2015 (9) TMI 165 - HC - Customs

Classification of grade of steel imported and exported Cancellation of redemption certificate Petitioner submitted that in view of communication of Norms Committee, it makes no difference whether actual import was of Non-Alloy or of Alloy Steel HR Coils/Plates so long as grade of steel of exported pipes is same as that of imported HR Coils/Plates However, in spite of above direct Addl. DGFT, in impugned order cancelled Redemption Certificates abinitio and imposed fiscal penalty equivalent to value of duty exemption availed against Advance Authorizations Held that - grade of steel exported (such as API) has to be compared with grade of steel imported by petitioner to ensure compliance with directions of Norms Committee This has admittedly not been done Therefore fit case for granting interim stay against operation and implementation of order of Additional DGFT Said interim order shall not come in way of respondent authority considering alloy and non-alloy, are not be treated as grades Interim stay granted in favour of Assesse.

Summary

Issues: Challenge to the order of Additional Director General of Foreign Trade (DGFT) ignoring the decision of the Norms Committee dated 2 May 2012.

The petitioner challenged the order of the Additional Director General of Foreign Trade (DGFT) dated 11 September 2013, which disregarded the decision of the Norms Committee dated 2 May 2012. The Norms Committee decision permitted the import of Alloy or Non-Alloy HR Coils/Plates for the redemption of Advance Authorizations, provided the grade of steel of exported pipes matched the imported HR Coils/Plates. The petitioner argued that the actual import being Alloy or Non-Alloy steel made no difference as long as the grade of steel of exported pipes matched the imported HR Coils/Plates. However, the Additional DGFT, in the impugned order, canceled the Redemption Certificates and imposed a fiscal penalty of over &8377; 860 crores, directing the licensing authorities to re-examine the Advance Authorizations in light of the Norms Committee decision. The petitioner contended that the Additional DGFT's actions displayed arbitrariness and lack of application of mind.

The petitioner further highlighted a communication from the Assistant DGFT, stating that the grade of steel imported (Alloy Steel HR Coils/Plates) did not match the grade of steel used in the export product (Non-Alloy HR Coils/Plates) for certain authorizations. The petitioner argued that the Assistant DGFT's communication also lacked proper consideration as it failed to compare the grades of steel imported and exported to ensure compliance with the Norms Committee's directions. The petitioner sought relief from the High Court against the Additional DGFT's order and the Assistant DGFT's communication, claiming arbitrariness and non-application of mind in both instances.

During the hearing, the respondent's counsel suggested that the petitioner had the option to appeal before the Bench of two Additional DGFT and noted that the matter was also under appeal before the CESTAT under the Customs Act, 1962. After considering the arguments and the Norms Committee's decision, the High Court granted interim relief by staying the operation and implementation of the Additional DGFT's order. The Court suspended the Assistant DGFT's communication as well. The Court clarified that the pendency of the writ petition and the interim order would not hinder the authority from examining the grade of material imported and exported to determine compliance with the Norms Committee's decision, emphasizing that alloy and non-alloy should not be treated as different grades. The Writ Petition was scheduled for final hearing on 15 January 2014.