2011 (1) TMI 22 - HC - Customs

EPCG Import of cars at concessional rate show cause notice (SCN) issued for violation of conditions Held that - The statement made by the learned counsel for the Department of Customs is taken on record and it is directed that the two show cause notices dated 3rd May, 2010 should be adjudicated and decided within six weeks from the date copy of this Order is received by the Department of Customs. In case, the proceedings are dropped, the bank guarantees and the bonds given by the petitioner no.1 company or on their behalf, shall be released. In case the stand of the petitioner no.1 is not accepted, the bank guarantees and the bond shall not be invoked and enforced for a period of four weeks from the date of service of the adjudication order to enable the petitioners to file appeal or take steps to challenge the said order in accordance with law. The adjudication order as required, should be a speaking order dealing with the contentions and the pleas raised by the petitioners. Petitioners are also given liberty to file additional or further response along with documents within two weeks from the date copy of this order is received.

Issues:
1. Challenge to show cause notices issued by the Commissioner of Customs.
2. Quashing of proceedings arising from the show cause notices.
3. Return of bank guarantees and cancellation of bonds given to Customs Department.
4. Compliance with export obligations under the EPCG Scheme.
5. Interpretation of Circulars issued by DGFT.
6. Role of DGFT and Customs Department in monitoring obligations.
7. Application of legal precedents in similar cases.

Analysis:

1. The petitioner challenged two show cause notices issued by the Commissioner of Customs under the Customs Act, 1962, alleging non-compliance with the EPCG Scheme obligations. The petitioner sought quashing of the notices and return of bank guarantees along with bond cancellation.

2. Allegations were made that the petitioner failed to use the imported cars for the specified purpose and did not meet the export obligations. The Customs Department contended that it has the authority to verify compliance with the EPCG Scheme terms.

3. The petitioner relied on Circulars issued by DGFT to support their case, emphasizing exemptions provided for EODC applications. Previous legal judgments were cited to argue against the allegations made by the Customs Department.

4. The Court emphasized the need to examine each import under the EPCG license separately, considering the factual matrix of each case. It was noted that fulfillment of obligations could vary for different licenses, requiring a detailed examination.

5. The judgment highlighted the distinction between the roles of DGFT and Customs Department in monitoring obligations under the EPCG Scheme. Legal precedents were cited to emphasize the need for a thorough examination of facts before reaching a conclusion.

6. The Court directed the Customs Department to adjudicate the show cause notices within a specified timeframe, ensuring a speaking order addressing all contentions raised by the petitioner. The petitioner was granted the opportunity to provide additional responses and documents for consideration.

7. The petition was disposed of with instructions for the Customs Department to either release the bank guarantees and bonds if proceedings were dropped, or refrain from invoking them for a specified period if the petitioner's stand was not accepted, allowing for appeal or legal challenge.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the arguments presented by both parties, and the Court's decision and directives in resolving the dispute.

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