2016 (4) TMI 1104 - HC - Customs

Demand of a sum equivalent to the bank guarantee amount as Customs Duty/Additional Duty of Customs together with interest - Failure to fulfil the export obligations - Licenses permitted the petitioner to import raw materials at Nil rate of Customs duty and NIL rate of Additional Duty of Customs subject to the petitioner fulfilling its export obligations and producing Export Obligation Discharge Certificate (EODC). Held that - considering that this Court, under similar circumstances, in the case of Jonson Rubber Industries Ltd. Versus Union of India & Others 2016 (4) TMI 1022 - DELHI HIGH COURT required the Adjudicating Authority to examine the matter afresh in the light of the EODC obtained by the Petitioner therein subsequently, the Court in the present case sets aside the Orders-in-Original dated 31st March, 2014 passed by the Adjudicating Authority in respect of two advance authorization licenses dated 19th April, 2007 and 13th June, 2008 and directs the Adjudicating Authority to consider the matter afresh in light of the Petitioner having obtained the EODC from the DGFT. As regards Advance Authorization Licence dated 30th March, 2006 it is pointed out that the DGFT is yet to issue the EODC to the Petitioner. However, the Petitioner is confident that the DGFT will now issue the EODC without unnecessary delay and if the matter is remanded to the Adjudicating Authority, the Petitioner will be able to produce the EODC. On the strength of the above statement made on behalf of the Petitioner, the Court set asides the order dated 31st March, 2014 passed by the Adjudicating Authority in respect of the Advance Authorization Licence dated 30th March, 2006 and remits the matter to the Adjudicating Authority for decision afresh subject to the Petitioner producing the EODC in respect of such licence. As regards the Advance Authorization Licence dated 25th October 2006, it is stated by the Petitioner that the Petitioner did not avail of the said licence at all and surrendered it by a letter dated 10th June, 2014. It is further pointed out that the DGFT wrote a letter dated 14th March, 2014 to the Commissioner of Customs in this regard and Deputy Commissioner of Customs in fact confirmed the said fact by letter dated 7th May, 2014. The Court is of the view that the Adjudicating Authority requires to take these facts into account and decide the issue afresh. Consequently, the order dated 31st March, 2014 passed by the Adjudicating Authority in respect of the Advance Licence dated 25th October, 2006 is set aside and the matter is remanded to the Adjudicating Authority for a decision afresh in the light of the above facts. - Petition disposed of

Summary

Issues:
1. Interpretation of Advance Authorization Licenses
2. Failure to fulfill export obligations
3. Validity of show cause notices
4. Judicial intervention in similar cases
5. Remand to Adjudicating Authority

Interpretation of Advance Authorization Licenses:
The Petitioner, engaged in manufacturing plastics and components, held four Advance Authorization Licenses allowing duty-free import subject to meeting export obligations. Customs issued show cause notices for failing to fulfill obligations. The Petitioner obtained Export Obligation Discharge Certificates (EODC) after adjudication, similar to a previous case where the court remanded the matter for considering the EODC. The court set aside Orders-in-Original for two licenses where EODCs were obtained post-adjudication, directing a fresh examination by the Adjudicating Authority.

Failure to fulfill export obligations:
Customs demanded duty and interest for unmet export obligations under the licenses. The Petitioner argued that subsequent EODCs were issued, similar to a previous case where the court remanded the matter. The Respondent contended that the Petitioner could have appealed the adjudication order but did not. The court, considering the previous ruling, set aside the Orders-in-Original for two licenses and directed a fresh review based on the obtained EODCs.

Validity of show cause notices:
Customs issued show cause notices demanding duty and interest for unmet export obligations under the licenses. The Petitioner argued that subsequent EODCs were obtained, leading to a similar case where the court remanded the matter. The court, noting the undisputed facts, set aside the Orders-in-Original for two licenses and directed a fresh review by the Adjudicating Authority in light of the EODCs.

Judicial intervention in similar cases:
The court referred to a prior case where a similar situation led to remanding the matter for considering subsequently obtained EODCs. The Respondent highlighted the Petitioner's failure to appeal the adjudication order. Despite this, the court, following the previous ruling, set aside the Orders-in-Original for two licenses and directed a fresh examination by the Adjudicating Authority.

Remand to Adjudicating Authority:
For licenses where EODCs were obtained post-adjudication, the court set aside the Orders-in-Original and directed a fresh review by the Adjudicating Authority. The Petitioner expressed confidence in obtaining the EODC for another license pending issuance by the DGFT. The court, relying on the Petitioner's assurance, remitted the matter to the Adjudicating Authority for a fresh decision upon producing the pending EODC. The court also remanded another license surrendered by the Petitioner for a fresh decision based on relevant facts. The writ petition was disposed of accordingly without costs.