Delhi High Court quashes Show Cause Notice by DGFT in respect of DEL, Imposes 25K Cost to DGFT [Read Judgment]

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The Delhi High Court quashed the Show Cause Notice passed by Assistant DGFT against Nautilus Metal Craft in respect of Denied Entity List (DEL).

The petitioner that it deals mainly with readymade garments and made ups and for the same it procures orders from countries such as the USA, different companies of South America, Europe, Middle East, United Kingdom etc. and after procurement of an order, directly approaches the manufacturer in India, mainly situated at Ludhiana, who manufactures the same and thereafter, these are supplied by the petitioner to the foreign buyers.

The petitioner challenged the so- called order passed by the Joint Director General of Foreign Trade, placing the petitioner in the Denied Entity List (DEL).

The petitioner further challenges the Show Cause Notice issued by the Assistant Director General of Foreign Trade, calling upon the petitioner to show cause as to why it should not be placed in DEL.

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.

The petitioner further claims that pursuant to the Circular No. 16/2019-Customs dated June 17, 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.

The purpose and effect of the Impugned Order has been explained by the respondent in its counter affidavit itself, which stated that when an entity is placed under DEL, it becomes ineligible to receive any Foreign Trade Policy benefits during the time of it being placed on DEL. It blocks future export incentives.

The Single Judge bench of Justice Navin Chawla noted that in many other cases, on being challenged, the respondents had withdrawn similar Show Cause Notices and orders placing such parties on DEL reserving liberty to issue fresh Show Cause Notice and thereafter pass fresh orders.

“The Impugned Order dated 10.01.2020 and the Show Cause Notices dated 08.11.2019 and 02.12.2019 are set aside. This order shall not however, bar the respondents from passing a fresh order, in accordance with law, in future,” the court said.

The court ordered that the respondents, DGFT shall pay costs of Rs. 25,000/- to the petitioner.

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