2021 (9) TMI 268 - HC - Customs

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

The court dismissed the Writ Petition challenging a communication from the Customs Department regarding Bank Guarantee for customer purposes. The court ... Import for Mega Power Project under exemption scheme - Auto Renewal of Security deposited as Fixed Deposit - imports for a project for which certificate regarding Mega Power Project status issued by an officer not below the rank of Joint Secretary to the Government of India in the Ministry of Power - HELD THAT:- The writ petition was filed in the year 2014 challenging the Communication issued by the Ministry of Finance Department of Revenue and the said Communication was issued relating to the Bank Guarantee for customers purposes. A provision for Auto Renewal was issued by the Reserve Bank of India in its Master Circular dated 01.07.2009. Similarly, the Central Board of Excise and Customs also issued a Circular dated 30.06.2010 based on the Reserve Bank of India Master Circular and the Circular issued by the Central Board of Excise and Customs, the respondents issued an impugned Communication dated 02.07.2014 directing the petitioners to opt for an Auto Renewal clause which became a requirement as per the Reserve Bank of India for the purpose of Bank Guarantee for customers purposes. This Court is of an opinion that Auto Renewal clause is a facility provided by the Banks and the petitioner could not able to establish in the event of opting such Auto Renewal clause, their rights are affected, a writ petition may be entertained if the petitioner is able to establish a right and such a right is infringed - In the present case, undoubtedly at the initial stage, the Communication was not available and that was not taken note of, however, during the year 2014, the respondents issued a communication which is impugned in the writ petition. Petition disposed off. 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.