Court dismisses writ petition, upholds Policy Committee decision on interest payment obligation.

The court dismissed the writ petition, upholding the Policy Relaxation Committee's decision to reject the review petition and affirming the petitioner's liability to pay interest. The court emphasized that statutory obligations must be fulfilled, and the petitioner's failure to meet export obligations and apply for regularisation under the Handbook of Procedures led to the rejection of their claims. The court held that interest under the Customs Act is mandatory and cannot be waived, emphasizing that the petitioner benefited from the deferred payment of customs duty.

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Issues Involved:
1. Legality of the rejection of the review petition by the Policy Relaxation Committee.
2. Liability of the petitioner to pay interest for the period during which the review petition was pending.

Issue-wise Detailed Analysis:

1. Legality of the rejection of the review petition by the Policy Relaxation Committee:

The petitioner, a company registered under the Companies Act, 1956, availed an advance licence to import raw materials without duty, contingent on meeting specified export obligations. Due to uncontrollable circumstances, the petitioner failed to meet these obligations within the stipulated time and sought an extension, which was denied. The petitioner’s review petition was also rejected by the Policy Relaxation Committee, which noted that the petitioner admitted to making zero exports within the original validity period of the licence. The Committee observed that despite an extension until 30-09-2008, no exports were made, leading to the decision not to grant further extensions. The Committee suggested the petitioner could apply for regularisation under clause 4.28 of the Handbook of Procedures. However, it was found that the petitioner’s case did not fall under clauses 4.28 (i) or 4.28 (ii), but under clause 4.28 (iii), which necessitated the payment of interest for regularisation. The petitioner did not apply for regularisation as per clause 4.28. The court found no merit in the petitioner’s argument that the rejection of the review petition warranted interference under judicial review, as the petitioner had not fulfilled the export obligations and had not applied for regularisation.

2. Liability of the petitioner to pay interest for the period during which the review petition was pending:

The petitioner contended that they should not be liable for interest during the pendency of the review petition. However, the court held that interest under the Customs Act is statutory and cannot be waived unless explicitly provided by the Act. The petitioner imported materials without paying customs duty based on the advance licence and failed to meet the export obligations, thus necessitating the payment of customs duty in 2006. The duty was paid only in 2013, and the petitioner enjoyed the benefit of the money payable to the Customs Department during this period. The court emphasized that interest is compensation for the retention of money and cannot be waived. The petitioner’s reliance on interim orders to stay the invocation of the bank guarantee did not exempt them from paying interest. The court referenced the Supreme Court’s decision in Voltas Ltd. v. State of A.P., which established that tax becomes due when returns are filed, and deferral of payment does not negate the due date. The court concluded that the petitioner was not entitled to relief from paying interest due to the statutory nature of the interest and the lack of provisions for waiver under the Customs Act.

Conclusion:

The writ petition was dismissed, upholding the Policy Relaxation Committee’s decision and the petitioner’s liability to pay interest. The court reiterated that statutory obligations must be met, and equity cannot override clear legal provisions.

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