2018 (12) TMI 1860 - HC - Customs

100% EOU - Direction to second respondent to adjust the payment remitted by the petitioner to the Department towards the MOT charges - refund of the balance amount to the petitioner by considering the representation of the petitioner - HELD THAT - It is not in dispute that the petitioner approached the respondent after having provided company license renewed periodically under Section 58 of the Customs Act 1962, and in-bond manufacture license under Section 65 of the Customs Act 1962 have agreed by their letter dated 23.02.2001 to the Cost Recovery Charges for the officer allotted to the unit, as prescribed by the department. No doubt, the petitioner has sought waiver of the Cost Recovery Charges, on the ground that the petitioner's unit was not function effectively till 31.05.2002 and commenced their operation only after 01.06.2002. However, the said claim made by the petitioner cannot be a ground to seek waiver as such having sought for appointment of an officer under the in-bond Manufacturing License. The petitioner is bound to pay the Cost Recovery Charges, even if the petitioner's company claims that no activity was commenced till 31.05.2002. The allocation of the officer to pay the Cost Recovery Charges for the officer allocated to the unit does not have any relation to the operational capacity of the petitioner's company. The petitioner's company is liable to pay the Cost Recovery Charges from the date of granting license and from the date on which, the officer was allocated to their unit to supervise the activities of the petitioner's unit. As the amount of Cost Recovery Charges demanded from the petitioner as the same as also incurred by the department towards the pay of allowance of one post of bond officer created for the service of the petitioner's unit as per their request it is also clear that it is not for the petitioner to dispense with the allocated bond officer when they do not require such services. This Court finds no infirmity in the orders passed by the second respondent and the second respondent order is a well reasoned one and there is no perversity as alleged by the petitioner. Next point to be considered regarding the issue of alternative remedy available as argued by the learned counsel for the respondents is power relating to alternative remedy is never a rule of law despite the existence of alternative remedy within a jurisdiction of description of this High Court to grant relief under Article 226 of the Constitution of India, since the petitioner has pleaded the jurisdictional error - In the present case, the petitioner has not made out any extraordinary circumstances for bypassing efficacious alternative remedy available and to grant relief under Article 226 of the Constitution of India. The order of the respondents is sustained and the writ petition is pending for the last ten years and it may not be appropriate to direct the petitioner to file before the Commissioner of Customs Appeal. Petition dismissed - decided against petitioner.

Summary

Issues Involved:
1. Waiver of Cost Recovery Charges (CRC) for the period when the Export Oriented Unit (EOU) was non-operational.
2. Request to switch from Cost Recovery Charges to Merchant Overtime (MOT) Charges.
3. Enforcing bank guarantee for unpaid CRC.
4. Availability of an alternative remedy through statutory appeal.

Detailed Analysis:

1. Waiver of Cost Recovery Charges (CRC):
The petitioner, an Export Oriented Unit (EOU), sought waiver of CRC for the period from 12.03.2001 to 31.12.2004, arguing that the unit was non-operational until 31.05.2002. The Customs Department demanded CRC despite the unit's non-operation, leading to the issuance of notices and subsequent payments by the petitioner. The petitioner contended that the CRC should be waived as the unit was not effectively functioning until June 2002. However, the court held that the petitioner is bound to pay CRC from the date of granting the license and allocation of the officer, irrespective of the unit's operational status. The court found no grounds for waiver, emphasizing that the allocation of the officer and the CRC obligation is independent of the unit's operational capacity.

2. Request to Switch to Merchant Overtime (MOT) Charges:
The petitioner requested to switch from CRC to MOT Charges from 01.01.2005, which was allowed by the Customs authorities. The petitioner argued that the MOT Charges should have been considered earlier. However, the court noted that the department permitted the switch to MOT Charges from 01.01.2005 and upheld the CRC obligation until 31.12.2004. The court found that the petitioner's request to switch earlier was not feasible as the CRC scheme was mandatory until the specified date.

3. Enforcing Bank Guarantee for Unpaid CRC:
The Customs Department enforced the bank guarantee provided by the petitioner to recover unpaid CRC. The petitioner argued that the enforcement was unreasonable as the waiver petition was pending, and no personal hearing was granted. The court, however, upheld the enforcement of the bank guarantee, stating that the petitioner had agreed to pay CRC and had not made any substantial case for waiver. The court found no violation of natural justice principles as the petitioner did not explicitly request a personal hearing.

4. Availability of Alternative Remedy:
The respondents contended that the petitioner had an alternative remedy through a statutory appeal to the Commissioner of Customs (Appeals). The court acknowledged the existence of an alternative remedy but decided to exercise its jurisdiction under Article 226 of the Constitution of India due to the prolonged pendency of the case. The court emphasized that while alternative remedies are generally preferred, the High Court can grant relief in exceptional circumstances. However, in this case, the petitioner did not demonstrate extraordinary circumstances to bypass the alternative remedy.

Conclusion:
The court dismissed the writ petition, sustaining the order of the second respondent. The court found no infirmity or perversity in the order demanding CRC from the petitioner. Consequently, the interim order passed in M.P.No.2 of 2008 in W.P.No.13338 of 2008 was vacated, and no costs were imposed.