2005 (5) TMI 359 - HC - Customs

EXIM - Import licence - fully export oriented unit - value restriction on goby by the DGFT - HELD THAT - No fault can be found with the imports made by the petitioner relying upon the endorsement made in the licence. The legal submission of Mr. Shah that there cannot be estoppel against law is well recognised. However, when the import is in accordance with the import licence issued to the petitioner, the respondents cannot take shelter under the import policy and purport to take action against the petitioner. It is not the case of the respondents that the deletion of the conditions set out in the licence is due to misrepresentation or suppression of material facts on the part of the petitioners. It is not even the case of the revenue that the deletion of the licence condition was carried out by the officers of the department in connivance with the petitioners. Therefore, if the deletion of the condition was a bona fide error or misconstruction of the import policy by the officers of the department the petitioners cannot be made to suffer. Thus, we hold that issuance of show cause notice (Annexure G ) is absolutely unjustified. Consequently, we have no option but to quash and set aside the show cause notice and hold that the petitioner has acted pursuant to the amendment made in the licence resulting in deletion of the value restrictions as such the respondents are not entitle to take impugned action against the petitioner. It is also declared that the clarification given by the DGFT (Exhibit H ) does not apply to the case of the petitioner qua licence and import involved herein. Thus, the petition is allowed. Rule is made absolute in terms of this order.

Summary

Issues:
Challenge to letter restricting CIF value, challenge to show cause notice for short levy, deletion of value restrictions from license, estoppel against law, unjustified show cause notice.

Analysis:
The petition challenged a letter restricting the CIF value and a show cause notice for short levy. The petitioner, an export-oriented unit, imported raw materials under the DEEC scheme. The Import Policy changes were made over the years. The petitioner sought repeat licenses due to static quantity requirements. The Chief Director General of Foreign Trade agreed to delete value restrictions from the licenses, allowing duty-free imports. However, the respondents later claimed value restrictions still applied due to rubber chemicals being sensitive items. The petitioner's imports were detained but later cleared duty-free for export. The show cause notice alleged non-compliance with value restrictions. The respondents claimed the deletion of restrictions was an inadvertent error. The petitioner argued estoppel against the revenue due to reliance on the deletion of restrictions.

The court noted the petitioner acted based on the deletion of value restrictions in the license, causing prejudice. It held that while estoppel against law is recognized, if imports align with the license, respondents cannot act against the petitioner based on import policy. The court found no misrepresentation or connivance in the deletion of conditions. As the deletion was a bona fide error, the court deemed the show cause notice unjustified. It quashed the notice, stating the petitioner acted in accordance with the license amendment, and the clarification from DGFT did not apply to the petitioner's case.

In conclusion, the court allowed the petition, quashed the show cause notice, and declared the petitioner not liable for the impugned action. The court held that the petitioner's reliance on the license's amendment justified their actions, and the respondents were not entitled to take action against the petitioner. The judgment ruled in favor of the petitioner, setting aside the show cause notice and clarifying the application of the DGFT's clarification to the petitioner's case.