2009 (10) TMI 50 - HC - Customs

Re-export of goods goods seized on various grounds i.e (a) The Let Export Order under Section 51 of the Act was given in January 2007 i.e. after the expiry of statutory period of two years in respect of two shipping bills, The exporter failed to produce any permission of Board for extension of two years limit specified under Section 74 of the Act (b) GR waiver certificate obtained earlier was also not valid (c) Present Market Value of the goods is less than drawback (d) Present Market Value of the goods is less than drawback held that - Further, action in the matter is possible only after the conclusion of the proceedings in the said show-cause. Therefore, at this stage, only relief that can be granted is to allow the petitioner to re-export the goods, subject to furnishing of the Bond (as that condition is not challenged) and leaving the petitioner to seek the appropriate remedy after the orders pursuant to the said show-cause notice are passed by the respondents.

Summary

Issues Involved:
1. Termination of franchisee agreement by BSNL.
2. Application for re-export of goods under Section 74 of the Customs Act.
3. Seizure and retention of goods and documents by the Department of Revenue Intelligence (DRI).
4. Compliance with mandatory procedures under Sections 105 and 110 of the Customs Act.
5. Claim of duty drawback under Section 74 of the Customs Act.
6. Provisional release of goods for re-export subject to execution of a Bond.
7. Issuance of show-cause notice under Section 124 of the Customs Act.

Detailed Analysis:

1. Termination of Franchisee Agreement by BSNL:
The petitioner entered into a franchisee agreement with BSNL to provide broadband connections and imported equipment for this purpose. However, BSNL terminated the contract before the equipment arrived in India. The petitioner filed for arbitration against BSNL, but the proceedings were terminated due to non-payment of fees by the petitioner.

2. Application for Re-export of Goods under Section 74 of the Customs Act:
After the termination of the franchisee agreement, the petitioner applied to re-export the unused equipment to Slovakia. However, the petitioner faced delays in obtaining necessary permissions from the Reserve Bank of India (RBI) and later decided to re-export the goods back to the supplier in China.

3. Seizure and Retention of Goods and Documents by the Department of Revenue Intelligence (DRI):
The DRI seized and sealed the containers containing the goods without prior notice or intimation to the petitioner. They also seized original documents related to the import. The petitioner argued that this seizure was illegal as it did not follow the mandatory procedure under Sections 105 and 110 of the Customs Act.

4. Compliance with Mandatory Procedures under Sections 105 and 110 of the Customs Act:
The petitioner claimed that the seizure was illegal due to non-compliance with the mandatory procedures of the Customs Act. The respondents, however, argued that it was a case of detention for investigation and not seizure, and thus did not require a panchnama or show-cause notice.

5. Claim of Duty Drawback under Section 74 of the Customs Act:
The respondents contended that the petitioner wrongly claimed duty drawback benefits. The DRI's investigation revealed that the goods were not worth the claimed drawback due to technological obsolescence and other discrepancies. The petitioner failed to comply with the conditions of Section 74 and Section 76 of the Customs Act.

6. Provisional Release of Goods for Re-export Subject to Execution of a Bond:
Pending investigation, the respondents decided to provisionally release the goods for re-export, subject to the petitioner executing a Bond. The petitioner did not utilize this opportunity and did not challenge the condition of furnishing a Bond in the court.

7. Issuance of Show-cause Notice under Section 124 of the Customs Act:
A show-cause notice was issued to the petitioner under Section 124 of the Customs Act, questioning the validity of the Let Export Order, the misdeclaration of the consignee, and the absence of a valid GR Waiver Certificate. The notice also questioned the duty drawback claim and proposed confiscation of the goods and imposition of penalties.

Conclusion:
The court found the petitioner's actions and transactions to be dubious and lacking serious efforts for the release of documents and re-export of goods. The court allowed the petitioner to re-export the goods subject to furnishing a Bond and left the petitioner to seek appropriate remedies after the conclusion of the proceedings pursuant to the show-cause notice. The petition was disposed of with no costs.