Court Upholds Customs' Cost Recovery Charges Demand for Export Unit

The court dismissed the writ petition, upholding the Customs Department's demand for Cost Recovery Charges (CRC) from the petitioner, an Export Oriented Unit (EOU). The court ruled that the petitioner was obligated to pay CRC from the date of licensing and officer allocation, regardless of the unit's operational status. Additionally, the court allowed the petitioner's switch to Merchant Overtime (MOT) Charges from a specified date and enforced the bank guarantee for unpaid CRC, rejecting the petitioner's contention for waiver. Despite acknowledging an alternative remedy through statutory appeal, the court exercised jurisdiction under Article 226 due to prolonged pendency but found no extraordinary circumstances warranting relief.

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Issues Involved:
1. Waiver of Cost Recovery Charges (CRC) for the period when the Export Oriented Unit (EOU) was non-operational.
2. Request to switch from Cost Recovery Charges to Merchant Overtime (MOT) Charges.
3. Enforcing bank guarantee for unpaid CRC.
4. Availability of an alternative remedy through statutory appeal.

Detailed Analysis:

1. Waiver of Cost Recovery Charges (CRC):
The petitioner, an Export Oriented Unit (EOU), sought waiver of CRC for the period from 12.03.2001 to 31.12.2004, arguing that the unit was non-operational until 31.05.2002. The Customs Department demanded CRC despite the unit's non-operation, leading to the issuance of notices and subsequent payments by the petitioner. The petitioner contended that the CRC should be waived as the unit was not effectively functioning until June 2002. However, the court held that the petitioner is bound to pay CRC from the date of granting the license and allocation of the officer, irrespective of the unit's operational status. The court found no grounds for waiver, emphasizing that the allocation of the officer and the CRC obligation is independent of the unit's operational capacity.

2. Request to Switch to Merchant Overtime (MOT) Charges:
The petitioner requested to switch from CRC to MOT Charges from 01.01.2005, which was allowed by the Customs authorities. The petitioner argued that the MOT Charges should have been considered earlier. However, the court noted that the department permitted the switch to MOT Charges from 01.01.2005 and upheld the CRC obligation until 31.12.2004. The court found that the petitioner's request to switch earlier was not feasible as the CRC scheme was mandatory until the specified date.

3. Enforcing Bank Guarantee for Unpaid CRC:
The Customs Department enforced the bank guarantee provided by the petitioner to recover unpaid CRC. The petitioner argued that the enforcement was unreasonable as the waiver petition was pending, and no personal hearing was granted. The court, however, upheld the enforcement of the bank guarantee, stating that the petitioner had agreed to pay CRC and had not made any substantial case for waiver. The court found no violation of natural justice principles as the petitioner did not explicitly request a personal hearing.

4. Availability of Alternative Remedy:
The respondents contended that the petitioner had an alternative remedy through a statutory appeal to the Commissioner of Customs (Appeals). The court acknowledged the existence of an alternative remedy but decided to exercise its jurisdiction under Article 226 of the Constitution of India due to the prolonged pendency of the case. The court emphasized that while alternative remedies are generally preferred, the High Court can grant relief in exceptional circumstances. However, in this case, the petitioner did not demonstrate extraordinary circumstances to bypass the alternative remedy.

Conclusion:
The court dismissed the writ petition, sustaining the order of the second respondent. The court found no infirmity or perversity in the order demanding CRC from the petitioner. Consequently, the interim order passed in M.P.No.2 of 2008 in W.P.No.13338 of 2008 was vacated, and no costs were imposed.

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