2014 (6) TMI 715 - HC - Customs

Court allows appeal partially, upholds Customs Authority's right to proceed on customs duty liability.

Union of India Versus Haldia Bulk Terminal Private Limited

The Court allowed the appeal in part, permitting Customs Authority to proceed as per law regarding customs duty liability. It emphasized adherence to the ... Whether the learned Judge, sitting in civil jurisdiction, could draw a conclusion, no duty was payable. - Failure to fulfill the export Obligation against the authorization - Cargo handling operation at Haldia Dock Complex. - imported various equipments including Mobile Harbour Cranes, Wheel Loaders, Dumpers etc. under a scheme - Enforcement of bank guarantee - Violation of condition of guarantee - Held that:- the Foreign Trade Department was satisfied with regard to discharge of the export obligation stipulated in the licence that might be one of the support documents to get the Bank Guarantees discharged. - Now that the Bank Guarantees had been released and to the said extent Mr. Bharadwaj conceded, we need not dilate on the issue. Jurisdiction of Civil Court - Held that:- Payment of duty under the Customs Act is determined through a complete procedure prescribed in law. The Civil Court, in our view, would not be competent to hold, no duty was payable. If we closely examine the letter dated March 14, 2013, we would not find any definite assertion, no customs duty was payable. The letter might have a dominant role in the matter of adjudication of the customs duty, it might be otherwise. Observation of the Civil Court would rather foreclose the right of the customs authorities to deal with the issue in accordance with law. In accordance with the provisions of Section 155, no suit does lie against the Central Government for any act done in pursuance of the Customs Act or the Rules or Regulations framed there under. The learned Judge possibly missed out the said provision while observing as such. - Customs Authority would be at liberty to proceed as against H.B.T. in accordance with law if they are so entitled to. - Decided in favour of Revenue. Issues:1. Return of Bank Guarantees under a scheme exempting import duty.2. Authority of Customs to proceed against the company for customs duty.3. Jurisdiction of Civil Court in determining customs duty liability.Issue 1: Return of Bank Guarantees under a scheme exempting import dutyThe case involved Holdia Bulk Terminal Private Limited (H.B.T.) importing equipment under a scheme exempting import duty. H.B.T. claimed compliance with conditions and sought return of Bank Guarantees. The Director General of Foreign Trade recommended return of the guarantees. Customs Authority initially declined, citing obligations under the Customs Act. The Single Judge directed return of guarantees, noting H.B.T.'s compliance with the scheme. Customs Authority discharged the guarantees and appealed belatedly.Issue 2: Authority of Customs to proceed against the company for customs dutyThe Customs Authority argued that the Bank Guarantees should not have been released without adjudication of customs liability under the Customs Act. They contended that the Civil Court lacked jurisdiction in this matter. H.B.T. maintained that once the Director General recommended return of guarantees, Customs had no claim. The Court examined relevant correspondence and found no definitive assertion of no customs duty payable. They emphasized the need for Customs to follow the prescribed procedure for determining duty liability.Issue 3: Jurisdiction of Civil Court in determining customs duty liabilityThe Court highlighted that no suit lies against the Central Government for acts under the Customs Act. They noted that the Civil Court should not have conclusively stated no duty was payable, as duty determination falls under the Customs Act's procedure. The Court set aside the observation restricting Customs' rights to proceed and clarified that Customs could act in accordance with the law, irrespective of the Civil Court's observations. The appeal was allowed in part, with Customs Authority permitted to proceed as per law.In conclusion, the judgment addressed the return of Bank Guarantees under an import duty exemption scheme, the Customs Authority's rights to proceed for customs duty, and the jurisdiction of the Civil Court in determining duty liability. The Court emphasized adherence to the Customs Act's procedures for duty adjudication and clarified the limitations of the Civil Court's jurisdiction in such matters.