and violative of the policy and liable to be quashed. It is further contended that if the suspension is not quashed the petitioner will be put to serious hardship and loss. The petitioners are effecting DTA sales as per the existing policy and the privilege had been earned and by sale of rejects or waste, no prejudice will be caused to the respondents. There is no provision in the EXIM policy or Handbook by which the impugned order can be passed. Hence the present writ petition. 10. The first respondent filed a counter affidavit. According to the respondent 100% EOU scheme provides for grant of permission for setting up a new undertaking/unit which is valid for three years and the undertaking not being established within three years, a further extension of time for another three years is permissible. The permission would be granted subject to certain conditions stipulated in the Annexure....
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....ion is a facility given to EOUs based on the FOB value of exports and if the FOB value of exports itself is in doubt, the question of permitting DTA sale does not arise. The DTA sale permission under Para 9.9(b) of the EXIM policy 1997-2002 entailed only concessional duty, this would have resulted in heavy loss of revenue to Government. 13. According to the second respondent the total customs duty thus evaded by the assessee is Rs. 16,13,10,303 and the Central Excise duty is Rs. 4,65,456/-. In view of the serious nature of allegations the first respondent initiated action suspending the DTA sale permission. But the first respondent has not stopped the imports and exports and normal function of the company, but has only passed order suspending the DTA sale on concessional duty, which is supported by Para 6 of the Legal Undertaking given by the petitioner. DTA sales have been granted only for a periods 1996-97 and 1997-98, the validity of the DTA sale permission would have expired on 31-3-2002 and 31-3-2001 respectively and the same is no longer available. The petitioners are not restrained from doing its normal activities of import and export which is the object of the lice....
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....sis. Chapter VI relates to Export Promotion capital goods scheme. Chapter VII provides the duty exemption scheme. Clause 7.4 of this Chapter prescribes the export obligation. Clause 7.25 provides for duty entitlement pass book. Chapter IX provides for Export Oriented Units, Units in Export Processing Zones, etc., Clause 9.1 prescribes the eligibility. Clause 9.9 provides for DTA sales subject to certain restrictions towards rejects. Clause 9.9(e) enables an Export Oriented Unit to sell finished products which are freely importable under the Policy in the DTA over and above the levels permissible under sub-paragraphs (b) and (c) of this Chapter against payment of full duties, provided they have achieved on an annual basis, the stipulated NFEP and export obligation. Clause 9.15 enumerates the various benefits for EOU/EPZ Units. The same Chapter provides for bonding and debonding in respect of bonded warehouse. Chapter X provides for deemed exports. Chapter XI provides for exports. 17. There is no doubt that in terms of the EXIM policy the petitioners have established a EOU Unit. The Foreign Trade (Development and Regulation) Act, 1992 provides for development and regulation ....
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....e precondition stipulated by the Rules and compliance thereof, there could be no suspension. 20. Per contra, Mr. V.T. Gopalan, learned Additional Solicitor General contends that what has been suspended is not a licence but the right in respect of DTA sales and it is in terms of the undertaking. The learned Solicitor General contended that it is not a licence, nor it is a part of the licence and therefore the rules do not apply and the communication of suspension which is only an interim suspension is valid and it is not liable to be interfered by this Court under Art. 26 of the Constitution. 21. The EXIM policy lays down establishment of EOU Units, import of goods without levy of duty, export of goods and after achieving the export obligation it also enables the EOU to dispose off part of its products in the local market. The said three limbs of the policy or licence form part of the licence. A licence cannot be divided into compartments as it is a bundle of rights which confers the privilege or obligation in respect of EOU under the Export and Import Policy. The policy has been framed by virtue of the statutory powers conferred under Section 5 of the Foreign Trad....
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....s part of the licence and it is a licence by itself and the contention to the contra advanced by the learned Additional Solicitor General cannot be countenanced. 25. The learned Senior Counsel appearing for the petitioner rightly referred to a notification namely the General Exemption Notification No. 55 in support of his interpretation that the DTA sale is a licence in accordance with the provisions as found in sub-paragraphs (a), (b), (c) and (d) of Paragraph 9.9 or of Paragraph 9.20 of the EXIM policy, dated 1st April, 1997. The material portion of the notification reads thus :- "Exemption to all excisable goods produced in 100% EOU, FTZ, EHTP or STP Units when sold in India. - In exercise of the powers conferred by sub-section (1) of Section 5A of the Central Excises and Salt Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all excisable goods (hereinafter referred to as the said goods) specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and produced or manufactured in a hundred per cent export oriented undertaking or a free trade zone or an Electronic Hardwar....
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....f proviso to sub-section (4) of Section 9 it is mandate to give a notice to the holder of the licence, a reasonable opportunity of being heard. Proviso to sub-section (4) mandatory and it obligates the Director General or Officer authorised to grant a reasonable opportunity of being heard before suspending the licence which licence also takes in or include the DTA sales. That apart, the Director General has to record reasons in writing before suspending the licence. Such suspension could be imposed for good and sufficient reasons as it is a restriction on the licence and that part of DTA sales already earned. 30. In the present case, admittedly, the petitioner has not been given a reasonable opportunity of being heard. Section 9(4) makes no difference between a suspension of a licence as a substantial order of penalty or an interim suspension. Under section 19 of the Foreign Trade (Development and Regulation) Act, 1992, Rules have been framed. Rule 9 provides for suspension of a licence. The licence could be suspended under sub-rule (1) of Rule 9, if an order of detention has been made under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1....