TaxTMI 
TaxTMI 
2020 (3) TMI 203
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.... In W. P. No.38158 of 2003, the petitioner has challenged the impugned order dated 30.10.2003 from File No.20/414/95/EPCG-III/5011 passed by the the 3rd respondent Foreign Trade Development Officer, New Delhi. 3. By the said order, the 3rd respondent had called upon the petitioner to pay a sum of Rs. 6,48,260/- as balance interest on the delayed payment of duty after appropriating the amounts paid by the petitioner on various dates. 4. In W.P.No.22282 of 2009, the petitioner has challenged the order-inappeal dated 27.11.2008 bearing reference No.11/47/08-09/ECA-I/1583 of the 2nd respondent Additional Director General of Foreign Trade (as an Appellate Authority) under the provisions of the Foreign Trade (Development and Regulation) Act, 1992 against the order dated 13.02.2008 bearing reference F.No.32/95/181/00045/AM05 of the 3rd respondent Joint Director-General of Foreign Trade, Coimbatore. 5. The Joint Director General of Foreign Trade had earlier passed an order dated 13.02.2008 and had imposed a penalty of Rs. 1,63,44,084/- on the petitioner in W.P.No.22282 of 2009 under Section 11(2) of the Foreign Trade (Development and Regulation) Act, 1992 pursuant to Show Cause No....
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....s and Exports (Contrl) Act, 1947, Imports (Control) Order, 1955 and the Customs Act, 1962. 105. In case of failure to fulfil the export obligation, either in full or in part, within the stipulated period, the Indemnity-cum- Surety Bond shall be involved and the bank guarantee shall be enforced. In addition, the licence holder shall also be liable to pay interest at the rate of 24% per annum on the amount of duty saved, from the date of import of the first consignment till the date of payment. This shall be without prejudice to any other action that may be taken under the Imports (Control) Order, 1955 and the Customs Act, 1962. 9. Para- 45 of the said Policy reads as under : A manufacturer- exporter shall be required to execute with the licensing authority an indemnity-cum-guarantee bond, supported by a bank guarantee, in the specified form for the value and period as mentioned in the licence. However, after the manufacturer-exporter has fulfilled 50% of the export obligation, the licensing authority may discharge the bank guarantee and require the manufacturer-exporter to execute a legal undertaking(LUT) for fulfillment of the remainder of the export obligation....
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....r various schemes announced from time to time. The Central Government in the exercise of its power under Section 25(1) of the Customs Act, 1962 has thought it fit to not to demand interest foregone, even if there was a failure to pay customs duty on due failure to discharge the Export obligation undertaken under the licence. 15. Though, the licenses were granted under the EPCG schemes of the Export and Import Policy, the duty liability and concession are given by the Government of India, Department of Revenue, Ministry of Finance under Notification issued under Customs Act, 1962. 16. It is the case of the petitioners that the Central Government, Department of Revenue, Ministry of Finance in the exercise of power vested with it under Section 25(1) of the Customs Act, 1962 had issued Notification No. 160/92-Cus dated 20.4.1992 for the aforesaid purpose and the said Notification does not contemplate interest in case there was a failure to discharge the export obligation. 17. It is submitted that the importer at the time of clearance of the capital goods under the said scheme was merely required to make a declaration before the Asst. Commissioner of Customs, in such form as he....
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....rtaking an export obligation equivalent to four times CIF value of the aforesaid capital goods over a period of five years under paragraph 38 of the Policy. 15% ad valorem Explanation : In this notification,- (i) "capital goods'' means any plant, machinery, equipment or accessories required by an importer for manufacture of goods and shall include machinery for packing goods, testing equipment and equipment required for Research and Development activity; (ii) "Export and Import Policy" means the Export and Import Policy, 1st April 1992-31st March 1997 published vide Public Notice of the Government of India in the Ministry of Commerce No.1-1TC (PN)/92-97 dated the 31st March, 1992; (iii) "Licensing authority" means an authority competent to grant a licence under the Import (Control) Order, 1955, made under the Imports and Exports (Control) Act, 1947 (18 of 1947). [F. No. B. 31/7/92-TRU] RAJIV SHARMA, Under Secy. 18. It was further submitted that under the provisions of the Foreign Trade Development And Regulation Act, 1992, the officers are empowered only to impose penalty. They neither have the authority to collect customs dut....
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....015(322) E.L.T.402 (S.C.) viii) Commr.of Cus.(Port) vs. Settlement Commission, Cus & C.Ex. 2005(179) E.L.T.386 (Cal.) 23. The learned counsel however submitted that while passing the above decisions referred to in paragraph 22 above, the courts have not examined the issue in the light of the decision of the Hon'ble Supreme Court in Carbon Ltd Versus State of Assam, 1997(6) SCC 479 and another decision of the Hon'ble Supreme Court in V.V.S.Sugars versus Government of Andhra Pradesh AIR 1999 (SC) 2124. He submits that the authorities under Foreign Trade (Development and Regulation) Act, 1992, have no powers to demand interest under the provisions of the Foreign Trade (Development and Regulation) Act, 1992. 24. It is therefore submitted that the decisions rendered against importers in the cited cases do not constitute a binding ratio decidendi and therefore prayed for allowing the writ petitions. In this connection reference was made to the following decisions of the Honourable Supreme Court:- i) Commissioner of Income Tax vs. M/s. Sun Engineering Works (P) , 1992 Supp 1 SCR 732 ii) Krishena Kumar and Anr. Etc. Etc. vs. Union of India and Ors, ....
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....ate importers like the petitioners to regularise the default by capping the interest payable to proportionate duty on the unfulfilled portion of the export obligation as a trade facilitation Notification No.46/2013-Cus dated 26.09.2013 was also issued by Central Government under section 25(1) of the Customs Act, 1962. 30. The respective counsels for the respondent Nos.1 to 3 in either of the two writ petitions have further submitted that Rule 6(2)(b) of the Foreign Trade Development (Regulation) Rules, 1993 as it stood during the relevant period stipulated that the goods covered under the license shall not be disposed of except in accordance with the provisions of the Policy or in the manner specified by the licensing authority in the license and that a licence was required to execute a bond for complying with the terms and conditions of the license. 31. Learned counsel for the customs department relied upon the decision of the Honourable Supreme Court in Union of India Versus Madras Steel-Re-Rollers Association 2012 (278) ELT 584 (S.C) to state that the officers of the Ministry of Commerce are bound by the circular/public notices issued by the Department and therefore the re....
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....he benefit of Customs Notification No.160/1992-Cus dated 20.04.1992 at the time of import of the capital goods under the Export Promotion Capital Goods (EPCG) scheme announced under the Export and Import Policy 1992-1997. 37. Both the importers executed bond/undertaking to pay interest at 24% in case they failed to discharge export obligation or violate the conditions of the license. The license itself contemplates that an importer has to execute a letter of undertaking and bond as per para 102 of the Handbook of Procedure as amended from time to time with respect to export obligation. 38. The licenses were issued in terms of the said Policy and the Policy mandated that the petitioners had to execute a bond in terms of the Handbook of Procedure. Thus, having taken advantage of the scheme, it is not open for the petitioners to state that the respondents have no power to demand customs duty and/or levy of interest thereon. 39. In fact, the custom duty foregone at the time of import was backed with the Bank Guarantee which was also furnished in favour of the licensing authority namely the Director-General of Foreign Trade. The bank guarantee also was invoked by the office of ....
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....would include within its fold interest payable under the bond furnished by the appellant before the Director General of Foreign Trade. 45. In the above judgment, the Honourable Supreme Court has held as under:- 25. The appellant having evaded payment of duty was bound to pay the same and furthermore was bound to pay interest in terms of the bond executed by it. The Settlement Commission, therefore, could not have given any direction for deduction in regard thereto. As the Settlement Commission, did not have any jurisdiction to waive the amount of interest payable under the bond, we do not see that any jurisdictional error has been committed by it in directing the payment of the said amount which is otherwise payable. In any event the appellant is not prejudiced thereby as irrespective of such direction, the appellant was bound to pay the interest payable under the bond. 46. In my view, it is not open for the petitioners to state that the respondents had no authority to demand interest on the custom duty foregone even though the petitioners failed to discharge export obligation undertaken by them. 47. In the case of the petitioner in W.P.No. 22282 of 2009 that ther....
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....ust, 2013 Subject: Option to close cases of default in Export Obligation. In exercise of powers conferred under Paragraph 2.4 the Foreign Trade Policy, 2009-2014, the Director General of Foreign Trade hereby provides a procedure to close cases of default in Export Obligation under (a) Duty Exemption Scheme (para 4.28 of the HBP v1and (b) EPCG Scheme (para 5.14 of HBPv1 RE-2012). a) All pending cases of the default in meeting Export Obligation (EO) can be regularised by the authorisation holder on payment of applicable customs duty, corresponding to the shortfall in export obligation, along with interest on such customs duty; but the interest component to be so paid shall not exceed the amount of customs duty payable for this default. [Here is an example: Suppose the default in EO is 100%, this would mean the complete duty saved amount has to be refunded. The interest on this duty saved amount has to be calculated from the date of import till the date of payment. The interest component under this dispensation would be limited to the duty saved amount. If the duty saved amount were Rs. 150, then the interest component would be limited to R....