2021 (7) TMI 522 - HC - Customs

Levy of Composition fee - invocation of Bank Guarantee for non-fulfilment of export obligation - Public Notice No.9/2002-07, dated 22.05.2013 - HELD THAT - In the present case, admittedly, such bank guarantee was given by the petitioner. The said public notice nowhere contemplates imposition of composition fee of 2% as charge. In other words, the composition fee, which is not contemplated in the Public Notice dated 22.05.2013, which is sought to be recovered from the petitioner through the impugned order, is impermissible. The petitioner has raised other grounds with reference to certain facts and circumstances and this Court is of the considered opinion that all those grounds are to be raised before the authority competent for read-judication, as the very imposition of composition fee itself is not contemplated in the public notice dated 22.05.2013. However, these factual aspects are to be adjudicated with reference to the records available and the mixed question of fact and law are to be adjudicated and findings are to be given. Such an exercise cannot be done by the High Court in a Writ proceedings. Thus, the case is to be remanded back for fresh consideration. Petition allowed by way of remand.

Summary

Issues involved: Challenge to imposition of composition fee, entitlement for waiver of composition fee, interpretation of Public Notice No.9/2002-07, remand for fresh adjudication.

Analysis:
1. Challenge to imposition of composition fee: The petitioner contested the imposition of a composition fee of 2% on the total duty saved for the initial two years and the requirement to pay 50% of the duty payable for unfulfilled export obligations in subsequent extensions. The petitioner argued that the Public Notice No.9/2002-07 did not mention such fees, and the imposition was impermissible. The court acknowledged this argument and found that the composition fee was not contemplated in the public notice, leading to the quashing of the impugned order.

2. Entitlement for waiver of composition fee: The petitioner, a small-scale industry in operation since 1996, had incurred substantial losses, making it eligible for a complete waiver of the composition fee and an extension of the Export Obligation Period until June 30, 2006. This entitlement was based on the provisions of the Foreign Trade Policy 2004-2009 and the Hand Book of Procedure issued under the Foreign Trade (Development and Regulations) Act, 1992. The court recognized the petitioner's eligibility for the waiver, emphasizing the need for adherence to the relevant legal provisions.

3. Interpretation of Public Notice No.9/2002-07: The court analyzed the content of Public Notice No.9/2002-07, dated 22.05.2013, to determine the requirements regarding bank guarantees for non-fulfillment of export obligations. The petitioner had furnished a bank guarantee as per the notice, but the notice did not specify the imposition of a composition fee. The court highlighted the discrepancy between the notice and the imposition of the fee, supporting the petitioner's argument against the validity of the fee.

4. Remand for fresh adjudication: In light of the above issues and the factual complexities involved, the court decided to remand the matter back to the third respondent for fresh adjudication. The court emphasized the need for a detailed review of the facts and grounds raised by the petitioner, indicating that the mixed questions of fact and law required a thorough examination by the competent authority. The remand was deemed necessary for a proper consideration of the case and the issuance of orders in accordance with the law.

In conclusion, the High Court of Madras allowed the writ petition, quashed the impugned order imposing the composition fee, and remanded the matter for fresh adjudication to address the petitioner's contentions and ensure compliance with the relevant legal provisions.