2013 (3) TMI 6 - HC - Customs

Export obligation - advanced licence - order beyond the scope of show cause notice - held that - in the show-cause notice there was no proposal that the authority would also proceed to pass an order for recovery of customs duty with interest. Under the circumstances we are of the opinion that the final orders that the Joint DGFT passed travelled beyond the proposals of the show-cause notice insofar as the orders pertain to recovery of customs duty and interest. To such extent the orders are vulnerable and are therefore hereby quashed. - Decided in favor of assessee.

Summary

Issues:
Challenge to orders passed by Joint Director General of Foreign Trade for recovery of customs duty with interest.

Analysis:
1. The petitions were filed against orders passed by the Joint Director General of Foreign Trade in July 2010. The petitioners, a company and an office bearer, had made imports under advanced licenses for manufacturing chemicals for export. However, the Joint DGFT found that the export obligations were not fulfilled, leading to show-cause notices being issued for breach of license conditions and policy terms.

2. The show-cause notices proposed penalties under Section 11(2) of the Foreign Trade (Development and Regulation) Act, 1992. The notices did not mention recovery of customs duty with interest. The petitioners challenged the recovery of customs duty, arguing that the notices did not indicate any such intention, and that the Joint DGFT lacked the power to recover customs duty, which falls under the jurisdiction of customs authorities as per the Customs Act, 1962.

3. The Court examined the relevant provisions of the Act. Section 11(2) allows for penalties, not exceeding a specified amount, for contraventions of the Act, rules, or policy. The Act does not grant authority for the recovery of customs duty. The show-cause notices only mentioned penalties under Section 11(2), not customs duty recovery. The Court held that the orders for customs duty recovery went beyond the scope of the notices and quashed them.

4. The Court clarified that it did not address the broader issue of whether the Joint DGFT had the authority to recover customs duty. If legally permissible, the authorities could pursue duty recovery in accordance with the law. The Court made the rule absolute to quash the orders for customs duty recovery with interest, without imposing any costs.

This detailed analysis of the judgment highlights the key issues raised, the arguments presented by the parties, and the Court's reasoning leading to the decision to quash the orders for recovery of customs duty with interest.