M/S.Tamilnadu v. Additional Director General
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 05.04.2022 CORAM :
THE HONOURABLE MR.JUSTICE M.GOVINDARAJ Writ Petition No.35890 of 2015 & M.P.No. 1 of 2015
1. M/s.Tamilnadu Petroproducts Limited Repd. by its Director Mr.M.Pazhaniandy Pillai, Manali Express Highways, Manali, Chennai-600 068.
... Petitioner -Vs1. Additional Director General of Foreign Trade Shastri Bhavan Annexe, 4th Floor, 26, Haddows Road, Chennai-600 006.
2. Deputy Director General of Foreign Trade Shastri Bhavan Annexe, 4th Floor 26, Haddows Road, Chennai-600 006.
3. Assistant Director General of Foreign Trade Shastri Bhavan Annexe, 4th Floor 26, Haddows Road, Chennai-600 006.
... Respondents Prayer :
Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorari, calling for the records of the 3rd Respondents culminating in the letter F.No.04/66/88/ 00004/AM12/5 dated 30.3.2015 read with the further communication in F.No.04/66/88/ 00004/AM12/316 by the 2nd Respondents dated 23.07.2015 and quash the same. For Petitioner : Mr. M.S.Harsha Prabhu for MR.S.Murugappan For Respondents : Mr. K.Ramamoorthy Central Government Standing Counsel
O R D E R
Petitioner is a manufacturer of chemicals in terms of Foreign Trade Policy announced by the Ministry of Commerce. The exporters are entitled to 'incentive scrip' as per the Foreign Trade Policy 3.16.1 and 3.16.4 of Foreign Trade Policy.
2. For the export of 'Linear Alkyl Benzene' manufactured by the Petitioner, he applied for incentive scrips for the total export made by them to the extent of 102.72 Crores, which was granted to the Petitioner Company and a license was issued for an amount of Rs.1,02,71,882/- representing 1% of FOB value for the exports made during April-March, 2011.
3. The incentive scrip was allowed by the department. However, all of a sudden, by communication dated 23.07.2015, the 2nd respondent informed that the Petitioner that the audit team has not accepted the entitlement of incentive scrip and directed the petitioner to pay excess duty credit along with 15% interest. Challenging the demand, the Petitioner submitted his explanation to the respondents. By an impugned communication dated 23.07.2015, it was rejected. Aggrieved over the same, the petitioner is before this Court.
4. Heard the submissions of both the sides.
5. A perusal of impugned communication dated 30.03.2015 by the 3rd Respondent, discloses the fact that the grant of incentive scrip was objected during audit. Therefore, the 1st Respondent directed the Petitioner to repay the excess duty credit availed by them along with the interest at the rate of 15% from the date of issue from the duty credit scrip.
6. Admittedly, the Petitioner availed the incentive given by the Ministry of Commerce to encourage export. It is based on an application made by the Petitioner for a status found in incentives scrip and it was granted by the Respondents in License No. 0410131951 dated 22.12.2011. Based on that the petitioner company has exported the chemicals. It is the duty of the respondents to apply their minds as to whether the claim made by the petitioner would fall under para 3.16.1 or 3.16.4 or 3.10.8 of the Foreign Trade Policy. However, it was granted and the petitioner has exported and availed the incentives given to him. Before taking steps to recover, the respondents shall follow the Principles of Natural Justice by issuing a show cause notice to show cause as to why the duty credit given to the petitioner should not be recovered and after getting his objections, they should have taken a decision, whether to recover or not to recover. But the impugned communication dated
30.3.2015 was a pre-determined one, cancelling the license without Notice and imposing recovery and that too with 15% interest.
7. However, the petitioner submitted his objections to the impugned communication dated 30.03.2015. But strangely, none of his objections were considered by the 1st respondent and following reply was given by the 2nd respondent on 23.07.2015. The impugned order of the 1st respondent is extracted hereunder: From the shipping bill-wise statement of exports in the Annexure to ANF-3E, it was observed that you had exported 'Linear Alkyl Bense' falling under ITC (HS) code 38170019 and SHIS was granted for Rs.10271882.00. Also, it has been observed that though in the RcMC issued by FIEO it was mentioned that the export product fell under Chemical and Allied products, under the Chemical and Allied products sector specified in the Table attached to para 3.10.8 of HBP, the goods falling under ITC (HS) code 38170019 was not included and that this had resulted in incorrect duty credit of Rs.10271882.00 which is recoverable with interest.
You are therefore requested to repay the excess duty credit availed by you as above, along with interest of 15% from the date of issue of the duty credit scrip, at the earliest.
8. The reading of the above communication clearly shows that the 1st respondent has failed to absolutely exercise his duty failed to apply his mind. The 1st Respondent has acted as an obedient servant of the audit department. Even though he is a competent authority to pass orders, he acted as post office to communicate what ever decision taken by the audit team without independent application of mind. Therefore, for the non application of mind on the face of it, the impugned order is liable to be set aside and accordingly is set aside.
9. However, liberty is granted to the 1st respondent to issue a fresh show cause notice recording reasons and to give opportunity to the petitioner to submit explanations and also an opportunity of personal hearing before taking a decision.
10. Accordingly, the writ petition is ordered with above directions. There shall be no order as to costs. Consequently, connected Miscellaneous Petition is closed.
Sd/- Assistant Registrar(CS II) //True Copy// Sub Assistant Registrar sha/kpr To
1. Additional Director General of Foreign Trade Shastri Bhavan Annexe, 4th Floor, 26, Haddows Road, Chennai-600 006.
2. Deputy Director General of Foreign Trade Shastri Bhavan Annexe, 4th Floor 26, Haddows Road, Chennai-600 006.
3. Assistant Director General of Foreign Trade Shastri Bhavan Annexe, 4th Floor 26, Haddows Road, Chennai-600 006.
+1cc to MR.S.Murugappan, Advocate, S.R.No.23185 +1cc to Mr.K.Ramanamoorthy, Advocate, S.R.No.22971 W.P.No.35890 of 2015 & M.P.No. 1 of 2015 SS(CO) CT 27/05/2022