In a significant development, the Delhi High Court has intervened in a case involving the Directorate General of Foreign Trade ( DGFT ), quashing a hefty penalty of Rs. 50,00,000 imposed under the Foreign Trade (Development & Regulation) Act, 1992. The penalty was originally levied against a petitioner who had allegedly failed to meet export obligations mandated by an Advance Authorisation Licence.
The petitioner had obtained an Advance Authorisation Licence from the DGFT, enabling the import of Copper ROD 8mm for manufacturing and subsequent export of copper wire, under the Foreign Trade Policy 2015-2020. However, the Deputy DGFT issued a show cause notice on 8th September, 2021, alleging non-fulfilment of export obligations stipulated in the licence.
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Following a final opportunity for a personal hearing granted on 6th September, 2023, the petitioner appeared before the Additional DGFT on 18th September, 2023. During this hearing, the petitioner cited the unavailability of crucial documents held by the DRI in Ahmedabad as the primary reason for their failure to comply with export obligations.
In response, the Assistant DGFT issued an order on 22nd September, 2023, maintaining that despite multiple opportunities, the petitioner had failed to rectify their non-compliance, leading to the imposition of a significant fiscal penalty and placement on the Denied Entry List in the B.O. Portal.
Senior Counsel Tarun Gulati, representing the petitioner, refrained from delving into the merits of the case but assured the court that given the opportunity, all requisite documents demonstrating compliance with the Advance Authorisation Licence would be promptly submitted.
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The court, presided over by the Single bench of Justice Sanjeev Narula took into account the petitioner’s explanation that crucial original documents related to the licence were currently held by the Directorate of Revenue Intelligence, Zonal Unit in Ahmedabad. During a personal hearing on 18th September, 2023, the petitioner assured authorities of their ongoing efforts to retrieve and submit these necessary documents promptly.
While acknowledging the validity of the penalty order, the bench expressed concerns over its substantial amount and the circumstances leading to the petitioner’s inability to present required documents in a timely manner. Consequently, the court opted to grant a final opportunity to the petitioner to furnish the essential documents within six weeks.
Thus, the Delhi High Court Bench extended a six-week deadline for the petitioner to fulfil all obligations under the licence.
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