2018 (11) TMI 770 - HC - Customs

Customs Department Cannot Demand Higher Composition Fee for Export Obligations

The High Court held that the demand for additional composition fee for an extension of time to complete export obligations was illegal and lacked ... Liability of Composition fee for being entitled for extension of time to complete the export obligation - Advance Authorisation Scheme - Held that:- Since the application for extension of time having not been rejected and order has been passed granting extension of time on 19-1-2018, which was interfered only with regard to the date of extension, now the respondent Department cannot go back on what they have said in their order dated 19-1-2018 under the pretext of demanding higher composition fee - the impugned order demanding additional sum of composition fee over and above the amount already remitted by the petitioner is without jurisdiction and illegal - petition allowed. Issues:1. Payment of composition fee for extension of time to complete export obligation.2. Disposal of application for extension of time.3. Encashment of Bank Guarantee by Customs Department.4. Show cause notice under Section 14 for action under Section 9(2) of the Foreign Trade Act.5. Placing petitioner under Denied Entry List (DEL).6. Judicial review of orders regarding extension of time and composition fee.7. Legality of demanding additional composition fee.Analysis:Issue 1: Payment of composition fee for extension of timeThe petitioner sought extension to complete export obligation but was directed to pay a sum as composition fee. The High Court found the demand for additional composition fee illegal and without jurisdiction. The Court emphasized that the respondent Department cannot backtrack on the extension granted earlier and cannot demand a higher composition fee than what was already remitted by the petitioner.Issue 2: Disposal of application for extension of timeThe Court noted that the initial application for extension remained pending despite the petitioner remitting the composition fee early on. The Court criticized the subsequent order demanding further composition fee until a specific date as illegal and an attempt to circumvent previous directions.Issue 3: Encashment of Bank GuaranteeThe Customs Department encashed the Bank Guarantee due to the petitioner's failure to produce the Export Discharge Certificate, leading to a show cause notice under Section 14. The petitioner's representation seeking extension was not promptly addressed, causing delays and subsequent legal actions.Issue 4: Show cause notice under Foreign Trade ActThe second respondent issued a show cause notice proposing action under Section 9(2) of the Foreign Trade Act, leading to legal proceedings and challenges by the petitioner regarding the placement under the Denied Entry List.Issue 5: Placing petitioner under Denied Entry List (DEL)The petitioner's name was placed under the Denied Entry List due to non-compliance with export obligations. The Court directed the removal of the petitioner's name from the list and emphasized that business activities should not be hampered.Issue 6: Judicial review of extension of time and composition feeThe Court reviewed previous orders regarding extension of time for export obligations and composition fee, setting aside certain decisions and directing the respondent to grant extension prospectively without demanding additional composition fee.Issue 7: Legality of demanding additional composition feeThe Court found the demand for additional composition fee beyond what was already paid by the petitioner as without jurisdiction and illegal. The respondent was directed to consider the payment already made and grant extension of time accordingly.Overall, the High Court's judgment focused on ensuring procedural fairness, adherence to regulations, and protecting the petitioner's rights in the context of export obligations and composition fee requirements.