2011 (7) TMI 985 - HC - Customs

Curtailing benefits and privileges conferred under the Foreign Trade Policy - Circular M.F. (D.R.) No. 58/2004-Cus. dated 21-10-2004 - star export house - The exporters who are status holders have been issued with show cause notices by the various officers under the Customs Act 1962 forcing them to furnish bank guarantees for the entire duty to be paid by them. Such notices are being issued arbitrarily jeopardising the operation of the exporters contrary to the benefits conferred under the Foreign Trade Policy. - held that - Even though the petitioner had been enjoying certain privileges as a status holder as per the notification issued under the Foreign Trade Policy such privileges had been granted subject to certain conditions prescribed in the Hand Book of Procedures. Further it has been contended on behalf of the second and the third respondents that the petitioner had committed certain irregularities by misdeclaration and suppression of facts while claiming additional duty exemption in the clearance of imported goods under the Duty Free Import Authorization (DFIA) Scheme. - As the writ petition is devoid of merits it is liable to be dismissed. Hence it is dismissed.

Summary

Issues:
Challenge to impugned Circular M.F. (D.R.) No. 58/2004-Cus. dated 21-10-2004, alleging it is contrary to Foreign Trade Policy, Customs Act, and Constitutional provisions.

Analysis:
1. The petitioner, a significant exporter of woven bags, challenged Circular M.F. (D.R.) No. 58/2004-Cus., claiming it curtailed privileges under the Foreign Trade Policy, causing prejudice to status holders like the petitioner.

2. The petitioner argued that the circular forced exporters to furnish bank guarantees arbitrarily, contrary to the benefits granted under the Foreign Trade Policy, impacting their operations adversely.

3. The petitioner cited the Supreme Court's decision in Sandur Micro circuits Limited v. Commissioner of Central Excise, emphasizing that circulars cannot override statutory notifications granting privileges.

4. The respondents countered, stating the circular aligns with the Foreign Trade Policy and Handbook of Procedures, requiring bank guarantees subject to conditions to prevent duty evasion.

5. The respondents issued show cause notices to the petitioner for misdeclaration under the Duty Free Import Authorization Scheme, leading to penalties and withdrawal of privileges.

6. The court held that the petitioner's challenge was belated, failed to prove the circular's inconsistency with the law, and dismissed the petition, suggesting pursuing alternate remedies.

Conclusion:
The court dismissed the writ petition challenging the impugned circular, emphasizing the need for the petitioner to seek redress through appropriate legal channels. The judgment highlighted the alignment of the circular with established procedures and conditions under the Foreign Trade Policy, rejecting the petitioner's claims of arbitrariness.