Kerala HC upholds duty credit for imported goods at approved hotels

The Kerala HC ruled in favor of a Company seeking duty credit for imported goods for an approved Hotel establishment. The Court upheld the petitioner's entitlement to duty credit based on clarifications from the Director General of Foreign Trade, allowing the return of bank guarantees and benefit from remaining duty credit under specified licenses. The objection regarding the absence of a Customs notification post clarifications was dismissed as unreasonable, leading to the disposal of the writ petition in favor of the petitioner.

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Issues: Claim for duty credit; Interpretation of clarifications issued by Director General of Foreign Trade; Entitlement to duty credit and benefit of licenses; Requirement of Customs notification for claiming benefit.

In this judgment by the Kerala High Court, the petitioner, a Company incorporated under the Companies Act, sought duty credit for goods imported for an approved Hotel establishment. The petitioner imported goods under specific bills of entries and an invoice, but the duty credit claimed was initially declined, leading to the release of goods upon furnishing a bank guarantee.

During the proceedings, the Director General of Foreign Trade issued clarifications (Exts. P17 and P18) stating that the petitioner was indeed entitled to duty credit for the imported goods mentioned in the bills of entries and invoice. Consequently, the petitioner was also found eligible for the duty credit certified under certain licenses (Exts. P5 to P5(d) and Ext. P6).

Based on the clarifications provided by the Director General of Foreign Trade, the High Court disposed of the petition by affirming the petitioner's entitlement to duty credit for the imported goods and ordered the return of bank guarantees. Additionally, the Court declared that the petitioner could benefit from the remaining duty credit certified under the mentioned licenses.

The judgment addressed an objection raised by the department's counsel regarding the absence of a Customs notification following the clarifications issued by the Director General of Foreign Trade. The Court noted that since the Government of India had issued the clarifications, it was deemed unreasonable to require the petitioner to wait for a Customs notification to claim the benefit. Consequently, the objection was dismissed, and the writ petition was disposed of accordingly.

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