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LAWS(BOM)-2024-12-10

HIGH COURT OF BOMBAY

Coram : M.S.Sonak, Jitendra Jain JJ.

Decided On : December 11, 2024

Appeal Type : WRIT PETITION NO.350 OF 2024

Appellant(s) :

Ashwini Ashish Dighe

Respondent(s) :

UNION OF INDIA

Advocate(s) :

Sanjeev Nair, Kevin Gogri, Dhruvi Shah, J.B.MISHRA, D.P.SINGH, Vikas Salgia

Equivalent Citation :

LAWS(BOM)-2024-12-10

Referred Act(s) :
- Constitution Of India, Art.226
- Foreign Trade (Development And Regulation) Act, 1992, S.15, S.9

Judgment :

JITENDRA JAIN,J.

(1.) By this petition under Article 226 of the Constitution of India, the petitioner is challenging an
Order-in-Appeal dtd. 10/11/2023 passed by the Additional Director General of Foreign Trade
(ADGFT) whereby the said authority has refused to entertain the appeal filed by the petitioner on the
ground that the rejection letter issued by the Joint Director General of Foreign Trade (JDGFT) is not a
decision or order passed by the adjudicating authority and since Sec. 15 of Foreign Trade
(Development Regulation) Act 1992 provides for an appeal from an order made by the adjudicating
authority, the appeal is not admissible.

Brief facts :-

(2.) The petitioner is engaged in the business of manufacturing optical fibers. The petitioner applied
for issuance of duty credit scrip under the Merchandise Export from India Scheme (MEIS) with
respect to the goods exported to an overseas buyer at UAE but on the instructions of overseas buyer
the goods were warehoused in the Free Trade and Warehousing Zone (FTWZ) Unit at Andhra

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Pradesh.

(3.) The above transactions were for the period January 2016 to March 2016. The application made by
the petitioner came to be rejected on 3/6/2020 and the said rejection was challenged before this Court
in Writ Petition No.5156 of 2021. The Co-ordinate Bench of this Court passed a detailed order and
observed that in the absence of documentary evidence, MEIS benefit cannot be granted merely on the
basis of pleadings which are prima facie insufficient on the face of record. However, after upholding
the rejection order, the coordinate bench granted the petitioner one more opportunity to approach the
respondents by filing a fresh application for MEIS benefit along with the entire documentary evidence
pertaining to the petitioners' transaction with the overseas buyer. Para 12 and 12.1 of the said order
read as under :

12. In view of absence of documentary evidence, and the findings and discussion
hereinabove, the Petitioner cannot be granted MEIS benefit merely on the basis of pleadings which are
prima facie insufficient on the face of record. Hence the Petition must fail.

12.1. The impugned order dtd. 3/6/2020 deserves to be upheld. However, since it is the
Petitioner's case that it has received consideration in foreign exchange from its overseas buyer against
the export goods and is eligible for MEIS benefit, the Petitioner is given one more final opportunity to
approach the Respondents by filing a fresh application for seeking MEIS benefit along with the entire
documentary evidence pertaining to the Petitioner's transaction with Technocraft Engineering LLC,
that is the Petitioner's purported overseas buyer, located in Dubai, UAE, along with: (i) Bills of
Receipt; (ii) Bills of Export of Goods; (iii) Export Invoices; (iv) with the Overseas Buyer to deliver the
Exp. Dt claimed nor been granted benefit under MEIS in regard to the instant transaction; (vii)
Shipping Bills; (viii) Purchase Orders; and, (ix) Tax Invoices. Petitioner shall make the application
within two weeks from the uploading of the copy of this judgement and order. In the event such an
application is made, the same shall be considered strictly in accordance with law by the Competent
Authority / Respondents by according an opportunity of personal hearing to the Petitioner and a
speaking order shall be passed.

(4.) Pursuant to the above, the petitioner applied to JDGFT on 27/1/2022, along with the documentary
evidence. The said application and documentary evidence are on pages 164 to 244 of the present
petition.

(5.) The above-referred application came to be rejected by JDGFT vide communication dtd.
9/12/2022 by relying upon paragraph 3.06 of the Foreign Trade Policy, which provides those exports
made by units under FTWZ are ineligible for duty credit scrip entitlement. The rejection letter further
observes that the documents were examined, and no co-relation would be established to substantiate
the petitioner's contention. The impugned rejection letter also records that the petitioner himself has
accepted that supplies have been made against the bill of exports, which are covered under the
ineligible categories.

(6.) The petitioner challenged the aforesaid order dtd. 9/12/2022 passed by the JDGFT by filing an

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appeal to the ADGFT. The said appellate authority, i.e. ADGFT has dismissed the appeal of the
petitioner on the ground that rejection letter is not a decision or order passed by the adjudicating
authority against which an appeal can be filed under Sec. 15 of the Foreign Trade (Development and
Regulation) Act, 1992 (the 1992 Act). It is in this backdrop that the petitioner has challenged the said
Order-in-Appeal dtd. 10/11/2023 and the rejection letter dtd. 9/12/2022 before us.

Submissions of the Petitioner :

(7.) Mr. Nair learned counsel for the petitioner, submits that the appeal is maintainable under Sec. 9
read with Sec. 15 of the 1992 Act and, therefore, the findings of the appellate authority without
considering the provisions of Sec. 9 is erroneous. He submits that the appeal is maintainable under
Sec. 9, read with Sec. 15. He further submits that the rejection letter is a non-speaking order and has
not considered the voluminous documents filed along with the application dtd. 27/1/2022. In view
thereof, the petitioner submits that the petition be allowed in terms of the prayer clause mentioned in
paragraph 52 of the petition.

Submissions of the Respondents :

(8.) Mr. Mishra, learned counsel for the respondent, submits that under Sec. 15 of the Foreign Trade
(Development and Regulation) Act 1992, an appeal ought to have been filed before the Director
General and not before the ADGFT and therefore the rejection of the appeal is justified. He further
submits that there is no infirmity pointed out in the rejection letter. In the rejection letter it is stated
that the petitioner has accepted that the supplies are covered under ineligible categories as per
paragraph 3.06 of the Foreign Trade Policy. In view thereof, he pressed for dismissal of the Writ
Petition.

(9.) We have heard learned counsel for the petitioner and the respondent.

Analysis and Conclusions :

(10.) Before we delve upon the reasoning, it will be apt to reproduce Ss. 9 and 15 of the Foreign
Trade (Development and Regulation) Act, 1992.

9. Issue, suspension and cancellation of licence.-

(1) The Central Government may levy fees, subject to such exceptions, in respect of such
person or class of persons making an application for licence, certificate, scrip or any instrument
bestowing financial or fiscal benefits or in respect of any licence, certificate, scrip or any instrument
bestowing financial or fiscal benefits granted or renewed in such manner as may be prescribed.

(2) The Director General or an officer authorised by him may, on an application and after
making such inquiry as he may think fit, grant or renew or refuse to grant or renew a licence to import
or export such class or classes of goods or services or technology as may be prescribed and, grant or
renew or refuse to grant or renew a certificate, scrip or any instrument bestowing financial or fiscal
benefit, after recording in writing his reasons for such refusal.

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(3) A licence, certificate, scrip or any instrument bestowing financial or fiscal benefits granted or
renewed under this sec. shall-

(a) be in such form as may be prescribed;

(b) be valid for such period as may be specified therein; and

(c) be subject to such terms, conditions and restrictions as may be prescribed or as specified
in the licence, certificate, scrip or any instrument bestowing financial or fiscal benefits with reference
to the terms, conditions and restrictions so prescribed.

(4) The Director-General or the officer authorised under sub-sec. (2) may, subject to such
conditions as may be prescribed, for good and sufficient reasons, to be recorded in writing, suspend or
cancel any licence, certificate, scrip or any instrument bestowing financial or fiscal benefits granted
under this Act:

Provided that no such suspension or cancellation shall be made except after giving the
holder of the licence, certificate, scrip or any instrument bestowing financial or fiscal benefits a
reasonable opportunity of being heard.

(5) An appeal against an order refusing to grant, or renew or suspending or cancelling, a

licence, certificate, scrip or any instrument bestowing financial or fiscal benefits shall lie in like
manner as an appeal against an order would lie under sec. 15.

15. Appeal.-

(1) Any person aggrieved by any decision or order made by the adjudicating authority
under this Act may prefer an appeal,- (a) where the decision or order has been made by the Director
General, to the Central Government;

(b) where the decision or order has been made by an officer subordinate to the Director
General, to the Director General or to any officer superior to the adjudicating authority authorised by
the Director General to hear the appeal, within a period of forty-five days from the date on which the
decision or order is served on such person:Provided that the Appellate Authority may, if it is satisfied
that the appellant was prevented by sufficient cause from preferring the appeal within the aforesaid
period, allow such appeal to be preferred within a further period of thirty days:Provided further that in
the case of an appeal against a decision or order imposing a penalty or redemption charges, no such
appeal shall be entertained unless the amount of penalty or redemption charges has been deposited by
the appellant:Provided also that, where the Appellate Authority is of opinion that the deposit to be
made will cause undue hardship to the appellant, it may, at its discretion, dispense with such deposit
either unconditionally or subject to such conditions as it may impose.

(2) The Appellate Authority may, after giving to the appellant a reasonable opportunity of
being heard, if he so desires, and after making such further inquiries, if any, as it may consider
necessary, make such orders as it thinks fit, confirming, modifying or reversing the decision or order

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appealed against, or may send back the case with such directions, as it may think fit, for a fresh
adjudication or decision, as the case may be, after taking additional evidence, if necessary:

Provided that an order enhancing or imposing a penalty or redemption charges or

confiscating the goods (including the goods connected with services or technology) of a greater value
shall not be made under this sec. unless the appellant has been given an opportunity of making a
representation, and, if he so desires, of being heard in his defence.

(3) The order made in appeal by the Appellate Authority shall be final.

(11.) The first issue that needs to be addressed is whether an appeal is provided under Sec. 15 against
a letter rejecting the petitioner's application for grant of MEIS scrip. Sec. 9 of Foreign Trade
(Development and Regulation) Act, 1992 provides for issuance/ suspension/cancellation of licence.
Sec. 9(1) provides that the Central Government may levy fees in respect of application for a licence,
certificate, scrip etc to be granted or renewed. Sec. 9(2) provides for processing of such application
after making necessary inquiries for grant or renewal as the case may be of the licence, certificate,
scrip etc and for recording reasons for refusal. Sec. 9(5) provides that an appeal against an order
refusing to grant or renew or suspending or cancelling a licence, certificate, scrip etc shall lie in like
manner as an appeal against an order would lie under Sec. 15. Sec. 15(1) begins with appeals from
orders passed by the adjudicating authority.

(12.) Sec. 2(a) of the Foreign Trade (Development and Regulation) Act, 1992 defines "adjudicating
authority" to mean, unless context otherwise requires the authority specified in or under Sec. 13 Sec.
13 provides that any penalty may be imposed or any confiscation may be adjudged under this Act by
the Director General or by such other officer as may be authorised by notification in the official
gazette. Admittedly, when an application is made for issuance of MEIS scrip by the exporter, no
penalty is imposed or any confiscation order is passed and therefore provisions of Sec. 13 read with
Sec. 2(a) which defines "adjudicating authority" would not be applicable. Therefore, when Sec. 9 deals
with issuance of MEIS scrip and the application made for the same and processing of the same, the
authority who would be processing the application under Sec. 9 would not be an adjudicating
authority. However, when Sec. 9(5) provides for appeal in like manner as an appeal against an order
would lie under Sec. 15, it would contemplate an order passed by the authority who need not be an
adjudicating authority as defined in Sec. 2 (a) read with Sec. 13 of the Foreign Trade (Development
and Regulation) Act 1992 but has trappings of the adjudicating authority. Therefore, when there is a
reference to Sec. 15 in Sec. 9(5), it would mean that an appeal filed under Sec. 15 refusing to grant or
renew or suspend or cancel a licence, certificate, scrip, etc would mean an order passed not by the
adjudicating authority as defined by Sec. 2(a) of the 1992 Act. Therefore, it would not be correct for
the respondents to contend that since the rejection order is not passed by the adjudicating authority as
defined under the Act, no appeal would lie.

(13.) Alternatively, the definition of "adjudicating authority" defined in Sec. 2(a) of the Act begins
with "unless the context otherwise requires". In the instant case, while processing the application for
issuance of MEIS scrip under Sec. 9, the authority who would be processing the application and after

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making inquiry as he may think fit before granting or renewing or refusing of grant or renew the
licence etc. would have to be treated as an adjudicating authority for the limited purpose of Sec. 15
read with Sec. 9 because, he is the authority who is deciding the claim of grant of scrip to the applicant
and if so construed, then, the letter rejecting the application for issuance of MEIS scrip will have to be
treated as a decision or order by an adjudicating authority which would be appealable under Sec. 15 of
the Foreign Trade (Development and Regulation) Act, 1992. Therefore, even on this count, the appeal
would be maintainable.

(14.) Therefore, the ADGFT/Appellate Authority rejecting the appeal because the rejection letter is
not a decision or the order passed by the adjudicating authority would not be the correct reading of the
appeal provision.

(15.) Mr. Mishra, learned counsel for the respondents submitted that the appeal ought to have been
filed under Sec. 15(1)(b) to the Director-General if the decision or order has been made by an officer
subordinate to the Director-General or to any officer superior to the adjudicating authority authorized
by the Director-General to hear the appeal. It is his submission that the appeal has not been filed with
the Director-General but with ADGFT and, therefore, the rejection is justified. In our view, firstly, this
is not the basis on which the appeal order is passed, and, therefore, the respondents cannot make any
submission on this count. Even otherwise the second part of Sec. 15(1)(b) provides that an appeal can
be preferred before any officer superior to the adjudicating authority authorised by the Director-
General to hear the appeal.

(16.) Mr. Mishra fairly stated that ADGFT is an authority superior to JDGFT whose rejection order is
challenged. If that be so, we fail to understand as to how the respondents can contend more,
particularly in the light of second part of Sec. 15(1)(b) that the appeal would not lie before the ADGFT
and before the Director-General only. In our view, this is contrary to plain reading of Sec. 15(1)(b)
itself and, therefore, the contention raised on behalf of the respondents (although not forming basis of
the appeal order) is to be rejected.

(17.) In any case, the Order-in-Appeal dtd. 10/11/2023 refers to Notification 101 (RE-2013)/2009-
2014 dtd. 5/12/2014. The central government has authorised ADGFT to function as an appellate
authority against the orders passed by the JDGFT. This notification is referred to in paragraph 3 of the
Order-in-Appeal. Therefore, even on this count, Mr. Mishra's contention is to be rejected since the
correct authority to hear the appeal is the authority that passed the order, i.e., ADGFT.

(18.) Therefore, from any angle, the appeal was filed with the correct authority, but the correct
authority rejected it on the erroneous ground that the rejection order is not the decision/order passed by
the adjudicating authority, which we have already opined is incorrect. Therefore, in our view, the
impugned order dtd. 10/11/2023 rejecting the petitioner's appeal as non-admissible is required to be
quashed and set aside.

(19.) The petitioner, pursuant to the order passed by this Court in Writ Petition No.5156 of 2021,
made a fresh application on 27/1/2022 for issuance of scrips with the office of JDGFT and enclosed

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various documents in support thereof which are annexed from pages 164 to 244 of the present petition.
However, JDGFT in his rejection order dtd. 9/12/2022 has curiously, without discussing anything,
rejected the claim of the petitioner mainly on the ground that the supplies have been made against Bill
of Exports, which are covered under the ineligible categories without considering the contention of the
petitioner that the Export was made to overseas buyers on whose instructions, the goods were
warehoused in the Free Trade and Warehousing Zone Unit at Andhra Pradesh. Whether such a
transaction would be covered by para 3.06 of the FTP, along with other issues is required to be
considered. The rejection order is not speaking since it further states that no co-relation could be
established, but with respect to what item co-relation could not be established has not been specified.

(20.) It is a settled position that the quasi-judicial authority speaks his mind through his order, and,
therefore, the order dealing with the application should have been a speaking order showing clearly the
reason for coming to the conclusion. In our view, this is absent in the impugned rejection letter.
Therefore, in the interest of justice, we quash and set aside the rejection letter dtd. 9/12/2022 and
remand the application dtd. 27/1/2022 back to the file of respondent no.4 for fresh consideration after
giving an opportunity of hearing to the petitioner and direct the respondent no.4 to pass a speaking
order deciding the application of the petitioner dtd. 27/1/2022.

(21.) In view of the above, we pass the following order :-

ORDER

(i) The impugned order dtd. 10/11/2023 rejecting the petitioner's appeal as non-admissible
is quashed and set aside.

(ii) The rejection letter dtd. 9/12/2022 passed by the JDGFT and the Order-in-Appeal dtd.
10/11/2023 passed by the ADGFT is quashed and set aside.

(iii) Respondent no.4-JDGFT is directed to consider the petitioner's application dtd.

27/1/2022 after giving a hearing to the petitioner and passing a speaking order on the said application
on or before 31/3/2025.

(22.) The rule is made absolute in the above terms. No order as to costs.

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