2015 (10) TMI 2032 - HC - Customs

Petitioner imported two motor cars; subject to conditions Petitioner is alleged not to comply with conditions of import Detention and restraint order passed on goods imported - Whether Petitioner is entitled to club his foreign exchange earnings from all sources? bank guarantees furnished by petitioner are sought to be encashed. Held That - Petitioner needs to respond to notuces and to put forward his contentions, supported by all necessary documents before the second respondent; Respondent thereafter shall consider the same and take a decision in the matter Same is not set aside. Bank guarantees can be encashed only after a proper determination of issues Until quantification is made and petitioner is found liable for some amount there is no justification for the issue of Ext.P11; same is unsustainable and set aside - Interim order granted shall continue to be in force until a decision is taken by the Joint Director of Foreign Trade Decision made partly in favour of assessee.

Summary

Issues:
1. Import of capital goods for hotel business under Foreign Trade Policy.
2. Requirement to register imported vehicles as tourist vehicles.
3. Show cause notice for violations of import conditions.
4. Enforcement of bank guarantees for imported vehicles.

Issue 1: Import of Capital Goods for Hotel Business under Foreign Trade Policy
The petitioner, a Private Limited Company in the hotel industry, sought permission to import two cars for providing services and earning foreign exchange. The cars were imported under a scheme promoting concessional customs duty against a bank guarantee. The petitioner executed a bank guarantee for 95% of the expected customs duty. The government's notification later required the vehicles to be registered as tourist vehicles, leading to a dispute regarding the retrospective effect of the notification and its impact on the imported vehicles.

Issue 2: Requirement to Register Imported Vehicles as Tourist Vehicles
Following a government notification, the petitioner was required to register the imported vehicles as tourist taxis. The petitioner objected, citing the vehicles' existing use and the notification's lack of retrospective effect. The petitioner's vehicles were restrained from use, leading to a writ petition challenging the requirement for registration and subsequent detention orders.

Issue 3: Show Cause Notice for Violations of Import Conditions
The petitioner faced a show cause notice alleging violations of import conditions for the vehicles. The notice sought explanations on potential confiscation of the cars, enforcement of bank guarantees, recovery of interest, and imposition of penalties under the Customs Act. The petitioner challenged the show cause notice through a writ petition, arguing that the notice was unwarranted due to an existing interim order.

Issue 4: Enforcement of Bank Guarantees for Imported Vehicles
The petitioner's bank guarantees were sought to be enforced by addressing the bank directly. The petitioner challenged this action through a writ petition, seeking orders to quash the proceedings related to the enforcement of bank guarantees. The court considered whether the petitioner had complied with the conditions of import and the requirement to earn stipulated foreign exchange solely through the use of the imported vehicles.

The judgment emphasized the need for the second respondent to determine if the petitioner had satisfied the conditions of import regarding foreign exchange earnings. The court directed the petitioner to respond to show cause notices and submit necessary documents for assessment. It was highlighted that no final decision had been made yet, indicating premature challenges in the writ petitions. The court set aside the order to encash bank guarantees until a proper determination of liabilities was made. The judgment provided directions for the second respondent to consider the petitioner's explanations and evidence, ensuring expeditious decision-making and continuation of interim orders until resolution.