Imposition of penalty & cancellation of LOP due to non achievement of NFE in 2 tune of Five year Block

PJ/Case Law/2019-2020/3598

Transatlantic Packaging Private Limited 01/92/171/22/AM-17/PC-VI Dated 05.05.2020
Brief Facts:M/s. Transatlantic Packaging Private Limited, Gujarat is a Exported Oriented Unit and involved manufacturing of Thermoformed Plastic Packaging Articles with or without multi-colored printing. The appellant has taken Letter of Permission by DC, KASED vide LOP No. KASEZ/100% EOU/II/147/04-05/2916 dated 17.03.2005. As per term of LOP, the unit was required to achieve Positive Net Foreign Exchange according FTP. The appellant has failed to achieve Net Foreign Exchange in tune of first block of five year. The department has issued to Show Cause Notice to the appellant on 18.05.2013. Thereafter, the Development Commissioner has dropped the proceeding against the appellant and extended the LOP in next five year block period on submission of undertaking. The department has reviewed APR filed by the appellant and failed to achieve NFE again in the second five year. A notice was issued to appellant on 15.05.2015 by Development Commissioner to show cause why action should not be taken against if for cancellation of LOP in terms of section 9 of the Act read with Rule 10 of Foreign Trade Rules, 1993 and for imposition of penalty under Section 11 of the Act as amended.
Issue: Imposition of penalty & cancellation of LOP due to non achievement of NFE in 2 tune of Five year Block.
Appellant Contention’s:The appellant has filed the reply to above show cause notice that the non achievement of NFE due to import of very expensive machinery, recession, stiff competition and sluggish market conditions. But the department has imposed the penalty of Rs.1.0 Crore and cancelled the said LOP due to non achieve of NFE in 2 five year Block. The export obligation Rs.22, 52, 35626/- is already by the appellant and penalty imposed on it should be set aside or may be reduced to nominal and cancellation of LOP against the provision of Foreign Trade Policy.
Respondent’s Contention and reasoning:The authority has argued that the appellant has failed to achieve NFE in both tune of five year block. The Development Commissioner have already dropped the proceeding for non achievement of NFE in first block year and extended the LOP in next five year with terms of undertaking. It is clearly show that the Development Commissioner has taken lenient view against the appellant in first tune and granted the permission again next five year to appellant. The contention of the appellant is totally baseless. Hence, penalty is rightly imposed on the appellant for non achievement of NFE as well as cancellation of LOP according to Act.
Prepared by : Vijay

Comments

PJ/Case Law/2019-2020/3598

Post a Comment

Query