2025-VIL-122-GUJ-CU
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CUSTOMS High Court Cases

Customs/DGFT – SEZ Unit, Negative NFE, Levy of penalty - As per the conditions of the LOP the petitioner was required to achieve positive Net Foreign Exchange Earnings (NFE) for a period of 5 years from the commencement of production - Due to heavy rains and cyclone, the goods in the petitioner's unit were damaged, resulting in a negative NFE for the block period from 2005-06 to 2009-10 – Respondent-Development Commissioner imposed a penalty on the petitioner for not achieving positive NFE under section 13 read with section 11 of the Foreign Trade (Development and Regulation) Act, 1992 and Rule 54(2) of Special Economic Zones Rules, 2006 - Whether the penalty imposed on the petitioner for not achieving positive NFE was justified – HELD – The petitioner could not achieve the positive NFE in the year 2008-09 on account of heavy rains and cyclone in the area but there is no dispute that the petitioner unit has achieved positive NFE for the block of 5 years, i.e. from 2005-06 to 2009-10 - As per Rule 54(2) of the SEZ Rules, a SEZ unit is liable for penal action only if it has not achieved positive NFE or failed to abide by any of the terms and conditions of the LOP or Bond-cum-Legal Undertaking. Since the petitioner had achieved positive NFE, no penalty could have been imposed on the petitioner unit - the petitioner had provided valid reasons for not achieving positive NFE due to heavy rains and cyclone in the year 2008-09 - neither the Development Commissioner nor the Appellate Authority had given any reason to justify the imposition of a penalty and no justification for the quantification of such amount was provided in the impugned orders – The penalty amount is reduced Rs. 10,000/- and the petition is partly allowed
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