2017 (2) TMI 707 - HC - Customs

Validity of SCN - whether SCN valid on the ground that the DGFT itself had formed an opinion that the petitioner had complied with the Export Obligation? - Held that - True that the DGFT had formed an opinion that the petitioner had complied with the Export Obligation. But still it is a matter for the Commissioner of Customs to decide on the question as to whether the licence conditions had been fully complied with or not. When a competent authority had issued a SCN, it for the said authority to finalise the proceedings and therefore, I do not think that there is any illegality in the Commissioner of Customs issuing SCN - petition dismissed.

Summary

Issues:
1. Compliance with Export Obligation by the petitioner.
2. Validity of show cause notice issued by the Commissioner of Customs.
3. Release of bank guarantee by the 4th respondent.
4. Authority of the Commissioner of Customs to decide on compliance with licence conditions.

Compliance with Export Obligation:
The petitioner, a company that imported vehicles with an Export Obligation, claimed to have met the obligation within the specified time. Previous writ petitions were filed, leading to a judgment stating that the issue raised in the Customs Department's notice should be considered by the Director General of Foreign Trade. The DGFT found that the Export Obligation had been fulfilled. Subsequently, a show cause notice (Ext.P18) was issued to the petitioner, challenging the necessity of the notice when the DGFT had confirmed compliance.

Validity of Show Cause Notice:
The petitioner challenged the show cause notice (Ext.P18) issued by the Commissioner of Customs, arguing that since the DGFT confirmed compliance with the Export Obligation, there was no need for the notice. The respondents contended that it was within the Commissioner's authority to determine if the licence conditions were fully met. The court held that despite the DGFT's opinion, the Commissioner had the right to decide on compliance, and issuing the show cause notice was not illegal.

Release of Bank Guarantee:
In a related petition (W.P. (C). No. 4218/2016), the petitioner sought the release of a bank guarantee given as a condition for meeting the Export Obligation. The court noted that the release of the bank guarantee depended on the final orders to be passed by the authorities. No immediate direction for release was given, but the authorities were instructed to finalize the matter within one month from the date of the judgment.

Authority of the Commissioner of Customs:
The court emphasized that when a competent authority issues a show cause notice, it is up to that authority to conclude the proceedings. The petitioner had already submitted objections, and the matter was pending orders. The court found no reason to interfere with the ongoing proceedings initiated by the respondents. Consequently, both petitions (W.P. (C). No. 16559 of 2016 and W.P. (C). No. 4218 of 2016) were dismissed.