Court upholds validity of circular under Foreign Trade Policy, dismissing Writ Petition challenging bank guarantee requirement.

The court upheld the validity of the circular dated 4th March, 2013, finding it compliant with statutory provisions and the Foreign Trade Policy. The court dismissed the Writ Petition, ruling that the circular did not violate constitutional mandates, including Articles 14 and 19(1)(g) of the Constitution of India. It held that the Customs Department had the authority to prescribe norms for bank guarantees under the schemes and that the requirement of furnishing a bank guarantee by the petitioners was justified, especially considering their violations under relevant acts.

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Issues Involved:
1. Validity of the circular dated 4th March, 2013.
2. Compliance with Articles 14 and 19(1)(g) of the Constitution of India.
3. Compliance with Section 5 of the Foreign Trade (Development and Regulation) Act, 1992.
4. Authority of the Customs Department to amend the Foreign Trade Policy.
5. Requirement of furnishing a bank guarantee by the petitioners.

Detailed Analysis:

Validity of the Circular Dated 4th March, 2013:
The petitioners challenged the circular dated 4th March, 2013, which amended the earlier circular dated 21st October, 2004. The impugned circular revised norms for execution of bank guarantees under Advance Authorization (AA), Duty Free Import Authorization (DFIA), and Export Promotion Capital Goods (EPCG) schemes. The petitioners argued that this circular imposed unreasonable restrictions on their fundamental rights and was discriminatory. The court noted that the circular was issued to ensure compliance with the Customs Act, 1962, and the Central Excise Act, 1944, and aimed to prevent misuse of the Advance License scheme. The court found that the circular was consistent with the Foreign Trade Policy and did not violate any statutory provisions.

Compliance with Articles 14 and 19(1)(g) of the Constitution of India:
The petitioners argued that the circular violated Articles 14 and 19(1)(g) of the Constitution of India, which guarantee equality before the law and the right to practice any profession or to carry on any occupation, trade, or business. The court held that the circular did not violate these constitutional mandates. It was noted that the circular aimed to serve larger public interest by denying exemptions to those who were penalized for violations of the Customs Act and the Central Excise Act. The court found that the circular did not impose unreasonable restrictions and was not discriminatory.

Compliance with Section 5 of the Foreign Trade (Development and Regulation) Act, 1992:
The petitioners contended that the circular was ultra vires to Section 5 of the Foreign Trade Act, which empowers only the Central Government to amend the Foreign Trade Policy. The court observed that the circular did not amend the Foreign Trade Policy but merely prescribed norms for execution of bank guarantees, which was within the powers of the Customs authorities under the Customs Act, 1962. The court held that the circular was consistent with the Foreign Trade Policy and did not override it.

Authority of the Customs Department to Amend the Foreign Trade Policy:
The petitioners argued that the Customs authorities were not empowered to amend the Foreign Trade Policy. The court clarified that the Customs authorities did not amend the Foreign Trade Policy but issued the circular to prescribe norms for execution of bank guarantees under the schemes. The court held that the Customs authorities acted within their powers under the Customs Act, 1962, and the Foreign Trade Policy recognized the authority of the Customs Department to prescribe such norms.

Requirement of Furnishing a Bank Guarantee by the Petitioners:
The petitioners were required to furnish a bank guarantee equal to 25% of the duty amount for clearance of consignments under Advance Licenses. The petitioners argued that they were exempt from furnishing bank guarantees as per the Foreign Trade Policy. The court noted that the petitioners were penalized for violations under the Central Excise Act, 1944, and the Customs Act, 1962. The court held that the exemption from furnishing bank guarantees was conditional and not applicable to those who were penalized for such violations. The court found that the requirement of furnishing a bank guarantee was justified and consistent with the circular and the Foreign Trade Policy.

Conclusion:
The court dismissed the Writ Petition, holding that the circular dated 4th March, 2013, was valid and did not violate the constitutional mandates or the Foreign Trade Act. The court upheld the requirement of furnishing a bank guarantee by the petitioners and found no merit in the petitioners' contentions. The rule was discharged with no order as to costs.

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