Authority Processing Duty Credit Scrip Applications Is 'Adjudicating Authority' For Appeal Under Foreign Trade Act: Bombay High Court

For context, Section 9 deals with the issuance, suspension and cancellation of licence by the Director General. Section 15 deals with an appeal against any decision or order made by the 'adjudicating authority' under the Act.

An 'adjudicating authority' as per Section 2(a) is an authority specified in Section 13 of the Act.

Section 13 provides that any penalty may be imposed or any confiscation may be adjudged under the Act by the 'Director General' or by such other officer as the Central Government may authorize.

A division bench of Justice M. S. Sonak and Justice Jitendra Jain was considering the petitioner's challenge to the order of the Additional Director General of Foreign Trade (ADGFT).

The petitioner, who is engaged in the business of manufacturing optical fibers, applied for the issuance of duty credit scrip under the Merchandise Export from India Scheme (MEIS) before the Joint Director General of Foreign Trade (JDGFT). However, the JDGFT issued a rejection letter to the petitioner's application.

The petitioner then preferred an appeal to the Additional Director General of Foreign Trade (ADGFT). The ADGFT refused to entertain the petitioner's appeal on the ground that the rejection letter issued by the Joint Director General of Foreign Trade (JDGFT) was not an order passed by an 'adjudicating authority' as provided under Section 15 of the Act.

The petitioner thus challenged the order before the High Court, contending that the appeal was maintainable under Section 9 read with Section 15 and that the ADGFT's order, having failed to consider the provisions of Section 9, was erroneous.

The Court referred to Section 13, which provides that any penalty may be imposed or any confiscation may be adjudged under by the Director General or any authorized officer.

It noted since no penalty is imposed or confiscation order is passed when an exported makes an application for issuance of MEIS scrip, Section 13 read with Section 2(a) which defines adjudicating authority would not be applicable in such cases.

It stated that the authority processing the application for issuance of MEIS scrip under Section 9 would not be an 'adjudicating authority'.

“Therefore, when Section 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 Section 9 would not be an adjudicating authority.”

Nevertheless, noting that Section 9(5) provides for appeal in like manner as an appeal against an order would lie under Section 15, the Court observed that though the order passed need not be an adjudicating authority, the provision has 'trappings of the adjudicating authority.'

“However, when Section 9(5) provides for appeal in like manner as an appeal against an order would lie under Section 15, it would contemplate an order passed by the authority who need not be an adjudicating authority as defined in Section 2 (a) read with Section 13 of the Foreign Trade (Development and Regulation) Act 1992 but has trappings of the adjudicating authority. Therefore, when there is a reference to Section 15 in Section 9(5), it would mean that an appeal filed under Section 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 Section2(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.”

The Court was of the view that the authority processing the application for issuance of MEIS scrip under Section 9 would have to treated as an adjudicating authority for the limited purpose of Section 15 read with Section 9.

“…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 Section 15 of the Foreign Trade (Development and Regulation) Act, 1992. Therefore, even on this count, the appeal would be maintainable.”

The Court thus held that the ADGFT's order was incorrect.

It further observed that the rejection letter issued by JDGFT did not clearly contain reasons for arriving at the conclusion. It thus quashed the rejection letter and remanded the matter back to JDGFT for fresh consideration.

Case title: Ashwini Ashish Dighe vs. Union of India & ors. (Writ Petition No.350 of 2024)