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2011 (2) TMI 164 - HC - CustomsEPCG Scheme - Order of settlement commission - export obligation - Revenue sought the court to grant a direction to the Settlement Commission to accept their consolidated statement - Held that - In a writ in the nature of mandamus no direction can be given to any statutory authority either to act contrary to the statute or to disobey the statutory provisions. Demand of interest - interest is not payable by virtue of Notification No.160/92. - Order of settlement commission sustained granting immunity from penalty and prosecution.
Issues Involved:
1. Legality of the Customs and Central Excise Settlement Commission's order directing ASCL to pay differential duty. 2. Whether the amounts realized through NRI/NRE subscriptions can be accounted towards fulfillment of export obligation (EO) under the EPCG license. 3. Extent to which ASCL fulfilled the export obligation. 4. Proportional duty realization for unfulfilled export obligation. 5. Chargeability of interest on the duty. Issue-wise Analysis: 1. Legality of the Customs and Central Excise Settlement Commission's Order: The writ petitioner, ASCL, challenged the order dated 13.8.2002 by the Customs and Central Excise Settlement Commission, which directed ASCL to remit Rs.1,94,00,860/- as differential duty. ASCL argued that the Commission, having extensive powers under Chapter XIV-A of the Customs Act and Section 127B, should have exercised its jurisdiction to grant immunity from such payments. The Commission had the power to waive levy of any interest and its orders should be conclusive under Section 127J of the Act. However, the court upheld the Commission's decision, noting that the Commission's findings were based on the materials available and that the ASCL's request for extension of export obligation was rejected by the DGFT. 2. Whether NRI/NRE Subscriptions Fulfill Export Obligation: The Commission addressed whether amounts realized through NRI/NRE subscriptions for cable connections in Kerala could be accounted towards fulfilling the export obligation under the EPCG license. It referred to the erstwhile para 46 E of the EXIM Policy 1992-97, which allowed receipt of payment in freely convertible currency for services rendered by the license holder, regardless of whether services were rendered in India or abroad. The Commission concluded that the provisions of para 46-E were relevant due to an amendment on the license. 3. Extent of Fulfillment of Export Obligation by ASCL: The Commission found that ASCL had achieved only 14% of the export obligation based on the DGFT's certification. Despite ASCL's claims of achieving 50.31% fulfillment, the Commission noted that the DGFT had repeatedly rejected ASCL's request for an extension of the export obligation period. The Commission held that the subsequent earnings in Indian Rupees and not in freely convertible currency could not be considered for fulfilling the export obligation. 4. Proportional Duty Realization for Unfulfilled Export Obligation: The Commission clarified that, as per Condition No.(iii) of Notification No.160/92 Cus., the duty to be charged should be proportionate to the extent of non-fulfillment of the export obligation. The Commission found that the Revenue's stand was consistent with the CBEC's clarification, which supported proportional duty realization. 5. Chargeability of Interest on the Duty: The Commission observed that during the material period of import (July 94 to Dec. 95), there was no provision in the Customs Act or Notification No.160/92 Cus. to levy interest on the duty due to non-fulfillment of export obligation. The Commission referred to judgments from the High Courts of Madras and Andhra Pradesh, supporting the view that interest could not be charged retroactively. Consequently, the Commission held that no interest was chargeable under the Customs Act for the subject imports. Conclusion: The court dismissed both writ petitions, upholding the Settlement Commission's order. It concluded that the Commission had acted within its jurisdiction and based its findings on the available evidence, including the DGFT's certification and relevant legal provisions. The court also noted the limited scope of judicial review in matters decided by the Settlement Commission, emphasizing that the Commission's decision-making process, rather than the decision itself, was subject to review.
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