2012 (3) TMI 453 - HC - FEMA

Re-export the goods to avoid demurrage charges which it is incurring on daily basis - Held that - Since as per the impugned order dated 23.03.2012, the petitioner is required to furnish a suitable security to the satisfaction of Development Commissioner (VSEZ), we are of the opinion that the petitioner should approach the aforesaid authority and offer this security bond. It is found that the assets of the petitioner are worth ₹ 125/- crores as claimed by the petitioner and after taking into account the liability to the bank as well as SEZ, the security of the said assets in the form of bond is adequate, we are confident that Development Commissioner (VSEZ) shall accept the Financial Security offered in the aforesaid manner and subject to the procedure / legal requirements for accepting the security deposit. The petitioner may approach the Development Commissioner (VSEZ) today itself for this purpose and the Development Commissioner (VSEZ) shall take a decision immediately. As far as the other prayers in the petition are concerned, the same are not pressed at this stage since these issues are still to be adjudicated upon by the Appellate Authority.

Summary

Issues:
Challenge to condition imposed by the Appellate Authority on re-exporting goods due to financial constraints.

Analysis:
The petitioner appealed against an order imposing duty/penalty under the Special Economic Zones Act and the Foreign Trade Act. While the appeal was pending, the petitioner sought permission to re-export goods due to demurrage losses. The Appellate Authority granted this permission but required a Bank Guarantee or Financial Security for the goods' value. The petitioner challenged this condition, stating inability to provide a Bank Guarantee. The petitioner suggested offering a security bond similar to what was provided to the SEZ Authority. The Court directed the petitioner to approach the Development Commissioner (VSEZ) to offer the suggested security bond based on the petitioner's assets' value and liabilities. The Court expressed confidence that the Development Commissioner would accept the Financial Security if found adequate.

The Court acknowledged the petitioner's financial situation and directed them to offer the suggested security bond to the Development Commissioner (VSEZ) for approval. The Court emphasized the importance of the security bond being commensurate with the petitioner's assets and liabilities. The petitioner was instructed to take immediate action in approaching the Development Commissioner for a prompt decision on the matter.

The Court disposed of the petition, focusing on the specific issue of challenging the condition imposed by the Appellate Authority. Other prayers in the petition were not addressed as they were pending adjudication by the Appellate Authority. The Court's decision highlighted the need for the petitioner to provide suitable security to the Development Commissioner (VSEZ) based on their financial circumstances, ensuring compliance with legal requirements for accepting the security deposit.