Delhi High Court permits vessel sale under SFIS Scheme with bank guarantee to ensure duty payment compliance

The Delhi High Court allowed the sale/re-export/alienation of the vessel, Greatship Akhila, imported under the SFIS Scheme after three years, subject to the petitioner furnishing a bank guarantee of Rs. 12 crores in favor of the respondent. The court clarified that duty payment would be based on entitlement under the Foreign Trade Policy of 2009-14, with no duty payable if entitled, but duty becoming payable if not entitled. The bank guarantee was ordered to safeguard revenue interests in case duty and charges become payable, emphasizing compliance with duty payment obligations.

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Issues:
- Permission to sell/re-export/alienate a vessel imported under the SFIS Scheme after three years.
- Requirement of furnishing a bank guarantee in favor of the respondent.
- Clarification on duty payment based on entitlement under the Foreign Trade Policy of 2009-14.

Analysis:
The judgment by the Delhi High Court addressed the issue of permitting the sale/re-export/alienation of a vessel, Greatship Akhila, imported under the SFIS Scheme after three years. The court allowed the sale/re-export/alienation of the vessel, despite the absence of a sequel notification by the Ministry of Finance, Government of India. However, this permission was subject to a specific condition that the petitioner must furnish a bank guarantee in favor of the respondent for an amount of Rs. 12 crores. This amount was determined based on the assessed customs duty of approximately Rs. 9.18 crores at the time of importation, which was exempted under the SFIS Scheme. The additional amount was intended to cover any other incidental charges that may arise.

Furthermore, the judgment clarified that if the petitioner was entitled to sell/re-export/alienate under the Foreign Trade Policy of 2009-14, no duty would be payable. However, in case the petitioner was not entitled to do so, the duty along with other incidental charges would become payable. The court emphasized that the order to furnish the bank guarantee was passed to safeguard the interest of revenue in the eventuality that duty and other charges become payable.

The court set a deadline for the filing of counter-affidavits and rejoinder/affidavits, with a subsequent renotification date. The judgment highlighted the importance of the bank guarantee in ensuring compliance with duty payment obligations and protecting the revenue's interests. The order provided a clear framework for the sale/re-export/alienation of the vessel while balancing the petitioner's rights under the Foreign Trade Policy with the revenue considerations.

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