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2010 (4) TMI 696 - HC - CustomsEPCG scheme import of capital goods with export obligation - Duty liability - Bank Guarantee was executed before issuance of the licence and goods were released for home consumption, subject to the conditions that the entire Bank Guarantee would be paid if no import licence is issued - petitioner not complied with the conditions - respondent refused to issue the import certificate as the petitioner company was not found eligible for the certificate - Customs authorities entitled to collect the entire duty liability involved in import of capital goods Para 197 never said that the cases with no export performance or little export performance shall also be considered. The question of fulfilling the export obligations within a given period, arises only when import licence certificate is issued by the licensing authority. Further, the question of fulfilling export obligations, does not arise in this case, since the licence was not issued to the petitioner, as the petitioner company failed to satisfy the requirement for import as per the existing policy provisions.
Issues Involved:
1. Rejection of import license application. 2. Compliance with Export Performance Criteria. 3. Issuance of EPCG license under the 1990-1993 Import Policy. 4. Entitlement to concessional customs duty. 5. Fulfillment of export obligations. Detailed Analysis: 1. Rejection of Import License Application: The petitioner's company applied for import licenses for capital goods under the 1990-1993 Import Policy, but the Director General of Foreign Trade (DGFT) rejected these applications on 15-11-1990. The petitioner anticipated receiving the licenses and imported machinery, leading to a dispute with the Customs Authorities, who demanded full duty payment. The petitioner sought judicial intervention, resulting in conditional release of goods by the court. 2. Compliance with Export Performance Criteria: The petitioner argued that they fulfilled all conditions under paragraph 197 of the Import Policy and Notification No. 169/90-Cus., dated 3-5-1990. The court had previously directed the DGFT to reconsider the petitioner's application, taking into account Public Notice No. 59/ITC/90-93 dated 7-9-1990. However, the DGFT maintained that the petitioner did not meet the required export performance criteria, which necessitated a minimum of three years of export performance. 3. Issuance of EPCG License under the 1990-1993 Import Policy: The DGFT reviewed the petitioner's application post the court's directive but again rejected it on 22-3-2002, citing that the policy did not allow for licenses to be issued retrospectively for the period 1990-1991. The petitioner's claim for an EPCG license under the 25% duty scheme was denied as it did not align with the applicable policy provisions and export obligations. 4. Entitlement to Concessional Customs Duty: The petitioner contended that the DGFT's refusal to issue the import certificate was arbitrary and unconstitutional. The court noted that the petitioner was aware of not meeting the eligibility criteria for the concessional duty facility, which was extended to manufacturers who did not fulfill the past three years' export performance criteria. 5. Fulfillment of Export Obligations: The court observed that the petitioner's company did not fulfill the necessary export performance conditions required for the issuance of an import license. The petitioner's goods were cleared by Customs without a valid license, and the bank guarantees executed were contingent on the issuance of such a license. Since the petitioner failed to meet the policy criteria, the Customs authorities were justified in collecting the full duty liability. Conclusion: The court dismissed the writ petitions, upholding the DGFT's decision to reject the import license applications and the Customs authorities' actions in demanding full duty payment. The petitioner's non-compliance with the export performance criteria and the policy provisions justified the denial of the EPCG license and the imposition of full customs duty. The court found no grounds for interference with the impugned orders.
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