2020 (3) TMI 383 - HC - Customs

Imposition of penalty - suspension of the IEC of the petitioner with immediate effect till the amounts of penalty is paid by the petitioner and cancellation of the petitioner s Advance Licence - duty free import of fuel for all Advance Licence applications either under SION or under self declaration as per para 4.7 - HELD THAT - Clause (d) provides that even the fuel is included as an import under SION, it should not be taken into account while fixing the DEPB rate for such products against which fuel has been allowed as an input. The petitioner has imported fuel under the Advance Licence Scheme and even admittedly he has not imported any other raw material under that scheme. The petitioner has not availed any benefit under the Advance Licence Scheme. Once the petitioner fulfills the export obligations of ₹ 30 crorers on the cost of ₹ 2.10 crores, he has incurred for importing fuel. Though the petitioner availed the benefit under the Advance Licence Scheme to import fuel as is clear in the aforesaid amended provision that has to be excluded from the said scheme. Appeal dismissed.

Summary

Issues:
Challenge to penalty and suspension imposed by respondent No.2 on petitioner's business, cancellation of Advance Licence, and suspension of IEC. Interpretation of Duty Exemption Scheme under Chapter 4 of FTP. Dispute over fulfilling export obligations under Advance Licenses. Appeal against order demanding customs duty, interest, and penalty. Validity of DEPB benefit claimed by petitioner. Review of order passed by learned Single Judge.

Analysis:
The case involves a challenge to the penalty, suspension, and cancellation of an Advance Licence imposed by respondent No.2 on the petitioner's business. The petitioner's business operations were severely affected due to the suspension of their Importer Exporter Code (IEC) and Advance Licence, hindering their manufacturing and export activities. The petitioner contended that they had fulfilled their export obligations under the Advance Licenses and had not availed benefits for importing other raw materials. They argued that the Duty Exemption Scheme under Chapter 4 of the Foreign Trade Policy (FTP) allowed them to import duty-free fuel for manufacturing, which they had complied with. The petitioner also claimed that they had applied for Duty Exemption Pass Book (DEPB) licenses post-export, as permitted under the FTP. Despite fulfilling export obligations, the respondent demanded customs duty, interest, and penalty, leading to a legal dispute.

The learned Single Judge, after reviewing the material, quashed the orders passed by the appellate authority, directing the respondent to accept exports towards fulfilling obligations under the Advance Licence and DEPB benefit. The Single Judge also ordered the restoration of the petitioner's IEC, withdrawal of the licence cancellation, and refund of the amount. The respondents, aggrieved by this decision, filed an appeal challenging the Single Judge's order.

Upon examination, the High Court found that the petitioner had imported fuel under the Advance Licence Scheme without availing benefits for other raw materials. The Court noted that the petitioner had fulfilled export obligations based on the cost incurred for importing fuel. The Court emphasized that the fuel imported under the scheme should be excluded from the benefits provided. Consequently, the Court upheld the Single Judge's decision, dismissing the writ appeal.

In conclusion, the High Court's judgment upheld the petitioner's arguments regarding fulfilling export obligations and the exclusion of fuel imports from benefit calculations under the Advance Licence Scheme. The Court's decision affirmed the Single Judge's ruling, emphasizing compliance with the Duty Exemption Scheme and rejecting the appeal filed by the respondents.