TaxTMI 
TaxTMI 
TaxTMI 
2006 (1) TMI 145
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.... of Section 5 of the Foreign Trade (Development and Regulation) Act, 1992, the Central Government formulates and announces the import export policy every five years. The said policies for the relevant years envisaged an EPCG Scheme, whereunder capital goods could be imported at a concessional customs duty of 5%, subject to an export obligation equivalent to five times of CIF value of such goods to be fulfilled by the importer over a period of 8 years reckoned from the date of the issue of the import license. It is common ground that the said Scheme permitted imports even by service providers like the petitioner company. 5.Taking advantage of the Scheme, the petitioner company appears to have imported seven luxury cars of BMW make. The petitioner's case is that the import of these cars was like other capital goods, subject to the condition that the petitioner fulfills the export obligation envisaged under the Scheme. Its further case is that the export obligation qua two of the cars imported by it had been fulfilled in recognition whereof the Director General of Foreign Trade (DGFT) had issued two discharge certificates dated 16th September, 2004 and 30th August, 2005, while the re....
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....nce was in that view not only incompetent but also extremely harmful for the general reputation of the petitioner, who was planning, according to Mr. Jaitley, to launch its own airlines by making investment of crores of rupees. Mr. Jaitley also attacked the demand for payment for differential duty, execution of bond and bank guarantees as a condition precedent for the release of the seized cars in favour of the petitioner and urged that the investigating officers could not ignore the certificate issued by the DGFT and act on an unfounded assumption that the goods had not been imported under the EPCG Scheme or that the condition subject to which such import was made had been violated. 9.On behalf of the respondents, Mr. P.P. Malhotra, learned Additional Solicitor General, argued that the import of capital goods under the Scheme including those by a service provider was, subject to the conditions stipulated under the Scheme. He urged, by reference to the Scheme as prevalent during the relevant period, that the export obligation equivalent to five times the CIF value of the imported goods had to be fulfilled by the petitioner-importer by use of the capital goods so imported. He conte....
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....een fulfilled. The argument appears to be that if a competent authority under the Scheme has interpreted or understood the Scheme in a particular fashion and certified due compliance with the conditions subject to which the imports were made, it is no longer open to any other agency of the Government to sit in judgment over the same, by either placing a different interpretation of the Scheme or otherwise. The interpretation sought, to be placed upon the terms of the Scheme by the officers of the Directorate of Revenue Intelligence is according to the petitioner even otherwise irrational. It was argued that the Scheme did not envisage fulfillment of the export obligation only by reference to the foreign exchange earnings by use of the capital goods. Mr. Jaitley gave the instance of a lift imported by a hotelier for installation in the hotel. He urged that it was impossible to determine the foreign exchange earnings out of the use of the lift once the same was installed for it would then be a part of the larger establishment which alone could generate foreign exchange receipts. Foreign exchange obligation could, therefore, be satisfied even if the capital goods were not themselves ge....
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....ven registered for the commercial activity for which the same were imported as was mandatory under Section 39 of the Motor Vehicles Act. There was, according to them an unauthorised diversion of goods contrary to the spirit of the Scheme, which could be investigated and made a basis for further action against the importer. The investigation instituted by the Directorate of Revenue Intelligence officers may in that above backdrop lead to the discovery of the true facts which would eventually lead to the issue of a show cause notice to which the petitioner can respond appropriately. Expression of any opinion by this Court at this stage would in that view be premature and would amount to pre-judging the issue which may arise at the appropriate stage in the context of the facts established in the course of the investigation. 13.That apart the power of this Court to interfere in the pending investigation is limited to cases where the investigation itself is incompetent or mala-fide. Such incompetence may arise out of any statutory bar to the institution of the proceedings or their continuance generally or by any particular authority. No such statutory bar has, however, been pointed out....