2023 (3) TMI 186 - HC - Customs

Court deems 'condition x' and TRQ Condition No. 3 illegal; orders refund of excess duty and return of Bank Guarantee.

The court ruled in favor of the petitioner, finding 'condition x' in the Public Notice and Condition No. 3 in the Tariff Rate Quota (TRQ) to be illegal ... Exemption from levy of whole of Basic Customs Duty and from whole of Agriculture Infrastructure and Development Cess as per Notification No. 30/2022-Cus dated 24.05.2022 - degummed and Crude Sunflower seed oil - freely importable goods, as per the ITC (HS) Schedule 1 - Import Policy, 2022, or not - legality and validity of ‘condition x’ mentioned in para-2 of the Public Notice at Annexure-J dated 14.06.2022 and consequential condition No.3 in the Condition sheet of the TRQ dated 05.07.2022 (Annexure-M) issued / allotted to the petitioner - subject goods of the petitioner lying at Indian Ports (under warehousing etc.,) before the date of issuance of TRQ licence. HELD THAT:- The power and jurisdiction to issue Public Notice stipulating the procedure and amending the same by the DGFT is circumscribed and traceable only to the FTP and consequently, the DGFT does not have jurisdiction or authority of law to stipulate any condition contrary to the FTP and which has the effect of amending, modifying or altering the FTP, thereby establishing that ‘condition x’ in the Public Notice dated 14.06.22 being contrary to Para 2.13 of FTP, the same clearly tantamounts to amending the provisions of the FTP, which power cannot be exercised by the DGFT, especially when the power to amend the FTP is within the sole domain of the Central Government and not by the DGFT and on this ground also, the impugned ‘condition x’ and consequential condition in the TRQ issued in favour of the petitioner deserve to be quashed. Issuance of license is only procedural aspect and in any case, the DGFT cannot impose conditions and restrictions in license which are contrary to FTP and FTDR Act and any such condition cannot be sustained in law. On this score also, the impugned ‘condition x’ is not sustainable in law. Under similar circumstances in Kanak Export’s case supra, the Apex Court held that exports and imports shall be free, except in cases where they are regulated by the provisions of the said Policy or any other law for the time being in force. As per Para 2.4, DGFT was authorised to specify the procedure which needs to be followed by an exporter or importer or by any licensee or other competent authority for the purposes of implementing the provisions of the Act, the Rules and the Orders made therein and this Policy. Such a procedure was to be stipulated and included in the Handbook (Vols. I & II), Schedule of DEPB and in ITC (HS) and published by means of a public notice. It was permissible to amend this procedure from time to time. The impugned ‘condition x’ mentioned in Para 2 of the Public Notice at Annexure-J dated 14.06.2022 and the consequential Condition No.3 in the Condition sheet of the TRQ dated 05.07.2022 vide Annexure-M issued / allotted to the petitioner deserve to be quashed and necessary directions are to be issued to the respondents to refund the excess duty paid by the petitioner back to him, in addition to returning the Bank Guarantee dated 05.08.2022 furnished by the petitioner pursuant to the orders of this Court. Petition allowed. Issues Involved:1. Legality and validity of 'condition x' mentioned in para-2 of the Public Notice dated 14.06.2022.2. Consequential condition No.3 in the Condition sheet of the Tariff Rate Quota (TRQ) dated 05.07.2022.3. Refund of excess duty paid by the petitioner.4. Return of the Bank Guarantee furnished by the petitioner.Detailed Analysis:1. Legality and Validity of 'Condition x':The petitioner challenged 'condition x' in the Public Notice dated 14.06.2022 issued by the Director General of Foreign Trade (DGFT), arguing it was illegal, arbitrary, and beyond the DGFT's jurisdiction. The condition stipulated that only import consignments landing at Indian ports after the issuance of the TRQ license would be considered for clearance under TRQ, which contradicted Para 2.13 of the Foreign Trade Policy (FTP) allowing clearance of warehoused imported goods against a subsequently issued authorization.The court examined the relevant provisions of the Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act) and the FTP. It noted that only the Central Government could formulate and amend the FTP, while the DGFT could issue procedural notices but not alter the FTP itself. The court found 'condition x' to be contrary to Para 2.13 of the FTP, which permits clearance of goods shipped/imported prior to the issuance of a TRQ license. The court concluded that 'condition x' effectively amended the FTP, which the DGFT had no authority to do.2. Consequential Condition No.3 in the Condition Sheet of the TRQ:Condition No. 3 in the TRQ dated 05.07.2022 mirrored 'condition x' from the Public Notice. Since 'condition x' was found to be illegal and beyond the DGFT's jurisdiction, the court also quashed Condition No. 3 in the TRQ issued to the petitioner.3. Refund of Excess Duty Paid by the Petitioner:The petitioner had paid excess duty on the clearance of goods due to the imposition of 'condition x'. The court directed the respondents to refund the entire excess duty paid by the petitioner as expeditiously as possible and within one month from the date of receipt of the court's order.4. Return of the Bank Guarantee Furnished by the Petitioner:The petitioner had furnished a Bank Guarantee pursuant to an interim order by the court. With the quashing of 'condition x' and the related TRQ condition, the court directed the respondents to return the Bank Guarantee to the petitioner.Conclusion:The court allowed the petition, quashed 'condition x' in the Public Notice dated 14.06.2022 and Condition No. 3 in the TRQ dated 05.07.2022, directed the refund of excess duty paid by the petitioner, and ordered the return of the Bank Guarantee furnished by the petitioner.