Release of Bank Guarantee for Imports: Customs Clarifications Upheld

The court ordered the release of the bank guarantee furnished by the petitioner for imports made against Value Based Advance Licences. Despite customs authorities' doubts on import valuation, clarifications confirmed the import's validity under a Special Scheme. Precedents highlighted that customs cannot demand further verification once export obligations are met, directing the release of the bank guarantee within 60 days.

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Issues involved:
The writ petition seeks a Writ of Mandamus for the release of a bank guarantee furnished by the petitioner in relation to imports made against Value Based Advance Licences.

Details of the Judgment:

Issue 1: Bank Guarantee Release
The petitioner, a manufacturer and exporter of quartz analog watches, imported items under the Export-Import Policy 1992-97 against Value Based Advance Licences. Customs authorities had doubts regarding the import valuation, leading to the requirement of a bank guarantee for release. Despite clarifications from the Joint Director General of Foreign Trade confirming the import's validity, the bank guarantee was not returned, prompting the writ petition.

Issue 2: Compliance with Policy
The first respondent, in a counter affidavit, cited Paragraph 109D of the policy for their actions and ongoing considerations with the Director General of Foreign Trade. However, it was established that the import fell under a Special Scheme, and the Joint Director General confirmed the import's legitimacy, indicating no justification for withholding the bank guarantees.

Precedents and Legal Interpretation
Citing the case of Salem Stainless Steel Suppliers v. Commissioner of Cus., Madras and Union of India v. Oceanic Export Corporation, the court emphasized that once the export obligation is fulfilled, customs authorities cannot demand further nexus verification for matters under the special scheme. Any non-compliance with the license terms should be addressed by licensing authorities, not customs. The court directed the release of the bank guarantee within 60 days, allowing for further legal actions if necessary.

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