2019 (1) TMI 1291 - HC - Customs

Principles of natural justice - Advance Authorization - specific case of the petitioners is that the first petitioner has imported various components from outside the country, assembled the same in India and supplied the finished product to the second petitioner - Held that - The respondents have not given any opportunity to the petitioners to establish their case and they have not considered the documents produced by the petitioners - They have unilaterally taken a decision and passed the impugned order at Annexure-A. There is violation of principles of natural justice. To give one more opportunity to the petitioners Annexure-A dated 15.02.2012 is treated as show-cause notice - petition disposed off.

Summary

Issues:
Challenge to denial of Advance Authorization benefits; Entitlement to deemed export benefits; Violation of principles of natural justice.

Analysis:
The petitioners challenged a letter denying the first petitioner benefits of Advance Authorization. The petitioners, involved in a Small Hydro Electric Power Project, had contracts for material supply and equipment installation. An advance authorization was issued exempting customs duty for the import of E & M Equipment. The petitioners claimed entitlement to deemed export benefits under the Foreign Trade Policy, having imported components, assembled them in India, and supplied finished products. The respondents, without notice, decided the petitioners were not eligible for deemed export benefits. The petitioners argued they qualified as 'manufacturers' under the Policy. The respondents contended the products supplied were final, imported goods, not manufactured in India. The first petitioner's request to cancel the Advance Authorization was later granted.

The court noted the petitioners' claim of being manufacturers and their submission of relevant documents. It found a lack of opportunity for the petitioners to present their case and the respondents' failure to consider the documents, violating natural justice. Treating the letter as a show-cause notice, the court directed the petitioners to respond within four weeks, allowing them to submit relevant documents. The third respondent was instructed to consider the reply and documents, issuing a detailed order in compliance with the law.

In conclusion, the writ petitions were disposed of with the court's observations on the violation of natural justice and the directive for the respondents to reevaluate the petitioners' entitlement to benefits in accordance with the law.