Case Law Details
Maruti Printers Vs Union of India (Gujarat High Court)
If assessee was given clean chit in SCN proceedings, respective authority might be requested to consider extension of Export Obligation period
Conclusion: If assessee was given a clean chit in the proceedings of the show cause notice, it might request the concerned authority to consider the case of extending the Export Obligation period which had been suspended presently and it would be for the authority to consider such a request at an appropriate time, if the factual circumstances based on the substantive material eventually tilt in favour of assessee.
Held: Assessee imported capital goods such as Ryobi Multi Colour Offset Printing Press (without Blanket washing & without air compressor), having total assessable value of Rs.2,46,96,480/- vide Bill of Entry No.607474 dated 17.09.2008 and the concession of the Customs Duty made available to him was to the tune of Rs.63,09,755/-. He, therefore, was required to export the goods valued at US$ 9,01,164.04 within the period of eight years or further period as could be extended by the Licensing Authority i.e. DGFT. Assessee was unable to fulfill complete Export Obligation and therefore, sought further extension of period for fulfilling the obligation of export. Such a request was made to respondent No.2 and respondent No.2 had extended the time for Export Obligation to 09.09.2018 for the first block period. As such letter was received only a month before the extended period expired, nothing could be done by assessee. He attempted to fulfill this through the third party exports as defined under para 5 and 9.6 of the FTP. He again applied for second extension, which was granted on 10.09.2018 and the time was granted upto 09.09.2020. Assessee had exported goods at US$ 2,54,266.14 (FOB) against the Export Obligation of US$ 9,29,268.71 (FOB) till 09.09.2018 under EPCG licence No.0830002618 dated 09.09.2008 and had not fulfilled the Export Obligation on FOB basis equivalent to six times of the duty saved within stipulated Export Obligation period of 10 days (8+2 extended) from the date of issuance of the EPCG licence, on the ground that it had violated condition mentioned in Para No.(3) of the Notification No.64/2008-CUS dated 09.05.2008, a show cause notice was issued on 05.03.2019. DRI alleged that EOP extension in respect of EPCG Authorisation, which was granted to assessee by respondent No.2 upto 09.09.2020 had been cancelled on account of instructions received from the DRI, Ahmedabad that assessee was indulging in misuse of the EPCG Scheme by fraudulently attempting to show bogus export towards fulfillment of their Export Obligation against EPCG Authorisation. Search operation was carried out on 15.09.2018 at the office cum factory premises of assessee where these suspicious documents had been found and therefore, immediately the original EPCG No.0830002618 had been called for. As the same was not furnished, as directed, there was a suspension of the same on 22.01.2019. Challenge in this petition was to this suspension of amendment sheet No.3, which had extended two years of Export Obligation period with a further request to prospectively grant it for two years. After nearly a month from the non-compliance on 22.01.2019, there had been a suspension of the amendment sheet No.3 dated 27.11.2018. The show cause notice pursuant to the said search operation and subsequent to the suspension of this was already given on 05.03.2019. Any indulgence on the part of the Court at this stage, would amount to entertaining the matter and indulging into the merit at the stage of show cause notice, which was impermissible. It was held that once having extended the period on 27.11.2018, without availing the opportunity, the grant of extension of Export Obligation period, could not be cancelled. However, if there were certain suspicious documents noticed by DRI, the authority concerned, if had chosen to suspend the same and had sought the detail from assessee, no interference was desirable. If assessee was given a clean chit in the proceedings of the show cause notice, it might request the concerned authority to consider the case of extending the Export Obligation period which had been suspended presently and it would be for the authority to consider such a request at an appropriate time, if the factual circumstances based on the substantive material eventually tilt in favour of assessee.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. This petition is preferred under Article 226 of the Constitution of India, where M/s Maruti Printers is the proprietary concern and Shri Bhadresh Shah is the proprietor of the firm. The petitioner is engaged in business of printing press from the premise and respondent Nos.2 and 3 are the officers of respondent No.1, exercising powers and discharging the duties cast upon them under the provisions of the Foreign Trade (Development & Regulation), Act, 1992. Respondent No.4 is the Principal Commissioner of Customs posted at the Nhava Sheava Custom House, duly appointed under the provisions of the Customs Act, 1962.
2. Brief facts leading to the present petition are as follows:
2.1 The Central Government issued various promotional/incentive schemes to accelerate growth of export goods for the country to earn the foreign exchange.
Chapter IV and V of the Foreign Trade Policy (‘the FTP’ for short) contains the provisions relating to Duty Exemption Scheme. These are the schemes for extending incentive to exporters.
2.2 One such scheme is import of capital goods under Export Promotion Capital Goods (‘the EPCG Scheme’ for short). Under the said scheme, the importers are allowed to import capital goods at Zero rate of duty or at the rate of 3% of the duty. This is to ensure that at affordable price the exporters are allowed to import the capital goods and good quality of final product can be made out from the same. The EPCG Scheme allowed import of capital goods for pre-production, production and post-production, subject to the condition that the exporters fulfill Export Obligation equivalent to eight times of duty on capital goods imported under the EPCG Scheme within a period of eight years or the period as extended by DGFT thereafter, reckoned from the date of issuance of the authorisation. In other words, as averred by the petitioner, there is a compulsion on the business houses/persons to bring in foreign currency which is equivalent to 800% of the duty saved on such importation measured in domestic currency. This EPGC Scheme has been set out under Chapter 5 of the Foreign Trade (Development & Regulation) Act, 1992.
2.3 The Central Government in exercise of powers conferred by Section 25(1) of the Customs Act, 1962 issued a Notification No.97/2004-CUS dated 17.09.2004 as amended from time to time; whereby the capital goods imported, under valid authorisation issued under the EPCG Scheme in terms of Chapter V of the FTP is exempted from so much of the duty of Customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act, 1975. This would be in excess of the amount calculated at the rate of 5% ad valorem, and the whole of additional duty leviable under Section 3 of the Customs Tariff Act,1975 with the conditions as provided under the said Notification.
2.4 The petitioner was even-though granted the EPCG Authorisation No.0830002618 dated 09.09.2008 by the respondent No.2 under the EPCG Scheme formulated by the Ministry of Commerce under the FTP in the year 2008, for import of printing machines with a condition to export of leaflets, booklets, brochures, commercial banners, books, calenders and similar matters classifiable under ITC 4901-1020 and 4902-9020 worth of US$ 9,29,268.71; pursuant to the said EPCG Authorisation, the petitioner imported capital goods such as Ryobi Multi Colour Offset Printing Press (without Blanket washing & without air compressor), having total assessable value of Rs.2,46,96,480/-vide Bill of Entry No.607474 dated 17.09.2008, availing concession of the Customs Duty of Rs.63,09,755/-.
2.5 The petitioner was required to export the goods valued at US$ 9,01,164.04 within the period of eight years or further period as may be extended by the DGFT which is the Licensing Authority.
2.6 It is the say of the petitioner that due to the global economic slowdown and due to the consequent lack of orders, the petitioner could manage to export the goods totally worth US$ 2,74,686/-equivalent to sum of Rs.1,68,25,375/-.
2.7 As the complete Export Obligation had not been fulfilled by the petitioner, extension was sought from the respondent No.2 and during the pendency of such application of EOP, further export of goods totally valued at US$ 1,33,075/-(worth Rs.77,54,572/-) was made. Although, the said export was not considered towards fulfillment of Export Obligation; as the application of the petitioner was pending and the Export Obligation Period (‘the EOP’ for short) had expired when the said goods were exported.
2.8 Respondent No.2 by an amendment sheet No.2 issued from File No.08/36/160/00206/AMI9 dated 27.08.2018 had extended the time for fulfillment of Export Obligation upto 09.09.2018 for the first block period; however, no Export Obligation could be discharged by the petitioner, as the letter granting extension of the time for Export Obligation was received only a month before the extended period expired. The petitioner also tried to fulfill the Export Obligation through the third party exports as defined under para 9.6 of the FTP and permitted under Para 5 of the FTP. Although, what was required was that the goods were actually to be manufactured on the imported capital goods w.e.f. April, 2015, the petitioner did not claim the benefit of such exports.
2.9 Because of this, the petitioner applied for second extension which was granted by an Amendment Sheet No.3 issued from File No.08/36/160/00233/AMI9 dated 10.09.2018, whereby the second block period for fulfillment of Export Obligation by the petitioner was extended to 09.09.2020.
2.10 In the meantime, the Directorate of Revenue Intelligence (‘the DRI’ for short) initiated investigations into duty-free imports of the petitioner. During the course of investigation, statement of the petitioner was recorded. Although, the application seeking extension of Export Obligation was pending before the licensing authority and the petitioner being eligible for second extension on payment of fees as payable the said capital goods imported under the EPCG scheme, pursuant to the seizure of the imported capital goods, the petitioner sought provisional release after furnishing bank guarantee of Rs.27,52,042/- and Bond for the full value of the imported capital goods. Upon furnishing the Bank guarantee and the Bond, the machine was released provisionally by the respondent No.4.
2.11 The petitioner was directed to submit the original copy of the EPCG licence issued to them within a period of two days without providing any details vide communication dated 24.12.2018 allegedly for no rhyme or reason. The petitioner requested respondent No.2 to clarify the matter as to why the licence was required to be submitted.
2.12 The respondent No.3 vide letter dated 22.01.2019 unilaterally cancelled the extension granted for fulfillment of Export Obligation without responding to the said letter dated 02.01.2019 nor did it bother to explain the reason for demanding original EPCG licence.
2.13 Request for personal hearing also was made pursuant to the communication dated 22.01.2019; however, the same was also not granted. It also enclosed the EPCG licence issued to the petitioner along with the letter. Upon completion of the investigations, a show cause notice dated 05.03.2019 was issued to the petitioner, where, the petitioner was directed to show cause to the respondent No.4 as to why the duty of Rs.45,87,584/-should not be demanded from him along with interest and consequent penalty.
2.14 Holding this unilateral action as arbitrary and contrary to law, it is lamented by the petitioner that although the extension of Export Obligation period was allowed by the respondent No.2 on 10.09.2018 after duly examining all facts and considering that the obligations have also been fulfilled by the petitioner and also considering the provisions of FTP governing the issue, fees of Rs.8000/- of such extension has also been paid. The respondent No.3 had no business to unilaterally suspend the said extension without granting any opportunity of hearing to the petitioner.
2.15 According to the petitioner, it is a settled position of law that the DGFT is the final authority in the matters concerning FTP as provided in para 2.57 of the FTP and licences, such as the EPCG licence issued to the petitioner. Despite the said position, respondent No.4 intervened in the process and prevented the petitioner from enjoying the benefit of the extension of the EOP granted to the petitioner as is permissible under the law. It is lamented by the petitioner that the DGFT permission once granted cannot be withdrawn. Resultantly, the present petition with the following prayers:
“12.
(a) this Hon’ble Court be pleased to issue writ of Mandamus or any other appropriate writ, order or direction under Article 226 of the Constitution of India, ordering and directing the Respondents, their subordinate servants and agents to forthwith-
(i) Withdraw the letter dated 22.01.2019 suspending the Amendment Sheet No.3 (Annexure G) and extend the Export Obligation Period for 2 years prospectively, so as to enable the Petitioner to complete their Export Obligation under the EPCG Authorisation issued to them as stipulated under Foreign Trade Policy;
(ii) The Extension given by Respondent No.2 vide licence Amendment sheet dated 27.11.2018, expiring on 09.09.2020 may be extended or made applicable for a period of 2 years prospectively from the date of communication of the order of extension or from the date of Order of this Hon’ble Court;
(III) Stay the operation/adjudication of the Show Cause Notice dated 05.03.2019 (Annexure I) issued to the Petitioner, till such time the extension of Export Obligation period is granted and valid;
(iv) Not to take coercive action against the Petitioner till the expiry of the extended period of EOP.
(B) this Hon’ble Court be pleased to issue a Writ of Certiorari, or a Writ in the nature of Certiorari, or any other appropriate Writ, Order or direction, calling for the papers and proceedings leading to the letter dated 22.01.2019 issued by Respondent No.3 suspending the Amendment Sheet No.3 (Annexure G) and after looking into the same and the legality thereof this Hon’ble Court be pleased to quash and set aside the said letter dated 22.01.2019 (Annexure G);
(c) that pending the hearing and final disposal of the present petition,this Hon’ble Court be pleased to direct the Respondents, their servants, agents, officers and subordinates
(i) not to take coercive steps to recover the duty and consequent levies involved on the Capital Goods involved in the EPCG Authorization from the petitioner;
(ii) Stay the operation/adjudication of the Show Cause Notice dated 05.03.2019 issued to the petitioner
(Annexure I),
(D) for interim and ad-interim relief in terms of prayer clause (c) above;
(E) for costs of this petition;
(F) for such further and other reliefs be granted to the Petitioners as this Hon’ble Court may deem proper and fit in the nature and circumstances of the case.”
3. This Court had issued the notice for final disposal on 02.07.2019 and thereafter, once again fresh notice came to be issued on 10.07.2019.
4. Affidavit-in-reply is filed by the respondent-Commissioner of Customs, NS-II, Customs and Excise Department, denying every allegations and averments. According to the respondent, the Notification No.97/2004-CUS dated 17.09.2004 is not applicable in the present case. The Notification 64/2008-CUS dated 09.05.2008 is applicable in the present case and the same is also mentioned in the EPCG authorisation No.0830002618 dated 09.09.2008 issued to the petitioner.
4.1. It is further the say of the respondent that out of the total shipping bills, the petitioner had only 14 shipping bills for export of goods totaling worth US$ 2,54,266.14 equivalent to Rs.1,57,08,787.73 mentioned towards fulfillment of their obligation towards EPCG authorisation No.0830002618. It is further contended by the respondent that the petitioner in connivance with M/s. Quarterfold Printabilites indulged in fraudulent activity of getting their names and EPCG licence number mentioned as supporting manufacturer in the 9 shipping bills filed by M/s.Quarterfold Printabilites without manufacturing and supplying any goods to M/s.Quarterf old Print abilites with an intent to submit them to DGFT towards their Export Obligation fulfillment to obtain EODC against the EPCG authorisation No.0830002618. According to the respondent, the capital goods were seized on 15.09.2018 as no extension for fulfillment of Export Obligation for EPCG authorisation No.0830002618 was granted by the DGFT after 09.09.2018.
5. It is further contended that the allegations made by the petitioner are false and baseless as DRI has sent communication to DGFT, Ahmedabad giving the details of case and statements recorded in case of M/s.Maruti Printers in the year 2018. According to the respondent, the prayer to stay the operation/ adjudication of the show cause notice dated 05.03.2019 is granted till such time the extension of EOP or his valid merit would not require to be considered. It is the connivance of the petitioner with the third party without manufacturing or supplying any goods to the third party version exporter on the contrary should require strict directions.
6. The affidavit-in-rejoinder is filed by the petitioner which would be regarded at an appropriate place.
7. This Court has heard extensively the learned advocate, Mr.Hardi P. Modh appearing for the petitioner and learned Central Government Standing Counsel, Mr.Parth Divyeshvar appearing for the respondent, who have argued along the line of the respective pleadings. On careful examination of the entire material and on thoughtfully considering the rival claims of the parties, for reasons to follow hereinafter, this petition merits no consideration.
8. It is urged fervently by the learned advocate, Mr.Hardik Modh that essential purpose of granting of EPCG licence is to bring foreign currency in India. According to him, communication dated 22.01.2019 issued by the respondent No.3, extended time upto 09.09.2020 for fulfillment of Export Obligation against EPCG authorisation dated 09.09.2008. It is his grievance that this has been unilaterally suspended without granting any opportunity of hearing or providing any reasons.
8.1 He fervently urged that there is a need for restoration of the time limit granted by the respondent No.3. He has also further urged that the petitioner made an attempt to get export orders from the foreign buyers. He also received the export order on 12.01.2019 from United Kingdom. The order came on 12.01.2019 and the export was to be made in three months’ period. There had been suspension of the amendment on 22.01.2019. According to him, he had no option but to export and therefore, against the invoice of 15.04.2019, he exported 10% of the quantity, and he did not mention the authorisation number in the export document, as it was not viable for the petitioner to export the ordered quantity as his authorisation was suspended to cancel the order, and did not supply further material towards purchase order on 12.01.2019.
8.2 He has lamented further that as it was not financially viable to supply the material since the export was not to be counted towards fulfillment of Export Obligations against the authorisation.
According to the learned advocate, the petitioner has not shown even a single rupee of sales to M/s.Quarterfold Printabilites in the books of accounts. Against the Export Obligation of US$ 2,54,244.14 he has been able to fulfill such obligation of US$ worth of Rs.4,01,481. He completed 43% of his obligation and is ready to so do it, so therefore, if the real objective of such export, if is looked at, he should be provided an opportunity. He emphasised that once the extension is granted, the same cannot be revoked without any valid reason. According to him, the show cause notice for misuse of EPCG licence is still pending for adjudication. Therefore, till then, he should be permitted the export by restoring the time limit extended by 27.11.2018.
9. Learned Central Government Standing Counsel, Mr.Parth Divyeshwar has emphasised that the show cause notice is still alive and 43% of export is already carried out; however, 57% of export is still remaining. The obligations of his since have remained unfulfilled, no purpose is likely to be served in granting the extension of the time against the EPCG authorisation No.0830002618 dated 09.09.2008, since the same had been suspended. Having noticed that, continuing the same, is of no use when the petitioner has not fulfilled his obligations as were required to be done at his end.
10. Having thus heard both the sides and also having considered the material on the record, the question that dragged the attention of this Court is as to whether the extension as sought for of the authorisation needs to be given to the petitioner in wake of the pendency of the show cause notice dated 05.03.2019 and in total set of facts and circumstances?
11. Undisputed facts in the instant case are that the petitioner applied for and was granted EPCG authorisation on 09.09.2008 by the office of respondent No.2 under the EPCG scheme formulated by the Ministry of Commerce under the FTP in the year 2008. The EPCG authorisation No.0830002618 was for import of printing machines with a condition to export leaflets, booklets, brouchers, commercial banners, books, calenders, etc. They were all classifiable under ITC 4901-1020 and 4902-9020 worth of US$ 929,268,.71.
12. It is the case of the petitioner that it imported capital goods such as Ryobi Multi Colour Offset Printing Press (without Blanket washing & without air compressor), having total assessable value of Rs.2,46,96,480/- vide Bill of Entry No.607474 dated 17.09.2008 and the concession of the Customs Duty made available to him was to the tune of Rs.63,09,755/-. He, therefore, was required to export the goods valued at US$ 9,01,164.04 within the period of eight years or further period as could be extended by the Licensing Authority i.e. DGFT.
13. The petitioner could export the goods totaling worth US$ 2,74,686/- out of the required export of goods of US$ 9,01,164.04. The petitioner was unable to fulfill complete Export Obligation and therefore, sought further extension of period for fulfilling the obligation of export. Such a request was made to respondent No.2 and during the pendecy of this request, he further exported the goods worth US$ 1,33,075/- (worth Rs.77,54,572/-). It is to be noted that this could not be considered towards the fulfillment of his Export Obligation as his EOP had already expired by then.
14. The respondent No.2 on 27.08.2018 extended the time for Export Obligation to 09.09.2018 for the first block period. As such letter was received only a month before the extended period expired, nothing could be done by the petitioner. He attempted to fulfill this through the third party exports as defined under para 5 and 9.6 of the FTP. He again applied for second extension, which was granted on 10.09.2018 and the time was granted upto 09.09.2020.
15. What is required of the petitioner was that the imported capital goods are to be utilized for the purpose of manufacturing and since the petitioner had exported goods at US$ 2,54,266.14 (FOB) against the Export Obligation of US$ 9,29,268.71 (FOB) till 09.09.2018 under EPCG licence No.0830002618 dated 09.09.2008 and had not fulfilled the Export Obligation on FOB basis equivalent to six times of the duty saved within stipulated Export Obligation period of 10 days (8+2 extended) from the date of issuance of the EPCG licence, on the ground that it had violated condition mentioned in Para No.(3) of the Notification No.64/2008-CUS dated 09.05.2008, a show cause notice was issued on 05.03.2019. The condition in Para No.5 of Notification No.64/2008-CUS dated 09.05.2008 requires the importer to furnish the details of Export Obligation fulfilled in two Blocks i.e. 50% Export Obligation in Block of 1st to 6th year and remaining 50% Export Obligation in Block of 7th to 8th year with evidence before the Customs Authorities within a period of 30 days of expiry of each Block. The respondent authorities could not find any evidence that within the stipulated time period, the Export Obligation of each Block had been fulfilled.
16. It also appears that the search operation was conducted on 15.09.2018 at the office cum factory premises of the petitioner at Abhay Estate, Tavdipura, Shahibaug, Ahmedabad where printing machines imported under the EPCG licence No.0830002618 dated 09.09.2008 was installed. During the course of the search operation conducted, the statements of the proprietor of the petitioner, the proprietor of M/s.Singh Road Carrier, Ahmedabad, General Manager of M/s.Quarterfold Printabilities, Production In-charge of Scratch Card unit of the petitioner, etc. have been recorded. It is alleged in the said show cause notice that in connivance with M/s.Quarterfold Printabilities and the consultant of M/s.Quarterfold Printabilites, the petitioner indulged in fabricating the export documents, i.e. Tax-Invoices, Lorry Receipt, E-way Bills, Custom Invoices, Packing List, SHIpping Bills, etc. This is only to masquerade as the goods having been transported through factory premise of the petitioner to M/s.Quarterfold Printabilites, Navi Mumbai and further exported by M/s.Quarterfold Printabilites. This is alleged to be the fraudulent manner of getting the name and EPCG Number of the petitioner as supporting manufacturer. The shipping bills filed by M/s.Quarterfold Printabilites showing the FOB value of US$ 4,65,074.07 allegedly are without manufacturing and supplying any goods to M/s.Quarterfold Printabilites, with an intent to further submit these documents to DGFT towards fulfillment of their Export Obligation and to obtain EODC against the said EPCG licence No.0830002618 dated 09.09.2008.
17. As could be noticed from the counter affidavit of the respondent Nos.1 to 3 the EOP extension in respect of EPCG Authorisation, which was granted to the petitioner by the respondent No.2 upto 09.09.2020 has been cancelled on account of instructions received from the DRI, Ahmedabad that the petitioner was indulging in misuse of the EPCG Scheme by fraudulently attempting to show bogus export towards fulfillment of their Export Obligation against EPCG Authorisation. The DRI has also alleged that in respect of the shipping bills of M/s.Quarterfold Printabilites, the petitioner had shown the said firm as its supporting manufacturer and had used the petitioner’s name and EPCG Authorisation number in the shipping bills of the firm to show them as its exports. It is thus prima facie clear that the required condition of EPCG Authorisation that the goods exported needed to be manufactured out of the capital goods imported by the petitioner has not been complied with as per the informations given by the DRI and therefore, the respondent No.2 had cancelled the EOP extension granted to the petitioner upto 09.09.2020, in respect its EPCG authorisation. It is the stand of the respondent that it is not mandatory to extend the said period of Export Obligation since the DRI had found the indulgence of the petitioner in the misuse of the EPCG scheme by making the use of shipping bills of other firms and using it before its own export. The Foreign Trade (Development & Regulation) Act, 1992 and the Rules made thereunder requires the personal hearing for the authority to propose imposition of the penalty and it also involves adjudication of the confiscation.
18. We notice that the extension has been firstly provided of the EOP by respondent No.2 on 10.09.2018 and thereafter, this has been suspended by the respondent No.3 on 22.01.2019. It is to be noted that the petitioner was directed to submit the original copy of the EPCG with the enclosure in two working days by a communication dated 24.12.2018. Yet another communication dated 22.01.2019, which is impugned here states that since the communication dated 24.12.2018 calling for authorisation for amendment had not been complied with nor had he availed any personal hearing to explain the non-compliance, the amendment in the Sheet No.3 dated 27.11.2018 stood suspended. It was further directed to furnish the original EPCG No.0830002618 within a period of seven days, failing which the action under Foreign Trade (Development & Regulation) Act, 1992 had been proposed. The show cause notice has been issued on 05.03.2019 after nearly two months of this communication. It is not out of place to make a mention that the search operation was carried out on 15.09.2018 at the office cum factory premises of the petitioner where these suspicious documents had been found and therefore, immediately the original EPCG No.0830002618 had been called for. As the same was not furnished, as directed, there was a suspension of the same on 22.01.2019.
19. Challenge in this petition is to this suspension of amendment sheet No.3, which had extended two years of Export Obligation period with a further request to prospectively grant it for two years. We could notice that the suspension on the part of the respondent authority is in wake of non-fulfillment of the directions on the part of the petitioner to the communication dated 24.12.2018. After nearly a month from the non-compliance on 22.01.2019, there had been a suspension of the amendment sheet No.3 dated 27.11.2018. It is to be noted that this communication clearly speaks of the suspension if not the cancellation or rejection of grant of the extension of the Export Obligation. This had come in wake of the inputs received from the DRI. The show cause notice pursuant to the said search operation and subsequent to the suspension of this is already given on 05.03.2019. Any indulgence on the part of the Court at this stage, would amount to entertaining the matter and indulging into the merit at the stage of show cause notice, which is impermissible.
20. Apt would be to refer to the decision of the Apex Court rendered in case of Union of India vs. Indalco Industries, reported in 2003 (3) SCR 377, its relevant findings and observations are as follow :
“There can be no doubt that in matter of taxation, it is inappropriate for the High Court to interfere in exercise of jurisdiction under Article 226 of the Constitution either at the stage of show cause notice or at the stage of assessment where alternative remedy by way of filing a reply or appeal, as the case may be, is available but these are the limitations imposed by the courts themselves in exercise of their jurisdiction and they are not matters of jurisdictional factors. Had the High Court declined to interfere at the stage of show cause notice, perhaps this court would not have been inclined to entertain the special leave petition; when the High Court did exercise its jurisdiction, entertained the writ petition and decided the issue on merits, we do not think it appropriate to upset the impugned order of the High Court under Article 136 of the Constitution on a technical ground.
The second contention urged by Mr. T.L.V. Iyer is that under Section 11-A, the authority did have power and the High Court had itself found in regard to paragraphs (1) to (13) and directed inquiry in respect of the clandestine removal of the goods. The assessee could have been directed to file a reply in regard to the matters concerning the incorrect valuation and the High Court ought not to have interfered. We are unable to accept the contention of the learned counsel for reasons more than one. First, as submitted by Mr. K.K. Venugopal, if an authority which has jurisdiction in regard to one aspect takes upon itself to make enquiry into a matter in respect of which it had no jurisdiction then merely because in regard to one aspect it has jurisdiction, the court cannot ignore the fact of lack of jurisdiction and allow the Tribunal to proceed with the matter in respect of which it has no jurisdiction to make inquiry. Secondly, the position, stated above, namely, that valuation once accepted under clause (a) and there being no vitiating factor, no recourse can be had to valuation under clause (b) is a settled position of law. Therefore, at this stage, if the party is directed to go back to the authority, it would be directing it to undergo a futile exercise.
For these reasons, we find no merit in the appeal. The civil appeal is dismissed but in the facts and circumstances of the case, we make no order as to costs. “
20.1 Similar view has been taken by the Apex Court in case of Divisional Forests Officer and Ors. Vs. Ramalinga Redd, reported in 2007 (9) SCC 286, of which relevant paragraph of this decision are as follow:
“13. In Management of Express Newspapers (Private) Ltd., Madras v. The Workers and Ors., AIR (1963) SC 569, it was opined:
“15. The High Court undoubtedly has jurisdiction to ask the Industrial Tribunal to stay its hands and to embark upon the preliminary enquiry itself. The jurisdiction of the High Court to adopt this course cannot be, and is indeed not disputed. But would it be proper for the High Court to adopt such a course unless the ends of Justice seem to make is necessary to do so? Normally, the questions of fact, though they may be jurisdictional facts the decision of which depends upon the appreciation of evidence, should be left to be tied by the Special Tribunals constituted for that purpose. If and after the Special Tribunals try the preliminary issue in respect of such jurisdictional facts, it would be, open to the aggrieved party to take that matter before the High Court by a writ petition and ask for an appropriate writ. Speaking generally, it would not be proper or appropriate that the initial jurisdiction of the Special Tribunal to deal with these jurisdictional facts should be circumvented and the decision of such a preliminary issue brought before a High Court in its writ jurisdiction.
We wish to point out that in making these observations, we do not propose to lay down any fixed or inflexible Rule; whether or not even the preliminary facts should be tried by a High Court in a writ petition, must naturally depend upon the circumstances of each case and upon the nature of the preliminary issue raised between the parties. Having regard to the circumstances of the present dispute, we think the court of appeal was right in taking the view that the preliminary issue should more appropriately be dealt with by the Tribunal. The appeal court has made it clear that any party who feels aggrieved by the finding of the Tribunal on this preliminary issue may move the high Court in accordance with law. Therefore, we are not prepared to accept Mr. Sastris argument that the Appeal court was wrong in reversing the conclusion of the trial Judge insofar as the trial Judge proceeded to deal with the question as to whether the action of the appellant was a closure or a lockout.”
14. In State of Uttar Pradesh v. Brahm Datt Sharma and Anr., AIR (1987) SC 943 : [1987] 2 SCC 179, this Court held:
“9. The High Court was not justified in quashing the show cause notice. When a show cause notice is issued to a government servant under a statutory provision calling upon him to show cause, ordinarily the government servant must place his case before the authority concerned by showing cause and the courts should be reluctant to interfere with the notice at that stage unless the notice is shown to have been issued probably without any authority of law. The purpose of issuing show cause notice is to afford opportunity of hearing to the government servant and once cause is shown it is open to the Government to consider the matter in the light of the facts and submissions placed by the government servant and only thereafter a final decision in the matter could be taken. Interference by the court before that stage would be premature, the High Court in our opinion ought not have interfered with the show cause notice.”
15. This Court in Special Director and Anr. v. Mohd. Ghulam Ghouse and Anr., [2004] 3 SCC 440 stated the law, thus:
“5. This Court in a large number of cases has deprecated the practice of the High Courts entertaining writ petitions questioning legality of the show-cause notices stalling enquiries as proposed and retarding investigative process to find actual facts with the participation and in the presence of the parties. Unless the High Court is satisfied that the show-cause notice was totally non est in the eye of the law for absolute want of jurisdiction of the authority to even investigate into facts, writ petitions should not been entertained for the mere asking and a matter of route, and the writ petitioner should invariably be directed to respond to the show-cause notice and take all stands highlighted in the writ petition. Whether the show-cause notice was founded on any legal premises, is a jurisdictional issue which can even by urged by the recipient of the notice and such issues also can be adjudicated by the authority issuing the very notice initially, before the aggrieved could approach the court. Further, when the court passes an interim order it should be careful to see that the statutory functionaries specially and specifically constituted for the purpose and are denuded of powers and authority to initially decide the matter and ensure that ultimate relief which may or may not be finally granted in the writ petition is not accorded to the writ petitioner even at the threshold by the interim protection granted.”
16. This aspect of the matter has recently been considered by this Court in Union of India and Anr. v. Kunisetty Satyanarayana, (2006) 12 SCALE 262. “
21. Once having extended the period on 27.11.2018, without availing the opportunity, the grant of extension of Export Obligation period, cannot be cancelled. However, if there are certain suspicious documents noticed by the DRI, the authority concerned, if has chosen to suspend the same and has sought the detail from the petitioner, no interference is desirable. If the petitioner is given a clean chit in the proceedings of the show cause notice, it may request the concerned authority to consider the case of extending the Export Obligation period which has been suspended presently and it would be for the authority to consider such a request at an appropriate time, if the factual circumstances based on the substantive material eventually tilt in favour of the petitioner.
22. For present, this petition deserves no merit and consideration, and stands dismissed & disposed of. This disposal shall not prejudice the right of the petitioner in the adjudication of the Show Cause Notice, which shall be decided on its own merit.
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