Court dismisses challenge to Customs Dept communication on Bank Guarantee, citing acceptance of Auto Renewal clause

I.L. & F.S. Tamil Nadu Power Company Limited Versus Commissioner of Customs (Sea Imports - Import), The Deputy Commissioner of Customs, Deputy General Manager, The Branch Head, IDBI Bank, IDBI Tower, Central Bank of India, Fort Branch

I.L. & F.S. Tamil Nadu Power Company Limited Versus Commissioner of Customs (Sea Imports - Import), The Deputy Commissioner of Customs, Deputy General ... Issues:
Challenge to the legal validity of a communication issued by the second respondent regarding Bank Guarantee for customer purposes.

Analysis:
The petitioner, a company setting up a coal-based Mega Thermal Power Project, challenged a communication issued by the second respondent on 02.07.2014. The petitioner contended that the communication violated a notification issued by the Government of India, Ministry of Finance on 17th March 2012. The notification required a security deposit in case of imports for a project with a provisional Mega Power Project status certificate. The petitioner argued that the communication was invalid as it was issued during the subsistence of the notification. The Customs Department, represented by the Senior Panel Counsel, maintained that they were bound by the Master Circular issued by the Reserve Bank of India regarding Bank Guarantee acceptance. The Customs Department asserted that any grievance regarding the circular should be addressed to the Reserve Bank of India, not the Customs Department.

The Senior Panel Counsel highlighted that the petitioner had previously accepted the Auto Renewal clause in bank guarantees. The State Bank of India confirmed that the Auto Renewal clause was available to all customers upon request. The petitioner's letters to the Deputy Commissioner of Customs indicated their acceptance of the Auto Renewal clause. The court noted that the Auto Renewal clause was a facility provided by banks and did not affect the petitioner's rights in business transactions. The court emphasized that the relief sought in the writ petition had no merit, as the petitioner had agreed to the Auto Renewal clause in their letters.

In conclusion, the court disposed of the Writ Petition, stating that the petitioner could opt for the Auto Renewal clause as agreed in their letters. The court found no merit in the petitioner's challenge to the communication issued by the Customs Department.