2014 (9) TMI 579 - HC - Customs

Failure to fulfil the export obligations - validity of SCN and OIO - a show cause notice was issued within the period of eight years granted under the licence, calling upon the petitioner to show cause as to why duty should not be imposed. Unfortunately, the petitioner did not give a reply, leading to the Original Authority passing an order in Original on 02.08.2010. - The petitioner woke up to this order after a gap of about three years and attempted to file an appeal. Since the Commissioner of Customs (Appeals), did not have the power to condone the delay, he rejected the appeal. The said order was confirmed by CESTAT on 18.09.2013. Held that - this is a case where the very initiation of the proceedings, was completely arbitrary and faulty. The licence granted a time limit of eight years for the petitioner to fulfil the export obligations. Even before the expiry of the period of eight years, the Department issued a show cause notice in the year 2008 itself. Ultimately what is to be seen in such cases is as to whether an exporter was within the boundaries of law and had fulfilled his obligations or not. If on facts the petitioner had fulfilled the export obligations as per the licence conditions, the technicality of the petitioner missing the bus at every time, should not be put against him, as substantial justice will fail in such cases. - Decided in favor of assessee.

Summary

Issues:
Challenge to order under Customs Act, 1962 for duty payment based on export obligations fulfillment timeline.

Analysis:
The petitioner challenged an order under the Customs Act, 1962, demanding duty payment of Rs. 5,11,350 for allegedly failing to fulfill export obligations within the stipulated timeline. The petitioner was granted a license in 2002 for exports, with an eight-year deadline until 2010. However, a show cause notice was issued within this period, leading to an order against the petitioner in 2010. The petitioner belatedly attempted to appeal, but the appeal was rejected due to delay, with subsequent confirmation by CESTAT in 2013. The High Court noted that the petitioner had exhausted all statutory remedies, making the writ petition technically unsustainable.

Despite the procedural technicalities, the High Court found the initiation of proceedings to be arbitrary and faulty. The Court emphasized that the key consideration should be whether the exporter had complied with the export obligations within the legal boundaries, rather than focusing solely on procedural lapses. In this case, the Court highlighted that the Department's premature issuance of the show cause notice, even before the expiration of the eight-year deadline, was unjust. The Court stressed that substantial justice should prevail over technicalities, especially if the exporter had fulfilled the obligations as per the license conditions.

Consequently, the High Court allowed the writ petition, setting aside the impugned orders demanding duty payment. The Court's decision was based on the principle that if an exporter had met the export obligations as required by the license terms, procedural shortcomings should not prejudice the exporter's position. The Court's ruling aimed to uphold the principles of justice and fairness, ensuring that exporters are not unduly penalized due to technicalities.