2015 (12) TMI 320 - HC - Customs

Exemption to import capital goods at concessional rates of customs duty under the EPCG Scheme - Held that - Writ Petition can be disposed of in terms of the statements and undertakings of the Petitioner. We find that if the Petitioner is approaching for exercising an option as propounded and placed before us by the Director General of Foreign Trade itself, then, the request to enable them to avail of the same on the terms proposed by Mr. Nankani can be accepted. Meaning thereby, while granting liberty to the Petitioner to avail of the option in terms of para 5.11 of the Handbook of Procedure, 2009-14, we accept the undertakings of the Petitioner that it would furnish fresh bank guarantees in the sum demanded by the Customs in terms of the document/communication dated 31st August, 2015 addressed to the Chief Manager of State Bank of India, Industrial Finance Branch, 5 Sai Complex, Bharat Nagar, Nagpur and keep these bank guarantees alive till it obtains the Export Obligation Discharge Certificate within the extended time. The Petitioner would submit these bank guarantees for verification and scrutiny. Needless to clarify that the exporter would obtain the Export Obligation Discharge Certificate and submit the same to the Customs/Competent Commissionerate and avail of such benefits as are permissible in law. - Petition disposed of.

Summary

Issues:
1) Petition seeking to quash letters issued by Respondent No. 4
2) Interpretation of Foreign Trade Policy and EPCG Scheme
3) Non-fulfillment of export obligation and invoking of bank guarantees
4) Request for extension under Corporate Debt Restructuring
5) Amendments proposed by the Petitioner
6) Response by Deputy Director General of Foreign Trade
7) Decision on the limited request made by the Petitioner

Analysis:
1) The Petitioner filed a petition under Article 226 seeking to quash letters dated 31st August, 2015, and deficiency letters issued by Respondent No. 4. The parties involved include Union of India, Deputy Commissioner of Customs, and others. The Petitioner, engaged in manufacturing and export, referred to the Foreign Trade Policy, specifically the Export Promotion Capital Goods Scheme (EPCG Scheme) for importing capital goods at concessional rates subject to fulfilling export obligations.

2) The Petitioner obtained licenses for importing machinery for setting up a paper mill in Nagpur, availing exemptions under Customs Notification No. 97 of 2004. However, due to financial difficulties, it could not meet the export obligations. The Petitioner sought an extension under the Foreign Trade Policy amendments, enabling the fulfillment of export obligations to avail customs duty concessions.

3) The Deputy Director General of Foreign Trade stated that extensions would not be allowed until a corresponding Customs Notification is issued, leading to the issuance of deficiency letters. The Petitioner decided to exercise the option to seek an export obligation period extension under the Handbook of Procedure, 2009-14, and agreed to submit fresh bank guarantees until obtaining the Export Obligation Discharge Certificate.

4) After considering both sides, the Court disposed of the Writ Petition based on the Petitioner's undertakings. The Petitioner was allowed to avail the option under para 5.11 of the Handbook of Procedure, 2009-14, by submitting fresh bank guarantees as demanded by Customs. The Court clarified that the larger controversy was not examined and kept open for future cases. The Demand Drafts were to be returned upon the Petitioner furnishing the bank guarantees as specified.