TaxTMI 
TaxTMI 
2018 (9) TMI 332
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.... of product to be exported and the export obligation undertaken by the concerned entity. The petitioner was desirous of exporting processed fabric, for which purpose, the company applied to the licensing authority for issuance of advance licenses. Two licenses were issued which were referred to as quantity based advance licenses on 04.10.1996 and 09.07.1997 permitting the petitioner-company duty free imports of specified goods, one of them being dyes which would be utilized for manufacturing the product in question. The licenses also permitted duty free import of other products. These licenses contained over-all ceiling of value of goods that could be imported. It is not in dispute that these licenses carried a condition that the same shall be "SUBJECT TO THE CONDITION SLIP ATTACHED WITH THE LICENSE AND ACTUAL USER CONDITION AS PER PARA 120 AND 109-c OF H.B. (VOL.1) AND AS PER PARA 50 AND 69 OF P.B. 92.97 AS AMENDED AND CONDITION NO. 04 AND 15 OF GENERAL NOTES FOR TEXTILE PRODUCTS IN THE H.B. 92.97 (VOL.1)" It is not disputed that the condition No. 15 of the general notice for textile product in the HB 92.97 volume (1) contained a condition that the dyes to be imported under such l....
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....ow-cause notice on 17.10.2002 further litigation ensued and eventually, the department did not pursue the show-case notice as the High Court quashed it. 5. The DGFT instead, issued a fresh show-cause notice on 25.01.2008 and pointed out as under: "7. Whereas it was revealed during the audit conducted by the O/o Accountant General, Ahmedabad that the firm had utilised the license in excess to the extent of US$ 42346.10 as stated below without following the condition of General Notes No.4 for Textiles i.e. restriction of 14% of FOB value which was specifically imposed on license has not been taken adhered to while importing the Dyes (Vat Indigo Blue) and thereby resulting into non-levy of Customs duty to the extent of Rs. 16,43,276/- plus interest. FOB value achieved = US$1980999 Restriction of 14% FOB value for Chemicals & Dyes as per Condition (4) of General Notes for Textiles = S$277339.86 Actual value utilized = US$319685.96 Excess Utilized = US42346.10 8. Whereas as per para 129 of the Hand Book of Procedures 1992-97 the payment of amount of duty, interest and any dues or surrender of Special Import License for regularization shall, however, be without pr....
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....g authority has no option except to make order for recovery of excess benefit obtained by the noticee firm alongwith amount of interest @ 15% from the date of import of first consignment i.e. 4/7/07 of chemicals till the date of payment, as the notice firm is liable for the same. ORDER 1. therefore, in exercise of powers as conferred in me under Section 13 of Foreign Trade (Development & Regulation) Act, 1992, Order as under:- 11.1 To recover/payment of customs duty equal to Rs. 684699/- (Rupees six lakh eighty four thousand six hundred ninety nine only) from the noticee firm. 11.2 To Recover/payment of interest with effect from 04/07/1997 till the date of payment at the rate of 15% (interest as on date comes to amount of Rs. 1120749/- (Rupees eleven lakh twenty thousand seven hundred forty nine only only). 11.3 Immediately after recovery/payment of the amount as indicated in paras 11.1 and 10.2 above present show cause notice will be treated as withdrawn and case will stand as closed/discharged/regularized. 12. This order is issued without prejudice to any other action that may be taken under any other Act, Rule or Regulation in force." 8. The petitioner unsucces....
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....ss of such ceiling would undoubtedly be irregular. 11. The question however is, in the present context, is the order passed by the DGFT as confirmed by the Appellate authority is legal and valid? Had the customs authorities initiated steps for recovery of unpaid duty on such imports, the issue would warrant consideration from an entirely different angle. In such context, the petitioner's contention that had such condition been enforced by the authorities at the relevant time when the imports were in the process of being made, the petitioner would have imported other raw materials would come-up for consideration. However, we face a situation where the Customs authorities had not initiated any action for recovery of unpaid duty. Instead, it is the authority under the DGFT which issued show-cause notice and ultimately passed the impugned order. These steps were initiated after discharge of the LUT and bank guarantees. The show-cause notice dated 25.01.2005 which was pursued and which culminated into the final order, referred to and proposed action under section 11(2) of the Act of 1992. Section 11 of the Act of 1992 pertains to contravention of provision of the said Act, rules, o....